#7 - The Hippie With A Billion Dollars

then the be story started this was now january two thousand and five it took only a couple of days to develop it and we went live and we had a million users after nine days bi be michael burns buy low and sell high has forty million global users media giant time warner is buying the social networking website be for eight hundred fifty million dollars alright i'm recording this i just finished my conversation with michael birch and for you those of you don't know michael is a internet entrepreneur he built a a social network back in a day when he he competed head to head against facebook and although facebook won the war michael did up too bad that company be who heard that before sold for eight hundred fifty million to aol and when i met michael we got back together and we bought it back for one million years later and then we actually sold that again just now to amazon so i've had an interesting history i've worked with michael for six years he was my boss then he gave me his job to run the company he's my investor and he's my friend he's a mentor i've learned a lot from him building companies to investing i mean he's invested in seventy five plus companies things of pinterest he was one of the first investors calm the meditation app he was an investor when nobody believed in calm and he's done all kinds of crazy things he's built hotels he's bought a private island off of richard branson he gives tons of money to different charities like charity water that he supports he's a very very humble guy you guys are gonna hear that you're gonna hear the humble beginnings when he quit his job as a you know programmer at an insurance company and made leap of faith to build his own company he wanted to work for himself he wasn't planning to become a billionaire he had that you know that was a great out come he really just wanted to work for himself and not have a job wanted to work on things he was interested in we talk about the years of struggle the all the different ideas he had it's almost sort of in the weeds but i think a lot of people have talked about his success with be and the big sale eight fifty million bucks very few people have heard the backstory before that about the different products that he tried to build the failures the learnings all that good stuff before he had his big breakthrough you'll also hear him i'm talking about viral marketing or viral products and for those you don't know it's a method of growth where instead of doing ads or sales or paid marketing you are relying on new users to send send the product to other users so things grow through word just from one user to the next and michael was really a pioneer of this before people were even saying viral marketing that's what he was doing because you know like you'll hear him and talk about he didn't have the money and he didn't have the sort of sales skills that wasn't that wasn't fun for him so he's really focused on building products that would grow just feel essentially word map or spreading to other users which is kinda crazy so he's a he's a real legend in in a growth for that and so i think you guys will really like this conversation i had a great time doing it enjoy audience wants to know who are we sitting down with today so just tell him a little bit about you you're michael and sure i'm michael birch i'm a forty nine year old hip i originally from a little island called england i've been living in some go seventeen years been doing internet stuff since nineteen ninety nine just start early on and then went on did to a few and obviously kind of culminated in selling be eleven years ago two thousand and eight and then same doing a lot of investing so that's a very brief pod history yeah before i even met you i moved to san francisco for you almost i was living in australia i wanted to come to the startup up mecca i was like okay if that's where all the action is i just gotta go there i don't know how much else besides that but might as well go where the action is and then figured it out from there i had never heard of you never heard of be before but i really like the ideal lab you had created and so i started doing some research and there's not many like podcast podcasts or interviews of you online do you like doing these or are you doing this as a favor to me like because there's not much out there but your story is really interesting so what's the what's the catch i don't mind doing them i just sort of question of why i often would do them i don't do really any conferences now so i don't tend to do a lot of talks you know i'm actually heads down doing startup would talk a little bit about that later again but yeah well you've done some interesting things i know you did that like a bbc documentary like what was it called like how to be a billionaire or something right yeah they didn't tell me what that we gonna call that document in their after she can't quite remember but you maybe have people call something like that but he threw the word billionaire in it yeah and i'm like oh no this like not what i wanted to do yeah i'd already filmed out at that point you know when i first looked you up i was like wow this guy sold a company for eight hundred fifty million bucks not bad like i wanna do something like that i should just go work for this guy maybe i can learn something from him so i think that there is something to that that spark or or that initial motivation even if you don't have much else to go on besides that i would agree with that did you have anything like that when you took sort of the leap of faith because if we rewind the clock right your story starts where i think nineteen ninety nine you're you're working as a programmer for insurance companies correct as boring as it gets that's pretty kind of a low point in life i think it's hard to get much better than that and how did you get there well how did you even get into position so originally i did a degree in physics in imperial college in london which i found quite a few people in silicon in valley seem to do physics for some reason but yeah i had no interest in doing physics like it's one of those subjects that unless you're are the top like point zero zero one percent it's probably not that interesting you're doing boring experiments or something and i definitely wasn't in that top even one percent but i got a good degree and then i left college at the time that was kind of a mini recession in the uk so the job market was hard and my brother was working as a programmer and an insurance company and he said why don't you come do this you'll love it and i like paul that's he's fucking programming i had a fucking insurance company it doesn't get more boring right it's like one boring thing on top another boy another boring yeah it's like exponentially boring and he's said no no trust me you'll like it and was like well it's not like i have a lot of other offers so i'll go again do the interview and they had i a graduate intake scheme where they employed ten people at a time and they trained you on the job i i was like okay so i actually wasn't one of the top ten but one of the people didn't accept the job so i was number eleven when i was like the backup guy nice and i got the job and and then i learned her programming cobalt which is like pretty old school right mainframe it's the insurance company of programming language which is yeah and a little bit to my surprise as you really enjoyed it i didn't particularly enjoy insurance i was fairly correct on that one but the programming side i got into it so i didn't love cobalt but i did like a six week training course and then immediately picked up a book and learn another language and started programming in that instead so and i joined a data warehousing team so it was analyzing data and i got became friends with the chief at the company and then started doing all this stuff with him and and kind of enjoyed it actually got into it so then found myself a program insurance company some enjoying work right and so that sounds all good why why switch why i leave well my father has always been an entrepreneur what did he do