Meeting the Wizard of Moz: Culture Breeds Community

5/29/13Follow @bromano

You can pay lip-service to corporate culture, or you can build a culture so deep that employees think about it when disciplining their kids.

SEOmoz, the Seattle Internet marketing software company, is today changing its name to just Moz. While the company is shortening its name, it’s broadening its offerings in a competitive and closely-watched field. The bet is that Moz’s culture, which enabled it to attract a large, loyal group of online marketing professionals and customers, has given it a built-in advantage each time the company introduces a new service or line of business.

More broadly, the Moz culture—which sets the bar for transparency in business and was informed, in part, by the money struggles of co-founders Rand Fishkin and his mom, Gillian Muessig—has become an influential model for other startups in Seattle and beyond. But it is not without its downsides. Moz has doubled in size over the past year, to include about 130 employees, and its leaders acknowledge that it won’t be easy to maintain the culture as it keeps getting bigger.

Moz has been known for its search engine optimization (SEO) software, which helps Internet marketers analyze and increase inbound traffic to Web sites through links, search keywords, site design, and competitive analysis. As the practice of SEO merges with the broader discipline of “inbound marketing,” Moz is introducing Moz Analytics to help companies track social media activity and brand mentions elsewhere on the Web.

Surprisingly, Moz executives don’t see these changes putting them in closer competition with other big names of inbound marketing, such as HubSpot, an IPO candidate; Marketo, which went public earlier this month; and Eloqua, snapped up by Oracle last December for $872 million.

Chief operating officer Sarah Bird says those companies focus further down the “marketing funnel”—helping businesses engage the customers who have already found their Web sites.

“Where we perform best, what we’re doing well—which they don’t focus on—is before [customers] get to your Web site,” Bird says. Moz seeks to help companies find answers to questions like, “What are they doing, where are they coming from, and how are you getting them to your Web site?”

These distinctions are harder to see from outside the industry. Suffice it to say that inbound marketing is an increasingly competitive business with a large potential for growth. Bird says that 90 percent of online marketing spending today is on paid advertising, which only generates 10 percent of Web site traffic.

(Another Northwest company, Act-On Software, in Beaverton, OR, is today announcing new inbound capabilities for its marketing automation software, including SEO and search keyword management.)

You can be sure that close to half a million marketing professionals will hear directly from Moz about their new offering. And it won’t be through a sales call. The Moz community has been built over many years, and it starts with TAGFEE.

TAGFEE Culture

At the heart of Moz culture is an acronym, TAGFEE, that stands for the tenets by which it does business: transparent, authentic, generous, fun, empathetic, and exceptional.

CEO Rand Fishkin, other executives, and employees take it seriously in both their work and personal lives. They use it as an adjective: “We want to make sure that individuals that join the team are TAGFEE,” explains Adam Schmidt, my tour guide on a visit to company headquarters last week. Schmidt, who works on the help team, applied for his job by submitting a video of himself playing the ukulele. Fun? Check.

Taking up multiple floors of an older building a few blocks from Pike Place Market, where the single-pane windows rattle in a spring wind, the Mozplex is typical of a fast-growing technology startup. Dogs run free through the open-plan space that feels a little tight. (Another contingent of Mozzers works in an office a block away. The company intends to move to a larger space in the neighborhood that can accommodate everyone later this year or early in 2014, Schmidt says.) Offices and meeting rooms have names like the Hall of Justice, the Bat Cave, and Spider Skull Island, which is where I met Fishkin. There is food and drink. A regular beer night. Ping pong. A life-size cardboard cutout of Fishkin—who could have been played by Matthew Broderick if the movie version of this company had come out a decade ago—appears in a new spot each day.

While most companies list their top executives on the Web site, Moz has pretty much the entire team listed in alphabetical order by first name. The CEO is not on top or otherwise distinguished from the rest of the team. In fact, he’s not even listed as the CEO. Fishkin is listed as “The Wizard of Moz.” Others hold positions including Architect of Anarchy, Post Modern Cowboy, Head of Team Happiness, and Code Wookie, along with more familiar software job titles.

The company has gone into great detail about each tenet of TAGFEE as part of its prolific production of content on all aspects of its business and the practices of marketing online. This story focuses mainly on the most unconventional tenet: transparency.

It starts from the top. Fishkin is highly personal and open with the Moz community. On February 6, 2007, he proposed to his now wife, Geraldine DeRuiter—a successful travel blogger—and posted about it that night on a company blog.  More recently, he introduced a blog post by noting, among other things, the state of his personal finances: “no debt and $26,961.98 in the bank as of tonight”.

That bit about the debt is not trivial. Fishkin and Muessig went deep into credit card debt in the mid-2000s as they built the business, which in its earliest incarnation, was her traditional marketing company, founded in 1981. It’s a story Fishkin tells often. Less well known is the formative impact this experience had on the culture of the company. They were struggling to service some $450,000 of debt and accumulated interest with consulting income of $10,000 to $20,000 a month or less, he says.

“The logical thing to do is declare bankruptcy, but we couldn’t do that, because we never told my Dad … that we had any debt,” Fishkin says.

The eldest of three, Fishkin says he feared that if the company was not a success, its failure and the secrets around its finances might have threatened the stability of his family.

“I think that’s what inspires you to have values,” Fishkin says. “That’s the kind of thing where you say ‘never again.’ From now on, I don’t care how dirty the laundry is, we’re going to be transparent about it.”

For some Moz employees the TAGFEE culture is more than just a way of doing business.

