Phil is the founder of SelectSoftware Reviews where businesses can learn about the best software for their organization. Phil started his career working in venture capital before getting his MBA at Harvard Business School.
00:56 minute mark:
Agile entrepreneur takeaway: Be a trusted advisor for your customers.
Phil starts off by explaining about his business which is to provide consumable information for businesses to make informed decisions on buying the right business software from the myriad options that are available for them. Phil’s company makes money by partnering with some of the vendors and with paid advertising on the web site.
04:28 minute mark:
Agile entrepreneur takeaway: Always start by identifying an ideal customer. Delight that customer first.
Phil talks about the ideal customer for his business and that is the HR manager of any business with employees between 100 and 1,000. Phil’s aspiration is that the beachhead of the HR customer will gradually lead to other functions in the org.
08:31 minute mark:
Agile entrepreneur takeaway: Business will evolve. Don’t sweat over trying to get it right the very first time.
Phil talks about the origins of his business. His desire to start a company originated in college when he interned at a one-man company and realized the impact he could have. Phil talks about how his business evolved 7 or 8 times since inception and how each iteration made the company a better business.
11:40 minute mark:
Agile entrepreneur takeaway: As an entrepreneur, be prepared to go though lean times. Find strength within.
Phil talks about the exhilaration of signing up marquee customers in the beginning but how that excitement was worn off when they didn’t renew afterwards. He talks about the learnings such as the tracking the customer interest to get an idea of what is working and what is not. He talks about the pain of going through lean times and watching his classmates shutter their own businesses within 9 to 18 months of starting their businesses. He found strength within to keep going by staying lean.
19:43 minute mark:
Agile entrepreneur takeaway: It’s always a better business model to do something that is already being done in the market faster, cheaper, and better.
Phil talks about 2 key challenges he faced in running his business. (1) Time management (2) Prioritization. Phil reminisces about few things he could have done better. (1) Not trying to change the behavior of the customer (2) Instead focusing on helping something that is already being done better, faster, cheaper etc.
23:07 minute mark:
Agile entrepreneur takeaway: Start with something you know and keep learning and building from there.
Phil continues talking about the need to start a business in an area that you are familiar with and understanding the customer behavior. Phil learnt the the hard way about HR and how HR managers make buying decisions. Phile also gives inside scoop on few tools he uses: Zoom MixMax (for calendaring), Mailchimp. Phil’s company also relies on freelancers from Upwork and Fiverr.
28:01 minute mark:
Agile entrepreneur takeaway: Keep learning and iterating.
Phil summarizes his learnings in this segment. (1) Try to find the market for your business (2) Keep iterating to find the right model (3) Start with something you know (4) Be realistic about your business journey.
Episode Transcript (Click to expand)
Ramesh: Hello everyone, welcome to the agile entrepreneur podcast. This is your host Ramesh Dontha. This podcast is about starting and building your own business with purpose, passion, perseverance and possibilities. Today's guest is Phil Strazzulla. So Phil is the founder of select software reviews where businesses can learn about the best software for the organization. Phil started his career working at in venture capital before getting his MBA at Harvard Business School. Hi Phil welcome.
Phil: Hey Ramesh, thanks a lot for having me on.
Ramesh: It's great to have you here. So Phil so if you could start off by explaining what your business is about and secondly your business model, how you make money.
Phil: Yeah sure, so my business is sort of riding the various waves of software sort of being ubiquitous in our lives and specifically in businesses on the best companies using different tools to accelerate their growth, hire the right people etc. etc. as well as the ease to build software companies. So this has been really on the backs of things like AWS, Ruby on Rails, all these different API’s that allow you to leverage things like you know Tulio's, SMS capabilities, send birds emails etc. to quickly build solutions that are Enterprise ready. That means there are so many different options out there for businesses and so when you're a business and you're looking at which software tools to use, it can be challenging. There are lots of pieces of conflicting and many times underwhelming advice out there and so our goal is to have really in-depth research that helps people figure out what's the right solution for my business, for my specific need. Maybe it's a new CRM, maybe it's payroll software. Whatever the case maybe we to give you in really consumable information, the right advice so you can quickly and competently buy the right software to help grow your business. We do it with free online guides that outline everything you need to know about a given category. Our business makes money is by partnering with some of the vendors to do things like pay per click advertising.
Ramesh: So how do you make money?
Phil: We make money specifically by having some of the different vendors that are featured on our website, do sponsored listings similar to Google's revenue model actually. It gets sort of more visibility; they're paying to essentially boost their profile on the site and that's how the business makes money and partners with the vendors.
