Andrew: Hey everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. I usually have just one topic that I want to focus on and, you know, basically we tell the story of how an entrepreneur built his business and spend some time on the one thing that makes the person unique. Today’s guest, I’ve got a few things that I want to talk about that make him unique.
Number one, he’s an entrepreneur who’s building a consulting agency. You know, they do development of web apps and mobile apps and more, but catering to startups. Not startups who just raise funding, whose VCs are going to introduce them to him, startups who have no fricking funding. How’s he building a business like that and staying profitable?
Number two, he was homeless at one point in his life, and I like to pry into people’s personal lives with their permission, so I’m going to ask him what that was like and how it influenced the way that he thinks about money and business today. So we’ll have a little bit of heart in this interview, just a little bit. Mostly, I’ll talk about the business part of that.
It’s funny, by the way. Jake, what I do is I ask people about their personal stuff and I get a little emotionally invested in it, but for the most part, all I want to do is suck out like, “How did that shape you as an entrepreneur, Jake?” So I’ll do that in this interview.
And then the final thing, this is my personal obsession, but frankly any entrepreneur needs to take this on as an obsession. How does he systemize his business? He told me last week when we tried to record this interview and we had some tech issues, that the reason that he’s able to service so many entrepreneurs who have frankly very little money to spend . . . How can he service them in a predictable, strong way and still make money? And he said his system, so I want to understand how he systemizes his business.
All right. Those are the three things — systemizing his business, his personal background, and then I also want to find out how he works with entrepreneurs.
This whole thing is sponsored by two great companies. The first will allow you to buy a design, and I’ll talk to you about a logo that I bought from them. It’s called DesignCrowd. And the second is a company that I’ve used to get somebody to come in here as like a part-time CFO. I can’t wait to tell you what happened with that. I just had my first meeting with the person. Anyway, I hired him through Toptal. I’ll tell you guys about both of those later.
Jake, good to have you here.
Jake: Hey, good to be here. Thanks, Andrew.
Andrew: You know, while you’re still smiling and we’re still friends, let me ask you the toughest question about revenue. How much revenue are you guys producing here?
Jake: So, right now, we’re at a monthly recurring revenue of about $150,000 a month.
Andrew: One hundred fifty thousand. I should say the company is LaunchPeer. You have a team of 27 people. You build web apps, you build mobile apps, and you also do growth for new startups, right?
Jake: Right, yeah. So we’ve been around for three years. Our primary focus is on pre-seed stage or pre-angel investment startups, and so we’ll get into how exactly we do that because I know a lot of people have asked me.
Andrew: Focus on people who don’t have money. It’s like you’re basically saying “I’m going to turn people away if they have a Series A funding.”
Jake: Right, and we don’t do that, but a lot of people have asked us about that for sure.
Andrew: Are you profitable?
Jake: Yeah, definitely. So everything about LaunchPeer is bootstrapped. I started the company three years ago. Me and my wife were co-founders, and all the money that goes into the business is all business funding. We’re not raising money for venture capital. We’re not using somebody else’s money. So the reason we have such good systems in place is because we have to have good systems in place. We don’t have a choice.
Andrew: I’m looking at my notes from my producer’s conversation with you, and one thing that stands out is “I have PTSD when it comes to spending money,” and the reason that you’re so lean, the reason that you care so much about where every dollar goes is this background that I hinted at earlier. Were you literally homeless?
Jake: Yeah, literally homeless. For a couple years in high school, we were homeless, and I came from a really low-income family. My dad was an alcoholic. My mom did drugs, and so we always bounced back between the two.
Andrew: You look so straight-edged that honestly . . . like I’m a dark person. I always look at someone like you and I think, “He’s got every advantage. He looks good.” Even the way that you’re dressed makes you look like you grew up in this environment where I imagine that your hardest decision in life was which country club to go to on Sunday. That’s not it at all.
Jake: No, not at all, actually and if you look at the way I dress, it’s definitely because of my wife, for sure. When we went back . . . being raised homeless and poor, I think a lot of entrepreneurs go through a really tough time, and the thing is, how are you going to get yourself out of it?
Andrew: Before we get into getting yourself out, like set the stage for me. When you say your dad was an alcoholic, do you mean every night he would have a beer or two beers? Give me an example of how bad it was for you.
Jake: So it was bad enough to where every night our dad would kind of lock us in our room after like 7:30 to 8:00, and then he would drink. So he did as much as he could to kind of hide it from me and my little sister. She’s two years younger than me. But I remember back when I was from 7 to 16 years old, coming out of the room at night and him throwing up and seeing empty beer bottles and stuff. Like he tried to hide it from us, but when you’re a kid and you’re raised in . . . it was a one-bedroom condo. Me and my sister shared a room for our whole lives, basically. You know, it’s hard to hide something in such a small space. So my dad did as much as he could, but it wasn’t easy for him to hide it from us.
Andrew: Meanwhile, when they got a divorce, your dad got custody, not your mom, which tells me that that must have been even worse. What was going on with your mom?
Jake: So my mom was doing drugs, harder drugs. I think it was meth, but she doesn’t like to talk about it, which is completely understandable. So I think when it came time to . . . you know, we were switching custody back and forth. I remember going and my mom did a much better job of hiding it from us mostly because she didn’t have full custody of us at any point until I got into high school, after my dad passed away when I was 16. But before that, she mostly did it on the weekend when we weren’t there, because my dad was keeping us during the week for the most part and so he was hiding it from us at night, she was hiding it from us during the week, and then when we came over to her on the weekend, it was like everything was great.
We only really found out about this because we started getting pulled into court for custody hearings, and obviously kids sometimes take part in that. And when people start asking you tough questions, you kind of have to wake up to the reality that (1) your parents aren’t perfect and (2) they’re far from it and (3) like this isn’t normal. When you’re a kid you think all this stuff is normal and everyone goes through this until you start talking to your friends or you do start making friends with people who are a lot more straight-edge and their parents do go to the country club every weekend.
Andrew: You know what? I felt for many reasons I wasn’t normal, but one of them was that I would watch “The Cosby Show” and “The Cosby Show,” as wholesome and good as it is, it really sets up families for failure because you look at your family compared to them and you go, “What the hell’s wrong with you, dad?”
Jake: Yeah. And for me, it was “Full House.” I remember watching that and thinking, “Oh, well that’s how a family should be, but my family’s not that different from it, right? I have a little sister and we have fun and I have an older sister. Yeah, I don’t see my mom and dad all the time, but we have a lot of friend’s families who are divorced.” You know, I didn’t realize it until I got in high school and had to start wearing the same clothes to school every day and we didn’t have a home to come to, and that’s when it started really sinking in.
Andrew: And the reason you didn’t have a home was?
Jake: So my dad lost his job when I was about 15 or 16, and so, because of that, we didn’t have any money. We were really low income, so it wasn’t like he had savings or we had a big family to go to. So we just started living out of our car. I remember we’d get to school at 5:30 to 6:00 in the morning, and then he’d pick us up at about 5:00 or 6:00 at the end of the day. We’d drive around for a couple hours because he had an extra key to the place he used to work, which was a big, factory warehouse, and so we’d drive around until everyone had left and then we’d sneak in and that’s where we’d wash up in the sink there at the workplace. He’d park his car in there, and we’d sit there until really early in the morning when he knew not everybody was there at work and then he’d leave. So it was kind of living like a second life sort of.
Andrew: At that point, you must have known something was wrong. How do you put up with that level of discomfort without complaining to your dad, getting angry at your dad? What was it that allowed you to deal with this?
Jake: So I do remember getting angry with my dad, but I think it was less anger and more motivation. Like I realized that, “Hey, I’m 16 now. I have two years until I finish high school. I’m going to do everything I can to make sure that this is not my life,” because when I started looking back at my family history, he wasn’t the only one and my mom wasn’t the only one. Our whole family for generations had . . . You know, I was the first one who actually ended up graduating high school, the first one to go to college and a bunch of other firsts. And when you start thinking about it, when you’re 15 or 16, there’s very little you can do about it, and so I started focusing not on what I couldn’t do about it but what I could do about it over the next two years. So it really helped my work ethic and really helped me learn to become a hustler, which goes into all the entrepreneurial stuff I ended up doing.
Andrew: I see. You know, I jumped into this interview, and I don’t think I properly introduced you as Jake Hare. I’m fascinated by you, not just your story, which we’re getting into right now but also the way that you operate. In all the research that I’ve done . . . I told you last week I got sucked into your world as I was researching you, so I jumped in a little too fast into this interview.
