Market Overview

Rand Fishkin Talks Google Spam, Dot-Com Game Changers, and More

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Welcome to Zing Talk, where Benzinga brings you the biggest names and brightest minds from Silicon Valley to New York City.

Today we have with us Rand Fishkin, CEO of SEOmoz.

How ya doing today Rand?

Rand Fishkin: Very well, thank you.

Can you start out by giving our readers some background on how you got your start in search engine optimization and how SEOmoz came to be?

Rand Fishkin: In the early 2000s I was doing consulting work, primarily for small businesses in the Seattle area. We had contracted some people to get some SEO help and struggled with that. We couldn't find folks who could do a great job. So I started learning the practice myself, and doing it, and I started the SEOmoz website to help other people learn through my experience and to share the things I encountered in the SEO field.

Can you tell us, in layman's terms, what search engine optimization is?

Rand Fishkin: SEO is essentially the practice of making your website pages perform better in search engine results so that you draw clicks and traffic when people make queries at Google (NASDAQ: GOOG), Bing (NASDAQ: MSFT) or Yahoo! (NASDAQ: YHOO).

How would you characterize your relationship between SEO and social media sites like Twitter and Facebook?

Rand Fishkin: I'd say there is a great deal of synergy. And actually, social media marketing is a term that was first coined by folks in the SEO field.

Back in the early days of social media, 2003 or 2004, when social media was really more sites like MySpace, as well as StumbleUpon, Delicious, Reddit was starting to get big. SEOs would leverage social media marketing, essentially trying to get their content in front of people on these social networks as a way to expose them to people who might lead to them or help them grow their reputation on the web.

Do you see this relationship evolving or changing in the future?

Rand Fishkin: I think it's changed a little bit. It feels to me like a lot of classic marketers, even people who weren't necessarily Web marketers before the emergence of Facebook and Twitter being as being big networks. [They've] sort of adopted the moniker of being social media marketers or social media experts. And I think that's meant a lot of differences between the two paths.

There are still people who engage in social media primarily, or at least somewhat, for SEO purpose to help their pages earn links, earn rankings, and get that highly qualified traffic that search engines send.

And then there's sort of the more brand-focused marketers who leverage social media primarily to get the message out. I think we're all relatively familiar from looking at analytics and statistics, both from our own sites and research done on the Web, that social media is not a conversion like the audience. If someone sees a tweet on their Twitter stream that looks interesting, they might click it, they might visit the site, they may even browse a few pages. But they're extremely unlikely at that time to make a purchase decision or give an e-mail address or register, those kinds of things.

That said, it [social media] can be extremely useful for exposing people to your brand, your story, your product, and then later have them do some searches and some research into it and evaluate the product and maybe make the purchase decision. But I think that's why you see the disparity; social sends the traffic but very few conversions. Search sends quite a bit of traffic but also a high percentage of converting traffic, which is why you have Google earning $20 billion a year on search advertising.

It's remarkable to me how social media has transformed the way social media gets their message out to the public.

Rand Fishkin: It's interesting because it might be a little bit early to leverage the channel that way. I think, social media particularly – unless you're talking about Facebook, and even if you are – it's a very early adopter-heavy field. So if you're talking about, Oh, we're gonna leverage Twitter and StumbleUpon and Flickr and LinkedIn and all these social networking sites to build our brand and our message, you better hope that you're trying to target this tech-elite set.

Because it turns out that the vast majority of consumers are not getting the information about the products or services that they're researching and buying through those mediums. There are a lot of us who are in those marketing-type roles and those technology-type roles, and we do it, so we think everyone else does it, but the data's not there yet.

In February, SEOmoz exited the consulting business. What motivated the change?

Rand Fishkin: I would argue a couple of things. In 2007, we launched a software subscription business. In that year, it was about 50% of our revenue. In years since, it has been 80%-85% of revenue. So the consulting business has been pretty small for the last three years. While consulting is certainly lucrative from the – Wow, we signed a consulting deal and it's a $30,000 to $40,000 client for four or five months work, and that might seem like a lot of money – in fact, it's a very frustrating and challenging business to scale.

If you want to get dozens or hundreds of clients paying those rates, you'd need to have lots and lots of consulting professionals doing great work. It's very hard to find consultants who are at that extremely high level of quality of sophistication and experience, particularly in these new and emerging types of fields – SEO and social media and those kinds of things.

For that reason, we decided to take this different path and build software, which I would argue is a much more lucrative business. Whereas a software client or a software customer for us is only paying $100 a month, we have 7,000 of those and we add 100 or so every week. So it's a much more scalable, robust-type of business, and something where we feel we can leverage our expertise in a more scalable fashion.

