Andrew: Coming up, today’s guest failed and then he did one thing differently and then he succeeded. I won’t tell you what that one thing is, but if you catch this interview all the way through the end you’ll know it for yourself, and if could have just as big an impact on your life. Also, notice the grin on today’s guest when he tells you how he got a high end develop shop to help him design the look, the feel, the features of his mobile app. You’ll understand why he’s grinning and then I want to know from you, is it something that you’d want to do to get your product developed? Finally how do you get strangers to tell you what to build for them and then to plunk down their credit cards and pay for it. All that and so much more is coming up.
Before we get started I want to congratulate Mixergy fan, Brad Mills, for creating this, Nuvia Cafe. He says he did it while listening to Mixergy interviews based on what he learned from those interviews. Can you imagine the first time by the way that an idea that he had became this box of coffee or this cup of coffee? That he could taste, that he could feel, that he could see out in the world? That’s what Mixergy’s about. Interviews for doers like Brad and you. By the way if you want to check out his website, it’s Nuviacafe.com, that’s where you can buy it.
And this whole thing is sponsored by Scott Edward Walker of Walker Corporate Law. Do you need a lawyer who actually understands the startup world that you live in? Go to WalkerCorporateLaw.com. I’ve known Scott Edward Walker for years, so tell him you’re a friend of mine. It’s also sponsored by Shopify. Does anyone you know need a beautiful online store that increases sales and is easy to set up and manage? Send them to Shopify.com. It’s the platform that top online stores run on. All right, let’s get started.
Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and after doing over 700 interviews with proven, successful entrepreneurs here on Mixergy there’s one big observation that I made. And that is, the people that want certain success, they do one thing. And I’ve been noticing it over and over in interviews. And that one thing is they find the pain. They talk to customers and they find the pain that’s so painful, that’s so serious, that customers are willing to, in fact they’re eager to pay for a solution for it.
And as you’ll see in today’s interview not only are they willing to pay for it, they’re willing to work with the founder to help build it and then after it’s built they’re eager to pay for it. And I’m so eager for you guys in the audience to see this, to see find the pain in action that I want to diversify my interviews a little bit. To not just do interviews with megahit companies but I want to do today’s interview so that you can see how a new entrepreneur finds the pain and how it leads to a turnaround for him.
Sam Ovens is the founder you’re about to meet. He’s the founder of SnapInspect, which makes software that allows property managers to inspect properties using their mobile phones. It even automatically creates beautiful inspection reports for them with one click. So, Sam, welcome.
Andrew: You had as I mentioned in the top of the interview a setback before as an entrepreneur. How much money did you invest in this previous company?
Sam: All of my money. It was, I think, ten thousand dollars.
Andrew: How much time did you invest in that company?
Sam: A solid 12 months.
Andrew: 12 months, $10,000, all of your money. How much revenue did you get from that business?
Andrew: Not a single customer?
Sam: Not a cent.
Andrew: Not a cent. I’ve asked entrepreneurs about this before. Some are willing to be open, some are not. I think you are. Tell me about what happens when your money’s going out the window and there’s no revenue coming in. Like what happens in your mind, what happens in your gut? What happens when you’re asleep at night for two hours?
Sam: It’s terrible like. It really is the only thing on your mind when you look at your account balance and it just goes down and down every day. And there’s nothing coming in, and you can’t even see a way of how some revenue is going to come in. And the expenses just keep coming, and it’s amazing how quickly you actually do run out of money. [??] went seriously [??]
Andrew: I know the feeling. Frankly, in the early days of Mixergy when I was just tossing money out the money. I think it was all end $300,000 that I wasted just going in the wrong direction with Mixergy. I was on vacation with Olivia in Europe trying to enjoy the vacation in Europe. But all I could think about is, “I’m losing so much money. Where’s my net worth going as a result of this?” I mean, we would be out by the beach or by a sunny countryside, and all I would be thinking is, “How much money am I losing?” You ever have that?
Andrew: You can’t enjoy things in life. Good food doesn’t taste good anymore, because you’re so busy thinking. Did that happen to you or am I imposing my vision on your experience?
Sam: Yeah, and I was cutting all my personal expense. So like taking my girlfriend out for dinner, whereas that might only be $50 but, I wouldn’t do that, just so I would have money to spend in the company, and to think how many dinners and stuff, I was wasting. And that’s your human side of your life, and it was even having an impact on that.
Andrew: We’re going to get to this new business that you launched which is the reason that I invited you here to Mixergy. We’ll get to it in a moment but, when you were going through this did you feel, “You know what, I just don’t have it. I’m not worthy of success.” Or did you feel, “Hey, there’s some greatness inside me that I just haven’t figured out how to tap.” Which was it? What were you feeling about your own sense of self and your own abilities?
Sam: Before we actually launched it and before we had a proper conversation with a customer . . .
Andrew: I mean, the previous business that took 10,000 of your dollars?
Sam: Yeah. So before that, before we had any real experiences with a customer, I felt like I was incredible. And that this idea was all that. And then, it all went backwards as soon as I talked to someone real. And it just went down from there.
Andrew: Oh, wow, I see. Once you talked to a customer . . .
Andrew: What was the product?
Sam: It was a website, and it was pretty much the opposite of how job websites were. So instead of people apply for jobs, you would put a profile up and say what you’re interested in and then companies would then search for you. A typical sort of like first business that I have no idea how I came up with that idea but . . .
Andrew: All right, I’m going to get back to exploring how you came up with that idea in a moment. Let’s go back not to this new business the one that you’re running now. Before you launched it how many customers would you say that you talked to, email, phone, etc?
Sam: OK. Probably around 30 to 40.
Andrew: 30 to 40 whereas the previous business where you talked to none.
Andrew: Before you launched it, how much sales did you have?
Sam: About five and a bit thousand.
Andrew: A little over $5000 in sales where the customers paid you or/and committed to continuing to pay you once you lunched?
Andrew: And this is before you had a product to hold to say, “This is what we’re paying for.”
