Longstanding insomnia sufferers, rejoice! My Moz 2015 Annual Report is here. Check out 2012, 2013, and 2014 if you’re a glutton for punishment.
So much happens in a year — fantastic and terrible things — distilling it into one blog post is my annual albatross.
Here’s me agonizing over what to write. It’s not always good to be king.
Alright. Enough wallowing in self pity.
Here’s how I’m organizing this post so you can jump around to whatever strikes your fancy:
Part 1: tl;dr 2015 was a strengthening year!
Part 2: Two 2015 strategic shifts
Part 3: Two invisible achievements
Part 6: Performance (metrics vomit)
Part 7: The Series C and looking ahead
[Part 1]
tl;dr: 2015 was a strengthening year!
2015 was a strengthening year. We grew customers, revenue, and product offerings. We also began some major tech investments that will continue to pay off in the years ahead.
With all the product launches comes increased opportunity in 2016, and also increased complexity. In the year ahead, you’ll see Moz delivering much more personalized onboarding, re-working the brand to accommodate our product families, changing up our customer acquisition flow, and investing in technologies and practices to speed up product development.
[Part 2]
Two 2015 major strategic shifts
First, instead of a one-size-fits-all product, we’re offering many crafted customer experiences.
The most visible strategic change is the move away from cramming every feature into one product; instead, we’re offering products designed to help specific kinds of customers with their particular needs. Our community and customers are diverse. The solutions we offer should be too.
We started 2015 with Moz Pro, Moz Local and our API business. We’re ending the year with two new products under out belt, Moz Content and Followerwonk. Pro will continue to evolve in 2016 to focus on professional SEOs. Moz Local just launched a major upgrade to its offering, making it the most useful way to manage your local SEO. Content marketers will love Moz Content’s new features. And social fanatics will enjoy analyzing their followers and fans with Followerwonk.
Why did we back away from all-in-one? Well. We discovered that adding more features into a product isn’t always better. Sometimes it’s just more. We heard from customers that they valued certain parts of the product that solved their problem, but weren’t interested in the others.
More simply, we built one product that many different kinds of customers could get a little benefit from. Instead, we want to build many products that customers get a lot out of. Even more simply, we won’t give each of our customers identical plates of food with lots of small bites, only 30% of which each enjoys. We’re giving everyone a big plate of their favorite food. Yum.
Second, people sometimes really want to talk to other people. And that’s good.
We’ve also relaxed our religious fervor about keeping humans out of the sales and onboarding process. We prided ourselves for years on dogmatically proclaiming that only bad products need human intervention. “The product should sell itself and be obvious to use,” we insisted.
We [I] clung to this belief in the face of overwhelming feedback from our customers that they would love to have more interaction with Mozzers.
I’m finally ready to let go of my belief that wanting to speak with a human is a failure in the system. We should give our customers what they want. Guess what? They sometimes want sales people, and personal onboarding and training.
We will not resort to barfy tactics like high pressure sales, harassment, and limit self-service. But maybe, just maybe, the world isn’t so black and white as humans=bad, computers=good.
Expect more opportunities to engage with real, live, bona-fide Mozzers as part of your product experience, should you need us.
[Part 3]
Two invisible accomplishments
Not all of our big 2015 accomplishments are transparent to customers or the community. They're important nonetheless.
The fance-pantsiest new engineering platform
We knew that to out-innovate our competitors and make marketing easier for our customers in this dynamic environment, we needed a step-function improvement in our ability to experiment and innovate.
We were inspired by compelling new development platforms built and tested at places like Google, Hubspot, and Twitter. They simplified the software development process without compromising security or performance.
RogerOS is our new engineering platform. It’s based on the Mesos kernel with a marathon wrapper. Moz Content was built 100% on it, so the two innovations incubated and launched together last year. More Moz services are starting to move to it.
In the spirit of generosity, we open sourced a big chunk of our work and look forward to contributing more in the future. We’ve still got a lot of work to do to make the platform more robust and we’ll continue these efforts in 2016.
The platform is poised to deliver the step function increase in innovation. Because a bigger, more complex Moz shouldn’t mean slower.