Ramesh: Do you charge membership fees for your audience, people who want to come on your side and get a select set of reviews or something like that?
Phil: No it's totally free and open and there's a couple reasons for that. One is a sort of philosophical one where the North Star of our business is to help businesses buy the right tools to continue to grow and the best way to do that is to offer the content for free. There is also a business reason for it. Which is the majority of our traffic coming through search engine optimization and putting that Information behind some sort of sign up or paywall means that Google is not going to index and rank it. Which would drastically decrease the amount of people that discover it and are able to utilize our content.
Ramesh: So interestingly actually I interviewed another gentleman who is a consumer product reviewer. So he runs a similar one, a consumer product reviews and they say they're anti TV in the way that they produce their reviews and one of the things that interestingly what he told me is that they have zeroed in on their customer who the ideal avatar so to say, right. So it's a 34-year-old male. So likewise do you have your ideal customers? Who are target audience I should say, who come under this?
Phil: Yeah, I think for anybody's starting a business, it really helps especially when you first get started to focus on one specific customer. It's you know one of these sort of siren calls of any business as you want to serve everybody right. But it's a disaster and so for us it is the head of HR at a small to medium size business. So anywhere from like a hundred to a thousand employees’ sort of thing who is buying these tools for the organization. So any sort of HR tech, or future work or tech sort of stuff that relates the applicant tracking systems, chat box for recruiting, performance management etc. etc. So that's sort of like our beachhead market that we've focused in on with aspirations of eventually when we're ready going into other parts of the organization and selling to you know the VP of Finance, the VP of you name it.
Ramesh: So do you specialize in HR human resources and talent management related software reviews?
Ramesh: Okay so does it prevent you from going into other segments of the market, whether it's a sales or other area. So is that your plan?
Phil: Yeah, I don't think it prevents us, our name probably implies our aspirations. Which is to eventually get into these other markets. We started with HR for a couple of reasons. One, that's sort of my background and my network. The last couple years I spent building this other company called next wave hire. Which is an HR tool that powers career websites and basically helps companies use inbound marketing to recruit. So it's just easier for us to start there. We've got the connections; we understand the buyer at a pretty deep level. We understand the various software solutions out there. At least you know at an elementary level and the goal is to once we sort of own that category to move into these other parts of the organization that we think also experience the pain of trying to figure out these really vast and complicated vendor ecosystems. You know anything from Devox to sales and marketing.
Ramesh: Excellent. So Phil now let's segway a little bit into you as a person on your own journey. So I mean you graduated from Harvard Business School and then you decided to start this company right after the school or did you work somewhere? If you could just help us understand your journey.
Phil: Yeah, so I started basically right out of the gate. I think like many people who start businesses I sort of had this like burning probably irrational desire to start a business. I think you know most rational thing probably would have been to go back into the venture capital world for a bit, make some more money, build my network etc. etc. or maybe join another sort of fast-growing company as you know a functional leader like heading up marketing or whatever to learn from another entrepreneur. But I think as probably many of the people listening out there can relate to, I just really wanted to start a business and that desire really started when I was in college. I interned at this essentially one-person company and just kind of got addicted to like the impact that I could have, the sort of chance to exercise my creativity, my analytical skill set and just see the results of everything that I was doing in real time and focus on the stuff that actually mattered. You know maybe having a boss that sends you down a couple rabbit holes and you're not super jazzed about how you're spending your day.
Ramesh: So how long ago was this?
Phil: It was just about five years ago.
Ramesh: Fantastic so the five years ago you said hey I’ll put my name on a shingle and then start the business and then you had prior background little bit in the HR side. How long did it take actually to set up the company and then get the operations going?
Phil: Yeah, so we definitely took like the Lean Startup approach to things where you know we probably had a website on like day two sort of thing and we're just like testing you know things around user engagement and what we really viewed is like the key hypotheses that had to play out in order to build a business and as we sort of went through that process, the company evolved probably like seven or eight times and so the current instantiation of the business probably, it probably took us like three years to get there. We kind of had these like other kind of suboptimal businesses prior that allowed us to you know pay our rent and survive and all that stuff, but the writing was on the wall just by being like pretty rigorous of no metrics that mattered that like you know those things were not sustainable models and so we just sort of like got going as soon as humanly possible, like literally like hey we've got this idea, let's start executing on it, let's start testing things and like the cheapest meanest way possible. Excuse me and then sort of just evolved and iterated from there and honestly evolved into a much much different business. But glad that we went on that journey. Because it allows us to have a nice profitable software company.
Ramesh: Good I mean I keep hearing that thread evolve like you evolved the business models. So how long did it take for you to you know get onto the path that you're on now?
