Chris Lema of Nexcess: “Learn to partner well”

Learn to partner well. You don’t have to be good at everything to have a successful eCommerce business. You need to do a couple things really well. And then you need to partner with others who do a couple other things really well. So learn to find the win-win-win that’s available — so that you, your partners, […]

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Learn to partner well. You don’t have to be good at everything to have a successful eCommerce business. You need to do a couple things really well. And then you need to partner with others who do a couple other things really well. So learn to find the win-win-win that’s available — so that you, your partners, and your customers all benefit from a great partnership. When we were building our product, the companies I was talking to were used to partnerships where they didn’t get any customer data. These were “white label” partnerships and I thought that was ridiculous. So none of our deals hid the vendor behind the service. We proudly shared who we had partnered with, and encouraged our customers to trust them like we did. It created that win-win-win I was talking about.


As part of my series about the “5 Things You Need to Know to Create A Highly Successful E-Commerce Business”, I had the pleasure of interviewing Chris Lema, VP of Products at Nexcess, a Liquid Web company, began building eCommerce stores in 1997 — when it took huge teams, years, and lots of money. Today he evangelizes open source products like WordPress and WooCommerce because of how easy and fast they make things. He’s a regular blogger and public speaker, known for his storytelling. Chris designed and launched the first hosting platform dedicated to WooCommerce — globally the largest platform for eCommerce.


Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I started working at Berkeley National Lab (a government research lab) back in 1994 with a desktop computer that was on the third fixed subnet of the entire internet. People were still trying to figure out what the Internet Superhighway was, and I was freshly graduated from college and using the web. It was a crazy time because the internet was tiny back then. Every single thing we did was a “first,” like connecting the web to a database, or building an online courseware platform.

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Liquid Web was a hosting company that started back in the late nineties. I had nothing to do with its inception.

Four years ago I was taking a year off of work, and thinking about what I wanted to build next, when I decided it would be eCommerce focused. I had built one of the earliest eCommerce platforms back in ’97. It had taken 6 of us, 12 months, and cost a lot of money.

My sense was that more and more people would go from garage sales, to Etsy or Amazon stores, to eventually wanting their own stores. And using open source technology like WordPress and WooCommerce, it could be done by one person in 25 minutes and as close to free as you could imagine.

That’s when I got a call from the executive team that had just purchased Liquid Web and they wanted to talk about WordPress — as it’s a widely-used content management system, and one I have deep experience with. My response was that I was interested in joining them, if they were interested in eCommerce. And that’s what brought me to Liquid Web to create our Managed WooCommerce hosting platform.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

Four years ago, no one had even heard of a platform dedicated to WooCommerce hosting. There were several hosts doing regular WordPress sites, but nothing that was comparable to Shopify but on WooCommerce.

The first thing we did was to build a “next-level” architecture for these eCommerce stores. On a completely different agenda, I called a CEO of a different hosting company, to see if they were interested in us acquiring them. They told me they weren’t ready because they had just burned a whole year working on a similar “next gen” architecture. They were now working to get past their mistakes and weren’t ready to focus on anything else. Internally I laughed because I felt like we had our architecture in the bag.

A year later I was laughing/crying. We walked into the same set of issues — a mistake I could have skipped if I’d asked a few more questions instead of being so confident. It delayed us a whole year. There were definitely days where I wanted to quit. But you can’t create something new if you’re not willing to make mistakes.

So, how are things going today? How did your grit and resilience lead to your eventual success?

Things are great. We host more multi-million-dollar WooCommerce stores than anyone else. Initially we created an offering solely focused on the larger stores but after a year realized we were missing out on the young stores that had started elsewhere and didn’t want to shift to us later. So today we have tons of stores getting started at 19 dollars/ month.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

Wait, you want another mistake I made? Sure. One time, and only one time, we let one of our folks run an update on servers before they went on vacation the next day. On a Friday night. I know. Crazy, right? Well, some of the servers didn’t restart correctly. It was the only time I had to issue credits in the four years I’ve been here. And the only time we did a software release on a Friday night. And the only time I let people take vacation. (Ok, that last part isn’t true, I love for our folks to take vacations.)

What do you think makes your company stand out? Can you share a story?