Kissing bad architecture goodbye
Technical debt is the worst. Ugh. It’s demotivating for the team and siphons cycles away from innovation. It’s hard on customers because feature delivery stalls when you're keeping a fragile system from imploding.
Our Moz Pro product was hobbled with some serious tech debt. The team spent months trying to keep it up. Customers were disappointed and the team was tired. We needed a plan to fix it that didn’t involve a highly risky 18-month rebuild.
Luckily, one of our engineers had an epiphany, and a bunch of other engineers worked very hard to turn that epiphany into a workable plan that delivered feature improvements (not just parity!) while retiring painful tech debt in seven months. That’s way, way better than the dreaded 18 month slog.
We have massively transformed the backend architecture for Moz Analytics. This frees up cycles for innovation and unlocks a bunch of latent potential in the data. It feels like we were running a race in a cast and crutches, and now finally our leg is free! We’re throwing those crutches to the sideline and sprinting. Here we come!
[Part 4]
The tough stuff
Have you noticed how many year-in-review posts skip the tough stuff? I don’t want to do that. After all, a lot of this year’s tough stuff become next year’s strategic initiative.
The marketing software space is getting crowded. It’s no secret that companies need to transform their marketing to match the new ways people discover, engage, and buy.
The spigot of investor cash has been flowing fast and free into marketing tech for last couple years. We’re definitely seeing more competition in the market.
To our competitors: We Salute You!
You keep good pressure on us to innovate and deliver a great experience for good value.
Moz is ahead in some areas and lagging in others. We’ve struggled to keep our link data reliable and we have to play catch up on the size and quality of our index. We’ve been very weak on keyword research, and will be remedying that in 2016. Our customer acquisition flow and brand is also way more complicated than it was a mere two months ago. We’ll be investing heavily in optimizing and improving this experience so it’s easier to find what you’re looking for.
These challenges are non-trivial, and yet invigorating. We’ve got the best people on the planet at Moz and we’ve been making forward-thinking tech investments. It’s game on in 2016.
[Part 5]
Inside Moz HQ
Amidst all of the shifts and changes, some things remain constant.
TAGFEE remains our aspiration and our compass. As an organization, as people, we often have great integrity with our values. We also have moments of failure.
But what makes Moz special is not the absence of flaws, or the TAGFEE page on the website; it’s the genuine commitment to those values. The pursuit is relentless.
I don’t know anyone who is perfect. The people I admire most are those that strive for excellence when they fail; they pick themselves up and keep trying. They never give up the commitment to their values. Mozzers are like that.
We’ve got 192 Mozzers now, up from last year’s number of 149.
This year, we’ve done a lot of good work on teaching Mozzers learning about productive conflict, feedback, and inclusion in tech. We’re not done, but we’ve made an earnest start.
Our gender diversity numbers are still terrible, but at least we’re headed in the right direction. Overall, we’re 40% women, up from 37% last year. We’re up to 27% in engineering. 54% of non-engineering roles are women.
A lot of the work we’re doing to make the tech industry more inclusive doesn’t benefit Moz directly, but we’re still happy to do it. For example, we partner with lots of programs to bring middle and high school girls on tours of Moz HQ and encourage them to consider careers in STEM — maybe even start their own business someday. Several Moz engineers volunteer at coding schools, like ADA Academy, mentoring and welcoming underrepresented people to tech careers. We’re also partnering with Year Up to give underserved young adults meaningful careers.
Our charity match program continues to be one of my most proud parts of Moz. Last year we donated over $110k to charities that Mozzers are passionate about. We match every Mozzer donation 150%.
Our paid, PAID vacation program continues to be a high point for all Mozzers.
Last year, Moz spent over $400k on airfare, hotels, tours, food, boats, and life-changing, memory-making experiences for Mozzers.
That’s money well spent on lives well lived.
Lastly, we reached a milestone so wonderful, I’m having a hard time expressing how it makes me feel. Two Mozzers, who didn’t know each other when they started working here, fell in love and are getting married. We made a whole family!!!