Sam: Yes, and before I even knew how it was really going to work.
Andrew: OK. Are you a developer?
Andrew: No. Did you have a best friend who’s a developer who’s going to build this for you?
Sam: No, but I sort of worked with the website before, which was nothing the same, but I had a little bit of experience.
Andrew: OK. A little bit of experience with web development, but not with mobile development, which is what it took to build this thing. All right, I want to find out how you went from where you were, a guy who spent $10,000 on a business that nobody, literally, nobody paid to buy from, to where you are now. A guy with a business where you have over 5,000 in sales before you even launch, where you talk to customers, you understand what they want you to build. Where you have, as I understand this, a dozen customers, a dozen spots sold before you even launched the business. And also maybe we can get into a little bit of how a guy who is not a developer could develop software. I think that’s also important.
All right, let’s go back and step by step by step understand how you did this. You said something very flattering to our producer when he asked you, what’s the first thing you said? You said, I wanted to reverse engineer. In fact, you tell it. The Groupon story. Why did Groupon factor into this, how did Groupon factor into this new mindset?
Sam: Well that was how I found Mixergy. I was struggling with my first company and I just couldn’t work out how to get customers. I thought that was supposed to be the easy part of business. So (?) been Googling all sorts of things and at the time Groupon was a big hit. So I had been Googling, how did Groupon gain traction? And I think those precise words or something very close was in the transcript of your interview. So I came to Mixergy through that, watched that interview. And then from there I guess I was hooked, that was my source of motivation and, that was my source of motivation and the first time I actually started to think, maybe I should learn from other successful people.
Andrew: I remember that interview. Andrew Mason told me when I asked him how he got the first users for Groupon, he said basically I went up and down in the building where I worked and I asked everybody to join this thing. And then from there, from that little niche, he grew Groupon to a deal site that covers the world right now.
You know, before we continue with the steps, and we’re going to go through very, very thoroughly, I think I’m going a little bit slowly on the intro, but it’s important. Because I want people to see what you’re able to do and what they more importantly can do once they understand this concept of talking to customers, of finding their pain, of getting them to buy. We’re going to step by step them through how to do this. But what I’m curious about is, why didn’t you think that sales was going to be tough? Why did you think, hey I’m going to build this thing and sales will naturally happen. Why didn’t you sweat the sales?
Sam: Well, I really had no idea that any. I thought that hard part, I thought the idea was everything. So I thought you’ve just got to have like a new innovative idea where there’s no competitors and you’re the first. And I also thought that the development in getting the product built was the hard part. And once you’d done that and once you had a product with an awesome logo and beautiful design and absolutely no bugs then you launched and people just naturally thought it was amazing and would start using it.
Andrew: I see. Because you thought the idea was amazing of course the world would want to buy from you. Other people needed to sell but that’s because they didn’t have this revolution on their hands, this revolution in a business, right?
Sam: And their logo wasn’t as good as mine.
Andrew: And their logo wasn’t as good as yours? Seriously?
Sam: Yes, that’s what I tell myself.
Andrew: OK, all right.
Sam: I’m going to call them as typical mistakes. Sort of like your first time businessman. I think I spent 300 bucks and a good week’s (?) over the logo.
Andrew: Wow, I didn’t realize. You also think that, in fact you know, one of the people who you met through Mixergy is Dane, Dane Maxwell. You saw him in his interview look at entrepreneurship in a whole new way and you said, I want that guy to be my mentor. Right? In a lot of ways, we’ll get back to Dane in a moment, but a lot of what you’re going to show us here came directly from Dane. This is the way that he shows you to talk to customers and figure out what they want and then build the business, right?
Andrew: Okay, alright. I’m writing a note here to come back and talk about Dane. But I’m realizing that I didn’t get into the specific steps yet. And if I were in the audience I’d go, Andrew, come on, tell me what to do already. Enough with this back story. So let’s go right into it.
One of the first things you did was, you wanted to find the right market. How did you find the right market?
Sam: So I think I thought the right market would have some money to spend. Well first of all ideally business to business. So out of the consumer world, into the business to business world.
Andrew: Why business to business?
Sam: Pardon me?
Andrew: Why business to business? I’m trying to compare the way that you’re going about this with the typical approach and the typical approach might me “What do I use? What would I want? What would my friends enjoy?” Well, it’s that kind of thing. What would I want to see on everyone’s iPhone as I go into school or as I go into work? But you were thinking I want business. You have a whole other way of looking at what you’re going to go after. So let’s start with the business component of it. Why was going after business users more important to you than consumers?
Sam: So, I’ve been in the consumer world with my previous company and a customer can really be anybody and because that customer can be anybody, how do you target them? You can’t just call them. You can’t find their phone number on the internet, and you just certainly can’t approach them and say something. It’s very hard to find them. But in the business to business world most companies have their phone numbers listed, their physical address listed, even every employee in their company listed, especially in real estate. So you can just look at everyone and see the size of the deal, see exactly who the decision makers going to be, see what their phone number is, their email everything.
Andrew: I see. Right. Now you could, of course, go find consumers in the street. You can stand in the street, find consumers. Some of them will let you have a conversation with them and let you interview them and so on, but you just don’t want a random person. You want to focus on a niche that you can really enthusiastically satisfy and then build and build from there. So you’re right, if you want to focus on a niche you can find consumers as easily as you can find business and with businesses, as we’ll see, you’re able target much better. All right, so now you know businesses. How do you know which businesses to go into, because frankly, when I first heard that you were going after that you were creating inspection software I said “Inspection software? There’s a whole product for that?” So how did you know that real estate would be the niche that you were going to target?
Sam: So, yeah, like I said, the first thing I decided was business to business then I wanted to find a niche that was approachable on the phone or viable email so a niche that was typical for people to list their details and a niche that was big enough and had some money to spend in this type of economy.
Andrew: How do you know which niche has money to spend? How’d you figure that out?
Sam: I don’t know economically if this is correct, but what I did is I went to a job site, a job website and I looked at you can see number of jobs listed in each industry and I just looked at the ones with the biggest amounts, I looked at the industries that were hiring the most.
