#2: Analytics and Experimentation with Daniel Cotlar

Daniel Cotlar, former Chief Marketing Officer and near-founder of Blinds.com, joined me to discuss Customer Journey Mapping, experimenting with customers, measuring success, and much, much more. I first met Daniel at Rice University's Customer Management Symposium and he was very generous to join the show as my second guest.

Video of Scott's Interview with Daniel Cotlar

Podcast Audio of Scott's Interview with Daniel Cotlar

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Transcript of Scott's Interview with Daniel Cotlar

That is what a marketer does within a company you're the eyes and ears of the customer experience, you are the voice of the customer and you interpret what their experience is so that it can be improved across the company.

Scott: All right let's jump right into the interview with Daniel Cotler, Daniel is… well my first exposure to you Daniel was at Rice University's Customer Management Symposium and all of the speakers there were tremendous but you're the one that was really memorable for me and you stood out for a number of reasons, one is since I earned my PhD in consumer behavior you just seem so in tune with the consumer perspective, and to be honest with you it wasn't really what I was expecting because you were talking about blinds.com and that's not necessarily the first industry that comes to mind when we think about customer oriented marketing and I really liked your approach, you were you were using some really cool and sophisticated tools for tracking customers and for adapting your marketing approach.

So, first thank you for joining me and it's such a such a tremendous value to my students for them to get this exposure to someone who's had your level of success, so we appreciate that and let's just start off by… So, you were the chief marketing officer for blinds.com for a number of years, so if I could ask; how did you come to be the CMO for blinds.com and then maybe finish off by telling us what you're up to today?

Daniel: Okay, great, well my education was as a rabbi, so that's not something you typically hear but I'll tell you that a lot of people who are in marketing have more philosophical backgrounds and I think that that is because it gives you an understanding and empathy for what the other person is experiencing so you can better relate and create experiences for them, I don't know whether that’s case here but coming out of that I then came to Houston and went to business school at Rice and was involved in a number of startups. Some of them went on to be successful and most… a couple of them did not and after doing that for a while and having some having two kids, I then went to work for Reliant Energy for five years doing marketing their online marketing.

In general, the strain that's run through most of my experience has been analytical marketing or statistical, taking kind of a numbers based approach to understanding the equations of customer acquisition and customer experience.

So I did that and then when I was… someone I had actually worked on a start-up unsuccessfully was the called me back and said would you join me at blinds.com, it just started to it just started to make the company successful to a significant size this is Jay Steinfeld the founder and I worked with him during a time when things weren't working so well and I learned what kind of great person he was and what he was like to work with, so I left a large company and the safety and the success of a large company to go to go work for something much smaller because of the opportunity to make a difference and I always like to, I like those building opportunities more than a running something opportunity it's you know it was an amazing ride, I was very fortunate to be there working with one of the best mentors I know and at a time when e-commerce was just completely on the ascension and fortunate to be there riding the wave and helping to develop e-commerce in our industry .

Let's see what I'm doing now? so we fortunately we were able to build a company to about $200 million in sales to the point where the Home Depot wanted to buy us, they didn't buy us because we were a blinds company they which we were. They bought us because we were a platform for difficult buying experiences, so what we created and we can get into this later as something that could be applied to any to any difficult to buy custom product or something where there's a complex buying experience.

First of all, we would fix their blinds experience and we did and then after that over time apply other products so that's why they bought us both the technology and a marketing and a customer service platform for those products and I stayed on for three or four years and transitioned it over time to some of the people who were working in my department.

Scott: That's such a cool story and you know starting as a rabbi and kind of learning to apply the empathy that you developed along the way to marketing experiences, I think you touched on a couple areas that that resonated with me, one is that marketing is not just soft skills which many students believe when they kind of enter a marketing track, so you mentioned your passion for the analytical side of marketing which of course is becoming ever important now that we have access to so much cool customer data and also just being able to see things from the customers’ perspective, I think sometimes we think of that only in business-to-business relationships but you've applied that to this B2C environment where you're offering custom blind solutions and I also like that you built up a platform so it's not just you know trying to figure out how to sell blinds to the end-user but this is something that's transferable and reusable which obviously tremendously increased the value, so lots of excellent points even though that was just kind of a background introduction, that was that was fantastic.

