Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart. I’m really apparently excited about today’s interview. I broke my clapboard before we started. It’s a really good one. It’s about the power of focus. Today’s guest runs a company that does what you can say many other businesses do. He does digital marketing for businesses so they can grow their companies and get more customers. But he focuses on just one kind of customer, car dealers. As a result his company, well, you’re going to find out how much it’s grown over the last few years. It’s big. Patrick Bennett is the co-founder of Showroom Logic, which is a company that does digital marketing for car dealerships. I invited him here to talk about how he did it and it’s all sponsored by Toptal.
Let’s suppose you listen to this interview and you think to yourself I’ve got a great idea for new software that we should be building. I’ve got a new product in mind but your developers don’t have enough time to code it up or maybe you don’t even have developers but you need it built. Well, you can go online to the freelance sites and hope all those ratings that you see online actually make sense and that they’re accurate and you can trust your project to a stranger and hope that they get it done and frankly that they don’t just disappear on you. Or you can start hunting for developers the way so many other tech companies do or you call up Toptal.
Toptal is a network of top developers. That’s why it’s called Toptal, top talent. They’re proven to be among the top 3% among their peers. You tell Toptal what you’re looking for the way I did when we needed a developer. They go to their network which is tested, vetted, and proven. They find just one or two people for you to talk to, you have a conversation. If you’re happy with that developer you can get started with them often the very next day. Work with that developer full-time, part time, maybe even just a few extra hours a week, and they are guaranteed to fit well within your company and your structure and your culture. If you need a developer, I want you to go to T-O-P-T-A-L.com.
Hey, Patrick. By the way, what do you think of the way that I just did that sponsorship message? I keep wanting to improve the way that I do my ads.
Patrick: I thought it was fine.
Andrew: All right.
Patrick: I didn’t have any problem with it.
Andrew: I’ll take fine. I’ve got to be honest with you. When I was talking about my sponsors in one of the earlier interviews, I think I did an awful job and I said I’m going to call myself out on it and my guest called me out on it. So I’ve been working on it, improving it.
Patrick: Okay. Okay.
Andrew: All right, but enough about me onto you. Before we even get to what you did recently, you programmed for a calculator when you were growing up. What did you build for the TI-86?
Patrick: Yeah. I think when people ask me where did it all start for you or where did your fascination for computers start and I think it was maybe seventh grade. I built a TI-86 app called the Love Matcher.
Andrew: The Love Matcher, okay.
Patrick: Yeah, the Love Matcher and the whole point of the Love Matcher was during class while I wasn’t listening anyways I’d pass it to a girl and it would ask her a series of questions, multiple choice. What’s your hair color? Eye color, age, weight, things like that. Then at the end as they went through it it’d say searching for your perfect match and it would always come back as me. So I was always the perfect match. So girls thought it was hilarious. I then distributed to all my friends, but I changed the variable at the end to have their name. Kind of went viral in the school, I guess you could say, back in those days. Yeah, that’s when I started to realize, man, it’s really cool how you can change these little digits and text and it becomes something. I think that’s where my fascination really started to grow.
Andrew: How do you learn how to code for it? Actually, was it coding or was it easier than coding?
Patrick: I would definitely consider it coding. I can’t even remember the language you build apps in with TI-86, but I remembered a friend of mine transferred a TI-86 app to me, it was a game and I just started looking at it. So if you ask my parents growing up what my room looked like, it was a disaster. I had every toy, every fan, everything that’s broken taken apart because I had to understand how it worked. So when I got this app I thought, man, how is this even possible? So I started dissecting the app looking at the lines of code and I just created my own from everything I saw.
Andrew: Actually, according to Google it ran basic.
Patrick: Okay, there you go.
Andrew: Wow! I had no idea you can do that, that you can actually code for one of these little calculators that has fewer keys than my computer keyboard has.
Patrick: For sure.
Andrew: Then you said all right I have vision for myself, I want to go grow up and be something. I want to actually go to Stanford and you started getting, well, how were your grades in high school?
Patrick: I had actually really good grades. I took AP and IB classes. My path in the time in high school if you asked me what I wanted to be, I wanted to be either a vaccine biologist or a mechanical engineer again because I love taking apart things. But I also love the idea of helping people and solving problems. So I really applied myself. If you ask my parents I’d come home and I would do four, five hours of homework at night. I’m never a great test taker but a really solid worker with a great work ethic. So I was always able to apply myself enough for my work to make up for my bad test grades but I generally had really good grades. Many semesters straight A student even with IB and AP classes. So I applied to Stanford, UCLA, BYU, UC Irvine. All these great schools and I got rejected from all of them.
Andrew: Why?
Patrick: I don’t know, I wish I knew. I think looking back I believed that I had a different path and if I wasn’t rejected I would have started down a different path for my life, but instead I got accepted to one safety school which is Cal State Long Beach which was here locally. I went to there for a year, I met my future wife and I also started to get really involved with entrepreneurship and the idea of owning my business. That kind of sparked a whole new direction for my life.
Andrew: I had horrible grades in school but I studied entrepreneurs, and one of the things that they taught me was you don’t have to take the first answer. I remember getting rejected from a school and right now I can’t remember which one and calling up the admissions officer and trying to persuade her to say yes to me and it turns out that’s possible.
Patrick: Wow! At the time I don’t think I was that ambitious, or thought it was possible, I guess, but.
Andrew: But interesting that you were entrepreneurial before then, then you went to college and that’s what made you entrepreneurial. What was it about the college experience that turned you from wanting to be a biologist or a tinker?
Patrick: I had a really bad taste in my mouth. I had a clear set path for me. I went to Cal State Long Beach my safety school kind of chagrined and kind of upset at the world and I just wasn’t too excited about learning more. In high school I’d started a little web design company. Not because I thought I’d ever pursue that path but it was a great way to make money on the side so I could take girls out. So in college it became the same thing. I was like hey how can I just have some fun side projects, make a little money while I’m in school so I kind of kept pursuing that. Then realized pretty quickly I could probably make more money than my professors if I just pursued this path full-time and started to realize that maybe 10 years of school isn’t what it is cracked up to be. So I don’t know, I just think I started learning things about myself that I was definitely more excited to control my own destiny than to pursue someone else’s path that they said this is the way you do it to become this type of person.
Andrew: Interesting. You are a Mormon who went on mission.
Patrick: Yeah, I did.
Andrew: How did that fit in? This new attitude of I don’t have to take the path that’s created for me.
Patrick: Yeah, I think that was an interesting two years of my life and very formative of what I became because you’re out there preaching something people don’t want to hear about and really trying to learn how to interact with people. So all my social skills that I’ve gained, sales skills even if you want to call them I learned two years of grinding. Waking up every day.