Sam: Well, who’s going to be hiring if they’re broke?
Andrew: I see. Right. So it’s a great indicator of success, of ability to spend, if they’re hiring people then it means that their business is going well. Beyond real estate, what else did you see?
Sam: A lot of stuff.
Andrew: Can you give me one other one that we might not think of?
Sam: Lawyers, accountants, heaps. This one, I remember just making a list of all of these different niches and putting them up on my wall and the other reason I chose property management I guess was I just felt more comfortable approaching property managers compared to lawyers and accountants and stuff. I guess it was a confidence thing back then.
Andrew: All right. That makes sense. So let’s go on then to the next step. So the reason that it’s important for you to be able to approach these guys is because every part of this process basically is interacting with your future customer. So I understand now how you figured out real estate people. Let’s get to how you figured out what product and how you got them to pay for it. What’s the next step? After you knew that it was real estate people that you were going after, what do you do to figure out what to build for them?
Sam: So the strategy behind this is, you know, to find a business to business niche.
Sam: That contactable on the phone or via email, that list their details, and that have a burning problem. Like a problem that, you know it’s like, they wake up, you know, you want to find what business owner say wakes up in the morning, and you know, as soon as he opens his eyes he goes, inside his head he says “oh, like f**k” I’ve got to go into work and do X. And all of this is to find out what X is. And once you know what X is, you know that changes like everything. Especially if it’s business to business and they’ve got some money to spend. And you know X then you know that you’ve got the foundations of a very good business.
Andrew: All right. So,
Sam: Strategy sort of thing. So the actual tactic I used. I just went and googled property managers, went through one by one and just found a persons name in the email and copy pasted it into excel. And I got a list of 100 I think.
Andrew: 100 names and email addresses of people in the real estate field. Did you focus on a specific city so that you can talk to them one on one, or did you say anywhere is fine?
Sam: I just focused on my home country.
Andrew: Where are you, by the way?
Sam: New Zealand.
Andrew: New Zealand.
Andrew: By the way, thank you. You told me before we started that it’s 3:00 a.m. where you are. I just have to thank you for going out of your way to do this interview with me. There’s no way that you’re going to get enough business from this interview for it to pay off. You’ve got a business to run, you’re at a critical point in your business, and as an entrepreneur you’re still willing to step aside for a moment, wake up in the middle of the night. Literally went to sleep, you woke up, and then you’re doing this interview so entrepreneurs in our audience can learn from your experience. I say thanks a lot in interviews but I should be saying it even more because it means so much to me. The people who do interviews on Mixergy, just thank you for going out of your way for doing so much just to help the audience. All right, so you said I’m only going to focus on property managers in New Zealand, in my home country, also in my home city too.
Sam: You know, I think it’s just a comfort and confidence thing.
Andrew: But did you also want them to be in your city so you could drive over and have a conversation one on one, or was that not important?
Andrew: You did?
Sam: So I did most of them in my city but I did contact other people that weren’t in my city. But most of those 100 were in my city, yeah.
Andrew: Okay, so you got 100 of them, their email addresses are all in a list in excel, what email did you send them?
Sam: So, I basically – I remember like the subject line was “strange question.” You know, when one of those lands in your inbox you just have to open it. And it said basically like, hi, persons name, introduced myself. At that time I was still enrolled in university.
Sam: So I said I’m basically doing some research on the property management industry and I want to learn about the most painful problems you have as a property manager. And I’m happy to share my findings with you at the end. Pretty short, and then just said Sam and put a link to my LinkedIn profile to prove that it wasn’t a spam.
Andrew: I see.
Sam: And I put my university name there too.
Andrew: [laugh] that’s great.
Sam: Yeah, so.
Andrew: And you were in university at the time?
Sam: I wasn’t actually going to class but I was enrolled.
Sam: So it wasn’t a lie but, you know.
Andrew: I see. All right, so basically you’re saying I’m doing this research project, I’m trying to figure out what your biggest pain is, and if you tell me what it is I’ll show you my findings afterwards so you get to know what others in your industry are going through also, so there’s an incentive for them to give you an answer. There’s also the trust that comes from seeing that you’re on LinkedIn and looking at your background, and knowing that you’re associated with the college is also, I sure, helpful. All right, how many responses did you get back from the hundred emails that you sent out like that?
Andrew: Twenty-five strangers hit reply and told you about their pain?
Andrew: OK. It was a great email and I actually have it copied and pasted here from what you gave our producer. If anyone in the audience wants it, just ask for it in the comments, and Jeremy, I’m sure will send you what he sent me. So if you guys are looking for the actual email, let me know. All right so 25 people responded to that email, what kind of answers did they give you?
Sam: Shitty ones.
Sam: Well, you get the surface problems, right? Through something like that, you always get the surface problems, what’s at the top of their mind. They write it and hit enter. So, surface problems in their industry, which is [??] making sure their tenants pay their rents on time, or maintenance issues, which is like, “Someone left the tap running and now the house is flooded.” Typical sort of surface problems. Which was fine. And you’ve got to be, I remember trying to control myself to not jump at one of those surface problems and say, this is going to be my problem.
Andrew: So, this is something that I still don’t understand. Why not hear that someone was tell you, “You know what, I can’t get enough people to pay their rent.” Or, “I’ve got another customer who’s got a leaking sink.” Why not jump on those and say, “All right, I’ll come up with software that handles leaking sink report, or that makes it easy to find plumbers. Or, I’m going to come up with software that will just keep bugging renters until they pay.” Why are those surface problems, and why not solve them?
Sam: So, at that point they were surface problems, and if I had just taken my findings from their email and run, I wouldn’t know the ins and outs of the problem, and I wouldn’t know how serious it was, and what it means to them, and how pain- I didn’t have a deep enough understanding of how bad the problem was. I hadn’t heard someone almost be in tears about it, you know.
