Mike Gellman of SpireMedia Talks 50 Cent, Building eBags, Hiring, Sales, and Partnerships

Brent: I’m Brent Weaver, and you’re watching uGurus TV, the must watch web series to be a more profitable and in-demand web professional. And today I’m here at SpireMedia. I’m hanging out with their CEO, Mike Gellman.
Welcome to the program.

Mike: Thank you for having me, Brent.

Brent: So, Mike, tell us a little bit about yourself.

Mike: Sure. I’m 41-years-old. I’ve been in the web business for 17 years. I started Spire 15 years ago, and we’re about 35 people. We build web and mobile applications for companies from startups to Fortune 500s. Our big focus is in product development, so we can take a company or an idea from nothing all the way to something. We do all the strategy, we do all the user experience, we do the information architecture, and then we actually build the applications and make them run.

Our clients are a who’s who of random names. We work with Western Union, First Data, the U.S. Navy, the Army Corps of Engineers, Intermountain Healthcare, then we got 50 Cent. It just goes on and on.

Brent: 50 Cent?

Mike: 50 Cent, the rapper.

Brent: What do you guys do for 50 Cent?

Mike: We launched his headphone line, SMS by 50, which was great, because over the years we’ve done some really corporate work, and every once in a while we get a chance to do something that’s a little crazy and a little fun. Actually, one of our first big clients, one of the companies that really gave us our name, was David Letterman. So strangely, David Letterman led us into doing Dell or Volkswagen, and then over the years, we’ve worked with all these different companies, and then we ended up with 50 Cent. The team likes it, I like it, and then we go back to working on a healthcare app or working on a website that helps conservationists travel the world gathering information.

Brent: Wow. So with 15 years in web and interactive, where did you get your start? Like, what was – was Spire your first venture into web, or what led up to that?

Mike: Yeah, so what I was saying before is that my sordid tale begins back in New York City. And after college, I moved out there, I wanted to be an actor, filmmaker, writer, you know, everything entertainment. I had a couple of roles, bit parts on television shows, and I also worked for a company called Troma. Troma is known as the East Coast kings of B films. They’ve done films called ‘The Toxic Avenger’, ‘Class of Nuke ‘Em High’, ‘Cycle Sluts From Hell’…

Brent: Yeah, I’ve seen Toxic Avenger.

Mike: You’ve seen the Toxic Avenger?

Brent: Yeah, I’ve seen Toxic Avenger.

Mike: So I worked there, and this was late 1995, and the web at that point was really just for enthusiasts and people who were really interested in something bizarre. My boss asked me to try to make a website. So I was like the only guy who knew about the web or what the web was, and I tried to make a website and it didn’t turn out so great, but it was for Troma and I’d always loved Troma, and we made a movie.

And all that was a great experience, but I’d decided there were greener pastures for me. So I moved out to Colorado just to get out of New York and start fresh. Got to Colorado, and with my web knowledge, I said, you know, this is something that I enjoy. There has to be a future here. And I just started doing it.

So I had a studio apartment, it cost $300 a month and that was all-in, furnished, and in my apartment across the way there was an ex-con. He’d just gotten out of jail and he needed somebody to drive him around. But he’d also learned how to make websites while he was in his halfway house. So he was my first employee. I paid him in rides and french fries from McDonald’s and cigarettes and chewing tobacco. Then his brother got out of jail as well and came to work for me. And it was called GIG Media and it was the Gellman Internet Group. In 1996, people weren’t spending money and they weren’t doing much, but I had a little business and I had enough that I knew this was going to be what I wanted to do.

And after a couple of years I did have expenses and I had clients, but it wasn’t going so well. I mean, you were asking me before we started this what my revenues were, well, maybe we were making $75,000 a year, and to support three people, it wasn’t real good. So I was just getting to the point where I was going to go out and get a job, and I said, hey, this is my last ditch attempt. I had $300 and I gave it to this guy who generated business. He said, I’m going to find you 50 solid leads that are going to give you projects to work on. So he brought me three, and disappeared. And I was like, oh, this is terrible.

So I figured, well, I might as well call the three. I called them, and one of them happened to be a guy who was working at Samsonite. So I called him, his name is Jon Nordmark. He said, I have no work for you, but we should talk. We got together and he told me that he wanted to do a startup selling luggage on the web. We got together every week for the next six months, and soon he said, hey, I got the money to build that website to sell luggage on the web, will you build it for me? And I said sure. I put together a team, incorporated as SpireMedia, moved into an office space, and it was a very successful launch. It was eBags, which really, you don’t realize it now, but that was one of the first e-commerce stores on the web. So literally from that point on, 1998, everything started moving really quickly.

