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MBP #10: Billy Murphy on building a seven-figure poker training membership site

He's the one in the green shirt :)

He’s the one in the green shirt 🙂

I met Billy last year at FINCON, the personal finance bloggers conference, and we got to talking, as one does at a conference, and I had no idea he built up such a hugely successful business in such a short period of time.

The photo in the above might seem over the top (no, he’s not comparing himself Christ, it’s just an awesome photo from what seemed like a fantastic trip), he’s not at all. Extremely humble and willing to share, as he does in this podcast.

Thrilled to have him on and one thing that surprised me was how much content he had on his site when he first launched (which by some accounts was a $30,000 first day).

What will you learn in this episode:

  • We talk a little about his background as a professional poker player, his young entrepreneur years, and the genesis of Blue Fire Poker
  • How he learned the importance of good coaching
  • How he focused on a specific game (No Limit Texas Hold ’em) to teach and emphasized quality over quantity
  • How he enticed professional partners to create videos and market the business
  • Billy explains the membership pricing strategy
  • How he gained exposure and word of mouth marketing without spending a penny on advertising
  • His challenges building the site using an offshore team through Elance

Big thanks to Billy for coming on the show! If you enjoyed the episode, please join me in thanking him by clicking to tweet @billymurph and tell him how much you enjoyed his story!

Resources and links mentioned in this chat:

Here’s the FoxNews clip where they discuss BlueFirePoker’s challenge to President Obama:

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Raw Transcript

Jim: Hey everyone, today’s guest is Billy Murphy. He’s the founder of Blue
Fire Poker, that’s a poker training site that at one point was bringing in
over a million dollars a year by teaching people how to play poker using
videos.

I first met Billy last year at FinCon which is a personal finance blogger
conference, and I was just struck by how down-to-earth and relaxed he was.
I wouldn’t have guessed that he started a company that made over a million
dollars a year teaching people how to play poker.

We talked a little bit about his background and how he started the site,
including his membership pricing strategy, which I really like, and a lot
more. I also want to say thank you, thank you, from the bottom of my heart,
to everyone who’s been subscribing, reviewing and rating the podcasts on
iTunes.

For a few short days it was actually on the new and noteworthy carousel for
all podcasts. I took a screenshot. I blew it up. I have you guys to thank
for it, so thank you, thank you very much.

If you hadn’t had a chance to review, subscribe or rate it yet, do me a
big, big favor and do that right now. Just leave an honest review; I’d love
to hear what you think. It would help me out a ton.

Hopefully, we can get back on the new and noteworthy carousel. Thank you so
much. And lastly, for the show notes, you can go to microblogger.com/10,
that’s the number 10. Let’s get to the chat. I hope you enjoy it.

Hey Billy, how’s it going?

Billy: Jim, what’s up man?

Jim: Not much. I’m excited to have you on. I want to talk to you a little
bit about sort of your background and how you got started with Blue Fire
Poker.

Billy: Definitely. Thanks for having me.

Jim: Yeah, of course, definitely. So tell us a little bit about yourself.
I know that you were, for a little while there, a professional poker player
which is sort of I guess the genesis of the Blue Fire Poker thing. But do
you want to go into that a bit?

Billy: Yeah, I did poker professionally for about four years. I
learned to play in college, played basically for side money for a couple
years, then got a job for a little after college then decided to try poker
full-time.

So I did that professionally for about four years, launched Blue Fire Poker
which is a poker training company in 2009, and then in 2011 started buying
e-commerce stores. I bought about 15 or 20 of them and just ran that kind
of as a side passive business. And yeah, started Forever Jobless, now
launching the podcast and doing some investing.

Jim: Wow, it sounds like you’ve got a lot of entrepreneurial blood and
spirit in you. Is that something your parents taught you? Or just something
you picked up?

Billy: I guess I just kind of picked it up. Neither of my parents were
entrepreneurs. As a kid, I always liked making money. I got a newspaper
route when I was nine, then I started buying and selling sports cards when
I was probably like 17. So I got the itch early.

Jim: Wow, sports cards? Were they still popular back then?

Billy: Well, not as popular. Yeah, I was doing baseball cards,
basketball cards, but they overproduced a lot of cards starting in like the
late ’80s and ’90s so the market was kind of going down when I was getting
in.

Jim: That’s all right, though. But I mean as a kid, you don’t really need
to make that much. You’re just sort of like feeding your hobby.

Billy: That’s the thing, it was . . . I initially got into it not
intending to make money at it. I bought a collection and tried to sell off
the cards I didn’t want. So I was a basketball guy, so I sold off the
baseball and football. And what happened was I made more money from the
half of the collection that I sold than the whole collection cost me.

Then I realized holy cow, I could probably keep doing this. It was more of
a fun thing. It was like the amount of hours I spent just enjoying it and
organizing the cards and stuff, I probably didn’t make a lot when you broke
it down per-hour.

But it didn’t really matter to me as a kid. If you make five grand or ten
grand here or there, it doesn’t matter if it took you a year, it’s a lot of
money.

Jim: So you do this, you go to college, you’re playing for beer money . .
. you’re playing for beer money. You’re playing poker, rather, for beer
money and all this stuff. And you decide to go play as a professional. What
was that transition like? How did your parents take you graduating college
then going to be a professional poker player?

Billy: Well, I always kind of put it out there that I might become
one. And I think . . . I can’t remember if it was before I told them I was
going to be a professional or after I decided to, but I remember at one
point they were super hesitant about the idea of me being a poker player.
And I tried to explain to them like listen, this isn’t gambling. I have a
skill; I have an edge on other people. I’ll make money long-term.

And so they didn’t really . . . people don’t understand poker. It seems
like a luck game. And there’s short-term luck, but long-term the math works
out. I remember one day I played this little tournament, and I ended up
winning the tournament. And so I went down and I printed out the tournament
results and I put it on the fridge.