he was a bottle so the degree bot worked for a company the uk or pb sort of rose to like number two in the company but would never get the top job because the guy was not leaving right was very still alive i think he may still be alive no you wrote i think he wrote the world's best bestselling paper back non fiction paper back books like gardening expert books he was a hard guy to be place he did that for a number of years and then left and started doing his own ins solve but was always like coming up with new ideas and inventing ideas and he did one as a new type of dental floss that was made out for a special type of rubber so as you stretch the barber would get thinner and theater and go through very tight teeth and things like that and so we took a a few products to market he never found that like one big thing that you never found like the retirement and money so he always continued working doing the alcohol sold and running and he was working from home and my bedroom was next to his office and there was like an interconnected door that was kind of didn't open but i could kinda hear everything so i'd always listen to him on the phone like coming up with the next idea and speak to someone and and how she found it quite intimidating but at the same time i kinda loved it yeah like i wanted to be able to do that and so you know i went through a fairly normal childhood very middle class suburban family again a little bit dull you so defines my early life for the way had a great childhood and went to university and then got his job and and then i realized that it's very hard to be entrepreneurs an entrepreneurial in insurance for sure i mean not that you can't do it but it's not exactly the world of entrepreneurs right than right dime dozen whereas computers were clearly evolving and becoming more and more relevant and the internet was like in its early days and not when i it wasn't really around in any meaningful way when i started but then as i kinda went on it was becoming a real thing and i i thought well this is it this is my chance to kinda of do what my dad did and be an entrepreneur and i don't didn't even have to phone anyone up i can just like learn a different language and start programming and build a website and so was there like a specific day you remember that you're like okay this is my last day of doing this i'm gonna take the leap yeah pretty much there was a guy i was working i left insurance a little bit work for mother care which is a retail chain in the uk doing data analysis and there was a guy there building internet stuff and he was starting to show me html and was like oh this is cool yeah a good stuff yeah so i started like reading some books and and doing a bit of a development and then my wife so got pregnant with our first child it was born obviously nine months later isabella and it was a maternity leave time and she was gonna like leave her job and i was like that's not fair or i should get to see at home and so i pretty much handed in my notice like at the same time that so you went the opposite way as most people most people are like oh i'm having my first child i need security yeah i need to provide you're like no i wanna be at home on i wasn't lost on it yeah or her i fail yeah i'm sure she loved that yeah i mean we were we're both from kind of these stable middle class families and we knew that it may not go well and we may run out of money but we also knew we weren't gonna be homeless right and we knew worst case scenario i mean we talked about it worst case scenario we go and live with one of our parents apply for another job we'll get another job we're young and we'll start working again and go back to our kind of former life but it sounds silly we didn't feel we had anything to lose by doing this so was it like a negotiation like alright give me give me x amount of time i'm i'm gonna see if i can make something work yeah i'd said three months not three months that's it i recommend not saying that so you you asked for three months how long did it actually take i took three years and so you just a rolling thing being like i'm just three more months away or what happened pretty much yeah you know it's like waiting for bus you're like you know with three months in it's obviously gonna happen soon and so the goal like when we left it wasn't even to make our first million like when i left to do my entire one hundred percent goal was to earn as much money doing my own thing as i was earning working for someone else gotcha so that was no what's the target for time well we would freelance we were both working between us we were making about three hundred thousand dollars a year which is great yeah back in ninety nine i mean it was really good money so it wasn't like super easy to get to that level but also felt that that must be achievable so that was a goal and and then if i could get there i felt i'd actually be happy just doing that the rest of my life right but then there'd always be that opportunity that maybe you go to the next level be on that right yep and so you were like okay if i can make as much money as making my job but doing my own thing i'll be happy and did you have an idea already or it was like first day at home okay time to think of ideas i had some idea so the first idea that we started on and i did it with a a friend of mine to begin with the very first idea and it was called interview test no that's you some startups recently doing this okay and the idea was if someone was applying for job they a technical job programming job you wanna know how good they are technically right so you'd send them a link with a timer and they would answer questions and do some exercises and you'd find out how good they were at some programming languages i literally had someone pitch pitching me this idea yesterday he's like you know we need a screener we need a a practical test the are i can't remember there's some startups now doing that but this was twenty years ago and i think probably a little too ahead of its time and we pretty much developed it and neville went live with it came up with another idea we pivoted okay so you didn't even ship it you were like yeah you got excited by something else yeah basically and so the other idea we we knew that was a hard one market like it would be a s so the other idea was purely viable and it was called lemon link and it was a self updating address book so similar to kind of plateau type thing but not software purely web based so we developed that did go live with it and got i think by the time we closed it down a total of about two thousand registered members okay not the most far website ever at the time were you like hey two thousand not bad or were you like this is snow that's pretty bad okay i mean that the is funny looking back in the night like nineties early two thousand like a million was the holy you know your the first million users rather than the first million dollars was kind of if you could get to a million users you were like you'd made it right internet land yeah i mean the so that's that's why i picked million for this podcast because i remember when i was young all my hypothetical like would you cut off your arm for a million dollars because i thought well a million dollars that's like infinite dollars that's all the dollars right and when you're kid it when i was a kid it was was right and and i and i and i think for many people still today they're like shit five a million dollars i wouldn't have any problems type of thing and so i think million is just this that you know like this sort of fantastical number that exists in people's brain million users million dollars i know now it's sort of creeping into you know tens of millions or a billion as the new billions yeah i need to add of common nowadays yeah know but i'm i'm still in the million okay so so you wanted lemon to work it's not working right and you're just at home but how are you feeling at this time you're you're in a bedroom you're working on this you know you guys have isabella you have your baby yeah what's life like at this time during during this period it was i'm a little bit stressful