Web Masters Episode #74: Marshall Brain


howstuffworks-logo – Real Graphene USA

Marshall Brain:

We had a brand. Look at Under Armour, that’s a brand. They started with water absorbing t-shirts and now you can get Under Armour anything you wear on your body plus anything you might carry with you while you’re doing a sport plus they could go into food. They’re a brand, everybody knows Under Armour. So you just take the brand and you think, well, what else could we do with this? I have Arm & Hammer dog biscuits over here. They contain baking soda to give your dog fresh breath. What? That’s like as far of a stretch as you can go with Arm & Hammer perhaps. But could they do mattresses that contain baking soda? Probably. You just take the brand and start stretching it.

Aaron Dinin:

The power and value of a brand, that’s a big part of what we’re going to discuss on this episode of Web Masters. And we’re doing it by talking with Marshall Brain, who built a recognizable and valuable brand on the internet. So valuable, in fact, that it got bought by Discovery Channel for $250 million. And that’s probably why you know it, it’s the HowStuffWorks brand. And it began life as a website, howstuffworks.com, that Marshall built as a way of exploring, well, how stuff in the world works. Shocking, I know. Are you ready to hear the story? Let’s get dialed in?

[INTRO]

Aaron Dinin:

Hello, everyone. And welcome to Web Masters. It’s the podcast that teaches about entrepreneurship while talking with some of the internet’s most impactful tech innovators. My name is Aaron Dinin. I’m a serial entrepreneur. I teach entrepreneurship at Duke University and as he have surely already figured out, I am your host. On this episode, I’ve got a guest who you might recognize because he spent a lot of years as the face of his company, he is Marshall Brain, as in the Marshall Brain of Marshall Brain’s HowStuffWorks. Today it’s just HowStuffWorks and Marshall is no longer associated. The company he built has fractured into a variety of different media entities, including the popular Stuff You Should Know podcasts, a YouTube channel, and of course the original website. In other words, the brand Marshall started has expanded in lots of different directions. And well, that’s kind of what I want to explore. I want to talk about the power and value of a recognizable brand.

            And to kick things off, I should start by mentioning one brand you have surely heard of if you’ve been listening to this podcast for a while, it’s our sponsor. Web Masters is being brought to you with the help and support of our sponsor, Latona’s. Latona’s is a boutique mergers and acquisitions broker that helps people buy and sell cash flow positive internet businesses and digital assets. That includes things like e-commerce stores, Amazon FBAs, SaaS apps, domain portfolios, and popular infotainment websites like we’ll be discussing on this episode. So basically any internet based business that makes money online. If you’re currently running one of those and thinking of selling it, you should be talking with Latona’s. They’ve helped broker deals for tons of businesses just like yours. And they’re going to be able to help you get a great price. Ultimately, if you’re hoping to buy a profitable internet business, Latona’s can help you too. Just check out their website where you’ll see all the listings for companies they’re currently helping sell. That website is latona’s.com, latona’s.com.

            The businesses we usually discuss here on Web Masters tend to be product focused businesses. By that I mean they’re businesses that built and sold a specific tool or a service. And when we discuss them, we mostly focus on how and why they built, well, whatever it was they built. But, of course, that’s not every kind of business, some businesses are in the business of entertaining or providing information or things like that. They’re not as focused on selling one specific product so much as they’re focused on cultivating and maintaining an audience that they can sell lots of different products to. That’s what a business like HowStuffWorks is. It’s a brand and, of course, as a result, numerous products can ultimately fall under that brand. Everything from staplers to amusement parks, at least that’s what our guest on this episode, Marshall Brain came to believe as he was building HowStuffWorks. He never set out to build any singular product or service. Actually, he never even set out to build a company. He was a writer who originally just wanted quicker feedback on his writing.

Marshall Brain:

A key fact to understand is that I’m a writer. I enjoy writing, I almost have a compulsive part of me that wants to write every day. I’m uncomfortable if I haven’t written something each day. And that’s been true… It was not true in college, it became through maybe as I turned 30 or something, I don’t even know. But I developed this writing thing. And so at this point I’ve written let’s say 25 books, I don’t know the exact number, book that have been published. So around my eighth book, I finished it. And the problem with a book is that you have to write all the words and then you have to edit all the words and then you have to index all the words and then you have to send it to a factory and get it printed. And then it goes to bookstores. And then you find out if anyone cares.

