Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, where I interview entrepreneurs about how they built their businesses. I just realized I really mumbled the name Mixergy, Mixergy.com. Mixergy is the name of the company. I like to talk so fast because I just want to get right to things.
Well, a little while back I got an email from today’s guest, who says, “Hi, Andrew. I’m listening to your July 25th interview with Glenn Elliott and I can’t help but write you this note. One of the first things that Glenn said was the digital marketing company that he founded trapped him. He felt the company truly wasn’t scalable and there was little opportunity for recurring revenue. I feel a strong need to challenge that generalized mindset.
“Using my own company as an example, we started Fourandhalf.com four and a half years ago, how interesting, with a simple premise–solve growth for small businesses.” And I’m assuming that Alex, who wrote this email, has actually been growing his company and I want to find out how he did it and why he thinks that service companies can actually scale well.
Today’s guest, the man who wrote that email is Alex Osenenko. He is the founder of Fourandhalf, which is a marketing company that works exclusively with fee-based property management services. I actually don’t exactly know what that means, but we’ll talk about that.
And this interview is sponsored by two great companies. The first is HostGator. It will host your website right. And I discovered that Alex actually uses them. We’ll talk about that later. And by Leadpages, they have a great conference. I hope you go there. I’ll be there. I’ll tell you more about that later too. And finally, guys, when I get boxes, I open them up within the interview. Well, I was going to open up this box and it turned out it came from Alex. So, we’ll open it up. I’ll put it right here later in the interview and we’ll see what Alex sent over. Alex, thanks for the box.
Alex: Hey, absolutely, Andrew. You’re welcome.
Andrew: What revenues are you guys doing?
Alex: So, let me just preface this by saying I’m really thrilled to be here and I love to hear your voice, but usually my mind takes me to my commute because that’s where I think about things that you talk about. I appreciate your show. I run my own podcast. What I’m learning from you is how to frame and how to kind of guide the interview to where I make it very interesting and engaging and I appreciate you starting with the interview question.
Andrew: What did you see me do that you like as an interview?
Alex: Well, you don’t let people mumble and rumble about whatever it is that they want to say. You have the eye of what the audience wants to see and hear and you’re not afraid to use it. I appreciate that and I think the audience can appreciate that as well.
Andrew: Thanks. One of the things that’s important for me is that the first question isn’t, “Tell me, what do you do?” Because guests can go on forever with that. I see bad interviewers do that all the time, “Tell you what you do.” The guest has no preparation. They start to really mumble. They go on forever.
The reason I ask the revenue question up front is because I know it’s an interesting question for the audience and also because I think it sets the size of the business that we’re all building here, kind of like if you were watching a PBS show about how to make a birdhouse and the first thing they showed you was, “Here’s the birdhouse. Now let’s talk about how to do it.” So, what is that revenue number?
Alex: So, the birdhouse size for Fourandhalf, we’re going to do $3 million in 2016, close to it, very close to it. We hope to do a little bit over that. That’s been in the works for the last four and a half years.
Andrew: What did you do 2015?
Alex: 2015 we did a little over $1.3 million, I think between $1.3 million and $1.4 million.
Andrew: $1.3 million? You know, Glen actually has a company now doing $300 million.
Alex: He’s a good guy, no doubt. He was in the wrong business. But the business was not wrong. He was the wrong guy for the business.
Andrew: You mean he was the wrong guy for the services business. So, he switched from a service business to Reward Gateway, which is doing that much money. Do you really think that a service business can actually grow, that your service business can actually grow, that your business can hit $300 million?
Alex: Absolutely can. It’s all about systemizing your operations. We chatted a little bit before the show and you said, “Hey, Alex, all this work you do, is it all custom stuff?” Absolutely not. If it was, we wouldn’t be able to scale and grow at the pace we’re growing and have the quality people and have this kind of service we provide. So, scalability is an issue for a service business. But I come from the software background in terms of working for different SaaS companies. We kind of brought that mindset and really put it into the service industry to help it scale.
Andrew: So, let me break down what the company does. I said that you’re a marketing company that works exclusively with fee-based property management services. What kind of marketing do you do for these companies?
Alex: So, my life’s purpose, professional life’s purpose, is to help small businesses grow and thrive. I can’t do it all, but I can pick one industry and start there and keep expanding. So, property managers is this unique industry that if you, Andrew, had a home in San Francisco and you needed to relocate to Austin, you don’t want to sell your home, you want to rent it out. You try it yourself. You fail and then you hire a professional. I help those professionals find people like you.
Andrew: I see. And then the property manager would also manage the property while I was out of the state.
Alex: That’s their job–to take care of your property completely, from rent collection to finding tenants to toilets, as you call it toilets and turnover or something like that.
Andrew: T&T, toilets and tenants.
Alex: Right. So, for the professional investor, it’s an absolute must as well as for a casual homeowner who’s relocating for work. It is also a must. A lot of laws and regulations and you don’t want to be in that minutiae.
Andrew: Okay. So, what kind of marketing do you do for these guys?
Alex: We help them find landlords and we help them find real estate investors who need management services.
Andrew: Okay.
Alex: That is done through the internet because everybody is there. A lot of it is content. We started with content and we’re still a content marketing company at the core. We just are able to systemize delivering local, very specific content for our clients and that’s how they get found.
Andrew: So, you write content for their websites that then gets discovered when somebody searches for them.
Alex: That’s actually very interesting. We went a little deeper than that. We figure out who their perfect client is. That’s an interview and a half. We figure out who their perfect client is and we figure out the pain point of that perfect client. And then we make them record blogs like you and I do and we split them up. We do the copywriting and then we publish it on their behalf. So, they’re answering customer questions on video like this.
Andrew: And then you turn it into a video product or you turn it into a written blog post?
Alex: Each blog post has a video along with it because we consume information differently. A lot of us are visual, a lot of us are not. Like me, I don’t really care about video, but I would listen to any audio stuff.
Andrew: Me too. I even turn Instapaper articles that I saved to read later into audio that I can listen to while I’m on my commute or walking around the house. I get it. I’m an audio person too. I get it. I understand people have different ways of absorbing it. You interview them. You publish on their website and you publish the text and that’s part of the stuff that helps them get discovered.
To me that seems like a very hard to systemize project because first of all, you need to know the questions their audience have. Second, you need to know how to pitch them the right questions so they can answer properly. Third, there’s some art to writing well. So, you have to figure out how to get that done.
Alex: Lots of coaching. We figured out the formula from day one. The guy I was following all my life who actually came up with this whole process I bought into was Marcus Sheridan, I don’t know if you know him, with the Sales Lion. He is, I think, the father of content marketing for small businesses. He’s done it with his small pool company and he saved his business.
The whole idea is his book is coming out called, “They Ask, You Answer.” That’s all there is to it. You answer your customer questions. You’ve got to systemize delivering those answers in an authentic, non-salesy way and then you win.
Andrew: So, how does a property manager get the questions from his customers or potential customers?
Alex: They get it every day in their day-to-day business. They know all the questions. They know all the answers.