Andrew: Give me an example, what did you learn?
Patrick: I learned for one, people don’t know what they don’t know and a lot of times they’re sett in their beliefs only because they’re scared of the unknown. And when you’re able to explain something that might be a path that makes more sense for them or can bring more happiness to their life, then it becomes their decision to take the step and see if it’s true.
Andrew: How do you get somebody to overcome a fear of even trying a new direction? If you frankly were to come to me and say, Andrew, I don’t think you should be on WordPress, you should move your site over to this other thing. That’s a big unknown that I don’t want to mess with.
Patrick: Sure.
Andrew: I know what I got here with this platform, I’m just going to keep running it. But if you come to me with God or a new direction on religion, that’s even scarier that switching from WordPress. How do you even get me to open up and to be open to your ideas?
Patrick: That’s a great question because a lot of our stuff is taboo and things people really don’t want to talk about. Religion is pretty personal.
Andrew: Yeah, to be honest if you might have noticed I hesitated before bringing it up. I said, well, does he even want to talk about religion? I don’t want to make this into a religion thing but we have to.
Patrick: I’m obviously happy to talk about it because that’s who I am. It’s a big part of my life and the decisions I made of being a family guy and balancing work. I consider my role as a father more important than my role as a business owner. That’s really what drives a lot of my decision making. But when it comes to religion, I believe in service leadership. So when I was out on my mission I just learned to serve people and say, hey, what can I do to help you today and we would wash their car, pull their weeds, whatever they needed.
Andrew: So instead of telling me about Joseph Smith, you would say what do you need and it might be I need better lighting in this office or something and you’d come in you’d fix that.
Patrick: Sure. If I had the skills I probably couldn’t help you with your lighting in your office. But really this world is about connections and helping and empowering each other and that’s all we are trying to do of saying, hey, we are here for two years living in your country, learning your language and we came to serve you and how can we help you and get to know you better. So I really developed a true love for people, and that’s when I really started to understand that life is much more about relationships than it is about anything else. And cultivating a relationship, having a healthy relationship with someone brings more value than anything else in this life. So I think that really helped me.
Andrew: Seems one of those relationships is with Bryan Johnson the founder of Braintree. How did you know him? You built his first website.
Patrick: Yeah, I like to say I did that because they later sold for like a bazillion dollars but as I came back from my mission and I actually married the wife I met when I was going to Cal State Long Beach and realized crap I better make some money. I started reapplying this idea of web design maybe owning my own destiny is better and I also was getting rejected from schools again. I applied to three different schools again when I came back.
Andrew: No, you must know why. You’re a curious enough person to take apart a fan in your house, you must know why they rejected you considering you have all As. Why did they reject you?
Patrick: I truly feel they rejected me because God had a different plan for me. If I would have been accepted I would have started a different path.
Andrew: If they were going to write down in your folder why they rejected you, they wouldn’t write down God has a different plan for you. What would they write down? What’s the statement that they would use?
Patrick: I have no idea to be honest with you.
Andrew: Did you write your application in crayon?
Patrick: Looking back there might have been a few things, few mistakes I made along the way.
Andrew: Did you send your application in on a TI-86 and so they didn’t know how to hit the right buttons to find it?
Patrick: To be honest with you, I think at the time I really didn’t know how to sell myself. That’s a technique I’ve learned over the years because now when I’m meeting with huge companies and getting them to transfer millions of dollars over to my company, I really have to sell myself when I raise capital. Anything I’ve done it becomes selling myself. So even with a Bryan Johnson who just received funding and is building out a new company, I had to sell myself and convince him that me and my little design firm was enough for him to be confident and that we’re going to give him a good product. So over time I think as I learned sales skills I learned how important it is to also sell yourself. So I’m pretty sure if I applied to those schools now I could get in but I really have no desire to go back to school.
Andrew: I see. So when we just look at your high school experiences just a transcript full of As it’s not the full story. What a college wants to see is what are you about? Write that essay and tell us what you stand for, who you are, where you are going and that part of salesmanship wasn’t there yet.
Patrick: No, I agree, yeah.
Andrew: The design company that you started was the one that you had in school, that’s what you used to create Braintree’s first website. You went on from there and at one point you met a guy named Mike at a print shop. Was it Mike who wanted to go work at the auto industry?
Patrick: Yeah, as I was growing relationships with this company I met Mike through Elance. I did a few jobs for him, we became friends. He had a lot of clients coming in that wanted business cards but they also wanted websites. So we started offering them websites so became friends over time. Mike calls me one day and says, “Pat, I want to go learn the auto industry and I was like, what does that even mean? He says I’m going to go get a job at a car dealership and I’m going to see what they’re doing with digital marketing and I don’t know I think there’s a huge opportunity. So we call Mike the instigator in the company because he truly opened that door. Without him I would have never gotten into auto.
So he goes and gets a job in an auto dealership. He’s eCommerce director over three stores even though he had never had a day of auto experience. He convinced them to hire my company to build their website. So we built a website completely for lead gen and within three months it was the best performing marketing thing they were doing.
Andrew: This is Michael Annable who went on to become your co-founder.
Patrick: Yeah Michael Annable. Yes.
Andrew: You know what that’s so interesting that he would go and work at a dealer just so he could learn the business and then go start another company. Why couldn’t he do informational interviews or try selling to them? Why do you think he felt he had to embed himself in there?
Patrick: I think I’ve learned the same thing, I think if you truly want to understand the industry and pains of the industry you’ve got to be on the ground level. You’ve got to be in the trenches, understanding from a day to day what are they really dealing with. We don’t really do a lot of customer interviews anymore to like figure out what we should create from a product standpoint because we feel like a lot of times they don’t really know what they need. It’s kind of like trying to tell Steve Jobs 10 years ago that someone needs the iPad. They didn’t really know they needed it until Steve Jobs said here is an iPad and they’re like, oh I have to have this and now there’s a demand created around something that he created. So I think when you want to get into anything you’ve got to get on the bottom level or know someone who is and truly know the ins and outs.
Andrew: I see. So your friendship with Mike allowed you to learn more about the auto industry …
Patrick: Yeah he was my insider.
Andrew: … and you created websites for them. How did you know how to do such great lead generation for them?
Patrick: That was just through my experience with my company prior. So I had a lot of great opportunities. My brother owns an SEO company. They are really big and so we shared a lot of clients back and forth and he helped me get off the ground. I had some big clients like Home Depot that I was able to really mature into and understand from a corporate standpoint how lead gen worked and do a lot of experimentation. I’m just a fiddler and a tester and so I just learn from doing.
Andrew: What’s the one thing that you did that looking back seemed so easy but no one in the auto industry or people who you were hired to help out didn’t know it and so this little simple thing gave you a leg up.
