What's the best marketing advice for a growing brand? Number one is you cannot play safe. The guest for today's episode is Todd Davis, Chairman of the Board at Kadenwood. Todd talks with Scott Harkey about how growing brands cannot copy someone else's marketing strategy. Even if you tweak it a little and paste your brand name on it, it won't work. You need a different strategy to reach your goals. Be bold and take chances! Tune in for more insights to grow your brand!
I'm here with Todd Davis, the former Founder and CEO of LifeLock. I'm going to jump into this, Todd. You know how we do it.
I'm ready, Scott.
You freaking put your Social Security number on national TV. What were you thinking?
I need to pay the bills. People think maybe there was a whole lot of research that went into this concept. We were trying to define a whole new industry that didn't exist. There was no such thing as identity theft protection. I tried to come up with good marketing. What's my hook? How do I differentiate? I had this idea of a million-dollar guarantee. That sounds like a big deal, a lot of money. AMEX would only cover you for $5,000 back then. I used that to go do a bunch of public relations. I could get on television and then people would look and go, “Who's the CEO of LifeLock? Who is that?” We look credible and we look big.
I'm not joking, I had been on CNBC one other time. It's a national cable. Granted, viewership at any given time is 200,000. I'm like, “I need the phones to ring. I need to get 1,000 signups so I can make payroll on Friday.” It’s that and all the good marketing. Purple Cow, we all read some of these books early on. How do I differentiate? We could talk consumer consciousness. How do I break through the clutter? I'm in the studio. If you've never done anything like this, you're in a broom closet in some studio somewhere and there's no one there. You can't see them. It's dark. You're sitting with the background behind you.
I'm going to be on, I want to talk about the million-dollar guarantee and this idea of identity theft and protection. I'm like, “I should do what everybody says don't do. Some people are going to think I'm crazy but this got to get their attention.” I pick up my phone, which back then was a Blackberry. They don't like it when you do that in a control room when you're on a satellite TV and you’re make upped up. You got this thing called IFB in your ear so you can hear the control room and the interviewer across the country. “Mr. Davis, you need to put down the phone.” “I got you. I'm appointing. Hold on one sec. I got a quick question. Can I give up my Social Security number on national television?” They’re like, “Why would you?” I’m like, “I only got so much time.” They’re like, “Okay.” One, they told me, “You cannot challenge anyone to steal your identity.”
Everyone remembers this ad, Scott. I challenged them. I couldn't have done it because that could have been deemed soliciting a felony. I could have been arrested. I'm like, “Great advice.” I never forgot that one. I never made that mistake. They were like, “Your credit is going to get crushed from 1,000 credit card applications. There's going to be some stuff back then that we couldn't see, some wireless accounts or payday loans. Nothing we can't clean up.” I'm like, “Thanks. Bye.”
Is this your general counsel or your attorney?
We didn't have enough money for a real general counsel. I'll call it legal advice. It's a gray area but that was solid. I get on the air. Mark has passed away now but he used to do what was called the Power Launcher. He's interviewing me and he said, “Mr. Davis, you're confident in your system that you got a million-dollar guarantee.” That's when I saw my opening. I said, “Mark, I'm confident I will give you my real Social Security number on the air.” He's like, “No.” I can hear my IFB in the earpiece and the control room is going, “Have him give it.”
Mark was a former lawyer and he's like, “This is not good. He can't do that.” When he told me no, it was like your friends holding you back in a high school fight. Now I'm tough. When I said no and I can't do it, I said, “Mark, I'm serious. I will give it right now on the air, live television.” He's like, “No. Mr. Davis, please don't do that.” I didn't give it out on that particular airing. Lightning in a bottle, we created a commercial. The phones didn't stop ringing. We signed up almost 20% of their entire viewing audience over the next 72 hours.
That's lightning in a bottle.
Think about that, that's 40,000 enrollments. Back then, that was $400,000 a month to us in revenue. That was it, we were on the map. We were going to survive. I didn't slow down for a decade.
My favorite part about this story, weren't you answering phones right after you got done with the interview and signing people up? Are you kidding me? Talk to me about that.