Fishkin remembers the first time he realized employees were taking this aspect of their work home with them. It was about four years ago. An employee told him about disciplining her daughter: “[She] was thinking to herself, ‘No I shouldn’t give her feedback in this way. It’s not TAGFEE. Right, like I need to be transparent with her about why we’re doing it, and I need to be empathetic and recognize what her motivations were.’ We’re talking about a three-year-old at the time.”

“It’s a kind of thing that almost brings you to tears,” Fishkin says. “I think it’s even more exciting than building a company, is building a culture that you believe in and that you think is positive, and extending that out from the corporate world, and the world of your professional life to people’s personal lives, and then to hear stories about how it benefits them and their families and kids. It’s super-cool.”

And scary?

“There’s a big feeling of responsibility, right? I deal with pressure pretty well, but I feel an incredible burden to represent those values and to honor them and to make sure that we never slip up, which we do and we will. And then of course, I have lots of natural but non-valuable feelings of guilt.”

Operations chief Bird says the corporate culture would not exist without buy-in from employees at all levels. The people who come to work for the company do so in part because they’re already predisposed to living and working this way. “I think that they want to have something more meaningful than just a paycheck,” she says.

It Takes Effort

While many businesses work hard to hide their dirty laundry and publicly project a PR-sanitized version of themselves, Fishkin is by no means the first executive to embrace more transparency. (Remember the 2007 Wired cover that used clear acetate to depict Jenna Fischer from The Office with and without clothes?) But Fishkin has done it in ways few others have, including his tumultuous efforts to raise a second round of venture capital, which my colleague Curt Woodward documented in 2011. Fishkin says now that it’s his posts about failing to raise venture money that inspire people more than the one about his success, which included such sought-after but rarely disclosed details as the pre-money valuation for the round ($75 million, equal to 4.1 times revenue at the time of the deal).

Maintaining a culture that embraces that transparency—that enables people to see the ups and downs—takes lots of effort, particularly as the company adds employees at a torrid pace (albeit one that’s slowing this year), expands to new offices in Portland, and takes on more outside investment. It’s significant that the lead investor on the $18 million Series B last year—much of which was spent on acquisitions and hiring in the last 12 months—was the Foundry Group (managing director Brad Feld joined the Moz board) and Ignition Partners.

Fishkin says the company treated the fundraising process like it does its hiring process. “If we didn’t want that person working here, if we didn’t think that they believed the same things that we believed, we wouldn’t bring them on board,” he says.

Feld, an agenda-setter among startup leaders, gave his full-throated support to TAGFEE in a blog post announcing the investment, writing that “it was one of the big factors that attracted me to the company.”

That board-level support helps Fishkin and the rest of the Moz leadership maintain the culture.

“It’s so hard,” he says. “…Especially with the tension of the launch coming up”—a May 2013 launch that was at one point planned for July 2012.

That has provoked internal questions about the right balance among the TAGFEE tenets, and business goals, such as, “Are we prioritizing empathy too much? Who is accountable for this, and how should that be treated?” Fishkin says.

But such introspective questions have to be put on hold in the pressure-cooker of software development against a deadline. That doesn’t mean they get ignored. You can expect that with Moz Analytics finally completed and on the market, Fishkin and team will be examining their processes this summer.

Competitive Intelligence

It would be easy to look at search engine optimization and see a zero-sum game. For my site to rank higher, it has to displace someone else’s. That begs the question of why these SEO professionals would be willing to share their best practices with the competition. How does TAGFEE lead to a community of people blogging and commenting on your site, attending your conferences, and ultimately, paying $99 a month and up for your software? (The company has upwards of 21,000 paying customers and no salespeople, Bird says.)

Paradoxically, transparency is in some respects the by-product of an effort to crack the very opaque codes of the search engines.

“There is no formal training, nor are the search engines—Google in particular—very transparent about how these things work, and so the only way to discover that is to go and get data on your own, go and research on your own, go and try things on your own,” Fishkin says. “… The only other way is to form a community and to have people who specialize and who share.”

This sharing yields social media mentions, spreads expertise, builds reputations and opportunities to speak at events, and ultimately leads to consulting referrals. It’s a virtuous cycle.

Moz does this at a company level, too. Fishkin admits that this has its downsides for the business. For example, he believes details about the costs and processes of running the Moz Web index have been valuable to competitors such as Majestic SEO and Raven Tools.

“I have no doubt that being able to read on your competitor’s blog exactly what they’re doing, how they’re doing it, who they’re hiring, how projects are going, what their road map looks like—that’s really good information, if you want to compete with a company, but honestly, as much as it might hurt in the short run, I think it’s the right thing to do in the long run, and the whole idea behind having core values is that you prioritize those over the competitive benefits or disadvantages that they might create,” Fishkin says.

That’s easier to say and do with a supportive board. But it’s not hard to imagine futures in which such disclosures would be more problematic.

Where Next?

Of course the Moz leadership is thinking about the future.

“Everyone you talk to wants to know, OK what’s your exit plan? Are you going to IPO, are you going to be acquired? … There’s just a lot of emphasis on liquidation events, or money—that one model of success is some sort of achievement around a big cash payout, right, as the IPO markets are heating up especially,” says Bird, sounding a bit frustrated. “There seems to be this sort of frenzy.”

She says she is preparing the company from an operations perspective “to be able to IPO one day when the time is right.” No surprise there.

But what would happen to the TAGFEE culture if Wall Street thinks too much competitive information is going out the door, or “PAID paid vacations” are a little bit too much fun for the bottom line, or the SEC looks askance at unconventional disclosure practices on social media? Similar questions would arise in an acquisition or private equity buyout.

“There’s no perfect solution out there where we can continue having the culture exactly as we want it,” Bird says. “There’s always going to be change. But I do believe that if you build a stellar business, you’ll have more options on how much you have to compromise.”

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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