So, Jake, you’re saying, “I had to find a better way.” So many entrepreneurs email me and say, “I didn’t realize this existed, this world of entrepreneurship, that this was an option,” until Mixergy or until something else happened. What was it for you that let you know this is an option? “My parents have one life, but here’s this other crazy thing that’s completely different that’s for me being a business person?”
Jake: So when I was growing up, I was always sort of a hustler. Not because I really wanted to be or I even knew what entrepreneurship was, but because I needed lunch money. So what I would do is I’d figure out ways to just make lunch money on the side. I remember betting on Monday night football games with my friends. I remember trading Pokemon cards for cash. I was really good at drawing when I was a kid, so I’d sell like little drawings to my friends for $1 or $2 here or there. But I didn’t know that was entrepreneurship. That was like the farthest thing from my mind.
After graduating college, which I thought I wanted to be a lawyer, so when you’re growing up and you’re watching “Full House,” and you’re watching “Law and Order” and all these other shows, you start thinking, especially as a kid from a household like that, you start looking for outside influences to figure out what you want in life. And so I thought, “Well, lawyers look successful and doctors look successful. I don’t want to be a doctor, so I’m going to go try to be a lawyer. So I went to college thinking I was going to be a lawyer. I graduated college. I had a really good GPA, and then I did really get introduced to entrepreneurship as a career until after I’d graduated college. I was in the Army for a few years, and then during the Army, I started learning about tech. If you’re in tech, you’re going to stumble across entrepreneurship at some point, so that’s what happened.
Andrew: Okay, so it wasn’t so much that 16-year-old Jake Hare is sitting in the car saying, “One day I’ll be an entrepreneur and get myself out of here by making money.” It was, “One day I’ll find a way out of here. Probably the law is going to be my way out because ‘Law and Order’ and other TV shows tell me that lawyers can dress up in suits and don’t have to wear the same thing every day, but who knows?” And so you kept working.
Jake: Right.
Andrew: I see you then were thinking about law school. You actually got accepted. You said, “I don’t want the student debt that goes along with it,” and frankly, it seemed like that wasn’t in your makeup of who you were, that you would have taken on that debt if you felt like the law was right for you. Am I right in reading that, or am I being too much of an armchair quarterback here?
Jake: Oh no, definitely. I was about to graduate college. I got accepted into a few law schools, Duke, Columbia and a couple others. But if you look at those law schools, you can’t work while you’re going to law school. They don’t allow you to do that, and during college, I was working a 40-hour job doing construction and going to school full time. That’s how I was able to pay for school. But after that, I was like, “Well, how am I going to pay for law school? I can’t work and I have a kid on the way. I’m married. So why don’t I just join the Army instead?” And every time that I hit a roadblock growing up, instead of thinking like, “Oh man, that’s it. It’s over. I can’t move beyond this,” I always thought, “Well, what’s a way to go around that? How can I get over that hurdle?” And so for me it was joining the Army. The Army would pay for law school for me if I wanted to do that after, so I ended up enlisting in the Army. I think it was 2010 I ended up joining the Army.
Andrew: What’s the tech that you got into in the Army?
Jake: I was an intelligence analyst, so a lot of cybersecurity stuff, a lot of networking and computer systems. That was really our primary job. I know with the intelligence world people think of like CIA stuff and spy thrillers. It’s the farthest thing from that. A lot of times in the Army they called my position like PowerPoint Rangers because we were just incredibly good at creating PowerPoint presentations, but we were good at other stuff too.
Andrew: How did they teach you something that translates into building websites or mobile apps, which is what you’re doing right now with LaunchPeer?
Jake: I think the Army really made me straightedge. It made me really good at speaking because we had to brief generals, we had to brief majors and command staff. A lot of times, they’re twice as old as you, and they don’t really care what background you’re from. They don’t care who you are. They don’t even really care what your name is. They just want to know, “What’s the information you’re going to give me, and how does that pertain to the problem we’re trying to deal with?” So it taught me a lot about how to deal with people that are “more important than me,” so when I got out it was really easy for me to present myself in a way that hiring managers wanted to see. So I didn’t get a job in tech as a developer, I got a job in tech as a business analyst whose job really is to translate between the development team and the client. So that’s what made me really good at working with startups, because a lot of times, startups don’t really know what they want, and so it’s my job to kind of translate what they want to a developer in as lean a way as possible.
Andrew: I see. So Jake, what you’re telling me is the military didn’t train you to code. The military trained you to speak and work with people, and that’s what allowed you then to work with developers and others. I see.
You know what? So John Lee Dumas runs a podcast called EoFire and he invited me out. You know him, right?
Jake: Yeah.
Andrew: So he invited me to do this podcast cruise with him. When I got to see him on a cruise with a bunch of I don’t know how many hundreds of people, dozens of people, fans of his, some people were really annoying and really demanding and a little complainy. And I looked at his face the whole time and I said, “I don’t see anything about you that shows that you’re at all disturbed by this. Why aren’t you disturbed by some of these things that are coming to you, just always so calm?” And he said, “You know, I was in the military.” I forget which branch he was in. “There’s stuff that goes wrong there all the time. If you think that this little thing is going to bother me, you’re out of your mind. This is peanuts compared to what . . .” So was this same thing for you? Were you also shaped that way?
Jake: Yeah, definitely. I remember one experience specifically when I was in the military. We had our command staff ask us to go paint serial numbers on our Humvees and vehicles and stuff. The problem was it was downpouring outside, so it was kind of weird, like, “Oh, go paint the vehicles outdoors.” And they knew they were just doing it to mess with us, but those were kind of the frustrating things that you deal with, or picking up rocks or cutting grass that’s already been cut and a bunch of these other things, let alone the actual frustration of war fighting and all that.
When you deal with something like that for three or four years, you know, the complaining from people in civilian life, it’s not like it doesn’t mean anything, but when you start dealing with fires and you start dealing with people complaining or you start having trouble with some clients like we have now sometimes or they get frustrated with something, it’s really easy because of that experience to put things in a normal perspective, to start looking at it and thinking, “You know, this isn’t the end of the world. What can I do to fix this?” So I know John has that same mentality, and so I think that mentality has kind of grown on me too through all of those experiences I had in the military.
Andrew: Okay. So you then left the military, you got a job as you talked about. What was it called, a business analyst? And then you came up with this idea that you wanted to do something on the side and you went to talk to them. I’ll take a moment here and then we’re going to jump back into the story of how Jake created LaunchPeer.
First, I’ve got to tell you and everyone else about my sponsor, which is DesignCrowd. So I have a designer, Jake. I know you have tons of designers on your team. I have a designer who I’ve really been loving. He’s creating these phenomenal landing pages for us that actually convert, sales pages, and now he’s trying to work on doing a lot of stuff. So then you might be wondering why would I, with this designer and access to so many other designers, why would I go to somebody like DesignCrowd? The reason is this. We had this need for a logo for our graduates, something that shows that they were certified bot creators. I’ve got this bot business too. I didn’t want one great designer’s idea of it. I wanted some options.
So what I did was one of our graduates gave me a list of all the certified logos that she liked. I thought, “This is phenomenal. I’m going to go to DesignCrowd, upload this image with all those designs that she likes, because she’s the one who’s going to have to put our certified logo on her site and people like her are going to have to do it. I’ll take all of the ones that she likes, I’ll put it on their site and I’ll tell them that I’m looking for this type of logo, I want these words on it, I want this kind of design.” And then I got I think it was 192 different designs. Let me go in and take a look.
At first, it was really overwhelming. But you know what? What they have on DesignCrowd is an easy way for me to click and say, “No, I don’t like this. I don’t like that,” and keep giving them feedback. The hardest part of this process is giving people feedback because I’m a nice person and I keep going in and saying, “I like this, but I think you need to do this.” I like that, but I think you need to do this.”
Kelly, who gave me her design suggestions, asked for my username and password so she could see how I’m responding to people and she said, “Andrew, be a little more fricking straightforward,” so I was. I went in and she was more straightforward, I was more straightforward and suddenly, all the designs took in my feedback and her feedback, and they all improved. And by the end of this process — I’ve got the number now — 191 people submitted their design, we picked the one that we liked, a badge that I feel proud of and a badge that she and others would feel proud to put on their site, and we paid for just that one.
That’s the beauty of DesignCrowd. You tell them what you’re looking for. You tell them in words or in images that you see that you like online, and then they get it out to their army of designers and they say, “Go do it.” And you, as a client, get to give feedback and you only pay for the one that you like and you can do this for so many different design projects any time that you have one.