because we didn't have like financial security but at the same time i was enjoying it i was enjoying the learning process and you know i felt i was creating things it felt like a very creative process and yeah our daughter was born sort of during the period of the early startup days and so we entered parenthood herd and then came up with another pivot okay but you start up really normally pivot and that was babysitting cycle ladies and gentlemen if you want to make either that first million you've got to delegate responsibilities our sponsor monday dot com is back to help you reach your goals with a weekly dose of the monday dot com motivation if you're a major multitask if you're trying to do every task every time you will slow down the productivity train you wanna determine who on your team is best suited for each task and assign them visit monday dot com slash pod slash million and you get ten percent off to see how their color coded platform helps you assign tasks increase your workflow manage workloads and get one step closer getting that money monday dot com that's who we use to organize things for the podcast highly recommend checking it out basically parents babysit for other people's children in a circle mh and so you kind of exchange credits within the circle sometimes people use tokens and so we kind of took that online and created a digital thing where you could find a local babysitting circle and and hopefully join one and do didn't really work and what was going wrong is this execution is this in european opinion right nobody knows but is it you weren't doing a good job or was it the market wasn't there yeah i without going again i now we'd moved away from the viable thing we thought it would be somewhat volatile because parents will no other local parents and they would tell them about it and asked them to join right but it wasn't like like ever gonna be exponentially vile i don't know i i think every we'd start up every like new website we launched i felt oh i know so much now that i didn't know before but you never know what you don't know right and then the next one i'd be like oh my got the last one i don't know have a clue what i was doing yeah now i think i've really worked it out and of course each time i was wrong eventually became true yeah it just went from one to the next and this all happened relatively quickly it wasn't like i was spending one to two years on each you know i'll spending maybe six months yeah and then moving on to another complete and what were the big things i mean i don't know even know if you can remember now but were the big kinda like realizations what were those big learnings where you looked back here like oh shit i didn't know this or i didn't understand this before but now i know i'm part of it is just becoming technically about us so i was becoming a lot faster and able to build more stable websites and this is back in the day when there wasn't any kind of cloud hosting so you know you're racking servers and right doing the whole shi shebang on my own so there was definitely a technical learning but i think the the thing that i should have like insisted on and not done anything other than was focused on file because the the problem that we always hit upon was i never tried to raise any real money from anyone that would allow us to like have a real marketing budget and so i was coming up with these ideas that then needed marketing and marketing was not my four day like i'm not a sales marketing guy mh and so i started creating products but then i unable to convince people to use them right and didn't have the budget even if i knew how to spend that money really wisely i just wasn't gonna be very good at that so i do a little bit of google adwords words and like that was sophisticated for me right so had i focus on va i could have you know only becomes a technical challenge right but then you got focus on products that are inherently vol so i kind of eventually worked out if found your sweet spot real yeah like you did one other website that was another you know pay to get customers because you write your will online it's called friendly wheels okay great name yeah the un unfriendly world's website never go anywhere it sounds like it would be a good bar or too you know this is friendly wheels we wheels the bartender can make great drinks yeah so that one didn't work either and then eventually we hit on an idea did you lose confidence at all during this time because most people would you know i don't know if you just don't have that gene i'm too arrogant use confident i mean a a little des at times you know i think my friends were like why don't you go to get a job the friends start having like semi interventions yeah i mean the reality was i was enjoying doing this so much more than i ever was like my last job was like just a hell of a miserable job and i just hated it and this was just this was fun i was sitting at home i was very self disciplined and i was working from a spare bedroom but i would get up early in the morning and then take like a twenty minute lunch break and then work through to kind of early evening hours and just love every moment of it yeah doing it it was like creating something learning building that didn't have the financial so that's we mortgage out flat twice so it went up in value by about work three and so we took money out twice and basically lived off that okay alright so looking no stranger to risk yeah and and so you i liked to i like the way you're thinking about that because i've worked on projects in both fronts i've worked on projects where i'm like this will be great if it works and when it doesn't work which it's most likely not gonna work then i'm bummed out and i'm like fuck that was a waste you know but then you know yeah there's learnings but like i wasn't if i wasn't enjoying doing it a it's hard to just wake up and do it every day but b then success is kinda dependent on it working out right and now i've basically made it a mandatory thing where i'm only gonna do projects where i enjoy doing them so at the very least i have a good time yeah and i would always prioritize enjoying work over any financial i mean obviously you do need to do something where you can afford to live yes i i certainly spend a huge portion of my life working so if i don't enjoy doing the thing that i spend more time doing than anything else what am i doing it for so some later happiness yeah i you're always optimizing for the future but never the present right so and that's become one thing that and it's not always obvious because you're it's so easy to be like planning like it was it john lennon and made the quote famous like life is what happens whilst you're busy making other plans right and as you think it's such a such a true quote that it's so easy to say what once i've done this and then that and then that then everything's gonna be great right and then i'll be happy and of course yeah and the moment of arrival is is very finite the journey is really long so don't like optimized for that one moment where you're like oh i'm statically happy because that worked yeah and then like well then what what do you do next right something after that you know you finally stumble into you know that first thing that starts to work right describe what that is and how you even stumbled into it so the website was called birth bay alarm when we did one of our early websites lemon link one of the options on that was you could enter a birthday right and no one ever said anything nice about lemon link of the two thousand members no whatever said oh thanks for creating this is awesome the only thing people will ever commented and i think it was my cousin kind of commented from new zealand emailed me and and i think we used to send out like a reminder to say it was someone's birthday i just i think he might have got a reminder saying it's my birthday and he said oh that's really cool because you know i didn't actually know your birthday and then he sort of sent me a nice email or an ec car i got bought nice and i thought oh okay that's cool so i just it just kinda stuck in my head though that