Here's the real backstory of a startup. There were only fourteen of us back when I did this. Anytime I was going to be on television anywhere in the country or on the radio, everybody had to man the phone. There's a technology where you can say, “Put me on a phone tree.” They call the 1-800 number but it rolls to a landline or a cell phone. We want to be able to answer the phone. Everybody, all engineers, I don't care who you were, you're answering phones. Back then, there were these CDPD cards that you slid into your laptop. It had a little antenna that always broke. I would slide it in and I knew that I can't answer, “LifeLock, this is Todd Davis.” They’d be like, “The guy I saw on the news? You're not big then.”
I would go into what I called phone voice. My full name is Richard Todd Davis. I would answer the phone in a car or wherever we were. I’d be like, “Thank you for calling LifeLock. This is Richard, how may I help you?” Scott, our back office was us on our web page. These were people who didn't want to go to a web page. They wanted to talk to somebody. We would sit there on the phone, fill out the web enrollment form with them over the phone and hit enter. I was sitting there sweating in my car. I can't get off the phone. Every time I hang up a call, it rings again. We got investors off that. It was truly lightning in a bottle.
LifeLock had fifteen employees when you started in Tempe to what now or when you sold?
We sold it years ago. Symantec, who does Norton AntiVirus, bought us for $2.3 billion. At that point, we had about 750 employees between California and Arizona. We were doing about $680 million a year in recurring revenue and growing.
First, there was Social Security and you followed up with commercials that we all remember. You also did some celebrity deals. Talk to us about that a little bit.
Building a brand is different. It's different marketing. You got a project an image. It's a little bit of a self-fulfilling prophecy. We're going to be big. We want you to know our name. We want to project confidence. We tried several things. We did some NASCAR sponsorship. We were the first-ever corporate sponsor on the WNBA jersey here for our own Arizona teams. The Phoenix Mercury was the first one and the great Diana Taurasi. It was awesome. We decided, “Let's do The Celebrity Apprentice.” We did all the stuff. You tape in November. You called it put it in the can. We did all this activation. When you're doing the sponsorship, activation is other marketing to support your appearance and the sponsored portion.
We had TV ads. We were on the first ones with TiVo when you could fast forward and the commercial would still play over the timer. We did that. We had an internet campaign where Donald Trump would hold up a piece of paper and it would be your name saying, “You're fired.” It personalized it to everyone's computer. We had this whole campaign thing drawn out. We were ready. This is our big bet, 2009. Here we go, our next big deal. $2.5 million to be the sponsor plus activation, that was to be on the show.
That was a bold move in terms of marketing and where people are like, “What are you doing? How do you know this is going to work? How many people were going to sign up if we do this?”
People were like, “How are we going to measure? What's the cost of acquisition? It’s almost like doing a Super Bowl ad.” I had to explain to people, “We're going to look at cost of acquisition. We'll get a nice lift but it is a bigger brand-building move.” All that sounds great. I get a phone call on a Thursday before it was supposed to air Sunday in April. We taped in November. We've done all the commercials. I won't expose any political views. Donald Trump's people call and said, “He wants $1 million more.” I’m like, “I don’t have $1 million. There's no way.” Donald and I had some arguments personally on the phone.
You had a deal with Donald Trump to be the spokesperson for LifeLock during The Celebrity Apprentice. The contract is done, it's ready to go to air and then all of a sudden, Donald's people call you and say, “We need some more money.”
I found out later, I didn't know this but they said, “That's like New York real estate. You thought the contract was the end of the negotiation. That's the beginning.” I was naive. I didn't know any better. I told him, “No. I'm not paying you. I'm not going to use you.” He says, “What are you going to do? You won't have any television ads to run.”
You and Donald are on the cell phone arguing this out.
Yes, yelling and cussing. It’s surreal now to think about it. I sent my guys on a red-eye from Arizona and New York and I said, “You better write a script. You have until Saturday. You got to get it to the station. We had to get the NBC to clear so they could run it. You've got to come up with the idea, get talent, tape it and have it ready to air in our spots.” They are two of the worst primetime television commercials ever. We used Joan Rivers in what would be called a still shot. Straightforward, she's holding her dog and diamonds and furs, “There's more to my identity than my possessions.” It’s the worse. As a jab to Donald, we used Carolyn. She used to be one of the assistants. When they started getting famous, Carolyn and George, they put their kids in there so they get the publicity. He fired Carolyn. We used her and she was like, “Do you know who I am?” Crickets. We spent $2.5 million. I don't remember the exact numbers but I'm sure it wasn't over $9,000, which is horrible.
