SDS52: James MacGregor, Biteable, Co-Founder
Simon Dell: Welcome to the show, James MacGregor. How are you?
James MacGregor: I’m very well, thanks for having me, Simon.
Simon Dell: Good. Now, you’re down in Tasmania, aren’t you? You’re down in the Hobart office, did you say?
James MacGregor: Yeah. I’m in the Biteable Hobart office this week.
Simon Dell: And how is beautiful Tasmania today?
James MacGregor: There are bushfires everywhere at the moment. There’s 40 bushfires in Tasmania at the moment, so it’s just weird.
Simon Dell: Just don’t burn to death whilst we’re on the show.
James MacGregor: We’ll try not to. Not around the office, so it should be fine.
Simon Dell: How did you end up in Tasmania then?
James MacGregor: I grew up in Hobart. I studied here, went to uni here, and then I lived away for about 16 years and I moved back about five or six years ago.
Simon Dell: Why Tasmania? What’s the attraction for you?
James MacGregor: I moved back from England with my wife and she… I’ve lived in Melbourne, and Sydney, and London, and she got off with a contract. We just took a really long backpacking holiday, like a three-month holiday, and she was emailing about jobs in Australia. Got off at a job in Hobart and we just decided we needed to get somewhere quiet for a year, we thought we were going to do, and then we’re kind of just still here. We just got really used to it. I’ve had two kids since then and yeah, I think it was just we wanted a change from London.
Simon Dell: Yeah, that’s why I came out here in the first place.
James MacGregor: Yeah.
Simon Dell: Fed up with getting stuck in traffic and fed up with the rain.
James MacGregor: Pretty much, yeah. Just commuting and just slogging it out, we just wanted to slow down and have more time.
Simon Dell: Tell us about Biteable. You’re the CEO. Tell us a little bit about Biteable.
James MacGregor: Biteable is a tool for making videos. You’re doing it all in a browser, doing it all online. Businesses use it for making promotional videos. They might make ads, or explainer videos, or job ads, or a plethora of different types of content. Generally, it’s a short form video, so under a minute. Yeah, we’ve got about 4 million users on the platform. There’s about 32 of us working on Biteable now. I’m one of the co-founders and CEOs, so I actually started it with my brother four years ago. He also just moved back to Hobart at the time and then we brought on a third co-founder and we’ve just been head down on it since then.
Simon Dell: Cheryl Mack, the CEO of StartCon, talks about getting the right people and getting the right co-founders. Obviously, with your brother, I don’t know whether I could… I don’t know. I could possibly go into business with my brother now. We might kill each other in the first week, but I could get away with it. How did that all come about and how did you guys go about finding that third person as a co-founder?
James MacGregor: Before I even started trying to find Biteable, when I moved back to Australia, I took a job as a marketing director at Pollenizer, a startup incubator. So, I’ve launched a few startups over the last decade or so and some of them successfully, some of them not at all. I was really interested in this model of, “How do you come up with an idea, and validate it, and put a team together, raise investment?” All the bits to get a startup off the ground.
What I really noticed at Pollenizer was you want to reduce the number of people involved in the early stages, and the minimum you needed was marketing, design, and engineering. And so, that was like the formula. That’s why there’s three founders. My brother is designer, the other co-founder is the CTO, the engineer, and I’m the marketing product guy. And so, that was the basic formula for it. Simon and I, he moved back here around the same time as me. We rented a little office together, and we were both just doing consulting work, and we just tested a new startup idea every month for a year.
Simon Dell: You started a new startup every month, or it was just testing an idea?
James MacGregor: Just testing. They were all just at the idea stage, but we would build out a prototype. I would go and sell it to people, test it out, kind of take it to market straight away. It was just the two of us, so we’d focus on the design. I worked a lot in design focused tools. A lot of them were quite design heavy. We basically had our own little incubator where we just incubated ideas for a year.
Simon Dell: Was Biteable one of those ideas?