            That’s frustrating unless you’re Tom Clancy or Stephen King or someone and you know people are going to love no matter what you put on paper. I’m not that caliber so I don’t know if anyone will care. But around the eighth book, I thought there’s this internet thing over here, and what if I tried to do my next book on the internet? And that way I could publish it one little bit at a time and I could find out if anyone cared and I could get feedback on it. This was my thinking. Blogs didn’t exist yet, they had to be invented. So there were no blogs, but I thought, “Well, I’ll just make a little website.”

Aaron Dinin:

When you first decided to publish online rather than via a traditional book, were you thinking about the potential of the web as a publishing medium in terms of reach and impact? Were you one of those entrepreneurs who recognized the future and was trying to get there ahead of everyone else or was it more a happy accident?

Marshall Brain:

I’m one of the larger idiots in the universe. Like Bill Gates looked at the early computers and he says, “I’m going to write a whole freaking version of basic and then I’m going to write an operating system for the IBM PC.” That was a person who could see what was coming and could be there and make stuff happen. I am not that person.

Aaron Dinin:

Good. That actually makes me feel better. I’m not that person either. So then how did you come up with the idea for HowStuffWorks? Was it just a random idea? Was it your first idea?

Marshall Brain:

I tried a couple of things before HowStuffWorks. But the concept was, I’m going to write to myself when I was 16 and I’m going to explain HowStuffWorks. And the act of doing that was really appealing to me. And initially there was no audience, no one knew or cared or anything. But I got the URL and I had a hosting arrangement for $30 a month or whatever the fee was. But I put it out there and the first article I wrote was how car engines work and like four people read that. Then I wrote another article and then I wrote another article, I was doing about one a week. I’d do a big chunk of it on Saturday and I’d put it up and no one cared. But I loved the process because I would learn a ton from writing these articles. So like how car engines work, how pendulum clocks work, how batteries work, whatever I was curious about that day, I would just go and research it and write it.

            And researching it meant I went to a library, I went to a bookstore and bought a book on it, or I called up an expert or something. There wasn’t anywhere to find it on the internet, that was the thing. Then I would do these bullshit little Gif animation, it’s like, how does a car engine work? I had a little eight frame Gif animation that showed the engine going through its cycles. I’m not an artist. Eventually when there was a company and I had real artists, they called my stuff Marshall Art and their goal was to purge all Marshall Art from the site because it just wasn’t up to their standards. In the beginning, an article a week with these little illustrations, everything was all on one page for the article. None of this break the article up into 14 pieces that are this big and then put 40 ads around it. There were no ads, there was a homepage that was just a list of here are all the articles. And no one cared and no one cared and no one cared and no one cared for like six months.

Aaron Dinin:

And what do you think got people to start caring after all those articles? What changed?

Marshall Brain:

So 20, 25 articles and then some news site liked the article, How Water Towers Work. And I can remember that day is like the day JFK got shot or Columbia Space Shuttle. That was the day because there was this enormous spike of traffic from this link. And you could see it and then it all went away the next day. But there was a little bump in the plateau. No one had cared and now it had some consistent traffic because of the aftermath of that link. And that was how it started gaining traffic.

Aaron Dinin:

Why did that article about water towers become the breakthrough article. Or actually I guess more broadly, how did you decide what to write about in general? Was it intentional or did you just stumble onto the right topics?

Marshall Brain:

It was all over the map, especially the early ones, because I didn’t know what anybody cared about. And it was literally what did I get curious about this week? So some of the early ones before anybody cared were things like, how car engines work, how pendulum clocks work, how guitars work, how bread works, how the power grid works. And that one was really interesting because I went all the way down to Sharon Harris Power Plant.

Aaron Dinin:

Sharon Harris is the name of a nuclear power plant near where Marshall lived.

Marshall Brain:

And this was before 9/11, so you could walk right up to the nuclear reactor. You’d just drive into the parking lot, park, and start snapping pictures and no one cared. Can’t do that anymore, it’s like a militarized now with M16. You can’t get anywhere near Sharon Harris now.