You raised money at this time after the Social Security stunt. VC or private equity, where they're like, “What the hell are you doing? You're spending money on a brand. What are we going to get back on this?”
Luckily, when it's working on the brand, you don't get the same level of scrutiny. We can show, “We're on 120,000 gross new enrollments a month.” We're going to keep going. We're going to keep hitting the gas. We're becoming the brand leader. They were scrutinizing and we said, “This is board level. We're going to place a bet. It may or may not work.” It was a horrible, catastrophic failure. The good news is our board was like, “We got to try stuff.”
The recognition we got from it was horrible. If you were to look at the metrics conversion and cost of acquisition, it was horrible. We had a whole other side of our business that were partner sales. We had instant credibility. Everybody wanted to talk about being on The Celebrity Apprentice. The other cool part was Mark Burnett, who produced the show with him, heard what happened with us and Donald. He said, “I'm going to make good.”
We had to pay something but it was a fraction of what we had paid the first year. We changed our strategy. We know we're going to build a brand. I don't expect immediate conversion. Ironically, I used it to build partnerships. A partner that did the show with me was Symantec who then, a few years later, bought us for $2.3 billion. It worked out to be a great thing. It was instrumental in building our brand and putting us on the map.
We did some other TV shows that we were sponsors of. General Wesley Clark tried to do Stars Earn Stripes. They tried to do the real-world missions and that stuff. It’s not great writing. It wasn't nearly as big as The Celebrity Apprentice but we did several things that were certainly successful in brand building. You couldn't look at that in isolation. It looked like, “Why are we wasting money on that?” What you found was every other channel, you got to lift.
All of a sudden, digital PPC is performing great.
That's good, “Why are we spending on it? Quit doing sponsorship, spend more here.” We always had this argument with the CFO every once in a while, “Turn it down.” All the metrics are now performing worse. They'd be like, “Put more money. Redirect that money where it's working.” It doesn't work like that. This is a whole ecosystem. Luckily, we were successful with it for a long time that we get the benefit of the doubt. They gave us time to prove it. We grew for twelve straight years, which is 48 consecutive quarters. We grew new members and revenue. That keeps giving you money when you keep growing all those metrics.
As a CEO, it's easier to be visionary and be bold with brand and strategy. Ad Age said that the average CMO lifecycle is 18 to 21 months. Do you think you could have been successful as a CMO or as an internal marketing person? Do you think being the CEO and the founder of a brand allows you to be bold with marketing strategy?
Let's put it this way, I had some great CMOs. You'll notice I said plural. I got to be the CEO for my full tenure of twelve-plus years until I'm wanting to step away. I'm a good marketer. I surround myself with even smarter people than me. They were great at building teams and those things but everybody else thinks they're a good marketer too. They were always in a tough spot, “Do I go take the risk?” I found the best CMOs were the ones that were willing to embrace my vision as strongly as I did and get out there and risk it with me. If this fails, could this be job terminating? Maybe. The ones that played it safe get terminated anyways after a while. I had a little bit of that. I won't ever name names. The ones that acted like a CEO in their role and owned it were passionate, “I will stand up and own the results.”
What does it take to be successful as a CMO? Is it brand building and purpose? Is it digital conversion or metrics of conversion? Is it a mix of both? Is it a great leader?
There are two aspects I want. I do want you to be an impassioned, courageous and commanding leader. That means you're going to attract great talent. This is a personal view by far. I'm sure it varies across different companies. I can typically find talented people to stay on top of the metrics, generate the reports, keep an eye on things and tell us what we need. What was hard to find were the ones that were willing to go, “We're going to try a whole new path. We're going to rebrand something. We're going to launch a new entire new line. I got to put in a big investment and don't expect to get a real return for X amount of time.” What I look for in a CMO is someone who could passionately convey why this may fail but I'm willing to put my name on it. They were on top of it. They never got surprised by the numbers. They were willing to pull back here and A/B test, “Let's work on getting those down.” They put smart people in charge of it but that was never their day-to-day. The main thing I do is go check the numbers and run the metrics.
If you're a marketing person out there and you're growing into your career, what advice would you give to somebody? I know the five P’s in college they’re still talking about. This is a street hustle. Can you give some advice on the mean streets of growing a brand?
Number one, you cannot be safe. There is no chance to go, “That worked for them. Let me copy that, put a little tweak and put our brand on it.” You're going to fail.