And the next day, I won the same exact tournament. And so I put it on the
fridge again, almost as like a statement. I know what I’m doing. Even
though that’s like . . . obviously winning two tournaments in a row doesn’t
prove anything.

So I remember I did that, and they were starting to understand a little bit
about maybe I wasn’t just . . . maybe I wasn’t just gambling. But then the
thing that turned them was . . . so I had borrowed money from my dad to
play or, not to play, sorry, to buy a car in college.

So I wanted to get a car. I was in college. I didn’t have a lot of money,
and so I probably put a little bit of money down that I had and the deal
was hey, when I get out of college and get a job and stuff, I would pay it
back. And the only reason I went through my dad instead of just getting a
loan, because I was a college kid, I didn’t have a lot of credit or
anything yet.

And so when he hears I’m going to be a poker player he figures “Man, this
might take forever to get paid back now. When am I going to get paid back?”
And he doesn’t bring it up a lot or anything, but I knew he was thinking
about it. He brought it up once or twice.

I started playing poker. I made literally like zero dollars the first month
as a professional, so I guess technically you couldn’t call me a
professional because I didn’t make any money. But it’d been I’d got a job
for a couple months after college and hadn’t played a lot; I was kind of
rusty.

And basically the whole month, I made zero dollars. The next month I worked
out a deal with the coach. He got a percentage of my play and spent
literally day and night every day playing, studying, playing, studying,
asking questions.

That second month as a pro, I made like $17,000. Over the next couple
months I kept doing really well. And so I remember this was probably three
or four months after . . . after I’d become a professional, a full-time
player. I remember my dad, I was staying at my parent’s place at the time.

I had moved back from . . . I had a job in New Jersey. My lease ended
there; I moved back. I was staying at my parents’ for a little bit until I
decided where I wanted to live.

I can remember he was sitting in the living room one time on the recliner,
and I had cashed out a bunch of money. And so I owed him however much for
the car, you know, $20,000 or whatever it was in a loan. He probably
expected to be paid a little bit over the next five years or whatever. And
so I brought this stack of money and I put it into a rubber band. He was
just sitting in there by himself. I said “Oh, here dad, here’s the money
for the car.” And I just threw it on his lap. He was like “What?”

And I hadn’t told him how I was doing at poker, like they had no idea if I
was doing well or not. So then they never bothered me again after that.
They never . . . because in those couple months before that, mom would
leave like a job ad out, like “Hey, you should check this out; this looks
good.” You know, obviously they didn’t understand it.

And they would tell their friends on the phone, when their friends would
ask “What’s Billy doing now that he graduated?” They’d be like “Oh, he’s
trying to figure it out.” I’m like “What do you mean? I’m a professional .
. .”

So after that, they never bothered me about getting a job again. They
probably told their friends I was a poker player from that point on, and I
think once they learned that hey, look, I can make plenty of money doing
this, that they were okay with it after that.

Jim: That’s funny. So the story . . . the professional poker, they stopped
hassling you because you paid my, not dues, but like I paid back the car
which is sort of the agreement and you’re supporting yourself which is
awesome.

Would you credit your jump from . . . I mean making nothing in the first
month is actually not that bad considering it’s your first month of being a
“professional poker player,” right? At least you’re not down a big amount.
So you go from zero to $17,000 after you hired a coach? How much do you
credit that jump to the coach?

Billy: A decent amount. So part of it was my rust in the amount of the
jump. I had made money throughout college playing poker, so I knew I could
make money. It wasn’t like I tried it out for the first time and made zero;
it was like the games had slightly changed in the four to six months since
I had played much. I hadn’t played in a while, and I think there was
probably some mental barrier to, “Wow, now I need to make money because I’m
trying to do this for a living”, where in college it didn’t really matter
if I lost one day or one week or whatever, it didn’t really matter.

But the coach definitely helped. So I think getting a coach or a mentor for
whatever you’re in is huge. I actually approached this guy and I said “Look
. . .” And I didn’t have a lot of money at the time because, remember, I
had just graduated from college. So it wasn’t like I could pay this guy a
couple hundred bucks an hour and feel good about it. I mean that was a lot
of money to me.

So I said “Listen, I’m going to work harder than any other poker player
this month. I’m going to play more hands than anybody you know, and I want
to work out a percentage deal,” because obviously the more hands you play
the more money you could possibly make.

So I talked to this guy about how much I was going to play, and he’s like
“There’s nobody that plays this much.” “I’m telling you, I can play that
much.” I think for the month I played like 88,000 hands, which that’s like
playing eight tables at a time, so obviously you can play hands quicker,
and it’s online so you can play quicker. But at the time there was almost
nobody playing that amount of hands.

But what I would do is as soon as I would get done playing for the day, I
would send him all my questions. So I’d print out like here I had questions
on these 25 hands, and here’s the spots I had questions on. And the
coaching arrangement was very unique. I didn’t want him to do coaching
calls and things like that to me. I said “I just want you to tell me the
specific advice that you would give on the hands that I ask.”

And so it was actually quicker for him than coaching me every day, and it
was . . . for me it was I was like a robot. I was like “Tell me how to play
these hands, I’ll figure it out.” Maybe twice that month we hopped on a
call to talk more in-depth strategy.

So I would stop playing, he would send me back feedback, and I would
literally study that for a couple hours and I would literally study that
for a couple hours and figure out why. And if I had more questions, I would
ask him.

And so that continued like day-after-day. So it started where maybe the
first day I’d have like 75 questions and the second day maybe I’d have 60,
and slowly by the end of the month I didn’t have a lot of questions
anymore.

So, I think it really, really helped for the coach. That was definitely a
big part of the jump. And once you have the knowledge, you don’t lose it.
Like, I didn’t need the same coach for a year. So that was the only month
he actually coached me, and after that I felt comfortable without him. I
hired coaches after him, but that’s I think an important thing for people,
hiring coaches. You don’t lose the knowledge you get, so it compounds for
you.

