Practical Founders Podcast

#23: Creating massive impact with a specialized school fundraising platform – Howard Gottlieb

Howard Gottlieb created and sold several businesses before starting a school fundraising website in 2003 called Easy Fundraising Ideas. It grew into the most popular Internet website for school fundraisers. He experimented with many business models and ideas while the fundraising industry still wasn’t changing or growing. 

In 2012, Howard started Read-a-Thon as a literacy-based fundraising platform that helped students raise money while boosting education. Their easy platform and simple fundraising approach created amazing results. The Read-a-Thon business grew steadily and profitably without any outside funding.

Their relentless focus on elementary school fundraising and their culture of continuous improvement helped them grow faster and create a much bigger impact. In 2022, Read-a-Thon helped thousands of schools and students to raise over $30 million in donations. Their platform has tracked over 30 billion reading minutes by students who have used the platform to earn donations.  

Best quote from Howard:

“I think that a founder’s worst enemy is their own self-confidence and their own self-importance when they think they know the answers and they want to be right. If that’s you, don’t start your own company. Because you’re going to be wrong more than you’re right. It doesn’t take being right a whole lot of times to have a big success. 

“If your ego needs you to be the smartest person in the room, you know you’re destined to struggle. I want smarter folks in the room to say, Howard, you’re a moron, that is stupid what you just said, and here’s why. And maybe they’re right, maybe they’re wrong. And do that to yourself, question everything.”

Edited transcript of Practical Founders Podcast interview with Howard Gottlieb, founder and CEO of Read-a-thon

Greg Head: And we’re live with Howard Gottlieb, founder and CEO of Read-a-Thon, and many other businesses along the way. But Read-a-Thon is an amazing, practical founder success story. Welcome to the Practical Founders podcast, Howard. 

Howard Gottlieb: Thanks, Greg. I appreciate your having me.

Greg Head: We’ve talked a few times. We’ve had some really interesting conversations. You’re a very experienced guy and you’re right in the middle of what I would call a rocket ride, a company that has no outside funding software company in the fundraising space. So let’s start with the end here. Read-a-Thon. You’re still running that. It’s still growing fast. What is Read-a-Thon?

Howard Gottlieb: Read-a-Thon is an online literacy-based fundraiser that we created about eight years ago as an alternative for elementary schools, preschools, daycares, and all sorts of schools as a better way, in our opinion, to stay focused on education as opposed to all of the other fundraising options that are available and have been there for 100 years. We were actually in the fundraising business for a long time. We saw that it was an old, ancient prehistoric industry that hadn’t changed in a while, and needed some fresh options. So out of that, we created Read A.

Greg Head: So you’re in the fundraising space and you looked over at schools and you saw all the candy bar drives and all this other stuff. Kids as labor in the fundraising game that wasn’t working that well. Many have tried that fundraising platform fundraising thing for schools. It’s a big problem. Did you have kids in school or think altruistically about helping education? Or did you see this as a business opportunity? How did you come about aiming at schools?

Howard Gottlieb: I actually own the busiest product fundraising website in the country, so we were very in tune with school fundraising and it was one of those industries that were doing things the same way today that they’d done it 50 years ago. And no industry today is doing things the same way they did 50 years ago. So it was ripe for change. And throughout the years we saw people try to do new things and some took some didn’t take anything less than a long time out of a division of this old company that I started. We got into the “thon” process and during that time I got lucky. I was out shopping for domains as and interestingly, two of the domains that I was able to buy, one was readathon, and the other walkathon. To this date, we own it. If you go to walkathon.com, it’ll redirect you to readathon.com. But I was shocked that those two domains were available and then we parked them for a long time. And then as we started seeing an industry, a $5 billion industry run by 70-year-old men, I hate to say it, out of their cars, we thought we could offer a better product. We tried a few things and then I said one day, you know, heck, let’s build out Read-a-Thon. So we started to do that.

Greg Head: So where is Read-a-Thon today? Right now? I mean, it’s a sizable company and you guys have made a huge impact. So this is fundraising saying instead of I’ll walk ten miles and you pay me $10 and I’ll take that as a donation there’s a thon and associate some work for donation or something like that. They’re reading books for donations.

Howard Gottlieb: And in 2023 we project that we’ll be in 5,000 schools. And when you add up the numbers, the average school in our system is between 400 and 500 students. So we estimate that we’ll have about 2 million readers using our system next year. Out of that will collect donations. Next year we’re projecting somewhere between $40-$50 million donated through the platform about the easiest possible fundraiser school can do. And you talk about changing from the old candy bar world.

We’ve also changed, and we’re not a pledge-based fundraising platform anymore either. We are a flat one-time donation fundraiser that collects money as the fundraiser is going. So if someone’s doing our fundraiser, they log into their account, and they see a number. That’s the amount that we have already collected for them. What we found through the system was pledge-based fundraising where we’re dreams. I’ve got pledges for $100 million, but at the end of the day, I’ve collected $10,000 because people don’t know what to pledge. And then you’ve got to go back and collect the money. So it’s an iffy deal up until the end of the fundraiser until you know exactly what you’ve run. We start out as a pledge-based system. By the way, one thing I love about Read-a-Thon is that we’re fairly small in headcount so we’re able to pivot quickly. I got into a meeting one day and for some reason we just said, I think we hate pledges because like a lot of things we do, we analyze the outcome of a pledge and there were three outcomes and two were bad. So if 67% of the outcomes were bad, why are we doing that? Can we just get to the one good outcome? And that was I have Grandma excited about their grandson reading. Let me get some grandma money now.