I know ebooks are really big on this. I know we used it for the cover art for this podcast. If you’re into this, it is something that has worked so well for the Mixergy community that DesignCrowd keeps buying more ads. Here’s the URL that they created just for us to give you, the Mixergy listener up to $100 off. Go to DesignCrowd.com/mixergy. You’ll see right on there one of the images that I bought from them, and you can see some of the work that they’ve done for other people. I really am so excited to be working with them, and I know that you’re going to get good results from them. It’s DesignCrowd.com/mixergy. Let the crowd help you get your next great design.
All right, you then go to your agency, Jake?
Jake: Yes. The first thing I did was I started a couple of SaaS startups before I even thought of the idea for LaunchPeer, which is where the idea for LaunchPeer was. I tried to build a property management application. That didn’t go so well, mostly because I’m not technical. Back then, I didn’t know the difference between Java and JavaScript and, you know, all these other things. Like HTML, I had no idea what it was. But like any good entrepreneur, I started trying to learn all this stuff. What I started realizing was it is really fricking hard to find one good tech co-founder, but let alone trying to find a good freelancer because if you’re nontechnical, it’s hard to figure out, “Well, what should I look for? What kind of equity should I give away? Should I pay them to do it, or should I not? How much is a good rate?” and all these things. So that kind of fizzled out. Then I tried to start another app and that didn’t go. That fizzled out.
Andrew: Because you weren’t able to find people to develop it for you?
Jake: Right. Because it was just really hard to find . . . and I worked in the agency, so at the agency I worked at, we did software development, we did app development. The problem was that agency, like a lot of others, is set up to work with big clients. We were working with Coca-Cola. We were working with Department of Veteran Affairs. We were working with big brands. The problem was the processes that those brands really like do not work for entrepreneurs. Like, they don’t have up-front pricing or transparent pricing. They don’t have a short sales cycle. They don’t scale up and down based on where you are, whether you’re MVP or whether you’re post-launch. They want to be able to put a team of five developers full time on your project for a few months and then churn something out. Well, five developers, full time for five months is a lot of money. Most early-stage startups can’t afford that.
I remember going to the agency I was working at and saying, “Hey, I want to build this. This is all the requirements.” And I was a requirements analyst and business analyst, so I had it all buttoned up. I knew exactly what I thought I wanted. And they said, “Cool. To build this, it’s going to be $1.2 million,” or something like that. I was like, “Great. There’s no way I can afford that.” So that’s when I started getting the idea that, “Hey, maybe there’s an idea for building an agency that only caters to early-stage startups” and so I started going around the community and doing some validation and talking to friends and going to startup groups and meetups in town and started kind of pitching them on this idea of like, “Oh yeah, I want to build this agency just for startups.”
Everyone really loved the idea. The one question I kept getting was, “Well, startups don’t have any money, so how are you going to make money?” I know we’re going to get to that in a minute, but that’s kind of where the idea for LaunchPeer was born. I started LaunchPeer while I was working at that other agency with permission from the agency. I said, “Hey, I want to start this thing,” and they said, “Yeah, that’s fine. As long as you just focus on startups, go ahead and do it.”
Andrew: Were you focused on startups in the beginning? Because I’m looking at Internet Archives. Actually, I’m bringing it up right now. Internet Archives shows that you weren’t focused on startups in the beginning, that you had more of a generalist at least messaging in the beginning.
Jake: Yeah, and that’s the biggest mistake that we made. So, for about six months, we got a couple projects, and I remember the day that I quit that job. We got one big project and for big it was like $20,000. So I said, “Okay, this is it. This is validation right here.” So me and my wife were going to quit. We had one or two contractors that we were working with at the time, and we were just going to take off. And so we quit, started building this app, started focusing on trying to build that, and then we did what a lot of agencies do, which was begin to focus on sales. And we got to the end of that project and said, “Oh, there’s no more sales in our pipeline.” I thought if we just built something, people would come and start using it, or people would fill out the contact form on our site.
So, instead of taking the attitude of maybe there’s something we’re doing wrong, we took the attitude of maybe startups just don’t have money, so let’s generalize. Let’s do what all the other agencies do and just say, “We build cool stuff for cool people.”
Andrew: I see. First, you started out by going after startups. You got a client, and then when you tried to get other startups and couldn’t you said, “Ah, let’s go broader.” I see. How did you get that first client? Twenty thousand is a good amount.
Jake: Yeah, it is a good amount. It was going to a networking event and finding someone who needed to find a tech co-founder.
Andrew: Which one?
Jake: So they were called Renteater at the time. They were very similar to the startup that I was trying to build before, so it was very easy to build rapport with them, and doing it in person was really easy because I was able to convince them, “Look, we’re a young agency but, you know, this is how we do things a little bit differently,” and that really sold them on the idea. Once we started working with them, everything went great. The problem was it wasn’t the startups that were the problem. It was our sales process and marketing process that was the problem. Just like I’m not a developer, I also wasn’t a marketer or salesperson either. So I had no idea how to go get new clients.
Andrew: But what you were doing was saying, “You know what? I’ll be the in-between because that’s what I do in my day job anyway. I’ll go online, I’ll find the developers for each project, and I’ll keep being the in-between, the guy who manages the developers, brings it back to the client, takes the client’s information and goes back to the developers.” That was the model.
Jake: Right, and so I was like the in-between communication to make sure that they were getting built what actually needed to get built.
Andrew: So then, why did that take up so much of your time that you couldn’t look for other clients? That doesn’t seem like that’s that much. It’s just going back and forth.
Jake: So startups are very . . . they want a lot of attention, especially when they’re early on and they’re still trying to figure out what product they want. So it’s not like when I was working at the other agencies, you know, Coca-Cola and Department of Veteran Affairs would come to us with like a 400-page requirements document. They knew exactly what they wanted, they had all the mock-ups ready, and all they’d do was drop it on the table and say, “All right, just build this.” Like, how long is it going to take? Six months.
Andrew: I see, because there’s so much to figure out.
Jake: Right. And so with startups, it was every day, like, “Hey Jake, what do you think about building this?” Or, “Maybe we should do this feature instead,” or “Maybe we should change the color of this button or move it over to this side,” and all this other stuff, which is fine. The problem is when you start getting invested in the startup, you start wanting to work on it as much as the founders do and you start forgetting that, “Hey, my whole business is centered around making more sales and doing marketing,” which we just stopped doing for a little bit too long.
Andrew: You know what? I’m smiling because your sites have come up on my screen. There it is. I’m just getting all these alerts as I’m pulling up pages about you as you were talking. So one of the first versions of your site says, “LaunchPeer,” in big, clear words and then also, very concrete what you do and who you serve. “Software development and consulting for startups and small business.” This is the beginning.
Jake: Right, the beginning.
Andrew: Let me see what date this is. This is what your site looked like on October 2014. Now skip to October 2015. Here is “The industries we serve. Startups and entrepreneurs, healthcare tech companies, government.” All right, so those are the ones that you service and it actually goes into more detail, like Department of Veterans, DOD, etc. And then, “What we do” goes on for a bit from there and then on and on and on. I don’t know what MOASC web redesign is, but that’s something you guys do.
Jake: Yep.
Andrew: It just goes on and on, I see.
Jake: Yeah. That year, between I think, 2015 was our toughest year by far. 2015 and then halfway into 2016 we just completely lost our way.
Andrew: And you’d given up your job.
Jake: We had given up our job of . . .
Andrew: And it’s you and your wife working on it.
Jake: Yep, and my wife had to go back to work. This was early 2015. She had to go back to work. I was staying at home watching our 3-year-old son at the time, so I was a stay-at-home dad. I remember taking sales calls, because yes, we were getting some sales calls. I remember taking sales calls and having to walk outside and telling my 3-year-old, “Just sit here and watch ‘Sponge Bob.’ I have a sales call, so please don’t come and bug me or say anything.”
Andrew: Yeah, I’m sure that worked.
Jake: Oh yeah, that never worked.
Andrew: Dad told me I should sit here. Of course, I’ll sit here.
Jake: Sometimes it was a cute thing when they’d come on, but sometimes it wasn’t such a cute thing.
Andrew: Yeah, especially if someone’s trying to work with you.
Jake: Yeah. And so we just completely lost our way for about a year and a half. When things started changing is when we got back to what we . . .
Andrew: Before we get into things changing, I want to spend . . . Listen, I’ve got to have some heart in this interview. But I want to touch back on where you were, which is suddenly you can’t pay the bills.
Jake: Right.
Andrew: The heating bill wasn’t getting paid, and as a result, what happened with your son?
Jake: Yeah, so you know, we got to the point where we missed mortgage payments. Actually, we missed two or three, so my credit is not that great.