Jim: So you were a professional poker player for four years. Is it around
the same time that you decided to put together a poker training site?

Billy: I honestly . . . so I always wanted to start a business. I
didn’t have a plan to do it in poker. Part of the reason that I decided to
do it was I was out in L.A. playing live poker. I pretty much played 90,
95, 99 percent online, but once in a while I’d be cool to go play live. So
I an apartment with a buddy for a month out in L.A., so we played at the
Commerce for a month.

There were a couple guys that came and visited us out there, and they were
involved in a poker training site. They started openly talking about how
much money there was in this education market. They didn’t own the company;
they just worked for it. But they knew how much the company was making.

And this company had made like . . . I forget how much they had made, but
it was six figures within the first couple months of launching. I was like
“What?” It didn’t make any sense to me, because there are already a bunch
of poker training sites. So that got me interested in the possibility of
doing it, was just talking to those guys.

I knew the market as good as anyone else. I’d been in poker for not only
the three or four years professionally I’d been playing up to that point,
but I was playing for another three or four years before that. And online
poker was a relatively new niche industry when I got into it, so I was as
knowledgeable as anybody in the poker market.

So I was like “Okay, I know . . . I think I can make that business model
better, plus it seems like there’s a lot of money to be made and I’m going
to start a business anyways.”

I didn’t play poker with the intention to go do it for 30 or 40 years; I
did it to, number one it was a fun job. I mean it’s probably the most fun
job you can have, but it’s still a job. And number two, I obviously did it
to build capital so that when I got . . . when I had a business or
investment that I wanted to do, I’d have the money to do it.

So that kind of started making me think about doing it. I had other ideas.
I mean I was going back-and-forth on probably four or five different ideas,
but that made a lot of sense to me because number one, people started
talking openly about the numbers. So they weren’t the only ones.

There was actually somebody who . . . one of the guys did an interview for
like “Forbes Online” or something, I can’t remember, but it was a pretty
public interview. He said “Yeah, we made a million dollars profit last
year.” And they were another poker education company.

At the time, this was earlier, but at the time nobody knew how much those
guys were making. So those guys opened the flood gates to a lot of
competitors. At the time I thought it’s probably filled up; it’s probably
saturated by now. But then when I heard these other guys talking about
another guy they knew that’d just watched one and they were doing some
videos for them and they had already made six figures and they just
launched.

I thought, “Well, it’s clearly not saturated yet. Maybe I should at least
look into it and check it out.” So I started checking it out and started
looking into it. I thought I could fill a need in the market.

Jim: So when you decided all right, I’m going to start this poker training
site even though there are all these other ones out there, did you think
“How am I going to make this different and better?”

Billy: Yeah, so that was a big thing. So a lot of the . . . you know,
I was a poker player, so I was their ideal customer right? And I wasn’t
signed up to any of these guys. I thought why am I not signed up? And part
of the reason was all these companies were focused on quantity.

So they put out a ton of videos, and maybe you were going to watch a couple
of them each month, but the majority of the videos weren’t anything you’d
want to see.

So I said okay, I’m going to put out way fewer videos. I’m going to do it
on a very specific niche. So for us, that was no limit, Texas Hold ’em,
cash games. That was it.

There’s a lot of different games in poker. There’s limit games; there’s
cash games; there’s tournaments; there’s sit-and-gos. There’s a lot of
different games we could offer. There’s pot limit Omaha; there’s stud. We
just picked one specific game, and I just got one different player at the
different levels of stakes.

So basically there was a very, very small stakes guy and then there was a
small stakes guy, there was a mid-stakes guy, there was a high stakes guy
and there was a very high stakes guy. I think I started with five or six.
So we were filling a really specific need. So my goal was if you were a no
limit hold ’em cash game player, this was clearly the site you signed up to
and signing up for anybody else would be incorrect.

That was the most popular game. By far the most people played that; that
was the one that got very popular on TV. Most of the guys were playing that
game and nobody had just crushed that market. It didn’t make sense to me.
Everybody was putting videos out on that stuff, but they were trying to
offer 30, 40, 50 videos a month and maybe like two of them you’d want to
see.

So I just changed it from why put out any of the other videos? Why don’t we
just put out what people want to see and forget about trying to be the jack
of all trades for now? And since then, we’ve obviously scaled up. I mean
this was over five years ago. We’ve scaled and went to other games. We’ll
use the same idea for each one that we did.

We didn’t bring on . . . some of our competitors literally had 80 pros at
times, and so that didn’t make any sense to me. So I thought we had an edge
from not only that, but the marketing edge.

Jim: It sounds like niching down was a very good strategy because I only
have so much time. Like if I’m watching a video on someone else playing a
hand or whatever, that’s time I’m not spending actually playing.

Billy: Right.

Jim: And so I know one of the big things with you and also with me is you
need a lot of value out of the time that you’re spending on these things,
so why would I go to a site that has 60 videos when I could find one that’s
specifically about no limit hold ’em and they only put out a couple videos
and each one is worth watching?

Billy: Yeah.

Jim: I think a lot of times we get into the habit of producing too much
quantity because that’s what we feel like we should do.

Billy: Yep.

Jim: We end up, let’s say it’s a blog and you’re writing five articles a
week. Well really maybe you should only write one and sort of focus that
down so that it’s something really worth reading.

So every single time someone comes back to a Blue Fire Poker, the video
that comes up, there’s a 90 percent chance it’s something I’m going to
watch every single time. I don’t need the 50 videos.

Billy: Yeah, no, exactly. And that’s the same strategy I’ve used for
blogging, for Forever Jobless. I just put out one . . . very regularly, but
whenever I put one out everybody shares it and talks about it and comments
on it. That strategy works in just about every industry I feel like.

Jim: Yeah. And so right now you have . . . when I last looked at the site,
you had like 20 or 25 pros. How does the partnership . . . how do you pay
them? What’s the contract? What does that look like to get those
contributors to produce videos?