So, kind of digging more into the weeds on your own philosophy and approach to customer relationship management, what are some of the you know just from kind of a 10,000-foot view like, sorry for introducing some so industry buzzwords into this but how would you describe your approach to customers?

Daniel: I’ll start with blinds.com what we had we had some very codified core values of the company and those were things like there were four of them: experiment without fear of failure, continuously improve, enjoy the ride, and always speak up and then we had a platform of what the purpose of the company was and that's to make people better than they ever believed possible that means ourselves it means our customers, means our partners, a lot of stuff is stuff you'll find anywhere as far as core values and purpose but we really lived it and it was on the what it was like pervasive I bring this up because a lot of times um especially me, you know I told you the philosophical background and so you might think it just comes naturally the empathy for customers, the truth is not, it's not like that for me and I'm a very numbers I'm the numbers guy. Well my natural state is just to be looking at numbers and figuring out equations and in treating customers like that so it's a stretch for me I'll tell you that I learned that it's it has to come from a place of a story that you can empathize with that customer’s experience for you to be effective in talking to that customer, remember the customer… the customer is your brother it's your it's your cousin and it's people you're going to work with and you can't treat them like some kind of a third party that's just nameless.

So I think the first thing is to be able to really jump in and understand what that customer story is live it yourself and for us, we tapped into what the emotion of the customer story was and this idea of making people better they ever believed possible, on a customer view that means these are people who would have had to go on to some had somebody come and do it for them and pay a ton of money and this way they are able to accomplish something on their own and say hey! Look what I did and it's like you actually have an emotional pride and sense of ownership, I've taken care of my family, I've done something that I never thought I could do done some complicated I know I'm not a handy person, you know and if you can tap into that and tell those customer stories then you can have a much more meaningful conversation with customers.

Scott: Awesome the some of the things you just talked about there in terms of understanding the customer’s emotions and the customer’s story reminded me of one thing that you showed us at that customer management symposium which was… and I don't know if you coined it the same way but customer journey mapping which is again something that's increasing in popularity in our field.

So, could you could you tell me a little bit about how you went about implementing customer journey mapping what kind of data you use and what it told you about your customers at blinds.com

Daniel: Yeah sure, so imagine you want to know how life is and you poll a bunch of 80-year-olds and say how was it? It's pretty good and then you get you know one to ten ratings of how life was from 80-year-olds, you're going to get a story that's important but you're not going to get the whole story, it's a long time at the end of the process and I think that's what most people do in terms of their customers they at the end of everything how was it and you get something from that and that's wonderful and I think we did that for many years. Where the nuance and the opportunity to improve comes in is where you start asking questions throughout the way and it's identifying those moments that are meaningful in the whole process, what were your teenage years like, you know ask them while they're a teenager maybe and then you know and you're married and you have kids and you're you know, yeah, all these steps on the way you identify those important steps and then you create kind of a map and a rating for a satisfaction or whatever your tool you're using at each of those levels and then you can say alright I can see kind of a rollercoaster where things are better and then we fail here and then we pick it up there and then over here later people generally like us or they don't or whatever it is.

A much more nuanced rich story allowing you to take action on those things. Now that's the first level view that goes from single data point to a series of data maybe it's five points.

Scott: Did that to that map to the customer decision-making process pretty closely

Daniel: Yeah it could it's like the research and consideration and then the actual yeah but it might not it might it's more just attentive to where are the moments of truth that you're going to need to get a pulse

Scott: Okay

Daniel: The next level down from that is to say what does this look like for key clusters of customers who are in some way differentiated from each other what does that look like for people who've heard about us from friends or those who heard about us on the radio or so then maybe the source is one of the differentiators, a lens I call them, if you take another lens you might say depending on what product they bought or depending on what channel they use to talk to us and buy from us, you can have all kinds of different lenses that can inform the then you know much more one level down on how you might be able to improve the experience.