Greg Head: Yes, right, right.

Howard Gottlieb: I don’t want grandma to have to follow a link in three weeks and pay. And then the other thing that was bad about pledging is if I say, Hey, I’m going to read a lot and you say, Well, what does that mean? Is a lot 100? Is a lot ten? So I’m afraid of what you might do. So do I pledge a penny? Do I pledge a dollar? So I don’t know what I’m pledging. So you would tend to pledge little. And I hate to even be talking about this because a lot of our competitors love pledge-based systems. We think they’re awful. So we are not. We changed that and we are leading school fundraising. We describe ourselves as a literacy-based fundraising company, and we actually have a new division launching next year that fits right in there. But everything we do now is focused on literacy, whether through reading or whether through books. And one of the things I’m most proud of about the company is to date, we’ve been running the fundraisers for about eight years now, and just recently I had our coders total the amount of minutes that readers had recorded on our platform, and it exceeded 30 billion reading minutes. And I’ll tell you in the office, I mean, there was dead silence. We said what we realized then and there was a lot of motivation, maybe a year ago when I got the number, that we were really impacting youth reading, I mean, maybe more than any website on the entire Internet. So if nothing else, at the end of the day, a great business, very profitable, but at the end of the day, that 30 billion number still just sticks in my mind. And when I’m done, that probably will be what I’m most proud of, I think.

Greg Head: So there’s an impact play here. And you didn’t set out to change the world for kids reading you were in the fundraising business and creating good businesses and other businesses before that. How many people are on your team now?

Howard Gottlieb: If you include everybody that we actually just expanded. I’ve got 17 employees. If you walk into my office, you’d be stunned. You would never you would think you would never guess that we’re running top-line revenue like we are. We had a bank come out three years ago and they said, Well, where’s your bookkeeper? We don’t have a bookkeeper. And where is your sales department? And up until about 90 days ago, we didn’t have a sales department. And where is this and where’s that? And none of it existed. So very small, very efficient.

Greg Head: I’m in the Dallas-Fort Worth area, and you’re on the other side of town outside of Fort Worth, area. It’s a glamorous software hotbed out there, right?

Howard Gottlieb: Yeah. Mansfield, Texas, is the center of technology for sure. For sure. What just go to show you, it doesn’t matter where you are anymore. The Internet is an amazing thing. At a discreet office in the middle of nowhere, you can be running this company that from a web view, looks like it could be in New York or in Silicon Valley or the Internet’s great equalizer.

Greg Head: And you don’t have any outside funding for this company.

Howard Gottlieb: Zero. Fabulous. Now, we do get offers. We got the attention of a lot of folks over the last three years, probably early COVID. So, I mean, if I needed money, it’s there. The one thing when you get those phone calls is, Well, how much money do you need? Well, it’s wonderful to say, Well, I really don’t need your money. Maybe I could use some distribution or expertise, but no one comes offering that. They want you to do what they want you to do the hard work, and they will give you the money for you to do your work. So we have absolutely no interest in outside funding or outside money, luckily.

Greg Head: And so you’re profitable here. So you have a software platform that you guys don’t do the fundraising, but the millions of students would actually do that and thousands of schools and it all is tracked and managed and transacted through your software platform. Correct. And are your developer and engineers in the Fort Worth, Texas area?

Howard Gottlieb: I’ve got three in-house, folks, finally. We’ve got a lead developer. We have a backside guy who’s just brilliant. And I have a front-side developer. So we have three in-house people. And on and off, we’ve used outside third-party development firms. A whole different animal when you’re doing that. Yeah, I love the idea of walking down the hallway, slapping a desk, and saying, Son of a gun, fix this now and standing over someone’s shoulder. And as embarrassing as this is, up until about 90 days ago, we were actually always working on the live site. We didn’t want to spend the money on additional servers, so we were running at the time on four servers and working on the live site. Today we have about 12 servers, including one full development server. So we actually test things, which is a novel idea for redesign, but we do change things so often. You know, it’s stunning that all the mistakes we’ve made and.

Greg Head: Especially still lean and mean and a little scrappy for a company that’s very profitable and growing fast and all of that. And we met a couple of months ago when you reached out to me. We talked about a potential offer that had come your way for the company. You said, Is this interesting or should I consider you’re considering it? What happened to that? Somebody said, We want to buy the company.

Howard Gottlieb: And this year we had two legitimate, serious buyers that both offered LOIs to purchase the company. The first company that looked to acquire us really made a whole lot of sense. And we actually were within ten days of them buying. Anyone who hasn’t dealt with PE firms, they’re going to look at you for one of two things. They’re either going to buy you to merge you into an operating company they already control to help grow a property they have or they’re going to buy you because they think they’re better at scaling companies and in a lot of cases they are. The first business was the former. They had just bought a very large edtech company and they were buying Read-a-Thon to fold into this company. The problem was they didn’t have a CEO of the company. Ten days before we were closing, they hired that CEO and he freaked when he found out he was going to be responsible for making sure that this check that they were about to write could be justified and could be covered. And although he loved what we did and he was a negative tie-breaking vote. And ultimately, I think that company will someday own us either acquiring it from me or acquiring it from whoever ultimately acquires it from me. It just made too much sense.