Billy: Most of the guys . . . so all of the guys basically right now
who are making videos for us get paid per-video. So if you produce a video
maybe you get $300, $400, whatever it is for the guys.

So if a guy puts out two videos a month and they get $300 a video they get
paid $600 a month. And then it depends on some guys put out more videos;
some guys put out less. But a lot of it, for the pros, a lot of them, it’s
beneficial for them because they get in front of potential . . .

Jim: Coaching clients?

Billy: Coaching clients, and yet a lot of the guys just like doing
that as kind of a side income. The majority of our guys are making pretty
good money from poker so they don’t need that extra $600 a month or $800 a
month or whatever. It’s not a lot of money for them. But it gets them a lot
of credibility, like number one being associated with one of the large
training sites.

Number two, like you mentioned, coaching clients. And it’s just . . . you
know, you can only play so many hours of poker in a game. Most of the guys
are not playing eight hours of poker in a day; it’s a big grind. So this is
kind of an easier way of making money than playing poker, less of a grind,
and kind of an extra way to make money and get a lot of exposure.

So a lot of guys write books. They’ll do books or e-books or whatever it
may be, and so it’s being associated with a large site gets them in front
of a big audience.

Jim: It’s funny to hear that poker players, to help them wind down, will
write books and do videos or commentary on videos that they’ve taken while
they were playing. But it makes sense.

While you’re playing, you have to be hyper vigilant and be paying attention
and doing a ton of math which is the real reason why it’s not . . . I mean
it’s more skill than it is luck, and short-term of course everything is
luck a little bit, but there’s a ton of thinking involved. So yeah.

So I wanted to, before we get too far along, I wanted to ask how well is
the site doing? I know that I’d heard you made this bet with President
Obama or any member of Congress for a million bucks. That’s sort of like a
marketing thing. Before we get into that, how well is the site doing at
sort of its peak?

Billy: So it was doing . . . we had some months where we did six
figures a month in revenue, so that was we were charging people $100
signup, $30 a month. So we had thousands of subscribers at the height.

Jim: So I guess you felt pretty comfortable challenging the president to a
game of poker. I guess it wasn’t you; it was you or one of the pros on the
site.

Billy: Yeah, it was basically any one of our pros. We had just
launched at that point.

Jim: Oh, okay.

Billy: It was we probably got on . . . we got on Fox News probably a
month or two after launch, and so we had just started. Basically I wanted
to do that challenge as a way to get . . . obviously for publicity, but
there was a kind of legislation that was potentially going to be passed at
the time that they were trying to say poker was a game of luck instead of
skill.

And so it was supposedly going to go to a vote and they were going to
decide is this a skill game or is it a luck game? That’s why it was a
strategic challenge both from a viewpoint of getting in the news because
they’re already talking about it to trying to prove out as good as possible
that this was a game of skill and we were willing to back it up. If anybody
could beat one of our pros, they should be willing to take that. We’re
offering a free million dollars.

So if it was a game of luck then it’s like flipping a coin, right? So they
would take that bet. But they wouldn’t have had a chance against any of our
pros.

So it was basically . . . and it was a strategic move to basically also get
the poker community behind us and say look, we’re going to help battle with
the poker rights too.

And we had just launched, so it was big to get the poker community to both
know who we were, know that . . . then it got us a lot of fans because of
the fact that we did that. We were brand new; a lot of people didn’t know
who we were at that point.

So for us to get on national news defending poker and basically trying to
battle the people trying to outlaw poker, it was really big for us.

Jim: I know that I’d heard that a lot of your marketing strategy involved
your pros being sort of ambassadors of the site and going on forums and
things like that whenever they were talking about forum to sort of be not a
public face, but just an ambassador of Blue Fire. Was that part of your
marketing strategy? How did that all work?

Billy: Yeah, the initial launch of the site, we literally . . . I had
a buddy post just to say the site was live. We didn’t do any pre-marketing,
pre-launch or anything like that. I had a friend post in one of the popular
poker forums and just say “Hey, this site just launched. Here’s what’s
going on.”

He might’ve wrote a brief blurb on it and just linked to the site. Then
that blew up because we hadn’t said anything about it; we kept it private,
so a bunch of people started talking about it. And then we would have our
pros go in and start talking about it.

I think we did such a good job at that type of marketing, the people
running the forum then wrote us and asked us to start paying them if we
were going to keep having our pros post. But it worked really well. I mean
it got us a ton of publicity right away. And yeah, we were getting such
good publicity, I think our competitors were buying advertising spots and
were complaining that everybody was talking about us and they were paying
$5,000 or $10,000 a month for great advertising on the site but everybody
was talking about us, their competitor.

Jim: That’s funny. And it was all based on your pros just talking about
the site?

Billy: Yeah, or the people talking about the site. You know, to launch
in that space at the time, there was like 30 competitors at the time. It
was a crowded space, because poker training in general is a pretty small
niche.

So to launch at that time was big news, because everybody thought we would
fail; a lot of people thought we would fail at the time. Just because
there’s already so many people in the space, you know, why do you need
another poker training site? But yeah, so there was a lot of buzz around
that. Will they make it? Will they not make it?

And each of our pros, so there was like sub forums, right? So in the poker
community there’s small stakes, medium stakes, big stakes. And so, again,
if you remember each of our pros was at a different stake level that they
played at, and so I had each of those guys try and start talking about
things in their forums or just participating more. I remember we put, I had
the guys put the logo of the company as their forum avatar, and so our
avatars were everywhere.

So the people who owned the forum didn’t want that anymore, even though our
competitors had those. But because we did it so much better, now they
didn’t like it because we were getting so much publicity. And again, we
weren’t spamming at all, we were literally just answering questions.

But we did it in such a way that we were everywhere. So if you were
anywhere around poker that week, you knew who we were, at least in certain
forums. That really helped get us right out of the gate really fast, and
then obviously the Obama challenge helped us a lot, not so much because of
Fox News because obviously people are going to see Fox News.