Aaron Dinin:

I’m actually okay with that.

Marshall Brain:

Right, it seems like a good idea. But anyway, I went to Sharon Harris and I said, okay, here we are. The power comes from here and here’s the substation that’s going to send it out all over town or the state wherever. And then you could follow it, you could just drive along the power line because it comes right down US1. Here it goes into this substation and here it goes here and here it goes here. And now it’s on the wire coming to my house and here’s my transformer. And it comes and here’s the plug in my house. That’s how the power grid works.

            Let’s explain what is a substation and what is a transformer and stuff. All the early articles were like that. So how water towers work, that seminal article that got it in first traffic, we were in Duck, North Carolina, which is right on the coast. And we were in a like timeshare and you’d come out and across the street was the Duck water tower. One day we come out and there’s a pickup truck parked at the Duck water tower and I’m like, “Oh, cool. I can find out how water towers work.” The guy was super nice. And then I did a little extra research with books and stuff and that’s where that article came from. It was total coincidence.

Aaron Dinin:

So I’m still back at this question, why do you think that article got popular? And in general, why did HowStuffWorks get popular? If you weren’t actively trying to market it, what happened? How did it grow?

Marshall Brain:

All right. So let’s consider what we have here. We have a guy, literally a random guy, I have written some books, but I’m not Tom Clancy. And I have a job at a little company that a friend and I had started that does computer consulting. And on weekends, I’m writing these articles as a Lark. I have no plan, there’s no business plan, I have no investors. There’s no one but me. And one day this article gets written that links to HowStuffWorks and I get this big spike of traffic and the plateau comes up.

            There is this phenomenon, which we could talk for a long time about, where once you get one hit like that, the ecosystem of media is a bit incestuous. So if one famous e-person writes about something, other people are going to say, “Oh, well, if this famous e-person is writing about it, then I should write about it. And so you get another hit and another spike and your plateau comes up a little bit more. Eventually, HowStuffWorks as the product of one random guy writing articles on weekends, it’s in USA Today and the New York Times sends a reporter down, literally sends a reporter down to interview me. And it took on this weird life of its own.

Aaron Dinin:

So it sounds like it was slow growth, gradually more and more people were discovering it over time thanks to fortuitous press and media. I guess then when did it become obvious you’d really hit on something that could be its own legitimate business?

Marshall Brain:

1999-ish, there was a thing called the coolest site on the internet. And once a day they would say here’s the coolest site of the day. But then they had an award ceremony every year, and this was trying to be the Oscars of the internet. This was the most legitimate award you could get. I’m nominated to be in the reference category. In the reference category are all the luminaries of the time like iVillage is in there, and TerraServer was the first global mapping system that had the whole planet in it. Microsoft and HP had done it and spent millions and millions and millions of dollars on it, had huge hype. And a bunch of really big, well funded, venture backed websites.

            I got a call and the guy who did the coolest site on the internet called me about a week before and he said, “Are you coming to the award ceremony?” Which was going to be in New York, hilariously was hosted by Robin Leach. He’s a famous guy. And it was in New York. They weren’t going to pay for my travel or anything like that but he said, “Are you coming?” And I had a friend and we had planned to come because how often is something like this going to happen? I said, “Sure, yeah, we’re coming. We’ll be there.” He said, “Good, I’m glad to hear that.”

            Because then when they did the awards, I won the reference category. But then I won the coolest site on the internet. I got to shake Robin Leach’s hand twice and that was the day. Because at that moment I got on the radar of venture capital. I was no longer unknown. Winning that award was a turning point and it had to stop being a hobby. The cost of hosting that website was growing. And there wasn’t AWS where you could just switch on servers on a whim, you had to buy servers and put them in racks and take care of them, and you needed a lot. So to handle the traffic, it really had to become something other than me at a hobby level.

Aaron Dinin:

That would’ve been what, 1998, 1999, the run up to the dot com boom? So does that crazy time in internet history play into your decision for how to build the business?

