I had the opportunity recently to talk to Cory Miller, the founder of iThemes. Cory started iThemes in January 2008, so they are currently celebrating their 6th anniversary.
Cory is a really thoughtful businessman and leader, and I really enjoyed our chat. If you'd like a good compliment to this interview, also listen to his talk with Troy Dean of WP Elevation.
Here's the interview:
Structure and culture at iThemes
iThemes has twenty two employees today. Cory (CEO) and Matt Danner (COO) make up the executive team, but then they also have a bevy of designers, developers and support personnel. Cory found that growing from ten to twenty employees was the hardest, because it was the point where he had a much harder time having one on one relationships with each person.
Matt becoming COO in 2011 was a huge help for iThemes to reach and maintain “that perfect equation” Cory notes in the interview. Cory is quite good at crediting the team around him — something I find to be a common quality of good leaders.
We talked about culture at iThemes and other businesses. Cory and I agree that culture is hugely important, and Cory made the wise point that companies are different everywhere, and it's a “unique set of DNA, personalities, and experiences that shape that [culture].” In our example, bean bags and trendy offices as a “culture” driver may work in some places, but it doesn't have to be what ties a company together, and doesn't have to be.
iThemes is a hybrid company; a number of their team works out of Oklahoma City, but many employees work remotely as well. One of the challenges for them has been working to ensure that culture is not fractured between on location and remote employees. Cory still would only give themselves a “B” grade for managing this barrier, but it's something they actively work on.
Tools for communication and operations
Being a new remote worker myself, I was interested in tools iThemes uses for communication and internal operations.
One of Cory's favorite tools is Trello, which they got to know this last summer as they prepared for the launch of Exchange and had six different developers working on one project. They've now expanded their use of Trello across their projects and processes, including public roadmaps that anyone can view.
For chat iThemes uses HipChat, a tool they've embraced after enough struggles with tools like Google Talk and Skype. They currently have HipChat rooms for each of their major product lines as well as generic office chats.
I personally am a big fan of HipChat as well. In fact, I'd say that it's probably been the best help for me to transition to remote work, always having coworkers in HipChat that I'm able to communicate with at any time.
Really, Trello and HipChat have been revolutionary for connecting people.
iThemes also uses P2 for internal announcements, but it's not as big of a part of their processes as the others.
iThemes product lines
I discussed a number of iThemes' product lines with Cory. Interestingly missing from our conversation was at-length conversation about themes. Toward the end we brought this up and Cory noted that plugins really are their main business now, and it's a testament to how the commercial space in WordPress has evolved.
BackupBuddy accounts for 45% of iThemes current sales revenue. All of their products utilize yearly renewals for support and upgrades, and BackupBudddy makes up almost half of that business for them.
BackupBuddy is by and large our biggest and most successful product we've had.
Cory notes that churn is a struggle in the WordPress world, as people don't always see why they need to renew memberships. It's something they “are actively trying to work on” to entice people to upgrade by developing new features for iThemes products.
Support is an expensive part of this product line. Due to the many struggles that can occur with various hosting environments (especially shared hosts), it makes this part of the business tough. But it also is one of the benefits of BackupBuddy being a mature product, because they've already encountered hundreds of the types of problems that someone could expect for these scenarios.
Cory also had some really insightful things to say about competition, both from hosts and other backup providers, for BackupBuddy; and how they intend to keep finding their niche in the backup space for cross-host, WordPress specific backups.
Sync is a new product for iThemes that “allows you to update and manage multiple websites — WordPress sites — from one central dashboard.” Currently this works for updating WordPress, plugins and themes, and Cory views Sync as a product that helps tie many of their products together.
For instance, from Sync, you could trigger BackupBuddy to function on various sites, run security checks with their security plugin, or in the future maybe even offer things like sales reports for their Exchange product
If you manage an online empire, Sync's meant to be that integration source for everything you're doing online.
Just released late last year, they are actively working on Sync to expand its feature set and tie in to their “central strategy” of offering integrated solutions for WordPress website owners.
Exchange is iThemes latest product. It's the result of months of planning and development. It's an eCommerce plugin with simplicity as its core goal. I covered it when it launched. By now they've moved into physical products in addition to downloads and they've released consistent updates to improve the plugin.
They've also tried to make sure they keep Exchange simple — a hard thing to do, especially for an eCommerce product. They are trying to lower the barrier to entry for eCommerce with Exchange.
Exchange is also their biggest investment to date, and they released the base plugin for free. Cory talked about what this means for them from a cash flow perspective and calculating their ROI. They know that Exchange is a long term investment, with a handful of people either full time or almost full time working on it, and it can't possibly pay off immediately. They haven't yet hit what Cory calls the “critical mass” of success, but they are seeing growth and adoption for the product and are optimistic about its future.
Better WP Security
Better WP Security is another new project by iThemes. It's a million+ download plugin they acquired when they hired Chris Wiegman. This will be a big part of their goals for 2014. Like with Exchange, their planning for acquiring Better WP Security and hiring Chris was vastly more sophisticated than their earlier business planning with BackupBuddy.
Product Profitability and pricing
We sidestepped our product discussion for a little bit to talk about pricing and profits. Cory noted that their lower price items are harder to be profitable, because if someone fills out one support ticket, that costs them a good bit of money and that sale isn't profitable. So they like bundled purchases (their biggest bundle is over $500) and higher priced items.
However, they don't dislike small purchases, because often times those are what get someone “into the iThemes family.” They tend to see repeat customers, and someone that has a good experience with an inexpensive item tends to check iThemes first when they're ready to spend more money.
One thing I asked Cory was whether he thought they could segregate the cost of support with the cost of the product and updates. I used my personal experience with Gravity Forms as an example: that I'm a multi-year customer and I rely on their updates, but I really never use support. They've contemplated separating out support before, but his reasoning is what intrigued me. Cory thinks that separating support from the product is potentially damaging to the brand, because, “even though you might say in big bold letters ‘NO SUPPORT', they [customers] still want it. Then that ends up putting egg on our face.” I think the potential loss of brand equity aspect of such an offering is a really interesting take, and one that makes a lot of sense and puts that concept in new light for me.
Advice for moving into new markets
I asked Cory what his advice is for others that are looking at new markets; whether a service looking at products or a product business looking at a new market.
Business that don't want to grow are probably flat lined or dying businesses.
Cory doesn't advocate rapid scaling for a company, but strongly advocates for companies to consistently invest in their own future. He envisions himself as the primary driver of the ship, always asking, “What's next?”
Cory notes that there will always be someone that can do what you are doing, and maybe even do it better. There may even be a teenager in their parents basement that can build something that kicks your product's butt.
But it's key to look at what you can do well, to execute, serve your customers, and constantly invest into the future.
Investing for the future of iThemes
iThemes is not sitting on their laurels and relying purely on existing products. Three of the four products we talked about in the interview were launched just last year. As WordPress and the web product space evolves, Cory intends for iThemes to be nimble and evolve with it.
Backups, eCommerce, security and updates: that's iThemes. That's what we do now. Those all really group well together. … We're moving into the future.