Trent: Hey everybody. Welcome back to another episode of the Bright Ideas Podcast. As always, I’m your host Trent Dyrsmid and I’m here to share the stories of today’s most successful entrepreneurs and more importantly to extract all the best golden nuggets that you can implement in your company. Starting today. My guest on the show today is Greg Mercer, founder of Jungle Scout, the leading software for Amazon sellers. Greg is a leader in the Amazon selling community who originally built Jungle Scout as a Chrome extension to automate the process of finding products to sell on Amazon while he was traveling the world. Today, Greg leads a team of 125 global employees who have built Jungle Scout into a robust sweet Saas solutions. Greg, thank you so much for making some time. Welcome to the show.
Greg: Great. Thank you very much for having me on and set a chat with you.
Trent: Indeed. So let’s without further ado, let’s start with part one. We’re going to talk this on this part of our first part of our three-part mini series. We’re going to talk about your company overview and some key stats that I think other SAS founders would be interested in. So real quick in a nutshell, what does your company do?
Greg: Jungle Scout is a all in one software tool for Amazon sellers, started out as a product research tool to help Amazon sellers find new opportunities or new products they wanted to sell on Amazon. Since then, it’s transitioned into a tool for Amazon sellers. It’s helped them not only find products but also manage their business and optimize their Amazon listings.
Trent: And I’ve used it and it’s a very comprehensive tool and it does a lot of stuff. I will say that. Your ideal customer, so there’s, there’s lots of Amazon sellers all the way from little one person shop in the, in the spare room, in their house, all the way up to, you know, companies that employ hundreds of people doing over a hundred million dollars a year in sales. Your target customer is?
Greg: The entrepreneur to the small business.
Trent: Okay. What does your pricing model look like?
Greg: Yeah. Our pricing model starts at around $40 a month and it goes up to typically the hundred dollar range. However, there’s a few custom plans for the larger customers.
Trent: Okay. And your average customers paying you how much per month?
Greg: Roughly 50 bucks.
Trent: 50 bucks. And when did you launch?
Greg: Yeah, February of 2015. So almost five years ago now.
Trent: Man, but still, that’s a hell of an accomplishment.
Trent: So how many customers do you have now and how many are paid? Do you have like a freemium model? So if there’s customers, break them up between paid and free.
Greg: Yeah. So we have, we’ve gone through a number of different pricing options through the life of Jungle Scout. You know [inaudible ] it was just a Chrome extension There was like this one time, the, so and then after that it went from to annual fee and now you can either purchase that monthly or annually and there’s about 200,000 customers using that product that are either currently paying or have been grandfathered in this like a lifetime type license.
Greg: And in addition, there’s about another 50,000 or so who have purchased our web application, which has more traditional Saas pricing.
Trent: Okay. And your monthly revenue, what range is that in right now?
Greg: Yeah, so we’re in the low tens of millions in ARR. So. [inaudible] get monthly.
Trent: Okay. Year over year growth rate.
Greg: Last year to this year, call it around 40% growth.
Trent: And how has that trend been over the last couple of years? Obviously as things get bigger, they get harder to continue to grow at a really high growth rate.
Greg: Yeah. You know, I’d say the, the first two years were kind of like a rocket ship and then like you said, as it matures, growth gets harder. So, a percent of year over year growth that has decreased each year.
Trent: Yup. Pretty understandable. And you’re up to about 125 employees now, is that correct?
Trent: So how many added in the last year versus how many added in the year before?
Greg: So let’s see, January 18 we had about 30 people. By the end of 2018 we had about a hundred people. So that was a really big as far as headcount, more than tripled. And then we definitely felt the growing pains associated with that. And this year, 2019, you know, we’re three quarters of the way done with the year when we’re recording this and you know, it’s only gone from a hundred. It’s about 125. So the head count growth this year has been much slower. And really the first quarter of this year we pretty much put a freeze on hiring and said let’s kind of [inaudible] all this new headcount. As you can imagine, there was a lot of just strain associated with that for the organization and making sure everyone knew what they were working on and doing and you know, just training all these new employees.
Trent: So we’re going to talk about that more in part three of our interview and we’ll use whatever time we have left in part one to dig into that a little bit more. But before we get into that, I want to talk about an activity which would have been presumably the precursor to that. And that’s raising capital because it’s really hard to hire that fast unless you’ve probably raised some capital or, or your company’s throwing off an immense amount of cash. So in your case, was it required for you to go out and do a raise or did you do a raise or have you literally been able to scale that quickly just on cashflow?
