I think this is, without question, one of the most anticipated posts I've authored. Since I announced back in September to several friends that I'd be posting SEOmoz's financial records on the blog, people have generally responded with shock and amazement. While public companies are forced by law to issue their balance sheets & earning statements, for private companies, financial information has always been thought of as competitive data. It is, to private firms, the most precious part of their secretive information, and yet we're laying it bare... why?
Primarily because it fits with our philosophy and with our goals - to be as open as possible about everything that we do. There's certain information we're bound not to reveal (like a full client list or the exact amount each client/project earned us), and there's other pieces of data that would make for a negative experience if they were revealed (like exactly how much each SEOmozzer earns). But, with those exceptions, it's my opinion that we have nothing to lose from revealing our finances and everything to gain. There's no competitive information contained here that our competitors could use against us and nothing that would hurt our reputation (at least, in my opinion). I believe that honesty and transparency are the greatest ways that we can give back to a community that has so warmly welcomed us.
Hopefully, you'll all get some great value (and satisfy your curiousities) by reviewing what we've done this year. Without further ado:
NOTE: For those who would take these numbers literally, be forewarned that these are estimates, and slightly rounded ones at that. Our books haven't been audited - this is simply an accounting done by Gillian in Excel for our own internal calculations. When we finish up with a professional accountant before submitting taxes in April, I wouldn't be surprised to find some significant discrepencies. So, Mr. IRS guy who reads the SEOmoz blog, please forgive our crudeness with numbers. And everyone else, please pretend there's a big ~ symbol in front of every figure.
Comparing Years
January 1, 2006:
- Cash in the Bank: $3,500 (Gillian couldn't sleep)
- Full time Employees: 4
- Clients Served in 2005: 12
January 1, 2007:
- Cash in the Bank: $64,000 (barring a weekend shopping spree by Rebecca
) - Full time Employees: 9
- Clients Served in 2006: 25
- Pitches Made in 2006: 30
- Clients Referred to Recommended List: ~300 (using my email as an estimate)
- Earnings from Referring Clients: $0.00
Breakdown of Earnings:
(I had to remove the month-by-month earnings, as they were incomplete - we're still working on them due to different accounts receiving different funds; sorry!)
- New Clients: $390,000
- Clients from pre-2006: $171,000
- In-house Projects: $36,000
- Total Earnings (2006) - $600,000
Breakdown of Expenses:
- 35.52% - Salaries & Bonuses
- 24.34% - Startup Finance Repayment (aka debt)
- 9.98% - Outsourcing
- 7.67% - Rent
- 6.91% - Travel (oh those SES shows)
- 2.73% - Utilities (incl. hosting & analytics)
- 2.33% - Medical
- 2.01% - Hardware & Software
- 1.35% - Taxes (I'm sure this number will be higher soon)
- 1.30% - Education
- 1.26% - Legal
- 0.99% - Consultant (Hi Andy!)
- 0.90% - Office Supplies
- 0.71% - Furniture
- 0.28% - Marketing (that's why we love word-of-mouth)
- 0.20% - L&I Insurance
- 0.14% - Business Insurance
- 0.11% - Shipping
- 0.0002% - Bank Fees
Addtional Notes:
- Accounts Receivable (owed in contracts, but not yet paid): $220,000
- Oustanding Debt: $20,000
- Rand's Total Personal Earnings (including bonuses): $38,000
- Rand's Total Personal Earnings last year: $26,000
Takeaways:
I'm guessing that a lot of people assumed we'd be a much more profitable company than we are. Our rates are among the top 10-20% in the industry and the clients we work with include a pair of Fortune 500s (though neither is willing to reveal their identity). We've got a fairly solid reputation, a big industry presence and a good deal of branding, but this has yet to be translated into solid earnings.
For me, personally, (and for Gillian as well) the last 18 months have been transformative, in an almost religious way. Gillian and I used to take shit (yes, that may be one of the only times I'll use that word on this blog, but it's the only appropriate one I know) all the time from family members about our business - why don't we quit this crazy dream and get real jobs? what the hell are we doing with our lives? when are we going to make some money out of this?
Not surprisingly, after the Newsweek article came out last December, those criticisms faded away (thank you Brad). The pure joy I feel about coming through near-bankruptcy, times when Gillian told Matt and I to choose between who would take home a paycheck, and emerging with a solid financial footing is exceptional. I know that I lack the "killer instinct" in business. I know that a savvier, more experienced businessman probably could have turned many of the hundreds of potential clients who've contacted us over the past year into profits. I know that growing this company, in ability, in personnel and earnings have been a struggle.