We’re a hosting company. But hosting is a little like running a storage company. You know what I’m talking about? The company that rents you a storage space for your junk that you can’t even fit in your house. You never look at it again. You keep paying. No one thinks of their storage company as a “partner.” So hosting is a bit like that. You put your store or site on it and just assume it will be there, working.

What we’ve tried to do is push deeper into the eCommerce side of things so we can be partners with our merchants. It sets us apart from our hosting competitors for sure. Without question.

A couple weeks ago we had a customer who hadn’t gotten an order in 4 days. We caught it and realized they had a problem with something their own staff had configured incorrectly. So we fixed it and let them know. And they wrote me a gushing email about it.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Remember when I told you about vacation and loving it. I mean it. Even if you can’t fly anywhere right now, take a break. Walk away. I can’t tell you how many inventions have been created in the history of science because people walk away and let their brains work in the background.

Until this year, I would take a break 4 times a year, at minimum. It might be 4 days or a whole week. But every quarter I need to get away from my computer and spend time outside. And I want the same from my team. They need breaks. Regularly.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

The list is too long. Everything I’ve done is because someone else inspired me, helped me, challenged me or believed in me.

Dennis Hall, my old boss at Berkeley Lab, moved me from a different job into his team in Computer Science and changed the trajectory of my life by inviting me to create not just web pages, websites, or even web applications. He had built the Software Tools project before UNIX, and he challenged me to build web platforms. That’s where I got my SaaS focus and it’s carried me forward since then.

Ok thank you for all that. Now let’s shift to the main focus of this interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that eCommerce businesses are implementing to adapt to the new realities created by the Pandemic?

We have a pizza company that only used the web to share their locations and menus. Once they were shut down, we helped them get online ordering in place.

We have a company that used to do in-person training that now was doing it over Zoom. But they needed a way to let customers order and get their t-shirts, so they launched a store without charging customers for the orders.

We have a company that used to use a catalog to showcase their cigars, but everyone would go into the lounge in person. They needed to shift to processing orders online to make up for the lost business when they were closed for months.

The ideas are all the same — each customer found a way to leverage online stores and shopping to replace what they used to do in person.

Amazon, and even Walmart are going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise retail companies and eCommerce companies, for them to be successful in the face of such strong competition?

You may recall back in March, April and May that Amazon decided it wasn’t going to accept deliveries of inventory from their third-party stores (for shipping fulfillment) unless it was in one of five categories. In essence, Amazon was saying, “We can’t focus on helping you ship to your customers because we have to focus on our shipping to our customers.” That was a wake up call. And customers buying from DTC vendors shipping products from China face the same problem.

They’ve all be conditioned to get their orders in 2 days, for free. And suddenly Amazon went off-brand. And DTC companies shipping from China take weeks.

To compete, retail companies need to look at alternatives to Fulfillment by Amazon (FBA), like one of our partners ShipBob, so they can get their products to customers quickly. It’s all about managing and meeting expectations — and shipping speeds are a big part of things.

What are the most common mistakes you have seen CEOs & founders make when they start an eCommerce business? What can be done to avoid those errors?

CEOs and Founders like “one throat to choke.” It’s an approach that suggests finding one partner and having them do a lot, rather than deal with the costs and challenges of coordinating multiple partners. But when one critical partner fails, the costs and consequences are significant. I suggest testing many different partners to find the ecosystem that can deliver what you want while limiting your overall risk.

In your experience, which aspect of running an eCommerce brand tends to be most underestimated? Can you explain or give an example?

Most companies think a single big project / expense to build the store is the most costly. What’s hard is believing that running an online store is an ongoing cost. You wouldn’t build or buy a pool and then not take care of it weekly — constantly checking the PH and making sure nothing is growing in it. Online stores often don’t have one big mistake present. Instead they have tons of little opportunities to make things better, to reduce friction in 100 places, not just one. And that’s ongoing maintenance.

Can you share a few examples of tools or software that you think can dramatically empower emerging eCommerce brands to be more effective and more successful?

Absolutely. Here are my three favorites.

  1. WooCommerce — for fast eCommerce stores that are flexible
  2. Glew.io — for deeper analytics and reporting. They’ll automatically create 24 segments of your customers so you can talk to different customers differently.
  3. ConvertKit — for their simple and easy email marketing.

As you know, “conversion” means to convert a visit into a sale. In your experience what are the best strategies an eCommerce business should use to increase conversion rates?