Patrick: The one module we found that we based our whole company on was this idea that dealers have inventory that’s changing everyday and if you’re trying to find consumers who want your cars you have to have a way to advertise those cars. So a simple module that would take any cars that came into their inventory daily created ads like on AdWords and then drove traffic to that car. It seems like such an easy concept and like this is a no brainer why aren’t people doing it but we found nobody that was doing it from an automation standpoint.
Andrew: So every car on their lot would have a page on your site that was then indexed by Google and gave them another opportunity to get traffic and then you’d buy traffic for it too.
Patrick: Exactly, yeah. We started with SEO as well but about six months in we dropped SEO completely and just focused on paid search. Just because it was a much easier return. PPC is great to get really quick results because you can turn it on overnight. SEO much more long-term play, and we just decided we didn’t want to go there.
Andrew: You know Mike on his LinkedIn profile shows November, 2007, as the start of the company.
Patrick: Yeah.
Andrew: I think you on your LinkedIn profile say 2008.
Patrick: Sure.
Andrew: Then I went to look online to see what your site looked like in 2008. I don’t think you had a website in 2008, 2009 there was just what looks like a landing page with a logo, Mike’s email and Mike’s phone number, the [inaudible 00:17:34] number.
Patrick: Sounds about right.
Andrew: Why is that? Why was there so little online after you guys had started, why would it start so fuzzy?
Patrick: We realized pretty quickly that the auto industry was all about relationships and there weren’t people actively searching on Google. “I need a company to market all my vehicles online.” It just wasn’t happening. So from like a lead gen perspective or digital presence we needed to create to funnel in all those customers it just wasn’t happening. So we had to go out and create that demand. We had to go talk to dealerships face to face, to learn to get dealerships to open their door, get past the gatekeepers and so it was much more of us landing very few deals. In 2008 I think we only had 20 customers by the end of the year. We realized pretty quickly that it was going to take much more to be successful.
Andrew: I wonder why from the outside and I’ve never been in the business, it seems like an easy business. They pay you, you keep a cut of your spend or a fee per month and all you have to do is buy ads that convert enough for them to make money and if they don’t you still make money.
Patrick: Yeah. The problem is dealerships have budgets and we’re competing for the same budget as Autotrader, cars.com. They have a digital budget and it’s thousands and thousands a month but they’re trying to figure out how to diversify and people are very scared of change. So we come in and say, hey, we built a platform that lets you own your own destiny, drive your own traffic, you don’t have to worry third party sites anymore. They’re like whoa, wait a second. I don’t know if I can do that and we realized too that car dealers are so much about relationships. These are guys who want their customers belly to belly still. I’m like just fear online all together that we knew that it wasn’t enough for us to just have a great product, we really had to build their trust in order for them to even try us.
Andrew: So different from the way my world works where if somebody even wants a phone call at first, it feels really weird. Just show me the value online, tell me what you do in a short email. Someone said I think I could do your transcripts better. Can we get on a six minute call? I said I don’t think I could do a six minute call. Just hit reply and tell me what you could do better.
Patrick: Sure. Well, dealers are getting hit up by hundreds of vendors a day because the thing about the auto industry is there’s millions and millions of dollars to be spent. And these aren’t small business owners. Dealerships are doing millions a year. They have huge advertising budgets. Everyone wants a piece of that so they literally get called 20 times a day from different vendors that have the next best thing. So it’s very noisy.
Andrew: I see. So they don’t want another stranger with the next best thing trying to get a piece of this multimillion dollar budget. You guys are walking in there. The software that you built to show them. Was it software at first or did you at first manually inventory everything? One of the things I see about you from your notes is you’re a guy who can stick with something obsessively but how did you get the first set of pages up for them?
Patrick: I’m a huge believer in MVP model and I think that’s why I have a huge competitive advantage over other people. I will always be first to market. If I’m up against anyone else I will always be first to market and the reason why is because I’m able to just distill things down to the simplest what are we really trying to test? What is the real model we’re trying to drive here? So our very first model that we were selling for a while we probably had 50 clients on this piece of crap before we actually invested and built something better. It was multiple lines of code that would just be executed from someone like logging into a terminal and saying okay execute this script for this dealer, go directly into the database, enter them in. We had no dashboards, we had no interface, nothing. But it was enough to prove to dealers when I come in and say, hey, we can take your inventory and advertise it online and update it on a daily basis. We had enough to prove that model out without building all these crazy stuff.
Andrew: Would they have to put the data into the software?
Patrick: Because they send their inventory to Autotrader cars.com all these different places already, we just became another recipient of that inventory. So it was really easy for them to just start dropping a file on our server everyday, like the FTP that we could just pull and then generate everyday. So that wasn’t a barrier at entry for us because other people had to solve that years ago when they wanted to post their cars on Autotrader.
Andrew: I’ve got a note here from your conversation with Jeremy Weisz in your pre-interview for Mixergy where you said, “If Mike took clients out to dinner and they wanted to order lobster, you’d get a phone call in the middle of dinner. Why would he call you in the middle of dinner?’
Patrick: Oh it’s great. This is back boot strap days. We hadn’t taken on any funding yet. I’m still working my full-time job. Showroom Logic is more of a hobby until we can both make that leap and part of auto industry is schmoozing. If you want to meet with some of the top guys you’ve got to take them out to a nice dinner, that’s just part of building the relationship. So he’d call me to go put money in the bank account because if he paid with our company credit card it would bounce. So I would go take my personal money, deposit in the credit card to ensure that they could have a smooth dinner without any awkward interruptions. So it was fun times.
Andrew: Help me understand something. Maybe it’s the surfboard over your shoulder, maybe it’s the attitude of this conversation, maybe it’s all the different things you took apart at your parents’ house when you were growing up. But you seem like a tinker who’s willing to just take risks like this. I’m looking at Mike’s LinkedIn profile. He seems like a no BS person, he seems much more of a conservative guy who would rather talk to someone in person that have them email the way that I would. Why was he going along for this ride with you? Why did a guy who was willing to put his time in working for a dealership to learn the industry over time say, hey, you know what? All right, if we can’t afford this lobster dinner that’s just the way things are, what was it about his make up that allowed him to take this kind of risk?
Patrick: Mike is a straight shooter and that’s what I’ve always loved about him. We’ve had a great relationship because we’re just very honest with each other. And I think for him too he grew up in the SEO and digital marketing world. He was doing it back in ’96 back when nobody was doing it. And so he also had a passion for digital marketing, for trying the next best thing and like me he was an entrepreneur, he liked to own his business. He had this print shop as I mentioned. Before that he had a lobster shipping business. This is a guy too who was willing to try stuff. So when we came together and I was kind of the technology guy and he was kind of the relationship kind of dreamer guy that could just do the work to figure it out because he is a hard worker, it was a great combination where we could feed off each other, keep each other motivated and just drive each other, to find that next best thing.