[Part 6]
Performance (metrics vomit!)
2015 was a strong improvement over 2014 revenue growth rate. We finished the year at about ~$38 million in revenue. That’s a growth rate of 21.6%, compared to the 5.7% the year prior.
Moz Pro still drives the majority of revenue, and Moz Local has demonstrated impressive growth.
Product gross profit margin fared well this year at 76%. That’s basically holding steady from last year. If you throw non-product in there, overall gross profit margin is 73%.
Total Cost of Revenue (COR) went up a little bit from last year. Most of the cost driven by increases in the amounts we pay to our data aggregator partners for Moz Local. We expect this to grow even more in 2016 as Local becomes a bigger share of our product mix.
Total operating expenses came to $36.4 million dollars in 2015 (excluding CORs). The basic shape of that spend has remained pretty constant. The vast, vast majority of our company spend is people. No major shifts in spending trends from 2014 to 2015 other than increased 3rd Party Data.
As planned, our EBITDA loss increased from last year to -$3.1 million.
Cash burn was slightly above our 10% of revenue plan, but we were pretty darn close at 11%.
Adam shared a detailed reflection of changes and upgrades to Moz Pro in 2015. I encourage you to check it out. Those changes are attracting a slightly different customer. The number of new Moz Pro customers we’re acquiring is much lower than in previous years, but our average revenue per user is increasing. We’re also keeping customers longer. Obviously, we’d love to add tons of new Pro customers *and* increase Average Revenue Per User (ARPU). We’ll be putting energy into that in 2016.
Moz Local locations more than doubled in 2015. And we’re very excited to see how customers are enjoying the big Moz Local Insights release we released this week. It’s only been 24 hours, but initial response is very good.
Organic traffic grew in 2015 by 16.7%. We hit just shy of 16 million organic visits.
You can read a bunch about the community we host here on Moz.com from this post.
Our external communities continued to grow. We did, however, decide to stop investing in the LinkedIn group in 2015 in favor of Instagram.
[Part 7]
The Series C and looking ahead
I wrote last week about closing our Series C. (BTW, did you notice the public markets for SaaS companies nose-dived soon after? Phew! If you’re reading this, we love you Foundry!)
We made big investments and placed some big bets in 2015. It’s so exciting to see them start to bear fruit. In the next 12 months, you should see (1) more feature releases, (2) more personal interaction with the Moz team when buying and using our products, and (3) increased clarity on our brand and customer acquisition flows.
Thanks for sharing your feedback, sticking with us, and rooting for us. We’ll keep trying to make great stuff that helps you do your job better, and bring a smile to your day!
Okay. And that’s a wrap on your 2015 Annual Report. Peace out.
Once again, Moz's transparency and authenticity (and all of TAGFEE) acts as a role model for businesses and humans alike. Absolutely love how strategic Moz is with taking care of its people!
Agree, they are an authentic role model!
Moz has become my favorite company for many reasons.
The fact that you invest a lot into the community work and charity inspires me a lot.
Thank you a lot for being a role model and for sticking to your core values.
I wish you a great year ahead!!!
David Bowie. <Sniff.> :(
But beyond that -- looks to be good news all around! Congratulations, Sarah, Rand, and Moz!
I miss David Bowie too. He's popping up everywhere for me. :(
Felt compelled to include him here.
Hi Sarah,
As always, thanks for the transparency :) How does Moz plan to develop a sales team that's as diverse as Moz itself?Diverse sales teams outperform homogenous sales teams (the data I have is on both race and gender diversity). They close more deals and obtain higher market share. But it's a challenge to find sellers that can perform regardless of background/race/gender/sexual orientation etc. Any ideas on how Moz is going to approach building a sales team that reflects Moz's diversity values? Considering you are in such a competitive market, this sounds tough.
Cheers,
JH
Wow. Great comprehensive review. No wonder it's your albatross (whatever that means :-)). Its really nice to get an insight like this as to what goes on behind a tool I use daily. Two points I want to raise...
All the best for 2016!
Amazing, really appreciate the transparency and love the TAGFEE culture you've in your team.