Deadman walking. Even if you could have a little success for a while, that's not marketing leadership. The ones I look for are fascinated by great marketing. It wasn't so they could go replicate it. They were looking for, “How did they think about that? How did they apply a different strategy to go accomplish that versus the norm?” Those were the ones that I tried to hire and were by far the most pleased with the results by the end. You got to be bold. Take the chances. I had some great CMOs that I still changed after a while to get what’s the next fresh thing. Some were willing to go outsource more of it. Some were willing to try and take it in-house. Sometimes it worked. Sometimes it didn't. If things aren't working, you change things up. I don't know that I have a firm belief in one philosophy or the other. I care about what's working. If it’s not working, change it up.
Brands take investment and time. What’s the gauge of giving somebody enough time? Is it a feeling?
That's a little bit of both. You can feel it when you're capturing something. It's easy to say lightning in the bottle my Social Security number. That was a one-time awesome opportunity. It's when the new campaigns and you see the traction and you see the future ads you run. I don't know if you remember some of these ads but they got popular. There was what looked like a security guard in a bank and there would be a robbery going on. Everyone’s like, “Get down.” They looked to him and go, “There's a bank robbery. Do something.” He goes, “I'm a security monitor. I just notify you if there's a bank robbery.” There's a bank robbery but he’s not doing anything. It’s a great ad and people remember it. You don't know that we did six other versions of that. Some were okay, the termite guy, “You got termite.” The dentist guy, “I don't fix it. Let's go to lunch.” We had this whole mix. You can tell when you got some mojo in it.
The key is its expectation setting. The initial numbers, metrics, if you're trying to look at conversion rates or cost of acquisition, they never start where you want them. They're going to start way higher than you could live with. Once you know that, “As long as it's within this range.” Over the next 3 to 8 weeks, we optimize. It can be one word. It's crazy the things that can make one work or not. We tweak it. All of a sudden, you got something that’s got great legs and gets all the right metrics. You got to start thinking, “That's only got so much shelf life. What's the next thing I'm going to go do?” That's how you knew great marketing.
You're the first guy that I've talked to that understands brand and purpose but also understands digital metrics, conversion and numbers. That's the unicorn of what people are looking for now. Can you talk to me about that? Is it a perfect strategy? Is it test and optimize? Is it brand or is it metrics? How do you mix all of these together? They’re all important.
There was a general formula that we would start with. Whatever we're testing first needs to be within this band of cost of acquisition, conversions or how many eyeballs we drove or whatever. We pre-determine what's the band. If it was way outside that, you're like, “I don't even need to A/B test this thing. Kill it. Move on to the next one.” We would do a control group and a focus group. The amount of market research is incredibly valuable before you go with the big launch. Don't do analysis paralysis. Pick the rain. Here's my band.
We then have a general chart, “If yes, here's what we do next.” Here's where we pour money into it. If we get a yes there, it's hit the gas hard. If we get a no, what do I got to do to refine it? We were okay in operating in bands. We were okay that we figured out doing search optimization, “How much do I spend there? Where's my diminishing return?” When I'm doing the brand stuff, my search optimization works better. You got to be willing to connect even though I cannot directly tie it. There's some technology trying to help all that I know.
It’s great, the more science you can get to it. They're still the beauty of marketing and brand, which I instill in you an emotion. Once I've done that, I've tied myself to that emotion. For us, I wanted you to think we were the leader and you could count on us. It became a self-fulfilling prophecy. We became the industry leader. We were the biggest by far. We crushed our competition because we believed in that.
You were the authority.
We were the leader. We were going to cultivate faster and we want to treat you better and you could count on us. We guarantee it.
Inventing a new industry, how do you gain consumer insight into what drives them emotionally?
It’s brutal because you got to evangelize while you're doing research so you know what you think is going to work and that's hard to market. First, I looked more credible because I was on your local news or I was on cable news, “I've never heard of these guys but they must be big. They got the CEO of the company on there.”
Thank you, PR.
There have been studies before. It was PNG or one of the guys that said it costs $1 billion to build a brand. If you go back and look at what we did, we spent $1 billion. It started with some awesome venture capitalists and investors that trusted us and let us spend their money. We then poured revenues and keep growing them. Once you have that, you had an unstoppable machine. You had to believe that building a brand will be a massive barrier entry. That's why Symantec comes out and says, “We think you're worth $2.3 billion.”