But, I also know that we've built something special with SEOmoz - a brand and identity that's unique in the corporate world (in my experience). I do want to be more profitable, and I want SEOmoz's staff to earn what they deserve, which is a far cry from what they're making now. To that end, this blog post is also serving as our official announcement that we'll be offering paid content and paid membership to this site in the next 30-40 days. Matt & I will have more to announce about this in the near future, but our intent is to make the SEOmoz website, which, to date hasn't produced any (direct) income (apart from ~$2,000 in ad revenue from when we used to run paid ads), into a revenue source for the company. We'll NEVER shut down the free material we provide via the blog, the many articles and the tools (in fact, we intend to expand all of these), but we are going to be wrapping some of our best advice into comprehensive, digestable packages and providing some special features on the site to paid members.
Our goal is to eventually become self-sufficient with income from internal projects - we love working on them, we're almost always more successful with them than with clients (with a few notable exceptions) and they have a greater long-term potential. From that position, we can take on those clients we know we can make a difference for and continue to refer out many others, while serving as a hub for resources, discussion and community in the search marketing world. It's not the grandest business plan, but it fits our passions - and that's what matters most.
Happy New Year to all - may you be blessed with the same success that we've experienced (and hopefully more). If you have thoughts to contribute or share about these numbers or your own business experiences, please do so in the comments. I'll be out of town Sunday and Monday with Mystery Guest (snowshoeing!), but we'll all be back to our usual schedule and full-time blogging next Tuesday.
p.s. For those seeking some more meat-y content, I answered a lot of questions about hosting and SEO over at Lunarpages' blog today.
p.p.s. If you haven't already, you really should read Danny's interview with Jimmy Wales about Wikia search - Danny doesn't pull any punches.
p.p.p.s. Don't forget to put that ~ in front of all the numbers as you read through
UPDATE in 2008: I've now posted our 2007 financials for those who are interested.
My wife and I talked about your post many times today. I would consider it the post of the year because there are so many things in it to discuss.
I only have one question (actually I have lots of them, but I only have one big question): why are making so little in your own projects? With your talent I would think that you would quickly figure out that you are making your customers a ton of money. Why not make some money for yourself?
I listen to the SEO Rock Star show and I understand that Greg does performance based consulting. If Greg's clients make a ton of money so does he. Why not go that route? (ok, that was two questions.)
Ok, one last comment. I gotta think someone like Matt who seems to be very talented will be receiving emails in the next few days from companies like Greg's because those types of companies know they can offer a lot bigger salary and steal him away.
I hope my comments don't come across negative - since you have given so much to the community I would like to see you do better financially.
David - Lots of great questions.
Matt has an equity stake in SEOmoz, so we hope he won't be running away too quickly :) And, it would be pretty low of Greg in particular to do something like that - he's a friend and someone that I trust. We'd certainly have more to fear from outsiders than from the people we've built relationships with.
Performance-based consulting - we have two clients on this type of a plan, but it's very rare that we find projects who can fit that mold well.
Internal projects - we really have not concentrated on these because of the need to fund the business through client-based projects. Our in-house stuff takes development time - the one resource that's hardest to get. Matt & Jeff's time is very, very difficult to free up, but we should have a considerably larger chunk in the next 12 months.
I won't go into too much detail, but I actually make good money here (don't assume that 38k is as high as the salaries get) Also - money aside, it would take a lot more than cash to make me leave this job. I work with my friends, I'm 5 minutes from my house, and I constantly get to be creative. I couldn't ask for much more.
I'd like to echo that there is a lot, aside from the money, that goes in to me working at a place. There is the location, staff, quality of work, and the managment that really play a large part in where I work. Like Matt, SEOmoz is 5 min from my house -- actually Matt just lives down the street from me -- and I work with some great, hilarious, friends in a very created and ever changing job.
What we see in our pocket today, is not what we are working for. There is a much larger picture and the future is VERY bright indeed.
Watch us grow...
Rand, again you're leading the charge. Bravo for the transparency, man.
One question: 600k in earnings, and ~215k in salaries across 9 people? taking away the 38 for yourself (wow man, if seattle is that cheap, then I'm... nevermind), that leaves ~175k for 8 people?
Where are you getting such incredibly talented folks for so cheap? One would think you guys are stitching Reeboks out of a bedroom for those wages, but nay, you're turning out solid bloggers & baiters!
Bravo, man. I hope the new year brings you all the prosperity & contentment you so richly deserve. (smooch :).
Abhilash - remember that most of those people came on late into this year - thus, you're looking at only partial salary numbers.
That said, Michael's point is very valid, too - we've been hiring and training, rather than bringing in highly experienced folks.
There's more to being a Mozzer than cash in the pocket today. We're all in it for the long haul. And if there was ever any doubt about it, now there is no more.