The first year in business, 1998, we had $400,000 in revenue, which was great considering working with the two ex-cons, who by the way didn’t join me in SpireMedia. It wasn’t my choice, they just decided they didn’t want to. Then the following year I had 35 employees, and we were doing $4 or $5 million. The world knew that we could build web businesses and there weren’t a lot of people who could build web businesses.

So it was just a really exciting time to be in the Internet, and I was very lucky that circumstances took hold where at that time I was a 26-year-old kid, I was able to learn what running a business is, I was able to essentially learn what this business would become, and also grow my future, which 15 years later, we’re still doing it.

So that was my humble beginnings. We just kept doing it and as time went on, by 2000 we were known as the top web development firm in Colorado and we’ve kept that title for the rest of our existence and people still consider us the best, and I think we’re the best.

Brent: Very cool. So one of my questions was going to be, who is that first hire? How do you choose that person? It sounds like you kind of, I mean, obviously there’s interesting circumstances there, but it sounds like you kind of fell into your first hire, like it was somebody that was immediately around you, somebody who was available. It wasn’t like you sat down and planned out this huge take over the world strategy that included this person and this person. Maybe talk to me a little bit about hiring that first couple of employees. Like, who do you hire first, and what do you look for?

Mike: You know, when I started first in 1996 that was just happenstance and as you said, it was somebody who was there and somebody who could work for me. As time went on, by the time we started Spire and we had eBags and by the time people found out we were working on eBags, we had 10 new clients and there was a need. I had sort of the technical and sales expertise, but I didn’t necessarily have the creative expertise, and I found the greatest web designer I knew, who is a guy named Paul Schrank who started the company with me and he became my partner. It was somebody who I really saw eye-to-eye with and I really liked him and we became partners and we started the company. He owned 50%, I owned 50%.

Then when we got our office, we said we need somebody else to work with us. We looked around and said, whose work do we love? And it was this kid at the time, he was 22, just graduated from Brown. He had the greatest work that I’d ever seen, and when we met with him, he flew here from Brown before he even graduated, he had such great ideas. Literally, it was like after 2 years of struggling and wanting to build a company, I got to the point where I found these two incredible people to work with and build the company. From then on, I learned a lesson because I had two things to look at, okay? I had one where people just kind of came to me and that’s how I worked with them, and the other where I found the people that I really liked, and I learned that people are everything. And for the next 15 years, I would never work with anybody who I didn’t completely respect, who wasn’t smarter than me. I wouldn’t work with somebody who didn’t have talent that I’m just amazed by, and I just in general wanted to work with good people who have passion who could make things happen.

Brent: What do you do right now at Spire? Like, what’s your role? I mean, obviously CEO is a title and it’s a nice title to have, but what does your day look like?

Mike: I’m often told at the office for those who watch Mad Men that I’m the Roger Sterling of the office, if anybody knows.

Brent: I was just watching that last night.

Mike: Were you? I missed that episode. But you know, once you reach the size that we’re at, as I said, we’re about 35 people right now. Most of our clients, most of our projects are very large. Generally, all of our clients that we work with spend at least $100,000 a year on up to, we have clients who spend $1,000,000 a year with us. It’s very high touch business, and it’s really about going out and gathering information, building relationships, and spending time with your customers. So, that’s the Roger Sterling piece of my business, the wining and dining and schmoozing. That’s definitely a big part of my life, that’s probably 30% of my job.

Beyond that, we have incredible people. I also have a lot of experience, and you essentially want to take your pieces and you want to mold them together. You want to get people excited, you want to make sure that the numbers look like you want them to, that the products that are coming that you’re developing internally or externally are what you want them to be. Essentially, you have to be the visionary. You have to be the person who makes sure that we’re on track. You have to grow the company and adapt.

This business, if there’s something else that I’ve learned, I’m full of things that I’ve learned today, but what I’ve really learned is that it’s always going to change. It will forever, ever change, and when you think about it, if you don’t change, because I’ve seen this to a lot of companies who have been in our business, you’re going to die. So, five, six years ago when we realized that mobile was going to be something, that was the point where I had to say this is going to be something that we’re going to focus on. We built a relationship with AT&T. AT&T became – they essentially wanted us to help them sell mobile apps to their customers, and that gave us a great headstart on a couple years later when everybody wanted a mobile app. By the point that we’re at now or last year is that we really are leaders in mobile, but that was because I had the foresight and the organizational ability to switch up and adapt to become a mobile company. So that’s the next 30%, which is the innovation and management.