Andrew: To this day, if I pull a credit report on you it’s not good?
Jake: Oh yeah. It’ll be like the low 600s or high 500s probably, so pretty bad. So we missed mortgage payments. It was a lot of robbing Peter to pay Paul, like, “Well, I won’t pay the mortgage payment, but I’ll pay all the electric bill payments and stuff.” Then I’ll switch over and, “Oh, there’s this client payment that might come in, in a couple weeks, and I can pay our heating bill.” It was just going back and forth.
I remember there were three times where we missed our electric bill payment, which meant our air got shut off in Middle Tennessee in the summer, and it gets in the upper 90s and probably low 100s. That is really tough when you have a 5-year-old and a 3-year-old. I remember coming home one day and the air conditioner had gotten shut off, the electric was shut off, and it was a weekend, so it was almost impossible to get a hold of someone to pay the bill. We didn’t really have the money in the account to pay it, and so I remember my son started crying and saying, “Oh, are we going to be poor?” And I thought, “That’s it. I can’t do this anymore, especially since I was making almost six figures at the job I was at before and I was only 26 years old.
Andrew: Why did you do that? You’re a guy who said at 16, “I’m never going to let my life be like this,” and here you were spiraling down, maybe not to living in your car, but not to living the life that you aspired to. Ten years after you’d set out on this path, why didn’t you say, “Entrepreneurship is not for me. I had a good six-figure job. Let’s go get that job and make sure that I’m never going to do to my kids what my dad did to me and my sister?”
Jake: I mean, I had the bug. I had the entrepreneur bug.
Andrew: The bug.
Jake: Yeah, the bug. I mean, I think a lot of entrepreneurs get it, where they just start convincing themselves that, “I’m going to make this work.” But actually, I did give up. I remember it was early 2016. I think it was like March or April. I gave up. I started applying to other jobs. I started looking for work, and I got a couple callbacks. At the same time that I had given up though, I was so desperate I decided, “You know what? If I’m going to fail, I’m going to fail hard. I’m going to go back and try to start the business that I wanted to start. Like, let’s go back to what we originally said we were going to do and build an agency just for startups.”
So, literally, with one tab open for Indeed.com and another tab open for our website, I was editing our website copy and messaging while I was sending applications out for jobs and I thought, “Well, one of them is going to break, right? I’m either going to get a job or somehow, some way, I’m going to start getting customers,” because we pivoted back to what we were actually supposed to be in the first place.
Andrew: Going right back to the startups that you wanted to get.
Jake: Yeah. And it’s funny . . . if you go back to the web archives so you can see it, like number one, we only focused on startups, and then for a year our website probably changed 30 times and we focused on everybody. And then I think probably in April or May of 2016, we rebranded, so we didn’t have the clipart logo that we had before. We got a new logo, a new color scheme, just kept the name, but really focused on startups and that’s when everything really started to change for us was at that point. So, luckily I didn’t get a job before we got some more customers.
Andrew: So April 2016. I’m going to pull that up and see if I can find what the site looks like. Archives.org is really useful for things like this. It’s just a little slow for fast research. Okay, now suddenly I see like Mission Control in Houston for the Space Shuttle with the fact-drop images. And the headline is just “Startup on Demand: Developers, designers and growth hackers on tap to build and grow your startup.” That is the focus. “Curated services, money back guarantee, only the top five percent, up-front pricing, pre-packaged service, handcrafted experts.” This is everything that you are doing today and it’s a really simple, easy-to-understand, focused message. That’s the difference.
Jake: Huge difference. I mean, that made all the difference for us. I remember when we made that pivot and went back to what we wanted to be, like calls started coming in. It’s not like we were doing any like big marketing spend, because I literally had no money. We had gone from having hardly anything in savings when we started the business. I think we had maybe $15,000 or $20,000 in savings, and it wasn’t really even savings. It was just sitting there and we spent all of it, went into another $30,000 in debt from credit cards and a bunch of stuff, so we had no more money to spend. So it’s not like we were spending a bunch on Facebook ads and all that stuff. It was just a messaging change.
Andrew: Well, how did people know about you? How did they even come to see this really nicely designed site?
Jake: So, at that time, I was doing things that just wouldn’t scale today. I started going to a ton of networking events, started going to meetups, started cold-calling people, cold-emailing people, like going on AngelList and finding startups that had just recently listed their profile and just started reaching out and saying, “Look, this is the service we have. This is what we do. Do you need anything?” And that’s when we started picking up steam. That wouldn’t have worked six months earlier. It wouldn’t have worked if they went to our website and saw that we just do everything for everyone. That message doesn’t speak to a good customer.
Andrew: Be honest with me. How did you get these people? On your site, you have a talent spotlight. It looks constantly like you had so many people on staff, even though you’re telling me you had nothing but a phone and not even heating or air conditioning. How did you get Lucas J., funding expert, over $5 million raised? He is one of the talented people we’re working with at the time at LaunchPeer. Sarah H., marketing expert. Michael G., IOS developer. How did you get all these people? Be open.
Jake: So I went to my network and started telling people, basically begging people, like, “Hey, I’m going to bring you work. You want to work with startups.” And I already knew these people wanted to work with startups based on their profiles, their LinkedIn profile, and I started reaching out and saying, “Look, I’m redoing my whole business. I’m shifting everything.” I was basically starting from scratch and just saying, “Look, I made a bunch of mistakes the last year and a half, but this is what LaunchPeer is and this is what we want it to be. I want you to come on board. You don’t have to have any buy-in. All I want to do is put your face on our website and I want you to be available if we do sign any startups in order for us to have them work with you. And you’ll get paid for it. It’s not like we won’t pay you, but I just want to make sure that our network is open and available for any startups that could hopefully come to LaunchPeer and want to build something.” And that’s how it has to happen.
Andrew: Okay. So they were just on the site? If you got a client, they would work with the client if they were a good fit. Got it. Okay.
Jake: Right. Yep.
Andrew: Yeah, I mean, even like suddenly the lead magnet on the site changes and is clear. It’s 230 awesome resources for startups. Press one button to download it and before you download we ask for your email address.
Jake: I didn’t even know what a lead magnet was before that.
Andrew: And you know what? Here’s how new you were to all this. It was like the branding of the tool that you were using, which is LeadIn, is still on the button.
Jake: Yeah, it is.
Andrew: You’re still using a lot of stuff. You and I talked before the interview started about how you’re using ManyChat for a chatbot. I guess if you’re going to do growth hacking or growth for your clients, you should be doing it for yourself. You also used Proof.
Jake: Yep. We have Proof on our site.
Andrew: How is Proof working for you?
Jake: So Proof works great for us. We have a lot of landing pages now, now that I actually know what a lead magnet is. We have a lot of lead magnets that we have. We use Viper.io for our giveaways. We have tens of thousands of people on our email list now. I mean, ManyChat has been great for us. We have a few hundred subscribers to ManyChat. I mean, it’s really been like a complete 180 from what it was before to what it is now, and I think one thing that founders need to do when they’re early on is you’re going to make a lot of mistakes the first year and a half, the first year, the first six months, however it is, especially if you’re a bootstraps founder who doesn’t have access to a VC who’s worked with dozens of startups before and just kind of knows the ropes. If you’re bootstrapping, you’re going to have to figure a lot of this stuff out on the way to hopeful success, or if you fail, going on to the next thing and building something else that’s successful.
We learned a lot of lessons on the way, especially me and having a small team and knowing that if I don’t make money, my family’s not going to be able to pay the bills. Like that is such a powerful thing for an entrepreneur to know, and it forces you to break yourself out of, “Well, I’m just going to do it because I think it’s going to work.” When we started being successful is when we got away from that and started thinking, “I need to switch things up and start doing what I think needs to be done because I want to make our customers successful.” Once we started thinking that way, a lot of things started changing for us.
Andrew: You know what? Part of this is what scared me off of doing an interview with you. Like you have really dialed-in landing pages. The landing pages are all offering books and guides for startups. I said, “This is a guy who’s really good at marketing. There’s no way he’s running a real agency. There’s no way this works. So what he’s probably doing is talking to himself, trying to figure what it is that he needs, writing it down, and offering it to others as lead magnets.” But no, I see the model now.
All right, I want to figure out how you’re making it work for entrepreneurs who don’t have much money. That includes the system. Now I understand the focus. Talk about the system, how it looks to the client and also what you do in the backend that works, and it also looks like you have a new book, which I see on your Twitter profile . . . another reason why I was afraid to do an interview with you. Even your Twitter profile is dialed in.
Jake: Yeah.