Then here came Buyer B. Buyer B was the latter. They were buying us for our strength, and then they had some other things that could make us stronger. But they were so over-analytical it drove me out of my mind at some point. You know, you either need to say this thing makes sense or it doesn’t. They desperately wanted it. The target kept on moving. It was stunning. So I finally said, Look, you know, I’ve spent the better part of 2022 focused on PE firms. I’m done. So I told them I could cancel the terms of the LOI at any time. So I sent them a written request and just said, Let’s mutually release each other. I am not trying to sell my company, I’m willing to sell it and we’re just not a good fit at this stage. Interestingly, since then, they’ve reached out three more times and I’ve got two other PE firms that are currently talking with us. So somebody, you know, somebody is going to buy us at some point if we determine that it makes sense to sell.

But, I know this is an audio interview, I am 66 years old. This isn’t my first rodeo. If I were 40 or 45, I wouldn’t even accept calls from the PE companies. The company Read-a-Thon has such a positive trajectory and I mean crazy stupid potential, I would even consider it. But at this stage in my life, I am willing to sell the company. Again, you’re not asking, but a lot of these PE companies, don’t know how to take that. When you say it, some of them think you’re full of crap. And some of them are stunned, but it is the fact.

Greg Head: Well, congratulations. I’m creating a successful company. It creates a lot of impact that’s worth a lot to somebody and the ability to say, No, I don’t think so. I’m willing, but don’t have to. And that’s very exciting. Let’s put this in context. Is Read-a-Thon thought more of K-12 education type software in that world, or is it more of like a fundraising software, like GoFundMe or these other fundraising platforms? Which is it more like?

Howard Gottlieb: Great question. At the end of the day, we’re a fundraising platform that wants to incorporate education into a fundraising platform. And I don’t ever want to lose focus because there are a lot of gigantic edtech companies that focus strictly on literacy, content and all of that stuff. I will never be the best content creator out there. I’ll never be the best tutoring firm. But interestingly, all those people are after that. None of them can claim they’re in the billions.

Howard Gottlieb: So, you know, if our focus was to get kids to read. I don’t know if we would be able to do that. As a resource and a fundraising tool, we motivate kids to read and families love that. So you know, where a GoFundMe is a fundraising platform for anybody. I have a defined market and we knew the GoFundMe, people. Well, we could talk about that later. If you told me 15 years ago when they first started, Do you want to own go fund me or Read-a-Thon, not knowing where to GoFundMe ended? I would still say Read-a-Thon because I. I have a market and I am the best at what we do and continue to get better. And all of us get lucky. I mean, so we put that on the table. Everyone thinks they’re super skilled and super smart. If you’re successful, you got lucky and then you turn that look into success. GoFundMe. Used to compete against a company called Rally.org, which was funded by Remember that? Oh yeah. Google and Facebook folks had their money.

Greg Head: The funded ones.

Howard Gottlieb: Right. And they couldn’t compete with Brad and his partner at GoFundMe who you know up until the day they sold he told me, Howard, I will never sell this thing. And then, you know, when they threw the check in front of them for north of $500 Million, he said, well, never just happened.

Greg Head: And were they funded by big VC funding too?

Howard Gottlieb: No. Brad was the coder and so was his partner. So it started out as two people. When he sold that thing, I think there were 15 employees there and they were running close to a billion dollars through their platform.

Greg Head: So another way to say it is they were just the generalist, any kind of funding to come on the platform and you were the specialist. We just do it for kids in elementary schools in North America with reading as the incentive.

Howard Gottlieb: Correct. So for the first time, again, as embarrassing as this is, we’ve grown to our size recently without a marketing department, without a sales department, which tells you that the product was received in the market fairly well. And we’re in the process of developing a brochure for the company in which we’re telling a story about us now. We’re finally at the point where we have a story to tell, including we have one little dyslexic girl who became a superhero and super fundraiser, and things like that. So finally, I’ve got an audience of 200,000 schools in the US, and I’m going to tell them our story. I wish I had known the story eight years ago, but I don’t know until you live a life whether you can tell the story if that makes any sense. A whole lot of people have a bunch of stories and never turned them into a business. We now have a business and we can tell the story. So I’m super excited. I mean. Next year is going to be phenomenal. We have a sales department and a marketing department. How novel.

Greg Head: Well, there’s something about, founders that don’t see this when they’re starting companies, every founder has a story and a story for the customer and sometimes a story for funding. But the story doesn’t come with any credibility. They’re saying It’s me in this big hill and we haven’t gotten any traction, but someday. And so people squint and say, I don’t know, I don’t think so. And then you tell the same story with the traction you have.

Howard Gottlieb: So the dilemma for every startup is, it’s distribution, actually. I mean, at the end of the day, you can have a gazillion good ideas if you don’t have distribution. And how do you get distribution? Either you buy distribution or you create demand somehow. And we were fortunate enough that word of mouth and some basic online email campaigns. Steph created the demand for the distribution, but.