James MacGregor: Yes. Biteable was an interesting one. Simon, my co-founder and brother, is an animator and motion designer whose worked on film. During that consulting year, we started making explainer videos for our startups. People would be impressed with the videos because it looks a lot better than what anyone else was doing on the web. They didn’t really use a real animator.
And so, we started getting requests for jobs and we were making customer explainer videos for people. We just kept getting asked for it. Whenever I pitched one of my startup ideas, people were like, “Yeah, the idea is alright, but I really love that video.” And so, it took us probably a year of chipping away at that idea until we came up with a practical way to do it because it’s quite a big undertaking.
Simon Dell: Tell us how that idea came about then. What was it that you suddenly went, “Right, this is how we do it.”
James MacGregor: We knew really quickly there was demand. We were making explainer videos at the time, little promotional videos for all different companies, mostly startups. And so, we knew that they wanted the end product. We just didn’t know how to produce a product that made it so that it wasn’t custom. And so, we just kept pulling it apart. We were testing a whole bunch of video tech all year. “What if we did this? What if we did this?”
It probably took about 10 months until I remember sketching up the current product design for Biteable. “What if we just had these simplified components, and people would stitch multiple pieces together to make a video, and they could just edit specific things?” We just both sort of looked at it and went, “Yeah. We could build that. That’s doable and we think it’ll deliver value.” It still felt very early stage, like it still felt like it probably wouldn’t work.
Simon Dell: Where did you get the affirmation that it was working, that it was a decent tool that people could use?
James MacGregor: We were manually making videos for people to kind of test the concept, and that was kind of… We learned some stuff. We brought on a third co-founder, Tommy, who is a really amazing engineer that I’ve worked with in a couple of startups previously. And so, we build out the very first prototype over a couple of months and we just started running ads, and testing it on real users. Pretty quickly, we started to get people liking it, and using it, and making real videos. It was very MVP. But yeah, interestingly, compared to all the other ideas it tested, it got traction straight away.
Simon Dell: How did you decide the revenue model? I’ve worked with software startups, I still work with software startups. In fact, I’ve worked with a video software startup. I can remember a couple of years ago, two to three years ago, the arguments about how it should be charged, freemium models, versus subscriptions, versus pay as you go. How did that all pan out through the discussions?
James MacGregor: In the early days, we really divied things up into three camps. There was three co-founders. And so, I was responsible for pricing: product decisions, marketing, pricing, stuff like that. Initially, we were charging per video, and people started to make quite a few videos and they complained it was too expensive. So, I just picked a number and made that an annual subscription. And then we’ve just iterated since then.
Simon Dell: Just on that, when you picked a number, did you just generally sort of pluck it out of your ass and go, “Right, this is a number. Let’s call it this.” Or was there any sort of detail, mathematical thought gone into it?
James MacGregor: There was no mathematical thought. There was just… I picked a price point that was like from previous things that I’ve run. That’s like a disposable price where people will buy it, they don’t have to go and ask for approval in the company. It’s like cheap enough that they can just make a decision there and then, but not so cheap that it’s going to be impossible to make any money out of it. We always just, in the very early days, like the first years, we just tried to keep it as cheap as humanly possible. The thought was unless the product is awesome, the rest of it doesn’t really matter. And so, we just put all our energy into the product for the first few years.
Simon Dell: I’m having a look at it here. Your annual subscription would be $276, is that right?
James MacGregor: Yeah.
Simon Dell: Just for anybody listening who is not in Australia, am I looking at that in Australian dollars?
James MacGregor: That’s all USD. $29 a month, or you can purchase annually and save 20%. Pricing is long and complicated. There’s been a lot of work on pricing and it’s… One thing we really focused on as a company now is listening to customers as number one, which actually saves a lot of the arguments.
Because if you are just like, “Well, you might think that and I might think this, but what does our customer think? Let’s go and find out.” And then we really focused on being adaptive to users over time. At the moment, we’re getting a lot of enterprise customers and universities, our pricing will change and it’s just about adapting to what the market tells us over time.