Marshall Brain:

So the first thing, to set the context, money is raining down from the sky. So in this era, space.com aligned itself with Lou Dobbs and I believe they raised $50 million for space.com. And you think, “That’s a lot of money for a website that talks about space.” Not everybody is interested in space, not even half of everybody. Like 10% of everybody has any interest in space and they certainly don’t need to drill down into what thruster was used on this mission and stuff like that. But they got $50 million. And eHow, I don’t know if you remember that one, but eHow explained how to do stuff, they got $20 million, then that was the theme. If you had a website and it had any traffic, you could go and you could get money. Well, not if you’re Marshall Brain because people looked at HowStuffWorks, I’m not Lou Dobbs, I didn’t have the credentials.

            So a guy came and he said, “Look, I’ve raised VC before and I can help you do this. Make me a partner and we’ll go out and we’ll raise some money and we’ll turn this into a venture backed web startup.” It still was hard. Like how did space.com raise $50 million? That is still a mystery to me. And it makes no rational sense. But we were able to raise an angel round of about $800,000. And then shortly after that, a VC round of about $5 million. Then the whole internet came crashing down right after that. There was the window of time and we barely got right at the tail end of that window. Then there was no money, there was the bubble breaking and then 9/11 happened and then the advertising desert after 9/11. It was just hard. We transitioned from being a hobby to being, let’s get some venture money and become a real company. And then let’s hire some people so it’s not a one man show anymore and we can expand the library faster, but then that whole era collapsed.

Aaron Dinin:

But HowStuffWorks survived the crash. How did you do that? When so many other companies didn’t?

Marshall Brain:

A lot of this has been blotted out of my memory by the trauma and the PTSD and stuff. But there was a day where I think we had gotten up to about 50-ish employees when the collapse came. I’m the CEO and I laid off like 40 of them, it was horrible. The top three worst days of my life and in that goes my father’s death at age 15 and number two or number three, just a horrible day. Oh my God because A, these were all high quality people B, we were a team, we were changing the world. The whole economy is collapsing and I have to tell you that you’re out, that whole era. Anyway.

Aaron Dinin:

So then let me ask a different question, how was this little content website positioned to become a venture style business? Because there’s a very specific thesis to a venture backed company, it has to have a certain growth potential. And at first glance, HowStuffWorks doesn’t really seem to fit that mold.

Marshall Brain:

Well, let’s first establish that several years later through a series of fortuitous events, we’re doing like 10 million visitors a month and 100 million page views a month. And we’re making about a penny and a half-ish per page that’s viewed off of advertising. After the collapse happened and the recovery started and things got better and Google came along with AdWords, let’s add that in as well, that hadn’t existed. And Google comes along with their whole AdWords thing and says, “Oh, geez. All you have to do is put this little tag on all your pages and we’ll populate an ad there. And if someone clicks on it, you get half the money.” That was the deal. So we had these context AdWords. If you are reading how car engines work, you might be interested in an ad about something about car engines, it’s contextual based advertising. But that hadn’t existed before, that level of easiness.

            So we did go through this horrible thing. But several years later, we’re doing 10 million visitors a month and we’re making 100 million times one and a half cents per month. To how did we get to 10 million people a month? That was all organic, that was all word of mouth and more like word of link. People would link to HowStuffWorks, they could be journalists, they could be businesses trying to explain something, they could be teachers. Google gets invented and it starts to go to dominance. And we had all these links coming into HowStuffWorks, so that gave us this great positioning in Google, especially because Wikipedia hadn’t been invented yet.

Aaron Dinin:

It sounds like it was basically a perfect SEO storm. People just happened to be searching Google for how does X, Y, Z work and your site would have naturally gobbled up all the traffic for those queries.

Marshall Brain:

All of this is the timing of it. You could say, I brilliantly positioned us, but that’s not the case. It happened to be in the right place at the right time with no competition. And Google is invented at that same era, all of that conflates together into something that makes HowStuffWorks a thing, a valuable thing. So now you have a brand, a brand people trust. Howstuffworks.com is a thing that people have heard of and they like it. So then we started doing books and we did a magazine. You asked, why would anybody invest in this? Well, the original plan was, well, we’re going to make money off of ads and we’re going to do e-commerce. But the ad market collapsed for a while and e-commerce just didn’t work. Our thing was, we were going to sell transparent everything so that you could see how it worked. Transparent telephones, calculators, staplers, anything. No one cared.