Salute from me, and good luck for year 2016 :-)
MOZ is great! every day I learn with you, thank you very much!
Hi Sarah,
I've been a Moz Pro Subscriber for more than a year now, and I want to thank you, for all I receive from you is improving over time. Your ethics and philosophy makes me have no doubts about my choice.
This report's transparency is admirable and as a woman I really appreciate your efforts in gender equality.
You're top of the industry and your self-commitment to push Moz further is really inspiring.
Thanks for eveything.
Thanks for the encouragement and support Teresa!
Other companies could learn from this level of transparency. Your competitors could only do better if they were so open. Alas, I doubt they have the nerve that you've shown here once again. Good job!
Other companies could learn from this level of transparency. Your competitors could only do better if they were so open.
Greg, that's a very interesting point. Personally, I've always valued the fact that Moz is very transparent -- it's a great thing.
But beyond branding, does such transparency have any positive, identifiable, and directly attributable effects on sales, revenue, retention, profit, human resources, or anything else? I'm genuinely curious and would love to see if anyone at Moz would have time to respond. Moz could have proof that more companies should be TAGFEE.
Transparency has no direct tie to sales, revenue, retention, profit or human resources.
We do a lot of stuff that doesn't have a direct connection to money making. We do it because that's how we want to live and work.
I believe, but cannot prove, that there is a significant halo effect from it that helps us with our business. But it's a leap of faith.
There are many different ways to be successful at business and to live a happy life. TAGFEE works for me.
Love the way you replied Sarah.
I think transparency is important both externally and internally. As controller, I like being able to have open conversations with other folks here at Moz about how things are going, financially. I think giving people more & better information lets them make better decisions.
That's an awesome question, thanks for asking!
As an engineer at Moz, seeing the value of being transparent has been huge for me. It's caused me to be much more empathetic when people fess up to dropping the ball because I realize if I had to fess up to dropping the ball, I'd want people to give me constructive criticism that says, "Hey, I value you. You messed up, but here's how we can fix it". Therefore, that's how I try to give feedback. Without that transparency, the fear of making a mistake can be debilitating--making me less effective at my job.
In short, transparency helps me to view mistakes from a growth mindset, rather than a fear mindset.
I couldn't speak on a company-wide level, but I do know that transparency has helped retain me. =)
My very favorite thing about working for Moz is the amount of trust the company places in its employees. I've never once felt like there was someone watching over my shoulder, or like I needed to seek permission rather than forgiveness. Trust is obviously a somewhat nebulous concept, and is built in a great number of ways, but one of the ways Moz builds trust (both with its community at large and its employees) is through transparency. We have monthly town hall meetings in which Glenn, our CFO, gives us presentations about all of our financials. He doesn't hide a thing, even when this roller-coaster ride we call startup land finds a valley instead of a peak. The E-team is wide open about the company's position and direction, and that leads me to feel safe. When there's nothing to hide, there's nothing to fear, and I swear I'll live longer for having worked at a company where that's the case. I imagine I'm not the only one, and while it'd be impossible to actually quantify the difference that's made for the company, I'd be willing to bet it's substantial.
Just to chime in, I agree that transparency and all the TAGFEE tenets can't be separated from the culture that makes us all love working at Moz so much. It's funny given how much goofy fun we get up to that I've never felt more treated like an adult.
I agree with all that's been said and more. It's a difficult thing, to quantify and put a number value on culture, but I have a hunch that transparency — along with all the other tenets of TAGFEE, as they stand strongest when together — has a great deal of sway over employee productivity, personal emotional investment in making the best products we can, and genuinely, earnestly striving for Moz to succeed.
I started out at Moz on our Help Team, and learned firsthand who our customers and users are, becoming intensely familiar with their frustrations and needs. Being on the front lines made me even more empathetic to the user experience with our products, and every time we work on a feature that will improve that experience and make people happy, I feel real joy in my heart [it's embarrassing sometimes how much I care] and find myself brainstorming ways I, personally, can help that feature succeed.