Simon Dell: Feel free not to answer this because I’m always fascinated with a B2C model. I’m fascinated between the split between those that would be paying monthly versus those that are paying yearly. I’m also fascinated to understand if they’re much of an upgrade to people that are paying monthly, and then a few months in, they decide to start paying annually because they see the value in it, or do they just live in two completely separate camps?
James MacGregor: At the moment, they mostly live in two separate camps. There’s not a great push in the out to migrate people between plans. That will change over time. The split, it’s a lot more monthly than annual. Actually, I couldn’t tell you what the current split is. I used to do all the pricing and we run a lot of pricing experiments and spend way too many hours looking at that side of it. And for the last year, we’ve had our pricing team. So, there’s a team of three people that sit down and they do pricing experiments every couple of weeks.
Simon Dell: And I guess that you then sort of look at that data and make new decisions based on what they’re coming up with?
James MacGregor: I mostly look at test results, like how did that go. We’ve done radical things like tested turning off freemium altogether, increasing pricing, reducing pricing, having multiple plans.
Simon Dell: On an experiment where you’ve turned off freemium, you don’t need to be detailed, but what’s the consequence of turning off freemium for you?
James MacGregor: At the time, when we turned it off, we saw a 10% increase in conversions to paid. So, we changed freemium to a trial. The benefit that we get from supporting free users outweigh that small increase in revenue.
Simon Dell: Just so everyone understands out there, the difference between freemium and a trial is… Do you want to just explain that?
James MacGregor: Freemium, you’re just on a free plan and you can use that free plan forever. We always grandfather a plan that someone signs up to, they’ll have that plan forever. When we test, we only test on new users. So, we tested on new users that rather than getting a free lifetime plan, they would get a 7-day trial which is quite common for SaaS companies, some of the companies in our space. It just wasn’t a significant impact but it doesn’t mean that down the track it won’t be something we revisit.
Simon Dell: So what you were saying is, when you move from the freemium model to the trial, it did increase the number of subscribers?
James MacGregor: Yes.
Simon Dell: But not significantly enough to actually..?
James MacGregor: To cost justify, not really. Freemium is really a marketing decision. That’s not pure pricing. It’s really a marketing play so you have a bigger audience, they can help you promote the product, which they do. We’re organically led, all of our marketing, and they also give you a bigger audience to develop the product on and speed up development of the features for everyone.
So, it’s a complicated one. The problem with freemium is it’s really hard to put a value on it for the business. In my experience, most SaaS companies shouldn’t be freemium. It’s a really mass market play and you have to be able to leverage that audience and actually get them to drive your marketing for it to make any sense.
Simon Dell: What percentage of people would you see upgrading from freemium to paid?
James MacGregor: We don’t really give out those numbers, but it’s a small percent of the free users convert to paid.
Simon Dell: That’s fine. My next question for you, because you’re the marketing brains behind this, I guess Biteable was pretty much its own marketing tool, really, because you’re creating videos that you can show people how they can create videos. So, it’s a bit of a no-brainer in that respect. But what channels work best for you for recruiting new users?
James MacGregor: The biggest driver for us has been organic, so content marketing mostly, building into the product, the ability for people to share their videos, that obviously attracts other users. Over the last year, we’re now running paid channels, but still by far the biggest driver for us is content marketing.
Simon Dell: Give me an example of what you guys would do from a content marketing perspective and where you would then seat that content.
James MacGregor: Content marketing is pretty broad for us. I think our guiding principle is we try and build content that is really useful to users, our own audience, or just educating the potential audience. And so, we do a lot of things.
We obviously produce videos, blog posts, a lot of social media content. We’ve just started publishing really in-depth e-books, really in-depth guides where we’ve had five writers over three months writing them. Case studies, it’s really just testing, continually putting new stuff out there and just seeing what actually resonates with users.
Simon Dell: From a paid channel, what’s been working best for you? I presume Facebook and Google and those kind of things. Where do you find the best Adwords?
James MacGregor: Adwords and Facebook. Adwords, because we’ve got a background in search and we understand that really well, and advertising with our content marketing is kind of just a natural add-on. Whereas Facebook, social in general for paid acquisition is very new territory. It works for us. It’s got lots of potential. It’s still a small driver of the business.