And yeah, we got a little traffic spike or whatever on the news. But the
real wave and the benefit was the second wave of publicity to the poker
forums. Like holy crap, this poker company just got on national news. How
did they do that?

And again, people were happy that we were kind of fighting for poker rights
and things like that, so we got the second wave through all the blogs, the
forums, the poker news site. So that’s all free. And so that was like
continued publicity.

And again, that’s the kind of stuff . . . with poker forums, they won’t
talk. They want us to pay to talk about us. So instead of I could’ve just
took out some ads for five to ten grand a month like our competitors were
doing, but instead I just kept creating stories that would cause people to
talk about us. There’s not a lot you can do if we’re creating the best
stories in poker; you’re going to keep talking about us. So we got a lot of
subscribers, a lot of traffic, from that stuff.

Jim: That’s funny. I remember the day when that used to be called guerilla
marketing. You remember that?

Billy: Right, I haven’t heard that term in a while.

Jim: Yeah, I just thought of it just now. Now it’s word-of-mouth and
viral, but that’s guerilla marketing. Did you ever buy advertising on the
forums after they asked you guys to take down your avatars and I guess stop
talking?

Billy: Never. We’ve never bought advertising.

Jim: So no AdWords? You’ve never done like Facebook ads or anything like
that?

Billy: We actually can’t. So for poker terms, you actually can’t buy
AdWords.

Jim: That’s a good point.

Billy: I looked into doing that. But never done Facebook. I’ve
actually considered it, especially most recently with how Facebook
advertising has gotten a little better and I think there’s some good things
to follow to do that, so I’ve thought about doing that. But we’ve literally
. . . I’m trying to think if I’ve ever . . . I think I’ve literally never
spent money on advertising. I’ve done it all viral, all word-of-mouth, all
referral.

Jim: How about affiliates? You ever use affiliate marketing?

Billy: We did use affiliates, but it’s so tiny. I actually thought
when I launched that affiliates were going to be a huge part of our
business. The problem was most poker blogs or news sites or whatever, most
of the places they’re trying to push people to are poker sites because they
get such a high CPA from people signing up for poker rooms.

So they were getting . . . our CPA was like . . . I think it’s still the
same, I think it’s like $50. So if you’re an affiliate and you send
somebody to learn poker from us, we pay you $50, where the poker rooms are
paying like $200.

Jim: Yeah, they get hundreds.

Billy: Yeah, they make so much more, it’s like why would we move you
into a space that’s going to get promotion? So we have affiliates but it’s
really tiny. We might get, you know, at the peak even we were probably only
getting dozens of signups a month through affiliates and now we’re probably
getting sporadic . . . I’d have to check, five, ten signups a month, 15
maybe.

Jim: Okay. You mentioned earlier about the membership pricing. I think you
started at a $100 signup fee and $30 a month, then there’s like a six-month
and 12-month plan. Has that not changed?

Billy: Hasn’t changed. So it’s the same. So basically, it’s somebody
signs up for a month, it’s basically the math would work into where it’s
just $120, whatever it is, $129, $130ish. Then the six month is $250 I
think then $400 for the yearly. So yeah, it hasn’t changed at all.

Honestly, we would’ve charged a lot more but there was already like, again,
30 people in the space and that made us the most . . . the highest-priced,
where a lot of our competitors were either not charging a signup fee and/or
charging like $15 or $20 a month.

So we knew we had a better product than other people, better service, but
we couldn’t come out and say “Hey, everybody else is $20 a month, $30 a
month. We’re like $150 a month.” So we didn’t want to . . . it was a gamble
we could’ve taken, but we didn’t take it.

Jim: How did you convince people that you were worth the extra money if
you were that much more expensive?

Billy: Well one of the things we did was we implemented a seven-day
free trial, so you could try for seven days and if you don’t like it, you
don’t have to pay anything. So what happens is you just put your . . . it
works probably the same as a lot of things this age. You put your card in.
If you don’t like . . . it holds it with like a dollar.

If you don’t like it, you get your dollar back and you never get charged.
So if you stay on after a week, you get charged. So basically it’s the
first five weeks are that price; you get the first week free.

Jim: So they get to look inside and see what it’s all about?

Billy: Yep, they can literally view every video on the site if they
wanted to. I think there’s a cap on downloads, we cap the downloads at five
or ten, so people couldn’t just download all our stuff and leave. But they
can stream 100 percent of the videos. They could go watch anything and see
the quality.

Jim: So for the trial they get a download limit. Is there a download limit
whenever the trial ends and they’re paying the full price?

Billy: Nope, no limit after that. So yeah, sometimes people will
probably sign up for a month or so and try and download everything want and
leave. You know, that’s going to happen but we don’t . . .

Jim: Is there anything you can do to prevent it?

Billy: There’s really not. The only thing we could do is obviously cap
the downloads each month, but the only reason we don’t is we don’t want to
make hoops for our real customers to jump through just to try and keep out
a couple of those guys who are doing stuff like that.

So we try to make it more convenient, because a lot of poker guys, they’re
traveling and things like that so they might download a ton of videos
before a trip just so they have all the videos on planes or wherever
they’re at. So we don’t . . . yeah, we don’t cap the downloads after the
trial.

Jim: Why do you have the signup fee?

Billy: So, a couple reasons. From a strategic perspective, it was a
way to make the six-month and yearly higher without actually making the six-
month and yearly higher, like they’re actually a discount to where if you
drop the signup fee it becomes $30 a month.

And then six month is actually now like . . . would have to be like $199,
and the yearly would have to be like whatever, $299. It would be a lot
lower. You’d lose a minimum of like whatever it is, 25 or 30 percent across
the board for every member.

And so that was one reason. The other reason was . . . and obviously again,
we wanted people to sign up for the longer ones. So we didn’t want one-
month customers, we wanted six month or yearly, so they saved money signing
up for six month or a year.