The note about training from the ground up is also very valid. We hire for intelligence, positive attitude/personality, and a demonstrated ability to learn fast, think on one's feet, and take initiative/risks. The rest we can teach easily enough.
Here's to my 'Mozzers - the finest team of dedicated professionals in the industry. Bar none.
This was a very interesting post and pretty interesting to see your growth over the last couple years.
It's all about exposure isnt it ;-)
Thanks for interviewing with me over at blog.lunarpages.com.
Have a great new year!
-Joe Whyte
Cheers to you guys. Success on a larger scale in INEVITBALE for each of you for so many reasons.
I would give an arm and a leg to be one of your clients. Service and knowledge based industries tend to do such a poor job at tending to their clients, and from the looks of it, that is the exact opposite here.
Hi Rand,
I appreciate your reply. First off let me wish you and your team a happy near year – and to all the readers as well of course.
I can see where you are coming from, and if several thousand is a likely number I think it’s a great idea. Personally I would sign up as well most probably – but with the exception of SEO book I’ve not come across a valuable source of SEO knowledge worth investing in.
With the growth search is enjoying (both seo + sem) I am sure there will always be a great demand for providing services, but also for the type of valuable information you believe MOZ can offer SEO professionals. I understand the stability factor, and I believe fixed income is ideal for most companies – its really getting it that proves quite a challenge. I think mobile operators, insurance companies and of course banks prove this is the case. But also Dell is an interesting example of a company that innovated by getting the cash first and delivering the product afterwards (rather than bulk building and then hoping to sell the lot – which is a possibility with existing clients for you).
I don’t see search going anywhere anytime soon in terms of a crash or otherwise (perhaps over saturation is a more real concern which can be as detrimental).
I believe often before offering a new product maximizing the existing ones makes the most sense. Also I think that clients will serve a large portion of revenue for MOZ for a while to come. Getting more money out of an existing client is easier than getting new ones, but also easier than developing a new strategy for revenue increase except if that follows through with the company vision.
Either way I think it is a very worth while shot and I’m curious to see how it works out.
Happy new year to you all at SEOmoz.
Pete "TCSM" Wailes
Wow. I'm reading this post as I look back on 3 years of business start-up hardship and looking at 2007 as the "big year". And here you are telling us all that it hasn't all been Cadillacs and Cristal around the SEOMOz office; it's been obstacles and hurdles and learning and growing, but it's also been fun and you guys all love what you do and the future is bright and shiny. Thanks guys, for giving me someone to relate to as I look at my own bank account and position right now. I'm tipping my champagne glass at midnight to you. Just be ready for some competiton fromm yours truly in '07!
Being acknowledged by Matt made SEOmoz relevant to Newsweek and the rest. In other words, if there was no recognition there would have been no inclusion.
Aaron - you've got your order backwards - Matt only mentioned us AFTER Newsweek did (and Slashdot and Digg) :)
Aaron - I'm gonna agree with Rand on this one. Matt cutts did not put us on the map. If it was anything it was the a combination of three things that initially got us rolling: 1. Our free SEO tools (not the ones we have now, the previous versions) 2. Rand at Conferences 3. The newsweek/slashdot/etc mentions
Matt - good call on the tools, that was the source of our initial visitor surges.
Thanks for sharing. I'm surprised you are not making more considering all contributions you have made to the SEO community. But I see things are looking up!
Best wishes for the coming year!
Rand, any business that ensures its financial statements give a clear picture is in the top echelon of good companies. But you also made them so interesting that people have discussed them here around the clock. Some of us have even been inspired by them. It's telling that you say the months they document "have been transformative, in almost a religious way." As credit card commercials like to remind us, some things are priceless, and in 2006 you experienced the priceless and shared it with your SEOmozzers and this community. For everyone's sake, have an even better year in 2007!
Hola,
I’m always curious to read the detail and transparency that is offered on MOZ. I applaud your transparency and service ethics, I personally feel it is heavily lacking in a non standardized industry (SEM+SEO).
I think you could generate far more from a single new high profile client than you would cumulatively from all of the memberships you intend to charge. I’m assuming this is part of your vision to generate revenue from internal projects rather than external sources, but I recommend the transition be more progressive.
If we take the sex and gambling industry (both unscrupulous for the most part) the reason they are successful in terms of marketing is because they provide affiliates with a life long value of the referral. I think you will likely manage to increase your profit considerably by using this if you are referring so many clients to other businesses.
Great stuff, keep up the good work. Oren
Oren - Our feeling on the issue is a bit different. While one large client brings in $5-$10K per month, a few thousand members would be considerably more valuable and would allow us to do more of what we love - research, writing article, building tools, etc. While we love working on client projects, our passion lies in growing the SEOmoz community and the resources therein.