Andrew: It’s in their inbox. It’s the kind of questions that a landlord would ask, like, “What happens if I also want to do Airbnb? What happens if the customer breaks my toilet if I’m away? Who pays?” That’s the kind of stuff.
Alex: Exactly.
Andrew: They know all those questions. They give them to you. One of your interviews interviews them and then turns it into a product?
Alex: Correct. The account manager does very similar to what you do with your guests, only we do it on a small business scale, two to three-minute blogs, and then we have our own copywriter create the writing. Most people don’t know how to write, including myself. I use a copywriter for most of my stuff. I have ideas, the back of the napkin, she makes them real.
Andrew: It’s a full time employee who’s copywriting?
Alex: It’s a contractor, but she’s been doing a lot of business with us from day one, so almost I would say yes.
Andrew: Okay. What’s the part of the business–I want to find out how you built it up, how you got customers and so on, but let me understand the business a little bit better–what’s the part of the business that was the hardest for you to systemize?
Alex: It’s still the hardest. It’s getting people in front of the camera and getting them to talk about what they know, what they’ve done for 20-30 years in front of the camera like this and having some kind of comfort level that it’s going to help them build their business. Once they’re convinced–
Andrew: Yeah. That is a really hard thing. Everything from–right behind you, there are blinds. Most people would have opened the blinds because they want to show what’s behind them. We need you to shut that. That’s an issue. Two, getting you to feel comfortable answering a question is a hard thing too, to not get you in your head, to not get you for the rest of the interview saying, “Why did I answer that first question so badly? It’s not a good way for me to present myself?” That stuff we have to work on. What’s your process for getting these people to present themselves well?
Alex: Building trust. It’s all about trust.
Andrew: How?
Alex: A lot of their friends are using our company. It’s an industry that has about 20,000 companies competing in the space. We have a good one to three percent market penetration, but what’s important, we have the thought leaders. The thought leaders have hired us, have seen success. There’s no doubt about it. They’re not going on discovery missions. This works.
Andrew: Who’s a thought leader in the property management space?
Alex: Well, there’s an association called the National Association of Residential Property Managers. These guys, they speak at these conferences, they have larger companies, they’re well-respected. They consult other property managers. They’re the presidents of other local chapters, they’re the leaders in the community and association.
Andrew: I see. So, you go to them. All right. I’ll tell you one of my techniques for getting people to feel comfortable. I’ve been doing this from the beginning. I pre-interview the guests. Now I have someone else who pre-interviews. When someone answers a question confidently, they feel better the second time answering it. So, we look for those questions people feel especially confident with. Do you have any techniques like that that you get people to feel comfortable with?
Alex: That’s actually a great tip. We actually break it in steps, right? So, we have the formula written out. We’ll have the perfect client profile meeting and then we’ll get on the preliminary session where we talk about the different topics that the property manager wants to address and discuss. So, that’s part of coaching.
And then once we get to actual live shoot, they usually have topics, index cards, whatever they’re comfortable with. On that prep call, we discover what they’re comfortable with and how we’re going to film it. A lot of times we’ll have them come to the office, the local ones. Some of them we shoot at the conferences. We take every opportunity to shoot videos. That’s our deliverable. We have to deliver it. So, we find ways to do it.
Andrew: You also do email marketing for them.
Alex: We just started doing–we partner up with a company called LeadSimple. They do CRM just for property management companies. So we actually built the automation on the back end of that CRM, so it’s super smart. For under $250 a month, they get a full on HubSpot, enterprise-level automation for their prospects.
Andrew: I like the way you price things. First of all, it’s on a monthly basis so you have recurring revenue and you know what you can count on with them. The difference in the tiers is not about the services you offer, at least from the pricing page that I see. The difference is in how much they want to grow. So, the smaller package allows them or helps them grow 20 to 40 new properties a year. The middle one is 40 to 60 properties and the highest is 60+. So, you’re saying you’re not paying more for more services, you’re paying more for more customers from me because of the services.
Alex: Depending on your growth and aspirations, depending on your lifestyle and where you’re going with your business, you’ll self-qualify.
Andrew: So, what do you do to help someone who’s just paid you $1,000 a month for three months get to 60 properties a year?
Alex: We built. We get to building out our system. So, with content in parallel, we do the LeadSimple installation and we work on email marketing, setup an automation. We work on reputation. That’s huge. Reputation is one of the biggest things you could turn your business around in a matter of a few months, right?
Andrew: That’s a fairly easy thing to do if I’m right. It’s not?
Alex: No. With property management, you understand two constituencies, tenants and owners. So tenants, 98% of your tenants are happy, but the 2% they’re evicting, they’re not going to be happy. They’re younger. They’re usually more avid in terms of internet stuff. So they’ll go and they’ll bash and smash you.
Andrew: So, what do you do? I’ve done a few courses on reputation management. From what I know, the simple stuff that stuck in my head is it’s easy to just create more content on major sites to drown out the negative stuff. So I might go and create a Flickr account and a Twitter account and every single account that I possibly could, a Foursquare account, etc. so when you’re looking for my name, all those different social profiles come to the top and anything that’s negatively said about me goes down to page two or three. What else is there for reputation management that you do?
Alex: So we could subject this reputation management and talk about it, but I’m going to make it short and sweet. Yelp and Google is where it’s at for businesses. Social doesn’t matter. They’re a landlord, they’re tenants. Nobody wants to Snapchat here. They want to get their house rented and the tenants want to live in a good place. They want to get their issues taken care of and it’s a very simple value proposition for both.
Andrew: So, what do you do–but Google, isn’t what I just said Google?
Alex: Google and Yelp.
Andrew: Isn’t what I just said Google, that people are searching for them and you want to bury anything negative below positive links?
Alex: Sorry. I thought you were talking about social profiles.
Andrew: I’m saying only create social profiles as a way of having links that you control show up when people search for you.
Alex: Okay. So, I misheard. I apologize. But Google and Yelp is where it’s at. Google has the stars. The comments are the comments, but they have the stars and everything is about the stars. If your competitor manages the properties and they have five stars and the other one has two stars, there’s no question who you’re going to call.
Andrew: And I looked you up. This is the best way to see it is a really ugly URL to say but I don’t expect anyone to write down. It’s Plus.Google.com/+Fourandhalf/About. That’s where I see you have all five stars from 37 people. That’s the stuff that when I look you up shows up on the right side of the Google page, that says what your business is and lets me see ratings, let’s me see directions to you. That’s the stuff you can help them with?
Alex: Right. So, for small local businesses, this is the Holy Grail. You talk about a lot of different and very interesting enterprise-level things on the show. For small businesses, restaurants, dry cleaners, property management shops, they do or die with Google and Yelp, specifically Google Reviews or they changed names but they’re called Google by Business now. That’s the nomenclature.
Andrew: I see. It’s not even Google search results. It’s not the search. It’s this, that Google for Business page, whatever they’re calling it now, their Yelp competitor and Yelp itself. So, if I go and I give you two negative ratings, one for me and one for my wife who I convince to do that, what do you do to stop us? How do you do reputation management on us?