Andrew: What year do you feel you finally broke even or got sustainable, was it only after you raised money?
Patrick: Well, we were on track before raising money. We’d proved the concept out. We knew there was something here but we knew we had to scale. We had about seven employees, about 75 customers. It was starting to kind of hit that breaking point. So we took on Angel money and actually blew through it in about four months. And that was a horrible experience but it taught us so many things of when you go ask for money, ask for more than you think. Make sure you have a plan for the money and you don’t just throw it in the wind and see what happens. So I would say it wasn’t until our second round that we actually finally stabilized, we were able to manage growth, kind of figure out a lot of things where we were finally on a smooth path that was trending upward and we felt much more established.
Andrew: Let’s understand how you even got to the point where you could go to investors and raise money from them. You told me about the first customer, the first customer was Mike’s business. The next set of customers I’m wondering where they came from and it sounds like you were just going knocking door to door at dealerships but was it literally walking down the street the way I would if I were looking for a car and saying hello to the receptionist?
Patrick: Yeah, we hit up Craigslist to find sales people, really anyone who would listen to us and wanted to make a little money. Mike and myself we’d go into dealerships and try to talk to people and it was literally like that. We’d find someone local in our market, we’d go and try to talk to the internet directors, find someone who’d listen to us and just try to sell. But as we started going to more and more conferences and getting certain clients we started to get more kind of people being much more curious and one gentleman by name of Sia [SP] he worked out of a very large car dealership. He was the eCommerce director of a car dealership. They had over 65 stores and we got one of his clients again just through banging down doors. Mike got them as a client and corporate started asking what are you guys doing? This one dealership is doing so well compared to other ones something happened three months ago. What is this dealership doing? Their internet director said it’s the this Mike and Pat guy they got something special and it’s really been working for us.
So we start cultivating the relationship with Sia and he starts believing in us. I actually start helping him to do his job, he starts saying to me, hey, can you pull this apart, hey can you help me understand this, hey can you vet this vendor out who’s trying to offer me something. We just became friends over time and he started helping us get into all the rest of the dealerships in that big group.
Andrew: I see. This group of dealers had him as the person who was buying all their ads. So he was that powerful within the network.
Patrick: Yeah. He was eCommerce director of an entire group so he had say over the entire digital marketing strategy for all stores. Now, luckily at this time many of them weren’t doing paid search back in like 2009, 2010. A lot of car dealers this was very new to them. So it wasn’t like they were doing a lot of this already, it was kind of like, hey, this is the next best thing that was coming. And he started getting really excited about it. So he helped introduce us to other people in the auto industry because he knew a lot of people. Those relationships became sales people who then came with a book of business and could call on 50 dealers they knew already, had that buddy buddy thing, were able to get more dealerships.
Andrew: What were they selling before that they could go back in to the same set of clients and say, hey, you should understand Showroom Logic is the future.
Patrick: Yeah, great question. So like websites, online chat, inventory solutions where they’d come and take pictures, just anything digital where it was easy for them to learn our product quickly and then leverage the relationship they already had.
Andrew: I see.
Patrick: So started working out really well and that’s how we started landing more and more and more clients. It just started scaling from there.
Andrew: Modern Blue is the name of the consultant company that you had the web design shop. Twenty ten is when you gave it up but around that time you were still buying food on credit cards and I’ve got this note here in my research, the teams sacrificed salaries so I can go full-time and take a salary. So the people who worked for you cut back on how much they were earning from Showroom Logic just so you can afford to work there full-time.
Patrick: Yeah and I’m always grateful for them for doing that and making that sacrifice and I think it just goes with your original team when you truly have a vision, you’re willing to do whatever it takes. So at that time I’m trying to keep Modern Blue alive, I’m basically working Showroom Logic at night, I’m sleeping three hours a day. I have a kid that’s like eight months old. It’s just a crazy time. Made some bad financial decisions, I had a very low bank account balance, was buying food on credit cards. I buy food on credit card now, but it’s more for points. Back then I bought it because I had no money.
Andrew: What was the bad financial decision that you made?
Patrick: I purchased a house very quickly top of the market in 2007, had a very high interest rate I thought I could afford, just kind of the American dream. Found out pretty quickly because my web design business wasn’t recurring revenue that, hey, I have a bad month sometimes where I bring in nothing. So just things like that and trying to pace myself a little quicker than the money was actually there. And again I am a huge risk taker and so a lot of time I’m just, hey, it will work out. I am okay making this investment because everything will work out.
Andrew: Is it hard to be a huge risk taker when you have kids and one of them is eight months old?
Patrick: You’ve got to have a wife that believes in you and I think my wife always knew because when she met me it was a much different path than before. This was a Pat that wanted to own his own company. So she knew what she was getting into, let’s say. So she believed in me and she saw my work ethic, she knew I was working really hard and it was a team decision. We decided that even though there were going to be hard times ahead, it was still the best course for our family.
Andrew I see. So you get her on board with this vision and as long as you’re both working towards the same thing we understand that you’re going to be working 30 hours in a row.
Patrick: Absolutely. Sacrifices have to be made if we want to build this company and own our own future together. So I couldn’t have done it without her and her belief in me. I still don’t know why she believes in me. She probably thinks I’m nuts but yeah it’s been huge and to your point about some of these other founders when Sia came in he was making really good money in [inaudible 00:30:51]. We didn’t have a lot of money to pay him because we just didn’t have the money. So he was able to sacrifice his salary for a little bit because we all decided that if anyone was going to be full-time that would make the biggest impact it was me because I could drive the technology, refine the product. So they were still kind of either had recently left their job or was still working part time or kind of floating other things as well. But everyone agreed that I should stop Modern Blue, get paid on a salary full-time that would support me and we’re not talking big, just enough to cover my expenses but that was enough for us to take off. So I’m always grateful for their sacrifices they made.
Andrew: Sia has an engineering degree from the University of Florida. You dropped out when you realized school wasn’t for you. Do you ever feel at least in the early days you feel like well this person is so much further ahead, has more connections than I do, has a degree, how am I ever going to lead him? How am I ever going to give enough that even proves my value as a guy in this company.
