Why sell a profitable company to take a risk on a new one?

David Rogenmoser finally had a profitable business. PayFunnels, which allowed businesses to offer hassle free, fast, online payments.

How did he do it? And, more strangely, why did he sell it take a risk on a new company, Proof?

Proof allows you to boost your website conversions with intelligent social proof.

David Rogenmoser

David Rogenmoser

Proof

David Rogenmoser is the founder of Proof which boosts your website conversions with intelligent social proof.

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Full Interview Transcript

Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they build their businesses. And a few weeks ago the founder of FE International emailed me and he said, “Andrew, you’ve got to get to know this entrepreneur.” And FE International, if you’ve listened to some of my interviews, you probably know is a company that sells software startups largely. And I feel like, you know what? This guy has deep insight into the companies that are on his network, that he helps sell. If he’s recommending an entrepreneur for me to get to know, I’ve really got to get to know them.

So I reached out to the entrepreneur, and we have him here on the site for today’s interview. His name is Dave Rogenmoser. He is the founder of, among other things, a product called Payfunnels. He created it to solve his own problem. He wanted to collect payment from people sometimes on the phone, make it easy for him to take their credit card, etc. He built it for himself and then started offering it to other people on a monthly subscription basis. And then it became this product that just kind of grew and grew and grew, and he sold it through FE international. That’s partially how we got connected.

The other thing that he’s got is a product called Proof, which landed on one of my sales pages recently. It’s this cool little thing that helps increase conversion rates by displaying customer activity. So if you went to one of my sales pages, you might see not just the name of the person who recently bought, but you’d see their face, and you’d see their location, I think, and it would say, “Hey, five minutes ago Susan bought, Susan from Chicago.” And it just kept popping up, and it kind of gave the sales page a heart. It made it feel like there was activity there.

Anyway, that’s the latest product. I’m going to ask him about both those things. And this interview is sponsored by two companies that you probably already know by now. The first will help you host your website right. It’s called HostGator. The second will help you hire your next great developer, and Dave has used them. It’s called Toptal.

Dave, welcome.

Dave: Thanks, Andrew. I’ve been a longtime listener. It’s good to finally be on your [inaudible 00:02:06].

Andrew: Thank you. What did you sell a Payfunnels for? How much?

Dave: So we sold Payfunnels, I can’t say the exact number, but kind of mid to a little below mid six figures.

Andrew: So not life changing, but a definite win.

Dave: Yeah. I can’t retire on that, but we did use that really to jumpstart our newest project, and that made a huge difference there.

Andrew: So you know what? Why don’t we get into the toughest question. I specifically when you asked me about Proof, I said, “I can’t put Proof on my site. I know one of your competitors is a friend of mine.” And then I walked away from the conversation thinking, all right, I’ll get to know Dave. We’ll do this interview. And suddenly I looked on my sales page and, boop, it comes up. And then another one came up, and it was kind of charming, so I left it up there. But how did you end up on my sale site?

Dave: Yes. I was a little bit lucky. Honestly, just over the last three months Proof has kind of spread like wildfire among kind of the information marketing, internet marketing community, and I think it was through Caleb, right? I knew Caleb, and I knew he knew a ton of influencers. So I made sure we launched to get Caleb on board really quickly. I said, “Just use this. You can use it with your clients. Just give me some feedback, kind of let me know, you know, how it’s working and all that.” And so yes, I ended up … I actually kind of found out, I think I actually clicked on one of your ads for the Bot Academy and saw it on there. And I was like, “What the heck? How did this happen?” I went and searched in our account and saw and kind of traced it all back to Caleb’s account, that Caleb had done it. So it was great.

Andrew: I see. So Caleb Hodges is the guy that we hire to help buy our ads, our Facebook ads, to help us with copy and sales. And you gave him a free account, and so you knew that he was working with clients like us, and you said, “Hey, he’s the guy who’s going to help us spread the word.” That’s what it was.

Dave: Yeah. That’s kind of been our strategy from the beginning is to get it in the hands of people that can get it on all of the top influencers. And so yeah, it paid off. I didn’t know what he was going to do with it, but it paid off.

Andrew: I noticed that you are really good at working with influencers. I kind of thought that you just talked to Caleb. You said, “Hey, you’re working with Andrew.” I thought it was more like a direct attack, which I was especially charmed by. I see it’s much more influencer marketing, which has also got its own charm to it. And I liked that that worked for you guys.

Let’s go back to what you were doing before all this. You were a digital marketing consultant. What does that mean? What were you selling?

Dave: So I got my start about three years ago as a digital marketing consultant. I really…

Andrew: That’s it?

Dave: Yeah, three years ago.

Andrew: What were you doing before three years ago?

Dave: So three years ago to the day I was just driving away in Columbia, Missouri. I’d been living in a fraternity as a house director there, and it was like working for this campus ministry for three years. That was, yeah, right at three years ago, and I…

Andrew: You were working for a campus ministry?

Dave: I was right before this.

Andrew: You’re a Christian?

Dave: Yeah, I am.

Andrew: A do-gooder Christian. Do you curse? I cursed so much before we started. Was that like a like a turnoff or something for you?

Dave: I didn’t used to curse. I curse a little bit now. No, not a turnoff at all. I like to have fun and hang out.

Andrew: So then how did you end up in digital marketing and the whole online space?

Dave: Yeah, so I just wanted to be an entrepreneur, kind of felt like I need to be an entrepreneur and didn’t know how to go about that, and ended up kind of getting into software through The Foundation, Dane Maxwell and Andy Drish, and started kind of trying to figure…

Andrew: You were a member of The Foundation?

Dave: I wasn’t a member. One of my friends was, and he kind of told me about it. And I would just kind of like leech off him, getting the information he had. I’m kind of watching him do all this stuff, and I’m just like trying to kind of copy what he’s doing and figure that out. So I ended up sinking about $10,000 hiring some guy off of Upwork and creating this fraternity recruitment software called RedWood Recruiting.

Andrew: Railroad Recruiting.

Dave: RedWood Recruiting.

Andrew: Oh, RedWood Recruiting. I see, this is a thing you started in 2004.

Dave: Yeah. Oh no, this would have been in 2000 . . .

Andrew: I’m sorry 2014, excuse me, 2014 to 2015. I’m looking at your LinkedIn profile. I see, and so you spent $10,000 creating software. What was the software that you created?

Dave: So basically it was like a CRM for fraternities to use to recruit members. And that’s, again, that’s the world I’m living in. Most of the people I know, I know they’re all using spreadsheets to kind of manage all of their recruitment, and they’re spending like $30,000 a year on recruitment. And I was like, hey, I can make a little software that does, you know, this better and replaces spreadsheets. And so I created that and got a little bit of revenue from that, mostly to spend about eight months spinning my wheels, losing all my money, before I was kind of running out of cash and I had to turn to a different model.

Andrew: Why? What was the problem with it? Now that you’ve got some experience, what do you think you could have done differently? Or what didn’t work out for you?

Dave: Well, obviously, the problem was me. I mean, just starting out early on I just wasn’t taking the right actions. I spent $300 of my first money getting a logo designed on 99designs. Like I would never spend $300 today, and like we have a lot bigger business. And I was just doing all the wrong things. And so I think the large problem was me. I think secondly, like it just wasn’t a huge pain honestly. The fraternity guys, they were fine with it. They weren’t really trying to like go out there and really just crush recruitment. They wanted to do a good job, mostly wanted to have fun and, you know, be a college guy. So it just wasn’t a huge pain I was trying to solve. I was kind of trying to force a square peg in a round hole.

Andrew: I see. Okay. And so then you started to do freelancing work?

Dave: Yeah, exactly.