We're also looking for a more stable income source. A massive downturn in Web 2.0 or a crash like the one in 2001 could mean the end of many client relationships, but folks paying a few dollars here and there for content or membership won't be as susceptible to these kinds of fluctuations.
A massive downturn would actually add fuel to the subscription model, if the content is seen as good and people are looking to educate themselves, preparing for what would be a more competitive job market.
I pay for WebmasterWorld - why wouldn't I pay for this. Good move.
It still remains completely true that the best way to get wealthy in the SEO biz is to do for yourself, not just for your clients.
Hehe I like a challenge, thanks for playing.
Matt Said the following on Dec. 11 2005:
The link: https://www.mattcutts.com/blog/2005/12/page/3/...
I was talking about "influence" not "order".
:)
Your arguments have lost any semblence of logic - I think you're just playing the "I don't want to be wrong about anything" game. End of discussion on my end.
BTW - You can use the "reply" feature to make the comments threaded, which makes following discussions much cleaner.
Rand,
By the way - the $220 that you have in outstanding contracts, isn't it "Accounts Receivables" (Accts Payable is what you owe)?
I could be wrong, but at least that's how we do it.
Just my .02c. I've been looking forward to this post for a few months and enjoyed it quite a bit.
Boris
Boris - you're right! My mistake - going to fix that straightaway.
Hi Rand,
I imagine you'll have a banner year in 2007. Thanks for sharing this information. You clearly had a vision that went beyond what you conveyed. Whether the healthy discussion is in this forum or expands elsewhere, people will be talking openly about all aspects of SEO firms and how to best position them. Growth doesn't come easy and there are sacrifices (often personal and financial). I hope you benefit from the foundation you've built. Your credibility and rates should connect with new clients with enough sense (and budgets) to ID first-rate players in an enormously crowded and noisy market.
Take care,
Mike Murray
Rand, I want to commend you on your openness and honesty and I had a complete deja vu reading your post. Its almost identically measures our own story. We do not network enough as owners in the industry and disucss the real issues like growing our SEO business, handling pitfalls, etc etc, I made a suggestion to a long time ago to have an SEO/SEM owners business meeting at SES after hours would be fine with me. We could brainstorm and share information with each other. There used to be a session run by Fredrick Marckini called "growing your SEM business the problems that keep you up at night" or something like that. I never made it to the session and then they stopped doing it.
I would love to see a business meeting at SES New York also and would be happy to help organize it. Forget being competitors there is enough business out there to keep us all run off our feet for years. I have been turning away busienss for the last two months or referring it out. If we all got to know each other better we could probably keep that business between us and grow together. Is there any interest in this meeting?
Fionn
Rand, I got a lot of respect for you, and your people after I just read that. I've read this post before, but after reading it again it sounded different hard to explain.
I think the transparency you are showing by providing such information is shows a well matured character that is complete with himself. You inspire me for when I start my own company.
Will you guys be posting your financials for the 2007 year? I am anxious to see!
Thanks,
Daniel
commarts - we've already posted them here.
Great post!
I normally lurk in seomoz (note to self:start contributing) but I felt obliged to comment this time. You should be applauded for your openness.
Touching on a couple of points...
(1) Salaries. Money is just part of the whole package. There's stacks of other benefits like enjoying what you do; working with like-minded people; no commute time; etc. I'm in the UK and used to do 2hrs commute each day - that's kind of expected over here. Now I work from home - love it !
(2) seomoz. You're building a strong (and trusted) brand. That also builds financial value. You could cash your chips in one day. Question... which do you think is the stronger brand, seomoz or Rand?
(3) Paid-for subscriptions. Rather suspect I might!
Hope your plans work out for you this year.
Wow Rand. Really really great. As an entrepreneur I am voracious with comparable metrics and models. Thanks for being so candid.
And I anxiously await the opportunity to pay you guys some money for the value I get from the site. Our firm isn't yet in a position to drop $50k on SEO, but you can bet I'd pay for the creative resources I see from you guys all the time.
Frankly, it's an anathema of the web2.0 world, but there is some good evidence that offering subscription/premium service purchases will let you do maybe 2 orders of magnitude higher revenue per visitor than an ad-supported business. (As long as you have something premium to offer.) I hope it rocks for you.
Hi Rand and Gang,
Happy New Year! I can’t believe it’s been a year since I discovered your site. My mom gets Newsweek and she said, “Now I understand a little bit more about what you do. There’s an article in Newsweek about search engines.”