Phil: So the path that I'm on now is quite recent. So I basically built this company out of the gate called next wave hire for four and a half years or so and then a couple of months ago started select software really from interacting with customers at next wave, understanding all the problems that they had buying software, understanding vendor landscapes, getting internal buy-in like all these things that functional leaders struggle with when they're trying to accomplish their goals, specifically by partnering with software vendors and other b2b tools. So I think it's like anything in life, it's funny I just talked to this woman who's probably like in her late 50s yesterday and she's the CEO of a company, she's leaving. She's going to do something else. She's going to be actually a different sort of leader within a different type of company. It's kind of funny to me how like these journeys they never stop changing. Like there are very few people that find the thing that they're going to do and do it for the next couple of decades until they retire. Well that like your journey through life and especially as an entrepreneur is continuously evolving. Especially in the world that we live in which is changing so quickly due to technology and globalization and all this different stuff. Which makes it exciting, maybe a little bit scary. But makes it a lot more fun than just doing the same thing day after day.
Ramesh: That's interesting Phil. So what was a trough of your journey? Like when was where you said am, I doing the right thing, what the hell am I doing here?
Phil: Yeah, I think honestly those things happen like on a frequent basis. I think especially when you're starting something like every day there's ups and downs and I think the highs can be super high you can feel like you're on drugs and the lows can be just as low and are extrapolating that success or failure like 10 years in the future and so for anybody out there starting off, it's super normal to feel that way and you probably hear this from a lot of entrepreneurs. Looking back on sort of like the journey like one of the lowest points for us at next wave was the first iteration of our business that really started charging customers, we got out of the gate with a couple of really really marquee brand names and we like you know through the roof we were so excited and then we had like 95% churn after a year on that product. Because it looked good in a PowerPoint, we could sell it to companies. We could get the money. But there were just fundamental things we didn't understand about our buyer that made it so that the actual adoption of our product was extremely low and when you know people buy something, they don't use it, they're not going to renew it the next year. So we still have like, it's kind of funny we have this like one customer from that iteration that like just every year sends us a check and we like laugh about it, might go out to dinner sort of things like celebrate it. But for the most part like we you know the first three months of that business we like sold like huge huge brands and we were like, oh my god this is it. And then it probably made it that much worse that people weren't using the product and eventually we're like you know we couldn't even get them back on the phone when it came time for renewals and at that point it was time to essentially shut that down and something else. We you know kept the same entity, the same cap table and all that stuff. Like it was kind of the same business. But we basically drastically pivoted in order to survive and find something that was more viable.
Ramesh: Interesting. So what kept you going during those lean times? What's your source of inspiration?
Phil: I have no idea. I think it's like something internal a little bit that like you're just sort of you've got like you've got kind of got that fire; you get excited about building things about solving problems. You have the optimism to think that there is a light at the end of the tunnel. Even though perhaps you know things seem bleak in many cases and those are the people when I look at like the cohort of people that started businesses out of my class at HBS, the vast majority of those people shut things down after 9 to 18 months sort of thing and then there was probably like three or four of us who can deal with the pain, can just sort of like put that in perspective and continue to somewhat objectively analyze their chances of success and continue to plod forward. It's funny now that I'm thinking about it like most of us had some sort of like painful athletic background. Like I think a lot of like track stars or entrepreneurs, I was a wrestler you know. I'm used to like dealing with the pain of like cutting weight and like not eating and like training really hard to like to accomplish a goal. A lot of the same sort of like chemical stimulus from entrepreneurship as I did wrestle and so maybe there's some sort of quarterly in there. But I think a lot of it's just sorts of like you're either got that personality and some of these things are augmented by support system by being thoughtful about like your lifestyle and sleep habits and exercise and diet and all that stuff. But I think a lot of it it's kind of like you got it, or you don't.
Ramesh: So I mean let's talk a little bit about the finance in your business. Did you need a lot of money to get the business going? How did you manage that?
Phil: Yeah, we did raise a small angel round. It was mostly people that I had worked with previously with a couple of like ex college roommate sort of situations as well. It was just enough to pay we enough to pay rent and live very frugally. So that we could build a product and iterate enough to get to a point where we had cash coming in the business. We've always been super lean. It's sort of again one of those mentalities that I think you either are more the growth crazy you know go for the unicorn mindset or you're more sort of this like bootstrapped cash flow focus sort of person. I'm like pretty cheap in my life generally speaking and I'm always super focused on cash flow. Because I think that's at the end of the day what makes a valuable business and what makes an actual business versus you know something that's being subsidized by venture investment or something like that. So we didn't raise money ever at that, we did some creative things to increase our cash flow. One of the things that you can do which is huge is to collect money up front for a contract. Many times your customer doesn't care if they pay you monthly or quarterly or annually and so that's been the main thing that's sort of like kept us afloat and then in my new business, I’ve sort of developed enough expertise to be a moderately paid consultant to various businesses out there who just sort of know me through the content that I do, through being in this space. They'll hire me to do stuff like speaking or strategy work. Which is enough to sort of fund the operations in the short term and then I’ve got a really strong focus on generating cash flow from customers that will fund the business.