Scott: Alright that's really cool and the so to get the emotional pulse because often you're looking for things like pain points right when you're doing customer journey mapping was that all done through surveying

Daniel: Yeah, right and we didn't have sophisticated tools really just it's a matter I think that a lot of the people think that you have to be some kind of a large data surveying agency or hire somebody expensive you really can do all the stuff on your own, and if you're worried about statistical significance read up a little bit on that and it really doesn't have it's much more important to have a conversation and get used to polling your customers in a respectful and not too frequent way but that where they know that they are being heard, it's more important to get used to that than it is to have a big survey every once in a while

Scott: Right, yeah and did you kind of set up listening posts for your customers so you weren't always going out and getting the information from them necessarily right they had ways to volunteer information to you along their journey?

Daniel: Absolutely one of the things that the CEO that Jay put in place even when he was a really small operation was 30 days after somebody buys from blinds.com they get an email that says and it looks like it's typewritten, I mean really old-school not HTML format and it was like if there was one thing you could change about your experience what would it be? By that time they'd probably installed the product and they have they've you know it's not like right in the moment, you can get a wealth and we did get a wealth information over the years and the other thing is we assured every one of these emails is being read as coming from Jay and you're writing you're just writing in an email, it feels like here you have it a relationship like that and you did for many of the first years when things got to like you know a million blinds a year or more at that point it was it was hard to read every one of them but we had a team reading every one and escalating to Jay and to us.

Scott: Ok cool, that's cool, that he's stuck with that even as you really grew up in size, that's great

Daniel: Yeah that's one example of a listening post

Scott: Right-right that's awesome the okay so this could be related to customer journey mapping or not but do you have an example especially since you're someone with an analytical background of where you were able to identify and fill some gap that you that existed in your marketing program?

Daniel: Sure, trying to think for us in and out we were you know what we were trying to be good at is to make the complex symbol that was the most important thing so we look for pain points and throughout the experience the transaction that could go wrong and what were the main things people were concerned about and we found that they were concerned about a few very obvious things they were I'm going to measure this wrong I'm going to look like a fool and waste money and it's going to be a hassle you know my wife will be mad at me the blinds will be sitting around the living room for a couple months etc. that's one big one, I don't even know if I can pick the right color and actually choose this right I don't know if I can install it those are some of the big pain points yeah we went through so we’ll start so what we did for the first was and this is one of the big I think launch pads to accelerate our growth we took the number one concern and tried to mitigate it and said I know you're worried about mismeasuring, let's just put it on the table if you mismeasure, we'll make a new one for free and that was a big turning point we called it the Surefit guarantee. At first we tried to sell it as insurance measuring insurance and not many people used it and we found it was actually making people more concerned and we just decided it's going to be our brand we did some A/B testing and we did and we saw a 15% lift just from that reassurance that the truth is that two one two percent of people ever used it but it's the reassurance and the reason so few used it is was because we put a lot of things in place on the education side to make sure that we didn't create disasters but some people use it in the meantime so that was the first thing for measuring.

The next thing was product choice and for that we created a blind finder kind of a wizard that would have mimicked the same thing that you would do if you went into somebody's home as an expert consultative sales person, ask the questions hey what are the main things you're worried about is it like is it blocking light, is it you know is it privacy and then asking a few questions you can whittle down 300 products down to four, three and then after that instituted free samples so you can get a look at the colors in your home that kind of thing shipped overnight.

And finally, the last thing was about installation what we wanted to show how simple it was and that was through video now everybody has video but it was it was a little revolutionary at the time video and all this stuff and creating a lot of content.

So, those are some examples of making sure that along the way there's there's um not just empty reassurances but you're really hitting the pain points

Scott: Yes, yeah that's great and did your competitors follow suit pretty quickly with kind of picking up on all these things you were doing?

Daniel: Absolutely, yeah you can they're always running and they tell it can be tempting to try and focus on you know they're copying us of course copying me you're going to get the best of what's out there also we look for other industries in our case because we were the leader in our industry but that wasn't too hard and so absolutely they are they were copying us and you have to just keep moving fast and changing experience.

The other thing you can do is depending on your position of leadership and for us because we were strong we had the best pricing from vendors and we had the best education for our customers, we want to create barriers where we want to actually take something that's difficult to do it's those things that if we can do them it'll be even harder for our competitors to, so you had all cost us 2% or whatever the number is but it cost them 10-percent and so finding things like that that can raise the bar on what constitutes an acceptable or great customer experience you keep raising the bar if you're making more difficult through people who are in a worse position

Scott: Now that's a great insight because it's sometimes we feel like we put all this effort into improving our marketing program and then the competition just comes in and swoops up what we've done but we probably… doing it first that's probably conferred to us some kind of advantage that we can.