Aaron Dinin:

That gets into what I noticed about HowStuffWorks as I was researching the story ahead of our conversation. It seems like HowStuffWorks monetized by basically becoming a brand that spread across a bunch of different things.

Marshall Brain:

Right. There was a period of time where we were entertaining the idea of an amusement park. I still think it’s a good idea, but that’s a whole different universe. We had a brand. Look at Under Armour, that’s a brand. They started with water absorbing t-shirts and now you can get Under Armour anything you wear on your body plus anything you might carry with you while you’re doing a sport plus they could go into food. They’re a brand, everybody knows Under Armour. So you just take the brand and you think, “Well, what else could we do with this?” I have Arm & Hammer dog biscuits over here, they contain baking soda to give your dog fresh breath. What? That’s as far of a stretch as you can go with Arm & Hammer perhaps. But could they do mattresses that contain baking soda? Probably. You just take the brand and start stretching it. So amusement parks, if Lego can make an amusement park, then anybody can.

Aaron Dinin:

You’re basically talking about the power and value of a brand. So that was the value of HowStuffWorks. It seems like you’re saying it was less about any one product and maybe more about building a brand that could sell any number of products. Is that right? So you turned it into books and magazines and staplers and whatever else you could try to sell using the brand?

Marshall Brain:

Right. You think, why would anybody buy a book when you can go to the internet and read it for free? It doesn’t make a bit of sense. And yet some people don’t like the internet or they want to give the internet to someone at graduation. Or there’s lots of uses for a book that have nothing to do with I’m connected on a computer. This was also before the iPhone existed, let’s keep in mind. And so the books worked, we wrote four.

Aaron Dinin:

Personally, I don’t think the entrepreneurial world gives enough credit to companies like HowStuffWorks. By that I mean the kinds of companies that get praised tend to be the ones associated with specific products or services. But HowStuffWorks wasn’t really a product. Marshall and his team built a huge audience and then sold that audience whatever it could, books or magazines or telephones. Unfortunately not amusement barks, but you get the idea. What I love about this type of audience focused company is also what you heard Marshall mention. When something didn’t work, like their store of transparent items, that was okay. Even though a product failed, the entire company didn’t fail because the company still had its audience. And the audience was the valuable asset not any one product. So valuable, in fact, that Marshall was able to bring it to a successful venture style exit. Though, as Marshall explains, once he took VC money, he didn’t really have much of a choice.

Marshall Brain:

This is a story that has happened a zillion times. You’re either going to hold onto it and it becomes your thing for the rest of your life. As soon as you take in venture capital dollars, you have decided that is not your path. Because any venture capitalist, they put money in and there’s a timer they set. And the timer is in 7, 8, 9 years, we want our money back. We want you to either get acquired or go public so we can get our dollars back out times 100. That’s their dream, right?

            We put our money in and then there’s this liquidity event that is implied five to 10 years later, you get bought or you go public. As soon as you take in venture capital money or angel money, you have signed up for that plan. So it gets acquired by Discovery Channel, it’s an exit event, it’s a good thing. From any startup company’s perspective, that’s a good thing. But from a founder’s perspective, it is at least bittersweet and sometimes awful. As soon as you sell it, it’s the buyer’s company and they can do with it what they want. And they often do something you don’t like or don’t agree with.

Aaron Dinin:

And I take it Discovery Channel did things you didn’t really care for?

Marshall Brain:

The company changed after it was purchased. And most companies, when you sell to the buyer, they have lockup contracts on the key people. You have to hang around for two years as we transition. That’s a typical thing, people hang around. Usually you’re incentivized to do that with good pay. I think when HowStuffWorks got purchased, it had 200 employees and that is its own like what? That’s just, how is that even possible? But it had 200 employees and it sold for $250 million, which also was like, wow, that is really peculiar. Until you look at some of the other things that sell, you start to pay attention. That’s really a pretty low number. Over the course of a couple years, all those 200 people except for a couple were gone. They had either been told to leave, the vibe had changed that they left. And it’s such a completely different company a couple of years later.

Aaron Dinin:

Wait, sorry, so are you saying you regret selling HowStuffWorks?

