When would you abandon an idea if it wasn’t working out? Six months? A year? Three years? Josh Haynam and Matthew Clark stuck with their business for seven years before earning their first million dollars.
Today, 11 years into its journey, Interact, a quiz-creation software company, generates $2.6 million in annual recurring revenue (ARR). They have 10 full-time team members (and counting) and almost 7,500 paying customers.
Founded before quizzes were all the rage on social media, Interact has now proven quizzes to be an instrumental tool for online businesses to capture leads, connect with prospects, and build customer relationships. They just did a study that showed the average conversion rate of a quiz is 40 percent – far beyond the industry standards for lead conversion methods.
When You’ve Never Had (or Needed) a 9-to-5 Job
Josh, the CEO and co-founder of Interact, has never had a full-time job. He’s been an entrepreneur since he was 15 years old (today he’s almost 30). He started his first company in high school during the 2008 financial crash, after not being able to get a job.
Josh says, “I grew up poor, so I needed to make money. And the only option that I had available at the time was to make my own money. I went to all these job interviews, including McDonald’s, and there was a line of 50 people trying to get this same job for eight bucks an hour. I decided that was crazy and started my first company.”
Josh mowed lawns, planted grass, and so on. He hated the work but was able to earn some money with it. Then he stumbled on the idea that you can buy, fix, and sell used electronics. “I scaled that up in high school and early college and was making good money. But then in college, I learned about software. I grew up in Central Valley, California, where it was pretty anti-technology,” he says.
“Not that there’s anything wrong with that, but the view on technology was outdated. So I learned about software and the business surrounding it at university. Then I realized it’s something I should get involved in.”
Josh and Matt, co-founder and CTO of Interact, were college buddies who worked together at a “hacker weekend”. During a hacker weekend, you work with a team to try and build a product in just two days. No product emerged from that weekend, but they did become friends and realized they enjoyed working together.
The concept of quiz software came out of their various failed attempts to start a company together. Even though the founders don’t love technology (ironically), they’re motivated by problem-solving and making complex or difficult tasks easy.
An Unexpected Tool to Improve the Customer Experience
The founders started Interact because they saw a hole at the heart of online marketing. Most marketing misses the mark when it comes to making people feel understood. And it’s not always the business’ fault. An online business seldom communicates directly with consumers, so it can struggle to get to know them as individuals.
Josh and Matt set out to create software that would empower digital entrepreneurs, creators, and brands to grow their business through empathetic listening, deeper understanding, and relationship-building.
Quizzes help companies learn about their prospects by asking them questions about themselves and digging into their needs and aspirations. This makes it easier to connect with consumers and, in turn, attract more leads and increase sales. In just 30 days, customers using Interact have achieved 9 million completed quizzes, 42,000 daily-generated leads, and an 80 percent quiz completion rate.
In 2011, quizzes were slowly gaining popularity. Josh and Matt found that they were also a good way of building a customer database. “We saw quizzes as a cheat code to building out your email list because you can ask for someone’s email address within the quiz,” Josh says.
If someone opts in and gives you their information by filling in a quiz, the company gets a ton of data points about that person. They can then use that information to tailor their customer experience to the individual (while following all of the privacy rules, of course).
Commonly referred to as zero-party data, it means that someone is voluntarily giving you their data and saying, “Use it to give me a better experience.” This can be in the form of offering up products or services that are relevant to that person or serving up content that matches their interests.
“If you placed all these data points into a form, no one would fill it out. But if you break the form apart, make it fun and interactive, then all of a sudden people want to do it. They feel like they’re learning something about themselves through the quiz. And, from the other side, the brand is getting to offer up a much better experience to their customer,” Josh says.
In It for the (Very) Long Haul
It took Josh a couple of years to switch from his electronics business to software because he essentially cut off his income stream. He didn’t realize how long it would take to start making money – he needed to build the software first. “Those were a hard few years, going from living pretty large for a 17-year-old to having nothing for a long time while we were starting Interact,” he says.
“When it came to our launch strategy for Interact, it seemed like nothing worked. I feel like, over the years, we’ve found the things that do slightly work and just stacked them together.” At first, they tried doing cold sales, reaching out to tens of thousands of people. But no one was interested. Then Josh started writing content, but that wasn’t bringing in any new customers either. The main issue was that the business was ahead of its time and people didn’t yet see the value of a well-curated quiz.
Worse, the Cambridge Analytica scandal – the theft of people’s data through quizzes – happened around the same time. As a result, companies and consumers gave quizzes a wide berth. “We couldn’t sell it to save our lives,” Josh says.