Greg Head: Distribution is a little bit of an old-world word when there were distributors, third parties who would sell, and so forth. But really you’re talking about sales and marketing. How do you get customers to line up and find you right, as opposed to building a product?

Howard Gottlieb: Right.Because of our background I get approached a lot by people wanting money, which I don’t really want to do, or advice. And everything we always tell them is distribution is the hardest part. Ideas are, you know, a penny an idea for all the ideas that are out there and everyone has ideas. But how do you take your idea to a market? That’s the hard part, right?

Greg Head: Right. I totally agree with that..

Howard Gottlieb: And will the market, you know, beat a path to your door? Probably not. You know, that’s a fairy tale. If you think just because you build a better mousetrap, you know, all of a sudden everyone’s going to line up to buy it. It just doesn’t happen that way.

Greg Head: But it wasn’t your first fundraising online fundraising company. Tell us about what it was before that. For a long time.

Howard Gottlieb: We used to own the website easyfundraisingideas.com. I developed that way back in the infancy of the Internet, and that’s when I first entered the school fundraising space, because like I said earlier, at that point it was dominated by some large companies that employed men and women who knocked on doors in their car with brochures and product in their trunk and one by one went to every school in America. So I thought to myself, Well, can’t I reach a larger audience in any one of those single folks? And so we built one of the first product fundraising websites out there.

Greg Head: Product fundraising is candy bar selling a Snickers bar. Right.

Howard Gottlieb: Yeah, right. And we didn’t manufacture anything. We didn’t own anything. I took the approach back then that I was a lead generator first and then if I could, other people had products and I could sell their products through my distribution, which is actually how we got to know the GoFundMe guys a little bit. They needed distribution and we had the traffic, so we built that. We spent a long time on SEO was the early days of search engine optimization and we got very good at it at one time we were tracking 4000 search terms related to school fundraising and we were either first or second for, if I recall this right, about 2800 of those 4000 terms. We were even the money term was fundraising ideas, and it would get somewhere about 8000, 9000 views a day. We were first for fundraising ideas organically. We never bought Google AdWords. We never spent the money there because I know I wasn’t smart enough to quantify the return on a lead since I wasn’t selling anything necessarily directly to the traffic. My thought was, Let me get as many eyeballs in here as possible. Let me be the mall and I’ll let all these suppliers be the stores in my mall. And that was kind of how I looked at easyfundraising. At our peak, we were getting 15,000-16,000 unique views a day.

Greg Head: And that’s distribution. You’re getting eyeballs of people who want to buy something and the people with products don’t have the eyeballs. So you were the interested eyeballs, which of course, is the magic of search. It’s not just eyeballs. Howard, what was the business model behind easy fundraising? You hadn’t didn’t have a software platform product idea. Were you selling leads?

Howard Gottlieb: Or once we got the eyeballs figured out and we were focused on search engine and traffic, then we were the first company out there that actually let you schedule a fundraiser online. And so you could say, I want to sell cookie dough. And within 90 seconds you gave us the information needed. We sent you the materials and you were doing a cookie dough fundraiser. So we were proud of that. And then interestingly, that led to another lesson because we were getting big at that point. We had people pulling brochures all day long, and I was getting angry because we had made the entry, the barrier to do a fundraiser so easy, a lot of people were scheduling fundraisers and never starting. And so I said, Man, I need to figure out why I’m sending out these materials to people and they’re not doing my fundraiser. I had a competitor call me one day, we were talking about it, and he says, Send me all those people. They’re my great lead for next year. So you may be disappointed that they didn’t do it now.

Greg Head: But they raised their hand. They were right there in the beginning.

Howard Gottlieb: And they gave me somebody to talk to again next year. So it Read-a-Thon, we have made the barrier, the entry point, as simple as possible. No barriers, no obligation. We have people all the time that say, Boy, you need to tell them you have limited spots and you have this and you have that. And here are all the reasons to do it fast. And maybe the right, you know, maybe one day I’ll change. But right now, our theory at Read-a-Thon is I want you to want to do my fundraiser. I don’t want you to feel any pressure. If things change, it’s okay. We’re not going to get mad, you know? We just want to be the resource to everybody. So anyway, we learned a lot at easyfundraising. I still own the company. Funny story. I go to a trade show. It’s the Association of Fundraising Specialists, and we’re in this convention center in Florida. Here’s our trade show. Right next to us is a trade show for funeral homes. And there was more excitement and more joy at the funeral home operators than the fundraising folks because the industry had been stale for so long and it was a zero-sum game at that point.

Howard Gottlieb: There was only so much business, so many schools, and no one was growing. It was around that time that we decided that, hey, maybe creating some other options for schools made sense. And out of that came Read-a-Thon. I will tell you, after some failures, we owned a website called ChooseaThon, and we were going to offer all of these different “thons.” And what we learned there when we talk about specialists versus generalists is if I give you eight choices, you would think maybe that’s a good thing, except then you need to make up your mind, What one of these do I want? And I lose you for a moment and I may never get you again. With Read-a-Thon you’ve come to me for a reading fundraiser, you know what we are when you come to my conversions right through the roof, Chooseathon didn’t work, but it was during then that I actually bought Walkathon and ReadaThon. So that failure led to the best $9 acquisition I ever made, which is what the readathon domain cost me.

