Wordstream's Larry Kim on Simplifying Internet Advertising for Business

The challenges back then and now, plus advice for newbies.

learn more about Yaniv Masjedi

By Yaniv Masjedi


Opinions expressed by Entrepreneur contributors are their own.

Small business owners with a little cash and high-growth aspirations are smart to invest in online advertising. Targeted ads on places like Google, Bing and Facebook can translate into millions in revenue and offer the boost a fledgling company needs without spending on more traditional media vehicles like billboards and television commercials.

But there is a downside to diversify advertising dollars on the internet -- tracking. An early stage startup founder doesn't have time to see if his or her campaign with Google AdWords is doing better this week than one on Facebook or Bing. This struggle can quickly get overwhelming and result in business owners throwing in the online advertising towel and missing out on future sales.

Related: Successful Entrepreneurs Have These 5 Traits in Common

Larry Kim knows this pain. A native of Winnipeg, Canada, Kim got into software consulting after college and soon found many of his marketing clients drowning in the repetitive work of tracking ad campaigns online. Inspired by his mother -- who worked as a self-employed piano teacher growing up -- he'd always wanted to be an entrepreneur, so he decided to create software to help marketers with the drudgery that went along with tracking multiple ad campaigns.

That software became what is now WordStream, a business that helps thousands of companies manage paid search and advertising campaigns. Kim moved down to Boston in 2007 to start the company, and since then it has taken off, employing more than 200 people, earning upwards of $23 million in revenue in 2015 and attracting the backing of major institutional investors.

I caught up with Kim between speaking events -- he will next appear at business strategy conference NextCon -- to ask about the early days of WordStream and his advice for budding entrepreneurs.

What challenges did you face early on at WordStream?

We had some growing pains and were forced to pivot during the early days. At first, we wanted the company to offer advanced keyword research software. We thought this was a great idea, but quickly realized that a customer's lifetime value for that type of solution wasn't very long -- maybe a year or so -- so we realized we needed to change things up.

It was critical for us to diversify WordStream software into a full-featured PPC (pay-per-click) marketing platform with features that benefit campaigns on an ongoing basis. We decided to provide support around Google AdWords, Bing ads and Facebook ads. But today we are so much more. We offer landing page design and hosting, lead capture and extensive analytics around every campaign. We've realized what works for our customer.

What challenges do you face these days, now that you are more established?

Well, in our early days I had a hard time convincing people to take a leap of faith, quit their jobs and join me in a venture that seemed risky and uncertain at the time. But as the company grew, it became a lot easier to attract and keep great talent. That said -- even though it is easier to bring in good people -- it is still challenging at times; something seen across the board in the software field at the moment.

For entrepreneurs just starting out, what are your three biggest pieces of hiring advice?

First, when it comes to trying to convince key hires or potential cofounders to join your team, make sure you project a bold/exciting vision for your startup. It's a bit like dating; first impressions matter a great deal.

Second, remember that people leave jobs because they don't like the people they're working with. For this reason, it is vital to pay attention to culture fit. This can often be more important than actual intelligence or skills, since a bad hire can cause turnover.

Related: The Obvious Mistake Most Startups Know Not to Make (But Still Make Anyway)

Third, work hard to find magical unicorns. No matter what the job, there are always people who can do what they do 10-100x better than others. Don't hire donkeys.

How have you seen the online advertising industry change in the past few years?

Wow, it has completely changed over the past decade. In the last few years, we've seen Facebook rise up as a major competitor to Google AdWords. I don't think many people saw that one coming. Remember how negatively Facebook Ads were perceived even three or four years ago? Now, the targeting options they offer are ridiculously precise and include offline purchasing data, demographics and more.

What are a few pieces of advice you can offer someone starting a company today?

Given the amount of time, effort and resources required to start a business, and given the fact that most of them fail, I recommend being very picky about what businesses you decide to pursue.

What are a few telltale signs that someone is choosing the right or wrong business for them?

Entrepreneurs tend to over-estimate the novelty of their ideas. Is it really a game changer? A couple of ways to be more objective:

  • Are your offers converting at 2 percent or 40 percent?
  • Is your Net Promoter Score over 50 percent?
  • Does the value you provide to your customers increase or decrease over time?
  • What makes it impossible for them to ever stop being a customer?
  • What makes them upgrade?
  • How will you find your target customers on the cheap?
  • What makes customers want to buy your stuff right now?

Those are some of the questions I ask. If you don't get great answers, I'd spend more time looking for a different outlier.

What is the biggest misconception about starting a company?

The biggest misconception is that you will be working for yourself. From the day I brought on my first customer, I started working for them. From the time I brought in investors, I've been working for them. From the time I started hiring staff, I've worked for them. You are accountable to a lot of different people, and those relationships shape the decisions you make as an entrepreneur.

Related: 5 Rules of Marketing That Will Help You Find the Right Niche and Thrive

Speaking of investors, what are some tips you can offer on choosing the right investor?

You get the investor you deserve. If you pitch a high risk/high reward idea, the investors that sign on are those who support this approach. If you pitch a more conservative, cash generating business idea, you'll find investors who are comfortable with that type of company. It's very hard to fundamentally change your company after raising money, because it's not what your investors invested in.

If you weren't at WordStream, what would you be doing?

That's easy. I'd be hanging out at the playground with my 2-year-old!

For more information on WordStream and NextCon, scheduled for Nov. 14-16 in Scottsdale, visit www.wordstream.com and www.nextcon.nextiva.com.

Yaniv Masjedi

CMO at Nextiva

Yaniv Masjedi is chief marketing officer at Nextiva, a leading provider of cloud-based unified communication solutions, headquartered in Scottsdale, Ariz. He manages the firm's marketing and branding efforts and initiates programs related to brand management, demand generation, advertising, marketing communications and thought leadership.

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