Business for life instead of life for business

Interview with Matt Hogi, founder of the MetaFilter online community

Launched in the late 90s as one of the first collective blogs, MetaFilter turned into a small but active online community. When AdSense was released in 2003, the site suddenly began to generate revenue. By 2005, Matt received from him twice as much as his salary at the main place of work and was able to quit in order to fully concentrate on MetaFilter.

In 2012, Google dramatically changed the page evaluation algorithm, and MetaFilter revenues suddenly fell. For the next few years, Matt struggled to keep MetaFilter afloat. Just over a year ago, Matt walked away from his daily routine.

A representative of Indie.vc met with him to see how things were going.
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Matt, April 28, 2016, XOXO Representative Office, in Portland, Oregon

After launching MetaFilter in 1999, when did this site become your permanent job? When did you start hiring staff for MetaFilter?

The first of November 2005 was my first full day with MetaFilter, and it was, like, a couple of months before Jessamine volunteered her help. She wanted to help and was the best user of the site, having already set the starting tone for Ask MetaFilter.

I started paying her in early 2006. For almost a year she was only at first simply in the position of a performer. I have not taken this seriously yet, still doing a lot of web projects on the side. In 2007, everything became more serious; we hired Josh , became a limited liability company, and we had a payroll with real wages. They also took Paul to help me with the development.

Income continued to grow. We were in the right place at the right time with blogs, google and advertising. The platform for questions and answers on MetaFilter very rapidly went up.

I was looking at web stats. The “Ask MetaFilter” subsection quickly found itself at the same level as the “MetaFilter”. And I thought: “This is because MetaFilter is advertised on the covers of magazines and all that!” Very quickly, “Ask MetaFilter” doubled and tripled the traffic. And then in general began to bring 90% of traffic and 90% of revenue ...

By 2009, the situation became very serious, because the cash flow continued to grow. We became a type S corporation, got health insurance for employees and all that, things went more stable. But I still illiterately handled money.

From 2010 to 2012 was a real business. The staff had 100% general medical, dental and ophthalmological insurance, there was a 401k pension plan with an addition from the company and everything else you can afford when money falls from the sky. And then came November 2012 ...

It's funny. I spoke at the first XOXO conference with a speech like: “Damn, I don’t know for sure, but it looks like the weather is changing, and black days can start for blogs.” It was a very depressive speech. In the end I tried to express optimism: “Suddenly, there will be some opportunities?”, But two weeks later I woke up, and it turned out that the profit from the site had halved overnight.



It turned out to be Google's damn things. I don’t like to bother people, but I knew Matt Cutts, the head of Google’s anti-spam team. In 2002, I worked on Creative Commons and occasionally talked with him on business. He was my only acquaintance on Google, except for the account manager in the advertising group.

Cutts said: “Oh, yes, it looks like this update has hooked you strongly. There are a couple of dumb places. But wait, for a month or two, we will re-index you, and everything will be fine. ”Then, like an idiot, I changed something in trifles, but, basically, I just waited and waited. I didn’t want to bother him because he was kind of a celebrity for me, and I didn’t want to waste his time. Then there was even a separate person in the state of Google who responded to his email. Go crazy, right? He then received thousands and thousands of messages a day.


Revenues from advertising at the site «MetaFilter»

I kept waiting. I waited a year and a half. Revenues continued to decline. It was terrible to observe how incomes at first fell sharply by half, and then continued to fall slowly by 3% per month for one and a half years. And finally, the day came when we could not pay bills. I went to Matt Cutts again: “We still have bad things.” He replied something like, “Really? Well, I'm sorry. ”He looked somewhere and said,“ Yes, it looks like nothing has changed. Although it should ... you were accidentally shoved in the wrong place. "

Two weeks later, traffic returned to its original level. But in two years the advertising market has changed. Even with the same traffic, we earned half as much as the market itself has fallen during this time.

You said you made a lot of money from 2009 to 2012. You had a business built entirely on a platform that you did not manage. How did it happen that you earned a lot of money, provided your employees well, but didn’t set aside any funds for difficult days?

I would say that from the very beginning we had a good mix of sources of income. Partially funds came from Amazon. Any mention of a book or something like that brought an appropriate payment. I was represented in an advertising firm that specialized in banner advertising on blogs. Then google. That is, it was approximately equal. Each source brought about 30% of income.