Andrew: I see. You know what, if you were to ask me right now, “Andrew, what’s your biggest problem?” I would point to that piece of equipment that I left out, this lighting equipment that I left out there for the interview, and that would be my biggest frustration, and frankly if you came back anytime after today and asked me what’s my biggest frustration, that wouldn’t register at all. So I see what you mean. You want to know, is this an ongoing problem?
Andrew: Is this a frustration that they really care about, or do they only care about it this second and they’ll forget about it. Do you also want to know, is there as solution for this problem already out in the market, or is that not important to you? While you answer that, I’m going to get rid of this thing.
Sam: So, yes, with [??] they already have software in place to handle [??], but certain [??] keep happening, because software can only do so much in getting a tenant to pay their rent on time. It can’t completely get rid of that problem. So they’re already using software and the software does a very good job, but there’s still that piece of human error that they can’t fix. So if I come into their niche I’m just going to be another me-too, and the real frustration that they’re experiencing, they’re still going to experience it with me too. So I’m not really solving the problem. I’m more just jumping in and doing what a lot of other dudes are doing.
Andrew: I see. OK. So you got 25 responses, a lot of surface answers in there. What do you do next with those 25 people?
Sam: I only replied back, and said basically, “Thanks for that, you sound like you know your industry very well. I’d love to give you a call and chat to you a bit more. Can you let me know a time that suits?” [??] Yeah, that was [??]
Andrew: OK. And of the 25 people who you sent that second email to, how many responded and said, “Yeah, I’ll help you out?”
Sam: This is just typical conversion stuff. It was 12 I think, yeah, 12.
Andrew: So 12 people. One of the reasons why I say that is, I recently recorded a course for Mixergy Premium with Jason Evanish of KISSmetrics. His whole job is to make the kind of calls that your talking about with potential customers for KISSmetrics, and with existing customers so that they can figure out what to build for new customers, and of course, how to improve the product for existing ones. And he told me that he had these doubts about his way of doing this because, I think the number that he got back was on 20% said, yes, they would talk to him. He said, “What am I doing wrong. Do people do not want this? Am I bothering people? Am I getting in their way?” And it wasn’t until he talked to Heaton Shaw, the founder of KISSmetrics, that he understood that this is pretty typical numbers. And that boost your confidence as a person who’s putting himself out there, who’s potentially talking to customers. Well, anyway, this is fairly typical and so I want the audience to hear that so if they duplicate what you’re doing, and they don’t get 100% response, or maybe the first person that they reach out to says, no, they’ll understand. It doesn’t mean they’re on the wrong track. All right, so 12 people responded back. They said, yes, they wanted to have phone calls. What did you learn in the phone calls that you didn’t learn in the phone calls?
Sam: So much. Like, I can’t even tell you how much more I learned on the phone. I guess to listen to how humans behave too. When you’re talking to someone on the phone and you’re interested, well, if you talk to anyone, and you’re interested in them and their problems and their life, and it’s all about them, and you’re not saying anything about yourself. People just open up, and they feel important. And some of these phone calls, which I thought the person the other end couldn’t wait to hang up on me. I thought that’s what was going to happen. Some of these calls ran over an hour in the middle of someone’s working day. So they just stopped what they were doing in the office and talked to a strange question email sender guy for over an hour. And just told me all of their problems with emotion too.
Andrew: You know what, I know what the audience wants next is they want to hear what kind of questions do you ask. And they also want to know how you break down all this information that you’re getting from so many people and make it into something useful, actionable. Because it feels like you’re going to get flooded with data, but I think it’s important to break away from what they want for a moment and talk about what they’re going to need and that is the difficulty of making phone calls. You worked with Dane, and so did other people who work with Dane, other new entrepreneurs, and you were all basically following this process that Dane Maxwell laid out for you guys of making potential phone calls. He told me that some people had challenges doing that. Talk about what you saw your peers go through as they had to make phone calls.
Sam: Myself too. I knew what I had to do, and even after I had the emails, even after . . . I could have called them first, but it was more a comfort thing to do the email first and then to get their approval to call them at this particular time. All of this stuff was procrastination to avoid getting on the phone.
Andrew: So you’re saying even the first email could have been, “I’m doing this research project. Can I call you about it and I’ll give you the results afterwards?” That might have been even better.
Sam: Or I could have just called them straightaway without ever sending an email.
Andrew: I see. So what’s going on in your head? What do you notice in your peers’ heads as your wrestling with whether to pick up the phone and call or do something else. What is it that you’re thinking? What is it that you’re experiencing? What are you feeling?
Sam: I would say it’s less what you’re thinking and more the emotions that just run with beginning entrepreneurs, and having to talk to a potential customer. It’s the fear of rejection. It’s that feeling that’s you know, not so much in your consciousness but like it’s just a feeling of being scared and trying to do everything to avoid that particular thing.
Andrew: So I’m concerned that someone in the audience that hears that will hear you say feeling scared, will hear you say worry about being rejected and they’ll think to themselves, I’m not scared. I’m an entrepreneur. I’m risking everything, of course I’m not scared. I’m not afraid of rejection, I know that you’re going to get rejected more than you’re going to do well. I know that even Babe Ruth didn’t have a thousand batting average, and so on. And the reason that we don’t identify with what you’re saying is because that’s not real to us. I think what’s real to us are the rationalizations that we make. And if you’ve expressed those rationalizations that you’ve made, or that you saw other people make, we’ll start to see our own rationalization and say, oh yeah that’s not really true. I don’t really have to take out the garbage right now. I can make a phone call and take out the garbage tomorrow and leave the place stinky. Or I don’t really have to clean up my office one more time. I do have to make this phone call and cleaning up the office is a rationalization. So what’s a big rationalization that you saw other entrepreneurs have, make?
Sam: The things beginning entrepreneurs will do to avoid talking to a customer is insane. Thinking they need a website. Thinking they need an e- mail with their domain name after the x sign. Thinking they need a signature at the end of their e-mail. A business card just in case someone says, oh can you come over. The list goes on and on and I see it every single day.