Alex: We don’t. We address it by saying, “Hey, I’m the business owner. Here’s my phone number. Reach out to me. Let’s deal with it. We’re here to make you happy.” But the more important thing is with property managers, they have a captured audience. So, if you’re a restaurant owner, people coming in and out, they have experiences, with property management, they don’t have such experiences with steak or shrimp. It’s either I don’t hear from a property manager and everything is good or it’s terrible and I’m going to write a bad review. What we do is we partner with a company called Reputation.com.
Andrew: I know them. Yes.
Alex: They’re quite large. Right. What we do, we use their platform to reach out to all of the tenants and all of the owners that particular property management company had a touchpoint with that month. Then we asked them, “How was your experience?” And these guys are like, “Well, my property manager exists and they fixed my sink. So, it was great.” So, they rate five stars and then we ask them to publish it on Google or Yelp.
That’s consistent reach out when you have 300, 400, 500 tenants, it adds up. That’s how you build the true reputation of your business because nobody else cares to give you a positive review because again, there’s no such thing as a positive property management experience.
Andrew: Right. I actually do rave about mine. But it’s a mom and pop operation. It’s like I’m literally renting the place they had before. Surprisingly they’re good.
Alex: Cool.
Andrew: What you’re saying is you use Reputation.com software. I didn’t know they offered this? They have a software as a service that lets you collect feedback from people and then send people who are giving you positive feedback to Google and Yelp?
Alex: Right. Exactly. What we do is we productize different software systems to work in our customers’ advantage and we’ll put a service on top of that. We deliver that as a package. That’s the whole going back to that scalability question. That’s the whole thing. There are tons of different SaaS companies, inspection software.
There are all kinds of different things. What we do is we find the best possible solution for this particular problem. We package or put services around it so they can pick up the phone number and call us. But the idea is we don’t type the software because now if tomorrow let’s say there’s another company called Script.com or something comes out that has a much better reputation package. We’re not obligated, we don’t have the technology debt, so to speak, with Reputation.com. We just choose another vendor.
Andrew: I see.
Alex: We take hundreds and hundreds of customers to the new vendor and they would probably appreciate our business.
Andrew: Got it. All right. I can see that. So, we’re talking about productized service that relies on software that you know that you don’t have to reinvent. I always think of productized service as the people internally having to do something from scratch every time and that’s not true.
Alex: One way to do it. But look, where we are right now with the technology, look at all the guests you have coming. They are geniuses. They have great software, incredible tools that are peanuts, very inexpensive SaaS because the marginal cost of use is nothing. So, it’s very inexpensive. When you negotiate on behalf of hundreds of people, you get even better prices. So, we have a very small markup and we make most of our money on services that surround the package. There is some stuff to do.
Andrew: I like that. Let’s keep going with how you’re building the business and where you came up with the idea, etc. But first, I have to tell everyone about my first sponsor. It’s called HostGator. Before the interview started, Alex, I said do you mind if I talk about HostGator or are you investing in a competitor? I’ve asked that where I’ve had people invest in competitors and they’d rather I not talk about it. You said, “No, I actually use HostGator.” So, since we’re in an ad for HostGator and use them, can I ask you, how do you use HostGator?
Alex: Yeah. So, we’ve stumbled our way into HostGator finally where we find our home there now. All of our websites, we do some custom websites. We do lots of landing pages, our own website, tons of blogs, my podcast. We host everything through HostGator. We pay them a good amount of money. The starter package you’re about to advertise I hear every time on your show is very attractive, except that when you scale up, you have to pay more. But if you want quality, they have it for you. That’s what I appreciate about them.
Andrew: You use it for your site and then when you setup a site for a property manager, do you use HostGator too?
Alex: Right.
Andrew: You do? Wow. I see. Okay. So, I always talk about the starter package. There is a really inexpensive starter package. They call it the hatchling plan. It’s like $3.48 a month using our discount code. But you’re right, even beyond what’s on this webpage I’m sending everyone to, they have bigger and better plans all the time.
So, if for example you’re on a WordPress site and you don’t want to have to worry about plugins being out of date, about viruses, which we got a virus on Mixergy, it’s pretty painful. You want that. You don’t have to go to another company to get it. HostGator does it.
Anything that works in the hosting space, it feels like they jump on. Because they have so many resources, they can do it really well. So, in your case, you’re setting it up for yourself and your clients. Other people have used it for WordPress sites and upgraded to WordPress hosting. Other people still have kept with the simple hatchling plan.
So, if you’re listening to me, regardless of where you are, if you have a website, you can move it over to over to HostGator, get really inexpensive packages that also will scale up with you as you grow or start big if that’s where you are right now, and for a limited time, we have a really deep discount from HostGator thanks to the ad salesman here at Mixergy. He really worked with them to get us the best. He said, “Give me the best you ever have.” I’m going to give it to you guys right now, 50% off.
Alex: Ooh. . .
Andrew: Yeah. It really is the best. If anyone can hear me and honestly go find a lower price, they should jump on that. I don’t think that exists. And of course, if you do get it through Mixergy and you ever have any issues, HostGator I’m sure will resolve it for you, but I’m here for you guys. I always am.
So, I’m glad that you used my code to let everyone of my sponsors know that you’re from Mixergy and they’re take good care of you. I will jump in if they don’t. Here’s a special URL where you get this 50% off discount. It’s HostGator.com/Mixergy. I’m grateful to them for being such good supporters of Mixergy.
Alex: Good sponsor. No doubt.
Andrew: Thanks. Yeah. I’m really happy with them. Let me see–what other software do you use like that? I really like the way you’ve structured your business.
Alex: So, we have certain agreements that we’re not necessarily going to mention. They’re more of a strategic and a back end stuff. But we have a really tight partnership with a company I already mentioned called LeadSimple.com. They do CRM just for our industry, which is like a match made in heaven.
So, the sales process for the property manager is very, very different. They have two constituencies, owners and tenants. Anybody can get them tenants, but nobody can get them owners. It’s very hard. So, these guys code up the CRM to help with owner sales process, which is very unique and then we do now a lot of work together as well.
Andrew: Okay. I’m hearing an accent, by the way. Where are you from?
Alex: I’m from Minsk, Belarus, ex-Russian Republic, the last dictatorship in Europe.
Andrew: It’s still a dictatorship?
Alex: It is. We have El Presidente that’s been there since I left 20 years ago.
Andrew: Are they doing like these sham elections at least?
Alex: Yeah.
Andrew: I see. Okay. We should do sham elections here at Mixergy. Vote for whoever you think should replace me and then it’s always me winning by 98%.
Alex: Yeah.
Andrew: Even I wouldn’t win for 98% here and I’ve got a self-selected audience. How hard was it to leave?
Alex: It was very hard to leave because I had a growth business already when I was just 16 years old. I was making more than my dad who was the department chief at the–my dad is a programmer and he’s a physicist as well at the electrical plant. It’s not a nuclear plant, but it was powering like a quarter of a city of two million people. It was hard to leave just because I was 16 and I was first time I felt that I was going for independence and I had a great future.
Andrew: What was this business you had?