I sent you an email to see if you did hourly consulting and you sent me a lengthy response that was enlightening. You wrote, “The best single piece of advice I can give you is to make sure that the SEO plan is part of the overall business and marketing plan and that you surround the SEO efforts with efforts in the field of marketing, advertising, and (perhaps most importantly) online public relations.”
A year ago, I wasn’t totally sure what that meant, since I thought it was all about rankings, but now I understand.
I couldn’t believe the time you spent with me at midnight last year writing this email and another follow-up one, and you spent 20 minutes with me at SES NY discussing this client.
You wrote, “I have no doubt that you’ll be able to do a great job for your client.” I think I did, although my client still needs to buy into Internet Marketing, but I'm working on him.
In the past year I’ve worked with a couple of people from your referred list and one of your bloggers, and your site continues to educate me every day. It is an incredible resource.
All of your bloggers are great, and I can tell that you're already implementing Andy's advice. Rebecca is becoming synonymous with SEOmoz, so she is becoming part of the SEOmoz brand, which is great. I'm sure Rebecca will be speaking soon at conferences.
I can’t believe your accomplishments and potential for such a young guy. I wish you continued success in 2007.
Take care. Risa
Are you bugging our office? Rand has been interested in getting me onto a panel at future conferences...
Excellent post - thanks for sharing this information.
I guess I should put "Call Andy" on my short-list for ways to succeed in 2007, eh?
Way to go!
Very nice summary of the 2006 year, Rand. I'm looking forward to seeing your company really take off in 2007!
Somewhere down the road, I'd be interested to hear your take on what I see as web 3.0, that is, mobile marketing and mobile SEO in conjunction with international SEO topics.
- Scott Fish
It sounds like a great Acquisition-bait post. ;-) Happy New Year!
It was Matt Cutts from Google who put SEOmoz on the map after he posted about you in his blog.
Maybe on your map... Matt's very, very far down on our referral list in the analytics, despite linking to us a few times (thanks Matt!). Obviously, his influence is very strong with certain folks (like yourself), but I believe that Newsweek, the Washington Post, Digg, Slashdot and even SearchEngineWatch were actually much more consequential in making the site popular.
heh... I think it was the yellow shoes.
When you released the Guide to SEO, then I started taking notice. Before then, I wouldn't have known you if you had come up an introduced yourself at a conference...oh wait, you did. ;-)
Rand -
Avatar does seem to rank very well.
Avatar is owned by your mom Gillian or you?
So, are you saying that other companies within your family (Outlines West, Inc.) are doing far better than SEOMoz?
David - Outlines West no longer exists; it was Gillian's company in the '80's and '90's. Avatar is owned by Jerry Zevenbergen. They're simply a client of ours - that's the extent of the relationship (though we do like to exchange Xmas cards and have lunch, too).
I'm really surprised things were so tough on you in 2006 - but sincerely glad you've managed to turn around the company fortunes.
Here's a glass for continued expansion and profitability in 2007. :)
Things weren't tough on us in '06. It was the prior years that were tough for anyone in hi-tech in Seattle during the dot-com crash. '06 was a really good year. We dug out of a hole and made a bit to boot. '07 is going to be fun.
Rand - im in the same boat. At first i worked on websites because it was my passion and i thrived on being able to 'make it' on my own. I also had a huge satisfaction of being able to do it cheaper and better, providing exceptional value to my clients.
It took me a few years to figure out how to make a decent living, even though i was helping businesses grow by millions of dollars.
If you provide a quality service, a business should recognize that value and pay accordingly.
Thanks for all the great free content while it lasted!
I've never been a big fan of the pay-for-content model, and was hoping you guys were doing it for the links and reputation that would end up sending the choicest big-ticket clients your way.
The second half of this year I've been on a daily personal SEOmoz religious evangelism program - telling everyone I meet involved in web / search / marketing to go straight to SEOmoz for the scoop and not to waste their time with the others.
I hope that your new website creates the same level of passionate following and user support.
Sincere thanks, and best wishes!
Brett - have no fear, the amount of great, free content will only grow. As I said in the post, the paid works are really for those who want a single, amalgamated source for information.
WOW - great info and sets the bar for transparency.
I too am surprised that such a high content/interesting site/company doesn't make more ... but Rome wasn't built in a day and you have built a very strong foundation - I'm sure 2007 will show a bit uptick - good luck.
https://slashdot.org/article.pl?sid=05/12/12/0...
Since you mentioned that Newsweek article, you are aware it was slashdot-ed.
Shit, this will probably go down in blog history as the most controversial submission ever ( hint: read the comments - most are not even about story) ROFL
Best of luck to you Rand and team. You have given more than you fair share to the SEO community, its about time you started to see some serious financial rewards.
I think you could, and should, make more from client referals. I would say your estimate of 300 is v light. Say it is 300 and the average project was $10k that is $3million worth of revenue you have provided other businesses with.