Andrew: What’s another one? You know what, you’re right. I hadn’t thought of the need for a domain or an e-mail address or their own website. But now that you’ve mentioned it I’m starting to realize, yeah of course a lot of people have said that. And I can see other people feeling that the person they’re calling wouldn’t trust that their a real business because they don’t have this. They might come across as a fraud. What else? What other rationalizations are there?
Sam: The biggest one. The biggest one, the product. So going back to my first business. I had a domain name, I had business cards, I had a brochure, I had a website, I had the entire product polished. It looked amazing. Everything. I had literally everything you could have. I had the e- mail signature. Everything was there. Before I went and talked to the customer. And the truth is, and in my case it’s true. And honestly I’ve noticed now that in every other successful business this has happened in some shape or form too, is that they talk to the customer first before even having a domain. Nothing, no money spent. You know I used my Gmail account. I had no footer. I had literally nothing. When I made the calls they were from my cell phone. I didn’t even have a land line. And you, most entrepreneurs procrastinate about, it’s not going to look professional. And you hear them say things like, well what if someone wants to buy it and I don’t have it? So I better build it just in case that happens.
Andrew: So you did what just in case? Oh I better build it just in case it happens.
Sam: What a terrible thing, right? Building something can cost tens of thousands and take a year or six months or whatever. Just so you can make that sort of thing work in your mind. It’s really screwed up. And I seriously see that every day with new entrepreneurs.
Andrew: And the reason that you see if every day with new entrepreneurs is because you have this peer group that Dane set up for you guys where you talk and, I guess it’s a Facebook group?
Sam: We use Hipchat.
Andrew: Oh, Hipchat. So you’re talking to other guys who are going through this. You’re talking to Dane. And now through Mixergy, hopefully some people will contact you and get to know you. And if you have time you’ll be able to help them also and hear their issues. All right, so this is a big problem. I’m not, I don’t want to minimize it by moving onto the next set of questions, and, but I. Well I know it’s a big problem because I talked to Dane. And I don’t know how much time he has to spend on this when he talks to entrepreneurs. I always thought it would just be, hey, give somebody a system and they’re ready to go, they can handle it. But in talking to him and talking to other entrepreneurs I see that it is a big problem.
So I’m not minimizing it I just need to move on with the rest of this part of this interview and hopefully we can find other people who can come on and do interviews here at Mixergy and talk about the mental side, the head part of being in business. Of recognizing your own insecurities, accepting that they’re insecurities and then dealing with them instead of doing what we mostly do which is we pretend it’s not there and call ourselves, we’re too big. We pretend we’re he-men and of course we all have this stuff going on in our heads.
Sam: That was honestly my biggest breakthrough.
Andrew: What was that?
Sam: Is realizing that not everything is logic. And that everything really is based on emotion. And learning my own reasons why I was scared of things. And you know that’s a whole other story but that was massive, more so then knowing the system.
Andrew: Knowing that even you, a person who’s logical, a person who over your shoulder has got a board, a white, that’s not a white board but a bulletin board of some kind. So you like to think in an organized way. Even as organized as you are you also are guided by your own emotions.
Sam: Yeah. And so are CEOs of million dollar companies and everyone else in the world.
Andrew: Yeah, that’s a tough realization to have, but it’s an important one. It’s a tough one to get to have. To get to a, it’s tough to get to a point where you can open yourself up to that reality. So now you’ve got them on the phone. What questions are you asking them?
Sam: So your strategy is basically to find out their biggest problem and also their most painful one and make sure it’s not just a one off and it’s something that is going to constantly keep them up at night. And it’s not just something they’re experiencing this week. The tactics to achieve that are, I find it very important to understand the strategy of something first and being, you can create infinite tactics below that. And so me telling the tactics now, you know people don’t have to copy them precisely. It’s more if they can understand the strategy and they can come up with their own tactics. It’s really important to not just be one of those people that just focuses on tactics and follows that. Because you have to adapt. Especially on the phone I remember people having a list of say twenty questions that could help get to this problem, and then ask the first question and then get the start of a good conversation going and then feel like they had to get to the next question. And I’d lose that depth that they were gaining. Just because they thought they had to get through the tactics. Do you know what I mean?
Andrew: I know exactly what you mean, yes, yeah. Obviously, I’ve seen bad interviewers do that where they have to go through all ten questions that they’ve submitted to the guest beforehand or else they feel like they’re cheating the guest and they also feel like they’re not doing a thorough job. But here I can see how it’s even more troubling because you’re after someone’s serious pain. And if you’re trying to get through your series of questions and if after the first one they’re basically crying, you don’t want to interrupt that crying session. You want to let it unfold so you can understand what’s behind it, so that you can understand where they are. Do I have that right?
Sam: Yes, you have that right.
Andrew: So what are the ways that you did it now that you’ve got this understanding down?
Sam: So, I started to ask questions like, walk me through your typical sort of day. And they would tell me and I would sort of, they’d say you know I come into the office and then I do this and this and this. And I’d say, okay you know like, what part of that do you dread doing the most. And you know they’d say something. And usually after a couple of questions and maybe ten, fifteen minutes in you’ve got a list of say four problems. And then I found this extremely helpful was to go, okay, so you told me that you had, and I repeated back to them what they told me. And they, the feeling, you could just hear it in their voice like Holy Shit, someone understands me. So I repeated it back and they were like, yes. And I was okay I want you to seriously think about this.
Out of those four things what is the most painful one, if you had to pick one, what’s the worst? And so after I’d found their problems I made them write them. And I don’t personally think they ever thought about that. And that no one had, because they had to rid, the phone was silent for like 20 seconds or something while they actually thought to themselves like what is my biggest problem out of those four? And then they told me it was, yeah, they told me and to me that sounded like I’d kind of hit something. Because you could almost feel over the phone that they’d come to a realization too.
Andrew: Suddenly like a business therapist.
Andrew: So that also answers the second question that I had earlier which is, when you have all of these frustrations and all of this data, how do you make sense of it? And the way you make sense of it is having them all rank it so you know what their top problem is. And then did you start to see a pattern emerge from that or was it still a collection of different problems that each person had something different from the next?