Alex: So, we sold the dry juice. It’s a powder juice called Yupi. It’s the fad. So, think of United States, think of like the hoverboard. The hoverboard is a fad. Everybody had to have it. It is kind of the thing. So, same thing happened back then in 1994 or 1995 in Russia. Coca Cola is too expensive. So, just to give you an example, my dad made $200 a month at his high position as a government employee.
Now, $200 a month, you can’t buy a lot of Coke bottle for that. You could buy Coke, but it was so expensive that it was out of reach for most people, this powder juice comes out, everybody wants to have it. You have the real looking orange juice and it tastes great. So, we found opportunity to sell it at the bazaar, which is the market in the middle of the city. It was the largest one in Minsk. We had a lot of success pushing the product.
Andrew: I see it here. It’s a powder kind of like Koll Aid, but it has more interesting flavors. That’s what you sold. At one point, you actually were, I guess, unpacking some of this and a car came out and hit you.
Alex: Yeah. We had to look at the product manually. Initially we were taking the bus and we were getting the product on credit, but as we grew, we started to be able to afford and buy the inventory. So, if you buy enough inventory just to go in the morning to pick it up and then sell it at the market during the day and we had enough inventory to last us all day. That’s when the real money started rolling in.
One of the mornings we were going to pick up the product and three of my friends kind of passed me and it was 4:00 in the morning. The sun was rising and I got hit by a Pajero. It was a little red Pajero going about 40 miles an hour hit me straight in my face.
Andrew: Wow. And what happened to you?
Alex: I flew, landed in the hospital for two weeks.
Andrew: Literally off your feet.
Alex: Yeah. They couldn’t find one of the shoes.
Andrew: Wow.
Alex: It was just gone.
Andrew: How long did it take you to recover?
Alex: Two weeks. I was 16, patched up.
Andrew: And you could just start walking again after two weeks?
Alex: With a cane for another half a year.
Andrew: Wow. And is that one of the reasons why you finally left?
Alex: Well, no. We already had tickets and we were packing for the United States. I would really consider not going. That particular accident, we left about two weeks after I got out of the hospital. So, that was already planned.
Andrew: I see. How hard was it to get out of Belarus?
Alex: We got on a plane to go. It was very simple.
Andrew: That’s it?
Alex: Yeah.
Andrew: Okay.
Alex: Direct flight to San Francisco back then.
Andrew: All right. So, you are now in the US. What’s the first thing that you do? That’s when you start to work, right?
Alex: Yeah. As soon as my parents are on welfare–
Andrew: Your parents were on welfare?
Alex: Yeah. We immigrated here with nothing. They were on welfare while they were going to school and learning English. I remember leaning into my dad quite significantly and going, “Why don’t you go work at McDonalds? All these other friends’ dads work in construction and stuff like that.” He’s like, “No. I’m a computer engineer. I need to learn the language and get a good job.” And I couldn’t understand that. But I was working fast food from literally day one.
Andrew: So, he decided, “I’m not going to go work at McDonalds and get a little bit of money. I’m going to take some welfare. I need the help right now. I’m going to study the language. I’m going to study the culture here. I’m going to finally get a job.”
Alex: He was going to school morning and night, as many classes as he could, picking up English, taking some computer programming classes just for the heck of it to see what’s going on. But he knew engineering English, but he needed a spoken English.
Andrew: And did he end up getting the job?
Alex: Oh yeah. My parents have been employed in very good jobs for a long time.
Andrew: Are you embarrassed that at the time you said, “Why don’t you just. . .?” You are? Still to this day?
Alex: I hounded him, my mom as well. Coming from zero privilege–back in Russia we were on the poor side–I could never afford sneakers or a shirt and it mattered a lot in getting girls and getting social status back then. There was no cell phone and many people don’t have a phone. You want to date somebody, you go to their house. You knock on the door. You meet the parents. The parents see a schmuck that has no cool shoes, nothing on him, obviously he’s not a good match.
So, you could never really date or have good friends back in Russia with nothing. I came here and I started to have that stuff back then. With my Yupi job, I was making $7 to $10 a day, which is huge, which is a lot of money back then.
Andrew: I see. You finally have the shoes. You finally are starting to get your life together and your dad brings you here and now you’re back to where you used to be, an environment where that stuff matters and worse, he’s on welfare.
Alex: He’s on welfare. We’ve got nothing. We live with his sister.
Andrew: So, how did you lean in to him? At family dinner, did you say, “Why did you bring me here?” Did you say anything like that that you’re especially regretful?
Alex: Yeah, a lot.
Andrew: What did you say?
Alex: I would cry and I’d say, “What are we doing here? This is a big mistake. We had a good life back there. I was just starting. I would support all of you. If you ever lost your job, this would have been a big business for me.” In retrospect, it may have been. It took me 20 years to start a business here, where back there, I was rolling. I would have been in a hopefully different place by now. Who knows.
Andrew: I see. So, you worked those little jobs. Did you literally work at McDonalds?
Alex: Yeah. I worked at a company called Nations. You as a San Franciscan might know it. There’s one in Daly City. It’s the best burger ever.
Andrew: What is it?
Alex: Nations?
Andrew: Oh, is that–
Alex: Nations Hamburger?
Andrew: No.
Alex: It’s a small chain. There are about 23 stores. That’s where I spent my youth, working my way from a bus boy to a shift supervisor.
Andrew: Did you end up smelling like the food going home?
Alex: All the time.
Andrew: I wanted to work at McDonalds and I wanted to work at Roy Rogers and whatever it was because I needed a job when I was growing up, before I was even old enough to really have one. My dad didn’t want me to have that kind of job. He thought that it would be an embarrassment to the family if the kid worked at McDonalds or whatever. So, that sense of pride kept me from having it.
Alex: I’m with you. I have to tell you, I interviewed at McDonalds twice. They didn’t take me.
Andrew: They didn’t take me either because I had long hair. They said, “You’d have to cut your hair.” I said, “I don’t think I’d do it for this.”
Alex: Yeah.
Andrew: But it didn’t matter. You also worked at Radio Shack, which I think is a little closer to where you ended up. I’m looking here at your LinkedIn profile. You were a loan consultant for Manhattan Financial. Then you became an account executive for Arena Solutions. You end up at Propertyware, which sounds like it’s a property management software company?
Alex: Yeah. So, the axe fell in 2007 or 2008, the housing crisis. Everybody got fired. I got fired with everybody. It was all bad, doom and gloom, remember? So, laid off from a massive six-figure software sales job and landed on my butt with nothing. Nobody was hiring. No software company in their right mind back then would live. So, I got a dog. I was raising a dog. I was really depressed.
And then I found this software company that was actually hiring. But they got me cheap. They got me for half price because they could. But that’s fine. It was a job. That’s how I learned about the property management industry. And that job led to where I’m at today and I’m absolutely grateful.
Andrew: And from what I understand, you worked at another company and people started to see you as the guy who knows about social media.
