Esther: This is the BusinessMakers Show, heard here and online at thebusinessmakers.com. I'm Esther Steinfeld and my guest today is Chris Baggot, founder of Compendium Blogware. Chris, welcome to The BusinessMakers Show.

Chris: Thank you so much. Pleasure to be here.

Esther: Chris, it's great to have you. The first company you founded is Exact Target, one of the top providers of email marketing software available today. Recently, you went on to found Compendium Blogware. So, tell me about Compendium.

Chris: First of all, it's sweet of you to say Exact Target was the first company I founded. It was the first successful company I founded. But that's a much longer story. Compendium is basically a software platform for organizations to help them with search engine optimization. What we've tried to do is build essentially what comes down to a content management system based on a blogging platform that allows companies to organize blog content that they create in ways that are better for search engine optimization.

Esther: Awesome. So, what attracted you to blogging for business?

Chris: Well, it all came down to acquisition, right? What's great about search and search marketing is customer intent. People go to search engines because they have a problem that they're trying to solve. Traditional advertising is interruption advertising, like Seth Godin says. You know? Hey, do you want to buy something? Hey, do you want to buy something? Hey, do you want to buy something? And, hopefully, if you reach and frequently shout your message, you'll find somebody that might be interested in what you have to offer. Versus search-which is, all I have to do now is listen for people to tell me their problem. And if they tell me the problem and I show up, I have a good chance of getting that business. The problem, of course, is they're going to tell their problem in thousands of different ways. So I've got to be able to scale my search to show up in lots of different search terms.

Esther: What triggered the idea for you to start this company?

Chris: I started from my own blogging with Exact Target. I had a blog called "Email Marketing Best Practices" and I realized I would win that search every time. But if you typed in "Best Practices in Email Marketing" I wouldn't win. And then there were the topics-things I was talking about. For example, I'd post a lot about list-building strategies, because that was something in email business care about. I have hundreds of posts on list-building strategies, but you'll never find my blog on list-building strategies. And that sort of gave me the epiphany of-wait a second-this content is organized improperly. It shouldn't be organized around Chris Baggot-it should be organized around my topics. If I had a blog called "List-building Strategies" populated with content only about list-building strategies, I'd rank highly on that term.

Esther: And has it been an easy road for you to start this company?

Chris: It's not as easy as I thought it was going to be. There's a lot of resistance. It's not dissimilar to what email was back in 2000-2001. People were like, what? You want me to email my customers? You know? Isn't email free? I can get a listserve and I can get my cousin to hook it up and I can get plug-ins to do my bounces and my subscriber management and my images. And that's kind of where we are with blogging. Sort of in this no-man's land right now of-you know-is blogging for search? Having an ROY about blogging a good thing for business, which it is, and it's catching on quickly. And, secondly, people perceiving blog software as free. So we're a blogging service provider focused on search. So we're crossing that chasm, if you will.

Esther: Well, one of the things that I've heard-something that's resistant to blogging is that there's all this legal stuff going on. What if your company has a lot of legal red tape? What do you do then?

Chris: You need a work flow. Again, one of the key components of Compendium is this idea of having an approval process for content. We advocate employee blogging in a big way, and constituent blogging, customer blogging. Let everyone contribute content and a system needs to help you with work flow. You know, in Exact Target we had the same problem where we were filed to go public and we were in a quiet period. So there was a big concern about employees blogging because we didn't want to violate the quiet period. We had to run everything through legal. So this system with Compendium allows legal to have a view. Before anything goes live, they have to put their stamp of approval on it.

Esther: Well, I think that would probably prevent a lot of the problems that people are concerned about.

Chris: You know, one of the problems is that when companies don't empower their employees to blog, the employees who want to blog are going to blog anyway. And your liability doesn't really go away if one of your employees is out there blogging and gives away a trade secret or says something foolish about a competitor or liable lists about something. So you need to embrace those things. You have liability. And secondly, you're missing out on an opportunity. Right? Because, again this is about content drive search. So if you've got your employees blogging and you're able to channel all that content to help the organization inwardly, that benefits the entire company.

Esther: What if you're just starting out? What if you're a very small business? How do you use these strategies to impact your business?

Chris: At the end of the day-you know small businesses are my favorite-right? Most marketing innovation actually happens in smaller and medium-sized businesses. It does not happen at the Fortune 500. And small businesses usually have a lot more passion, they're a lot closer to the customer, they can tell better stories, right? When I go home and tell my wife that I'm mortgaging the house to start a dry cleaners, or a liquor store, or a sock business, or whatever it is I'm going to do, I'm really committed to this and I probably have a lot of passion. And those people make great bloggers. They're also close to the customers so they've got a lot better stories, right? Blogs are about stories. Customers don't care about a lot of things, but what they do care about are similar situations. Right? The number selling tactic of all time is-you tell me how you've solved a problem like mine for someone like me-odds are you're going to get my business. And blogging gives you great opportunity to tell lots of stories about how you solve problems.

Esther: One of the things that you talk about is blogging for very specific key words.