Simon Dell: Do you analyse the return on investment from those channels?
James MacGregor: Yes. I used to just experiment on everything. And some of it I’ll make a call, like Facebook Ads don’t work, but the devil’s in the detail. And so now, what we do is we generally continually do little pilots on new channels. And if we see some type of success, we try and have a daily person on that channel. So, we have someone who just does Facebook Ads, someone who just does Adwords, et cetera.
Simon Dell: Have you found Facebook Ads in the last couple of years… Because my difference would be that it’s taken… The ROI from a Facebook ad has taken a bit of a hammering in the past year or so. Just interested if that’s the sort of insight that you guys have seen as well.
James MacGregor: The prices are going up, definitely. I’ve been promoting software companies, mostly, for the last 20 years, so I saw the same thing. Adwords, definitely, is getting more expensive. But it’s so powerful, there’s so much targeting, you can do really unique things. So, it doesn’t necessarily matter. Paid acquisition is all about your target audience and your lifetime value. So yeah, it’s more expensive. Maybe it doesn’t make great sense for a lot of freemium tools. For us, it kind of makes sense but also, because we’re a video marketing platform, we just want to experiment on all the things that our customers try and do.
So, we sort of have a dual purpose with paid acquisition, that we’re trying to find scalable channels, but we’re also just trying to understand those channels so we can educate our users and build new products around interesting capabilities.
Simon Dell: Obviously, the growth of video in the last few years has been massive. And as the route to the internet becomes easier and easier with smartphones and tools like yourself, more people get into it. What are some of the things that work best from video? If you’ve got somebody that’s sat in front of you go and saying, “I want to produce videos. I want to produce promotional videos.” What are perhaps two or three key things that you think people should remember when it comes to producing videos for their business?
James MacGregor: That is a very broad one.
Simon Dell: It is a bit.
James MacGregor: There’s a lot of things. I think firstly, video itself is very broad. It covers a lot of different types of videos. Biteable really good for some of them, really terrible for other of them. So, what works for business is to produce different types of videos, to always test. What works for us may not work for you, but we just try and test lots of different types of content.
So, short-form videos that we specialize in, they are really good for explaining things that are really difficult to get across. Most people don’t read your blog posts, they don’t want to read a long page of features. They’re more likely to watch a 30-second video that just covers the five dot points, it’s really entertaining. They’re like quick summaries of information and they work really well for getting people to take the next step.
Simon Dell: What do you see then? Perhaps if I rephrase the question, what do you see people doing videos, and they do it, and it’s badly, and it’s kind of one of those things where it raises the hair on the back of your neck and you just go ‘ugh.’
James MacGregor: I guess as a company, the thing that we struggle with is just really poor quality videos.
Simon Dell: What’s your definition of poor quality? Because there’ll be people out there that are producing videos that they think are absolutely great, and I’ve seen them and I go, “Oh my god, that’s terrible” but they think they’re great. How should people be going, “This is not good.” What’s a rough benchmark for that?
James MacGregor: It’s a tough one. We have a team of motion designers in the office. Obviously, we’re very biased. But I think if it looks like a PowerPoint that is animated, it’s probably going to feel really cheap to the user. What videos are best at is getting an emotional reaction out of the users, which you can do with imagery, you can do with language, but video, because of sound, and motion, and the number of elements that you have to play with, you can have a lot deeper connection. People can really react to a video.
For example, my wife made a video with Biteable late last year and shared it. It was a little explainer video covering a health topic. I haven’t watched it, but it’s had 100,000 views and a couple thousand shares. She works for the health department here on nutrition, so they’re educating people about nutrition and health. The message, the whole package just really resonated with a certain audience and they’ve just shared the hell out of it.
I think the key with video is just pumping out a whole lot of videos that are just really average doesn’t work. It’s producing something that when someone watches, they actually feel something.
Simon Dell: One of the other challenges I see a lot of is voiceovers, voiceovers and whether to use captions or things like that. Explain to me how that works in Biteable and then maybe I want to get an understanding of how people can do a voiceover without breaking the bank.