Alex: So, graduating from Propertyware, this was a short, six-month stint, the company was restructuring a little bit. It wasn’t the right fit for me. So, I left. I picked up the phone and called their competitor and said, “I’m going anyway. I have this experience. Would you like me?” Back then, it was the stuff that the economy was still bad. They said, “Sure, why don’t you drive to Santa Barbara and we’ll interview you?” I drove to Santa Barbara, met with the CEO, interviewed, got a job, drove back home.
Andrew: This is AppFolio.
Alex: AppFolio.
Andrew: What does AppFolio do?
Alex: So, AppFolio does property management software, but they were multi-vertical and they’re a public company now. So, when I started, it was like 32 people. Now they’re a public company, very, very well managed. I learned a lot from them.
Andrew: What did you learn from them?
Alex: Just overall how to treat employees how you want to be treated, how to run the company, how to strategize, how to invest in product and just many, many little things that make up a good business.
Andrew: I see.
Alex: Most of it came from them.
Andrew: And so you ended up there. You started speaking at events, from what I understand, right?
Alex: So, yeah, as an account executive, I was representing the company at different industry events. At those events, I would speak on social media and internet marketing just because AppFolio wanted to provide value beyond accounting software. So, that was hot topic and we spoke on it. So, I spoke on it. I was one of the people who spoke on that subject.
Andrew: Okay. That’s how you start to build a reputation for yourself. How do you turn that reputation into your own business?
Alex: One day I took the customers, four or five customers I had, whitewater rafting here in Sacramento. After whitewater rafting, it was like an exhilarating experience. I was like, “If I did this for a fee, would you sign up?” All of them said yes. Every single one said yes.
Andrew: And when you say this, what’s this?
Alex: Internet marketing. If I helped you market your business to the internet and get more clients, would you be willing to sign up with me? All of them said yes. I took them up on it.
Andrew: I see. So, you then went back to them and you said, “I’m going to do your internet marketing.” You said you’d pay. Let’s get started.
Alex: Yeah.
Andrew: At what point did you start blogging?
Alex: Probably about a few months before that, maybe six months before the end.
Andrew: Did you also blog at Fourandhalf.com?
Alex: I did, but I blogged on Fourandhalf.com. So, I didn’t blog for AppFolio. I kind of created my own blog. This whole Fourandhalf thing wasn’t necessarily a company yet. It was just my blog.
Andrew: So, what does Fourandhalf mean?
Alex: It’s a business philosophy, Andrew. It’s very simple. You don’t optimize in fringes. You don’t worry about the fringes. You don’t grease the squeaky wheel. You go for the best of your customers. You bend over backwards to take care of them, let go of the fringes, so four and a half out of five is the business philosophy.
Andrew: You let go of four and a half out of five. . .
Alex: No. You let go of 0.5 on either side, right? So, the fringes don’t matter as much because they take most of your time and they won’t give you the revenue or you won’t be able to satisfy them.
Andrew: What’s an example of something on the fringe that I should be spending time?
Alex: On the fringe?
Andrew: Yeah.
Alex: I don’t know. That’s a good question. For a particular business, I can give you an example. When your customer is calling you on your cell phone all the time, let’s say I’m bugging you every five minutes about this interview and I’m worried about it and I’m asking you all these tips and I’m calling you and I show up at your house, you’re like, “I don’t need this guy Alex. That’s not worth it for me.” That’s a fringe. You get rid of me, your life is good.
Andrew: I see. So, you’re saying get rid of the people on the lower end or get rid of things that are pesky on the lower end and on the higher end, the ones that demand a lot.
Alex: That’s right. Just do it the best you can do for your best customer and let go of the fringes.
Andrew: I see. Got it. I would understand the people on the lower end, the ones who are constantly nagging you and so on. I wouldn’t have expected that we should be getting rid of people on the higher end. Then I read this post by I think it was Jason Fried. He said recently that when he started, people were asking for more and more expensive versions of Basecamp for themselves and they were willing to pay a lot of money.
He said he decided not to say yes to those people because they would then change the course of his business. He would start to become a service company catering just to them instead of what he wanted, which was a software company catering to the Fortune five million, I think is what they call them.
Alex: That is precisely the definition. Also, the larger customers will take your product in different directions, but they will also require a lot of resources on your team that are not dedicated. We have systems. We have processes. Our job is not to take 10,000 unit customer become a 20,000 unit customer. We help a 1,000 unit customer become 2,000. That’s what we’re good at. We’re not going to bend over backwards for somebody who’s not a good fit. We’ll recommend a better shop for that purpose.
Andrew: So, I’m actually on your about page and you guys have a really good set of photos for the team. If I mouse over someone’s headshot, they make a face.
Alex: Yes.
Andrew: So, that caught my attention. But then I started counting all the people who you have on the team. You have you, president and CEO. You have John. He’s a VP of operations. You have a director of sales, director of account management, account manager, PPC team manager, marketing manager, director of customer success. I could keep on going here. How do you have all these people when your revenues are $1.3 million last year? That’s a lot of people to pay.
Alex: Sure. We do double every year. We have been doubling from day one. It took us a little while to get traction. We’ve changed offices five times because of the rapid growth. We reinvest every dollar back in the business.
Andrew: There are over 16 people that I see here.
Alex: We have 22.
Andrew: 22 people full-time? All right. Let me do quick math here–22 people times $50,000, let’s suppose that they make, that’s $1.1 million. I know that they’re going to get more than $50,000. We’re talking about not full-time employees then, right?
Alex: Everybody’s full-time.
Andrew: Is your payroll more than $1 million?
Alex: Yes, of course it is. Absolutely it is. We pay very close attention to our unit economics. One of my advisors, board advisors is a vice president at the Comerica bank and he’s very good at business valuations and stuff. So, him and I created this unit economics sheet that we’ve been working on. Every month I fill in new numbers. We keep a very close eye. Our numbers are very, very healthy in terms of growth and we don’t need more investment. We’ve been breaking even at this pace since day one.
Andrew: You’re breaking even, even though you’re taking a salary for yourself.
Alex: I’m very comfortable.
Andrew: What are your expenses then? If salaries alone are $1.1 million, then you also have all this software, at least $1.1 million. I’m actually going to guess even more than that.
Alex: Probably more.
Andrew: So, you lost money last year didn’t you?
Alex: We lost something to the tune of $20,000.
Andrew: $20,000, and that includes your salary?
Alex: I’m an employee of the company just like everybody else.
Andrew: So, after taking a salary for yourself, you guys lost about $20,000.
Alex: We use TriNet, which is very expensive for all of our HR. We pay full benefits, health and …
Andrew: Why do you use TriNet? I hear a lot of tech companies that take funding use TriNet. I think it’s the one that Marc Andreessen recommends. Why do you use TriNet?
Alex: Because people is my most important resource and I’m not an HR maven nor can I afford one.
Andrew: I mean why not go for a cheaper one, like ADP’s TriNet competitor or something?
Alex: Well, we have to discuss whether they’re cheaper or not. We’ve looked at a bunch of options and I’ve negotiated a deal. But I’m saying in a grand scheme of things, they’re more expensive than doing it yourself. Last year, I had my bookkeeper doing our payroll and that’s just not going to cut it.