Here are five quit hits:

  1. Shorten your checkout process (count clicks)
  2. Use your receipts to share coupons and bring customers back
  3. Support multiple payment gateways (Stripe AND PayPal)
  4. Offer multiple payment plans (support installments)
  5. Collect emails before checkout so you can follow up with 70% that abandon carts

Of course, the main way to increase conversion rates is to create a trusted and beloved brand. Can you share a few ways that an eCommerce business can earn a reputation as a trusted and beloved brand?

The most important dynamic in building your brand and reputation is trust. And that means that every touchpoint between your customers and your company needs to be reviewed for that trust. If your marketing says that returns are easy, but your process is complex, you’ve lied and that breaks trust. Every interaction needs to reviewed in the light of “surprise.” It’s how you delight customers. And if delight requires surprise, then what are you doing to surprise customers with an incredible experience. I once ordered shoes from an online store that told me the shoes would be here in 3 days. That was fine. Then I got an email the next day saying they’d upgraded shipping to next day and I would get my shoes two days earlier. That’s delight!

One of the main benefits of shopping online is the ability to read reviews. Consumers love it! While good reviews are of course positive for a brand, poor reviews can be very damaging. In your experience what are a few things a brand should do to properly and effectively respond to poor reviews? How about other unfair things said online about a brand?

The best reviews are the negative ones. Those are the ones I read first. Because I want to see if the negative issues are really big enough for me to reject my inclination to make a purchase. So when you reply to a negative review, make sure you’re not defensive. And if you’ve acknowledged the negative experience, then state what you’re doing so it doesn’t happen again.

The other advice is to ignore the negative statements. I have something like 20k followers on Twitter. Someone who writes something negative about me might have 200 followers. But if I reply, 20k people see it. I bring the attention. So most times, I just ignore the “haters.”

Ok super. Here is the main question of our interview. Based on your experience and success, what are the five most important things one should know in order to create a very successful e-commerce business? Please share a story or an example for each.

First, success is a multi-variate function. In other words, you need a team with a diverse set of skills and backgrounds to make things work. One of our clients runs a blog with several courses available for sale. While he’s the author of books, the blog, and the courses, his success is dependent on the media person who creates artwork, the podcast manager that does all the work to get people on the podcast, the web developer who works on the site for new features, and the finance guy who decides how much to spend on Facebook ads every month.

Second, narrow your focus. It’s hard to remember someone who is good at 27 things (except Amazon). Until you get to Amazon status, don’t try to be known for everything. Instead, take a small corner. We have a customer who focuses on dogs (iheartdogs.com) and makes millions doing it.

Third, talk to customers. You hear a lot of folks that tell you to talk to prospects and get their feedback. I reject that approach. I really only want to hear from people who have already demonstrated an ability to reach for their wallet. So those are the folks I want to talk to. A lot. When we first launched our Managed WooCommerce hosting, I talked to every single customer and asked them questions (Who did you consider? Why did you choose us? What surprised you?).

Fourth, embrace automation. I’m not talking about really complex personalization. I’m talking about sending emails to first time buyers to invite them back. And emails to second-time buyers to thank them for their repeat purchases. And then calculate the delta between first and second purchases across your business so you know when to send them an email for that third purchase. Build the systems to handle and automate all of this. It’s why I love Glew.io — because when I saw they were doing that, I reached out to their CEO to talk about a partnership. I wanted all our serious stores to leverage their solution.

Lastly, learn to partner well. You don’t have to be good at everything to have a successful eCommerce business. You need to do a couple things really well. And then you need to partner with others who do a couple other things really well. So learn to find the win-win-win that’s available — so that you, your partners, and your customers all benefit from a great partnership. When we were building our product, the companies I was talking to were used to partnerships where they didn’t get any customer data. These were “white label” partnerships and I thought that was ridiculous. So none of our deals hid the vendor behind the service. We proudly shared who we had partnered with, and encouraged our customers to trust them like we did. It created that win-win-win I was talking about.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I love being generous. It’s a key part of who I am and it’s a value our family embraces. So if I could start a movement it would be around generosity. I can’t tell you the doors that have opened days, months or years after I was generous with someone. And I didn’t do it for the door to open (or it wouldn’t be generosity), but I can tie many great moments in life to earlier choices to be generous.

This was very inspiring. Thank you so much for the time you spent with this!


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