was cool then and then we thought why don't we just why don't we try just see if we can now we were thinking viral or viral like can we do a a website and all it does is just remind people of birthdays like that's it mh super simple simpler than lemon link by filing many ways and we knew it we're we thought it could be inherently on vial because the reality is if you think about whose birthday do you really know by heart you know you're like children's your parents and siblings you probably don't know your cousins you may know one or two best friends but that's it yeah the vast majority of people you know in life you don't know their birthdays this is obviously before facebook yes now you know far too many people's birthday but you don't care about so you have to in order to use it you send an email and ask all of your friends to enter their birthday because you don't know it a fair request not having your friends just saying hey what's your birthday i wanna keep track of it i wanna remember and this was back in the day when there weren't a lot of email requests from websites like viral things weren't there weren't a lot of inherently eval websites well people even really trying to do it for some reason and so you've got this fair request saying hey i'd like to know your birthday and be reminded each year can you enter it here the response rate to that email was very good and then the next question was would you like to be reminded of your friend's birthday the one that just asked you mh so a lot of people would say yes well to be reminded you need an account so you create an account do you wanna be reminded of lots of other friend's birthdays you only one off the calendar there let's get everything else and so then you take them through the email flow and at the time we did copy and paste a link so we had kind of a little issue should cc see everywhere but add like a very short email so it was more than a link it was like a pre canned email in my text it i don't even need to think of what to say yeah and just a one line hey i'd like to remind of your birthday can you click on this link and entry for yeah and so people would copy that into their address book and send it and it didn't work immediately day one where we did some tweaks and then it we i remember getting up one morning and this is probably the most excited i've ever been during the entire like career career yeah like more excited probably than any highlight of be even and so you know i got up one morning we've done this little tweak do you remember what the tweet was or it was even around copy and paste because i think originally we had people entering like enter all your friend's emails right team yeah and then we're like why don't we just do a text here i think it's my brother's idea actually you whenever we just do this text area box saying and let them copy and use their own email client rather they're not sending and getting blocked because our mouse servers not listed right and so we got out the next one let's see how it did and we went in and it we had reports written so we could see how well things were doing but because we had so few users the one we bought we had was a list of names of those who were joined and the time stamp which they joined right because you know we'd get a few people a day yeah so you're like hey margaret who's was joined great and so we got up in the morning and then we click run on the report it pulled up and was i like oh jeez jesus let's look at that and all all these names were listed but they were like you know within a minute there were a few each minute and i like oh my god so then had to write another report to actually count how many users there were i think overnight we'd we'd got a good few hundred users and even then it was kind of ramping up and so we we sort of jumped up down and a little dance in the office come bedroom and kinda celebrate it that's like we've done it we've done it that's it you know free hundred users it's not gonna be great where then we thought you know this is ramping up we could get bigger and bigger so we carried on working on it and we got it to the point through the copy and paste mechanism where we're getting ten thousand users per day wow which again back in well this was now two thousand that was a lot of users and so you're you this like a sort of match beans stock it's like you know you just wake up and you get users for free yeah every day yeah i know it's great it's not and so and and and at this time there's no business model no so you about that but you're like i'm over the moon anyways because people are actually using the thing i built yeah i i was still living with this this number of a million users in my head yeah right so if you're getting ten thousand a day we need a hundred days and we get to get to that million right so we just have to wait a few months and not screw it up yeah and we'll get there and so what what happens from there what we still weren't making any money but we were in england at the time and we moved to the us april twenty second of two thousand and two so we've been doing alarm for a while then and we had accumulated a few million users and we were doing we were just doing through i think it was tribal fusion and ad network we were just putting ads on the pages but it's not the sort of website where you come back to every day yeah so we were sending a significant number of reminders and we've started doing some greeting cards we thought what's one thing you're gonna do if you know it's someone's birthday you wanna wish some happy birthday so send them a card so was thought we'll combine we'll use the viral mechanics of birthday remind us to grow and we'll use the greeting cards to one day monetize right in a more meaningful way than we could for ads and so from the ads at that point we were doing ten thousand dollars a month in revenue and that was you know to pay for our living costs the server costs you know all the business costs and everything so we were living on sort of in a very conservative manner and we were just about baking even on ten thousand a month so we haven't reached a point where we were used to earn mh but we'd reached a point of kind of financial independence as it were right but not living as well as we used to as still felt like a win it felt like a win it felt like in a a meaningful milestone yeah and so we moved to the us i literally we had two servers i and you moved because for work reasons or just life reasons you so from the space so family yeah we always agreed with move between countries we both wondered to experience living in each other's country yeah and so the time would come we're like well there's no reason that we can't move and you thought you know silicon valley maybe not the worst place to do a website so and were you talking to other entrepreneurs internet people at this time were you learning from them were you nope getting nobody knew about earth at alarm i was getting pressed nobody's i thought i'd proven nothing i was not worthy of meeting other people that did internet stuff okay so was literally myself and so she was was also a program and i got a job at that same insurance company so she was helping me on some of the programming as well so the both both of us were doing programming in the early days and she was doing it between children we had another child born in the uk before we moved but yeah we just made switch so i packed one of our two servers in a suitcase i've checked it in flew it to san francisco went and acted who needs the cloud yeah i don't hack server check it in in a c i think we were down synchronize the database i think we were down for like two minutes well so like flipped right over from from the uk the us hosting probably violated all sorts of data right thousands of burning days lost yeah anyway we we made that jump and and now we were in silicon valley is still not meeting anyone who worked in the internet space and so where did things start to turn where you go from sort of the ten thousand a month to i believe you got to like ten thousand a day what was that jump how how did you sort of ramp it up because