Andrew: Who does your bookkeeping?
Alex: We have a bookkeeper.
Andrew: A service or an individual?
Alex: A person that has a company, yes. They’re an individual consultant.
Andrew: Okay. How does it feel to talk about all these numbers with me?
Alex: Feels great.
Andrew: I’m looking you to get a sense of when you’re tense.
Alex: Except my board members, nobody is really asking these numbers. So, it’s a private company, so I don’t all of it.
Andrew: What percentage do you own?
Alex: I own over 50%. Let’s leave it at that. I am not the only decision-maker in this company. My partner, who worked for me for free and I met him at Arena, the previous company, brought him in, he worked for free, he was unemployed and now he’s part owner. We have raised about a little under $500,000 between two different rounds from customers and those guys own a bit of the company. So, yeah, we’re a happy family.
Andrew: How did you figure out the paperwork for getting investment from property managers?
Alex: Well, it’s very easy. You have to have a good attorney. We use guys that are very well known in the valley for the startups.
Andrew: Who are they?
Alex: I found them on Quora.
Andrew: That’s okay if you can’t remember.
Alex: Let me come up with the name as we talk. It’s Scott. . .
Andrew: Scott Edward Walker?
Alex: That’s it.
Andrew: Yeah. That’s the guy. He’s really good at that stuff. He was a Mixergy advertiser for years. All right. Speaking of advertisers, I should talk about my second advertiser. It’s a company called Leadpages. They’re not paying me to talk about Leadpages, which is great landing page conversion–software for creating landing pages. But it’s their conference that they’re paying me to talk about.
They’ve got something called Conversion 2016. It’s a conference that helps you hear from the masters of conversion how to get more of the people that come on to your website to give you their email addresses if that’s what you’re collecting or their phone numbers if that’s what you’re collecting, really create pages that increase conversion and to help you with those sales pages, the ones that actually are designed to sell. How do you get more conversions on there? They’ve got some of the best people in the business to come on stage and talk about it.
I know because I’m on stage and I also know because they have the data. They’re Leadpages. They get to see who has the highest conversions and then they get to go out and say, “Look, we know your numbers. We’re not going to reveal them, but how about coming and speaking at our conference. So, they got those people to come on stage and talk. In the audience are people who are fanatical about increasing their conversions, the kinds of people who you want to hear from and learn from.
I hate going to conferences because I think the conference has to be especially good for me to leave here, where I have access to Quora if I want to learn something, where I have access to all these different people I can text and where I get to reach a big audience just by doing Mixergy. But when there’s a good conference, I’m willing to travel anywhere to go see it. That’s why I’m going to Conversion 2016.
If you’re listening to me and you’re trying to increase your conversions, I really urge you to check out Conversion 2016 and here’s a special URL where you can find out more about it. Go to Leadpages.net/Mixergy. When you go there, you’re going to get 25% off the price that other people are paying. So, yes, you will be paying less than other people who are at the conference.
Please, after you get it, email me, let me know you’re coming so that the two of us can connect in person. I’ll give you my cell phone number, we’ll text so that we can have a drink there in person and I can introduce you to some of the other speakers and other people I’m getting to know. I have no idea who I’ll end up talking to, but I always end up talking to interest people and I’d like to introduce you to them.
So, go to this special URL, get 25% off and I’ll see you at the conference where we’ll both learn how to increase our conversions. That URL is Leadpages.net/Mixergy.
Alex, I’ve got this box here under my arm. I’m dying to open it up, but I’ll wait for the right moment to do it.
Alex: Well, why don’t–can I take a step back for a second because we started to talk about something interesting and your audience would be interested in this as well.
Andrew: Okay.
Alex: You talked about like, “Hey, Alex, your payroll is $1.5 million and your revenue is $3 million. What are you thinking? This is not scalable. This is service business.” I want to make sure we discuss the important issue here because I am arguing a point that I want to prove. So, with a software company, you have engineers and you have PhDs on staff, you have this phenomenal technology budget, engineering budget that is sucking you dry if you’re not raising money.
Well, for me, we have these software vendors which we don’t pay a lot of money to. We have rent, which is little. And really, that’s it.
Andrew: I see. You’re saying outside of people, you’ve got rent ad software and that’s all you have. You don’t have high engineering costs?
Alex: No. I don’t. We have fully scaled our bottom line is over 20%, bottom profit.
Andrew: Wait, that can’t be because you lost $20,000 last year.
Alex: Fully scaled, meaning that–
Andrew: If you have all the customers that you need.
Alex: So, right now, we’re about six months ahead. So, we were hiring and training to be six months ahead of where we are today. So, we project sales for next year, number of customers and we are right now staffing up for six months.
Andrew: Okay.
Alex: So, when we stop and do, let’s say, scale back and do three months forward staffing or one month forward staffing or at current level staffing, that’s where the 20% to 25% bottom line will start trickling in as what I call fully scaled.
Andrew: Okay.
Alex: We won’t reach there for a while because the growth is too much opportunity to give up for little profit in the pocket right now.
Andrew: How long have you been in business?
Alex: Four and a half years in July.
Andrew: So, it seems like to even get to $1 million took three years?
Alex: Yeah.
Andrew: It’s a pretty tough business to grow, isn’t it?
Alex: It is. It is but it isn’t. You can’t break neck speed. So, take a step back for a second. You think of any average small business. We’re here in a bubble in Silicon Valley. We’re thinking of in three years, if you haven’t raised $2 million and if you haven’t made $1 billion, you are close to nobody, right? At least you’ve got to go back and try another startup. This one failed.
In real life, getting to a $1 million mark is a major milestone for the business and some take years and years to get there, especially not losing money. Considering that you’re not raising a lot of money, you’re not burning any cash every month. Let’s say if given $1 million to scale this business, it’s a lot easier to do than with nothing.
But if you look at the way we’ve done it and what we’ve done so far and the investment we made and the infrastructure and the company and systems, now taking it to another vertical is just a matter of hiring the right people and marketing and growing to that vertical. So, property management is our initial vertical that we’re going to go with and we have fast growth here. We’re going to continue growing, but we’re looking at others as well.
Andrew: Okay. I like how you didn’t fold when I asked you those tough questions. I feel like I asked the tough questions that I want to know if I’m listening in the audience, but I also know that when you’re being asked those questions, it’s very easy to get derailed and try to think of justifying your position instead of explaining. I’m glad you didn’t feel too put off by that.
Alex: Not at all, Andrew. I think we’re all too nice to each other. I think the truth comes out in real passionate and real candid conversations. A lot of it is over a cocktail because you’re relaxed and a lot of it is in a more interesting interview like this. I appreciate this.
Andrew: Why are you doing this interview, by the way? I don’t have property managers in the audience.
Alex: I was asking myself this question so many times. That’s the stupidest thing you’re probably going to do in a long while because yeah, you’re right. The percentage of property managers listening is close to none. We’re not looking for any VC capital. The company is not for sale. You say that, but there’s always until it makes sense.