Patrick: Yeah, it was a big undertaking to be honest with you and I realized really quickly that if I didn’t get a guy like Sia on board we were going to have a really hard time growing this company. So I made it my personal pursuit to get Sia to jump ship and join our company and it took months of convincing, of begging, of showing the value, of showing the technology, of promising things and it finally became the point where I gave him an offer he couldn’t refuse, where he could come over, take some equity, join this vision we had but also become the CEO. I felt with his maturity, his know-how in the auto industry. I felt that he was much more poised to be the CEO and lead us rather than me. Because I don’t know I was 25 at the time and didn’t really know a lot of people on automotive and felt a guy with his maturity level and his connections would be much better for us.
Andrew: I’m curious about the surfboard over your shoulder. I keep going back to that.
Patrick: Oh sorry.
Andrew: No, I love that. I think it shows your personality in a way that just having you on camera doesn’t but is it over your shoulder because you want to make an impression when you’re talking to someone or is it over your shoulder because you need to run out and surf at any minute and you need to grab it quickly. Why do you have it there? As a person who has nothing over his shoulder, I’m curious.
Patrick: I think it’s over my shoulder because one, this is my home office and it’s a little cramped to be honest with you.
Andrew: Okay.
Patrick: And two, I do like it as a reminder that you have to take time for yourself and one of my passions is surfing. I live in Huntington Beach, I’m really closer to the water and sometimes you just get carried away in the business and all of the other life things, you have to make time for yourself. I know personally I need Pat time so that I can be more effective in all the other roles and responsibilities that I have.
Andrew: Don’t you feel guilty when you’re surfing and somebody is at the office working and says wait a minute, oh he’s surfing? Because frankly sometimes I feel like that way about running and I don’t have as big as an operation as you do.
Patrick: No, I don’t. I think if anyone questions my value or worth when I am working, then maybe it’s time for me to move on but apparently I’m still adding in enough value where people trust me and feel like I’m benefiting them where I can decide to go surf and take time. I do a lot of travel as well and there’s times where I fly to our different offices and be with the team and be in the trenches. So I don’t think anyone questions my decision to go surfing as I’m lazy or I’m not supporting them. I think they see it more of like yeah, it’s justified because of everything else he does. At least, that’s what I think. Maybe they’re pissed at me, I don’t know.
Andrew: I think you’d know. I doubt that they do. I was wondering whether you felt that way and it’s interesting that you don’t, that you feel it’s my time and I’m going to do it I need it.
Patrick: Yeah, I think I need certain things to be as effective as possible and I’ve learned over the years what those things are. If I don’t make time for them I’m not as effective as being a leader as I am when I do them. So for me I can justify it because my output on one side is stronger because I take the time on the other side.
Andrew: What are you like when you don’t do it?
Patrick: Oh I just get super crabby, really hard mentally to focus because surfing for me is kind of meditation too you’re not really talking to anybody you have the ocean, you’re outside. The whole experience more than just like riding the waves. So when I don’t do it I quickly realize that I’m getting way too caught up in the hustle and bustle and I’m not taking time to sit back, strategize, meditate, remind myself what’s important in this life.
Andrew: So now we get to the point where you went out to raise money, you weren’t very experienced, you gave your presentation. I love this one line in the notes. You told the investor what you were looking for and he said I can blow my nose with that. What did you ask that made him say that?
Patrick: I was asking for $100,000 which I thought at the time was a lot of money and I learned pretty quickly that for some of these guys it’s a joke. It’s not even enough for them to take the energy to hire an attorney to do the due diligence and write the check. Also asking for $100K doesn’t show a lot of vision, it also doesn’t show a lot of confidence. So I didn’t know how much to ask for. We kind of talked through it and we were like yeah maybe just 100K that will probably get us over the next hump but I didn’t really have a good plan. I totally blew it to be honest with you.
Andrew: Because you weren’t asking for enough and you didn’t have a big enough plan. What did you think you were going to do with 100,000?
Patrick: It was really just hiring more programmers so we could continue to refine the technology but there was no impact to the business model. So we didn’t have anything that said after making this investment it will make us this much better which allows us to acquire this many more customers which drives our revenue this way. So it wasn’t showing that the plan led to anything exciting. It was just this is what we need so can you give us some money. And investors they are very emotional, especially Angel investors. They’re giving money not just because they want a return, they want to be bought into a vision and if you’re not exciting and get them into that vision and sold on that idea then it’s really not worth their time and I think that’s what I failed completely on.
Andrew: Did you go back, work on the presentation, and come back to him with more of a request and more vision. You did?
Patrick: Yes. More gumption. Yes, about six weeks ago I came back into his office, had a much more formal presentation, had Sia fly out so he could meet him and Sia is very good at sales too. So between the both of us we were able to pitch a much better vision, this is where we’re going, this is the opportunity, this is the next best thing, here’s the numbers to support our growth, here’s how much we want and we were able to get the deal done so much different story the second time round.
Andrew: How much did you ask for?
Patrick: We asked for 500,000.
Andrew: 500,000. You know what, one of the things that I love about your business is I think you have a fantastic homepage. It’s not one of these homepages that’s designed to convert me but I understand exactly who you are right away and I do a lot of research where …
Patrick: That’s good feedback.
Andrew: … most of my guests, some of them have confusing homepages. Then I have to go and do research and come back to the homepage with a new understanding and then keep diving into prepping for them. There are two things that I love that whoever did that top image is fantastic at explaining complicated issues like that. All these stuff that goes into this machine, the machine is the AdLogic ROI engine, that’s your business and it’s the stuff that goes in. The inputs are inventory, data, analytics, websites, objectives, specials, etc. That all goes in and what comes out is retargeting, display, paid search different kind of ads from each one of those is more detail about what you’re doing. So it says retargeting and then there’s an arrow that points to Facebook, AdWords, lists, etc. Just a really good example of how to describe a tough business or a complicated business easily. The other thing is the Inc. 5000 logo that you guys were number 26 on Inc. 5000 in the year 2014. What was your revenue that year?
Patrick: It was around 13 million, so I don’t have the exact number but yeah.
Andrew: Wow. And at the time did you have this whole system that I just described put together? Did you know this is where we want to go, we want to take all of this information from our customers and have a system that gets them ads, automatedly, intelligently and etc. Was that vision there at the time you were looking for funding?
Patrick: Yeah, we’ve known since 2011 who we were going to be. When we started we tried everything. We tried SEO, we tried Facebook, landing pages. We tried so many different products and we realized really quickly we need to be good at one thing. We’re going to be the best platform at page search display and retargeting that’s it. And we made that decision in 2011. That was part of our investment thesis and because the opportunity is so large, there are so many customers, so much budget if we just do good at that one thing it’s going to be a great story for all of us. So to the point of the homepage, it’s very easy to create a simple homepage when what you do is very straightforward. When people ask us do you build websites? We do not build websites because this is what we do. We’re paid search display retargeting. So it’s simple when everyone in the company has that vision of this is what we do and we’re the best at it you don’t have to worry about trying to describe all these other things that sometimes don’t have to do with each other.