But in 2010-11, 95% of the money began to come from Google, and other advertising companies died or were bought out. I remember showing my friends that my income was formed from a single source and said: “Because of this, I am on pins and needles”. And they told me: “Well, yes, nightmare, you need to do something urgently, Diversify, throw money into any alternatives, maybe at least something will shoot. This is terrible! If they suddenly disconnect you - that's it, cover! ”And that's how it turned out.

Have you tried to diversify and work on something else?

Little by little. We have slightly increased work with Amazon. In 2010 came the iPad. The idea of ​​the iPad magazine seemed interesting at the time, and we spent some time and money ordering an application from one company. Then it turned out that it was almost impossible to make a lot of money on an iPad magazine, so it’s probably good that I didn’t go that far.

I think I had a premonition before 2012 how everything will be. But I looked at it somehow abstractly. Yes, we will ever hit a wall. Someday everything will be ruined. And then one day you wake up and understand: “someday” - this is exactly today.


Site traffic "ask.metafilter.com"

But I had hope that there would be a slow decline, not a collapse. Once upon a time I received advice from a friend who made a lot of money on the Internet. I remember I asked him: “What are you doing when serious money starts?”. He immediately replied: “We need to invest back into the business. Pay people crazy amounts. The choice is only to give it as taxes to the government or to give money to people. Do not be a pig and eat everything yourself! If you earned a million dollars, then do not take 900 thousand yourself, giving 100 thousand employees. You have to pay them as much as possible; this will help the business and will be the best reinvestment of capital. "

So I did. Employees earned very well. We provided a lot of benefits. I think that I tried to invest in the business to the maximum. Each employee had an elegant armchair, two monitors and a brand new iMac.

What I'm really sorry about is the lack of a reserve. I read somewhere that a bank should have a reserve for 6 months of payments, but this seemed impossible. Ideally, you can sleep peacefully, if the stock in the bank is at least 6 months salary for each employee. I do not know why I did not make it my priority. We basically always had a salary in the bank for one or two months, that's all.

Why didn't you get a savings account? After all, it is very easy to return money from it back into circulation, this makes the business more stable.

I was just too stupid to figure it out. I do not want to seem like a politician who emphasizes his “proximity to the people,” but since my childhood I grew up with rather scarce means. My parents always had an inferior small business that never gave a lot of money. Among my adult acquaintances, there were no golf club regulars who could tell me: “You need a lawyer for that, you have to register something in such and such a state and could then avoid this tax”. I was not familiar with such people. I was financially illiterate until I was 20 years old.

I was constantly confused by conflicting advice from others. It took years to find people who taught me the realities of this business. Before that, I seemed to be messing around in the sandbox.

Finding a really good accountant, a good business lawyer, business mentors in life is a great success. Neither my parents nor their friends could act in such a capacity. I spent years to find a good investment specialist who knew outstanding accountants, lawyers and others. My household was put in order by 2011, but only because I stumbled upon good people who knew something that I did not have access to before.

It is easy to say, looking back, that if I knew in 2005 what I know now, much would have been done completely differently. But, strangely, people almost never write honestly on the net: how to become an adult in business. And if they, nevertheless, write about this, then they write for an already knowledgeable audience. People tend to talk about such things in passing, without details. After all, everyone knows this, right? Not really!

If you do not know what an S-corporation is, then it is difficult to count on serious support. I was a stupid, awkward idiot with lots of money. The personification of my spirit of that time could be called stuntman Kenny Powers, and I would have to act like a billionaire Warren Buffett.

A year has passed since you moved away from MetaFilter. How did this happen? How did you decide to leave and how did this affect your business?

In 2014, I realized that I was completely exhausted. I worked 40 hours a week as damned, moderating the site and at the same time managing the entire organization. Previously, I just watched the site, and six employees did all the daily work on moderation. After I took on one of these functions, and then everything else, the work began to take 60-80 hours a week. After a couple of years, I became tortured and jaded.

Then they approached me from one company: And let's you lead the community on another site, big and popular? We're going to buy out your company, so you have nowhere to go. "It was just their first step - and already such rudeness! Thank God, the deal did not take place, but they gave me an idea. Perhaps it would be worth hiring someone in order to relieve myself, and then reduce my daily participation and quit, in general, it was the first glimmer of hope for the opportunity to do something else instead of “plowing” 80 hours a week.