Greg Head: People don’t see this. I say, every time there’s a successful company, and you’ve got a successful company, it’s worth a lot and very valuable and is growing fast and changing the world without any big funding, I’ll show you that they were a specialist like a leader in something specific. And then I’ll also show you before that there was a wandering time where they said, I know something’s out here. Let me try this and we’ll try that, I’m going to try this, I’m going to try that until they found it. They tried 20 things and half didn’t work, five kind of worked, some work pretty well and one worked really well. After all those lessons, how long were you out there experimenting and learning and trying and testing before you said It’s Read-a-Thon?

Howard Gottlieb: Right. We knew the industry. I’d been in the industry for about 11 years when we came up with the idea of Read-a-Thon. And luckily at the time, EasyFundraising was also a very successful company. So I refocused our developer on starting to build out what we thought we Read-a-Thon look like. We spent about a year and a half building it and hated it. It was we had an idea we were going to be an affiliate marketer and try to get the books from Amazon. And we had all these thoughts and none of it worked and we hated it. After about two years of development, we finally came out with a simplified product. Another year and a half later, we finally had a product that we were getting positive feedback for. And still today we look nothing like what we looked like seven years ago when I think we started to get traction. As successful as we are, we’re making massive changes to the system for the spring season because we’ve studied. I talked about this before.

Greg Head: It’a all improving.

Howard Gottlieb: I want the easiest path from A to B. What’s my business? I want you to schedule a fundraiser. And then in our case, the next event I want you to do is I want you to get a starter kit. We have an in-house print shop. So I want to get you from booking to print. I and I looked at the way we’re doing that now, and it was terrible. If you could get that journey completed now, Man, that was so much easier. So now we’ve created a process. You can go from, from saying I want to do a Read-a-Thon to print in less than 3 minutes. Now that’s going to cause me to have more people who are going to get a printed starter kit that aren’t going to start. But so what I’m. Risking about $30 of materials for you to try our fundraiser. And if you don’t do it, I’ll lose 30 bucks. So, I would love to have 10,000 groups next year get my starter kit.

Greg Head: 30 bucks for a click to get on your landing page is, you know, is out there and there way further down the cycle.

Howard Gottlieb: Oh, my gosh. Yeah. This is someone who’s actually getting materials that all they need do is handed out to their kids and they’re going to accidentally raise $10,000. Love that.

Greg Head: Howard, can I ask you about this journey here, like you did several successful companies. You had companies before this in the nineties that weren’t even online companies. I have this conversation with founders all the time. Like you had to go run or run around and find where the opportunity is to then start focusing on it. But when you look back, you’re kind of in the conversion optimization game, right? Test this see it it works, keep moving, keep moving. Do you think it’s mostly a good idea looking forward, you know because you kind of have an assumption there, or do you pretty much have to try almost everything and then narrow it down to the things that work and then try that again and then narrow it down and keep them like, how much do you think of it as being smart beforehand and how much do you think of it as just trying stuff as you go and noticing the difference?

Howard Gottlieb: So if I could get money for every time I ran into a brick wall, I would be fabulously wealthy. We try everything. We’ve learned.

Greg Head: So you take your best guess you’re smart, and then there’s a brick wall because it usually doesn’t work right? And you keep going. And by the way, that’s how the internet world of SEO and conversion, get people this before print. And then you keep trying things and keep improving the print conversion and the cycle. And it’s all a big conversion optimization puzzle.

Howard Gottlieb: Right. Interestingly. I think that a founder’s worst enemy is their own self-confidence and their own self-importance they think they know the answers and they want to be right. If that’s you, don’t start your own company. Because you’re going to be wrong more than you’re right. It doesn’t take being right a whole lot of times. If your ego needs you to be the smartest person in the room, you know you’re destined to struggle. I want to be the dumbest guy on the team. I played baseball in high school, and in college, and I always want to be the worst guy on the team because I thought if I was the worst one, we have a pretty doggone good team. So I want smarter folks in the room to say, Howard, you’re a moron, that stupid what you just said, and here’s why. And maybe they’re right, maybe they’re wrong. And do that to yourself, question everything. And one thing I’ve learned to do is to read my own website out loud, and you’ll hear the words versus thinking the words, and you’ll be astounded at how silly you sound sometimes because you’re writing at people instead of talking to people and part of marketing. And it’s the hardest thing in the world because we’ve done a lot of video generation these past couple of years. The hardest thing in the world is to get a skilled speaker to talk to me, not talk at me. You know, just rehearse and say these lines. Talk to me, talk to me in my words, in my language. A lot of lessons to learn in life. Man, I wish sometimes I wish I could do it again. And sometimes, man, I’m glad I’m at the end of the journey.

Greg Head: So did you start off this way? Did you start off as a brash, smart, competitive kid and then get humbled along the way, or somehow you had this attitude of I think I could do it, it probably won’t work and you just keep busting down the walls?