Daniel: Six months… one of the things we did for that first thing was we assured before we even got started that we worked a deal with all the suppliers so that if the customer had to remake it well they gave us it at a significant discount so we wouldn't pay the hundred percent, so we worked out all these things and then if you want the program our competitors wouldn't have had that worked out and the suppliers are being and less likely to do that with them than they would us

Scott: Very good the so we've talked a little bit at about customer satisfaction but kind of this holistic approach I'm just curious since you're the analytical person, what variables were most important to you? Did a lot of survey work, were you looking at Net Promoter Score or you had your just general customer satisfaction ratings?

Daniel: Net Promoter Score was good we looked typical call center type poll and like after the call with you mind answering you know something quick like that some more implicit things than explicit and that was if we were a customer what were the things that would that would define whether it was a good experience or not, so some things you might not expect being a customer experience score but are more just how well the business is running like conversion rate or I would say you know the website know what percentage of people who come our the other end who come in.

Another more nuanced way of doing that is a task completion rate not everyone who comes to the website at any given point is trying to buy so if you're just looking at the five percent who end up buying then you're not you're ignoring the other you know ninety-five percent who might have had another cast if you can do a little more nuanced survey and say what were you what you come in for did you do it or you could type people implicitly, then you can say alright this person came to get instructions got them, you know you can get a task complete range for your five main tasks in the experience.

That was one thing, another is looking at something like the percentage of time that somebody has a post-order interaction at all that, we would rather they certainly don't want to call us they don't want you to have to deal with us afterwards they want everything to run smoothly so what percent of the time and you’d be surprised in our industry it was crazy high like eighty percent of the time

Scott: Wow okay

Daniel: That somebody orders there's something you know like whether it's such a status check wait where's my order because these things are being made in real time after they order or it's like I'm missing a piece or the measuring help me with the measuring you know or the installing, so that's we had a very low bar in our industry which is great and then you can just improve on that over time looking at that ratio between the orders and the post order.

You also can look at how quick orders are resolved I mean issues are resolved and whether they resolved at the first the first time or not, so there's a lot of different numbers that look at them but look at that and those are longer or longer-term ones like NPS.

Scott: Right I love the task completion rate because one thing we try to emphasize in marketing is that we seem to fixate on the average with things like survey instruments, so looking at non-users and looking at your super-users these are important considerations because they can sometimes give us the deepest insights and especially with non-users right if we're trying to build up our customer base ignoring them would be foolish if we have access to some data, so that's it's really cool that you were able to do that.

Now with all these variables of interest that you that you just talked about did you have dashboards or how did you manage all of this all this stuff, did you have a proprietary system.

Daniel: I guess you could say that it was dashboards in in various not a nothing particular did to say oh you should definitely get this dashboard but you should definitely have a dashboard

Scott: Right-right

Daniel: And it should be one that I'm a fan of metrics that are simpler and that are actionable this is all obvious but also ones where there's not a ton of movement up and down that that distracts from the story they have to tell us the way so some of the tools are used as things like trailing 12-months measures in some cases, so that you get much more you wipe out the seasonality to the extent that it exists and you just get a smoother curve.

Scott: I think that just even you say it's obvious but I think that sometimes we overlook the obvious and thinking that and you've probably experienced this too in your journey as a marketer but we can we can approach customer problems with a lot of hubris and think that that we know the customer or that maybe we are the customer so we’ll ignore some of the metrics that may seem obvious or some of the tools that we should be implementing that that seem obvious but it really… you find that these are commonly omitted things and we make we make easy mistakes in marketing

Daniel: So one of the things that we tended to do sometimes is people use financial reporting tools or things that are similar to them as their as their basis for some of the customer stuff and I find that because of the metrics you choose and because of the fact that there may be in arrears a month or two it's like driving by looking in the rearview mirror or like through binoculars in the rearview mirror you're looking right like how does that inform what you're doing today and you want to make sure to look at leading indicators wherever possible and if you're trying to figure out certainly what's about to happen you want to be looking ahead.