I don't think many companies would complain if you asked for 5% of any business you provided them. 5% of $3m = $150k (pure profit, apart from the upkeep of SEOmoz)
Worth considering, eh?
What do you mean "barring a weekend shopping spree by Rebecca"? You're the one with all the shoes, dude!
Sounds like an opportunity to me, Rebecca :)
Seriously - thanks to all at SEOmoz for being comfortable (or at least letting Rand go through with his plan of) releasing all this information.
I am with you, Rand, that it really strengthens your open brand and I hope I'm right to agree with you that it doesn't give anyone any competitive advantages against you.
I would love to follow suit - at least privately (if not out in the open - haven't ruled that out) - we'll need to pull some numbers, but check your inboxes in the new year. We don't have quite the same level of historic information (trading just over 18 months).
Have a fun New Year weekend all.
Hey now! Don't be grudge a man a few pairs of sneakers.
As a consulting business, you should aim for a net profit margin of at least 25%. If your debt repayment (24%) is counted as profit, then you are doing a good job.
What are you planning to do in 2007 to improve profitability?
That would be my arena.
Our net profit margin is actually excellent, as you noted. As I have also managed to add nearly all the required hardware, software, utilities, hosting, etc. required to grow to the next level, the profit margin should increase significantly in 07. It's just those darned bar tabs every Friday (for the office staff meetings, of course) that drag my numbers down.
If you'd like to take the conversation off-blog, email me with your plans for '07. If you have good ideas for cost cutting and increased profitability from your own firm, I'm always in the market to learn and share more.
Great post Rand. Thanks. I enjoyed reading it.
I also re-read your post from Andy's visit back in September. I'd be interested to see what has changed in the company in the last three months based on his visit. Are you transitioning away from your consulting so that you can scale? Have you/are you adding a campaign coordinator? Alternate revenue streams? Team training? Pricing changes?
We have added a (kick ass) client coordinator, we have changed our pricing, Rand's been training us more to reduce information siloing, and we're looking into in-house projects that will serve as alternate revenue streams.
Aww...thanks.
tom6a, I'm the new Campaign Coordinator here at SEOmoz. I can't tell you the exact details of the projects we're working on for next year, but the big one involves a cranberry, two paperclips, a fusion reactor and a midget named Pepe.
Please, Scott, "midget" is not PC. Pepe prefers to be called a "persona pequena."
Keep your eye out for our new website, coming in January. It contains some of the elements for monetization we've been working on this past year.
WOW... that was enlightening... and now I'm confused... and I'm not sure why.
Count me as one of the readers surprised by the size of your profits this year. It sounds like a bandwidth issue if you are referring out 300 clients/yr...
Couldn't agree more (with Stokelake) that you should be making at least some sort of kickback from those referrals. I am sure the companies you refer to would be more than happy to pay you for the added business.
Personally, I'm surprised that you hadn't decided to charge for premium content sooner...how are you going/have you gone about analyzing what to charge it?
David - we're trying to balance the quantity of effort and information provided against the accessibility of the prices. Right now, we're thinking that the reports will range between $19-34.
Thanks for sharing, Rand! High Rankings will be growing this year as well, which means I'll be paying overhead and salaries, so this is very interesting to me.
Jill - Email me with any questions you have. I'll be happy to share more indepth info with you as what is written here is merely a frist blush, broad brushstroke. A year of growth takes careful planning and a financial balancing act. What to purchase vs what to lease. What to deduct vs what to amortize and depreciate. How to pay new hires; when to have to 1099's and when to add to payroll.
The ramifications of each are myriad and can make or break the bank during periods of strong growth, as well as belt tightening times.
I'm going to propose a forum at NYC conference for the business end of SEO beyond the contracts (there's already a session on that). It's been on my mind for some time. We'll see....
They've had sessions on the business of SEM before, it would be good to have them at NYC.
Rand,
You have valuable knowledge.
You are a skilled writer.
You like people.
People like you.
You’re a great communicator.
You’re young and good looking and open.
People want to know what you know…
Where is your salary for paid speaking engagements?
Christina Niven
P.S. Mr. Cutts, don't you agree. Wouldn't corporations pay to here his story? Talk to him.
Great post Rand. I'm truly excited for you guys in 2007 and beyond.
I'm guessing if you were to break out the numbers for just the last 3 months, we'd see a different picture - with SEOmoz likely showing an annual run-rate already well into seven figures.
BTW - you need to spend more money on furniture and office suppplies. ;-)
Andy - Gillian noted the same thing. If you were to break out the year, we'd look like two completely different companies from January to August and September to December. That's an excellent insight.