Greg: Yeah, so believe it or not, the company’s completely bootstrapped as a single founder and we’ve been able to grow just off cash flow. Now in the early days I did have a, I still have an Amazon business physical products business that was funding the company in the early days But really for the past few years, we’ve been able to grow and scale just off the cashflow in Jungle Scout.
Trent: Wow. Now at the size that you’re at, do you think you’re going to raise money at any point or do you just not, so you need to do so?
Greg: I’m definitely open to it. We’ve been very fortunate and the fact that that we’ve been able to grow just off cash flow to date. I don’t foresee us needing to raise capital in the near future, let’s say like the next half a year or a year. But depending on kind of what we decided to do as far as some of like the growth plans and opportunities where we want to invest, what potential business opportunities we want to take on, you know, I don’t have all the answers to all those right now by any means. So just kind of depending on that, that’s when we’ll just do some more thinking about whether or not it makes sense to raise capital or not. So nothing against it. We’ve just been fortunate enough to be able to grow based off of the revenue generated from our customers.
Trent: And how do you decide, when you look at the profits in a given quarter or a year, how do you decide how much is going to be taken out of the business or put into the emergency fund versus, you know, reinvested in the business? Or do you literally just take all the profit all the time and just completely reinvest and reinvest?
Greg: I think in the earlier days I was pretty hesitant to reinvest heavily or run the business at smaller margins. I think that was kind of like a, maybe more of like a typical, just like a young entrepreneur mindset. Also like for me, you know, like bootstrapping this, I quit my job, you know, as an entrepreneur, just making money off my businesses. And like the first few years I always just had this terrible fright. I was gonna have to go back and get a real job at some point and that was like the scariest thing I’ve ever heard in my entire life, having to go back and get a real job. So in the earlier days I was definitely much more conservative as far as like, Hey, I have to make sure there’s enough money for me to like survive. I don’t have to go back and get a real job.
Greg: And then I would say there’s a certain point where I think I like that over that hump. I was like, okay I’ll probably not going to have to go back and get a real job anymore. Not only that, but the business has able to like generate a little bit of a push in the bank account as well and kind of those two things combined, that’s when I started to feel like a little bit more comfortable with running the business, let’s say like closer at a break even to maximize growth as opposed to maximizing for like this balance of profitability and growth.
Trent: How many months worth of overhead do you like to keep in the bank as we call it emergency fund for lack of a better expression.
Greg: Yeah, I would say. If we generated $0 million revenue starting today,, how long can we operate the business? And you know, I’d say I feel pretty comfortable at like let’s say four to six months. If the revenue got cut off today, we would run the same expense, same expenses for four to six months. I think I feel pretty comfortable with that because realistically you’re never gonna cut off your revenue down to $0. So that’s a really healthy amount. I think that’s what we would have like in, we might even have more than that in the bank right now, but I would feel plenty, plenty comfortable with even three or four months.
Trent: And I would imagine at this size of revenue and profitability that you know, you’ve got operating lines of capital available to you and all sorts of other forms of financing that wouldn’t require you to go out and raise money from investors.
Greg: Yeah. I think that’s the other thing that I became more aware of as we grew is, you know, like going out and raising money would be pretty easy for me at this point. Getting capital and other means using other structures would be fairly easy or like very doable. So that’s why I like no longer quite have like that scarcity mindset maybe than I was .
Trent: Okay. So we have a couple of minutes left in this first segment and I mentioned, so we’ve got about four and a half minutes left. the one thing before we get into our five quick facts, the one thing I want to dive a little bit deeper into that we’re going to cover in more detail in part three of this series is the hiring. If you had to pick the single greatest challenge or surprise either or of adding that many people to the payroll and to your team in a 12 month period of time, that you maybe didn’t, like I say you didn’t predict going in, what would that be?
Greg: The single biggest surprise of growing headcount by that?
Trent: Yeah, because you’d mentioned, you know, there were some challenges as, as you might as it comes as no surprise, but you know, I’m sure you went into that, having talked to people and developed a plan and how are we going to scale and how are we going to onboard them. And I’m sure you gave it thought in advance but then stuff always happens.
Greg: Right? I’d say like the biggest, it was probably a surprise, but also the biggest just learning from that experience was, I value previous people management and management experience much more now than like before I went through that, that kind of like growth phase. So you know, we promoted a lot of like all star individual contributors into people managers and you know, now I feel like I can almost like write a book on it, but it was like we’re seeing the same issues and problems over and over and over with first time people managers and part of that’s of course, because like we’re like mentorship and teaching inside of our company. I think that was like one of the biggest surprises to me.