Andrew: How do you learn the stuff that you were going to do freelancing work on? Because you don’t have that background.

Dave: Yeah. So just through reading tons of blogs, probably listening to Mixergy stuff, listening to Smart Passive Income stuff, and just being like, hey, I’m learning about marketing here. And I saw other people who were starting to do Facebook ad consulting and websites and all that kind of thing. So I decided to start through just kind of a program that I joined. I started to consult with other people and sell local people or local business owners websites, SEO, and Facebook ads, and kind of outsourced the work.

Andrew: Local businesses?

Dave: Oh yeah, man, I was meeting the people at Starbucks and signing them up.

Andrew: What’s an example of a local business that you sold ads to?

Dave: One of the first people was an architect that we pitched and sold, and we were running Facebook ads for him to acquire new leads for his architecture company.

Andrew: Wow. That seems kind of a hard to sell, because local businesses, every dollar matters to them, right? They’re not flush. They’re a little scared of online stuff. They don’t have a sales funnel set up. How is it to recruit them and to actually service them?

Dave: Oh, it’s rough. I mean, the first guy, we actually drove out to his house. This was another architecture guy. We drove out to his house. I’m sitting in his living room, and I had just heard about people pitching like $2,000 a month packages. I’m sitting in his living room. It’s just him. We get to the pitch. He’s loving it. I’m talking about SEO and all this stuff. I’m just kind of like regurgitating stuff I’d heard. And we get to it, and I just flat out lay out $2,000 a month retainer for SEO that’s going to pay off like six or seven months down the road. And he just like his face goes white, and he’s like so offended. He’s like, “That’s twice as much as my mortgage. What are you talking about? I can’t pay this.”

Andrew: Ah. It’s such a great story.

Dave: Yeah. And so I realized very quick I had to like find the right target, the right size business to do that. But once we started picking the right businesses and got kind of a little bit more skills, it was easier to get started.

Andrew: Right. You know, let me hang up and come right back to you, because your video just froze.

Dave: Okay.

Andrew: Yeah, $2,000 I can see being a lot of money to a small local business, but frankly, if Caleb … ah, your video, there it is. Your video froze. What I was saying is if Caleb charged me that per week, I’d probably pay him because he’s so good. And I guess that’s the difference between an online business versus an offline local shop. All right. So did you start to shift your attention away from these local businesses?

Dave: Yeah. So we just started getting into like larger businesses and started kind of more marketing nationally, and marketed on LinkedIn and started getting a lot of sales on LinkedIn. And so I don’t think it was so much like local. I just think we were just targeting the wrong size business. I think we found as we started targeting businesses that were doing over a million dollars a year, it got way, way easier to sell them marketing services.

Andrew: All right. So then what was the problem that you had, that your partner helped solve with the new software?

Dave: Yeah. So we started landing clients, and we started trying to kind of manage the payment, and we had tried a couple other things to manage the payment. And basically, one day he comes to me and says, “Hey, I want you to start using this thing called Payfunnels.” And I was like, “Great, I don’t care. I’m just going to go out there. I’m just trying to land new clients.” And so I start landing more clients. I’m always sending links to charge them with a Payfunnels account.

And then actually, funny story, one day I came to him, and I wanted to accept the phone number in the order form on this link. So I said, “Hey, can you set it up to where it collects phone numbers, so I can call him afterwards to thank him?” And he said, “That’s going to take a few hours to do.” I was like, “Few hours to do? Just like look it up on their website, or something like that,” because it was a beautiful website. And that’s when he said, “Dave, like we are Payfunnels.” And I literally had no idea to that point. I’d been using it for two months, and he had built it and was like managing it. And I don’t know why, if it was he purposely didn’t tell me or what, but it was this great service that I really loved, and I was really excited when he told me that he had just kind of built it one day without me knowing.

Andrew: What do you mean? Why did you even have any trouble charging people? It feels to me like there are tons of different ways to charge people. I can just go to PayPal and type in their credit card information myself. I think I could do that. I can go to Stripe and without even creating a landing page I can start taking people’s credit card data into my Stripe account. What was missing that you were looking for?

Dave: Yes, we wanted to use Stripe for sure, and so we didn’t really want to use PayPal, just because somebody had told us Stripe was great. We also wanted to build to kind of create different amounts on the fly, which some of these other ones you have to kind of create a really nice template beforehand of various prices. Sometimes on the phone I dropped from like $1,500 a month down to like $1,300 a month. I don’t have time to like create this new thing. I didn’t want to hang up the phone without getting the deal across the line right there, because I didn’t have like an order form ready.

And then thirdly, we wanted to be able to send it off to him really quickly. Some people wanted to see it. Some people wanted to type in the card their own, instead of being on the phone. And so I wanted to be able to create a link and send it off in an email really, really quickly.

And so I just think we looked around and couldn’t … we didn’t have the flexibility that we wanted to, but we also wanted to hook up to Stripe. And so he created this to give us a little more flexibility and because that’s what software guys do. They go create things for fun in their free time.

Andrew: I see. So you just created it for you. You guys used it. I asked you before the interview, “What about FreshBooks and all those other platforms that existed?” And you had the best answer for it. Do you remember what you said?

Dave: I don’t remember what I said.

Andrew: You said, “Eh, you know what? I didn’t even think of that.” It wasn’t like you put in any research into it. It was just, you know, maybe there are competitors out there, maybe there aren’t, but I just needed this. My guy, my partner, my business partner created it. I started using it, end of story here, Andrew. There’s not that much more to it, except that after you started using it other people saw you use it, and said what?

Dave: They said, “How do I sign up for this Payfunnels thing I see you using?” And that’s when we kind of started to shift from having this product. We never intended to sell it, to be honest. We were just going to use this thing. We were going to go make our money selling other stuff. And after doing that for a bit, we’ve kind of turned it into a SaaS product and made it so people could sign up, they could have a free trial, they could test that for themselves, and it shifted to being kind of this like complimentary piece of our business, that just kind of grew on its own.

The first customer that you had, how long did it take you to get them on board after you created this? What am I trying to say? I guess I’m saying what you had for yourself couldn’t just be used by the first customer that you had. What was the process that you had to go through to turn this thing that was an internal tool into something other people could use?

Andrew: Yes. So I used it for the first four months, and I was totally the first customer. I wasn’t involved with it at all. I was just the guy sending out and collecting payments. So I was kind of the first customer. And it was probably three or four months after that that we started having people asked us about it. And it maybe took, you know, a week or two to get it ready to actually have somebody sign up. So it was a pretty big process when we realized there are some demand to it, and this just kind of slowly built up along …

Andrew: What did you have to do to get it ready?

Dave: I don’t even know. I mean, just kind of something inside the code he had to build to create accounts. We had to have a nice landing page. We had to have a free trial. And so it was just some of the internal technical stuff. I don’t even know what it was though.

Andrew: How did you get your first customers?

Dave: So we started selling a program called 6K Success, that was basically everything I had learned. We’ve grown our agency to about $25,000 a month. It was everything I’ve learned about signing clients, landing clients, outsourcing deals, all of that. And that was like a $997 program we started selling via webinars. We kind of entered into the information marketing space. We ended up selling about 450 people with that over the next, I don’t know, 4 to 6 months. And of course, they’re all learning the exact same model and want to know exactly, “Hey, what does Dave for his payment invoicing?” So they’re really all people that were in that program.

Andrew: Okay. And so you started getting those sales. What did you get from that first webinar? Do you remember?

Dave: Oh, for the course? I think our first webinar had nine people on it, and I think we kind of knew most of them. So I think we sold three people on that very first one. It was a pretty small webinar, but it felt like we made about a million dollars at that time.