The other reason was I think one or two of our competitors had that, and so
it wasn’t that out there. Like somebody else was doing it, but the main
reason from a why would anyone have it is to kind of make the guys who are
downloading a ton of stuff . . . they had to pay a little bit.

So for example, we have over a thousand videos on our site. If you just
paid $30, if we didn’t have a signup fee, you could technically download
everything and leave for $30, where they’re at least paying for . . .
compared to the people who don’t have a signup fee, they’d be paying for
four months upfront.

And again, we’ve never tested against it without having it. So we could
obviously get more customers if we didn’t have it, but would we be able to
get “X” . . .

Jim: Enough to pay off? Yeah.

Billy: And I don’t know that we would.

Jim: If you have a thousand videos on now, how many did you have when you
launched?

Billy: We had . . . I want to say we launched with like eight or
something like that, so not very many, but we’ve consistently put out . . .
like now we do, I think we do four a week right now.

At our high point we were probably doing ten a week which that was just . .
. that was a lot, that was a lot of content, probably too much. People
couldn’t even keep up with it. So we’ve put out anything from four to ten a
week for the last five plus years.

Jim: How did you know how many to put out? When you put out ten a week,
how did you know that was too many?

Billy: It was tough. Because there’s so many games, again, we were
trying to service a lot of games. And so the ones that . . . we would look
at what got what amount of downloads, what got what amount of views, and if
we’re paying for every video we want to make sure we’re not paying for
something nobody’s watching.

So we’d look and say “Okay, our sit-and-go videos aren’t getting viewed
very much. We don’t need four different sit-and-go videos every week. So I
think when we were doing it, we were splitting the games. It was still like
four cash game videos and then three sit-and-gos and three tournament
videos each week, something like that.

So we would find what was popular to people, what wasn’t, and kind of scale
it down. Now I think we’re doing more along the lines of yeah, 15 or 20
videos a month.

Jim: Okay. And some people, they would just leave comments to you. Just
read the comments and figure out what was working, what wasn’t. Did you
have any sort of training for the poker players or for the pros on how to
make better videos or anything like that?

Billy: Unless we were getting . . . we tell people what they wanted to
hear. So when people left, if anybody cancels their subscription, we email
them when they leave and say “Hey, is there any feedback you can give us?
Is there anything that you weren’t getting that you would hope to get?” So
they give us feedback and we try to implement that and tell the pros.

But for the most part, we like to have our pros make whatever videos they
want to make. Part of that because they’ll make a better video if they
enjoy the subject they’re talking about, but also it’s just they know the
games.

Especially at this point, like, I haven’t played poker in years, so they
know the games better than I do. So other than giving them feedback that
our customers might’ve given, it doesn’t’ make a lot of sense for me to try
to tell them what video to make.

Jim: Okay. You just mentioned as people left they would give you feedback.
Were there things that you did to sort of up the retention rate, either
proactively or reactively?

Billy: Yeah, I mean, that was obviously reactive on the . . . when
people left we’d say “What could’ve kept you here?” But we would actually
keep . . . so the guy who ran the support and videos and stuff, I would
have him keep folders of the different things people were asking for.

Then if we filled that need that they were asking for, like if enough
people were asking for something, we would do it. So then we would email
those people back and say “Hey, we actually . . . hey, whatever type of
tournament videos you were asking for, we actually do those now and we
wanted to let you go. You should come back and check them out.”

So sometimes people would come back based on number one, that we got their
feedback in the first place, but number two, that we followed up, did what
they asked for, and emailed them to let them know. So we did that
sometimes, but honestly, a lot of times once . . . and this is another
reason for the signup fee.

A lot of times, if you pay the signup fee, you can’t leave and come back;
you have to pay it again. So a lot of people, they don’t want to leave and
have to pay again to get in. The $100 is a fee to be part of our community
and part of our membership.

So it’s so cheap, right? It’s $30 a month. So after you’re in, it’s like if
you can’t afford a dollar a day, if you’re not getting enough value for a
dollar a day from the advice of really good professional poker players,
it’s probably not for you. It’s not very expensive. So basically, we didn’t
have to do a lot to be proactive to keep people other than just keep
putting out good content.

Jim: And that was based on feedback and then what people . . . so people
would tell you as they’re part of the membership, I guess these are like
forums, that they’d love to see more videos about sit-and-go tournaments or
multi-table tournaments?

Billy: Even sometimes through the forums, or all of our videos you can
comment on. People comment on every video and we get emails sometimes.

Jim: Okay, gotcha. So now looking at the whole Blue Fire Poker
infrastructure and system, how did you get that built?

Billy: Man, that was a hassle. We got the first version built in India
which was . . . this was my first website ever, so we hired through eLance.
It was supposed to take three months; it took nine. At the middle of the
process they held our code hostage; they wanted more money. And so it was
just a hassle.

It was taking a lot more time than they thought it would, because it was
100 percent custom. At the time we didn’t know . . . I don’t even know if
out-of-the-box membership solutions existed then, but if they did I didn’t
know about them. So this was 100 percent custom.

So everything from the videos to the blogs to the forums to any page on the
site was custom. So it was . . . and using a team that English isn’t their
first language. I don’t know if you’ve ever done that, but it’s not fun.

Jim: No, it’s not fun.

Billy: So that was a learning experience. I learned a lot from that
experience, but . . .

Jim: What did you learn? What are some things you would do differently
there?

Billy: Well one, I would much rather pay somebody three or four times
as much to be able to talk to someone in English as their first language. I
probably won’t outsource . . . unless it’s a small project, like a really
small project, I’ll never outsource a big project overseas again unless
someone English is running it that I know can get it done.

There was nobody I could even talk to. Our calls were all broken English,
and I think most of the times we did chat because chat was easier to
understand each other. So I probably won’t ever hire again over there.