birth alarm the user base grew from you know zero to i don't know where is that now it's a fifty million more i mean that i think we still actually own birthday long and i think since this inception it's probably registered about two hundred million users but over a very long period now right twenty years pretty much yeah yeah we're coming up for our twenty so it's a long time and obviously a lot of those are are active we still haven't made the million so we haven't got that part yeah know we can end the podcast when together there we we were doing it we were still making ten thousand in a month we were living in walnut creek and east bay rented in an office like a tiny office where we did both just about fit two desks we're sharing it with two lawyers well a bigger office with two lawyers and accountant one of the lawyers shouted on the phone a lot which was always entertaining he was a litigation lawyer and so we were there still not meeting anyone and then friend of mine emailed me a link guy called morgan saudi still a good friend today emailed me a link of friends and said check this out and sorry i clicked on the link i was i oh my god that's amazing this is really really cool and was just kind of immediately ent by it so thought okay so like two minutes later i was like copying the birthday alarm code base yeah we're doing this now yeah changed name and starred you know it was amazing ninety percent of the code like i used some birthday alarm because we had all this like back end systems and so on as customer support and so on so i started developing this new website and my friend so i did that with my friend morgan who sent me the link and my brother was also part of that and he he owned a domain name called ringo ringo dot com which he'd bought just because he could for fifteen hundred dollars who saw it available and he said why don't we use this name for it and so i think about two weeks later we launched ringo dot com as a direct competitor friends it was an early early social network and kind of applied everything we'd learned on viral marketing to that point mh and i think within you know by the time we sold it we had about four hundred thousand users but we started selling it three months after launching a day that he sent me that link oh okay from the day you heard of heard i heard of it we were selling our business and it was definitely a mistake who sold it we shouldn't have sold it i still i didn't i still only making ten thousand a month this was now incurring way bigger cost because this thing was far more intense and computing power than the previous one because people were spending all day on it so we have four hundred thousand users but a lot of them were active and so i spent six thousand dollars on a new database server which was like a lot of yeah cash to saver i racked it and we out it like the next week that's like fuck i can't do this and of there should have gotten and raise money right that wasn't even a consideration didn't even didn't really think about it yeah i didn't even speak to a vc didn't pick up the phone right and then i went to my we went so and i went to our first ever like internet networking found that we'd ever been to and the founder of of of fans that jonathan abrams was there mh on a panel talking about social networking of course and we were at this event and was just listening and then we spoke to a couple of people and said oh we're doing this thing wing and then two people that night said we wanna buy ringo okay yeah so one was eye village and the other was a company tickle yep not wasn't like a formal off over it's like we'd love to talk you about this yeah so i had some follow meetings with them ended up meeting the the founders as it tickle and ended up selling it to them and it took about three months to close the sale so it took as long to close the sale as it did start to come to build the entire business yeah you can call it a business and we were making a tiny bit of money from advertising but not and how did you you guys negotiate the price did you just have a hammer in mind and or did they make an offer they made an offer yeah it was mostly stock with some cash so i think we sold it for very little again still haven't got to the million dollar it right we sold it i think in in consideration of the time i think was around seven hundred thousand holders okay at the time to give some perspective so friends had just reached that holy grail of a million users and we were four hundred thousand mh so we were the second biggest social network in world with four hundred thousand users right and friends had been valued at i think fifty million and we sold it for like peanuts really right yeah so i totally have gone raise money yeah and we got some help on scaling in some money but we sold it it ended up the tickle then sold later so ended up being worth two million dollars because the tickle stock was went up in value and this whole time broke that i'm still kicking off money yeah and so i went to work as part of the condition of the sale i had to work with them for a while i can't remember three or six months that i would work for tickle but i kept birthday alarm they didn't buy birthday long and and whilst i was at tickle now at i've for suddenly i was now meeting other engineers mh other people other entrepreneurs right and they were doing something which no one else was doing which was doing the address book importing scraping so there was no apis for like hotmail in yahoo gmail was around them but very small so the two big ones were hotmail yahoo right instead of copy paste this and send the email on your own you say connect to hotmail yeah and it says import your address here's all your email contacts push send yeah and so they were doing a tickle did a they were called mode and we renamed as tickle at the time that they bought us but they were doing these online quizzes and so they had a famous one which was like you what type of dog are you that went super vile tens of millions of users what type of dog are you i can't remember i don't believe in that crack they were doing this thing and it wasn't the funny thing was it wasn't really working for them like they put it live and it didn't really move the needle for them and i don't really know why but i thought it was very clever and i hadn't seen anyone else doing it so i think they were the first people to do it so i went home one weekend because i'm still working for them and i was like i'm gonna put that live on i'm it on so i work the weekend put it live sunday night and then looked at the data like twenty four hours later and we'd added a hundred thousand new members so we were still having ten thousand a day and then twenty four hours later we just added a hundred thousand members and y'all i was sort of ecstatic and i thought this is amazing but then i also thought they're obviously gonna cut me off because it's not i don't think they had anything in the terms of he's against it but like all they had to do is block my ip address because it's all coming from one server and i'm not gonna be able to do it all they gonna send me a cease desist right and so i i was went live with hotmail and yahoo and then it just carried on working and so the next day we added a hundred and fifty thousand i think it peaked at just under two hundred thousand but it stayed there stayed at a hundred and fifty thousand for an entire year didn't drop every day you're like today the day yeah and i they're gonna catch saying and then if and now and then it would actually not working because they changed their code right so we're not doing it through an api so i'd have to like log in and look at their html out how to delineate the different contacts and and was like oh now fix it so i probably it like a dozen times where it broke because they changed something but every time i my heart was syncing they love me yeah i know there they haven't they just changed something and so that was that was definitely like the turning point where we knew would be successful and then during that period i was working at tik i went live we've done greeting cards on the website