Andrew: I also have here in my notes that at some point you started selling something for $500, and you made $7,000 with the first webinar for that. What was that? Does sound familiar at all? Was this one of the digital marketing products that you had?

Dave: That might have been a little bit later on when we started selling kind of some like higher … well, I guess that was the $500 product. We sold lots of different size products there. So it might have been one of those other ones there.

Andrew: Okay. Let me take a moment to talk about my sponsor, and then I’ll come back and we’ll talk about the rest of this story, how you got more customers, why you sold it, and what happened that led you to create Proof.

But the first sponsor I’ll talk about is Toptal. That’s where you get to go hire developers. And I told you that I was going to do an ad for them, and you said that you use them. What do you use them for?

Dave: So when we were launching Proof, my partner’s a really great developer, but we really wanted someone who had scaled a lot higher and really ran software for much bigger companies. And so we really wanted a senior developer to help us scale this thing from the very beginning and lay a good foundation. I didn’t know where to find that guy. I looked on a lot of different places, ZipRecruiter, tons of other sites. I was totally lost. Heard about Toptal actually from Mixergy here, went on, talked to the guys, had a great experience and hired a guy, I guess it was six months ago, and he’s still with us today. And he’s a total all star, so we love it.

Andrew: And so he’s working with your partner, kind of like a full … is it a full-time project?

Dave: He’s a part-time consultant. He’s got a pretty good gig somewhere else, so yeah. He’s almost like a consultant [inaudible 00:16:51].

Andrew: So he has a full-time job somewhere?

Dave: Yeah, he does.

Andrew: And this is what he’s doing on the side working with you guys?

Dave: Exactly.

Andrew: What do you think about the prices that they have?

Dave: I’m great with it. I mean, I think with developers, you just are better paying a lot of money. It’s just really worth it. If you can sell a product at all, having a great developer is only going to pay off a ton. And so we pay, you know, a good amount of money for our guy. We pay about $100 an hour for him and about 20 hours a week. And it’s been ridiculously worth the time.

Andrew: What does he specialized in?

Dave: He’s just kind of the total full stack guy. I mean, he’s really just been kind of an advisor to us and kind of saying, “Hey, here’s the decisions you can be thinking about now if you’re going to scale to $100,000 a month by the end of the year.” And that’s been really helpful.

Andrew: And so is he also doing coding himself, or just giving you …

Dave: He’s doing it.

Andrew: I see. So because he’s seen it on the job himself, and he’s experienced what it’s like to grow a business like yours, he can bring that knowledge in and he can also do the coding himself. I see, that makes a lot of sense.

All right, If anyone out there is looking for a developer, kind of like the one that Dave is talking about, go check out Toptal.com. Or frankly, if you want something a little bit better than most people get when they go to Toptal.com, in fact, something so good that it’s 80 hours of Toptal developer credit when you pay for your first 80 hours, in addition to a no-risk trial period, if you want that, go check out the Toptal.com/Mixergy. Top as in the top of the mountain, tal as in talent.com/mixergy. So if you do 20 hours, that means that after 4 weeks, you racked up 80 hours. That means the next four weeks was free for you?

Dave: So yeah, that link saved me $8,000. I almost fell over when I heard you say that on the podcast. I was like that’s literally $8,000 of free development. And we got it on our account. It was sweet.

Andrew: You know what? They actually don’t want me to overemphasize this. This is the first time that I’ve actually underlined it that way, because they don’t want people to sign up just for the free stuff. They also don’t want me to emphasize the two-week trial period too much. So if you’ve heard me read this a million times, guys, and you see me say it the exact same way, it’s because they said, “Look, Andrew, we want no fluff in it. We don’t want you to oversell it. Just tell people this is what they get. But if you oversell it, we’re going to end up with people who are just looking for the no-risk two-week trial period.” And so I said, “All right. I’m going to read it exactly as it is on the landing page.”

All right. So I see that you’re starting to get business from this. Where did you when you decided to really … when you decided to focus on marketing, what worked for you to market Payfunnels?

Dave: So really, the best thing for us was we just kind of had Payfunnels tacked onto information products. And so it was always kind of like the second in command. We would try to sell the products that taught people marketing, and then we would always just kind of recommend Payfunnels along with it. And so, and I think it’s a great strategy. You know, we’re selling this other thing. It’s totally making money. And then if we can just kind of streamline behind and sell software, that was great. And it really built up to a pretty good recurring revenue just from our current customers buying it.

Andrew: But you didn’t do any of what you’re doing now? You didn’t start buying ads for it? I’ve seen your Facebook ads for Proof. You didn’t look for influencers. You didn’t do any real marketing just for that?

Dave: It’s funny. We really didn’t do that much marketing just for Payfunnels. We’ve run like some retargeting ads every now and then, but we just never planned on it being the product that it became. It really kind of became that over time. It became out of a need. People just kept asking us about it. People started signing up for it, just on our website without even us telling them about it. And this kind of grew, because I think we’d solved a very small pain, but a pain people felt online. And so it just kind of grew into this thing that we were able to eventually sell.

Andrew: Why didn’t you see more possibilities with it? Why didn’t you say, “Hey, you know what? This whole selling information products is actually draining. It depends too much on us. It depends on you shaving every day and see you’re going on camera.” Why didn’t you say, “You know what? I’m going to get into a SaaS. This is a great SaaS product, that this could be our big thing.”

Dave: Well, it’s kind of like what you said at the beginning to be honest with you. Payfunnels doesn’t solve a huge pain. It’s not particularly sexy. It’s not this thing that can make you a ton of money. It’s just a thing that can kind of make a certain pain a little bit less painful. I think there are all other options too, and this is a good lesson too, like even if there’s other options, there’s still tons of space to go out there and build products that solve a certain niche problem. And so I think for us we just kind of looked at it, and we liked it. It solved a problem, but we didn’t see it being this huge thing down the road. And so we just never really got that jazzed up about it to be honest.

Andrew: I kind of see that happening in social media publishing tools. All right. Like Buffer is the giant in this space. Hootsuite is another giant in the space, in the medium-sized business in this space. And still it feels like there are tons of other competitors, none of which are getting super rich like Hootsuite, but they’re making a nice living, and they’ve actually got a nice lifestyle company coming from just building another way to publish on Twitter. Right? That’s what you’re saying. That’s what this would have been.

Dave: Exactly. Yeah, I mean, there are other options, and to be honest with you, you know if I hadn’t built a relationship with the people, and if I wasn’t kind of teaching them courses and they didn’t trust me so much, it would have been a way harder sell, to just kind of go and say, “Hey, we’re Payfunnels.” But because we built up the influence, built up the authority, it was pretty easy for everybody to sign up without even really thinking too much about it.

Andrew: I don’t know. I kind of feel like it could have been a ClickFunnels type product, you know? When I think of the name Payfunnels, it just screams for better landing pages, for better upsells, for all that stuff. But I guess you always thought of it as just an internal sales tool, huh?

Dave: Yeah. It was never really a cart either. You know, like I know the guys at SamCard, and we had kind of even talked about kind of selling them Payfunnels as an invoice. And it was always an invoicing tool. And so we were never hooking it up to like the end of landing pages and selling our courses through it. We just kind of never moved it into the shopping cart arena, and to be honest, I’m glad we didn’t. But yeah, it was just always more of a coaching, consulting, invoicing tool.

Andrew: I see. Okay. So then why did you decide to sell it instead of keeping that revenue coming and having it be part of your sales funnel?

