Founder and CEO
As consumers, we are all word-of-mouth marketers. We buy a product, love it and share our opinion with a couple of our friends. Conversely, if we hate the product, well we certainly don't keep that view to ourselves. Either way, what we say can have a dramatic impact on a company's bottom line.
Of course the difficulty for marketers is creating the right kind of buzz with enough momentum to carry it over the tipping point. Dave Balter, founder and CEO of BzzAgent and his network of 300,000 volunteer agents believe they've figured out a way to crack that code.
Balter is a man on mission. Coming out of the credit card industry where he managed several loyalty programs, he ran two promotion agencies and sold them both in 2001. His plan was to go work for a company, but much to his surprise, no one would hire him. He says the typical line was "you've done your own thing for so long, you'll never want to work for anyone again."
So Balter did what so many entrepreneurs do when they can't find a job, he read — a lot. "I read a ton of books," he explains. "But it wasn't until Buttlerfly Economics, by theoretical economist Paul Ormerod, that the lightbulb went off." And his obsession with word-of-mouth marketing began.
No matter how you analyze it, human behavior is surprisingly random. And no economic model can account for all of it at any given time. "Paul Ormerod's big idea was that you can't predict economies until you know the behavior of people," says Balter.
So Balter set about creating a different type of loyalty model which organizes massive groups of people to share their opinions around products and services and then, rewards them for doing it. In 2001, BzzAgent was born.
Word-of-mouth has been around forever. But up until a few years ago, marketers viewed it only as an outcome of a successful marketing campaign. "If I make a great product or offer a great service, I'll get word-of-mouth," explains Balter.
With BzzAgent, Balter has created a system that organizes, manages and measures word-of-mouth. CRM systems, he says, are filled with insane amounts of data. They're knowledge platforms. "I wanted to create a people platform of opinion and insight. I see word-of-mouth becoming a media channel that companies repeatedly tap into for everything from ideation to innovation."
Depending on who you talk to, word-of-mouth marketers are either "evangelists or shills" (to quote a recent article). Balter knew he had perception issues to overcome. BzzAgent learned early on that in order to deliver effective word-of-mouth, it had to maintain an open, transparent, independent culture. That's convenient, given that Balter himself is an open and transparent kind of guy.
Since early 2003, he's maintained three experimental corporate blogs inviting outsiders in for a birds-eye view of his firm's growth and transformation. Balter even goes so far as to post company meetings on the public site. It hasn't always been pretty but it has been honest. "It can be a scary moment when things are open. But it's also a way to make communications ultra-clear and get ideas from a variety of different sources."
In early 2006, after running for four years at a profit, BzzAgent secured nearly $15 million in venture capital. During the financing round, Balter took the highly unusual step of posting his internal rankings of all the venture capitalists on the public blog. (Note: He masked their names. Transparency knows some boundaries.) It boldly outlined how BzzAgent was evaluating the VC's on everything from knowledge in the space to connections, culture and relationships. "The grid was the defining moment of the financing," says Balter.
Why do it? While many thought he was crazy, Balter says, "That alone let the market know what we were all about. By walking the talk, the VC's said, 'a-ha, now I know how you're evaluating me. Let me explain why I'm best suited as an investor.'"
For Balter, what began as a lifestyle business — "this was intended to be a nice, small five-person company" — is now a firm with more than 70 employees and a big time dream. When asked where he wants BzzAgent to be in the next five years, he answers: "Like TV networks or cable companies are the distribution platforms for advertiser's commercials, I'd like to be known as the media channel in anyone seeking to engage the power of people's credible opinions. If you're going to do anything in word-of-mouth, you need to tap into the Bzzagent network."