Ramesh: So it looks like you're trying to find ways to differentiate you and your business. Like in your own words I mean how what do you think you're doing to differentiate yourself and what is your differentiation?
Phil: As a business or as an individual?
Ramesh: As a business
Phil: Yeah so, I think as a business for select software, it has to be about putting the user first and not the customer. Which might be a little bit counterintuitive. You always say you know put the customer first blah blah blah. But in this case if we do a really good job of creating high quality useful unbiased content that allows businesses to buy the right software, we're going to be okay and it's actually really really an analogous to Google's business right? Google search engine spend all of their time trying to be the best unbiased search engine and therefore people come back and if they weren't the best you go somewhere else and they wouldn't have a business. But because they are so good, because their algorithm is all about serving up the right content, getting you the answers that you need, you keep coming back and then some percentage of us click on those ads and that's how they make 30 billion dollars a year. For us it's the exact same thing. Just create an amazing awesome content, which is differentiated in this market. Most of the people that we are competing against they're doing sketchy stuff, they're not putting the user first, they're putting their customer first and I think that over time this philosophy will win out.
Ramesh: So Phil what are the challenges that you're facing in the day-to-day of running of your business?
Phil: I think one of them is time. You know you can only work so many productive hours. There's a you know I used to my first job out of college I worked as an investment banking analyst and I used to literally work two hours a week. There were many times where I would work from 8:30 a.m. Until one o'clock in the morning two days later. You know like 40 hours straight, never going home. Not even really taking breaks to eat and you know the last like 20 hours of that I probably got nothing done, I was probably even negative and so I’ve sort of learned from that and realized that look I can work incredibly efficiently for like 55,60 hours a week. But of course I'm only one person and there's so much to get done in a startup. Especially when you're talking about building content and building links of that content and doing all this online marketing stuff that a lot of it's just like execution and takes time and so that's one of the biggest bottlenecks for us right now. Especially on a day to day basis, like how do I prioritize and how do I make sure that I'm efficient. You know turning off the cellphone, closing my email tabs and just focusing on a task for 45 or 50 minutes and just doing as good a job as I can.
Ramesh: Yeah actually that comes across you know time management is the number one challenge and of course apart from cash flow management and other things. So looking at your own journey over the last five years or so, what are the things that you think you should have done differently and then as a piece of advice, what you advise to other entrepreneurs to do differently based on journey?
Phil: Yeah, I think there's probably a million things I could have done differently. With hindsight in terms of generalizable advice I think that the key to any new business is finding product market fit. For us, our first couple of iterations of our business and even on this led to some extent the last iteration of next wave is trying to do something drastically different. We're trying to change the behavior in the buying cycle as well as the using of the software of our customer and that is so incredibly challenging. If you look at the most successful businesses, they are all just doing something that is already being done, better, cheaper faster. So Uber is like taxis, which is a huge market. Everybody takes taxis, except it's better, cheaper, faster. There's just like a million examples of this in the recruiting space in our b2c wise as well our consumer lives and so I think like for me if I could go back in time I would really encourage myself to look at ideas that were just better, cheaper, faster relative to something where I'm like you know creating this new market. Which also takes tremendous amount of capital and time. Most companies that do that they raise a ton of money and many of them fail. So I think that's a really good thing to keep in mind.
Ramesh: So basically just to summarize at that point, you're saying go after the proven market and do it better.
Phil: Exactly. Yeah, so don't try to like change someone's behavior. Just take something that they're already doing, give it more efficient. Like that's key to every single, like even if you think about something that you think it was really innovative, like maybe you think Uber is really innovative, but it's not. It's just making the taxi experience much better. So I think that's a big key, I think the other is when we started off, I didn't know anything about HR and that really hurt us the first like two years and it took that long to really understand our buyer. I think I probably should have spent more time just like working next to HR people and you know hearing what they talk about, hearing how they think about tools and basically everything in life. That would have been much, would have saved us a lot of pain and I mentioned earlier are like 95 percent turn on that original product, it was because we didn't understand the behavior of HR people. We built it for people like us who like we're super tech savvy and we are super execution focused and like just grew up in a different era and for the most part that was not our customer and that's why that product failed. It's really understanding your customer, if you're doing b2c build something for yourself or somebody who like is your spouse or best friend. If you're doing b2b really understand who you're selling to, why they're going to buy this and hopefully again build it for yourself.