To make ends meet, Josh and Matt built websites and custom quizzes. “But sometimes we would spend two weeks building a completely custom quiz for someone for just $150 and then they would say, ‘Oh, this isn’t what we wanted, give us a refund.’ So we had a very negative ROI.”
“I think that over time, the combination of having reached out to so many people and accumulating content online made it all click into place. But this was only after a year of writing content twice a week and reaching out to 200 people a week. Finally, we generated enough buzz for people to notice us, and Interact started making headway. There were some chinks in the armor, if you will,” Josh says.
People were finally willing to give Interact a try. And the customers who signed up saw incredible results. It was just a matter of getting companies to test-drive the tool. To this day, once customers reach the third month of their subscription, they rarely churn. Most customers stay on for years.
“That saying of needing seven touchpoints with a prospect before they convert is very real. But because there was no market or industry for our type of business yet, no one else was talking about it. As a result, we had to be all seven of those touchpoints. That could be five emails and two articles they read on our blog, or four articles and three emails. We had to educate the market and create interest all at the same time. That’s a lot of progress to make before starting to sell our product,” the founder says.
“So it took about a year for things to come together, but then it was still really, really, really slow going. We failed against every benchmark you can find online. We couldn’t keep any sort of month-over-month growth rate going. It was like trekking through the mud with flippers on.”
Some of their biggest milestones were winning customers like American Red Cross (who is still a customer to this day). “We were sitting in our college library and couldn’t believe that the Red Cross was making quizzes about fire safety with our software. So while our numbers were abysmal, that was something really exciting. All we had to go on in those days was ‘Look at these people who are using our tool and seeing tremendous success.’ That sustained us through the first five years,” Josh says.
Creating a Quiz Isn’t as Easy as It Seems
Driven by market demand, Interact has evolved beyond simple quiz-building software into a content engine. “From the beginning, the problem with selling software for making quizzes was that somebody had to write the quiz. Historically, vendors sold quiz software as a subscription with a very high price point. The majority of that money is going to humans who are writing the quizzes because it’s such a complex procedure. The software itself is just a form builder that results in a quiz format,” Josh says.
But for a small-to-medium business, $3,000 per month to build and use a quiz isn’t feasible – even with those high conversion rates that are four times higher than other lead generation tools (like popups and landing pages).
Why don’t companies just create it themselves? Josh says, “It’s quite an undertaking to create a quiz from scratch. It’s a combination of psychology, copywriting, marketing, sales, storytelling, and having an incredible knowledge of your customer base. So you’re asking someone to learn six different jobs and then condense all that down to a total of 300 words. For most people, this isn’t doable.”
So, Interact has partnered with the best quiz writers in the world (yes, that’s a real job!). If you asked these writers for a quiz, you’d pay $10,000 to $20,000 depending on the type of quiz you want. Instead, Interact has worked with them to create hundreds (soon to be thousands) of ready-to-use templates for almost every single industry and subcategory.
Instead of spending hours (or weeks) learning how to write a quiz, you now spend 20 minutes to launch it, answering a few questions about your industry, who your customers are, and what you’re trying to accomplish. Then you can tweak and optimize it as you go based on the analytics. You don’t have this huge upfront commitment and cost – Interact’s subscription starts at only $47 per month.
For customers who do want to create their quiz from scratch, Interact coaches them through a training course. It’s four weeks and there’s a couple of hours of homework each week to learn the best practices of quiz creation. If you want to take full advantage of a quiz as a lead generation tool, this is going to bring you the best results. But how many small business owners or marketers have time to go through this whole process just to write a quiz?
There’s More to Life Than Running Your Company
Both founders believe that when you have something valuable, it’s worth sticking it out to see where you can take it. And in Interact’s case, it worked out well. But it wasn’t an easy road. “We slogged it out and had to keep all our efforts going for almost seven years before Interact started growing reasonably and sustainably. A long, long haul on that one,” Josh says.
Their view shifted as the business matured. “It’s no longer we’re doing this no matter what. Now there are a lot of other factors in play. But back then, as young people with nothing to lose, we saw it as something cool is happening here and we want to see where this can go.”
But they’ve learned an important lesson over the past 11 years. Josh shares, “Make sure to invest in the rest of your life as well, even if you’re focused on building a company. I’ve noticed that oftentimes the answers to business questions come from somewhere else. If you’re only thinking about your business, you’re going to get stuck. It’s also easy to feel like nothing is going right in your life if nothing is going right in your business.”
“But if you have other things going on outside of that, be it friends, family, a significant other, hobbies, whatever it is, you can see that good things are happening in those areas of your life. And it doesn’t feel like your whole existence is wrapped up in just your company.”
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