Sam: Yeah, so, on first call, that was my first call by the way, which was crazy. And that call wrapped up and then I jumped on another one. And it didn’t come as easy them saying it on their own, but I could, it was one of their problems and if I probed enough that that problem would come out. And I think it was only after four calls that I was like, okay this is common across all, not all, but it’s common across property managers. You know, they hate this problem.
Andrew: They hate what? What’s the problem as they’ve described it to you?
Sam: Property inspections. So at the moment they organize a schedule with outlook or a physical calendar. Then they print off a check list. Then they navigate their route for the day. So they’ve got five properties to inspect, they’ve got to work out the best way around town.
Andrew: You mean like using Google Maps. They plot them all on there and they figured out what’s the most efficient way to go do this? Okay.
Sam: Yeah. Then they’d start, they’d drive there and they’d go through the property and they’d check everything off. And then they have a digital camera too and they take photos or the house or the property. And then they collect all of that stuff and at the end of the day they drive back to the office, put their notes there, you know plug their digital camera into their computer, upload all the photos to their computer, then work out what photos are from what property. What photos from each property relate to what room? They open up Microsoft Word, put their header and footer in there and then start to type up the reports like one by one. And then they, you know what Word’s like, trying to format a photo and get it positioned right and then they have to send the reports to the owners. So that’s the process. And I’m pretty sure even if you’re not a property manager you can tell that that sucks.
Andrew: Yeah, and now that you describe it, absolutely. And then the report that they send over is probably going to be pretty ugly, stretched kind of. Every time someone tries to resize in Word it feels to me, at least non techies, it feels to me that if you make it wider you should also make it taller. Keep the aspect ratio the same or else the place looks weird? So I don’t know if they have those problems but they have problems like that as they’re putting it in word. And that’s why that sentence that I read in the intro, it even automatically creates beautiful inspection reports with one click. That’s why that’s so significant.
Andrew: That your software does that. Okay, so I see now how you can see their pain and their frustration in that and how you can say to yourself, hmm, software would work to make that simpler. So is, the next thing you do as I understand from your conversation with Jeremy our producer is, you diagrammed the solution for them. So now that you’ve (?) the problem and the step by step and you had a vision for what you could do, how did you diagram it?
Sam: So, I had this problem, and it reminds me, when you’re on the phone, I wasn’t just looking for any problem. I was kind of angling towards problems that could be solved with software, because that’s what I wanted out of the core. So come to here I’d found a problem that could potentially be solved with software but I could kind of imagine how you could have an app where you could do the photos and the checking off with. And to be honest I didn’t even know if it was possible to build it. But I drew it anyway. I got out some paper and I started drawing like how it would work. And you know, I just kept drawing until I found something that would solve the problem. And then when I had that all drawn up I was like, I called the customer, well they weren’t a customer.
I called the people back and said, you know, it was a series of calling and sending e-mails with these ugly sketches of a could be software product attached and getting feedback. And at first they were like, whoa, whoa, whoa, whoa, whoa, whoa, like, it would have to do this. And you know, here comes your product, from the mouth of the customer. That’s when you know that you’re building something good, when they’re actually telling you that you’ve got it wrong and it needs to do this. So I made them sort of do that, being careful of course not to let it, a lot of what they’d drawn, I just.
Andrew: What’s one thing they told you about the product when they saw the sketch that you wouldn’t have known without them? How did they help shape it? Do you have a specific?
Andrew: Here’s one that I got from your conversation with Jeremy. They didn’t want to have to type a lot on their phones. They wanted auto complete in certain. So you said, oh I can give you auto complete so you don’t have to do much typing. Is that a good example?
Sam: Yeah, so, you got it. They said I would hate to have to type in all these comments with my thumb, I hate texting and that would suck. That’s what they told me. I came up with the auto text thing based on the problem that they told me, to solve that. So I think again it’s important not to let your customers tell you the feature, but more to tell you the problem at the moment, and then work out how to solve that. Because if you give them reins of your product, I did give them reins of it for a while, and it just started to become like a spaceship. I had to start ripping stuff away and I realized I was making that classic mistake of just letting them do whatever they wanted. But lucky it was only at paper at the time.
Andrew: All right, so you’re showing them the sketches, they’re giving you a little bit of feedback on features that they need or on solutions that they need. You’re improving the sketches. You finally get them to say, this is exactly what I need, I want this. At that point do you say, would you pay?
Sam: Well, not right at that point. And I definitely didn’t say it like that. I said, like I just kept going back and forth. And remember at this point in time I’d actually met up with these people for coffee and stuff. There was a good relationship there. And the communications had included meeting up, calling and e-mail and so they, yeah, it got to the point where they were like, yes, I want this. This would do it. And I was like, awesome, finally I’ve got that. So I went away and I worked out how much I’d have to charge for it to make a good business for myself out of it, and it sounds kind of selfish, but if you’re going to, if this is going to be what you do, you’ve got to make sure that it can make enough money to satisfy you.
Andrew: So how much money did you estimate that it would cost to build it? I know things change as you build out, but what was the original estimate?
Sam: The original estimate was $6,000.
Andrew: OK. And how many customers would you need to close to earn $6,000?
Sam: Probably, I had 12, 15.
Andrew: Oh, 15 you’d need to close to get to $6,000?
Andrew: OK. All right.
Sam: That was on top of the whole development cost right? But that’s not what you’re trying to do here. You’re not trying to cover your whole development cost. That’s not the reason why you’re (?). The reason why you work out your pricing and you come back to them is because that’s what you’re going to have to sell if for to make a profit in the long run. It’s not as short term as “I just need to cover my development costs”. So I didn’t mind putting in my own money to get it developed provided that all (?) was would people pay for this?
Andrew: I see.
Sam: That was the most important thing. You can have everything else, but if someone won’t pull out their credit card and give you the money you haven’t did shit.
Andrew: I see.
Sam: You need money, yeah.
Andrew: So, at what point did you get them to pay you? Did you get them to pay before you built it?