Greg: If the difference of a first time people manager that probably doesn’t have that good and mentorship inside of the company of how to become a great people manager. Compare it to like well experienced seasoned managers and executives and how much better they are at managing people.
Trent: Yup. I made a note of that and we’re going to dive into that a little deeper in part three before we close out for today, let’s get into the five quick facts. What is either the current business book that you’re reading or your favorite business book?
Greg: I just got done with Radical Candor. I think it’s Kim Scott. It’s a book about giving honest feedback and how ultimately that’s like the best thing you can do is be more candor and your feedback and that you give to the team members on your team and it’s a really good book if you haven’t read it and you’d like to improve, just like your management leadership abilities, Radical Candor is great.
Trent: Have you ever read a book called a Vivid Vision or one called The Road Less Stupid?
Greg: I have not read either of those.
Trent: I recommend them. I read them both earlier this year. We don’t have time to dive into it, but go read the Amazon reviews and make your own decision. Favorite online tool for growing your business and you can’t say Jungle Scout.
Greg: I think these types of questions, everyone tends to answer like Zoom or Slack, which I of course love and use hours and hours every day. They were one that wouldn’t get as mentioned as much. The one that I use called Snagit, but there’s a handful that do something similar. Essentially you just take a little screenshot on your screen and you can do a little arrow or a text word or URLs, and that’s just a really effective way for like communicating, especially if someone’s not in the office next to you about like what you’re looking for, what you’d like them to do. So I find myself using that a lot.
Trent: Yeah, I use Sketch. Same thing. How many times a day, 10? 20? 30? because it’s communicating with remote people, it’s wonderful. Hours per week. How many hours a week you putting into the office?
Greg: I work about 50 hours a week.
Trent: And that, you know, we CEOs say we work 50 hours a week, but that’s when you’re there. You know, there’s always this going on all the time.
Greg: Yeah. A lot of that going on in my mind, I am more disciplined now about like when I’m at home about spending you like better quality time with my wife instead of me sitting with the laptop on my lap with my wife next to me and calling that quality time. Disconnecting from the hardware when I get home. But it’s still always going on in the mind. I can’t stop that.
Trent: Yeah. So that was actually my next question. Family situations. You have a wife, do you have kids yet?
Greg: No kids.
Trent: And then finally, with hindsight to your benefit, what do you wish that your younger self knew?
Greg: I wish I took the plunge into entrepreneurship much younger. You know, I think I like my whole life I’ve just had this entrepreneurial spirit and I wish I just didn’t feel like society and cultural pressures to like get a typical corporate job even though I knew I wanted to be an entrepreneur.
Trent: All right. Tell me about your customer acquisition Geez, I can’t talk today. System.
Greg: Yeah. So I think we have a pretty well balanced customer acquisition channel. What I mean by that is we have quite a few different channels that work effectively for us. The nice thing about that is you’re not just relying on Google or just relying on this or that at the other thing. If I were to say or you know, let’s dive a little bit deeper into one of them that I feel like is effective for. And I think, you know, like for us, if I were to like to kind of like sum it up out like my favorite one or the one that’s, I felt like has worked with the best is doing very, very high quality content series.
Greg: So an example of this is we did a content series called The Million Dollar Case Study. The Million Dollar Case Study was where we publicly launched an Amazon product. We build it, this business, we grow it to $1 million in revenue. This is done through a series of live webinars and then ultimately record it. You could see our product, you got to see behind the scenes and it was quite well done. It was totally for free. And yeah, it was like you could get really everything you needed to start and grow an Amazon business.
Trent: Was Jungle Sticks an example of that?
Greg: Jungle Sticks was the first series and we ended up doing four series. So like a different product each series. But yeah, like you know, you’ve heard of Jungle Sticks and quite a few other people have heard of those or different, other different products that we’ve launched and it’s really because, you know, we just produce high quality piece of content that was very educational and I guess it was like so good that people were even like just recommending it to their friends. Like, you should check this out if you want to learn how to sell, that type of thing.
Trent: And how far out does the content come after the product launch? Cause I’m right away wondering, you know, how many people are copying you trying to piggy back on the idea, polluting the marketplace and increasing competition.
Greg: We were doing it live so real time and as you imagine we would have tons of copycats and of course that would affect our margins. But that was kind of just the one of the things that we just decided we wanted to deal with and you know, all the products are still successful in their own right. I’d say for the first like three to six months because the margins were really tight because of all that increased competition of all the people also copying us in real time. But all things consider I think is still a great win for us.