I learned that e-Lance and companies like that, man, they’re not very
helpful if you get in a situation like that. At least we weren’t; they
weren’t in our case. So I probably wouldn’t . . . you know, I wouldn’t bank
on e-Lance or oDesk and companies like that to come to help if you need
help. They were probably the most unhelpful business I came across.

That was a dire situation, especially for they already had 50 percent of
the money and they were sitting on the project and more importantly it was
just taking . . . they were not doing anything.

So even after I sent the emails over and told them what was going on,
there really wasn’t much they did to help. So I probably wouldn’t . . . for
me personally, I probably wouldn’t use eLance just because of that if I had
to do it again. But . . .

Jim: Yeah, that is scary. And what’s funny, maybe not that funny, is
English is one of the national languages of India. Can you imagine if you
were working in another country where it wasn’t even an official language?

Billy: Yeah. Yeah.

Jim: So how much did the whole site cost you initially?

Billy: So the first version of the site was $16,000.

Jim: $16,000 and it took nine months?

Billy: Nine months, yeah. Really they weren’t working on it the whole
nine months, but yeah, the whole process took nine months. I really kick
myself now. I’ll give you an idea, the second version of our site took 60
grand and now I look at it and I’m like “Man, if I had spent 60 grand and
got the site done six months sooner, we could’ve potentially made another
400 to 500 grand and saved a huge headache.”

So now I look back and it’s like . . . but you don’t think about it like
that at the time. At the time it was my first online business, so the idea
of spending 60 grand on a website sounded absurd to me. Even 16 grand was a
lot to me.

So especially now, now I think about it, I’m friends with Stu McLaren [from
[Wishlist Member] and he’s like . . . I started talking to him about when I
spent 60 on my second version of my site. He’s like “Yeah, you totally
should’ve talked to me,” because there were some things I think that
[Wishlist Member] wouldn’t do.

He’s like “Yeah, you should’ve talked to me, I could’ve probably figured
out a way to make it happen for you.” That alone would’ve saved me like
$59,000. So now it’s just having a better network, better friends, you can
probably save a lot of money on that stuff.

Jim: Wow. Yeah, $16,000 is a lot, especially as your first venture out.
But as you grew obviously, it makes perfect economic sense to spend $60,000
to provide so much more functionality because now you have users, you have
paying members, and the economics, you could see it right in front of you.

Billy: Yeah.

Jim: So, I know there was a little bit . . . from its peak in terms of
revenue and membership, there’s been a bit of a I guess pull-back, a little
bit, from the height in terms of successfulness of the site. Do you want to
talk a little bit about sort of the economy of the poker world and how
that’s sort of affected your business?

Billy: Yeah, so the biggest hit by far was the legislation in
basically the US revolving around the ability for banks to fund online
gambling, whether it be poker or sports books or any of that stuff. So
basically overnight like 30 to 35 percent, let’s say 35 percent of our
audience which was the U.S., was wiped out from playing poker.

So obviously the majority of those guys either didn’t play poker anymore,
or a small percentage of them made a decent amount of money from poker and
couldn’t just give it up; they moved out of the country.

Basically 35 percent of that audience, I don’t know what percentage of them
decided to move out of the country, but it wasn’t a lot of them. So
basically we lost all those customers, because if they’re not playing poker
they don’t need poker education. So that cost us a lot of money.

It’s just been one thing after the other. Then one of the payment
processors for us didn’t want to service anymore, so again that was a much
smaller hit but it was just another thing, that was a convenient thing for
people outside of the country to pay and they just didn’t want to deal with
any companies in the U.S., even though we weren’t doing anything gambling-
related, we were just doing educational videos. But they just played it
overly safe to avoid any sort of sanctions or whatever.

And then a lot of the pros . . . a lot of the popular pros for us that used
to make videos left. One of them formed a competitor, and so it’s kind of
one thing after the other. There’s constantly been more people trying to
get a piece of the pie in the poker video market. Both of those things
happened at the same time, like more people getting into the market, less
customers in the market; much less customers in the market.

And as it continues, basically the poker economy is like eating itself.
What I mean by that is there’s not really any new money coming into poker,
but all the old money is still eating up any of the money that there is.

So slowly people that are professional poker players, guys that maybe were
making $200k a couple years ago, maybe now they’re making like $60k so is
it worth it to be a poker pro anymore? Maybe not.

So it’s kind of eating . . . the economy’s eating itself. Yeah, it’s just
continued over the last couple of years to go down and down and down.

Jim: Is there anything you would’ve done differently to sort of protect
yourself against this? I’m not even sure that’s even possible given that
the entire poker economy is still shrinking.

Billy: Yeah, not really. I mean there’s really nothing we could’ve.
The one thing that if I was going to gamble on it, one thing that I could
do right now is go buy everything up. I could go buy poker forums, poker
blogs, poker media sites. I could be buying everything now because
everything’s at very low prices and I could gamble on the fact that once it
gets regulated in the U.S., we’re going to have a little bit of a boom.

I don’t know how much that boom is, but it might be a decent opportunity
now if you wanted to gamble and say “I’m going to go spend several hundred
thousand dollars and just buy up all this stuff cheap in the hopes that
it’s going to turn around . . .” So that’s something I could theoretically
do now.

I probably won’t do that just because I haven’t paid attention much to the
poker market lately. It’s just you really can’t do anything right now for
the most part in poker. I mean you could, but you’re going to spend a lot
of time and money just trying to force yourself to grow rather than it’s, I
don’t want to say, dying, but for lack of a better term, it’s like a dying
market because of the fact the economy’s eating itself. So until something
happens to get new money into the game, it’s just going to keep going down.

Jim: That makes sense. In thinking back to all of Blue Fire and all your
sort of entrepreneur career, was there anything surprising that you did,
maybe it was something that was small, but it had this outsized incredible
result for you?

Billy: Did you say outside of Blue Fire or in Blue Fire?

Jim: In Blue Fire.

Billy: I mean the marketing stuff we were doing worked really, really
well. Yeah, I would say that was the main thing outside of getting people
to make videos.