James MacGregor: Most Biteable videos interestingly don’t have a voiceover. When we first built the platform, we didn’t have the capability. Because we’ve made explainer videos that were a bit longer form, we just assumed it was something we were going to have to add, we just hadn’t gotten to. What we found was people were making shorter and shorter videos. It was sort of between 10 seconds and a minute.
Because the message is written in the video, having a voiceover didn’t add anything. Music actually works a lot better for that style of video. So, people do record a voiceover and add it over the top. But generally, it’s better for a longer form video, and that’s usually something that’s either custom-made, or to a product walkthrough, or an actual case study, or something more in-depth.
I think people use this for two things, either to condense explaining a topic really quickly or just pure marketing where they’re just trying to capture attention. Neither of those you need voiceover for.
Simon Dell: Aside from your wife’s video which you’re not allowed to plug anymore, what’s some of the ones that you’ve seen? You’ve mentioned some case studies there. There’s some on your website, but what’s your favourite Biteable video that’s been produced by somebody else?
James MacGregor: There’s a team that looks at case studies so I’m not completely up-to-date, but the craziest one that I saw was about two years ago. Somebody sent us this link for a video someone had made and shared on Facebook. It had 23 million views, and we just looked at it and go, “That can’t be bright.”
We just kept looking at it, like, “Surely, they’ve got some link farm.” Like, people are just clicking on that, it’s got to be fake. And we ended up getting in contact with them and ran a case study on them. They were just making really inspirational videos. That really opened my eyes that if the video, even if it’s simple, if it really resonates with the audience, it can just go really crazy. I still look at it and go, “Wow, that’s so many views.” They didn’t run any ads. We’ve had nowhere near that many views on anything we’ve ever done.
Simon Dell: There’s obviously a lot more we can talk about video, but you’ve had quite a background in product marketing, all those kind of things. I think one of the other ones I wanted to ask you about was moo.com. You were there for about a year. Explain for everyone’s benefit what moo.com is out there.
James MacGregor: MOO is an online tool for making business cards. The amazing thing with MOO is the cards are better than you’re probably going to get from anyone, like a designer or a little print house, but they’re really cheap. And so, I was lucky enough to be a product manager there. MOO for Business was one of my projects, and I was already a MOO fan. I seeked to them out and wanted to work there.
What I discovered at MOO was they just put a lot of time and effort into that product, some of it insanely so. The card quality, they wouldn’t outsource the printing. They own their own print factories. They’ve written all this software that did really unique things when it cut up the cards. It’s just so much detail into a very simple product. But the outcome was it’s amazing value. It really came across in the brand. People just love MOO.
Simon Dell: Yeah, I remember whenever I see them and their communication has just been really spot-on. They do that really well, engagement with the end user.
James MacGregor: Definitely. We actually had a chat with the Head of Customer Service recently to get some tips about how do we expand our customer service team. We worked with their Head of Brand who did our rebrand last year. Definitely, very inspired by MOO. My last two big projects had been MOO, and I was with Interspire before that and helped launch BigCommerce in Europe.
Both of them were successful and really interesting. What I wanted was a startup that had the amazing brand of MOO but MOO is quite consumer, and disposable, and business-wise it’s actually a reasonably difficult business. The market opportunity of BigCommerce, which are e-commerce stores all over the world that spend millions on advertising and get amazing value out of the BigCommerce platform. It was like, “Okay, I want to do something with the feel of MOO but has a bit more value and is more business-focused.” Somehow, we landed there with Biteable.
Simon Dell: One of the other things that I’ve seen is common to yourself and MOO is the Trustpilot rating. Trustpilot is actually, and god knows how long I’ve been in marketing, but is actually something I only discovered last year. Do you find that that’s a benefit? Do people trust you more when they see that Trustpilot ranking?