and i was like we need to start charging for greeting cards so we added a subscription was thirty ninety five for an annual subscription all you can send greeting cards and so we went live without whilst i think we're still working at tik and then this was everything always a very round number in zeros for us for some reason but the the first day we made ten thousand dollars so we went from ten thousand dollars a month to ten thousand dollars a day so financially this was by far the biggest transformation in our lives yeah and so we never really did reach the point of what the money we used to make in jobs wheeler went way over way over it in one guy yeah that's how things tend to go right it's like yeah things go from sort of nothing nothing nothing nothing but to you overs shoot because you've been investing in something that had more potential yeah and so that first year we made just shy of four million dollars like the first twelve months are charging and our expenses were the same it'll still myself and soc in this little office our c cost were the same right so we were still living pretty much on ten thousand a month but we were making ten thousand a day and that's when we we moved to san francisco that we can actually help for san francisco so we moved into the city yeah i mean we it we just carried on building birthday alarm for a while and then wanted to go back to social networking so we had a non compete when we sold the original social network we waited for that to expire and in fact before it even had expired we did another website which was going back to our first viral idea of lemon link and doing that again and we called it be and it was a self updating address book and i was like i'm gonna see if everything i've learned since we the very the same idea yeah but now better but do it properly and so we applied all of the viral techniques again it was like you know birthday alarm save as rename yeah rename all the viral mechanics the scraping all of that code all still valid super simple thing of was just like instead of entering your birthday enter your contact details i i love how you had two constraints one was you basically between you and zoe you were the only programming talent you had you kinda just chose ideas that were somewhat similar it's like okay if i can reuse eighty percent of what i already built great then i don't have to have you know weeks and weeks of engineering just to get something live right and then two was why don't i have money nor do i really have a sort of sales and marketing background that's not what i enjoy so i'm gonna make products that are designed to be viral where using the product invites more people to the product yeah and those two constraints i feel like major career whether consciously chose them or or not the i mean those two things because if if you had had a whole bunch more resources is maybe you would have chosen other projects that weren't quite as you high potential and so i think that it's amazing how within those two constraints you found projects like alarm ringo be that all were able to hit right yeah it's kinda incredible the viral thing was we didn't hit on it in the very beginning but it became apparent when we tried and failed a marketing right and that's does certainly stopped true for a long time that we just focus on viral stuff so that then the be story started this was now january two thousand and five we took only a couple of days to develop it because it was pretty much the same website and we went live and we had a million users after nine days of going live okay it was the most viral website we'd ever done by far the the viral coefficient the k factor or whatever you wanna call it was three point five for reference if it's over one you've like one is far one is viral one is you're gonna win yeah three point five is like you're taking steroids so every person joined would get three and a half other people to you own an average and so if i think on the ninth day we added three hundred and fifty thousand new members on one day and bizarre a hundred thousand of those three hundred and fifty thousand were from singapore so i had to look up on the map i looked up the population i like jesus we just like in one day got a meaningful percentage of the entire population of one country to join right yeah which was just bizarre but as at the same time it was the most website we'd never done by far it was also the least sticky so i think two people came back one of them was me and then one other guidance one ar again so she was back yeah so yeah i just didn't you know was it was i kind of validated the original viral concept but as i say even when i started doing this i remember speaking to soc about and saying you know no one one's gonna use it like it's kind of an interesting academic exercise but like self updating address books don't work yeah i think they could work if apple did it and build it into the iphone or if google did it but they don't work as like a standalone alone thing because you end up getting ten percent of your friends entering their address book at their contact details but then they don't continue using it because who uses an address with any ten percent of your contacts right and because they're not using it they don't update it so we ended up sort of calling it the non self updating self updating address so you realize that's not gonna work but you're like let's go back to that social networking thing that sounds way more fun yeah i mean it was kind of filling in a gap waiting for the an not computer to expire okay so then we started adding photos to it so we thought well you you know gonna visit and look up someone's one's address every day but if people started sharing photos so flick was a big hit around that time before that so why don't we use the viral vitality of the contacts that make it also a photo sharing website which then people may do frequently and then obviously photos sharing becomes a big part of social networking mh and so then that started working a little more started getting some we be use some decent photos and then we just i spent actually six months with the longest time i've ever spent developing like a product spent six months actually developing the social network we launched with a very simple social ocean network work spent six months actually making it a social working site as opposed to social not working yeah it took six months first to go from like no engagement to really high engagement and so paint a picture in people's his minds so be at this time is it like what we see kind of roughly with facebook today or myspace for those remember that or was there some core difference if you think of early friends who an even early facebook it was kind of about profiles and it was about posting on other people's pages and but you had post in like different widgets or different boxes so you'd there'd be like a comment section or you could you know take we we had quizzes you could take so you'd sort of engage on someone's page there wasn't the concept of a news feed so facebook at the time didn't have the news feed concept early be days what we did do was we did basically we did a news feed but as an email so we'd send a daily email we called it the changes email because you know he doesn't likes thing and so we'd send a daily email we'd all that so that was a way of kind of pulling people back so they could see everything that had happened but i don't why we didn't make that like dynamic i think we just thought that would be really hard to do because it was hard work creating this email in batch and working out all the differences but we should have sat down and worked out how to do the actual news feed yeah but yeah it wasn't dissimilar and what was the you know i'm mean you've been asked this a million times but why did facebook win because you had a great sale but be the product didn't necessarily like sort of become the d factor social networking sites i think there's a few reasons we we started a year so when we did our original so at ring we were probably six months before facebook went live so we were definitely very early