“There are no shortcuts” When It Comes to Acquiring Traffic & Other Lessons from a Startup

This the first installment of our new Q&A Series – short interviews with talented, experienced, and successful entrepreneurs who are on the front lines of running online businesses. I’ve always believed that it’s a big mistake to not at least listen to those who have worn the same shoes that we are putting on every day. I hope these interviews prove to be as informative to you as they have been for me.

Our first guest is Ryan Thompson, co-Founder of FileLater. I recently had a chance to sit down with Ryan. He had some great insights on starting a business, traffic, and the importance of listening to customers.

B5: Briefly, tell me a little about what FileLater is all about.

RT: FileLater was developed to help the 15 million people who file tax extensions every year.  There are a lot of misconceptions around tax extensions, and until FileLater, there wasn’t an easy way to get more time to do your taxes. So, we created one leveraging our expertises on the internet and taxes.

B5: How long has FileLater been in business?
RT: FileLater is 3 years old, although we spent about half of that time researching, building the product, and working with the IRS to become and authorized IRS e-file provider.

B5: I won’t ask you to get into numbers because I know how secretive startups are about sales, but how are things going so far?
RT: Things are going much better than expected, and we’re having a lot of fun doing it. It’s a real satisfaction to know you’re removing so much stress for thousands and thousands of folks by letting them know there’s an easy way to get more time to do their taxes. We’ve really learned to appreciate and listen to what our customers want, and we really believe that’s been instrumental in growing the business as quickly as we have.

B5: Are you backed by any investors, or is FileLater bootstrapped?
RT: Wow – how much time do you have for me to explain this one? The short answer is that we are entirely bootstrapped.  Although, we’re a little lucky it turned out that way. We talked to lots of potential investors along the way and the bank account ran pretty low in Year 1. Looking back, that was good for us. It’s really amazing how creative you can be when needed to save on expenses. Luckily, we’re in a much better position now and can invest in growth.

B5: Your company doesn’t offer any physical products or have any physical locations. What’s unique about running an online pure-play?
RT: I think the most unique thing is that there’s almost an expectation that you don’t support your customers because everything is online, which I think is just the wrong way to do business. Think about it – every restaurant or retail shop you go to, you’re generally greeted by warm smiles and “Thank Yous” on the way out the door. When you’re serving tens of thousands of customers over such a short period of time, it’s much harder to do… but, as I said, that’s very important to us and part of how we see ourselves different than other online tax providers.

B5: I would think qualified traffic is pretty much do-or-die to your business. Is that true?
RT: Yes. The reality is that everyone who buys from us starts as a lead one way or another.  We do see a lot of word of mouth and return users, but still the vast majority come from our marketing efforts. Establishing ourselves in the search space is very important to our success.

B5: How much of your marketing strategy is organic search versus pay-per-click?
RT: Our strategy certainly includes both, but I’d say we spend 70-80% of our search efforts on organic. The decision really comes down to return on investment.  It’s no surprise that bidding on tax related terms in April isn’t cheap, and it’s very competitive. So, we’re better off focusing the majority of our search efforts on SEO, and we’ll compete in PPC where it makes sense. Plus, SEO has a longer term benefit that brings additional value to our company. There are lots of companies out there that get acquired for their SEO rankings alone.

B5: What else can you say to startups about SEO?
RT: Come up with a plan and start executing it early. Once you start, stick to the plan and be patient. We are a very seasonal business. Every year we come up with a 6-month plan for creating new content and getting new links. The trick is sticking to it and not over-reacting if what you are doing doesn’t always result in instant success. Even today we are seeing benefits from some of the things that we did last year. Patience is key.

B5: What tips can you share with our readers about traffic acquisition?
RT: That’s a great question. Well, first I’d say that there are no shortcuts.  Things like link exchanges or black hat SEO tactics just don’t work in the long term. You’re much better off investing in the right content and earning your way to the top of SEO.  Also, having the best product will earn you word of mouth that will really help you grow. And, as hard as it is, you have to have some element of patience. Growing a strong following for anything simply takes time and effort.  Oh, and when someone tells you they have a shortcut and it seems too good to be true, it probably is, and I say all of this from experience.

B5: What have you learned that you didn’t know when you started the business?
RT: Well, as I mentioned earlier, we knew technology and the tax space pretty well when we launched.  However, the Internet changes so quickly that you have no choice but to keep up. Things like social media, advancements in SEO strategies, and new developer tools are moving so quickly that you’ll get left in the dust if you don’t keep up with them.  And, I’d also reiterate the focus on making a great customer experience. We knew it was important when we started, but I don’t think we completely understood the magnitude of what it means to have a product that customers will tell their friends about.

B5: What are FileLater’s plans for the future?
RT: We’re committed to having the best tax extension service on the web. There are other tax and let’s say “civic duties” that we think we can use the Internet to help simplify, but we’re carefully balancing that against finding a niche and solving it very well. Between now and mid-April, we’re heads down with tax extensions, and we’ll regroup when the dust settles to flush out the rest.

What do you think? I’d love to hear your thoughts in the comments section below. Don’t be shy!

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