James MacGregor: I don’t spend a lot of time on Trustpilot. There’s one of the team members that that’s his whole initiative. He runs it. We’ve definitely seen we get really good reviews with Trustpilot. We’re a Trustpilot subscriber. We’ve always focused on transparency, and one thing that’s Trustpilot is good is just a really easy for your actual subscribers to share their feedback about the service. We just didn’t really have a way for that. We would encourage people to tweet, or try and look for quotes in support tickets. Trustpilot’s just a way of automating that.
Simon Dell: Last three questions. The third to last question is: What are some of the other brands, and not necessarily ones that you’ve worked with, but some other brands that you really like, things that you buy frequently, things that you perhaps draw lessons from and ideas from?
James MacGregor: The two brands that I really follow is obviously moo.com and another English startup called Wonderbly which are online kids’ books which you personalize for your child, which is, again, just a mind-blowingly awesome product. Both of those too, that’s definitely on the product side of it.
Simon Dell: I think I’ve got one of these. I have a 9-week-old so I think I got one.
James MacGregor: Awesome.
Simon Dell: They’re beautiful books.
James MacGregor: Yeah. So digitally, probably those two and lots of other SaaS tools. And then the real world examples of similar things like producing really quality products on scale at amazing value, things like Uniqlo, IKEA. I’m just really interested in that model of how are they kind of bringing at least as good a quality product or often a lot higher than existed previously, but amazingly good value [INAUDIBLE 00:39:03] all around the world.
Simon Dell: Do you think there’s a shift from the consumer looking for end products that are now going to perhaps outlast them a season or at least last them longer than perhaps this H&M and Zara approach which was quick fashion, quick turnaround fashion that you buy something, it’s cheap, and then six weeks later you buy something else. I kind of wonder where the Uniqlo and IKEA are sort of stuck in that middle where they want you to have things for a long time. I wonder if there’s a shift now. Do you see that happening?
James MacGregor: I don’t follow consumer trends as much but I would assume that it’s the opposite that people have gotten really used to everything being cheap and disposable. I would like to think that there’s a wave of quality that’s coming back where people… We’ve definitely seen the last five years of people want things that are handmade, and back to that customized.
I strangely rarely buy things on the web. I love going out and shopping, just things that are a little more handmade, generally, and quality. I don’t think it’s the current trend. I think it’s kind of the opposite, but I hope people start to seek out the better versions of things and are prepared to support the producers and that it kind of reverses. I don’t know where IKEA sits in that but probably on the disposable end.
Simon Dell: Yeah, it’s in a strange position because, traditionally, a lot of people didn’t expect IKEA stuff to last. But I think now when you spend money on a piece of furniture, you expect some longevity out of that rather than it falls apart in a year’s time. Anyway, second to last question, what’s in the pipeline for Biteable in 2019? Is there anything, any new products, any new features, things that you can’t tell us about, or just keep us hooked, things that you can tell us about.
James MacGregor: For the last four years, we’ve been building out Biteable with a single product. For the last six months, we’ve been building first of our second products which is a tool that’s more focused on social media content. There are whole bunch of things more specific for social media that the current platform doesn’t cater to. This year, we’re moving to this mindset and framework of producing multiple products. We’ve always had a single product development team and just sort of always done one thing at a time.
Now, we’re breaking up and the plan is to… We already have two product development teams. We should have a third shortly, and the plan is to start building out a suite of products that do really specific, unique things, all in video marketing and just to be doing a lot more things in parallel.
Simon Dell: Interesting. Final question: If people want to ask you a question, if they want to chat, where’s the best place to find you?
James MacGregor: Just email me at firstname.lastname@example.org. I’m happy to chat at any time.
Simon Dell: You on LinkedIn, or Twitter, or anything else as well?
James MacGregor: Yeah. Ping me on Twitter or connect with me on LinkedIn, but I’m always with a zero inbox policy. So, if you email me, I will check it. I do check it every day and I do respond.
Simon Dell: Cool, awesome. Mate, thank you very much for your time today. It’s been an absolute pleasure and I recommend everybody out there listening, check out biteable.com. Thank you for your time today.
James MacGregor: Great. Nice chatting. Thanks, Simon.
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