Andrew: The one mistake you have, and I don’t want to embarrass you, but since I’m like complimenting you a lot, I think it will be fun. Your personal website expired on Squarespace.
Jake: No! I’ll fix that.
Andrew: Go get it before somebody else gets it.
Jake: Yeah, I know, seriously. The domain name is still good. I had to pay a lot of money for that domain name.
Andrew: What did you have to pay for it?
Jake: I had to pay $3,500 for it. You know what the funny thing is? Before I started the business, it was $10 and I thought, “I don’t need to buy my personal website. Like I’m not going to use it. I’ll just focus on LaunchPeer.” And then two years go by and then I say, “You know what? I should buy my personal website.” And then I go and look at it, and it had gotten bought by a huge Domains.com and I had to basically like pay $3,500 for it. I’m just leasing it, so I have a payment plan to buy my domain name.
Andrew: You’re paying to own it?
Jake: Right.
Andrew: It’s like on layaway.
Jake: Yeah, exactly. It’s just layaway.
Andrew: You don’t have $3,500 bucks to just give it to the and get rid of them?
Jake: I probably should do that. I think I could offer them a low amount and do it, but when I had gotten the domain name, it was like six months ago or something and, you know, I’m still pretty cheap and I was like, “Well, should I drop $3,500 to buy it, or should I just pay like $200 for the next couple years and just have it available?” So that’s kind of what I did.
Andrew: You got it and then here I am telling you the site is down.
Jake: I know.
Andrew: Oh yeah, who’s Brad Hare?
Jake: I don’t know.
Andrew: That’s who you have as your administrative contact, or maybe that’s who they, the owners of the domain have listed as the administrative contact. [inaudible 00:39:50] as we’re doing these interviews. By the way, speaking of Squarespace, one quick tip that I learned about Squarespace, if you’re ever on a Squarespace site, hit escape. In fact, if you’re ever curious if something’s in a Squarespace site, hit escape because doesn’t escape take you directly to the . . .
Jake: Oh, to Squarespace.com?
Andrew: Any domain that’s hosted on Squarespace, if you hit escape, you know it’s hosted on Squarespace because that’s what takes you into the login screen or whatever or the dashboard.
Jake: Ah. Got it. That’s a good trick. I didn’t know that either.
Andrew: As a customer of theirs, now you’ll be able to use that every time you want to log in to your own site.
Jake: Yeah, we manage a lot of sites on Squarespace, so we’re big fans.
Andrew: You do, huh? Beautiful there. I just taught you something you’ll be able to use. I think it should still work. Yeah. Anyway, it should work. There we go. No, I can’t test it. I hate when I can’t test it. Guys, somebody please test it and confirm it.
First, I’ve got to go on and talk about my sponsor, a company called Toptal. Get this. Jake, you might be going through this, but you might be at the point where you’re too cheap to want to do it. Here’s my problem. Years ago, I had a company which did online greeting cards, did a lot of profits, a lot of revenues, and then I had a down year. And man, because I had a down year, I was bummed about myself. We lost money. Only losers lose money. I had this height. How did I suddenly lose money? And it wasn’t like the end of the world, but I lost money. In my head, I thought, “I’m a failure. I have to find a way to get myself out of this.”
But I had a great CFO, Chief Financial Officer, a guy who would go through my finances, and he didn’t have this self-criticism over the books. He just needed to look at the books. So he looked at the books and he said, “You know, Andrew, we are having an off year here. I can see the problem. I know that we’re fixing it for next year, but you know you can actually get back some of the money you paid in taxes last year?” I said, “What?” He goes, “Well, here’s how it works,” and he started telling me how it works. I go, “I’m so busy thinking that I’ve failed here, and this is a guy who just is thinking.” So I followed his instructions. I did exactly what I supposed to. I took it to my accountant. I said, “What the hell did you guys not . . . Why didn’t you guys know about this?” They said, “Well, we didn’t think about it. We weren’t looking at it I guess that carefully. It’s so good that you got this guy Richard Urb on your team.” Great. It is so good and sure enough, we got some money back.
There were lots of situations like that where I was thinking like the business person. “How do I bring in more money?” I was thinking with my own world view, with my own personal experiences, and the CFO was thinking broader. “Here’s my experience from all these other companies. Here’s what I know and here’s what I can bring in because I, unlike Andrew, the founder, am not in my own head about success and failure, what does this mean and what’s the day-to-day activities?”
So that’s years ago. What does that have to do with Mixergy and this other company, Bot Academy, that we’re running? Here’s the difference. Now, I’m running the whole thing by myself. It’s me and the bookkeepers who are looking at the numbers. Sometimes I’m just repeating the same stuff over and over without recognizing that I’m doing it. Like I had these assumptions. Well, I’ll talk about them in a second.
Anyway, I went to Toptal. I said, “Hey, you guys are Toptal, you bought a company that does nothing but hire out finance people. I want to work with one of your people.” So they gave me three candidates. I talked to all three. There was one guy who had like five businesses that he ran and he could help me in certain ways, another woman, fresh out of Stanford and fantastic, but not perfect, and then a final person who I hired, a guy who was a McKinsey person, who ran companies, who had all this experience. I talked to him. I showed him my books on the screen. I gave him limited access after the call, and then I hired him because I loved it and he was immediately was giving me feedback and immediately was like taking control of my mouse and keyboard, using our screen share.
Do you recognize any of this, by the way, Jake? Does this resonate as an entrepreneur?
Jake: Oh yeah, we should have hired an accountant way before we actually did last year.
Andrew: I’ve had an accountant. I’ve had him for years. But even the accountants bring in the same thing. What the accountant has is an interest in covering your ass and their ass, but they’re not looking for new ways for you to make money. Nobody says, “This accountant helped me restructure the way that I’m charging my credit cards.”
Anyway, he looked at my whole thing. We were supposed to start Monday, October 23. The weekend before I give him all this access, he’s already given me a document, a spreadsheet showing me why we should be an S-Corp and not an LLC. Why don’t we think about it? He’s giving me numbers. He hasn’t even been hired. He’s not getting paid. He can’t help himself. He gives me a worksheet with his main objective, his secondary objective, and a detailed list of how he’s going to achieve those objectives. Who the hell is this guy?
We get on the phone on Monday, we talk a little bit further and he’s saying, “You know what, Andrew? With these refunds, you’re paying twice possibly.” I go, “I don’t understand how that could be. I didn’t even think that refunds were an issue.” Anyway, I had all these assumptions about refunds. Like if I’m refunding someone’s money, the credit card company isn’t charging me for it. He said, “Let’s check that assumption.” I gave him some research and I gave him some reports that he could go and research that with, and he just went up and down my spreadsheet, giving me feedback, giving me direction. I was like firing away emails of my accounts. “What about this? Should we be doing that?” And here’s what he said. Boom. And then I said, “You know what? I shouldn’t be in this. Can I set you up with a call with our bookkeeper?” Great. He’s going to get on a call with the bookkeeper.
Anyway, here’s the thing that I’m going to come back to here. Toptal has a lot of finance people. I never knew how to use them until now. Now I’m realizing it’s not just if you want help pricing your product. It’s not just if you’re creating spreadsheets for when you’re trying to raise money. It’s when you just need somebody with finance experience to come and give you a fresh perspective on your business. I hired someone from Toptal. What I love about them is the top people don’t need to even get paid to do a good job. They can’t help it. He could not help but create these spreadsheets and Google Docs to send me before we started. That’s what you want, someone who’s so good that they can’t help being great for you.
If you want to hire someone from finance and so many other areas of business from Toptal, the best of the best available for you to hire the way that I did, go to Toptal.com/mixergy. I’m not just doing this as a sponsorship. I’m telling you this as a resource for an entrepreneur, one entrepreneur to another. Go check them out at Toptal.com/mixergy. And of course, you’re going to get this no-risk trial period, which I’m still going through, so there’s nothing to lose. Go check them out. Jake, sometimes I go on these tears when I’m really excited or pumped about something.
Jake: Yeah. That’s cool, man. I like it. And yeah, if you don’t have a CFO or outsourced CFO, you need to go get one. Like, seriously, we didn’t get an accountant or a CFO until I think it was about a month after the pivot, and they looked back at our previous stuff and it was just like, “This is a mess.”
Andrew: What did they discover?
Jake: So they discovered, just like you, we should have been an S-Corp and not an LLC.
Andrew: Who knew?