The reason why I’m doing this, Andrew, is to learn from you. My motivation is I live to help small businesses grow. Growing up in the socialist community, you don’t understand how much opportunity is really worth for somebody, the freedom and the opportunity to start your own thing, start your business, support your family. This is foundational for who we are as a country, I believe, right. I fully am behind this.
So, I commit the professional part of my life to helping small businesses grow and thrive and helping entrepreneurs grow and thrive. I think that’s an investment in that more than an investment in myself, though I hope that someday maybe something positive will come out.
Andrew: I think it’s a good idea to do it. One of my sponsors is Acuity Scheduling. I feel like because of the fact that founder doesn’t talk much, nobody knows who he is. I can see one day him waking up and seeing his competitor getting acquired for a lot of money and him saying, “Why is nobody paying attention to me?”
I can see him seeing other people sign up for his competitor’s software and saying, “Why is everyone talking about that like it was just invented, like this whole category is just invented when I’ve been doing this for years and I’m actually doing it better?” I think it’s because if you don’t get yourself out there, no one is going to know about you and all the opportunities that you want won’t be available to you.
Alex: I believe it is the rule of reciprocation, number one, and I believe in throwing positive energy out there in the universe and even if you don’t get it back, you feel good about doing something good.
Andrew: I’ve been trying to figure out where you get your customers. I go to SimilarWeb.com a lot to check on where people are getting their traffic. If you heard some like random audio in the background as we were talking, it’s because I clicked on the one link that I see as a referral for you on SimilarWeb. It’s OpenPotion.com. I don’t know what it is. But that can’t be where you’re getting your traffic. Where are you actually getting it?
Alex: A lot of it is two ways. So, most of them get from search. We’ve just done a study that on average, Andrew, it takes 31 weekly emails to convince a client to work with us.
Andrew: 31 emails?
Alex: 31 emails.
Andrew: Automated emails or are we talking about from Sales people?
Alex: We do education every month. We do blogs every month. We record a video and an article every month. We record a video and an article every month on the industry-specific ways to market and grow. So, it takes 31 of those weekly. We do it every week. It’s a whole production schedule. It’s set in stone for us. We have to publish every week. It takes 31 of those to earn the trust. Marketing companies are not trusted. You already are way behind when they first talked to you, even if they decided to talk to you because they got burned three or four times.
Andrew: I think that’s what you might have told our producer, where you said, “Look, I’m asking people to pay $10,000 a year,” when they might have been burned spending that much before. Why are they going to spend that much with me? What do you do to overcome that feeling that they would burn for thousands of dollars.
Alex: Reviews, trust factor, the fact that we’re here, we’re with them. We work with the thought leaders. We prove it by bringing results. We speak at the conference. In fact, we’re putting up our own conference. I was going to ask you for your conference fees because we’re actually looking for a second day opening speaker. You and I can talk about flying on this one. But it’s a property management conference. It’s very boring, unless you’re property managers, then it’s going to be a lot of fun. In any event, we do lots of things. We do content. All of it is content, Andrew.
If you look at anything property management, marketing, if you searched, just go jump Google and do property management marketing, property management leads, how to close property management leads, all of these terms we own and we’re represented more than twice on every page either through a webinar with somebody or a video on our YouTube channel.
Andrew: Here’s one of the big search terms that’s used to send people to your site. I’m probably going to mispronounce it, but it’s Nitu Sidhu.
Alex: I’m not sure what that is. That’s actually our marketing manager.
Andrew: That is? For some reason, people are Googling for him. And then if I Google for him, I end up on his author page for your site. That is one of the big keywords. Here’s another one, social media tips for property management. That leads to you a lot.
Alex: Property management marketing is what usually leads to a customer.
Andrew: What is?
Alex: Property management marketing or property management leads.
Andrew: Are you doing search ads also?
Alex: No. We have not done pay per click. We do it for our clients. We don’t do it for ourselves because we own all these searches that are even remotely important. Let me give you a stat that might actually blow your mind a little bit or you might say, “Alex, that’s nothing.”
Consider that our YouTube channel only consists of property management educational videos, such as how to start a property management company or how to grow your property management through 200 units, blah, blah, blah. That’s only relevant to property managers. Our content is watched four and a half hours every day, average. Every day.
Andrew: Of people watching this to see–and your stuff has done well. Who shoots these videos?
Alex: We do in house. If you look at earlier ones, you’ll see some of the progressions we’ve made. We’re not about finesse. It’s about quality of the content, not necessarily polishing and production value.
Andrew: So, what do you have? It’s a two-camera shoot, I think, right?
Alex: Single camera most of the time.
Andrew: Single camera. I see. It looks good. I like how you guys keep it moving. I need to keep moving on my videos when I do interviews like this. It’s very hard when you’re doing it remotely.
Alex: It’s a talking head. There’s nothing you can do. If you move around, you distract people.
Andrew: Right. Exactly. Well, I watched some Vox videos. Sometimes it’s one person talking, but they’ll still put up the image and they’ll make the image move and there’s never a point where anything does not move, where with two talking heads, not really much that’s happening.
Alex: I think maybe this is the segue for your box opening scene.
Andrew: Let’s do that. Good call.
Alex: This is the time you move and I’ll move.
Andrew: That’s partially why I decided to do it, to have some mystery on the show to also make it easier for me to open because frankly I get so humbled when somebody gives me a present that I feel guilty for it.
Alex: Don’t feel guilty. I’m a good giver now because I found this company.
Andrew: Look at this. Look at the presentation on this. Here’s what it says. “Andrew, I’ve gained lots of knowledge and insight from your podcast, thank you for that. As a father of two young girls, I feel the contents of this bag might be a small yet helpful way to show my appreciation as you’re preparing for the best day of your life to arrive, Alex, Fourandhalf.com.”
I like how you say who you are. I get notes sometimes from people. They don’t say who they are or they put their first name and I can’t tell which Alex it is. Interesting. I just saw one thing that I know for sure is going to be useful after having had one kid, this.
Alex: Oh, you already have a kid?
Andrew: I’m going to pull back here. My kid is due any day now. By the time this interview is up, we probably will have the second kid. This is like a military bag with an owner’s manual to baby in it. We’ve got the–oh, dude, the mustache pacifier. I think my 2-year-old is going to love it. Here’s the thing I was going to grab out of it earlier–Red Bull. Oh man, do I need that. I started ordering soda by the truckload after the first one. Is this military fatigues for me because I’m going to go through this hard period?
Alex: That’s a blanket for your child.
Andrew: Yeah, this is for the baby, military hat. What’s this?
Alex: That’s for you.
Andrew: Jerky? I thought it might by Yupi in here. I was looking up Yupi online. Wow. Thank you. I really am going into combat. There’s not been anything that I’ve done that’s been as hard as having a baby for the first couple of months of the baby’s life, nothing.
Alex: I’m with you on that.
Andrew: Running a marathon, totally easy compared to it. For one thing, you could practice running a marathon. If you know you’re going to do 26.2 miles, you could do one mile, then build up to 5 miles, then build up to 18 miles, which is what I did, then you do your 26. You can’t really build up to something like this.