Right on the button, Andy.... can't imagine that had anything to do with the date of your visit, now would it? Oh wait! As a matter of fact, it does.
Are you listening SEO'ers out there? For a more prosperous '07, call Andy now! (And no. I don't get paid to say that.)
Rand,
Thanks for the answers.
Two more questions:
1. Why not free up sometime to do more in house projects by blogging far less and spend only one hour a week on Webmaster Radio with your own show? I am guessing the show will give you the same amount of exposure that your blog does for new clients and you have more time for in house projects. This is what Greg and DaveN are doing.
2. Can you tell us about one of your larger clients that has shot up in the rankings because of your work and has made them a ton of money? Can you give us a ROI for one of those companies?
David -
1. I love the blog; I don't think I could ever give it up. That, and while Webmaster Radio provides some exposure, it's exceptionally hard to reference and cite. SEOmoz serves as much more of a resource and a community, and that's always been my passion.
2. Avatar hasn't shot up in the rankings, but they've had very good positions since our success for them in early 2005. These are competitive queries and their ROI has been spectacular. They've made 8 figures+ in revenue from the leads we've brought them through the search engines (and that's just counting the leads that were submitted online and thus, are trackable, nevermind the phone calls). We'll be posting some stories about clients in a new section on the new website, too, so watch for that!
Nice work. I maybe one of your clients in 2007.
Neat stuff. Well done!
Thank you for this post.
10% to outsourcing. What do you outsource?
I've outsourced some work to Rand this year and he outsourced work to me on some national and local levels (some national level co-work and direct local references which generated, to NVI, 20k+ in revenues in 2006 and should turn in recurring seo/sem/smo projects of 50k+ next year). And I got the chance to have him give us the best advices I could hope to help of my client, which also greatly improved the way we build website now. I look forward using alot more of his services next year as our company expand from Canada to the US and in France in 2007.
The working experience with SEOmoz was one of the best I've ever had with a friend / colleague. The beauty of SEO is really that the more we share, the stronger we will be, since most of great companies always have that "magic" to have the greatest people to stick around and build enduring greatness.
NVI business model is almost an image of SEOmoz for 2006. Roughly, the numbers match one another although they are slightly lower in revenues and our salary are way higher (60% since we do development as well). I never thought that was the case!
We've outsourced work to Guillaume, to Kim Krause (for usability reports), to Bill Slawski (particularly when our staff didn't have the bandwidth to take on all our new clients), and Ruud Hein (for some programming work). I believe there's a few others in there, too that aren't coming off the top of my head.
It is extremely astounding and amazingly rare to reveal financial data. Knowledge about it can be used by competitors, potential customers, firms that want to hire away from you, etc. etc. etc.
It is gracious to reveal the information and part of the charm that has attracted so much press, publicity, popularity--and explains the dramatically low cost of advertising and the ability to attract clients by word of mouth.
Winning 25 pieces of business against 30 proposals is an amazing stat for most businesses. It is a credit to your qualities and a credit to the word of mouth aspect of new business.
I'd try and use these revelations in conversations with competitors to get a feel how they are doing, what they are doing, etc. to refine your actions going forward.
You previously referenced how so many other great SEO'ers are acting on their own accounts--and I wish you well with those efforts.
Happy New Year.
Dave The training versus experience description is a valid point about salaries.
RAND, I'm going to give you the best advice I can (coming from my heart and from my business head as a young entrepreneur), and it's one I would really like you to consider:
Although we never discussed about any sort of sales commission, if NVI just had 25% of the reputation you guys have for the niche market you are targeting and would have that kind of "HUB" you have, I would really, really, really try to keep EVERYTHING ACCESSIBLE and FREE to any visitors, which are the HEART of your business model along with the transparency, which I can say we are on the same page there.
Instead, using your hub and offer some sort of a "reference service" that would earn you so much more revenues while offering 100% of your content to the HEART of your site and not move out of your unique branding niche market. I think I admire you because you are willing to share everything with everyone.
I think crossing the dollar bridge with your visitors (which are more a community than visitors, to my opinion) of your site is a mistake because it is not in SEOmoz vision (well, to the vision I personnaly have of SEOmoz) to create different content for "members" and "non-members". Since your business is all about transparency, I don't think you are really monetizing it with the creation of a members / non-members area. It does not relate very well.
In fact, to be honest, I was kinda expecting that I was going to give you some sort of payback for the jobs you referred to me. I think referring customers with some sort of a one timer 5% reference cost (I give 8% usually, and as much as 15-20% to my business development director) would be something clients would use, for this reason:
-You share everything with everyone, so anyone asking for your referring services should/would be willing to pay 5% to have someone like you take care of finding the right person. You can even mention it on the page, people are still going to use it, especially if you say 300 people already did so... imagine 2007... probably around/over 1000. Some might want to find the right person themselves with your recommended list, but you can offer the service of choosing the right people for them - as it is what usually make it or kill it for a project: who will contribute to it.