when we launched be we were a year after facebook so we were always in catch up mode they had considerably more funding we raised we did one round and raised fifteen million dollars they had considerably more funding they were probably ten times the engineers we were always in catch it's not like we had the lead and then they over took us but i do think they made some decisions that we didn't make early on which kind of paid dividends they even insisted on real identities and we didn't we were more sort of we were trying to be the kind of self expression of my myspace but with the kind of product quality of facebook and engineering of facebook that's where we were trying to kind of position it mh and with all that the middle ground would be the winning ground right but it everyone to started entering silly names and then they'd for names which had like hearts in it and like and then it was just all symbols for their name and so you try to find a friend like a you couldn't remember what ridiculous combination of characters each friend had chosen to use for themselves and then you couldn't search because i can't type heart in the search part not very easily anyway and so i think that that was one thing we we took off with a teenage demographic early on i i designed it for me and then realized obviously of the mentality of a teenager because that's who was resonating with and it would i think it was hard then for the older demographic because it got it got branded as a teenage website mh so it was hugely popular with a teenager like any like every single teenager almost bar numbers in the uk and ireland in new zealand we're using it so i kind of call it playground ground vol because fifty percent of our new users were actually just typing be dot com in the and signing up right they heard a they heard about it on the plate they heard about it it was true word mouth marketing and so it was very popular but then we just we hit this ceiling and then we we grew in those other countries we twenty percent of our page views us base sixty percent were uk us so us based sixty percent with uk based and i think about twenty percent well fifteen percent were in ireland we had these great markets that were english language and therefore easier to monetize and we didn't have to do in the multilingual thing we did later on but we didn't need to in the early days and but we just couldn't in the end facebook they kind of didn't care about other markets to be in it they were very us centric so they kind of left a little window open so we launched and cared about be in the uk i think they were just starting to do uk schools and colleges and so we just took off there in without the the sort of threat and competitiveness of facebook but then eventually they started gaining traction right and we could tell because they're talk people are talking about facebook on bieber so we we could search and see and people are like posting on their profile don't use it anymore on facebook here's a link right and i'm like oh shit so you how how did you come to the sort of realization or it's time it's time to sell because i i don't think from the outside people could see necessarily that it was was it clear for everybody or was it was it more because you were in the middle of it you sort of knew before other people that's it's time to sell well we i mean we had obviously we knew our own data so we we've been growing for the first three years of we've just been growing every month like exponentially like every month was a new record in every measure and it was very exciting to be doing that so we sort of we'd sell away and have a champagne toast whenever we hit a certain milestone but then we found we're doing it like every one or two days so and then it it tailed off it started didn't always grow at that rate and then for the six months prior to and in closing the sale we didn't grow we didn't shrink but we didn't grow right and you know you could tell publicly on something like alexa that we were kind of flat and whereas pride would been hockey sticking and i was trying to get it far like when i hadn't really spent any time on growth for a very long time because i didn't need to because he just kept growing but then i was starting and like how do we get it growing again and it was evident that you like as much as we could get someone to come in through the front door someone else was leaving out the backdoor door mh to go typically to facebook and so it was just evident that this is really hard to do this it's certainly hard to do it alone and so we we ended up joanna shields who was the company present at the time i think did a presentation she was invited to present to the time warner aboard about social networking and so she kinda shared her vision of of the social networking landscape and what was happening at be and then they were interested so it kind of stemmed from that then we appointed allan and c the bank we ran a process so we spoke to other people other companies to see try and get the highest bidder but it ended up going back to aol mh there's been a a a sort of question mark okay it's old for this much is that just a matter of market timing like you know can't buy facebook my myspace already got bought be sort of the you know you're sort of the last girl on the dance floor if somebody wants if somebody wants to have a social network you know you're gonna have to pay a premium or what really caused how did it get to that number how did it get to eight hundred fifty million it's a good question that's not there's no right real formula for valuing we i think we were doing last year we did twenty million dollars in revenue i believe so as a more of revenue it wasn't gonna work mh and it was all about the potential of what it could be i mean you're right in your analysis that we we were kind of the only one you could buy in many ways like we were basically we were the third place like we're were in the medals but only just there were other ones like tagged and high five that were not dissimilar may have even had more page views but they were far more dominant in markets non english language harder to monetize markets right so facebook at the time who raised they're done round with microsoft everyone failed us over valued but they valued at fifteen billion mh so you know they set the benchmark yeah and we we were shooting for a billion that was kind of the holy grail because you know i like my zeros on the end yeah yeah it's gotta be a round number and we didn't quite get there but that was the kind of the negotiation and it's like look it's a really good discount versus facebook right and i mean the hope aol was they aim was aol instant messenger was still a big deal like they had i think a hundred million users on at the time like it was one of the big ims so that the the vision that they had was merge aim and be and then one plus one equals three yeah that was the hope yeah but of course people already had their social network so they didn't want other thing forced on so the reality wasn't in entirely flawed as an idea but the reality was he didn't really turn out that way yeah i see what's it like waking up that day when it finally closes and you you hit refresh on your bank account and you know you see you know seven hundred million dollars there like what what was that like was it what was the emotion like and you you surprised me with your answer i can't wanna said to you out there like well it's just like i mean even now like just thinking back what was that light it wasn't even a single movement of like hell we've done it there was kind of this relief that would go through what is quite a stressful process as health cycle mh like which goes on for i think around six months in our case we also unemployed the day of closing we were the only own searching and i with the only two people not offered a job by aol right and so we were like okay what do we do because we've been enjoying work maybe not the sales cycle so much but generally we really enjoyed the be journey the day it closed i think we went to get some money out and saw the bank balance and it was like that's cool