So, finding those leading indicators that's one of the things, leading indicators also of customer satisfaction and success the early indications.

Another thing is not looking at the whole story at the macro conversion or the macro story but micro story, like you know if you were if you were going out and you're trying to find your life mate you wouldn't look at the success ratio the number of times you got married, it brings… if you're trying to meet people okay how did that first interaction go you're not trying to get pop you know pop the question in the ring right in the first meeting you want to know the phone number and was it a good experience that kind of said without taking that metaphor too far everything, there's a micro conversion and it tells you all right what percent of time did they leave getting with what they wanted did they order a free sample and what percent of those you know came back within the next thirty days things like that

Scott: Oh, that's cool, I want to jump back quickly to one thing you mentioned earlier you were talking about looking at some of your website metrics like conversion rate, did you do A/B testing or any kind of experimentation? Since your I imagine you did since you're you know an e-commerce website but what did that look like what was your approach to experimentation?

Daniel: I think that's the lifeblood of an e-commerce and e-commerce company and it's what drew me to the company is the ability to do that our whole the marketing department was themed the idea lab and we thought we fancied ourselves lab you know kind of scientists, so there's a lot of tools out there some free some paid that make it super easy to do that, just test everything test incremental improvements, it's better to find you know 1% improvements but to do that very often you've seen charts that show what 1% does over time and just continually looking lowering the bar on what it takes to try something and that means you know you have this amazing idea well how can we try that within a few days of effort and being able to recognize the input of the and measure the effect of it.

So, we had some rules for testing the fact that number one; if you're calling it a test it's actually you are going to here's how you're going to measure its success.

Number two, that if it's successful it'll be significant enough to make a difference you don't want to try something and not sure you know first of all be not sure whether it succeeded or not so lay out the test properly and even if it is successful you want to send out you don't want it to not matter at all.

And then also you want it to be something that you can tell your mom about so like we were there were certainly opportunities to test concepts where we probably would have made more profit but it wouldn't be something we'd be proud of and so you know like selling our customer list you know after the sale things like that.

So, it was kind of a set of the guidelines for what constitutes a good experiment and then have at it, you know make it it's super quick to do get an answer, move on

Scott: That's great what was, you had one of your core values was related to experimentation wasn't it that you talked about?

Daniel: Experiment without fear fighter

Scott: Experiment without fear fighter, I like that, I like that, that's very cool. Good, I'm going to switch gears on you just a little bit here to make things a little more relatable to a set of students that I encounter all the time.

So we have students who are they’re either entrepreneurs and they've started their own business or they're going to be managing marketing programs for someone else's small business, do you have any advice for these people because sometimes and you've already said some great things in terms of you know how to do experimentation on the cheap and you know how to how to kind of build your own internal dashboards but one of the most important things to know about managing customers if you're just getting started or if you're doing it on a small scale because one thing that's great about you is you've been through a lot of different transitional periods in your career and you've worked for you know startups and businesses that have grown up, so sorry to make the question so lengthy but what is your advice for students like that?

Daniel: The first thing is as a marketer I consider some people go straight to oh he's an ad or she's in advertising, that's what the least important part of what you do and in our group which eventually grew from one person to forty people in marketing it was always a minority of the team that was involved in customer acquisition in general and advertising in specific.

So I would say it's far more important ten-to-one to you've heard all the studies about the value of keeping your own customer versus for procuring more customers and how much easier it is to do and more efficient and cheaper to do that but so much more valuable to understand improve the existing customer experience, to me that's the that is what a marketer does within a company you're the eyes and ears of the customer experience, you are the voice of the customer and you interpret what their experience is so that it can be improved across the company.

Being in that position of being the eyes and ears interpreting you also know how to find more of them, so that be the first thing and it's tempting to go for moonshots and look for new ways to find customers we certainly did that and failed a bunch of a bunch of times I did things like advertising on dry-cleaning hangers and a huge direct mail campaign to a bunch of lists that were unsuccessful but where you'll find a lot a lot of times the most value is in fishing where the fish are and first that means understanding your… understanding the customers you have today and going out to areas they're just like them you know other customers that are very similar to them and it's more important to be very present within a small set of people like if you're a Seth Godin and the concepts of tribes and things like that be very known to and appreciated within a small set of people and then you build that over time better do that and you know an inch wide and a mile deep then to be an inch deep and a mile wide.