-Since you are transparent, you already are some sort of a reviewer of directly competing companies. You put your reputation at stake with this and I think this is where the monetization is: this is consulting babe, and very hot consulting not to have to find the proper person... 5% "safety bet" is a joke compared to a provider who can't deliver the proper job and you have to start all over.
SEOmoz can be a wonderful "linking to great people hub company" by referring to potential customers / clients the best provider possible to help them achieve new heights. This takes some of your time and also greatly help other companies, but you don't have to worry about members / non-members stuff.
I'd really like your feedback on this... Selling 19-34$ 1 timer report to thousands of people is great and totally doable (like SEOBook does), but I think the strength and value of your company relies alot more in helping customers picking the best people to work with, as you have a very deep understanding of the market right now while having a contributing / active community to feed you.
That's my 2 cents and I wish you the best for 2007.
Guillaume - I appreciate your input tremendously. We are very conscious of the disparity between SEOmoz's community and reputation vs. the idea of paid content, however, we also felt that it served communities like SEOBook and SearchEngineWatch very well without hampering the massive amounts of free knowledge and exchange of ideas available there.
Rest assured that our providing paid content will not in any way detract from the free resources available. There will NOT be a "members only" lounge or secret access, but rather, members will be getting access to additional features on our tools, invitations to participate in beta trials of content or services and access to all of the paid content that we'll provide.
As for earning revenue off referrals - it simply couldn't work in an honest fashion. There would always be the temptation to refer to those companies that have the highest close rates and the highest kickbacks, rather than the firms that can do the best job.
To my mind, the far lesser of the evils is paid content and membership. Kickback fees would mean that we're no longer an honest source to get great references.
Heheh... Why is there such thing as EVIL.
:P
I agree with the biased thing, but that's where your transparency pays off; if people know you are transparent, you put your reputation at stake every time you refer a company to a customer, so it is an ethical OBLIGATION to refer them to the best company for that, no matter the kickback or the close rate.
I'm with Guillaume on this one :o)
I can fully understand the other side of the argument here, but I personally am happy to pay for some of these additional benefits outlined. And for some reason I prefer keeping money out of referrals between peers. Not quite sure why, but I think I feel it taints the quality somehow.
I appreciate the transparency. It is helpful looking in on how a young company in the field is progressing.
I guess I'm most shocked that referring brought you no love in the form of cash. I don't operate that way. Most businesses I know pay the referrer and there are some obvious reasons for doing so. Least of which is to thank the referrer.
I hope 2007 brings you much prosperity Rand and Co. I appreciate your blog........Happy New Year!
Bravo Dude! I really think that your openness about EVERYTHING gives you and your wonderful team a "something" that I can never put into words. It is just "something".
I just lost a HUGE job because I was probably a bit too transparent about our company's practices. Some other company came along stuffed their offices for a day and said they were bigger than they are and won the biz.
I say this (I almost blogged about it) because it hit me like a ton of bricks...stay true to ourselves or try to compete with those shmucks and "fake it" a bit.
It took me all of about 5 seconds to realize that I do this because it is fun (and profitable) and what isn't fun about SEO as an industry is the number of liars, fakers, nay-sayers, etc, and I LOVE the fact that you guys just put it out there the way you do. This is TRULY a thread in your company. I remember reading your blog when you were hiring, and you really put the whole process "out there" on the blog.
So putting your numbers up is a part of who you guys are as a company, as you've been open on everything in search, and every other aspect of the business, this is just icing on the cake.
Personally you've inspired me to be more open with my employees even (hey we gotta start somewhere). I was thinking about the URL for a new blog I will launch in 2007 about what it is like to run a company when you are running with scissors. I was a bit fearful to put it all "out there " on our blog but, if I can build up some cajaones maybe I will start small and work my way up.
Thanks so much, screw your SEO knowledge I think all of your readers walk away from many posts with a better understanding of people and business as well as search. Keep it up in 2007.
(PS I was gonna put this in an e-mail, but figured in the theme of this thread, I'll post it).
Wil - much appreciated. I do hope that our transparency serves as an inspiration to others, but I have no delusions about the fact that it can hurt credibility sometimes, and even cost some jobs. Generally speaking, however, those aren't the types of clients that are going to fit well with our business culture (and from what it sounds like, yours either).
Better to have 10 great clients who are with you, loyally, and love your company and service than 100 clients who are ready to bail at the sign of the next best offer.