Dave: Yeah, it was a battle. I mean, we never really thought it would get to the point that we would sell it. We never thought we could sell it for as much as we ended up selling it for. And we saw that it was going to keep going well, but we decided to sell it, or at least got really interested in selling it when we started to have a new idea for our next big idea, which was Proof. And it was another software company, another software product. With thought we would take everything that we had learned and then go put it into this new product. But the problem was cash. Right? Like I’m going to hire this guy on Toptal. He cost a lot of money. And I didn’t have enough money to go pay him for very long. And so we needed to liquidate one of our assets, Payfunnels, to go do that. So for us it was like, “Hey, this is going to go well, but like I think the trajectory of Proof could be way different if we had a little bit of a war chest to go throw at it.

Andrew: What about the unexpected tax bill?

Dave: Yeah, taxes are rough, man. I’m actually paying that like tomorrow.

Andrew: What is this unexpected tax bill? What happened?

Dave: Yes. So we just, you know, we kind of growing the business and just kind of lost sight of taxes, right? You know, I’m just…

Andrew: You mean you missed the … what is it? March 15th or April 15th, depending on how you do your taxes, deadline?

Dave: Yeah. So we didn’t get that all done, so we filed an extension. We just hadn’t really thought about how much we would owe from the past year. Last year also I hadn’t really thought about paying the taxes on Payfunnels, which ended up selling in March for like a quarterly tax estimation. And so all this kind of caught up to us. And we were like, “Wow, this is a lot of money.”

Andrew: Because as a business, you’re supposed to keep track of how much money you’re making, set aside a portion of that for taxes, know what that portion is throughout the year, and then at your filing deadline pay it. And yeah, that’s kind of a pain in the butt, right? And so what they try to get you to do is, in fact, you’re required to pay estimates throughout the year based on your previous year’s profit, which I never do because a Mixergy interviewee said you don’t have to do it. You could just pay the penalty. And I said, “Screw that. I’ll pay the penalty. I’d much rather look at my bank account and see the money in there.” And then, who knows, maybe I’ll end up spending a whole lot of it before the end of the year.

I see. And you didn’t do either one of those things. And then the bill comes and you say, “Wow. We should have saved this money instead of spending it.” Right?

Dave: Yeah. It’s such a grind. You’re just kind of head down, you’re making money, you’re just kind of eking by, trying to just build a business, and you just forget about that stuff. We didn’t have our books in order. We just kind of got our books in order about six months ago, got our accounting in order.

Andrew: That’s the worst. Let me talk about that, because you know what? I think it’s too many businesses have their books out of order, and the entrepreneurs behind them are too embarrassed to admit it to themselves, and so they don’t even think about it. So maybe in the middle of the night you wake up and you go, “Oh, crap. My books are out of date. I don’t even know how much money I made, how much money I owe. But this is my number one responsibility. Everyone’s assuming I have this right. If I even talk about it, then the team is going to think that I’m a boob, and everyone around me is not going to trust me anymore.” And in reality this happens much more than people will admit.

Dave: You’re describing my life. Yeah, telling me it’s embarrassing. And you’re like, I’m like, “Six months ago, I don’t actually know what a profit and loss statement is or does. Like I need to learn these things, because we’re actually making money now.” And you just learn how to keep track of it.

Andrew: Who did the books back in 2016 for you guys?

Dave: In 2016, we actually used a company called CPA on Fire.

Andrew: CPA on Fire. Oh, I know him. They’re kind of connected to EOFire right?

Dave: Yeah, exactly. [inaudible 00:26:33]

Andrew: Right, right. He’s the guy who does the podcast with John every 30 days or so, every month, to talk about how much money they made last year.

Dave: Gotcha.

Andrew: How was that?

Dave: It was good. I mean, I think we were kind of a pain to work with, because it was like last on our priority list, to be honest with you. Like we’re late, we’re never getting back to him on time. We just weren’t really good about kind of managing that. It was good. We don’t use them anymore.

Andrew: But they’re a bookkeeping service?

Dave: They do bookkeeping and accounting. They’ll like do your taxes and stuff at the end of the year too.

Andrew: Okay. All right. And so then, wait, really? He’s a CPA, and he has people who are going to do your books for you?

Dave: They will do your books and kind of, they’ll do the whole thing for you.

Andrew: Okay. All right. So then what was the problem? If he’s supposed to do your books, you were supposed to get him data, huh?

Dave: Yeah, we were supposed to get him data. We just kind of had rough communication the whole time. And again, that’s like 80% on me. We just kind of wanted somebody that we could see face to face, I could talk about it, because I’m like kind of a dummy about this stuff. So I just like need someone to sit down with me and like tell me like what even is going on here. So I ended up finding a guy that moved up here, named Adam Rundle [SP] from South Africa.

Andrew: Just a local guy?

Dave: Yeah, a local guy who moved up to be kind of in our friend group, and this guy is an accountant. He’s kind of working with us to get everything back in order, and life’s been sweet since then.

Andrew: You know what? I don’t even want to get my data to them. I want if the data isn’t there, it could be their fault and they better scramble to fix it, right? I’m going to give you my username and a password for Stripe, because on Stripe you can actually create accounts for bookkeepers. Now, it’s your fault if the data isn’t there. I want it on them, because just like you, I end up beating myself up. Why didn’t I send over the data to them? Meanwhile, I get tons of other stuff, and I have to remember to download the file in a spreadsheet, pass it on to them. Screw that. It’s their fault if it’s not done.

I don’t mean to be a dick. But you know what? Damn jerk. I don’t know why I’m cursing a lot with you. I think it’s because it’s like late on Friday that we’re recording. But I don’t want it to be on me. I want it to be on them.

And like you said, I wish I’d known that too. I want once a month, a real in-person conversation. Actually, I don’t even want an in-person. Face to face is what’s important to me, and I schedule that, because if they say, “Hey, Andrew, last month’s books are done.” I say, “Great. And then I forget to look at them in detail. Or I have to set that time aside, and I never am as efficient as if someone’s looking over my shoulder. So once a month if you’re my bookkeeper, you have to first of all get all my data, and number two, you have to schedule a once a month call me where you watch me go through my numbers and understand every bit of it.

Even though I could do it by myself and email you questions, and you email me back, screw that. Watch me do it so that if I have questions, you’re there to respond. And you know what? That seems like a big ass. I thought like maybe that was like a weak thing to do. But in reality, they like doing that. And they appreciate that you’re on the books and giving them feedback in real time, and then they adjust the way that they collect data based on what you’re seeing. It’s fantastic.

Dave: That’s really great. Yeah, I’m on a twice a month plan right now. We meet twice a month and do the exact same thing. And I’m sitting there, and I’m just asking a million questions. Like, “What is this number?”

Andrew: You know what? I should do the twice a month. Why do you do it twice a month? Maybe that’s what I should be doing.

Dave: Because I need it, you know. I’m trying to grow a huge business here, and these are CEO skills I just need to learn. And so I think, for me, the last six months has been about transitioning from like marketer, learn how to make money to CEO skills, learn how to build a team, learn how to keep money, learn how to start to scale.

Andrew: You know what? My friend Will Schröder runs a bunch of different companies. He gets his data, specific numbers every single morning sent to him, and I get it. You want to be on top a specific numbers to just get a sense of where there’s a crisis, where there isn’t. I’m not yet ready for that. But this twice a month thing, that’s a great idea, right? Let’s see where we’re spending. That’s one of the big things I took away from this interview.

All right. So then FE International, not to promote them, but why them? Why am I seeing more and more people use them?

Dave: I just kind of found them through, I think, Googling, FE International Googling, or how to sell startups, how to value SaaS companies. I had Facebook messaged a few people that I know in the space, that I thought would be interested in buying Payfunnels, that could really kind of tack onto what they’re already doing. But ultimately I had no idea what I was doing. And I was just thinking if I go into this alone, either I’m going to get hosed, or the buyer is going to get hosed, and I don’t know which one that’s going to be until down the road, and I didn’t want to mess anything up. And so I decided to go hire a company that had done it before to kind of walk me through the whole process.