Andrew: Why would it be a problem if you kept … and this actually brings us back to how I started the interview which is your focus. Why would it have been so bad if you said we also design websites. Frankly designing websites doesn’t take that much time, it doesn’t take that much energy as long as you’re not over complicating things. You can hire a team of people to do it. It’s something that anyone who has a showroom could potentially use and they could have synergies where someone buys a website design from you and development from you might also need advertising and vice versa. Why shed that business instead of integrating and saying we’ll keep doing as much as we can where the revenue is.
Patrick: Yeah, that’s a great question. I think for us when we’re looking at building out a business model that makes sense we’re looking at margins and things like that. If it just doesn’t fit in, it doesn’t become something that we’re interested in and websites back at the time were becoming a commodity. There are these huge companies like dealer.com and ClickMotive. They created landing page platforms where the dealer could log in and make adjustments themselves. They could add stupid yellow buttons if they wanted to and guys flying across the screen and make it snow when it was winter. Dealerships are kind of very emotional about their businesses and a lot of those things don’t always drive ROI.
So we decided from kind of a commodities standpoint, we’re not going to be a me-too product. If we can’t be the very best at something we’re not going to undertake it. So with dealer.com already being such a big company and some other ones too, it was such a crowded space. We thought why be distracted with that when there are so many people fighting for those dollars and it’s already becoming a commodity. Let’s stay with the new fun exciting stuff and have our growth through that.
Andrew: If you would have been distracted, what wouldn’t you have been able to do or what would have done poorly because of the extra business?
Patrick: I think we’d be distracted from a technology perspective. I think just taking the website model, for example, there’s a lot of support that’s needed to support someone when you give them like a website platform. They have to say I want this photo changed or hey why isn’t it doing this or I need to get this tracking pixel installed. So we just felt like if we had to spend too much time on that side we wouldn’t keep making our product better and better and better. So when you’re a fast growing company and you come into kind of planning meetings and you’re saying okay here is 100 things we want to do, can’t do them all, where are we going to focus. Those decisions become much easier when you say what’s in line with our strategies? Here is what we want to be, here’s how we want to be when we grow up and just make that our focus.
Andrew: That explains why even March 9, 2009, the website said Showroom Logic manages the inventory of used car dealerships nationwide. Our available software’s affordable, easy to use, optimized for search engines, looks professional. By that point you’d already said everything except for search engines. Why not then say you know we have this great software, it will work for anyone who has inventory. If you’re selling lots of fans, if you’re selling lots of light bulbs, we’ll manage all your inventory. Just get it in there and we’ll make sure that you buy ads that are intelligent.
Patrick: It’s a great question. I think for us we decided almost the same focus around that technology in that platform was the same focus around the vertical we’re in. We felt when you’re really mapping out the opportunity, there are 17,000 new car dealers in the U.S. We felt like if we could just get 25% penetration we would become a humongous company. So that was enough for us to keep us excited, keep us focused. Any time you add another vertical, you’re expanding how big your opportunity is, but you’re also diluting the focus that you can get on obtaining this. So I’d rather have a very large piece of a vertical because it means more to potential acquirers and also gets investors more excited than to have a very small piece of 20 verticals. I would rather own one space and be the master than to be like just the me-too guy on 20 other spaces.
Andrew: Why is it better? Why wouldn’t it be better to have lots of different spaces to be diversified and learn from each space something that you could bring to the other, like real estate brokers and car dealers. I tend to agree with you, I just don’t know how to articulate why that makes more sense?
Patrick: I think it’s all about disruption and I think when you think of if you’re just taking a small piece of a bunch of different verticals you’re not disrupting anything in those verticals. You’re just another guy that sells another thing that has a small booth at the trade show, that’s not very exciting. But if you’re able to dominate one and just kill all your competition. Own the world, that’s much more fun and exciting and I also think better for morale than to be just like kind of good at multiple things.
Andrew: I see.
Patrick: So that’s the decision we made. We are going to be the best SEM platform in automotive and until we obtain that goal, we’re not looking to go into any other verticals. Kept us very focused.
Andrew: You raise money and as you said soon afterwards you almost run out of money.
Patrick: We did get [inaudible 00:45:59].
Andrew: How close did you get to nothing?
Patrick: We ran out.
Andrew: Oh you did fully run out.
Patrick: Yeah, we did. Technically with receivables and stuff there is a little flow but technically the cash we raised had been expended.
Andrew: How?
Patrick: That’s what I mentioned it’s just through not properly executing on a plan. We had a bank account balance and every day it seemed like it was always looking too much in the short term. What happened today that we need to solve? Trying to put out fires too much instead of thinking around overall strategy. When you take on capital like that, how are you going to apply it so that it gets you to where to be in five years instead of what are you going to do with this capital over the next three months. So I think we just learned really quickly that without having a true plan and without having the right people to get us there that the money just went really quick and it happened fast. We had about a two weeks notice like wait a second, we were out of money, guys. So we had to go back to the Angel investor which lesson learned you never ever, ever want to have to go back and say you’ve run out of money because then they have all the leverage in the world. So we learned our lesson on that one.
Andrew: How do you not lose your cool under those circumstances? How do you keep yourself from saying, I’m a big failure, this isn’t working out, I’m not meant to be running this business, I’m not meant to be the founder of the business. Or play head games with yourself that would keep you from having a real conversation with the investor.
Patrick: Yeah, that’s a great question. I think by nature too I kind of have a problem where I take a lot of risks. I don’t have a gambling problem but I say when it comes to businesses and I think okay, because when we took on the Angel investment we had to leverage our houses. We had to do a lot of stuff for him to feel confident in giving us that money.
Andrew: He wanted you to leverage your house before he could put in 100,000 even.
Patrick Absolutely. Well, the 100,000 we didn’t even get to that conversation but as he was saying you guys are a young company. I need to manage my risks, I need all of you guys to put up your houses and anything as collateral. So if the business failed, we were going to have to pay him back.
Andrew: Oh really?
Patrick: Yeah, absolutely.
Andrew: What kind of a deal is that? It’s a loan that then gives him equity in the business?
Patrick: Yeah. What I’ve learned about deals and rounds is you can be as creative as you want. So that’s actually something we did. We said we’re willing to put these things on the line if you take less equity. So he only took 5% equity.
Andrew: I see.
Patrick: Which is a $10 million valuation. We won’t even worth $2 million at that point. So he took a huge risk on the equity side because if everything worked out it was fine for him. That 5% meant a lot but for us if we were able to make it happen then we weren’t that diluted, it would have been a great story. So we believed in it enough to say we’re willing to up the ante here if you’ll bring down your equity and we worked him down from 10 down to five.