Scott: Right-right

Daniel: No one to nobody, so that's really deeply understanding your customers finding more like them and what were able to find is this is what our customers are like and here's where they're already hanging out so it might be like well why am I going to go and advertise there it's the same people but there's a lot of people there yeah and so in the example of a direct mail campaign it was so such a big failure we had about 10-15 lists that all fail but one list was successful and that was the one that was going to people who we already have some interaction with the house list and we started a whole multi-million dollar a year in cost and certainly in revenue a direct mail program just to our house list to people buying more from us or buying from us for the first time after having an interaction.

So, I guess the answer or in summary is understand your customers and interact with them and people like them and slowly build your notoriety and your appreciation within that set of people

Scott: Right, that's awesome advice especially for someone who's just getting started because there is that kind of thirst for new market share that will make you like you said kind of go for the moon shot look for look for new customers and places where none of your existing customers are today and typically that's a that's a quick path to failure, so I think that's tremendous advice

Daniel: It's not to say that you shouldn't have a lot of a few feelers out there to test whether there was some opportunity in other areas you definitely should and when you do that though make sure that you pick metrics that are once again that aren’t end of the road metrics there are indications of interest.

So, when we started radio advertising for the first time we didn't look at right away are they buying we looked at some, are they or we do we have people who are ordering free samples right or if you're a B2B company maybe it's downloading a white paper or having similar do we have people from that radio channel who are doing that look for leading indicators little nibbles at the line success and then you can start to spend more time and energy where you have traction

Scott: Right, that's great and also you know when you see how many radio customers are ordering free samples and if they're not buying then you can try to figure out how to move them right from the free sample to becoming a buyer so I think that's awesome advice.

Alright I've taken a lot of your time but I do want to ask one last question if you'll amuse me which is kind of a broad question but I want to ask if what's one like really cool thing that you've done as a marketer, whether it's a story or some you know memory of a specific transaction or a campaign you ran for one of your startups or Blinds.com or some new product development you've been involved in or even a social cause that that's memorable for you if you could leave us with kind of a parting feel good marketing story.

Daniel: This isn't necessarily huge but I think that I'm happy to know that when we set up that sure fit guarantee that we'll remake it for free, we originally set it up so that you have to mail back the blind to us, we didn't want people to order two blinds for the price of one and that was the official rule, what we did over time and 95% of the time this is what happened is that if you wanted a new blind you got it and you didn't even have to the old blind just give it to someone who needed it, whether that's habitat for humanity or goodwill someone and if you can get a receipt that says you gave the blind? We were good, so over time lots of people hundreds of thousands of blinds were given to were given to people who really needed them veterans and people you know indigent who just needed something to block out the light in their house and all that kind of stuff.

So, we got some really cool stories from that experience and over time grew the relationship to Home Depot for one does a lot with Habitat for Humanity and our employees always go out and they're involved in those campaigns

Scott: So, I'm not going to eat up any more of your day but I want I want to thank you for just a some tremendous insight, one thing that as marketing academics we sometimes fail to do is add that practical insight and talk to people who have actually you know put the theories we're talking about into action and I appreciate you because you really you have a great sense for marketing and spirit for marketing and I love the your analytical nature and but also not losing sight of who the customer is and how to relate to that customer.

So, I think that in our short time together you've been able to kind of weave together a lot of different things that we talked about in our marketing courses and that's just tremendously valuable for me and also for everyone who's watching this video so.

Daniel: Thank you

Scott: We appreciate your time and let's as you as you move into your next adventure let's stay in touch and then and then maybe we'll have more good stories to tell

Daniel: I'd be honored I appreciate it, thank you. Now just one parting thought, you asked somebody questions about marketing successes and you get the successes, it's like looking at a Facebook page you know oh this is great, that's great, well you don't get over this 20-years a lot of failures and a lot of difficult times, so I wouldn't I just want to tell your students not to be discouraged, there's been a lot of failures throughout that period right and you're picking up on the stuff that works so.