And then aside from that, look, I’m a great marketer. I’m getting out there telling the story of what we do and getting it out, using the social networks, supporting our clients as well, and building partnerships. So everything is on the front end, but I am very much still running this company, and I wouldn’t have it any other way.

As a side note, Paul Schrank who I was saying before became my partner, he left in 2002. So I had other partners and other partners, and at this point I have a great leadership team and a great group of people. But at this point, I’m leading all of them and making sure that they do what they need to do.

Brent: So you said you work on projects that are $100,000 to $1,000,000 projects per year. I think for our audience, those are big projects, right? It sounds like you kind of got in in this very unique time to the web space. I mean, obviously, eBags is a big company, they’re doing great things. Jon Nordmark is a very influential entrepreneur. Was it after eBags when everything was big projects and big clients, or did you guys ever work with the small business space? Did you ever spend any time there?

Mike: Really, what happened was when you’re part of an evolving industry, you have the luxury of really being able to see what feels right. What we determined after our first 15 clients, a) what do they look like? And at that time, they looked like technology companies and they were funded technology companies and they had money, but more importantly, they required a level of service and services that cost money. So we built our process around giving everything, leaving nothing to chance, giving service that goes beyond what you could ever imagine, being the guys who didn’t get it wrong, being the guys who had the capabilities and the people available constantly to make sure that it would work. And having them in-house, having them in America, having them in our office, and really having a go-to staff that people could count on. The most talented staff. A lot of our clients pay us for our ability to find the talent because that’s what makes us.

So really, at that point, we became a company that charged a lot but we were giving great value. Being in Colorado was nice because we charged a lot but compared to the West Coast and the East Coast, we weren’t the most expensive company in the country. We ultimately gave great value and you really can’t go back. Still, you see what the market dictates and what the market wants you to work on. We’ve become known as not the cheapest option, but the best option.

Brent: So with a company like eBags, when you were going after them, you said you wanted to work with some startups that have funding and are well funded. Did you guys ever have a practice of taking equity in exchange for cheaper prices or just straight equity in a project that you guys were working on?

Mike: You know, I’ve known a lot of people who have done that. We made the decision at Spire back then not to do that, and the reason is it’s really a conflict of interest from my perspective. I think it’s great other companies that do that, and other companies sometimes really succeed and do well. You hear that story about the artist who worked on Facebook and he came out and I think he got $50 million or something just for making a mural. And those are great stories, but those are few and far between.

More likely what you see is that you work on the project, you’re not getting paid, you’re not necessarily able to give them all the service that they require and all the time they require. Your mind is balancing different things, and in general, I don’t like it to be that way. I like to give our clients, every single client, the top quality service and the top quality talent, and I don’t want to think about any reason why I wouldn’t do that. So, if you’re an owner and you’re not getting paid, you’re trading for equity, you think about things differently. So it’s a decision we’ve made, and I’ve heard lots of stories where it’s worked out and I’ve heard lots of stories where it hasn’t.

Brent: So now, thinking about new clients, are you – you said you go out and do some of the wining and dining. How does Spire acquire new customers? You’ve talked a lot about partnerships, channel deals, what’s the strategy for getting new customers?

Mike: We’re very lucky. I think that my advice to anybody running a web agency would be get a great reputation. I can’t tell you enough about word of mouth and how important that is. Most of our clients come from word of mouth, and most of our best clients come from word of mouth.

Beyond that, we’ve really had a strong focus in partnerships, and they’re somewhat unexpected partnerships, especially AT&T. You wouldn’t imagine that AT&T is such a rich source of web business, but they work with big companies, they want to provide them everything in the connected world, and that’s been just an unbelievable partnership. Another one that’s somewhat unexpected is MapMyFitness. We started working with them, and essentially they build the app where you can map your run or you can map your bike ride or you can map essentially anything that you do to become healthy. But they also have an API and they want to have a corporate product that they’re selling, and we’re the company that can integrate their API.

We also work very closely with Acquia, and Acquia is – we’re a big Drupal shop, and Acquia is, in case people don’t know, they’re sort of the Red Hat for Drupal. They’ve been great because they’re talking to everybody who does Drupal and they’re a high end company and they come to us and we work together and partner up. We also do the same with Automattic and Automattic is the Acquia of WordPress.