Jim: How’d you think to challenge President Obama or a member of Congress?

Billy: So the idea around that was that was actually my second or
third attempt to get on, to get big publicity. The first . . . I can’t
remember what the other one was, but the first or second one was I had
actually challenged, or not challenged, but at the time the economy was
tanking and everybody was losing their jobs.

I sent out a I guess press release or whatever basically saying anybody who
sent me a pink slip that they got fired, I’d give them free training. I’d
train them to be a professional poker player. I thought that was going to
get publicity. I put it in the right people’s hands, I thought, and nobody
picked it up. I mean a couple of small blogs picked it up.

Jim: That does sound like a good idea.

Billy: Yeah, I figured we were going to get some publicity off of
that, but it didn’t work. And at the time, keep in mind, this was five
years ago, over five years ago, and at the time poker was so easy, again,
because the economy and poker were so much better; there was all this new
money coming in.

So I could legitimately, like Jim, if you’d want to play poker, I could
literally hand you a sheet of paper telling you how to play and you could
never talk to me again and probably be profitable. It was that kind of . .
. so it was a confident, I wasn’t just throwing out this publicity thing. I
could legitimately turn people into money makers playing poker. Now it’s
harder.

So yeah, that was one of the things I tried. I want to say I just kept
trying these little thing over and over and over, and some of them hit.
Obviously the Obama thing hit. How I thought of that was it was in the news
already, like, “Hey, they’re going to try to outlaw poker based on it’s a
game of luck and it’s clearly not a game of luck.”

I said, “You know what? Why don’t I try some publicity for this? Why don’t
I basically, I’ll put my money where my mouth is and back it up and say
poker’s not a game of luck and if you disagree come get our million
dollars. Beat one of our guys. It’s impossible for you to beat one of our
guys because it’s a skill game. If it was a luck game, you could beat
them.”

We actually got some interest. We had somebody, some representative of
somebody called us and said they were interested. What was going to happen?
Was it a real offer? I was like it’s a very real offer.

We actually had some poker organizations who were trying to get poker
legalized call us too and want to get behind us and say “Look, if you could
actually make a game happen with anybody, like any member of Congress, we
can get this on TV.”

So it had the possibility to turn into a ridiculous publicity storm, but
the representative said whoever it was they were representing didn’t want
to put their name that much on poker. They were worried for their political
stuff that that was too aggressive for them.

But yeah, it was just stuff like that. I tried to pick things that were in
the news to get a little press off of. When Michael Vick got out of prison
I offered him a contract to play poker.

Jim: Oh, nice.

Billy: Because nobody was offering . . . I don’t know if you remember
at the time, for a little while nobody offered him a job because everybody
was scared to touch him. I put out a press release and said “I’ll give you
a job and I’ll train you how to be a poker player.”

And I think we got picked up by like ESPN Radio, a couple other places.
That one didn’t get a lot of traffic, but it was just another little thing
where we kept getting stories in the news. And again, those news stories
aren’t where we get the traffic and signups, but it’s the second wave when
everybody in poker is like “They did it again.”

Now they’re on ESPN Radio. It’s like that second wave of where, again back
to paying for advertising, we didn’t pay for any advertising; I just
created situations where people would have to talk about us and it was
better than the advertising we would’ve paid for.

Jim: That’s awesome. I love those stories. So your new project now is
Forever Jobless. What’s that all about?

Billy: So Forever Jobless is my blog, and basically I just talk about
my own I guess business case studies, the good, the bad, how I’ve made
money, how I’ve lost money. I talk about ideas I’m investing in. I started
investing and advising in businesses over the last like four to six months.

So I talk about some of those deals. Now I’m launching a Forever Jobless
podcast. Basically I just want to talk about all the things that
entrepreneurs want to hear but is not really talked about.

I try to talk pretty in-depth. A lot of my posts are 3,000 to 5,000 words
on a certain subject. I try to just break down everything around the
subject and try and give people a better idea of how to make money as an
entrepreneur.

Jim: Great, I’ll be sure to try to send as many people as I can over
there. I know there was one post about expected value that I really liked,
and it was surprising to me that a lot more people don’t think in these
terms. E.V.s, it’s kind of . . . I used to play poker. Not professionally.
I stopped in college.

I was like, “Oh, this is fun, I play online,” and then after that… But
expected value is basically everything. Anything dealing with probability,
you have to think of that in those terms. That’s entrepreneurship, it’s a
bunch of probabilities, even if you don’t know what those numbers are.

Billy: It’s crazy that more people don’t know that. And if they just
knew the basics of expected value, like every decision becomes so busy like
whether you should start this business or whether you should market this
way or sell this. Everything becomes really simple.

Jim: Yeah, definitely. Billy, I just want to thank you for coming on the
show. This is a lot of fun.

Billy: Definitely, man. Thanks for having me.

Jim: All right, buddy. Take care.

Billy: All right, cool. See you, Jim.

Jim: I really hope you enjoyed that chat with Billy. He’s a really smart
guy who studies a lot and is able to take that knowledge and apply it to
almost everything he does.

You can tell he played quite a bit of poker in his day, and it’s no more
evident than on his posts at Forever Jobless on expected value. It’s worth
checking out, especially if you’re an entrepreneur.

I’ll link to it in the show notes which you can find at
microblogger.com/10, that’s the number 10.

And lastly, if you haven’t subscribed or viewed or given me a rating on
iTunes, could you help me out and do that right now? It’ll help others find
the podcast and it would give me a nice shot in the arm. I really like
seeing it.

And if you need to reach me, tell me a joke, you want to give me a
suggestion or whatever you want, me email is jim@microblogger.com or you
can tweet me at @wangarific. Thanks and see you next time.

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Jim

In 2005, I founded a personal finance blog (Bargaineering.com) that became successful enough that I quit my career as a software developer in the defense industry. It is my goal to share everything I learned so that you can do the same - build an online business that let's you pursue your passion.

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