Jake: I had no idea. Everybody when you look online they say like, “Oh, just register as an LLC. Don’t worry about it.” And then when you start making even a little bit of cash, it’s like, “Oh, you’re going to get taxed at like 40% or 50%.” My tax bill last year was ridiculous, and this year it’s not going to be as bad. Like there are things they’re going to find that you never would even think about tracking, especially when it comes to . . . when you’re an early stage company, and I’m sure you’ve done this too . . . making sure you’re separating personal books from business books and separating owner expenses from business expenses and things like that. We just weren’t doing that as well as we should.
Andrew: You were doing the books yourself.
Jake: Right. We were doing the books ourselves. I thought, “Well, it doesn’t matter. I’ll just put that down. Like I’m going to Walmart to buy stuff for the office and stuff for home, so who cares?” No, it really matters to keep track of that stuff because, at the end of the year, all that stuff you’ll be able to write off and every little thing adds up.
Andrew: Yeah, and you know what? If you’re just starting, a bookkeeper is not that expensive and can actually help you. If you have someone with a little tax knowledge, they can actually save you money and you’re right, as the business evolves, the corporate structure could make sense to change. I actually asked them, “Why were we even set up this way in this kind of LLC?” And he said, “Truthfully when you got started, you probably weren’t . . .” and it’s true, I wasn’t trying to make money with Mixergy, so it would have made sense to set it up the way you were. As the business grows, as revenue comes in, things change and it’s worth looking over. That’s really helpful. How did you find your bookkeeper?
Jake: In Charleston here there’s an accounting service and they work with all the big tech companies in town and the small tech companies too. I just asked around for some recommendations and saw their model. It’s funny, their model is almost exactly like what LaunchPeer’s model is. They just do it for accounting, so it was like a perfect match. It’s a husband and wife team that founded the company together, so it was a great match for us. Yeah, it was a good fit.
Andrew: I’m with you, by the way. I think that an individual bookkeeper is a waste. I like these bigger companies so that you have one point person, but you have backups with lots of other people there.
Jake: Right. There’s a lot of times our accountant’s out of town or something and I just have an emergency, like, “Oh, we just hired a new employee and I need to get them onboard into our system.” Oh, well if my accountant was out of town for a week, that wouldn’t happen in the time that I needed it to and I’m a very not last-minute person, but, you know, I want somebody there for me when I need them there for me, and so, with a company like them, and I’m sure with Toptal and your finance guy, you have people like backups that you can go to and get help from.
Andrew: Well, Toptal doesn’t do the bookkeeping for me. I also use a bookkeeper separate but you’re right, for the same reason. I think a lot of entrepreneurs think, “How do I get a bookkeeper?” And at some point internally, when you want to hire someone, it makes sense to have a bookkeeper, but until you’re hiring your own person, I think it makes so much more sense to do a bookkeeping service. Like you said, you have backups, you have last-minute things, and they have multiple people to be there for you. I also think sometimes as entrepreneurs we are hesitant to send something to people and if they’re individual like mom and pop, you feel bad. “Why am I sending it to them now? I need it to be turned around by tomorrow.” I don’t want to feel that. I want to feel like there’s a service. “It’s on you guys.” I’m hiring the team. If it’s not done, I should be upset.
Jake: Right, exactly. Yeah, that’s why we picked that company too.
Andrew: Okay, so you now have your model. It’s all set up, you’re ready to roll with your business, and now we have to think about how to do this right because if you don’t do it right, you’re going to lose money on all these startups, who are, as you say, demanding and they should be demanding.
Jake: Right.
Andrew: So what’s the structure that you set up in the beginning, and how did that structure evolve to allow you to service all these people in a systemized way?
Jake: So, when we made that pivot, we were still four or five actual people working on the business, me and my wife full time, and then we had a couple people who were sort of drifting between half and full time based on how much money we had that month. We were floating somewhere between $5,000 and $15,000 a month in revenue, only because it depended on projects. When you’re an agency, you’re very project dependent, so one month you have a project and the next month you don’t have a new project and you just go back and forth.
When we made that pivot, like you could see our books, like our growth curve and we have an article on Media about this. We went from maybe $5,000 to $10,000 in revenue to . . . I think we ended 2016 with about $80,000 in October, $100,000 in November, and like $120,000 in December and that just made our whole year. And we ended the year of 2016 with like $480,000 in revenue, so if add those three months up, there wasn’t a whole lot of revenue before that and the year before . . . like I look at the yearly breakdowns when I want to feel good about myself and the business. In 2015, we made like $15,000. In 2016, we made $480,000, and this year we’re on track to do about $1.5 million. So I think the thing that we put in place was . . . the biggest differentiator was we got back to who our customer was, and so we started speaking directly to them, which meant I knew what podcast to go on. I knew to go on Mixergy. I knew to talk to guys like John Lee Dumas, and I knew what articles to write. I knew what lead magnets to write.
If you go back to the website example, what lead magnet am I going to use to capture government contractors, startups, and healthcare IT? There’s no lead magnet that’s going to capture all three of those people, but if we’re working with early-stage entrepreneurs, I know that every one of them wants a list of 240 amazing tools to build their startup, right? Or today we have a bunch of other lead magnets on our site and so really getting back to that messaging really helped.
I think the other thing that helped was the up-front pricing. When I go buy a car, I think the thing that people hate the most about it is that sure, there’s a price tag on the car, but you know you’re going to have to deal with some sales guy that’s going to be like, “Oh, you know, but you want this option and that option. It’s going to cost more or less,” or all this stuff. When you’re an early-stage founder, the last thing you want to do is schedule a call or meeting with an agency that’s going to end up telling you while you’re sitting there, “Oh, we’re just out of your price range. You can’t afford us.” We didn’t want to do that to entrepreneurs. We’d much rather have our pricing on our website.
The only people at that point who would schedule a call with us or a meeting with us are people who we knew could afford it, which saved us a lot of time on people who would want to call us and say, “Oh, can you work for equity?” which we still get sometimes, but it doesn’t happen as often. So when we put our pricing on our website, that’s really what changed a lot of things. And since then, we put a lot of processes and stuff in place with the transparent pricing where we don’t bill clients on deposits. So we don’t say, “Oh, hey Andrew. Do you want to buy a Honda Odyssey? You’re going to have to pay $15,000 today and $15,000 when you’re done with the car.” It doesn’t work that way. You pay like a really small deposit, and then you pay payments over the course of a few years.
For us, what we do is when a client comes to us, we say, “Okay, your project is going to take 300 hours. What’s your burn rate?” “Okay, I can spend a couple thousand dollars a week,” or “I can spend $1,000 a week,” or “$200 a week,” “Okay, based on that, we’re going to bill you every two weeks for the hours we worked the previous two weeks, and we’re just going to keep working every two weeks at that burn rate until we’re done with your project.” And so we really let our clients kind of spread out the cost of building their startup over time instead of forcing them to make a decision today.
And then with that our clients can fire us every two weeks, which I think is probably the thing I love about what we do. It’s that my team has to prove to our clients that we’re good at what we do every two weeks, because since they’re paying their bill every two weeks, if they’re not happy for any reason, they just say, “You know what guys? Thanks for the two weeks of work. Thanks for the 40 hours you worked on my stuff, but I don’t like the quality of the work” or “I don’t like the lack of transparency” or whatever it ends up being, and it gives them the freedom to go somewhere else as opposed to if we charged a deposit, they’d kind of be locked in on whatever the project was that they were having us work on.
Andrew: Okay. Let me see if I understand the onboarding process. If a brand new person comes to your site, chances are they’re not going to be ready to go and hire you right away.
Jake: Right.
Andrew: But they will give you their email address in one of many different ways, maybe to get a lead magnet, maybe to just stay in touch, maybe to find out more, right? Then they get emails, which you guys drip out, as I understand it, using HubSpot?
Jake: Yep.
Andrew: He has it all HubSpotted out is what I see.
Jake: All HubSpotted out.
Andrew: They manage your website, your email, and your calendar for booking calls with someone.
Jake: Yeah.
Andrew: Okay. They come in, they get these ongoing messages, they finally are ready to buy. They go to your website, LaunchPeer.com/development. Your next step with them is to go to the bottom and book a call.
Jake: Right.
Andrew: Who is it that you would be booking a call with?
Jake: John.
Andrew: What does John do?
Jake: John’s our business development guy, so he handles all the initial phone screenings with different clients. So he’s basically, I guess you’d call it qualifying, but really what he’s doing is taking 30 minutes to learn what they need done and whether we can help them do that. Most of the time it’s just really differentiating like, “Do you want us to build something for equity, or do you want to actually pay us and if you want to pay us, what is it that you’re trying to get built?” That way, when we have the second call with them, we can decide, “Okay, do we need to have an iOS developer on the phone? Do we need to have a web developer on the phone? Do we need to have our marketing team on the call?” So he’s kind of doing that initial contact with them to find that stuff out.