So in general, most of our business I would say comes from partnerships and word of mouth, and you can’t be in a better place than that. You’re not necessarily competing with the rest of the people in town. We’ve taken a regional approach to where we work or where we focus our energies. We have a client right now, TomTom, who is out in Amsterdam. We have clients on both coasts. But really, where we’d like to focus our business or spend our efforts are right in this somewhat region. We really like Texas, and have lots of clients in Dallas and Houston and Austin, and we really like Utah. Salt Lake City, in particular, we have a wonderful partnership and relationship with Intermountain Healthcare, who is one of the top healthcare companies in the world. And now we’re looking to Nevada as well. I told you I recently went out and saw the big plans that Tony Hsieh of Zappos has for downtown Nevada, and we’re putting some time and effort into doing some work out there as well. And then Colorado, of course.

Brent: For sure, for sure. So now, companies – you mentioned Acquia, Automattic, those are obviously large development companies in their own right. So where does Spire fit into – like, what do they have you do that they wouldn’t necessarily do in-house?

Mike: Well, I’ll say this about Acquia and Automattic. I mean, generally they’re making most of their money off of hosting and support, and where we come in is custom builds. Generally, people will come to us – the perfect client for Spire is they come to us with an idea, whether it’s a big company or a small company, and they have it funded, whether it’s through venture capital or whether it’s from a grant or whether it’s from funds that were set aside in a budget for a big company, and they say, how do we make this happen, and we say, we’ll go through the process and we’ll get you there, and we literally go from idea to launch. We’ve become known as the guys who can do that.

Interestingly though, you talk about other big companies, I mean, when we started, advertising agencies weren’t trying to be web shops. These days, if you’re doing advertising or marketing, you’re doing web. But we’ve found that some of our best partners are big advertising agencies because they have certain expertise that they don’t have in-house and they want to work with people who are going to make sure that they get it done. They’ve worked out the budgets, and we’ll come in there and we’ll help them succeed.

So, I’ve found that the web industry or the agency industry in general, everybody’s got a little niche of what they do right, and if you come together and you’re not afraid of competition or you’re not afraid to collaborate, you’re going to get work with whoever.

Brent: A lot of guys I talk to – always curious about, they maybe do the production themselves right now, they’re the one or two-man show. They’re always like, I need to hire a salesperson to get out there and sell for me, or, I need to hire somebody to do production to go out there and produce while I go sell. How have you found salespeople or hiring people to do sales in web? I’ve personally found it’s a complicated nut to crack because web projects are very complicated. I assume you have some people here at Spire that do that kind of thing. I’d love some insights there.

Mike: Yeah, well, I’ll say first of all that you’re going to be the best salesperson, the owner of the company or the guy who started the company is going to be the best salesperson. You have the most passion and the most experience, and you really will be the best salesperson in the beginning. But you need to make a conscious decision if you want to grow from 2, 3, 4 people into 20, 30, 100, 200, you need to make a decision that you’re going to step away and have other people work on it.

I’ve been really blessed, it’s taken me a long time to get blessed, but to have incredible salespeople and really develop a process that works for them. I think when salespeople join your team or account executives or whatever you want to call them, you really need to figure out a process that can make them successful, and figure out a compensation plan that makes them successful. At Spire, everybody knows that pitches are a group effort, and the account executive is the person who facilitates that group effort. Remember, we’re not selling in the sense that we’re trying – like a car or real estate, you’re not trying to chalk up a number. What you’re really trying to do when you’re selling is gather information so you can provide a solid bid, and that bid everybody should know for the most part is what happens when you go into the project, whether it’s time and materials or it’s fixed bid, people are still expecting what you bid them out in the sales process.

So our CTO, our head of technology, our creative director, our head of user experience, they’re in most of these pitches. And when they’re there, they’re gathering information, they’re providing information, and they’re collaborating with the client to make sure that the project is going to be successful because the project begins when you sell it.

So, I think you need great people all around. I would say if you’re a small shop, get everybody involved in the sales process as you can afford it, and if you’re getting bigger, get somebody who really knows how to manage teams and really knows how to have a solid relationship with clients and can gather information.

Brent: So now, you mentioned that several years ago you kind of saw the puck was moving to mobile and you started making some investments and some early moves in mobile, which I definitely commend you for. That’s amazing foresight. What are you doing now? Like, where is the puck moving now?

Mike: The puck is always moving, and as I said, that’s what makes us different. I mean, I would say what is hot right now? First of all, agile methodology is extremely hot. I think that clients do want, at least the clients that we have, do want developers working towards sprints, working in short iterations and really doing product development while you’re doing the actual development. We’ve scrum certified most of our staff and we’re working on getting more people scrum certified, and being experts at that agile process is huge for us. In addition, the product development consulting is really big for us because we’re seeing that people, that clients do want that major expertise in putting things together and bringing products to market. We consider ourselves an IDEO of the web development world. In addition, user experience is really hot, we’re getting lots of calls for it and we’re just continuing to bolster our staff.