Chris: Right.

Esther: Can you speak to that a little more?

Chris: Sure. It's known data and Matt Cutts from Google say this point blank. If you want to do well on search, talk about the things that your customers care about. They tell you what they care about by their search terms. So you need to be talking about the search terms that you're targeting. Right? You need to title your blog with the search terms. It's not "Chris's Corner." It's "Corporate Blogging Software" in my case, right? Or whatever the key words are that you're talking about. And you need to make sure that in your blog post you're populating and using that language. We call it the language of the customer. You know what that language is because you can do your key word research. Now just use that language in your blog post and you're going to not only rank highly on search for those terms but also rank highly on engagement. Because the customer is, like, "Hey, these people get me. They're using my language."

Esther: I'm talking to Chris Baggot, founder and CEO of Compendium Blogware. And we'll have more with Chris after this. I'm Esther Steinfeld and you're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.

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Esther: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com. I'm Esther Steinfeld and I'm talking with Chris Baggot, Founder and CEO of Compendium Blogware. Chris, before the break we were talking about search terms. One of the things that I think would be valuable for people is to talk to people's pain points. What bothers them? What affects them emotionally? Isn't that something that's important with blogging?

Chris: Yes and no. You don't want to get too psychological about this, right? This isn't journalism. This isn't self-help. You're a business. So, you look at your terms and that's going to really guide you to what to talk about. People are searching on those terms because they probably have a problem. It could be a big problem like, "I need a Quisinart 4-slice toaster." Or, "Hawaiian vacations." Or "cancer treatments." Right? So those terms are going to guide you in how you should be telling your stories. But the key point is tell your stories using those terms. Not facts and figures or statistics or big thoughts. I kind of joke about, like Rick Wagner was the CEO of General Motors until recently and a couple of years ago he was lauded as the best business blogger because he had this road ahead. And he talked about these big picture macro-economic themes about the auto business which didn't sell any cars. At the end of the day, he's up here talking about this stuff. Meanwhile, there are millions of searches going on every day for four-door fuel-efficient sedan that he's not talking about. He's not selling any cars. And that's where you get to this whole top down, bottom up thing. Thousands and thousands of car dealers, mechanics, salesmen, people who work on the cars. Let them talk about those cars. Tell the stories of, I had a family come in here yesterday. They had five people and they were concerned whether the Ford Fiesta could, you know, that's blog post. And when I'm a family of five shopping for a car and I make my search and I land on that story, guess what? I'm going to say, "These people get me. They understand me." And I'm going to convert.

Esther: What do you think about blogging in this difficult economy? How is that helping sell more products?

Chris: I struggle to think of a less expensive means to generate leads. Search is free. It's out there. People are still searching. They're highly qualified leads. When someone types in a problem, it's because they have intent to solve that problem. And whoever shows up is going to get a big chance. So you see your ratios, like your conversion ratios, and your bounce ratios, just get so much better with business blogging than anything else. And, if you can scale your content to get your customers to participate, to get your employees to participate, that spreads the heavy lifting of this. So you don't have to actually hire resources to do it and you just focus on good content and getting those conversions.

Esther: I want to switch gears a little bit here. I read something about you that you started out your career as a white-water rafting guide.

Chris: That is true. Yes.

Esther: So, how did you go from leading white-water rafting tours to leading the way in technology.

Chris: Wow. Well, that's interesting, because there's a lot of similarities, as I think about it. And that may be a 45 minute answer. You know, as a river guide, you're in front of a lot different people. You have to make sure everybody is having a good time. And you have scared old ladies, and you have macho army guys, and you have little kids. And you've got to be able to talk to them and make sure everyone is having a good time, right? And if you think how that relates to blogging, it's very similar. I need to tell stories in a lot of different ways. Oftentimes, they're the exact same story. The river doesn't change. The rapids don't change. But the way it's going to be told for that particular constituent changes. So maybe that's how it relates.

Esther: What led you into founding your first business? Because Exact Target wasn't even your first business. What was your first business?

Chris: Well, I'm really old. So my career goes back. But I started off in the medical equipment business and then I evolved into the printing business in Chicago. I worked for R. Donnelly and I was Director of Marketing for their catalog group. And I would consult with customers about catalogs and sending the right catalogs to the right people. And it was really frustrating because you have all the data that say, "I know who you are and I know what you're going to buy and I know where you live and I know what the temperature is." But I still have to send 2 million books in the mail on the same day to everybody. So that lead me to one thing. Ultimately, I stumbled onto dry cleaning. So I wanted to be an entrepreneur and I thought, "Boo, dry cleaning. This is a great way to be an entrepreneur."