When you go raise money, how much of marketing is a piece of that? How much are leadership and numbers? Talk to the people who haven't raised a lot of money. You go to Goldman Sachs and be like, “I need $1 billion. I'm going to build a brand on something that hasn't existed before.”
By far, the most important thing is a team. They would even rather bet on a team with a mediocre idea than a weak mediocre team with a great idea. Generally, most across the board, team matters. Get your right leadership. A key piece of that for us wasn't just me but our CMO. For us, the technology and stuff, too. The was what they first bet on. The decisive point for us to be wildly successful is to be the brand leader. To do that, “Here's the amount of money we're going to lose for quite a while and we're going to have to raise.” They said, “We believe.”
They are keeping a finger on the pulse. There are regular, quarterly and bi-monthly board meetings. Once they bought into, “We believe in this team,” they'll adjust the courses they need to. Some campaigns will work and some won't. At the end of the day, they're going to build a brand. We got to see that success and growth metrics along the way. The reality is we had a great experience with venture capital money.
People who have had horror stories, I jokingly call venture capitalists. Some of my best friends are now these guys but they are sharks. The good news is there are people who swim with sharks every day and never get bit. You have no shark behavior. These guys don't want to be surprised. They want to get a great return on their investment in X amount of time. I made plenty of mistakes leading the company but I didn't surprise them. I let them know what's coming. I owned it when I made a mistake and we delivered. They were fantastic partners. The people who have a bad time are the ones that don't admit when we've made a mistake, try to blame something else, don't communicate right away when something goes wrong then get ready, you’re going to get bit.
You put your Social Security number out there. Are you good? Did you get hacked?
A couple of different things. One, when they even told me, “Your credit is going to be a mess. Nothing we can't clean up but it'll take a while.” I did joke and said, “If it works, I'll live on cash. It will be successful.” The other one was, at one point, I had done some articles and it hadn't got a whole lot of attention where I said, “My identity has been compromised. They got a payday loan. There have been some wireless accounts that were opened but LifeLock served me like it would anybody else. We got a guarantee and they made it better and I didn't feel any pain. I'm not out with any money. It's all good.” All of a sudden, it picked up traction on national. There was a day that I was the second most searched term behind Britney Spears. That was a monumental day.
I had to go on to The Today Show. Everybody's like, “The LifeLock CEO got his identity hat.” I'm like, “I gave out my Social Security on a billboard truck. Let’s face it, I own it. Do you want to talk about it?” I did the red-eye to New York. I sat down with now-fired Matt Lauer. First, he roasted me, “You're arrogant, giving out you're Social. Now you've been compromised.” I’m like, “I gave out my Social Security number. Here's what we do. You could be compromised. We're going to take care of you. We do more.” I got to go make our pitch, record enrollment that day. The story is supposed to be like, “Aren't you embarrassed? You were cocky and pretentious to give out your Social.”
You owned it and you were authentic.
It supported our brand, which was saying, “We can't stop it all but we'll make it better for you. Trust us.” We did. All those Google searches turned out more successful.
The bad publicity that was supposed to happen was positive growth for the company.
To my point, if you looked at our growth, 12 straight years and 44 quarters, you could not look at our growth curve in those twelve years and figure out when that bad press happened. That's a strong brand. You weather the attacks.
You built a moat around the brand and you supported it
By not skimping. By being committed. We weren't tepidly committed to ours. We were all in. I had 700 and some of the greatest employees on the planet who believed in our mission, who are passionate about it. Also, who were ticked off when people would be like, “They're trying to say we're not doing our service or that we're not good. We don't fulfill our promise.” What is a brand? It's a promise. I fulfilled my promise. They were tit that someone was trying to say we weren't fulfilling our promise. It was awesome. We were strong. We all came together. I didn't have to rally the troops, “Stay with me.” They were like, “What hill do you want us to take? We got this.” We grew right through it.
I want to end on that. A brand is a promise. The support you have when you're on purpose and brand, internally, people will take an island for you because of what they believe in. That's truly building a brand. It's not just the marketing or the TV shows or anything else. It's that deep, committed promise. I love that. Thank you, Todd, for coming on.
Thanks, Scott. I enjoyed it.
Scott leads a stable of marketing agencies and services offering the world's biggest brands speed, value and results. OH is an independent agency built to serve today's brands through consumer-centric marketing and strategy.
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