Andrew: How do they work?

Dave: So they assign you a broker, and you get this broker. Basically, you pay them a fee if the sale goes through. You don’t pay them anything if the sale doesn’t go through. And then they’ve got their full email list of people that are interested in buying SaaS companies, and they kind of work with you, put together the whole prospectus, the whole package, and they send this thing out to their list of buyers and start to field all the interested parties.

Andrew: And then what percentage of the sale do they get?

Dave: I think it was 20% is what we ended up paying them.

Andrew: And you feel like you got more from them selling it than you would from Flippa?

Dave: I think so. I don’t know about the competitors. To be honest with you, I didn’t look at a ton of them. Yeah, I think I got 20% more than I would have, had I gotten on my own. So it’s almost like it’s free in my opinion. Plus tons of headache, tons of hassle out of your hands.

Andrew: The only issue I have with FE International, I think the name just makes it feel a little bit like mysterious and not like … but I don’t know what name would have worked for them. They can’t go with the founders’ names, because then it would seem a little too big for smaller businesses to use. They can’t go with a cutesy name, because then it would seem a little too silly for a business to use. But I’ve heard good things about them, and it seems like one of the things that they helped you do was like decide that you really did want to sell. It seems like throughout this process you were a little bit hesitant, huh?

Dave: Yeah, I mean, I pulled out once actually. So we had listed it at a certain price. We were about to get done. I had interested buyers, and I looked at it, and we’d grown significantly in about two or three months the first value of the company. And I was like, “It’s worth a lot more. It’s worth 30% more now than we listed it at. We need to pull this thing off. Like this is the wrong price.” So I pulled it off against their desires, and we ended up relisting it again. And finally got a couple people that were back interested in. We kind of went through the due diligence. And on the last day, I mean this is like a five month process, because we’d pulled out once. Finally on the last day I call them to pull out again. And I promise I’m not like that sketchy of a guy here, but it’s just like an emotional decision. You’re selling your business, the most money you’ve ever got in your life. You’re like, “This could be worth way more later on.” I’m like the optimist. And so I call him, and I’m like, “Hey, I think we’re just going to go ahead and pass on this, actually. I’m really sorry for the whole hassle. We don’t mean that at all. I think it’s what need to do.”

He was like, “Well, just talk to the owner, Thomas, here real quick.” You know Thomas. He’s the one who introduced us, and so I get escalated to the boss, and I’m like …

Andrew: Yeah, Thomas is a co-founder FE International.

Dave: Yeah. I get escalated to him, and I’m like, “Gosh, this guy is going to try to sell me on selling this. I know he obviously wants me to sell it.” We talked for about an hour. And I told him about Proof and why we are selling. And he just goes, “Dave, listen, this is totally normal.” He goes, “Listen, I don’t really care whether you sell it or not. This is not a huge piece of our revenue, but I would sell, brother. I would sell. You’re going to have a bad name in the SaaS space. If you like pull out again, it’s going to look bad on us. And I just think you’ve got a really big opportunity here to go focus and use the cash and put it all towards Proof.” And at the end of the call I went in thinking I was going to totally pull out, and I left saying, “Sell it. Let’s do it.” And that was a great decision. I’m really thankful for his advice there.

Andrew: What was the revenue like before you sold it?

Dave: So revenue was right around like $10,000 MRR when we sold it.

Andrew: Impressive.

Dave: Yeah, that was cool.

Andrew: With just one developer.

Dave: Yeah, just one developer. Kind of this side product. I mean there was no blog. There was no Facebook advertising. We were missing a lot of stuff that businesses typically have. And it kind of just built up on the side really lean.

Andrew: What’s this other business that you also have, the one that teaches?

Dave: Yeah, the Entrepreneur Alliance. So last year, we started that about eight months ago. It’s a really fun group. Basically, I had made a bunch of money selling courses and all of that. But I was kind of sick of the internet marketing space. I was kind of like everyone’s just doing weird stuff, and I just didn’t like the feel of it all. And so I basically started this program. It’s $30 a month to be involved. And I just said, “Hey, listen, I’m just going to kind of show you everything.” I’m going to have public numbers. I’m going to tell you about my days. I’m going to tell you the ups and downs. I’m just going to be me and raw and real. And if you guys want that, hop in. If you don’t, don’t hop in.” It was really a scary thing.

And so we just kind of opened it up. This is something that was going to be fun while we went and built software companies, because that’s where we were kind of shifting to. And it’s grown to about 800 and, I don’t know, 50 members right now, that all pay monthly. It’s been a ton of fun kind of having that on the side.

Andrew: And what did they get for that money?

Dave: They basically get four trainings a month. They get three that are trainings, interviews with experts on how to do different parts marketing. They get one behind the scenes. And the behind the scenes is like an hour long of me breaking down all of our numbers, all of our funnel numbers, upsells, downsells. Here’s our cash. Here’s everything that we do.

Andrew: For Proof or for what?

Dave: This is for Entrepreneur Alliance, how we grew Entrepreneur Alliance.

Andrew: I see. Oh, so you’re showing them the business that their customers of how you’re getting customers and then how you’re upselling?

Dave: Yeah. I just kind of share my screen. We look at all the ads. We look at all the churn rate. Here’s why churn is bad this month. Here’s what we’re doing …

Andrew: I see your churn. It’s 12.2%. Why is churn 12.2%? And is that bad or not?

Dave: I think it’s too high. Baremetrics does it a little bit interesting, where it’s a little bit artificially high, so it’s probably a little bit lower than that. Yeah, we’re just working on having a better product that people want to stick around. I’d like it to be ultimately down to like 5% or 6%. But I think high single digits is probably a good number to shoot for as well.

Andrew: By the way, the reason I know that and I know all your numbers from this business is because you’ve made it public. Anyone can see it. The URL is alliance.baremetrics.com. It really shows off too why Baremetrics is such a cool tool, that’s just so well designed. I can see like your monthly recurring revenue as of today is $23,239 from that business.

All right. Let’s get into … actually, you know what? Let me take a sponsorship break, and then we’re going to talk about Proof, this thing that ended up on my site and on other people sites.

The sponsor is a company called HostGator. Let me ask you this, actually. Dave, your a guy who has seen a lot of businesses. You’ve tried a lot of things out. If you were to start today with nothing, no money, no nothing, just a HostGator website that you now have to populate with some content and turn into a profitable business, what would it be?

Dave: I would start a consulting business again.

Andrew: I think so too, yes.

Dave: I would go just try to talk to people about what they needed, charge them monthly retainer to work with them, and then just go get enough people to pay me $6,000 to $10,000 a month in order to have a little bit of buffer and start growing that.

Andrew: $6,000 to $10,000 a month.

Dave: Yeah. I think that’s a number that I can live comfortably on. I’m not panicking.

Andrew: Oh, you mean in the aggregate, they’d all pay you $6,000 to $10,000 a month.

Dave: Yeah, totally.

Andrew: Okay. And then what would you charge an individual client, and what’s a service that you would charge?

Dave: I would run Facebook ads for somebody, and I would charge them probably $1,500 to $2,000 a month draw to run their Facebook ads.

Andrew: That does seem like an easy way. And if you didn’t know how to do Facebook ads, what would you do? How would you …

Dave: Well, when I started, I didn’t know how to do any of it. And so I’d go find people that knew Facebook ads, and I would charge clients $1,500 a month, and I would pay the person $750 a month, and I would just kind of make $750 for being the face of it, and they would do all the work. And so …

Andrew: I’ve seen multiple people do that. I worked with a guy who did that, and frankly it’s pretty good, because I just want someone who knows me and like cares enough to like obsess about me, to talk to me and see what I want, and then just go figure out how you do it. I don’t care if you’re the one clicking the buttons on Facebook’s ad platform or not.