Dry cleaning is a mom and pop business. There's no national competitors. And it has a great database. A dry cleaning customer tells you their name and their address and their phone number. And you know when they're coming back so you can build lifetime value. So it had a lot of database marketing metrics. So I set out and went deeply into debt and bought a dry cleaners in Minneapolis. Wrote a 50 page business plan. Talked all about the database and never once mentioned who's going to press the pants or any of the actual dry cleaning part of it. Which I was horrible at. But what happened was we built a database and we knew all the customers. Tell me a new customer today-tell me a new customer that I haven't seen-tell me people who have been in twice that I try to get a third visit to-tell me people who spend $100 a month that I haven't seen for 10 days. Those things. And I really had no way to leverage this data.

So that gets us to about 1997 or 1998, and I found AOL. And I thought, "Boy, I wonder if my customers have AOL?" And that's how I got into email. And then I was doing AOL email and then Outlook. And I was using Front Page to paste into Outlook. And it really worked. It was great. We'd segment out our database and we'd send emails to people. And it was fantastic. And that gradually evolved into software. And that's what evolved into becoming Exact Target.

Esther: Well, I think you were way ahead of the curve. That's for sure.

Chris: Well, that's the way we feel here with blogging. I think we're a little bit out in front of this and we've got 400 clients. We're winning a lot. Our business is growing very quickly. We're about 45 people. We get about 75 or so new engagements a month. I think still a lot of people are questioning and we still have some evangelism to do.

Esther: Email marketing is so powerful. It's so important these days for small and large businesses. What can you say about segmenting those emails? I know segmenting emails is kind of the newest, best way to reach targeted groups of customers.

Chris: And that's the funny thing, you know. What's broken on the web has always been taking paper-based tactics and applying them on line. Right? The web is so much more powerful than paper. But, in email, it used to be the newsletter. We were always data-drive. I just told you our background. So we were never about list size. We were always about segmenting. Because the fact is, it's the only medium in the world that I can actually have a dialogue with millions of people simultaneously. So everyone has to segment. Just like my little dry cleaners. Right? How do I talk to a new customer? My database told me if I can get someone in three times, I'd have them for a year. If they didn't make that third visit, they were never coming back. So my goal is, not 50 cents off a sweater for everybody, it's that second-time visitor. That might cost me $10 or $12 or $15 in offers to get to that third visit. But if you look at lifetime value, it works. So there's no business too small they shouldn't be segmenting.

Esther: Sure. Now, I'm talking with Chris Baggot, founder and CEO of Compendium Blogware, and we'll have more with Chris after this. I'm Esther Steinfeld, and you're listening to The BusinessMakers Show, heard here and on line at thebusinessmakers.com.

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Esther: This is The BusinessMakers Show, heard here and on line at thebusinessmakers.com. I'm Esther Steinfeld, and continuing on with Chris Baggot, founder and CEO of Compendium Blogware. Now, before this, you were talking about the fact that you had 400 clients. For a relatively new business, that's pretty amazing.

Chris: It's growing really quickly. We're doubling almost every quarter. You know, people are really starting to catch on to this. It's an extremely unique solution. There's just really no other way to this for organizations. From a blogging standpoint, it's pretty uncompetitive. You have Word Press, Type Pad, and those are all kind of built for citizen journalism. Then you might have content management systems that are, "Oh yeah, you can have A blog." But nobody's really focused on a softwares or services solution for corporate blogging with the goal of being search engine optimization, content organization around search. We like the spot we're in.

Esther: It sounds like you guys are in a class all your own, because one of the things you talk about is having multiple blogs-thousands of blogs, even-depending on the size of your business.

Chris: Exactly. Right. In our own business, we have 45 people. We have 580 blogs that we populate through Compendium. We have customers that have five or 15 blogs, and we have customers that have 15,000 blogs. It all depends on how big you are and how much you want to scale. But it's very democratizing. It's like email. It's a great tool for small businesses and big businesses. You pay based on your consumption. Again, I love email and I love the web in general because marketing used to be about whoever had the most money, won. And now it's not that. I can be Joe's Hardware Store on the corner and I can destroy on line a national chain that isn't doing a good job targeting my community for local search or web presence or using email or all the other aspects of supporting my community.

Esther: Before I let you go, you have so much experience in business-what advise can you give to up and coming entrepreneurs? People who are just starting out in their businesses.

Chris: Never go into debt-hang on to your equity-and take as little as money as possible. The biggest mistake entrepreneurs make, and I talk to lots of them every week, is in their overall initial funding. They give up too much of the company to the first person that will give them any money. They always think they need more money than they do because they plan for, "I need a million dollars to get through the next 12 months." Great. Well, how much do you need to get through the next two months? Oh, $150,000. Well, that's a whole lot easier to raise. And if you make it to the next two months and look up again, you'll probably get a higher valuation, you've proven something-built a product-gotten a customer-hit a milestone-that's going to make it a lot more likely they get that next money in the future. Long tale of fundraising, I call it.

Esther: Chris, thank you so much for being here and talking with me today.

Chris: Well, thank you so much for inviting me. It's a pleasure.

Esther: Absolutely. And that wraps up our discussion with Chris Baggot, founder and CEO of Compendium Blogware. I'm Esther Steinfeld and you've been listening to The BusinessMakers Show, heard here and on line at thebusinessmakers.com