Sam: So, again, it’s very tempting, just human nature to think “OK, I’ll just go build it and then when I’ve got it and it’s all shiny I can then get someone to pay for it”.
Andrew: It’s hard to get somebody to pay for something you haven’t built yet.
Sam: Surprisingly not.
Andrew: So how did you do it?
Sam: I went back and this is the (?) that I’m thinking about charging for this and I had worked it out just the tiers, again, printed on paper, nothing fancy and they sort of looked at it and they were like “Yeah, it looks fine”. They weren’t ecstatic about it , but there wasn’t any major objections and I said basically “I’m going to have to dedicate a lot of my time to get this product built and I’m going to have to invest a lot of my own money in it and it’s going to be a massive thing for me, so I need to have some sort of cash flow from this to make it all work. So this is the pricing I’m thinking”. They looked at it and said “Yeah, looks fine” and I said “So I’m willing to offer you 10% off for life and I’ll never change the pricing on you. I will always leave it at what’s on this paper minus 10% if you join now and pay three months in advance”. Yeah, surprising, but not so surprising now when you think back, but people took it.
Andrew: All right.
Sam: Yeah, human nature would mean before you asked for that you’d need the payment system right, or a business bank account or something to accept credit cards. Well shit, I didn’t have any of that. They said “Can you send me through the paperwork?” and I was like “Shit, I don’t have any paperwork”. At that point I didn’t even have a domain name and this product didn’t have a name, remember. It was just a drawing. No name, no logo, nothing, and I had no paperwork. I just said… I just gave them my personal account number, which was like a tertiary account. And I was just like, “This is my account number, but can you just put the money in and use this reference.” And people were like, “Yeah, sure.” Paid the money, and then, I was like, “OK. I’ve really got a solid foundation for something here.”
Andrew: I imagine at this point people must be thinking, “That sounds outrageous. He just gave them the account number and money comes. What’s Andrew trying to sell?” But, I’ve got to tell you, when you’re thinking of a business expense, how much were you charging a month?
Sam: Like 150. I think.
Andrew: 150 bucks.
Andrew: It’s nothing compared to some of the problems that we deal with and some of the expenses that we deal with. Amazon S3, just to host some of our video files on Mixergy must cost over $600 a month. That’s like a nothing part of the business. It’s invisible to the audience. I remember someone called me up, an entrepreneur. And he said, “I’ve got this solution to a problem that you posted online, if I create it . . . ” I sent the money before he even had a chance to really describe the solution. I just Paypaled it over to him. It was 100 or so dollars. It’s nothing when you consider that it’s a business problem, and business have huge expenses, and if you can freaking solve one of our big problems we’re going to have a lot of revenue, or a big reduction in our expenses as a result of it.
Sam: What about the pain?
Andrew: Right. If it’s a huge enough pain . . .
Sam: Yeah. Someone doesn’t care if the produce is on paper without a name, a domain, anything. And you give them your personal account number. All the other stuff, all the things that entrepreneurs obsess about, like polish and getting everything right. None of that stuff matters, when you get the actual basics right, you can get away with the scrappiest of all things, if you just get the basics right.
Andrew: And yet, it wasn’t enough for you. You knew their problem. They’re willing to pay. You still, because of your feelings about the past failure said, “I’m not yet on solid ground.” And you decided to do one other thing, what’s that? To confirm that you were going to build something that would actually produce revenue.
Sam: Yeah. So, I’m really glad I did this, and I would do this again. Because, in my mind, I was sort of thing, “Well, I’ve built a really good relationship with these people. And they designed it with me.” It could have felt like their baby, because it was something that they’d had their hands on. And I was like, “Sure, I closed the deal, but is this going to work with other people?” Because they’re not going to have their hands on the product and they’re not going to have this sort of relationship with me. So I thought, so there’s only one way. And I thought, “I’ve got to try to sell this thing to someone I’ve got no relationship with.” And so, I just found some phone numbers, and pretty much called someone and said, “My name is Sam, ‘I’ve got a new . . .” It’s kind of lying, but I literally pitched it like I had it ready to go. And I saw what happened.
And, we’d have a conversation, and I got the same objections I get today. The sales conversation goes exactly the same, and having that conversation, you can have the conversation before you have the product. And it’s like, “This is the most important thing in the world.” It needs to be so clear. When I started my first company I did everything and then talked to a customer. But really, you can have the exact same conversation at the very beginning.
Andrew: Before you even build it. Do you tell them, “I’m about to build it.” Or did you say, “I’ve got this product.”
Sam: I said, I had it. Well, I didn’t say I had it, I said, “We’ve basically got this new product that does.”
Andrew: Got it.
Sam: Then when I actually got towards the end of the call and people were like, “Yeah, let’s do it. This sounds really good.” And they asked how much it cost, everything. And they were happy with it. Not as easy as that, there was actually some salesmanship involved. And, then I had to say that, well, I didn’t have it. I said it was in development. And it was due to be released at this time. And they said, they’re kind of like, “Oh, you pitched me, and it’s not eve build?” I made them the same offer.
Andrew: You said, “When I build it, I’ll give you 10% off if you buy it now.”
Andrew: And they said, “Yes.” Some of them did.
Sam: Yeah. Not all, but a good percentage. Enough for me to think, “This is the exact . . .” I had the exact sales conversation. The real . . .
Andrew: What are the objections that you said that they brought up.
Sam: What’s a typical thing? “I don’t have enough time to implement something like this.”
Andrew: And what’s your answer to that?
Sam: Back then it wasn’t as good as it is now. But back then, I was kind of like, “Well, are you sure? The whole benefit you’re going to get from this product is saving a whole lot of time. Tell me what you’re working on at the moment.” And they were like, “Well, we’re trying to get this done, trying set up this new office.” And I’m like, “OK, OK, so if you revolved this out, it would probably take you a day to implement, and then it’s going to save you this much time. You’re going to get these things faster.” Just basically trying to do that.