I quickly realized with MetaFilter that the online community is a strange thing. It does not belong to me, I'm just another user on the site. Yes, I created it, but people make it cool - both employees and participants. I felt that if I left, it would live without me. There is a great team that has been working on the site for many years and that knows what to do with it.

Therefore, after that deal was dropped, I emailed a note to Stewart, CEO of Slack. I have known him for many years. I wrote: “If somehow something appears for me, let me know. I like working with Slack, and I was happy to help develop it. ”After a while, he responded:“ Let me think. If something appears, I will contact. ”Soon they offered me to join as a writer, and I agreed.

Several part-time MetaFilter employees agreed to go full-time. I accepted an offer from Slack on Friday, and on Monday I started work.



How did this work? How did your care affect the site? How is MetaFilter a year later?

My ultimate goal was for people to work and not disturb me. Ideally, I wanted to be called no more than once every three months, and then if something out of the ordinary happens. And the staff coped with this incredible task, surpassing my wildest dreams. They took all the load off of me. I'm happy. I tell my friends that it’s as if I had a restaurant in Los Angeles — I don’t go there to eat or create something in the kitchen, but I’m a kind of “silent” owner. I even want to somehow transfer my ownership to the employees officially. I understand now how to do it.

After my departure, income grew slightly, and the employees saved the money. They are spent only on salary. 90% of the cost of working the site is salary, but it is fixed. The situation is stable. They have a salary reserve of six months in the bank, which is simply unbelievable. They added a few “features” in my style to the site that I really like.



And another thing: communities do not scale well. It takes a lot of human resources to support the community. This is what I went through myself. I was depressed, I felt overwhelmed, I even went to the doctor, and every day I had to do stupid and dirty work. It took me sixteen years to figure it out.

Strange, but once we imagined that MetaFilter would develop as Reddit, with pluses and minuses for posts, and we would not have to do anything manually; it is now clear that this would kill the individuality and humanity of our site. It would be just the power of the crowd with all the problems that Reddit has now: the tone of communication is set by disgusting personalities. Yes, it is very difficult to scale something that is controlled in manual mode. I think that's why I never wanted to do anything big.

Almost every year, some guy from some venture capital company stumbles upon my name and sends a letter like: “We need to talk. God knows, you have an undervalued business - I could quickly straighten things out. He will grow tenfold, etc. etc. ”But none of them can answer the simple question: if you gave me a $ 5 million investment in MetaFilter, what exactly would you do to make it better or more expensive? Communities are not responsive to rapid growth.

What advice would you give to someone who starts his business now? Everywhere there are new media company based on Snapchat and Instagram. But they appear on the platforms and receive income from things they do not control.

I myself wrote the engine, so I had some control over the platform, but I did not control the source of income. I thought about moving sales inside to have more control over them, but it never worked on MetaFilter. We were not focused enough. And the focus is very important when you sell advertising.

And about the people who are building their company on the basis of Instagram or Snapchat ... It's not as bad as it sounds, they say, you are at the mercy of someone's platform. The main thing - there is an audience. But, nevertheless, use good advice: - try to diversify your income, make it so that it does not come from one source.

And if big money has suddenly fallen on you, do not spend it. Save them. Always be prepared; Try to save up to six to twelve months in the bank as quickly as possible. A drop in income in half in one day completely changed my life. I live within my means; trying not to spend too much. If the money comes, then they go to savings or retirement accounts. No need to run them in jet skis, yachts, huge holidays and other nonsense.

People go to few platforms; you just have to put up with it. Some things just have to be on Instagram or something like that. Do not expect to get the same audience if you have a separate site, even if you control it.



What was my dream when I first got acquainted with the Internet in the late 90s? I moved away from learning science to network. Then I just received a master's degree in soil chemistry. My fellow students told me something like: “What the fuck did you forget in this web?” I replied: “Someday I will scam the net, living in some kind of wilderness with a thick Internet channel. I will earn a hundred thousand bucks a year, and it will be fine. "And they replied:" Well, of course, dreaming is not harmful. "But I always had this goal.

I remember telling friends when they launch a web product: “You should immediately charge $ 50 for installation or $ 10 per month for a subscription.” When they were chasing money, I told them: “This is the only reasonable goal: if you can make 10 thousand bucks a month, do it right now. Why are you chasing 20 million? ”

I thirst for simplicity and do not want complexity. Many times I have recommended to my friends to do precisely such things, which may bring some money, but make you happy. Is this not enough?