Then when you get to the technology end, obviously mobile is still hot, but I’m finding that mobile is not a gimmick anymore, and most of the apps we’re developing for our clients are becoming more and more useful. We built an app for a hospital concern where you can take in the Medevac, you can take the iPad in the helicopter and you can put all the information for a patient and then it gets to the hospital before you’re even there so that you can begin the whole process of actually saving lives. We’ve done the same thing with glucose monitors and cholesterol monitors and diabetes. I mean, all of these things that are really making a difference, and that’s a big trend is really ultra useful apps, whether they’re on the phone or on a tablet. And besides that, we’re getting into, by a strange little twist of luck, we’re getting into wearable computing as well. We’re building – I can’t say much about it, but for a very large navigation company we’re building a wearable computer.

For us, the web is everywhere, and I think that being able to adapt and move the web – they talk about the Internet of things. Have you heard of that term?

Brent: Loosely.

Mike: It’s a popular term that’s coming out, but really, what I’m seeing is that it’s not just web-based, it’s not just mobile, it’s everywhere. And for us to get the opportunity to work on a watch or something that’s wearable, which is a watch, I’m really excited to see what else we’re going to be doing in the future.

Brent: Very nice. So, you and I met through EO, and a big part of what EO talks about is this work-life balance. So you’ve got this 35 person agency, you’ve got the Roger Sterling role at Spire, but what does down time look like for you? How do you maintain that balance? How do you continue to grow this enterprise here but at the same time live a rich and full life?

Mike: Everybody talks about the work-life balance, and I think it’s something that you have to fall into. You have to see what fits for you. I know there are lots of people who are extremely regimented in how they make their life work. Luckily, or whatever, I don’t have children which leaves me a lot of time to work and to schmooze and to be out there. But ultimately, I think it’s just what feels right. I travel a lot, and I do that because I love traveling but I also do that because – and travel for fun, by the way. I do that really because I need to see new things. I need to go to different places and experience different cultures. And so I work – as they say, you work hard and play hard, but I work very hard when I’m here, and then when I take my vacations, I’m there to nurture my mind and come back with new ideas, see where technology is in the rest of the world.

I went out to Amsterdam last summer just to see some friends, and I thought I was just going to be touring around and having a great time. It turns out I learned more about new technology than I ever could imagine because there’s so much going on there. Same with when I went to Estonia a few years ago. People don’t realize that in Estonia, that’s where Skype got its start, and there are some really, really smart people. So I’ve been lucky enough – you have groups like EO which help teach you to – this is the Entrepreneurs’ Organization for those who don’t know – they really do help teach you about your work-life balance. But ultimately when it comes down to it, just follow your passion. And I could say I don’t think you necessarily need a balance when you love and have passion for what you do. Yeah, I work a lot, but it’s a part of my life. That’s kind of how I look at it.

Brent: I read on your bio that you do some stand-up comedy? Is this an active…?

Mike: No, no. Years ago, I did stand-up comedy. That was something that I really had a passion for was comedy. As I said, I went out to New York after college to – probably didn’t spend enough time to make it happen, but yeah, I do like comedy, and for years I wrote comedy just as a side line. You were talking about your work-life balance, and that was one the things that I did to kind of keep that balance. I was reading in an article recently, and I had no idea about this, it was in Wired when they were doing a look-back on the past 20 years, and they said that in 1998, there were 24 known bloggers, and in 1999 there were a million bloggers. Well, I started blogging in 1996, and it was really popular and I turned it into a book – you shouldn’t buy it because it’s completely outdated, and the references and the jokes, you know, they’re not going to be funny anymore. But it was something that was fun to do. And in addition, blogging back then really helped me to learn a lot about the web and about how people interact. I started blogging again a couple years ago, stopped last year, I’ll probably start again in a couple years, but you learn something when you’re actually creating content and being a part of the web.

Brent: Very cool. Well, Mike, we appreciate you taking the time out of your very busy day to hang out with us for a little bit. It’s been a pleasure to learn more about Spire and what you guys are doing, and hopefully we can come back sometime in the near future.

Mike: Yeah, well, it’s been a pleasure. Obviously I can talk a lot, so I’ll talk whenever you guys want to talk. Thanks a lot, Brent.

Brent: Very nice. Alright. Well, stay tuned for more great content from uGurus.com.