Now he’s an entrepreneur too. A lot of people on our team are entrepreneurs. They’ve all built startups before or are in the process of building their own startup, which I think also differentiates us a little bit. I hire people that are entrepreneurs first and their skill sets are kind of secondary.
Andrew: Okay. Why entrepreneurs?
Jake: Because when we’re working with bootstrap founders — and I learned this from the agency I was at before — if you’re not an entrepreneur and you don’t have an entrepreneur mindset, if the client says, “Hey I want to build X, Y and Z,” if you’re not an entrepreneur your thought process when you work in an agency is great, like, “We can charge 300 hours of work for that. Let’s do it.” Well, if you’re an entrepreneur, you’re thinking, “I want this entrepreneur to keep as much money as they can. So why don’t we use this third-party tool where we can only charge 50 hours to implement and we won’t be . . .”
Andrew: What’s an example of a third-party tool that you guys can use to avoid development?
Jake: So we’ve had clients come to us who wanted us to build like a custom . . . this is one good example who wanted us to build a widget on their website that when they click on it, it captures an email, captures a name, captures the phone number and then sends a PDF document to the customer and then also integrates with their CRM, which I think they were using Zoho at the time. We gave them an estimate, and then I realized after we gave the estimate and were about to send it out — I think it was for $10,000 or $15,000 or something — I said, “Hey Rodney.” And he’s in town. Treelee [SP] is his startup. I said, “You know, you can use Leadpages.” You could sign up for I think it was $97 a month at that point and they have Leadbox, which is their popup tool where you can place a button.
Andrew: You guys didn’t even set it up for them. You just said, “Look, I’m an entrepreneur, or I think like an entrepreneur.” That’s what John would have said. “I know this other tool. Just go use it. As an entrepreneur to another, I don’t want to charge you for this.”
Jake: Exactly, so we told him about that tool. He tweeted about us relentlessly about how we’d saved him like tens of thousands because he had gotten quotes from other shops too, but nobody told him that there was a third-party tool out there. He ended up coming back about a month later and had us build his website and do some designs because we saved him what he thought he was going to spend. And when you do that for someone, I think it builds a lot of trust and builds a relationship with them where sure, maybe he wouldn’t have worked with us, but he would have told his friends to work with us because he knew that he could trust our relationship with them and help them save money, however we did that.
Andrew: All right. So I see the onboarding. The marketing part doesn’t blow my mind. Is there something that I’m missing that would blow my mind?
Jake: So the difference between our marketing and other place’s marketing is that we focus on the idea of a sales funnel and you kind of touched on this a little earlier and ManyChat is a good way to do this. A lot of startup founders aren’t really educated on like what a sales funnel is, like, how do you build a pipeline to get new customers? Most of them make the mistake that I did when I was early on, which is, “Let me build a website, put a contact form on here, put a Register Now button on here and just spend a ton of money on Facebook or Google ads to get traffic there,” and then that’s kind of it. That’s where they stop.
For us, what we do is we build the lead magnet, we integrate the popups to their site, we figure out, based on what kind of company it is whether it’s a mobile application or it’s a B2B web application or it’s a healthcare application, where are those customers and what’s going to appeal to them? Because when I look at marketing, I look at it like a bell curve. You have a bunch of people on the right-hand side who are going to buy right now. You found them at the right time, they have their credit card sitting at the computer, and they’re ready to go. You have people all the way on the left-hand side that are never going to buy. They’re just not your ideal customer. They just stumbled across you because their friend liked your page on Facebook or something.
There’s a bunch of people in the middle who are just question marks, like “Eh, I don’t know if I’m ready to buy. My credit card’s not next to me. I’m using another solution right now. I have a contract that doesn’t end for another six months,” or whatever. Our job as a marketing agency is to do whatever it takes to get the people in the middle to convert into actual customers, and so that’s kind of what we do. We build that whole system for startups that we work with.
Andrew: Tell me just one thing that makes the marketing automation more powerful than other people’s marketing. I use marketing automation. We all do. What’s one thing that you’ve learned that we can all take and build into our businesses?
Jake: So I think the one thing that I’ve learned is messaging is so much more important than people give it credit for. When you’re looking at who your ideal customer is, a lot of startup founders make the mistake of, “Well, I don’t want to be too specific with my messaging because then I’m going to alienate certain types of customers” and so what we do when we go in and work with a new client is “No, we should be alienating people.” Like there should be some people who go to your website and say, “This isn’t for me. I don’t need this. I’ll never need this. I’m actually a little offended that they’re not trying to target somebody like me.” So we want to make sure that we alienate those people to get the ideal customer to actually click on it, which is what our website does.
If you look at LaunchPeer’s website, we say that we work with startups. There are going to be people who need development we could work with who work at companies like Verizon, which is a client of ours. We’ve worked with Verizon and some restaurant sites in town like Edmund’s Oast, which is a really popular in Charleston, which we’ve worked with. But some of the people at those companies are going to go to LaunchPeer and say, “Oh, I’m not going to fill out the contact form because they don’t work with people like me,” and that’s totally fine. That’s not a problem. That’s actually a good thing.
Andrew: Okay. All right. I see it. It’s lots of different ways in, lots of different nurturing. Actually, it’s not lots of different nurturing. It’s one or two nurturing sequences of emails, right?
Jake: Right. So we usually do two sequences of nurturing emails, and we also have different ways to nurture too. We believe there should be a lot of different touches. I think there was some study done somewhere — I don’t know if it was true or not — where it takes like an average of eight touches with someone to actually get them to become a customer. So you can send some emails out but they’re not all going to get read. But at the same time, you can always nurture them with retargeting Facebook ads or retargeted Google ads, which we do too. Andrew, if you’ve been to our website, you’re probably going to get retargeted mail for a long time.
Andrew: I have ad block on. I don’t see junk mail.
Jake: Oh, you’re good then.
Andrew: Let me go to Facebook. Okay, so what you’re saying is it’s not just the email that I get when I sign up. It’s nurturing via Facebook, nurturing online via Google. You also have something called The Academy, so I might sign up to learn from you guys and you guys use Teachable. It’s free?
Jake: Yeah, Teachable [inaudible 01:02:10].
Andrew: I might sign up and learn for free from you guys. If I gave you my email address, you’re using that also for retargeting. Okay, so I see now the marketing automation. Talk to me about the business part of it because once you get me as a client, unless you’ve really systemized the way that you service me, it’s going to cost you money, so what do you do? Blow my mind with the process.
Jake: So our process, what we do, when we get a new client working with us, is you’re automatically integrated into your own private Slack channel. So, in that Slack channel, you’re with our entire team. So let’s say Mixergy signed on as a client. It would have a Mixergy Slack channel, and our project managers would be in there, our developers would be in there, our designers would be in there, and the communication is instant, which lowers our overhead cost. So instead of our project managers only being able to manage two or three projects at a time, which is what usually happens at other agencies, our project managers are able to manage 10 or 12 projects at a time because we really encourage communication between the developers and the clients.
Andrew: Maybe we should go back a step. What about the scope? What I found is that if you’re really clear about what you’re going to get done, it makes it easier for you to do it at the right price. So how do you narrow down the scope with people?
Jake: So we’ve accepted the fact that most clients we work with aren’t going to really know what the scope is. So what we do when we first start working with them is we identify a very high-level scope and say, “Okay, you want a mobile application that’s going to do X, Y, and Z.” Very, very high-level. Once we start working with them, every two weeks we’re not just building a client. We’re sitting down with them on a Monday and saying, “Look, these are all the features that you want to get built. We’re going to build features 1, 2, and 3. We’re going to finish them during the two-week period, sit down with you at the end of two weeks and demo them to you.” Because a client really can’t understand what they want until they start seeing something getting built, so our entire process is built on that transparency. So, from Day 1, we have the applications live so our clients can actually go and see it, instead of us saying, “All right, Andrew, we’ll be back in six weeks and we’ll show you whatever we’ve built.”
Andrew: So you take everything that they’re looking to do and you come up with one two-week project that you could accomplish, you go out and you do it. Now, when you write this all down, their list of the ideal set of features, where does that go?
Jake: So we use JIRA or Atlassian or whatever and we integrate all of that stuff in there.
Andrew: That’s a project management software that developers love.
Jake: Yeah, developers love it. We just moved to it. We used to use Teamwork.com, actually but it didn’t have all the reporting capabilities we needed. So we invite our clients into there too, so they can see every minute of every hour of who’s working on their project, what they’re working on, and what status it’s in.