Trent: So best marketing, best marketing activity. Content. What would be the second best marketing activity?
Greg: The second best would probably be a, like if I were to group together either podcasts and webinars and guest appearances on whatever medium you choose on other partners. And again, the goal of these is always like 99.99% just provide pure value and ask for like nothing in return. So you know, like I’m not going on there to like sell Jungle Scout, but instead of just like try to teach you everything I know. And of course there’s going to be some mentions of Jungle Scout, that’s where I work, that’s where, well, you know what it does as a result, people are just naturally curious. They check it out and they see it, they’re interested in it.
Trent: So those approaches have resulted in a customer acquisition costs of?
Greg: It’s about, so our total blended customer acquisition costs. For all of our marketing spend, including salaries of our whole marketing team equals about 2x of our average first month revenue from a customer. So it takes about two months to earn back the amount of money that it costs to acquire the customer total blended.
Trent: So about a hundred bucks because like you said earlier is about $50 per.
Trent: Okay. So you already answered my next question in advance. Thank you for that. average lifetime value of a customer, how long they hang around for?
Greg: Our business is quite interesting because there’s different groups, you know, like one of the groups are these aspiring Amazon sellers, aspiring entrepreneurs, and this group is extremely churney, right? Like they could only stick around for like one or two months. And then if you look at like our cohort graph or a cohort chart, you know, it’s like people either burnout at like month one or two or they stay for like one, two, three years. So total blended there. The average time of customer sticks around, it’s like close to six months.
Trent: So knowing that the churn is so high for the aspiring entrepreneurs and that’s just the very nature of the business. A lot of folks have dreams, but then they don’t necessarily have the fortitude or the stickiness or whatever to make a success of it. Does your team spend much time trying to figure out how to go from one month to three months or do you just accept that that’s a fact of the business of, for that particular customer segment and work on getting the folks who are going to be successful to stick with your tool for as long as possible.
Greg: We still do attempt to get those one month people, to two or three or four months because they still do make up a significant portion of our new signups. And the way we do that is just like everything we can think of or do to try to help them be successful on Amazon. So part of that is, you know, like mindset and sticking with it even though there’s going to be bumps in the road and challenges because you are starting a business. The other part of it is tactics. You know, the other part of it is like helping them find that opportunity then helping him find a supplier for it. So we do like everything we can think of essentially to help these people be successful with starting their business. We’ve seen some success there, but it’s a pretty hard, it’s a pretty difficult challenge. Like the truth of all of it is that starting a business is challenging. Like there’s, it’s going to be tough, there’s going to be some late nights and there’s going to be some hard work and you got to invest some money and some people just don’t ultimately quite have what it takes no matter what we do to try to help.
Trent: Yup. Have you thought of doing things like, okay, if you’re current stick rate in that segment is two months, maybe we come up with a pricing plan where they can buy six months for four months or something like that to try and increase the average ticket so that you’re able to spend more on marketing?
Greg: Yes, we are currently doing quite a bit of testing with how we package these different plans and the pricing associated with them. The, and I think we can do a lot better with it. I’m confident that we will find something that works a lot better, but it’s challenging I think from a marketing standpoint in a pricing and merchandising standpoint to segment those two different audiences, like the people who, what to become an Amazon seller versus like the small business that has one, two, three, four people and they, you know, I already got started, but there’s still quite a small business. It’s like, it’s kind of difficult to segment those groups and like kind of show them different packages or different pricing. So that’s something that we’re working on. It’s not a challenge. We can’t ever come but I’d say it’s kinda, it’s kind of a hard problem.
Trent: Yeah. I don’t doubt it. Okay. What about, so for the other segment, Average churn per month, do you know what that number is?
Greg: The segment of, let’s call it more like mature sellers, It’s roughly five or 6% per month.
Trent: Okay. and are there ways, I mean I’m sure your team is always working on ways to get that number down in the last six months, have there been any experiments that you have run that have been quite reasonably successful in getting that number down or I guess another way is what’s been the best experiment to get that number down?
Greg: You know, I think like the best, the thing that we’ve done to impact it the most is just dive into like the analytics and a lot of people who probably just know these kind of like by gut and see like what are those key moments in your customer’s journey that’s kind of like a little bit like an aha moment or like the moment they’re like, Oh that’s so awesome or something like that that kind of gets them to like fall in love with in like the first month or two or something along those lines. So like how do those people behave that ended up sticking around for a while. So like an example of Jungle Scout now is the customers who you know now we offer analytics for your Amazon business and we just released a keyword rank tracking and different things like that.