Ramesh: So Phil what are the tools that you use in your business that you rely on extensively?
Phil: Zoom, mix max, MailChimp.
Ramesh: What do you use the mix max for?
Phil: Mix max for booking meeting. So there’s always back and forth as well as you can send some like email campaigns through that like no merge type stuff, through plain text email. Which I think converts much higher than the HTML emails. But I did mention we do use MailChimp that's more for like the newsletter type of stuff. A variety of CMS's. So WordPress, Squarespace to build web pages. Of course Google Analytics, Google tag manager, hot jars great for understanding the behavior on your website and you keep Maps you can record people on your website. I use a lot of like Excel to understand the data, like pulling out the data from these different systems and trying to figure out like how to you know actually convert people down the funnel sort of thing and then I don't know if I mentioned or not, but zoom. We use Zoom every single day.
Ramesh: That's right. Do you outsource any parts of your business?
Phil: Yeah, we do, and we use Upwork to find really phenomenal freelancers. Especially those abroad. I've also used Fiverr and Fiverr is going public. I'm actually a shareholder in Fiverr, maybe I should mention that. But that's a great way to get like you know willows designed or video intros or whatever. So those sorts of marketplaces can really help you feel skills as well as time gaps that you might not have in usually really cost-effective ways.
Ramesh: Yeah actually so those are the I think top mentioned areas. So towards the end of this podcast Phil, I want to understand the Phil as a person. Who are you? What drives you? What kinds of interests you have in life?
Phil: Great question. I think that in no particular order the things that are important to me are personal growth and learning. My relationships with friends and family. I love to do things that are active and athletic. Like get out and play stuff. I love to see new places. Yeah, I guess I'm just sort of like a voracious sort of learner. Which is interesting as I was never a great like that great of a student. Like you're probably like oh you went to HBS, I think that was more of like a working experience sort of thing that got me in. But yeah, I just love to learn new stuff and I love to teach stuff. Which is kind of why I select offers like the perfect business for me. I am you know learning about these different software landscapes and then trying to teach the relevant points to the end buyers. Who the information is really valuable to and I just love to continue to learn about myself? You know big into meditation, yoga, introspection and journaling since I was in fifth grade and the other thing I’ve been doing since I was a kid is investing. I just love sort of thinking about the world through a finance lens. Always been like kind of a number’s person.
Ramesh: Excellent. So Phil any areas that we did not touch in this podcast so far? Anything that you want to share?
Phil: I don't think so. I mean I think that if somebody is starting a business, it's a tremendous journey. You're certainly going to learn a lot about yourself. Probably your market, different skill sets, you're going to network and you're going to have lots of options. I think a lot people are afraid to start a business. Because they're like oh my gosh if I do this thing and I fail, I'm totally screwed. It's not the case whatsoever. Like if you start a business and it doesn't work out, people love that experience and it could be as company like Google, could be a company in your space that you were trying to do a business development relationship with. It didn't work out, but you impress the person who's your contact and they're dying to hire you. Because they're just so impressed with what you're trying to do and they understand that the majority of businesses fail and they fail for reasons, many times that are beyond your control. Just like they succeed for many times reasons that are beyond your control. Just finding product market fit at the right time. It's not a coincidence that even like you know Walmart and Kmart were all started in the same year. You know like New Balance and Nike were started the same year. Like all these trends happen and these businesses start, and they succeed. And part of its due to the individual, a lot of it's due to the market and so just try to enjoy the journey, don't let the lows get you down too much. Be analytical and rigorous about your thinking. Don't delude yourself either way into optimism or pessimism and know that there's a light at the end of the tunnel. Whether it's a you know profitable, successful, business. Whether it's a unicorn or whether it's just learning about yourself and getting a cool job afterwards.
Ramesh: Excellent advice Phil. Thank you very much and by the way I should mention your blog, www.philstrazulla.com. I spent some time going through that. It's a very, it’s a nice blog actually. I like it. I mean especially some of the articles about your investing and then about the views that you had and one of the sites, it's good. I like it.
Phil: Thanks, yeah thanks for checking it out.
Ramesh: Yeah yeah, hey Phil thank you very much for your time. I really appreciate it. So the good luck on your journey and to greater heights.
Phil: Thanks Ramesh. I appreciate it, good luck to everybody out there listening.