Andrew: So [inaudible 01:04:51] the full scope list?
Jake: Everything, every instrument.
Andrew: And then you as a team will help . . . or someone on your team . . . Who on your team will work with that client to come up with the first two-week sprint?
Jake: So our project manager and our lead developer on that project will work with the client.
Andrew: Do they get on a call with them every week?
Jake: Every week. Every week, they get on a call with us.
Andrew: A specific time, every week, you get on a call, and you’re very clear. “Over this next two weeks, we’re going to achieve . . .” It’s a sprint, right? You guys use Scrum?
Jake: Yep, exactly.
Andrew: Okay. So every two weeks you know what you guys are going to get done, it goes into your project management software, where the client can watch what happens around it, and then your development team . . . Who’s on the development team? Is it local people or is it remote people or is it contractors?
Jake: So it’s all local people. We’re headquartered in Charleston, South Carolina. We do have a couple remote employees, like one in Georgia, one in Colorado, but everyone’s here stateside. What we do is, you know, everyone being in the office but all of our clients are disbursed all over the country. We have clients in Alabama, California, New York, and Seattle, and so we really have a big mixture of what type of clients we have, which forces us to act like a remote team, which is why we use Slack. We don’t just use Slack for communications. We integrate JIRA with Slack, we integrate Trello with Slack, and we integrate our design tool with Slack. Basically, any time a developer changes a line of code, a project manager updates a task . . .
Andrew: It goes into the Slack channel that your client has?
Jake: Yep, exactly.
Andrew: Why do you use Trello if you also use . . .
Jake: So we use Trello mostly for the marketing task management, because JIRA is great for development task management, but not so great for like marketing task management.
Andrew: Okay. I see. So now the team knows what they need to get done. The client knows how many hours it’s expected to take and how much the client’s going to pay per hour.
Jake: Exactly and they know what is being charged. Because when we say a task is going to take 10 hours, they can see the progress of our time tracking towards that task during the two weeks, so if we track 7 hours, 42 minutes and 30 seconds, they’re only going to get billed for 7 hours, 42 minutes and 30 seconds.
Andrew: What happens if it takes longer than you guys expect?
Jake: If it takes 12 hours, 13 minutes and 22 seconds, they get charged for 13 hours, 14 or . . .
Andrew: I see, so you’re not telling them “Here’s exactly how many hours it’s going to take us over the next two weeks to hit this milestone.” It’s more like “We expect it’s going to take this many hours. You can watch us and if it takes a little bit longer, you have to pay more. If it takes a little bit less, you’d have to pay less.” I see. Okay.
All right. For the growth stuff, it all happens in Trello. So if I hire you guys to grow my email list, what happens in your Trello?
Jake: So our onboarding process is very similar for all of our clients. We get access to your email marketing software. We get access to your . . . If you have any landing-page software already, we use that. If not, we use Clickfunnels or some other landing-page software like Leadpages. When we start with a client, our biggest thing is a goal, so I’ll give you an example. There’s a brand out in California called Four Athletics. They do crowdfunded athletic apparel.
They came to us and said, “Guys, we’re spending $5,000 a month on Facebook ads, and our customer acquisition cost is hovering around $40 to $45,” which is a lot, but their products are a little on the higher side, about $60 to $70 per product. Their whole goal was, “We want to lower the customer acquisition cost down to mid $20s.” And so when I worked with them, our marketing team said, “Look, I don’t care what we do. I don’t care if we focus mostly on Facebook ads or Google ads or if we focus on one lead magnet or five lead magnets. At the end of the day, I want to see measurable decreases in customer acquisition costs.” So, when we work with clients on the marketing side, it’s less about “Oh, what’s the specific scope? Like, how many posts are you going to have on Facebook this week or how many tweets are you going to tweet?”
Andrew: So what’s your system then for creating the . . . I’m sorry. It’s not all that. You were going to say what it is instead.
Jake: Oh yeah. So what we do instead is we take measurable steps to achieve that goal. So, for that client, that meant focusing mostly on the Facebook ads, because that’s what was driving the most traffic, that’s where they wanted to lower the customer acquisition costs and they were spending the most money. So during the first month of working with them — and we wrote a case study about this — they went from $5,000 in ad spend to $4,000 in ad spend, went from a customer cost of $50 per customer to $13 per customer, and I think they tripled their revenue. And they were a Shopify store, which I love Shopify free commerce because you can actually see the analytics of it, so I was actually able to screenshot and post it in the Slack channel with the client and say, “Look, we tripled your revenue this month.”
But for that client, we took a Facebook ads approach. For another client, we’re working with called Snap, they’re a B2B healthcare startup in town . . .
Andrew: So how are you keeping visuals of whether you’re hitting their goals or not? Is it a spreadsheet that then pulls data in from Facebook or what? How do you keep track of it all?
Jake: So, for them, it was an e-commerce store so we were able to print reports out from their e-commerce . . .
Andrew: I mean you internally. If you’re managing all this as a company, do you have a process for doing this or for each client do you go in and individually look at their work?
Jake: Yeah, so for our marketing clients we work on sprints too. So every two-week sprint we’re not only . . . For the development team, they’re giving a report to the client of, “Okay, here’s what we were supposed to work on. Here’s how many hours we worked and what we accomplished.” The marketing team’s doing the same thing, except for them it’s not how many hours we worked because the client’s not getting charged hourly. What they want to know is what’s the report of the progress we’re making towards our goal? So if we’re running Facebook ads, we’re going to go and say, “Hey, we started running these five ads. This is the customer acquisition cost for these ads, and based on what your goal is, we’re meeting that goal by like 220% or so.” So we’re giving them constant updates as well. And they’re also in our Slack channel, so every time we do anything with them, we communicate with them too.
Andrew: I’m trying to systemize our company again. I think our system’s gotten a little stale, so I’m redoing it. My goal is to bring everything into one dashboard that’s in a Google sheet, and I know that sounds very amateur, but I want one place to see it all and everything can feed into Google sheet. That’s why I was wondering what you were doing.
Jake: One thing that we set up, and this might actually work really well for you, is for every client we have a Geckoboard. I don’t know if you’ve used Geckoboard before.
Andrew: That’s basically a dashboard creator.
Jake: A dashboard creator, right. And so we have a different dashboard for every client. So we identify what our client’s key KPIs are, which for development they’re always the same. For marketing, they’re different because it depends on, “Well, do you want just user acquisition or do you want revenue growth?” or whatever and we create dashboards based on that. The cool thing about it is it does integrate with Google Drive. So if you want to create a spreadsheet for something that’s not automatically tracked, you can create a spreadsheet for it and for you, you can have your VA update the spreadsheet and it tracks that. We do that internally too, so our biggest KPI for me is how many sales calls is my business development guy getting every month? That lets me know if I’m doing a good job at lead generation, which means are lead magnets working? Are we going after the right customers? Are we doing the right things we need to do to get more people on the phone with our sales guy?
Andrew: Okay. Yeah, I like this looking through Geckoboard.com. Cool. While I’m giving out websites, the website for anyone who wants to check out your site, Jake, is Launchpeer.com. Tell them you heard him on Mixergy even though I get no percentage. If you see that his personal website is down, please let him know that JakeHare.com is down. If it’s up, here’s what you could do. You could actually . . . I was researching this as we were talking. You could hit escape on any Squarespace site to get to their dashboard. The reason it didn’t work on Squarespace.com is that you can also disable that feature, and they must have disabled it on their own personal site.
Jake: Oh, yeah. They probably did.
Andrew: It’s a pretty interesting little feature of Squarespace. Finally, if you are looking for a collection of designs, I really urge you guys to go check out DesignCrowd.com. They just do such phenomenal work. Low price and the collection of designs are so different that you can find something that fits you. And frankly, if you don’t or even if you do and you want a little bit of adjustment, just let them know. Their designers will adjust. You pick and pay for only the design that you like. DesignCrowd.com/mixergy for that big discount.
And if you want to hire what I did, someone who’s going to help you with your finances, whether it’s figuring out prices or maybe it’s cohort analyses or maybe it’s creating spreadsheets for your investors . . . Whatever it is, go check them out at Toptal.com/mixergy.
Finally, we’re working on the audio and the video in these interviews. Please give us feedback. The team is looking for some feedback. If you hate it, if you love it, if you’re noticing something that could be improved or something that has improved, contact at Mixergy.com and the whole team will get to look at how we’re doing with our interview.
Jake, thanks for being on here.
Jake: Yeah. Of course, it was great Andrew. Thanks a lot.
Andrew: You bet. Bye everyone.