Howard Gottlieb: My wife and I talk about this all the time. My dad was in New York City fireman. My mom was a bookkeeper. I worked my way through college being a sportswriter, I go to my folks, and I get a job in Dallas as assistant corporate sales manager for Little Chemical Company. And I tell my mom, I’m going to go take this job. And she says, Well, you know, don’t be disappointed if it doesn’t work out, because that’s just we don’t our family doesn’t have those opportunities grow up fairly poor. So, no, I had no idea that I would have success. I’m still shocked at the success we’ve had over the years. But I’ve learned and I have a specific skill that that’s unique to me and I’ve used it over the years, over and over and over again. And that’s the application of logic. We’ve had seven companies now, and I’ve never been able to run the equipment at most of them. I don’t know how to do most of the functions we do. But that was okay because I could say, Here’s the business we’re in. What’s the logical way to run this company? What’s the logical way to bring it to market? What’s the logical way to make us different? And sometimes we were terribly wrong. I mean, most of the time we were terribly wrong. Had two crazy raging failures. But you learn you learn along the way.

Greg Head: Just briefly, what kind of businesses were you in before you started playing with Internet business and fundraising and all of that 20 years ago?

Howard Gottlieb: So the job I told you about that I got in Dallas as a corporate sales manager at a chemical company. The guy that ran it bought an industrial fastener company that was doing terribly. And one day he comes to me, he says, Howard, I want you to leave the chemical company. I want you to go to work at this industrial fastener company. And three months later, the president of the fastener company is pulled back to do something else. And he says, Why don’t you run it? Well, heck, I’m 27 and don’t know anything. Got a company that’s virtually taking the express train to bankruptcy and I turned the company around, somehow spent hours negotiating with creditors, and closed branches, and I’m learning on the fly. And then one day through a crazy story, which I won’t get into here, I decided that I was doing all this work for somebody else and not getting paid really a whole lot. So I gave, if I recall, about a six-month notice, came home and I told my wife we had two little babies at home. I said, I just quit my job. I’ve got a non-compete, so we can’t sell commercial industrial fasteners, so we’re going to sell airplane parts out of our house. So we started an airplane parts distribution company out of our bedroom.

Greg Head: Well, waiting to hear what she said. Usually, there’s a punch in the nose or something.

Howard Gottlieb: I have the best wife on the planet, has never questioned me. A wannabe entrepreneur with a spouse who isn’t on board–don’t do it, because you may give up your marriage for your business and get your priorities. I was blessed to have phenomenal support at home. You’ve seen them and continue to be so yeah, it was interesting.

Greg Head: Yeah. Yeah. Do you see? You did Fasteners and you did. What other things did you do?

Howard Gottlieb: As a distributor? There was nothing I could do to compete better than anybody else other than compete on price. And that was stupid. So I wanted to find the simplest product to manufacture, possibly to sell through our own distribution. And we found out that manufacturing spacers were simple. You just cut the tube. So I bought a screw machine. We hired a guy to run a screw machine, and we started manufacturing spacers. And then we got a little more advanced. We started.

Greg Head: That’s a sexy business.

Howard Gottlieb: Oh, yeah. I used to come home smelling like oil every night. It was mundane manufacturing, but even then, and this is 30 years ago, we hired software folks to help us learn to price product based on available manufacturing time, set up time, and all of that. So we were the first people in the industry that you could call and we could price you on ten items while you held on the phone because we had a computer program that took waste and materials and labor and setup time into consideration. So we ended up out of all the companies I’ve had, that company was called the Spacer Company because we ended up selling off the distribution company to someone who didn’t pay us and created a disaster. But then the Spacer Company was born out of that and out of all the companies I had, that’s the one I’m most proud of. If you wanted to see an impressive facility, that was an impressive facility with the equipment and the manpower, ran 24 hours a day, seven days a week, 363 days a year, We were selling to every major airframe manufacturer on the planet. It was a great business.

Greg Head: Howard, it strikes me a little bit like it wasn’t just the brute force of your working hard. It wasn’t that you just raised an unbelievable amount of money and solved it with funding. You didn’t have the brash confidence and ego. It sounds like you’re a little bit like the Columbo where something’s failing and you come in and you ask the obvious questions and you get to the bottom of it and you start asking the customer what they really want. And you start like putting the pieces together, and then you double check everything, and then you do this the simple maybe obvious things or the not so obvious things that other people don’t do. And you start untangling these puzzles.

Howard Gottlieb: Right. You would think that there are two ways to success. Either you create something new that doesn’t exist and then find a market for it, or you either disrupt or radically improve what’s already being done. A whole lot easier, or a whole lot less brains are required for the second. And we’ve taken more of that approach. Well, then I got a business that was fun and I bought a couple of retail stores, athletic apparel retail stores, and I grew that into the largest chain, independent chain of athletic footwear and apparel stores in the state of Texas. Right at the time that Nike and Adidas were fashion statements. Within a year they weren’t the fashion statements anymore. And that business, there was nothing I could do better than anybody else. It failed. We sold off our best stores and lost north of $1,000,000. It was after that that we started EasyFundraising.

Greg Head: There’s something about the practical founder game. It isn’t this mega unicorn billion-dollar Silicon Valley thing. It’s about these actually really great small businesses, you would even say with this really high leverage, 17 people creating billions of minutes and thousands of schools and $30 million and serious profits for founders without big funding. That is a great small business, more than a spacer business. You know, like you can defy gravity with technology and you can’t with physical products and restaurants. There are a lot of people working harder in restaurants, and you did easy fundraising and they didn’t get as far. So it’s pretty amazing the leverage that’s in a modern software business.