Marshall Brain:

I don’t have a ton of regrets. I guess it was an experience that was largely positive. Here’s one regret, I don’t like the way it looks now, I find it troubling. I would like to be able to go back and fix it, but that ship has sailed. And I don’t think I’m alone in that, a lot of HowStuffWorks parents would say, “Wow, we would really like this site to be better.” But I don’t own it anymore.

Aaron Dinin:

Then do you regret taking venture capital? You could still own the company I suppose if you’d take in more of a slow growth approach.

Marshall Brain:

If you were to go back in history, knowing what you know now, you would really think about, do I want to take in money or do I want to have a slower growth path but not have to be controlled by venture capital? There’s pros and cons, and you don’t know what the economy’s going to do, you’re not in a perfect world. So I would at least go back to that moment and think, do we really want to do this? Would it be better to be a 10 person company that doesn’t have all these ups and downs and I’m not having to lay off 50 people in one day and blah, blah, blah? I don’t know.

Aaron Dinin:

I just have to say you described a $250 million exit as small. But honestly, I think you’re being humble, that’s a pretty enormous success. That along with a brand that still exists today, let’s just say I’m pretty impressed.

Marshall Brain:

Well, looking at it selfishly, I got to see the whole ride. I was there when the first word was written and I was there when it got acquired for $250 million. And I got to see how to raise venture capital and how to hire tons of people and how to fire tons of people and how to survive in vast economic wastelands. That was a complete experience. It had the good and the bad and the happy and the unhappy and all of that mixed together. And it’s incredibly educational. It’s a 12 year-ish project and I get to see the whole thing, which is fantastic from a personal standpoint.

            People will still come up to me and say, “Oh my God, I love HowStuffWorks. And when I was a teenager, it taught me everything I knew. It’s what got me into engineering.” It affected a lot of people in a significant sometimes life changing way. There’s just something appealing or satisfying about knowing that you added something positive to the world. It did gainfully employ a lot of people, and those were good jobs. You got to work on something creative. There’s nothing destructive about HowStuffWorks, we’re not trying to tear anything down. It’s always, “Oh, what’s the coolest thing we can do with how guitars work?” Whatever, pick any topic, you could do worse let’s just say. Those were good jobs.

            There was a lot of technology that came out of it. We had our own content management system. And the people who created that, we used to all get together. And there’s a lot of people from HowStuffWorks that we still get together, have lunch. A lot of us are still in the area and so we’re all good friends. Was it a very appealing thing that got created no negatives? I could have done without the economic catastrophe that happened in the middle of it and 9/11 and a whole bunch of other weirdness. But overall, it was a great ride.

Aaron Dinin:

Where I’m sitting, it certainly sounds like it was a great ride. What started as one guy publishing articles about HowStuffWorks on his own website on the early internet became a global phenomenon that in its various of all forms still gets huge audiences today. During the process, he raised millions of dollars, survived an extinction level market event that killed off tons of other similar companies, and he even achieved a nine figure exit to a major media outlet. All while, as Marshall noted, being a company that created content rather than destroyed things and provided value to the world. Marshall was pretty humble about all that, but yeah, I don’t think he should be. So I want to thank Marshall Brain for taking the time to share how HowStuffWorks worked. He’s the kind of entrepreneur who deserves to have his story told, and I’m excited we got to share it here on Web Masters.

            By the way, if you’d like to see what Marshall is up to these days, you can find him on Twitter, he’s @MarshallBrain. We’re on Twitter too, it’s @WebMastersPod and I’m on Twitter @AaronDinin, that’s A-A-R-O-N D-I-N-I-N. So send us any thoughts or feedback or questions you have about this or really any episode. You’ll also find lots of additional content about startups, business, and entrepreneurship over on my website, that’s aarondinin.com. Thank you to our audio engineer, Ryan Higgs for piecing together this episode and thank you to our sponsor Latona’s for their constant support of Web Masters. If you’re thinking about buying or selling an internet business, be sure to check out latonas.com.

And hey, be sure to check out all the other episodes of Web Masters, we’ve got a lot at this point. You can find them wherever you listen to your favorite podcasts. While you’re there, don’t forget to subscribe so you get the next episode as soon as it’s released. We’ll have that for you real soon. Until then, well, it’s time for me to sign off.