Andrew: Who’s the investor?
Patrick: His name is Tom Olds.
Andrew: Oh he’s on your site.
Patrick: Yeah.
Andrew: He’s the first person on the site. Thomas Olds, the founder, president and CEO of California based 2000 bed Skilled Nursing company. He’s also the founder of Medliance, the technology based Long-Term Care Pharmacy Management Company. How do you know him?
Patrick: Yeah, he’s an extremely successful entrepreneur as well and he has businesses that crank out a lot of money and at the time of that first capital raise we were just deciding, okay, who do we know? This first round is going to come from friends and family, who do we know? We just started talking to people and I had a friend who said, hey, you should really talk to this Tom guy. I was friends with his son-in-law growing up, we had a great relationship, I think I can make an introduction. So I said great, set it up. That’s how I was able to meet him. It turned out too he’s local, he’s here down the street, he became a mentor of mine. We’re great friends now. He really helped mature me as a business owner over the years and that’s what Angel investors do, that’s what’s so great about them. Is they not only put in their money they also mentor you and are there for you.
Andrew: One of the things that you did that helped you grow was get a small SMB, small medium business relationship with Google.
Patrick: Yes.
Andrew: Why was that important?
Patrick: Yes. There is status with Google where it’s called the Google Premier SMB Partnership and at the time there were only about 18 in North America and when you reach that status there’s man, many things that happened. For one, Google starts giving you MDF dollars that can be used for marketing campaigns. They’ll fly out sales people to train your sales staff how to sell better. They’ll co-market white papers with you, they’ll help fund events, trade shows, and things. It’s the highest level of partnership you can get through Google through their AdWords channel side and having that under our belt, being able to wear that badge and go into a dealership and say we’re one of three other partners in automotive that have this badge at the time. There’s more since then but at the time when we got it it meant a lot and Google is doing so much to make that badge worth something of saying when you work with a premier partner this is what you get. They did videos saying Showroom Logic is someone we trust. It’s like them putting their name behind us and endorsing us.
Andrew: I see.
Patrick: So it meant everything for us.
Andrew: And that started bringing business. Do you have a sense of how much new business you were able to get because of it? Actually, do I have a sense of it? Do I have in my numbers here? No.
Patrick: I don’t know that we looked at an exact figure but I would say that at the time …
Andrew: Actually, I’ve got something here. Roughly 200 dealers to 800 dealers in one year happened around that time.
Patrick: Sure.
Andrew: [inaudible 00:52:12].
Patrick: Yeah, I can’t say that’s all Google but I would definitely credit them a big part of that growth. They came in, they gave us a lot of resources to help us, they helped improve our technology, gave us access to more APIs and betas than we had before. And really just became our partner and we have a terrific partnership with Google now.
Andrew: Here’s what I’m showing for revenue going back to what we said before. Twenty thirteen revenue was 13.4 million just to give people a sense of growth. Twenty ten was 157,000. So from 157,000 to 13.4 million. And over the same number of years you added 86 new jobs. That’s fast growth.
Patrick: Yeah, it’s fun and I learned really quickly that scaling bodies is very difficult. Once we hit that 90 employee mark because we’re at 140 now, once we hit that 90 employee mark it becomes very difficult to manage cultures. And now you have to worry about HR issues. I made a joke with my early founders that as soon as we hired an HR person I’m out, I’m just taking off. We’re too big, too much bureaucracy. But obviously I’m still around so it’s worked out okay. When you really start have to scaling people that fast. When you’re hiring 15 to 20 people a month you have to have certain processes and things established that prove you’re a more mature company. There’s a lot of people who don’t like to work for startups and a lot of times those are the people you want to join your team because they’re seasoned, they are mature, they can bring a new level of professionalism you haven’t had before. So for us to find those people we had to make a lot of changes to show our maturity.
Andrew: Look at this. You’re really good at going after the people you want. How did you get your CTO?
Patrick: Chris.
Andrew: You had no money.
Patrick: Yeah, it was great. Even to this day I don’t really care about resumes because to me I care about communication. So I put this job posting that said in 500 words or less tell me why I should hire you. Got a great new opportunity, start up well, seeking funding, everything. So he wrote me an email back and his subject line was you will hire me. I loved that audacity from him right away and then he went into this great email of this is why you should hire me. And I thought, man, this guy is really good. So as I started creating my short list and interviewing more and more people I decided to put him through the ringer and we do this with all of our developers we hire. We give them a test project. The test project I gave Chris was nothing short of slave labor. I said this is what I need done in this period of time. He came back with flying colors.
Andrew: For free.
Patrick: For free, yeah.
Andrew: He’s just proving himself to you.
Patrick: Absolutely. So obviously this guy was driven. He was tired of his current job, kind of felt like there wasn’t new growth, looking for a new and exciting opportunity and at the time too I think I’ve learned to sell myself and I’m pretty good at hiring these days.
Andrew: How did you sell him before he even applied? What did you say to him that made him say I’m going to tell this guy that he’s going to hire me because I want it so badly?
Patrick: I think I just told him do you want to work in a company where you can have autonomy, where you can grow your own development team and you can help change how people are buying and selling cars online? It was just do you want to be a part of this movement or not and he wanted to. The cool thing was I couldn’t afford him and right as we were going through this investment round everyday after work or in between bathroom breaks he’d call me and say do we have the money yet? Do we have the money yet. Yeah, we’re getting so close. Then one day I call him and I said, “Chris, put in your two weeks, we’ve got the investment. It’s done.” He went home that night, celebrated with his wife, put in his resignation and he’s still our CTO today. One of the best hires I’ve made.
Andrew: We’ve talked a lot about focusing on one vertical and actually you know what I was looking to confirm how much Dealer.com sold for. They sold to Dealertrack for a billion dollars.
Patrick: A billion dollars.
Andrew: So the guest who I had recently Shuki Lehavi [SP] who told me about the need for focus he gave me that example and he said compare them to a site like Wix which sells websites for $5. These guys are also selling websites but they’re selling it to dealers and they’re customizing it to dealer’s needs and because they’re so obsessed and because they’re so focused they end up being more valuable to their customers and being more valuable as a business which is why they sold. Do you feel the same thing is happening for you?
Patrick: Absolutely. I think people want specialists. If I’m hiring an accountant I don’t care if he’s good at golf or any other things. I want the best accountant. So when your whole marketing play is this is what we do and we’re the best at it and they see that focus they also feel like when they become your customer, you’re going to continue to focus on that need that you’re selling them. You’re not going to in three months say that we were sun setting that and now we’re going to focus over here. They have confidence in you. Dealer.com did a great job of that, of we do websites, they also did some paid search and other things as well that complimented it but they were tremendously focused as well. Their name is dealerships. With Dealer.com you’re not going into any other verticals. So yeah, the great example of building a business super focus, owning the entire market and selling for a billion dollars.