Alex: Also, when you’re finished with the marathon, you’re finished. With a baby, you just start a baby.
Andrew: Yeah. But it does get easier. I just didn’t know how to deal with being woken up in the middle of the night. That’s really tough. How old are yours?
Alex: Two and six.
Andrew: Mine is two and we’re about to have one more coming up.
Alex: Two year difference. That’s good. We went for four so the older one can help out with the younger one. So far it’s kind of working out.
Andrew: One of the reasons why I love living in cities like San Francisco is because they pamper you. They take care of everything here. If I wanted to have lunch right now, somebody’s going to bring lunch here in half an hour. I want to have my clothes dry cleaned, there’s a guy that’s going to pick up my clothes, have them dry cleaned tomorrow, maybe in two days, anything you want, it’s there for you.
Alex: The apps.
Andrew: The apps, especially San Francisco. But I lived in New York. I grew up there. You could call down to the deli and they get you anything you want and they bring it upstairs. Even if it’s not from the deli, they know you’re going to tip them. There’s just nothing for taking care of kids here. I can’t even go to the gym and say you’re going to have a play center you can play in. I’ll go work out. It’s not meant for kids.
Alex: Isn’t that something interesting? I heavily considered doing a daycare with our company, but we’re not the size. We’re not the Google size. But even Google doesn’t have onsite daycare, I don’t think. They can launder your clothes, but they don’t have baby care.
Andrew: I don’t know that they do, actually, now that you mentioned it. It really is a problem, which is why when a Mixergy fan created an app called Trusted, I was so ecstatic. Trusted is this app. You get to hire a babysitter often like you hire an Uber that will come to your house. You get to see their background. This woman who came the other day, she was a nurse. Her two parents are nurses. She was fantastic. They set up a camera so you can watch the sitter with the kids, like on your phone wherever you are. It’s a fantastic setup.
Alex: What is it called?
Andrew: It’s called Trusted.
Alex: I want to figure that out. It’s in the App Store?
Andrew: It’s in the App Store. Well, are you in San Francisco?
Alex: Castro Valley.
Andrew: So that’s San Francisco, right? I’m fairly new here.
Alex: That’s across the San Mateo Bridge.
Andrew: Okay. By the way, we should get together in person sometime. Check out Trusted. It’s fan-freaking-tastic.
Alex: Will do.
Andrew: It’s amazing. So, if someone’s listening to us and is buying into this and saying, “Service is scalable, service is something I could get into. There’s actually logic to it. I don’t’ have to reinvent something. You don’t have to reinvent transportation the way Uber did in order to do services. Is there another area that you think that they should consider?
Alex: Find something that’s incredibly boring and if you can explain to a person like Andrew in under five seconds what you do, you’re in the wrong business for making money and profit and growth. I think it has to be boring, it has to be difficult to explain and you have to commit a year, a couple of years of your life working in the industry in any capacity you can but be super curious.
Be the sponge, look out, ask questions, build relationships and you pretty much have your business. From there, once you start your service business, you spin it off to a larger company or you build a happy, successful business, whatever it is, your entrepreneurial dreams will come true. I think that’s a formula.
Andrew: By boring you mean a little harder to understand. You man something like something property management isn’t an industry most people think about.
Alex: Not sexy, like by boring I mean not sexy.
Andrew: What’s another not sexy area that people can go into? What is it?
Alex: Helping court reporters get appointments.
Andrew: Yeah.
Alex: A court reporter, that’s not sexy at all or let’s say facilities management. That’s not property management. That’s completely different. There is such a thing.
Andrew: Let’s suppose we find court reporters and we say there are a lot of them here. They’re needed. How do I figure out what to create for them, what service to create for them?
Alex: You ask them what they’re looking for. Ask them what they need. It’s not about what you want to do. It’s about what they need and you do that.
Andrew: I see. So, it might be something like saying I’m really interested in court reporting. Why did you get into it? How did you get into it? What sucks about it? And then let them talk about that sucky part so you can see if you can help out.
Alex: How do you grow? How do you make more money? What do you want to go with it, right?
Andrew: Good one, right.
Alex: I think again, this is more of an engineering mindset. What sucks about it, you’re solving real problems that they’re dealing with through software and automation and tools. You’re solving growth than you’ve got to ask how do you grow, what do you want to be in a year, two years. What does success mean to you? How do you find the customers? How do customers find you? Who’s your best customer? Who’s your worst customer? Tell me about that experience.
So, for court reporters as an example, these guys work for courts. I think they get paid by the courts, but the lawyers who pick them. There’s some kind of dynamic there that you really need to know. I don’t know anything about it. I’m just saying it’s one of those boring things with difficult constituencies that I’m pretty sure is underserved. I don’t know. I’m just shooting off the hip right now.
Andrew: I see. Is there one that you’re going after next that you feel comfortable talking about?
Alex: We haven’t decided. Real estate was the next opportunity and we have a lot of customers that are already real estate.
Andrew: You mean real estate owners?
Alex: Sales.
Andrew: Sales.
Alex: But we’ve found it’s full of a lot of different people and it’s not boring enough for us. I think it’s too glamorous too. Real estate, sales, flashy cars, flashy marketing companies, we’re not that.
Andrew: Where nobody is standing next to a Lamborghini if they’re a property manager.
Alex: Not at all.
Andrew: No. I see. I got it. I got what you’re looking for. Okay. I especially like how you’ve systemized what you’re giving them. You’re clear about what it is. You use software that already is working so that you don’t have to hire developers to do it for you or create something brand new every time. I like the clarity of it.
Alex: It’s pretty simple in the concept. It’s difficult in execution, but it’s not impossible. Anybody can figure this out. It’s not rocket science, for sure.
Andrew: And the logo is four sticks and the one half stick standing up like a thumbs up.
Alex: That’s the idea.
Andrew: Yeah. All right. There’s the website. If anyone wants to check them out and you should just to see what he’s up to, go check out Fourandhalf.com, all those words actually written out. I saw you bought it from Sedo, right? I never know how to pronounce their name. Sedo, you bought the domain?
Alex: I have no idea. I don’t remember. It was a long while ago.
Andrew: I’m pretty sure how it was. I went to hunt down how you ended up with that name.
Alex: I’m pretty sure it was GoDaddy.
Andrew: Was it? You bought it directly.
Alex: Pretty much.
Andrew: You didn’t have to buy it from someone else?
Alex: Not back then. It was six years ago? Yeah. It was just hanging around.
Andrew: All right. And the two sponsors, the first is Leadpages. I’m going to be at their conference. Come check me out, meet me in person. Let’s have a drink. Let’s talk. Let’s meet other people there. The website if you want to get your ticket at 25% off is Leadpages.net/Mixergy. And the second one is the hosting company that Alex and so many people who I’ve interviewed have built businesses on. If you don’t like your hosting company, go to this URL, HostGator.com/Mixergy. I’m grateful to you, Alex, for being here.
Alex: Thank you, Andrew.
Andrew: Thank you. And thanks for the gift. Thank you all for being a part of Mixergy. Bye, everyone.