So we can say, “Wow, we discovered this really interesting thing about web analytics, and what metrics people should be monitoring in search engines that will really help them move the needle and know how they're doing and figure out if things have gone wrong and why.” And we can put that right into our software and help thousands of people instead of one or two clients.

If software was the next step from consulting, are there any other steps you foresee in the future?

Rand Fishkin: We're definitely going to stick with the software business for a while. We've been really focused on the small- to medium-sized businesses, and we haven't really focused on large enterprises. I think, for the next few years at least, that will continue to be our focus. But long-term I could see us looking into trying to build good software for those bigger companies and agencies as well.

It's been really exciting. Just four years ago there were three of us in a tiny, crappy office above a movie theater. It didn't have good sound insulation so you could hear the movies playing below you.

Now we've got this super-nice, fancy office space. There's 26 people; we're hiring three more before the end of the year. We have tons of people working at the company who are a lot smaller than I am. It's been really exciting to grow and to see the progress that we make and to see the marketers' lives we've been able to make better and how much we've been able to help them in their jobs to be more efficient, do better reporting, those kinds of things. It's very humbling.

Google came and shaped the world of online search. YouTube came and shaped the world of online video. What do you personally see as the next game-changer on the worldwide web?

Rand Fishkin: There are a few companies that I think are very interesting. I would say that a lot of folks in Silicon Valley have been talking about the Q&A space. There's a few companies in there that are kind of vying for that big attention, and those are Formspring, Quora, and Stack Overflow.

There could be new entrants as well, but I think one of those is going to reach an impressive critical mass. It'll be interesting to see if that can be a new channel that Internet researchers and consumers and users of all types go to for answers versus just performing searches in Google or Bing.

I'd also say that there's probably going to be a shakeup in some of the location-based services. You saw Foursquare come out and attract a lot of attention. Now everybody's in that game. Google Places has a check-in feature. Facebook has a check-in feature. Twitter's got a location aware feature. All those mobile carriers are trying to build their own. So there's likely going to be some relation to that.

And I'd say that, in the shopping sphere, I think that Groupon, as well as Living Social, have been doing some very exciting things around leveraging the social relationships for commercial activity.

There was an e-mail that went around our office today – we're in downtown Seattle across the street from a Nordstrom Rack – and someone said, “Oh my gosh, there's a Groupon! Spend $25, get a $50 gift certificate!” And I think everyone at SEOmoz was buying that today.

We're giving you the loudspeaker now to break any news, draw attention to anything that's not getting sufficient attention in the media, or really just sound off on any issue you care about.

Rand Fishkin: One thing that's been interesting for me recently [is] that I've seen Google has been…not ignoring, but falling behind in the web spam problem. Basically they've been letting a lot of spam and manipulation – not terribly spammy results rank well, but results that are ranking well through the manipulation of primarily links and anchor text.

I think that if Google doesn't address this quickly and robustly, it could actually predict that people start turning to other sources for information that they previously relied on search engines for. That could be the start of a slippery slope for Google and other search engines. They really need to address that soon – I hope that they're hard at work. ‘Cause I love their service, but I'm worried about this perception of spam. I'd say that if people start finding that their Google results aren't useful and valuable anymore, they're gonna find alternatives.

You and your wife have some pretty popular blogs: CopyWroned, the Everywhereist, and What is the blog that you read the most?

Rand Fishkin: I wouldn't call it a blog – it's more of an aggregator. But there are two sites I visit religiously: Hacker News, and Techmeme. Both are just excellent, crowd-sourced plus curation plus algorithmic sort of top things to read in the technology space. And it's really helped me to get a broader understanding of the tech/web startup market, as opposed to my narrow view of my single startup company or my single industry. So I'm big fans of those.

What was the best and what was the worst investment decision that you've ever made?

Rand Fishkin: Best investment decision I ever made was [when] we took venture capital in November of 2007. We took $1.1 million. We burned up almost all of it. We got down to about $200,000 - $250,000 in the bank, which, when your payroll is $70,000 or $80,000 grand, that's only a few months of money if anything goes wrong. We spent that building our web index. And that product has been powerful phenomenal. Our customers love it to death – it's been fantastic. I'm really glad I made that investment.

The worst investment I ever made… You know, I spent a bunch of money on baseball cards when I was a kid. Those didn't really pan out. And at the time, I think it was probably a more significant portion of my wealth – given that I was only earning five bucks a week allowance – than I should have been spending. I think I spent $85 buying a collection of baseball cards, thinking that two years from now I'm gonna sell them for $500. That didn't work out so well.