Andrew: Does that drive you that they hit that number? Do you feel like we’re got to be able to build a billion dollar business too. I want that.
Patrick: I love hearing those examples and they’re very motivating for me. I don’t really try to compare myself to other companies. I think when the time comes that we decide selling is right, I hope that we get a fair value for whatever it is at the time.
Andrew: How about Bryan Johnson ? You’ve met him, you built his first site, you saw how a human being not some guy who’s like magical and can float in the air but he’s a real human being. Smart, hardworking. Builds up this business that’s worth almost a billion dollars to eBay. Do you feel like all right this is so close I want that too. We’ve got to do that at Showroom Logic. You’re smiling as I say that. I’m seeing some recognitions, I’m not being crazy for suggesting it.
Patrick: For me it’s funny. I’m kind of smiling because I’m really not driven by the number I’m more excited and driven by having fun and the growth and the opportunity that’s here. Whether I sell for $1 million or $100 million or a billion dollars, that doesn’t change the fact that I’m passionate about what I do. I love what I do, I love the people I work with and one day we’re going to sell for a ton of money and whatever the market bears at that point and we all feel the timing right, great. But I won’t let the number dictate whether I’m successful or not. I’ve already achieved success with this company, anything else that happens is just gravy. So although I’m excited for them and think it’s great they were able to build something so large and feel like I totally could do the same, the timing might be different for our company. We may not achieve that billion dollar number but that’s okay.
Andrew: Do your investors know you talk like that or they’re feeling, what is Andrew getting him to say? This is not …
Patrick: They are like, wait a second. This isn’t what we talked about in our last board meeting.
Andrew: You guys are now going into second vertical you and I talked about it before we started the interview. What’s the second vertical?
Patrick: The second vertical is high tech working with companies like Adobe, Net Rack Space, a lot of these big high tech companies. I talked about earlier of that Google partnership we have. They actually decided about six months ago that the high tech space was very similar to auto where you have a manufacturer that does a lot of their selling through Vars. So it’s very similar to what we do in auto where a lot of times we do deals with Mazda or Scion or some of these big OEMs. And then we’re able to go after the dealerships. We can do a deal with a high tech company and then offer digital marketing solutions to all of their resellers. So it benefits the OEM because now there’s more resellers doing marketing about their products. It benefits the Vars because they have no idea how to get on digital and they want to know how. So in a partnership with Google they chose us as a platform partner for high tech. We’re now going to these big companies and saying we have technology that allows us to scale and we can create a digital marketing strategy that you can put through your channel that’s going to benefit everybody. So it’s really exciting because it fits in with exactly the same model we did in automotive, it’s now just kind of changing the landscape a little bit. We don’t have to tweak that much to make it work that’s the great thing.
Andrew: Before we started I checked in with you on the way I was going to position this conversation. I said is it true that to you guys focus is important to you? I don’t want to just force your story into message that I believe in, I’m here to learn from you and you said yes I do, I believe in it strongly. So that’s what we kept in there. How does this new vertical square with your need for focus and what you’ve set up until now?
Patrick: That’s a great question. We feel like we’ve achieved enough. Well, I don’t want to say enough that’s complacency but we’ve achieved enough growth and saturation in the market where we can now take a risk of going into another vertical. So our trajectory in automotive is secured enough that we’ve proven we can sell. We’ve hired amazing people. We have a huge support department that can serve our clients’ needs. That model has been proven for the last few years enough where we all collectively agreed we can now take a risk without hurting our core business.
Andrew: Do you feel you’ve saturated your market?
Patrick: No, there’s still a huge opportunity for us absolutely. The goals we’ve set we’re still not achieving those and we want to continue to grow and automotive over the next few years for us will continue to grow. I think for us is now we’re in a position where we have the capital. We have the things that you need when you want to start a new vertical. So we see high tech as a new company really where every single person working on high tech right now was hired for high tech. So we’re not using any resources on automotive to get high tech done. So that’s a really good thing when you’re in a position where you’ve proven out your model enough, where the revenue is there, it’s keeping the lights on, the trajectory is in the right place and you can take that risk of trying something new but you don’t want to do it too prematurely.
Andrew: I see. You know what the other thing I’m learning from you is that you don’t go door to door with dealers anymore. We’re over time but I’ll just finish this statement and wrap it up here. But you don’t go door to door anymore, you go to people who have your customers, who are those people who tend to have your customers in bulk and can recommend you? I can see in high tech it’s guys like Adobe? Where do you get the dealers?
Patrick: There’s a few, there’s really large dealer groups like AutoNation and [inaudible 01:03:27] is really big groups that own a lot of stores and they’re starting to bring more of their digital marketing strategy in house. So there’s actually a corporate office now with people that control a lot of the digital strategies so signing a deal with them which then can get you into multiple dealerships that helps. Also doing something with the manufacturer who you can basically co-partner on a program where Mazda will say hey Mazda dealers Showroom Logic is our preferred partner for SEM if you use them you can also receive co-op funds. So it’s really nice when you can put those programs together. The thing is they take a very long time. So I wouldn’t say that we’ve taken our eyes off of direct sales. We still have 20 direct sales people that are still pounding the door on dealerships and that’s a bigger part of our revenue than through deals with OEMs. But I would say like on the high tech side, for example, we are starting that company only with that model. We have no direct sales people, we’re only doing top down. Because we’ve learned it, we know how it goes, we know how to model it, we know how long those deals take. It’s much different now than in automotive. And in automotive there’s still a lot of onezie, twozies that they’re not owned by a big conglomerate, they might not be associated with a big manufacturer and they need what we have too.
Andrew: All right. This has been such an interesting story because I know you’ve been written up in Tech Crunch but I don’t read about your company in the tech blogs and the tech articles that I tend to read. It’s different and you and I didn’t meet because we have a friend in common who made the introduction which is the way I usually get guests. We just reached out to you cold and you said the same thing that you said before we started and I asked you what’s the the win for you. You said I just want to teach people and share with them what we’ve learned and if they get that then that’s a win for me and I know they got more than that and so it’s a win for me and it’s a win for our audience and I’m especially grateful to you for coming out here and doing this with a stranger. You didn’t know me before, right?
Patrick: No, never met you. Yeah. Thanks for getting me in and I appreciate the opportunity.
Andrew:: It’s great to have you on here. The website is showroomlogic.com. Patrick Bennett, thanks for being on Mixergy.
Patrick: Thanks a lot, I appreciate it.
Andrew: You bet. Thank you all for being here.