All right. That makes sense. All right. Listen up guys, if you’re doing that or anything else, it’s so easy to get started with HostGator. In fact, one of the packages that HostGator has even on their cheaper collection of packages, this package will let you have an unlimited number of domains. In fact, just go out and come up with a domain name, mynewfreelancebusiness.com one day, and then the next day it might be mynewblog.com, and the next day after that it could be yourname.com, and you just keep launching these domains, and they’re not going to charge you any more. Obviously, you have to pay to buy the domain, but those are pretty inexpensive. Less than $10 a year will get a domain, and you’re up and running. One-click install of WordPress, easy to manage, everything’s up and running, and you can just experiment with a bunch of different ideas.

If you’re out there and you’re looking to do that, HostGator’s a great platform, and you might even already know that, that for less than 10 bucks a month you can set this up with HostGator. What you may not know is that HostGator also will scale with your business. In fact, I didn’t know this when I was doing ads for HostGator in the beginning. But when we started this new business, Bot Academy, which we have Proof on, Proof the software on, I wanted a really robust hosting package, because I knew that there would be days when hundreds of people all show up on my site at once, thousands of people all show up within the same hour, and I wanted a package that could really hold up to all that pressure and give me a lot of flexibility to install whatever crazy nonsense some of our developers might want to experiment with.

And so I talked to HostGator. I said, “What’s your best plan?” They had one that was a little more expensive, not too much more expensive, like $180, I think we’re paying. Dedicated server, all this customer support we need, and a really, really good plan that keeps our site up and running fast, and that’s one of things that I need to be better at communicating to you guys.

So if you’re looking to get started with HostGator, I’m going to give you a URL where you can see the inexpensive starting plans, but be aware that you can always upgrade with them and get the more robust plans, which is what we did, because I knew that we’re going to get a lot of traffic. So here’s the URL. Go to HostGator.com/Mixergy, HostGator.com/Mixergy. When you do, you’re going to get 50% off their already low prices on these starter plans, and, of course, they’ll always know that you came through Mixergy, and I believe I know that sponsors take much better care of people that come through Mixergy than they do anyone else, because they know that I’m a pain in the ass. If anyone has a problem, for some reason I cannot let it go. I just pass it on to the sponsor. I say, “Hey, look, this guy got an issue with you.” And then I just move back and let them handle it, because they know that I will not let them advertise again if my customers are unhappy with them.

All right. HostGator.com/Mixergy. I’m really proud to be one of their customers and urge you guys to check them out too.

All right. Where did the idea for Proof come from?

Dave: So we’d actually seen it, a kind of a few different versions. I’ve really been kind of into social proof since the beginning. I saw as I put it on the marketing funnels, I put it on websites, conversion rates went up. I thought I was kind of just taking screenshots of things that people had said about me and putting it up there, conversion went up. So I’m kind of big [inaudible 00:41:27]

Andrew: You’re talking about your standard sales pages that say, “Andrew Warner’s a customer.” Right. I’m on a bunch of people, like Pipedrive’s sales page, right underneath the place where you put your credit card I think is my photo and my reason for using Pipedrive. So you know that that’s helped you close more sales. All right.

Dave: Because early on, like I’m just trying to learn everything, you know. I haven’t been doing this that long. And so I’m like trying to learn copywriting and what’s the best headline? What’s all this stuff? And like I’m a dummy, again. So I just go and start screenshotting every nice thing anybody said about me, putting it on the sales page, and it converts better. And so it’s like it’s a shortcut, it’s a cheat code, and I’ve kind of been seeing that and thinking that for a couple years now. And then I’d seen as I’m like shopping for hotels. There was actually, a while back, I was booking a hotel in South Africa. I was going on a safari there. I don’t know anything about South Africa or Kenya or any of these places. And I saw a little notification pop up that said, “Hey, two people booked this hotel earlier today.”

And I got nervous. I was nervous they were going book out, and so I went and booked it right there. I was like, “That was really cool. That was like super charged social proof.”

And then I had actually been helping a client with a Shopify site and saw a kind of a similar feature on Shopify. It would kind of pop up and say so and so has bought this product. And I go to my team and I’m like, “Guys, we have to have this.” And we ended up kind of talking about it, and we couldn’t find anything that would do what we wanted on there, and so we built it. And that was kind of a cool thing. We just ended up taking kind of a two-week period, building out a little bit of an MVP version, and throwing it up on our site and seeing what the results were.

Andrew: But there was a tool out there, wasn’t there?

Dave: So there was a Shopify tool, and then since then, actually we actually didn’t even know of anything that would work. Since then, we’ve seen like competitors and all that. But it’s kind of like the Payfunnels thing, right? Like we just kind of have ideas and then we go build it, and then we kind of like look at the landscape a little bit later. So really we hadn’t even done like research. We kind of were just like, “Hey,” like, “Can you do this?” He goes and builds it in a weekend, and we went and tested it out. So yeah, we hadn’t really seen anything that did anything similar.

Andrew: I see. So you didn’t realize that was there. You started building it for yourself, but this time you said, “I know that we can sell this as a tool. We can charge on a monthly recurring basis?”

Dave: Yeah. And so, for us, we just want to see would it work. I was like if this works, great. Maybe it doesn’t work. And then we just kind of keep selling the Entrepreneur Alliance and courses and stuff like that. And so we put it on our order form for the Entrepreneur Alliance, and it was converting at about 20%. Week after week, it kind of settled in at that, which is fine. We’ll make [inaudible 00:44:04].

Andrew: That sales page converts to 20%?

Dave: Yeah, 20%. But it’s a low …

Andrew: Twenty percent?

Dave: It’s a low ticket product. I mean, you think that’s low or high?

Andrew: That’s high, isn’t it?

Dave: Yeah, but it’s for a $1 trial that then goes into a $30 a month. So yes, so for us, I don’t know, we had optimized it some. We tested some, and it’s converting at 20%. And we go put Proof on there. And I’m like we’ll see what this does, convert 25%, 30%. And three days later, and I’ve got screenshots of all this, we came back and it was converting at 42% by having little popups that just said, you know, whatever, “Alex from Maryland just bought the Entrepreneur Alliance. Dave from Annapolis just bought the Entrepreneur Alliance.” And it was converting at 42%.

So, of course, I screenshot it. I’m freaking out. I send it to the guys, like, “Guys, it’s working.” And so we went to go start testing on lead magnets and webinar registration pages and all the other pages we had in our funnels, and we saw a pretty cool thing that it was converting higher across the board. So before we even started selling it or anything like that, we wanted to kind of see would it even increase conversions. And if it didn’t, we were going to walk away from it. If it did, then we were thinking we could start selling it.

Andrew: One of my favorite parts about it is that you show the person’s face. How do you get their face?

Dave: Yeah, so we actually take the email address that they give us, and then we go look for public social profiles that the person has, that we can go find it.

Andrew: Using what? What’s the tool that you guys use?

Dave: I don’t know the full API. I think like Gravatar. Yes, it’s kind of using Gravatar. Actually, I think we use something called FullContact, to go find the rest of the person’s information.

Andrew: FullContact, okay.

Dave: Yeah, I think they’ve got an API that we hook into to do that.

Andrew: You know what? It is so powerful to actually see the person’s face. What about this? Do I need to get their permission to use their photo on my sales page to show the world that they just bought something? Maybe they don’t want that.