Imagine a workforce full of employees invested in that kind of success, rather than just showin' up to punch code into a keyboard and collect a paycheck — it's not hard numbers or data, but you can imagine what kind of effect it could have.
Of course, the fact that transparency/TAGFEE is so saturated throughout all of the company does have its occasional (anecdotal) monetary implication, in a way. I've had more conversations than I can count with folks who are surprised and delighted to have an honest answer to their concern or frustration — even when it's not the news they want to hear — and proving to your users that you're a business that operates on a foundation of honesty & empathy can go a long way toward securing loyalty. On the Help Team, I had conversations with customers spanning six months or longer; maybe a bug or two (or three, those poor souls) hit them now and again, but the commitment to transparency and TAGFEE is often what would keep their faith going strong. :) I guess that would fall under retention!
Okay, I definitely wrote too much. Can you tell we're a passionate bunch?!?! Thanks for the awesome questions. :]
Great, Being the part of this community for more than a year, i found Moz the most reliable resource on internet. Thank you for adding so much in our lives. Best of Luck for 2016.
Thanks for your transparency, Moz. And for encouraging more girls into STEM. I wish I had that kind of opportunity when I was younger, and it's good to see more companies actively pushing it this past year. Great report all in all!
Moz is the only community I have experienced that serves its members by adhering to its core values. I really appreciate it.
It is only my first day here
So I have no idea about your company
But it looks good.
Thanks for sharing! Really interesting article :)!
Congrats. Great to see transparency
Congratulations Moz Team !! Great work Roger, keep it up. i can see more #girlpower here :-)
Thanks for sharing the report!
I like the data transparent you have with all of us, informing us of their statistics generate greater confidence in your customers and fans like me. Thanks very much and I'm sure this year will be better.
Love this informative and TRANSPARENT approach. Glad I've joined this community of like-minded individuals!
Good post, very useful. Congratulations
It is rare to find companies with the transparency that Moz offers,it is a role model. Thanks for being you
That a good number of list. Thanks a lot for share.. loved your article..
Its really important to a newbie like me to have a look n use these tools!.. thanks for the share
Really delighted that you have shared the company annual report with the community with clear statistics. Thank you.
Impressive numbers - Congrats on the another strong year! Good to see you keep investing in staff.
Like a Boss indeed!!.. way to go moz!!.. :) :)
Thanks Moz, appreciate the transparency!
It is incredible that a company is so transparent. It is a pleasure to belong to your community. Many public companies should follow the example.
Your growth is impressive guys, and I love that you're so transparent with your financials. It puts a lot of faith in us who use your platform!
Sarah, thanks for the transparent report yet again.
I like that you guys are adding sales people. Sometimes, I feel more like a support ticket when I'd like to feel like a customer -- and I'm stoked that I have a couple meetings with account managers next week to chat about some things I couldn't get answered.
One thing I noticed that Moz did last year was open up some of its (engineering) positions to remote workers. I asked a question about this at MozCon a couple years ago, and at that time you said Moz hired all on-location staff.
What was the reason for opening up to remote workers, and how has this affected things at Moz?
Thanks for the feedback, Jack. I lead Human Resources and Recruiting at Moz. Last year we decided to expand our geographic hiring strategy for engineers as the Seattle talent market was highly competitive (and the Bay area, even more so). We knew there were strong candidates in other parts of the country, that for family and other reasons were unwilling to relocate to Seattle, so we decided to pursue a remote hiring strategy. We now have people working across the country out of their home offices. So far, it has proven successful for us. Again, it is a small percentage of our overall team, but we continue to be open to this approach to ensure we add the best talent to our team.
"Not a great year" according to Rand....mmm. Did he expect to triple everything?
https://twitter.com/randfish/status/698002560855072768
I think our targets for growth were ~25-30% and for traffic growth ~20%, so we didn't quite meet our expectations. Definitely a good year, and a year of improvement, but not a great year.
Great Being the part of this community for more than a year No wonder it's your albatross . Its really nice to get an insight like this as to what goes on behind a tool I use daily
Very thorough, I like the report! However, there are too many references to DB, which I am willing to forgive you. Thanks anyway!
ATB
Nice