Howard Gottlieb: Correct. And you don’t have to be a coder to start a software business. It helps if you do, but frankly, you know, other than Brad or, again, I don’t know him well, there are some developers who create their own successful companies. More of the success I found was successful people with good ideas hiring developers. And there’s a different skill set. So if you have a great idea for a technology company and you don’t know how to code, don’t feel like you need to go to school and be a coder because you’ll never be as good as the kid who locked himself as a gamer in his room as a coder, they’re better than you.

Greg Head: And hire them.

Howard Gottlieb: Hire them, hire them. They’ll love your money. So there are no barriers to fulfilling your idea. You can do anything with very little money. I don’t know what it’s like to go out and get money and have all this money, but I do know the difference between the way I did it and the way that these VCs have talked when they’ve talked to me is, I have a very profitable company that throws up a crazy amount of cash that I take home. None of them would do that. They all, for a certain period, would suck all the money back into the company and grow it, you know, pedal to the metal. And if it worked, they hit a home run. If it doesn’t work, they blow it up. They write that off because they’re only looking for one explosion. You know, and if one of my heroes out there is Peter Thiel, the PayPal guy, like he says, you know, he’ll put money in about ten things and expect nine to be like raging failures. And if just one works, he’s done well.

Greg Head: Well, you could look at your experiments and you funded a lot of experiments that didn’t work. And then you doubled down on the ones that did and create new businesses out of that. Right. So it’s interesting. So one out of ten is a very typical VC funding game. We’re looking for the thousand-time winner, and they will give up nine and it’s okay to lose on nine. But for the nine founders that lost, that’s totally them it’s they lost 100%, right? Not 10%. So it’s very different when you’re in there.

Howard Gottlieb: Right. Right. Right. And if you talk to VCs, some of it is you are partially selling your soul.

Greg Head: What do you mean by that?

Howard Gottlieb: Well, I mean, it sounds good. Say, when we were developing Read-a-Thon, if I had gone out, I probably could’ve. We see valuations for some stuff and it’s silly. No chance of monetization and you know you get a check for $10 million if you gather all these folks. Well they may the VCs may be good with that for a couple of years and then at some point they need a return. And if you don’t hit profit targets, you lose a little bit more equity for nothing. And at some point, you’re answering to them not your dream anymore. And maybe your dream and their dream don’t align because they are professional money managers and they’re smarter at that and more demanding and ruthless at that than you’ll ever be. And if you want to stay up at night, just think about I am answering to this $5 million investor and they want me to do this. It’s not what I think. It’s the contrary, but you have to do it because that’s where your funding came from. And instead of possibly focusing on actually making a living at what you’re doing, you’re focused on a group of ex-McKinsey folks telling you, Well, on paper, I think, if you do these things, it’ll work. Well, heck, maybe it doesn’t work. And now you’ve got nothing. I’m not saying it’s a bad thing, You know, that world has never appealed to me.

Greg Head: Did you ever raise funding with any of these ventures? You all just kind of created them out of the dirt.

Howard Gottlieb: Yeah, well, and, you know, once you’ve. You’ve started a couple of companies and you have a little bit of money, it’s a whole lot easier. When we sold the Spacer Company, it was a good amount of money. When we sold their manufacturer, it was for a good amount of money. And when we sold EasyFundraising, it was a good amount of money. So we were never, you know, these poor folks trying to start a company and desperately needing money. We were okay because we had had some success, but we were approached, you know, especially we Read-a-Thon since its inception. I mean, it’s, you know, what do you need? What do you need? Let’s grow this thing to a billion, you know, What do you need? What do you need? You know, and maybe I won’t grow there that fast.

Greg Head: Well, speed is actually one of the biggest things here. Funds, VCs need you to pay back their 10X or 10 X in 5 to 7 years because that’s the time frame that they committed to their investors that this will turn over. Right. And sometimes things markets don’t grow that fast. Right. You know and founders don’t go that fast and it’s just a difference in speed that can kill a business.

Howard Gottlieb: So you know I think to myself you take Read-a-Thon and I think Read-a-Thon is a unicorn. So it’s probably not typical. But I rather own all of Read-a-Thon now, or it is three times its size and owns 20%, you know. I’d rather own all of it now because it will grow to that size and I’ll still own it.

Greg Head: And it’s more than just the math. You have control over everything, right? You what the customers get and what the employees get. You’re answering for what works in the world.

Howard Gottlieb: Well, and you also when we talk to these companies now and some of them say to us, well, we’d like to take a majority stake, we’ll buy 51%. You keep 49%. I just tell them I have absolutely no interest. If I’m betting on one of us, it’s me. If you buy 51%, then I’m betting on you and risking half of what I’ve built. So I don’t know exactly how people do that, but at the time that we do ultimately sell, it will most likely be a 100% cash deal, or we’ll keep a small interest that’s valued at greater than the percent to maintain motivation for me to help them. And we’re turning the tables a little bit. It’s not me counting on them to grow. It’s them needing my help for a while till they have instincts for what we do. And then they can take their game plan and run with it. It’s not even VCs at that point. Those are private equity firms. And there’s a vast difference between a private equity firm and a VC. A VC is a shark looking to take something that you’ve got going and just give you the easy thing for them to write your little check in their world and suck most of your life. PE firms are looking to buy you either buy all of you or buy most of you. And I think they are a different animal, at least from my experience.