Dave: Yeah. That’s been something that we’ve been thinking through and trying to be really sensitive about that. And one, people see it before they opt in, so they kind of know, “Hey, if I go through with this, my face is going to be on there.” So we’re kind of seeing like does that and it always increases the conversion rate or almost always increases conversion rate.

Secondly, we kind of put it in our privacy policy. If they kind of message the person to opt out of it, they can opt out, and they can just get it deleted off there. But yeah, we’re aware of that concern, and I don’t want to like intrude on people’s privacy. I want people to be able to say yes or no. But we haven’t found a really good way for someone to kind of say yes or no on the front end before going through that.

Andrew: One of the tools that I’m seeing for grabbing people’s photos is a site called Pipl, P-I-P-L. When I want to get to know someone before a call, I just type their email address in there. It’s fantastic. It shows me their freaking age. I don’t know how to do that. It shows me their background, their links to everything. Like if you put my email address in there, you’ll see the places I lived with shocking accuracy. You see my family members. Do they even have my home address here? I could have sworn that they’d that, no. I don’t know how they do this. But it’s just there as a tool for people like me to try and then say, “You know what? I’m building software. I might want this kind of data in my software. How do I get access to their API?” Then they sell access to that.

All right, that’s really powerful. So I’m imagining the first few customers came from your network?

Dave: Yeah. So, to launch, we needed more cash, right? We’re getting a software company. We want to go big, so we want to hire great people. And so we went and hosted a webinar where we invited everybody to it. We had a following, we had an email list, and so we knew we could pull off a webinar pretty well. And so we were kind of building that. We tested it on a few people, just for free, just to see what would happen on there. Had great results from that screenshot and using that as social proof. We get everybody to a webinar, and we ended up selling 38 people a year-long package about a month before it existed. And that was kind of the way that we validated the idea, got enough cash to really kind of go grow the business, pay our tax bills and keep the business going. But that was really cool moment for us.

Andrew: What is it? 34 people paying how much?

Dave: We had 38 people paying a thousand for the year.

Andrew: Oh, wow.

Dave: So they paid kind of the full package upfront.

Andrew: You know, one of the challenge … So you got $38,000, that’s fantastic. One of the challenges with a tool like yours is we don’t get that many people going through our shopping cart that I could A/B test it. I then would also have to put A/B software on my shopping cart, which I don’t want to do, right? I want to keep that light. I only have A/B software on my sales page. And there are not that many people hitting the sales page for most of us, so even A/B test don’t really say much, right? Haven’t you found that?

Dave: Yeah. So one, it works even further up the funnel. It’s a lot easier to split tests on lead magnets and stuff like that. I would say most of our customers don’t split-test it. Kind like you’re saying [00:48:56 inaudible]. Yeah, and even you said this. I think was asking about numbers and all that, and I think you had said, hey, listen. Like, you know, one there’s lots to do in a launch and all that. You don’t have time to go get all the exact data. But the second one you’re just like, “Hey, this is going to work.” Like, “I think this is going to work. I don’t want to like miss out on the revenue if we’re having it.”

Andrew: No, I’ll tell the truth. I said, “I hire people who I trust, and then I trust them to run the thing.” Even though I invested in a bookkeeping company, when my ad salesman said, “We have an advertiser that’s another bookkeeping company.” I said, “You know how we work. I trust you. If you think it’s a good service and it is and we’ll be proud of it, then I trust you. You can even go against my interest.” The same thing with Caleb. I can’t say, “Hey, Caleb, you run our sales page.” And then go, “Caleb, why do you have that on here?” The only thing I want to stand by and say, “Can we feel happy and confident and proud of what’s on there, or did we go too far and we need to scale things back?” Otherwise, it’s up to him. Right?

So there are a lot of tools, frankly, that people use on our team that I don’t like, that I wish that they wouldn’t use, but I have to trust them. And so I also feel like there is no way to A/B test if I had to. Is it taking away from the sales page? No. Do I feel proud that it looks good on the page? Yeah, I freaking do. I like it. Right?

As a person, I remember doing webinars. I see people sign up. I saw their name in the webinar, and I then I see their photo come up on the sales page, and I think, “All right. That actually, helped me understand who it is who just bought.” I like for myself. So that’s the thinking. But that is an issue though, isn’t it with Proof?

Dave: Yeah. So we’ve been trying to be really rigorous from the beginning about split testing, about data. My goal is to have the tool that converts higher than anything else out there. And so conversion is really our north star from the beginning. That’s who we are. We’re marketers. We live and breathe on funnels and traffic and all that. Really kind obsess the numbers. And so from the beginning, we’ve wanted to know, “Does this thing work?” No hype, no fluff. Just how well does it work? And so we have a lot of people tested it. I probably get screenshots once or twice a day from people who are actually split testing it and see that, which is cool. But yeah, we haven’t figured out a great way for everyone to split test it easily, and I can just see it everyone’s accounts all the time. Although we’re moving to that here in the next couple of months.

Andrew: I guess you could add a split test feature into it, where people can decide what percent. You know what? What I’m interested in also, and you and I have talked about this, we all talk about the sales page. But what about like the actual usage page? It’d be so interesting for people to see which other customers of ours are engaged with which element of our product, right? Like this person just finished Module Two, or just entered Module Two, etc.

So I talked to you about that via email, and you immediately, to your credit, didn’t just say, “Hey, interesting idea.” and you moved on. You said, “Well, who’s your developer? Who do I talk to?” So I connected you with Michael. Did Michael respond?

Dave: Yeah. We never ended up getting connected. We still need to connect with him and get that.

Andrew: I think it’s because he just had a baby, and I think also that he made a mistake or he thought that I wasn’t paying him above a certain level, and so he got so overwhelmed and said, “Andrew is asking me to do all this free stuff, and I could do it for him, but I can’t handle it.” So we had a conversation, and I finally came to an understanding that he didn’t understand our agreement. Our agreement was much more flexible. Yeah, I’m going to pay him far beyond the number that he thought was his payment, and that he’d been billing us for months was actually my minimum. I said, “You don’t get any less than this. Now, go out there and do work for us and do whatever comes up.” So I think that, plus the baby, must have thrown him off. But is that something you’re interested in doing?

Dave: Oh, yeah. I mean, I love social proof. I just think it’s a better user experience, and I think it’s better if people can see that so and so is completing a module, than for you to go in and tell them to complete a module. I just think it’s a better user experience. And so, yeah, I think there’s all sorts of ways that we can use it like that, and that was a cool idea. I hadn’t actually thought through that. Really cool idea when you said that.

Andrew: I wonder also would it work on our email collection pages, right? This and that. This person just subscribed. This person just downloaded the product. So it would be …

Dave: Oh, yeah. It works great on that. And that’s been kind of [inaudible 00:52:57].

Andrew: Do you do it on that?

Dave: Yeah, totally. We do on it lead magnets and webinar registration pages. Yeah, we do it on all that. And what I found is that it works better the further down the funnel you go. I mean, I think like people need a little bit of nudge to give their email address. People need a lot of nudge to give a thousand bucks or whatever. But, yeah, I mean we’ve got one lead magnet that’s converting at like 93% using Proof on there, which is pretty nuts, that’s from cold Facebook traffic. And we’ve seen some really cool bumps in conversion rate from using it just kind of further up the funnel.

Andrew: All right. So I was on Facebook and I saw ads for you. Actually, ads for how effective social proof is, but it wasn’t your tool that those people were using. I know those people. I know what they were using. I don’t even know that your tool existed. So it seems like what you did was you said, “Here’s someone who’s using a tool like us. You should use our tool because you’ll get the same result.” But you were basically working off of your competitors’ results.