Greg: So like the customers who enter their expenses, it takes a little while, right? It takes like, you know, if you have 20 products, you might have to spend 30 minutes entering all your expenses. Like the customers who do enter their expenses stay around much longer because then all of a sudden like the profit analytics and the profit dashboard, it works. We automatically download Amazon sales but if you don’t enter your costs and you don’t actually know your profits. So there’s just some little things like that that it’s like if you perform this action, it’s much more likely for you to stick around. And then what can we do to help? Those are like, increase the amount of customers that perform those actions. You know, some of it’s as easy as like send them follow up email every week that they still haven’t entered their expenses. Some of the things that were that we’re testing this quarter but we haven’t done yet is giving them something of value. So like sending them a Jungle Scout T-shirt or if they enter their expenses or giving them a coupon or like doing different things like this to really incentivize them to perform these different actions that we know lead to longer retention.
Trent: So in terms of customer success systems, which is obviously pretty important during the onboarding phase, aside from what you’ve just described, is there anything else that you know, you had in use for awhile and you consider it to be, you know, a foundation or a cornerstone, of your customer success?
Greg: Yeah, I don’t think I have any magic bullets here or things that you wouldn’t typically hear, you know, like an onboarding email series when they’ve signed up and there’s different routes. You can go down with that, right? If you perform this action, but not that you get a different email. So it’s a little bit more customized. What’s most important to you? There’s little in-app messaging that tells you about..ask you to do something or tells you how to use something. You have like little videos in there in-app that are explainers. So you know, there’s few little things like that, but it’s your, It’s the type of just kind of like onboarding customer success, product education that you see for most companies.
Trent: So earlier you and I talked about Nathan. I don’t know if you’ve seeing this, but he’s got a Slack group, which he’s made really clever. Some of the stuff that he’s done with different channels and then bots to force people to get interacting with another, with one another to build a community. Have you guys, with respect to build, Cause I know in my world, you know when you build community, people get together and they become each other’s accountability partner and I think I don’t have any hard data in my world to support this because I haven’t done those studies, but my feeling is that helps people to stick around more and work harder because they have these relationships. So if you haven’t checked out Nathan’s Slack community, I would encourage you or someone on your team to just get in and and see kind of what he’s doing because I’m sure you could reverse engineer it. It’s quite clever.
Greg: Cool. Yeah, I’ll have to check that out. You know we’ve experimented with like a private Facebook community if you join Jungle Scout. It is pretty active and there’s like 50,000 people in there and they’re pretty good about helping each other out. But it’s still feels like to me on Facebook that the perceived value of that is extremely low. That like Facebook, it should be free. I do agree that it seems like an app community or a Slack community or something like that, it feels like the perceived value would be a little bit higher. You feel like you have to kind of like stick around and continue use the tool in order to get it. So I would like to do some more on that.
Trent: Yeah, that’s been, he’s actually taking his community, which has been free and it’s going to become a premium community for I think 500 bucks a year. And so I’ve been, I’ve been using it a lot in the last while to try and determine, Hey, I was, should I pay the 500 bucks and remain a part of this community once it’s pay wall goes up.
Trent: But I do particularly like how it’s got a Monday morning coffee thing and the little bot tells me, Hey, you’re matched up with so-and-so this week. So I might not have otherwise reached out to so-and-so to talk shop. But now I’m doing it because the bots telling me to do it. And I think that’s probably the feature that I liked the most about it.
Greg: Cool. I like that.
Trent: What role have standard operating procedures or documented business systems played in helping you to scale your business over the last year or two?
Greg: Yeah, good question. You know, I would say that. SOPs in good systems to help you scale I’d say it’s like a probably a weak point of mine. I’m like, I’m not very organized, like a little bit more like creative and I have been [inaudible] notice a transition in the business from, you know, hiring managers and executives that are better operators and more organized and understand how to scale their team from 20 people to a hundred people.
Greg: So I say like, you know, they would be much more active in using like these organized processes or SOP to help . kind of like grow the department and definitely it helps. It makes, you know, it makes sense. I don’t think anyone can argue that.
Trent: So that’s not necessarily a part of the company culture that Hey, no matter what we do we have a documented process for it?
Greg: No, it’s not. It’s, it’s more of a just kind of like scrappy, make it happen. It’s not like a really well organized and like SOP type company culture.
Trent: Last question for this segment. What is one actionable item that a listener, and we’ll define listener as another Saas founder or senior leadership at a Saas company could put into action tomorrow to achieve more growth? I know that’s rather a broad question.