that was kinda of funny yeah i i just had james song from hot or nod on and he said yeah he used to go to the atm and just print the receipt like don't take don't take any money i'll just be like show my balance just like yeah got a million bucks in there he's was like i used to just love that that moment we should have printed in kept it we didn't and we obviously transferred it out the the single bank come account quite quickly i think we got a little bit of money out and then went to watch a a film forgetting so marshall good movie good movie we've got the mad ticket which is a little cheaper in the evening so i always to save money always always thinking about that and it was the most fun thing for us to do because we hadn't been to watch a film without our kids for a very very long time like bobby some years right and so we could go and watch a raided our movie just the two of us without the kids and and it was really enjoyable he's enjoy doing that okay so that was the first thing you did yeah okay great and you used to work really freaking hard this is what lucinda tells me she's like because i've only known you sort of after that be me and so i always thought man michael's really laid back guy he don't do it work yeah he don't doesn't do a lot of work he likes to do a lot of things well rounded life he like to travel you spent time with the family you spend time with friends and she was like no that's not what michael was like back in the bib days like michael used to like not go home michael was like you know upset is that like fair is that a good characterization yeah i certainly worked actually started doing that again recently which is kinda funny for the first time since selling be but yeah i would work i i don't i i think the other people to have work longer hours i'd probably do seventy to eighty hours a week but i'd also never really stop thinking about it gotta go out in the evening i'll i have dinner with someone i'd be talking about it i'd socialize pretty much only with company people mh and so you're always talking about it you're always thinking you're always brainstorming i carried on coding to the very end i think i was still spending fifty percent of my time writing code all the way through to the end mh i remember proudly checking in code on my last day like i'm gonna another check right probably both the entire thing and i enjoyed that that coding parallel that my favorite part of it was being in the engineering team and so we had an open plan office and i sat you know basically in the middle of all the engineers and you know engineering product that was kind of my passion in building the business right you know when this podcast comes out there's gonna be people out there who listen and they say man michael seems like a great guy love your story and they're gonna wanna reach out to you and all that stuff and i always give guests you know an option one a you can you can shout out a twitter or some way that people can reach you if you want to be reached so that's one option for you and then the second thing is i ask what type of people do you want reaching out because obviously no fun whenever everybody just goes and asks you for something so hey hey hey invest in my company or that sort of thing some people who are full time investors love that they're like hey send me all your projects i wanna i want deal flow yeah is there a type of person that you like being reached out to by that you actually enjoy when they when they reach out to you and new yeah really talented engineers okay who wanna come and work with me okay and and what much the only person right now that and why why would have really talented engineer want to come work with you they have many options at the table what's what's the pitch for that well we're working on i'm sort of getting the band back together employing some of the former of best be engineers and close friends that i've worked with technically clean in the past so we're doing hospitality software we opened a private members club in san francisco called the battery five years ago it's kind of the biggest project i've undertaken since selling bieber that was time consuming and we realized a host hospitality software socks so started writing our own software so we i started doing that six years ago and i wrote the code myself to begin with prior opening and a little bit after and then got a cofounder and sort of t along for a few years and then this year decided that we're really gonna go for it and build this out and sell it to other private clubs and hotels and and so it's just just trying to build a super engineering product centric business that's doing a very very ambitious project because we're writing all the software like not just things like point of sales and dining reservations with membership and events and finance systems and you know it's a little bit ridiculous the scope of what we've taken on but the problem with hospitality software most businesses use like five six seven pieces of software and they try to integrate them and they don't really work right so the only solution is one system i think it's the the only way to do amazing things because once you have once you own the entire c stack the entire c base you can implement features which are then cross systems and so you get these kind of magic moments as we call them internally where there's kind of the aha moment like how hell did that happen what's an example of one of those so the point of sale system would be integrated with the membership database and knows when people have checked in at the front door we have a we're developing an app for members which is a community centric but then it allows once we've installed the app to know through a beacon around the club where they are so we know where members are no no kind of s way but if they walk up to the bar we know who just walked up to the bar and there's could be ipads behind the bar saying who's at the bar the pos knows who's near the bar so when you go to open a tabs you know you don't have to ask who they are the membership number right greet them by name you greet them by name you know don't have don't have to take out the credit card and forget the credit credit of the bar i'll just pay end of time they drink guinness so you're like would you like a guinness michael and then at the end they walk away and then they kind of uber style payments when they leave the club we know when they left the club then then they get an email saying here's an email receipt of the money you spent and we've charged their car so it's just kind of like the seamless beautiful moments that you can have as they kind of progress through the club love it and and how it does one of those engineers reach out to you listen this way totally facebook facebook okay michael birch yeah i love it anything else you wanna leave us with any other words of wisdom any other any other any other things you wanna say on the podcast before we sign off here optimize for fulfillment mh well like when you say optimize for fulfillment to me that means you know maybe by default people are optimizing for something else like what do you think people are optimizing for if not fulfillment i think ultimate financial success and so like where is a situation where you are like i'm not optimizing for financial success here i'm optimizing for fulfillment i think when i first started on the journey it wasn't the goal was never about money so that i left my job because i thought i would enjoy this i didn't like reporting to people and i didn't like to develop crappy systems that they didn't care about had no passion for so i think you know that's that very first step was entirely doing that and you know to begin with there was certainly was sacrifice because i went from making good money to making zero money so you know there's was definitely a compromise in that well you heard it here folks quit your job yeah if we want your quit joel that's what we will leave you if mainly our president love it alright michael thanks for coming in thanks for doing this i know you don't do a ton of these so really appreciate it yeah thanks