Andrew: I get what you’re saying. And this point now, you understand what their concerns are, you have answers for how to counter their concerns. You’re always going to have objections. There’s never going to be a perfect product where people say, “Yeah, I’m jumping in.” Your goal is to come up with responses that explain your product better and assuage their worries. But you found something that worked. It was time to develop. I want to get to a couple of other things. When you developed it, to show the developers you used Key-Noteopia[SP], which is a design product that makes it easy for non-designers to designers what they want. Especially, for mobile devices. But what’s more important, looking at me notes here is, you talked to high end developers, but you wanted to hire cheaper developers. I see the big smile. Tell the audience what your process was, and why you did that.
Sam: No offense to the developers that are listening t this. But I went to a really good, like a top of the line software company in my own country. And showed them what I needed build, and they, because we’re both from the same country, English is our proper language, and they’re very smart, and they know exactly how to do it. And they put together the whole feature list, the whole proposal for something like this. Exactly how it would need to be built.
Andrew: They said, “If you hire us, this is what it will look like. These are the features we’ll build in. This is how . . .” I see you’re eyes are lighting up as I say it. OK. And what did you do with that proposal?
Sam: So that proposal came back, and that was 110 grand.
Andrew: $100,000 to build this thing.
Sam: So then I used that proposal to send to development companies in India, without the price on it, of course, and say, “Hey, I need to get this done. This is one proposal. Can you give me a quote on it?” And let everyone fight for it, pretty much just price shopping and got it down to the cheapest one, pretty much. Yeah.
Andrew: OK. And that’s how you had it built. I don’t want to get too much into that because that’s a whole other conversation in itself and, frankly, we have programs on how to find developers and how to work with them and get the product built. What I think was especially unique about your business is the way that you figured out what the business should be. And already this business is more successful than your last one.
Speaking of your last one, I want to come back to that now, now that we understand this process. If you would have done this process all over for your previous business, what’s one mistake that you made that you think customers would have quickly shot you down for? What’s one big mistake that you didn’t notice back then?
Sam: This is my first ever business, right?
Andrew: The $10,000 loss business, the one that was a big pain.
Sam: Yeah. Well, I never really had any customers. What do you mean?
Andrew: What I mean is, I guess you did talk to customers after you launched it. When you talked to customers, what did they tell you was bad, was dopey, was a mistake about your business? What did they tell you they didn’t like that you could have heard beforehand and avoided?
Sam: So just the fact that they didn’t really need it.
Andrew: That’s a good point. It’s not necessarily any one feature, it’s just that we don’t need this.
Andrew: This doesn’t solve a problem for us.
Sam: Exactly. It’s not about features or anything. That was the truth. They just didn’t need it. Like, it wasn’t high on their priority list at all. To be honest, the thought wasn’t even really in their mind. There was no desire for it. There was no need. There was definitely no pain. It was a nothing.
Andrew: All right. That’s a good place to leave it, a before and after right there if I ever saw one. First of all, if they want follow-up with you and they want to say thank you, where’s a good place for them to go?
Sam: I don’t know. Just in the comments or they can send me an e-mail.
Andrew: What’s your e-mail address?
Andrew: Sam@samovens.com. And of course I always urge entrepreneurs to talk to past guests so that they can get to know them, first of all, just because it’s a nice thing to do but also because we need these relationships as entrepreneurs. I talk to Dane every once in awhile to just help him think through my ideas. I remember the first call that I made to him where we talked about some random thing and then through the conversation I opened up about this observation about “find the pain” is this big thing that I’ve noticed in interviews and having a conversation with him helped me. So it helps us, I think, as entrepreneurs to have other people who get our space and get our world to help us think through our ideas and to clarify them.
Dane also has a group that you are a part of. If someone else wants to join the group, do you know where they go for that?
Sam: Yeah. So it’s thefoundation.io.
Andrew: Yeah, I’m looking actually right now on my iPad. Yes. Thefoundation.io. Look at this, he’s got my photo up on the page. Of course I gave him a testimonial. Dane’s incredibly helpful. So thefoundation.io, if anyone else wants to be a part of this, Dane’s the guy who’s your mentor, who helped walk you through this process. Are you still able to talk to Dane now that you’re done?
Sam: Yes. We’re good friends now.
Andrew: Yeah, done, I should say, with the program. He’s got this program where he walks entrepreneurs through this process where he introduces them to each other, where he helps them and they help each other out. So if you had an issue with him today, like, I don’t know, “That Andrew really ripped me a new one in the interview,” could you email him? How would you contact him?
Sam: I could just give him a call.
Andrew: You’ve got his cell phone and you would just call him up and say, “Dane, I’ve got this problem with Andrew,” or, “Dane, I need to find more customers,” and he’d talk to you and help you out with it.
Sam: Yeah, definitely.
Andrew: All right. I don’t get a commission, by the way, for talking about this. You don’t get a commission for talking about it but Dane’s a good friend who’s helped us out and so I want to say, I keep looking at the iPad just to make sure that the top level domain is right, that’s it’s thefoundation.io and not dot something else. So it’s thefoundation.io.
All right, Sam. Thank you for doing this interview.
Sam: No problem.
Andrew: Cool. How many interviews, by the way, have you watched? Mixergy interviews?
Sam: I couldn’t give you a number but more than 100.
Andrew: One hundred. You’ve heard me in the past say, “After you build your business, come back here and teach others”?
Andrew: How does it feel now that you have that opportunity to come here and, I think, you did a great job helping other entrepreneurs understand this process but how did it feel from your point of view?
Sam: Just weird being on the other side because I’ve seen your face and I’ve heard your voice and I’ve seen those books in the background so many times that I never imagined being the dude on the other side of the computer. It’s a bit weird, but no, I feel good.
Andrew: Well, thank you for doing this and I’ll say the same thing to the audience: use what you’ve learned in this interview and other interviews, build up that business and then I hope that you’ll come back here and do an interview with me where you get to be as useful for other entrepreneurs as you’ve noticed Sam be here today.
So thank you all for being a part of Mixergy. Bye.