Greg: I’m trying to think of some of the, you know, some of like the biggest easy needle mover. You know, like it’s easy to say things like, Oh, like improve the product, whatever else, but it’s just takes a lot of developers and a lot of time. Easy things, I feel like not enough people do or like one, you know, in the past a few months we’ve been always running a split test on our pricing page and this isn’t necessarily even different prices, but even the way that we package it and merchandise it or add a plan or remove the plan, and some of those have a really big impact and it’s not that difficult I think to do, you know, sign up for one of the AB testing platforms, you know, build a new page that you have a hypothesis that’s going to work better and test it and yeah. Some of them are like kind of a wash or some of them lose and other ones it’s like, wow, this has made a huge difference.
Trent: So in episode number one, you disclosed that you had 125 employees, you added heavily to that, I think you said last year in 2018 and not so heavily correct. Correct. So can you break that down? First of all, let’s break it down into the two biggest silos in a software company, engineering versus sales and marketing. What are the percentages in each of those silos?
Greg: There are 25 people in our marketing department and for engineering, I like to also group in like the product managers and the UX designers. And we kind of call it like R and D and there was about 55 or 60 people in the R and D department.
Trent: I would just some customer support. You’re not including in that category.
Greg: Correct. Not including customer support.
Trent: So how many for customer support?
Greg: I think a little bit less than 20.
Trent: 20. Okay. So tell me, first of all, let’s let’s dive into how you attract these folks. So back in 2018 when you were on a huge binge to add head count, I know in my own business I needed time, I’m trying to fill an opening. It’s really hard to find, it’s not hard to get applications. It was really hard to find the right people to make the decision on. So can you share with us some of the best practices that have been working well for you in that regard from posting to interviewing to actually hiring?
Greg: Yeah. And actually looking back, this is probably one of the biggest, or this has made a huge impact on our company is that we used to post job offers and just wait for applications to come in. And then we transitioned, we hired a recruiter and then you know like if we look forward to today, I don’t know if we post job applications or not, but all of our applicants only come in from outbound recruiting. So like we have two recruiters, you know, like their full time job is just to source candidates for whatever open rules that we have. And this has made, you know, so I’d say like probably 90 or 95% of people that we hire now are not, we’re not looking for jobs. They weren’t out like searching for a new job. They already had a job that they liked and they were probably doing a good job at it and we proactively reached out to them and like we recruited them.
Greg: So I think that made a big difference for a couple of reasons. One is the best people already have jobs and they’re probably happy with those jobs. You know, like they’re probably doing a really good job of that company. So it’s less likely that type of person is constantly job searching. Like of course there’s some good people job searching, but you get the idea. And the other reason, I’m a huge fan of this and I think it was really beneficial. It used to be the job of the hiring manager to essentially sort through the applications and contact them to interview them and do the interviews, right? And that’s very time consuming. Totally very time consuming. So I think what would happen is, you know, this is before we had HR or anything, so they were in charge of like all these different types of interviewing and sorting through applications. Everything else.
Greg: And as a result, I think it was more likely that they would accept a mediocre candidate because they’re like, well let me go interview 10 more people like before I fill this role. Cause that’s, that’s a lot of time, a lot of work. So instead, now they just have like, they have an endless pipeline and we’ll just put good candidates in front of them as long as they’re willing to interview which takes a long time. But you know, like we’re sorta doing outbound, we’re finding good people. There was a screening call with our recruiters, which is pretty in depth. They weed out most people. So as a result of their getting a, you know, limitless pipeline of high quality candidates and as a result, like it’s you know, it’s like, well, I kind of, you know, that person’s pretty good, but yeah, who cares.
Greg: I get 10 more good interviews next week. So like I’m not going to take this mediocre person who, [inaudible] the good ones next week.
Trent: Are these recruiters employees or are they companies, the recruiting companies that you’re paying a commission to?
Greg: They are internal. At one point we had one of our recruiters leave so we got a contract. But you know, they do that. All the recruiters do outbound or just reach out on LinkedIn. It’s pretty easy to do. We haven’t found that hiring these recruitment firms give any added benefit and they’re actually quite expensive because they usually [crosstalk] It’s like man, after two or three people, like we could just pay for, we can just have an internal really high quality recruiters. That’s what we’ve done ever since.
Trent: Okay. And so when they’re looking on LinkedIn for folks what are, what are two of the tactics that they’re using to, in the whole huge world of LinkedIn where they’re, you know, an endless number of people. How do they go about finding folks that would be good prospects to come and join your team?