Greg Head: Yeah, VCs don’t want to operate your company. They want to invest and get you on the funding drugs. And have you carry the whole thing.

Howard Gottlieb: And have you sell it as fast as they want you to sell? .

Greg Head: And sometimes that aligns with what founders want, not it doesn’t always. So how we’re getting to the end of our conversation here, you’ve been creating businesses for 30 years and you’ve got a very successful modern digital fundraising company with a laser focus on schools and reading, and growing very fast. One of your biggest success stories, it sounds like, through the years for all those practical founders out there, can you just give one or two more lessons? You’ve got a crowd of practical founders in the audience here. What are a few things that you think everybody should know coming from your perspective that would help them create these kind of businesses?

Howard Gottlieb: I hear a lot of people that get super focused on their competition as opposed to their business. And if you don’t have a better idea for your business before you start, probably don’t want to start. You need to create an environment where your competitors are worried about what you’re doing more than you’re worried about what they’re doing. I don’t know if that makes sense or not. I don’t.

Greg Head: Pay. So it’s a little bit like if you’re worried about competitors, you shouldn’t have started your business because you actually have to create something that defies the competition, right?

Howard Gottlieb: I mean, we’ve seen people, at GoFundMe for example, I could hire some coders and I can replicate GoFundMe just in a minute. I mean, for $10,000, I have a donation platform. But they had a better idea. Read-a-Thon was unique in what we do there. So, you know, I’m not really worried about what other people do. I want to offer the best value for what we do. So I focus on my business, not the outside world. Occasionally we’ll glance it and I’ve hired a new VP of Sales and a VP of operations, and they bring me what our competitors are doing. And I constantly say, So what? You know, No we’re not going to do what they do. You know, I don’t want to be them. I want to be us. If you don’t have a better idea, don’t start. And then don’t lose your focus on being what you thought you would be and grow in that vision. There’s nothing that you do today that you can’t do better tomorrow. Be insanely aggressive at identifying areas that you can improve, and conversion optimization is a great analogy here. If you’re on my home page and my money page is six pages in, my home page probably can’t affect a whole lot, six pages in.

Howard Gottlieb: So I’m looking at the next steps, conversions. So the same thing with operations is, How can I make this handoff to this be smoother? Not six handoffs down because I may never affect that. So incremental steps and conversion, how does this make this better? And then the biggest thing that it took us forever to do is identify what you really do and how your business runs. So for us, we’ve determined there are four processes and three markets to our business, and that’s what we’re focused on. I get a booking to print, to perform, to rebook. That’s my business. Simple. Then I’ve got three markets, I’ve got the school doing the fundraiser, I’ve got the parent creating the page, and I’ve got grandma, the donor. And those are unique customers of my platform. So I need to treat them all individually. So micromanage, understand your business, understand who you’re interacting with, interact on their level, make it as simple, and talk in their language. Heck, if you do all that and you got a good idea, you’d be I’ll bet on you every day that that’s the formula after 40 years.

Greg Head: Well, yeah, after 40 years. And it didn’t sound like in the spacer or business and these other businesses, you are out to change the world and make an impact like a cause or a higher purpose, which we hear more about today. But you actually created a business that is affecting positive change with Read-a-Thon with kids reading. Just an amazing amount of impact that you’re creating without all the big funding from right here just outside of Fort Worth, Texas, with a small team, it’s amazing the impact in the world that you’re creating. And it’s going to continue to grow.

Howard Gottlieb: We’re lucky. Lucky and blessed. Lucky and blessed.

Greg Head: Well, thanks for sharing your story and your wisdom here, Howard, on the Practical Founders podcast. It’s been great learning about what you’ve been doing and learning from your insights.

Howard Gottlieb: Thanks, Greg. I appreciate your having me.

In this episode, Howard explains:

  • How Read-a-Thon has impacted literacy in the US in a material way as they reach more schools, students, and donors
  • Why they changed their business model from pledge-based to one-time fundraising
  • How he experimented with many business models in school fundraising before starting Read-a-Thon
  • Why he didn’t sell the company to a private equity buyer that had an offer on the table
  • The power of specialized focus on elementary school fundraising vs. being a generalized platform for any type of fundraising
  • Why he is constantly testing, improving, and optimizing everything inside the business and in the customer experience
  • What he learned from the previous companies he created and sold before starting Read-a-Thon

Read-a-Thon Company Facts

  • Founded: 2012
  • Description: Literacy-based fundraising platform used by over 4,000 elementary. Read-a-Thon has tracked over 3 billion reading minutes by students 
  • Number of Employees: 17
  • Funding: Bootstrapped inexpensively with founder investment and profits from a related fundraising website
  • Location: Mansfield, Texas

Links

The Practical Founders Podcast

Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies—without big funding.

Subscribe to the Practical Founders Podcast using your favorite podcast app.

Get weekly Practical Founders newsletter and podcast updates.

Greg Head recorded this on episode on December 2, 2022 for the Practical Founders Podcast see all of the episodes.

Share Practical Founders