Dave: Well, what we had done was we were showing social proof notifications across tons of different ways. And so some of those were actually examples of our customers, some of those were booking.com, and I’ll just kind of point and say, “Hey, Booking.com using that.” Some of that was using a couple other things. Some of it was one of our competitors that had one of them. We’re basically just kind of saying, “Look, this is happening as a part of the ecosystem of marketing right now, and we’re making it available to you right now, because some of those are custom coded. Some of those you can’t have. You can have ours here right now.”

Andrew: Doesn’t that go beyond the line where some people might think, “Oh, these guys have all these customers.” But in reality, those customers are actually using your competitor’s product? I see you’re shaking. Are you feeling a little nervous now? You’re rocking back and forth a little bit.

Dave: No. So I think this is something … so you know Andy Drish with The Foundation?

Andrew: Yes.

Dave: He’s one of our advisors, and he was the one who had this idea for this kind of video. And we wrestled with that. I didn’t want to be disingenuous, but I also wanted to say, “Here’s what’s happening right now.” And again, some of those were our customers that were using Proof on there. And so I tend to be pretty clear that like, hey, this is happening, and that I thought it was good that we don’t have Booking.com as one of our customers. It’s just happening on there. But yeah, but it towing the line. It’s saying … I can see how that can be confusing for sure, but we just thought it was proving a point really effectively.

Andrew: Is that video still up? Can we see it?

Dave: It probably is still up somewhere.

Andrew: I also think the URL was a little tough, but you shortened it. It used to be … what was that URL?

Dave: It was getmoreproof.com.

Andrew: Getmoreproof.com. Proof is a hard word to Google anyway, because it comes up so much. Now, what is it?

Dave: Now, it’s useproof.com.

Andrew: Useproof.com.

Dave: Yeah, and I’ve got the video if you want to show that. So it’s start.getmoreproof.com/double, was the funnel that that was leading to.

Andrew: How did you get Andy as an advisor?

Dave: Well, actually, this is a cool story. He’s kind one of the guys, he came from The Foundation I kind of got my start with. And he was looking at buying Payfunnels through FE International. He’d seen it. He got the email from them. He got their prospectus. He was interested in buying it, and so he contacted us, actually, through Caleb. Came back to me and we got on a Skype call and he was looking at buying it. We kind of built a relationship just as we went back and forth on that. He didn’t end up bidding on it. But we built a relationship. I told him about Proof, and he was really excited about it. So I said, “Man, can help us grow this thing?”

Andrew: I feel like he’s got really good marketing chops, but people don’t fully see it, because they think about Dane Maxwell, who was for a long time the face of The Foundation. Right? But I think more and more people are seeing what Andy’s capable of, and I could totally see Andy coming up with that idea.

Dave: Oh, yeah. Andy is brilliant. We’ll get on calls, and like in 10 minutes he just tells me like this whole funnel was our first funnel, and he just kind of told it to me off the top of his head. He goes, “All right, you’re going to have this. You’ll use the insanely simple software top marketers are using to double their sales. Go show them what happened and all these different people.” He’s like they’re going to opt in. They’re going to share it on the next page. He just like whips this thing out in like 10 minutes in his head. So really, really brilliant guy and he’s been a huge help to have this grow this thing.

Andrew: So what does he get for doing all that?

Dave: So he gets a percentage of equity and then a nice affiliate commission.

Andrew: Oh, an affiliate commission when he sells it?

Dave: Yeah. So we give him an affiliate link and let him make some actual cash from that.

Andrew: Yeah. The thing about Andy is he’ll like squint for a bit, and I’m telling him what my idea is, and I see this squint, and he doesn’t talk. And I feel like, “Ah, he just feel so bothered by this. He has no interest. It’s like he thinks this is the stupidest idea or something.” And he just kind of riffs on what you should be doing, and it makes a lot of sense. It’s like he goes into some kind of other world for a second, and then he comes back and says, “All right, I brought it back to you. Here’s what I want you to do.”

Dave: He comes back with the right answer. You are like, “Yeah, that’s him.”

Andrew: Yeah, yeah. You go, “All right, good. For a second I thought you couldn’t stand me.”

Dave: Yeah, totally.

Andrew: Yeah. He’s good. All right. So where do you see the vision for this? It is like this little widget that appears on people’s sales pages. Is that really going to be that big monster success? Or do you see it growing beyond just that widget?

Dave: Yeah, I think it’s going to develop into a platform to be honest. I think this notification, this popup can go a long way. I think it can be built into a pretty good size business, to be honest with you. But I want to move more into a platform around using social proof and conversion to …

Andrew: Like what?

Dave: I don’t have the answer to this. I’ve thought about some good ideas in my head. So we actually went out and interviewed at Y Combinator a couple months ago, which was a pretty cool experience for us, and it was kind of the same thing. They loved it. They couldn’t believe how well it worked. They were loving our growth rate. But they were like, “How does it become a billion dollar company?” And to be honest with you, [inaudible 00:58:50]

Andrew: They ask you that specifically?

Dave: Basically, yeah. I’m like, “How does this become …” I don’t if they said billion dollar, but how does this become a massive company? Like, “What are we going to do with this?” And that’s still something that I’m still kind of processing. And to be honest with you, I don’t have the answer about what this becomes to become a $100 million company. I think it’ll become pretty big as it is now, but we need to develop more into a platform.

Andrew: You know what? You got to have that answer. If you walk, if you set foot in San Francisco, you need the answer to that. How does this become a billion dollar company? And I got to tell you some of these people are such great bullshit artists, they believe it completely, they have their answer, and you’re thinking, “This is huge.” And it’s not until I go home that I think, “He actually just has an idea for another blog. But it’s like a stripped down blog.” Right? But they do believe it, and I do really like how they think so much bigger because of it. Frankly, all you should do is just go to a coffee shop here in San Francisco, look at the person sitting next to you and say, “Hey, if you had this, how would you explain to people it’s a billion dollar idea?”

Dave: And it’s tough as you go. And I walk in the Y Combinator and like we’re in a huge bootstrapped environment. Everyone’s talking bootstrap. Nobody wants like to like raise money, nobody’s doing that. And so like, on one hand, I’m just trying to get like our landing page up. And I’m going to walk into this room and tell them about my billion dollar company. And so it’s like if you’re not raising money, if you’re not in that mindset, it’s just kind of a hard shift to make when there are so many little fires to put out day-by-day, to just go [inaudible 01:00:17].

Andrew: But, you know what? Here’s what Ryan Hoover said. I asked Ryan Hoover, “Look Product Hunt, you’re not making much money from it. Where’s the revenue?” And he said, “Well, look, if people come to my site looking for things that are new and buying it, we have to find a way to make a lot of money off of that, right?” And so that’s the other answer. It’s like if we’re sitting on people sales pages and their sales depend on us, you got to understand how there’s money in that, right?

Dave: Yeah, totally.

Andrew: It’s like fill in the gap.

Dave: So yeah, I think this could go kind of AppSumo type way where, “Hey, we’re already on the page, we can add on multiple other things. We can add on layers.” Like I think we’re kind of laying the plumbing almost, and now we can bring in tons of other stuff onto the sites of our customers here.

Andrew: And frankly, I think like customer suggestions, like ours, or maybe it won’t even be mine, maybe my idea is just completely off base, but sometimes customer needs, customer requests end up leading to that next big thing, and you don’t have to have it all right now.

For now, what I do like it the design of it. Like a lot of your stuff, it’s just a really nicely designed, little widget that comes up.

All right. For anyone who wants to go check it out, check out useproof.com, and the previous business that we talked about is at payfunnels.com.

Dave, congratulations. Thanks for doing this. All right, and thank you all for listening. And, of course, the two sponsors that I talked about are HostGator.com/Mixergy and Toptal.com/Mixergy, and I’m grateful to them for sponsoring.


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