Greg: Okay. Honestly, I don’t really know. But they do a good job at it. I don’t know for sure how they search and filters through them. I think if you sign up for like a LinkedIn recruiter plan, I think you have some added filters are something that you can use. But I’d be lying to you if I told you I really knew Trent.
Trent: Okay. So let’s shift then and talk a little bit about retention. It’s no good to recruit. It’d be really good at recruiting if you can’t keep them on board. And I was listening to a, a really funny episode of another podcast the other day and this particular company, I think it was Borland, which was a big software company back in the day, you know, they had the gym and they had a hot tub and they had the cafeteria and then all these perks for employees.
Trent: And one manager walks by one day and there’s two employees on company time sitting in the hot tub complaining about working at that company. And then you get the irony in that situation is, you know, they’re in the hot tub on company time, having probably just eating a meal that was made in the company, you know, and they’re complaining about working there, which is to say that perks aren’t everything.
Trent: So what are some of the things that you have discovered that work exceedingly well to keep folks happy and to keep them loyal?
Greg: Yeah. You know, my opinion on this has changed a lot over the years. Like here at Jungle Scout, you know, we, I’d say we probably pay, you know, like in the top 25% dial you know, the salary ranges and we have 401k and you get equity and yeah, snacks and the cool office, blah blah, blah, blah, all that kind of stuff.
Greg: But there’s really, you know, I know strongly believe that most of that stuff really doesn’t matter at all actually. I think it helps a little bit with the recruiting, but actually I don’t think it really helps at all with employee retention. I’ve never, I don’t think anyone’s ever really stuck around. So it’s like, Oh, are they whatever have this. The by far the number one thing that like makes team members happy or like fulfilled with their job is I think that their manager. So like I think that’s by far are the most important one is like their relationship with their manager and if they’re enjoying their work. And most high achievers and like most the highest quality employee, they really want to be challenged and like given new challenges and new problems. So they’re constantly learning and they want like a good mentor also to help where that is typically their manager, but maybe it’s other people as well.
Greg: So I like, I now firmly believe that that’s the most important thing for employee retention, all this other crap that we do and spend money on probably doesn’t make hardly any difference. And we also do like we do twice a year company retreats. You do sometimes hear like that and we go to cool places like we’re going to Costa Rica in January and we’ve been to all these cool cities all around the world. You dp from time to time you hear people talk about that and like they do get pretty excited about that. I’d say more so than snacks or 401k or equity or whatever else. But I think it’s by far just their day to day satisfaction, which is primarily driven by their manager and the work that they’re doing.
Trent: Well that’s not surprising at all because a 401k and equity is delayed gratification. The snack is incidental, but enjoying what I’m doing each day and enjoying who I’m talking to each day I’m reminded of how much I like it or how much I don’t every day.
Greg: I’d say the main thing that you should focus on for increased employee retention is having really good managers. You know, it’s like now we invest quite a bit in manager training and we hire or you know, like we’re extra extra careful about the managers that we’re hiring and how good mentors and coaches they are, the problems and the challenges that we’re giving to people. Cause yeah, I think that’s ultimately what makes the difference.
Trent: So that was going to be my next question. So talking about, you said earlier on that you had found that finding people who already had some level of management experience was a valuable change from what you were doing before and then you’re continuing to invest more money in educating and training those folks. What types of training, are there certain things or programs that you’ve found that, Hey, like this is working really well for us and if so, what are those programs?
Greg: I’d say that’s like a combination of things. You know, one is depending on the department, they’ll send them to different you know, conferences or we have our recommended reading material or things like that. But I think probably the two areas that I feel like helped the most is one, just like an internal manager training that we’ve developed. And that’s actually probably the biggest one. The second one I was going to say was we do hire coaches for most of our, a lot of our managers. right now we’re using this service called Better Up, which is like a coaching at scale. So it’s more affordable. I think it’s like maybe 5,000 per person per year. There’s a lot of coaches would be like quite a bit more than that. So it’s like a little bit more affordable, but probably our internal trainings actually that has the biggest help. [inaudible] the mentorship from their manager were internal training where we help train new employees, like new managers.
Greg: So what that can see, like now we kinda just have these things that are, it’s like, Oh man, we see this every time we promote someone into our first time manager. The most common one is that they always just want to be their friend instead of being like pretty critical and hard on them. And you know, the new manager always thinks that Oh by being really nice all the time and their friend, this is what will make them like me the most whatever. But in reality, again, like the high performers, they want critical feedback and they want you to be pretty hard on them. They want you to Oh shit. Cause that’s how they’ve learned in developing, grow inside of their careers. Like that’s by far the biggest one. And then there was a lot of just other smaller ones about just like setting clear expectations. And a lot of it’s just around kind of like, it’s really just be around kind of communication, expectation setting, a lot of it really in those areas.
Trent: So with respect to the internal manager training, were there any programs, people, conferences or whatever, which influenced the material that you’ve, that your team has developed?
Greg: I think there was probably a lot that influenced it. It was developed by our director of people operations here at Jungle Scout. And yeah, I think it took kind of inspiration from a lot of different leadership courses, books, whatever else. And probably just combine that into like common themes, things we maybe believe in the most or just kind of like how it works here at Jungle Scout and he’s an easy example of that is like here at Jungle Scout, all managers have to have a one on, you know, we recommend you have a one-on-one weekly, but at the bare minimum every other week with all your directors. And like, so there’s just like little things like that that some of the listeners for the show, it’s like, Oh, of course do that as manager. But we solve fairly often before developing some of the little things like that that they just kind of weren’t having one on ones or not talking very much or just things like that.
Trent: Makes a lot of sense. So I want to make good on the promise that we made in the first part of this three part series. And you talked about hiring first time managers versus hiring more experienced folks. I’m trying to figure out how to do this in a way to make it interesting and helpful to the audience. So aside from the fact that just works better, is there any other color you can add to that topic too, for folks who are listening to make them think more about it or make them potentially alter their approach?
Greg: Yeah, I definitely have like this entrepreneurial spirit, very like entrepreneurial minded. You know, I got to Jungle Scout from. I grew Jungle Scout quite a bit in like in the first couple of years without any you know, these are real like experience executives. Like we were mostly hiring these like scrappy, get it done type attitudes. They, maybe it didn’t have like any experience really, but they could just like figure out how to make stuff happen.
Greg: You know, it was like, it was a lot of like those types of people in like the first ten people. Yeah. I think that was actually quite important. But one of the things that I realized is, you know, like the saying like what got you here won’t get you there. It was very, very true for us. And I saw that change by hiring more like seasoned executives and more experienced people. And so, you know, now I have a full executive team that reports to me and when I say an executive, they’re either a C level or VP level. These people typically have 20 years industry experience. I think they all have Ivy league MBAs. They’ve worked at a bunch of successful startups that have gone from with billion dollar valuations or exits. And so they’re definitely just like been around the block.
Greg: And at first I think I was quite hesitant. Like, no, we don’t need people like that are like we don’t need these really experienced people. Like you know, we, we’ve made this work without them type of thing. And then once we got to a certain size, it was probably like 20 or 30 people. It’s like, well every, there’s so much broken stuff in here and it’s a mess. And then once I started hiring these more seasoned executives, that’s what I was like, Oh wow, you guys are really good at running, operating companies, and running departments and growing. And so I would say, you know, if you’re listening to this and you do have five or 10 on your team and that resonates with you, that you don’t really have very many experienced well-experienced people and you don’t really feel like you need it cause there’s something different about your company, I would encourage you to kind of think twice about it and think like, okay, does it make sense to hire a little bit more?
Greg: And as a result they’re also really expensive, right? So it gives us a shell out, a lot of cash for this level of experience. But for us, I think we found it’s definitely worth it.
Trent: So let’s say somebody out there is listening and they’re right at that inflection point, maybe it’s 10 or 12 people somewhere in there, what’s the first position they should hire that level of talent for? Is it a COO or director of ops? Is it Marketing?
Greg: Yeah. One of our first was a, there’s an operations role, they originally hired a director level and I think that actually makes sense for that size. But like I’d be looking for people who have been a director at like, you know, like legit good size companies before. I think that’s a good experience level for that size of company. What’d you start getting into 30 40, 50 people. That’s where I think it really starts make sense and start hiring like the VP level or C level type people. My first one was like an ops role. After that, I would probably encourage you to think about what you’re best at and what you would like or like what you would like help at. So for me, most of the marketing stuff came quite a bit more naturally than say formal product experience, or you know, some of the customer support stuff. Like I just found myself naturally gravitating towards marketing. So that was one of the last executives that I hired. I ran that department for quite a while.
Trent: Okay. So the company is Jungle Scout. My guest has been Greg Mercer. The success story has been phenomenal. Going as a bootstrap company from no employees to 125 in just a few short years. Greg, thank you very much for being on the show has been a pleasure to have here.
Greg: Great. I enjoyed it. Thank You.