Andrew: Hey there, freedom fighters. My name is Andrew Warner. I already cut off my guest. I saw he was about to say something before I made this intro, but I don’t care. I’m going for it, Dan. Here’s the thing. I interviewed today’s guest a few years ago about how he had a martial arts website called Science of Skill. And at the time, I’m going to be honest, I thought this site just looked okay. But this dude came on and he talked about how he did with his business, that was interesting. And then he and I had a private conversation he said, “Andrew, you do not understand marketing automation at all online.”
I went through your site because I’m a madman. I didn’t say you are a madman but I picked up on that. And here’s the kind of automation you could do. And he was showing me his marketing automation. If someone clicks on this, they get tagged like that and they go in this bucket. The brilliance behind it was just it was unbelievable. I actually had them on to teach a course on Mixergy about it.
But what I took away from it was, number one, Dan was just incredibly caring about me and I don’t even know why. And number two, he was just opening my eyes to how much marketing automation can transform a business. Here was a guy with a martial arts studio where people came and bought from him in person. And because he understood how to tag people based on what they did on a site and what they were interested in and what they bought, he was able to sell to them in a more intelligent way and he was able to build up his business.
What I did not know at the time is that in the back of his head he wanted to sell that business. And he tried and he failed. And then he tried again and he did succeed and that’s why we’re here to celebrate. Right? Look at him, Dan Faggella given a punch in the air. You must be excited.
Dan: Oh yeah, no, I’m very happy to be working on what I really care about at last for sure.
Andrew: And the thing he really cares about is AI, Artificial Intelligence. He’s now running a business called TechEmergence. It’s a media and market research firm in San Francisco that’s focused on artificial intelligence. I’m going to ask him why he wants to do that and why he’s so passionate about it. And this whole thing is sponsored by two companies that he and I both know well. The first is ActiveCampaign for sending outsmart marketing automation, and the second is Toptal for hiring great developers. But first Dan, aside from all the niceties of being on here, thank you for being here. Nice to see you, etc. etc. How much did you sell for?
Dan: We sold Science of Skill for a hair over $1 million. So 1 million and then 12,000 or 1 million 20 something thousand. So it was like . . .
Andrew: Wow. How much of that was up front and how much of it did you have to wait for?
Dan: Ninety percent up front and only one month of consulting after. Done-zo.
Andrew: That’s it. And so . . .
Dan: Ninety percent cash, cash to the face. Yeah.
Andrew: That’s about $950,000 cash in the bank? You only had to pay 15% tax or something on that?
Dan: Yeah. I mean, we had a broker and we had arrangements with them and we had some legal stuff, but we also had a lot of inventory that was worth a lot of money which kind of added to the plus side. And so yeah, I mean, it was safely over 800 that kind of hit in the first Wells Fargo pop, and then we’ve got the other 100 something that’s maybe lingering on its way. But those guys are doing great, they’re doing well with the company.
Andrew: This thing was beautiful.
Dan: Yes. Science of Skill is a . . . I mean, when I sold it we were maybe doing . . . We went from zero to over 2 million in four years, got an 85,000 whole nine yards. They’re probably going to be closing the gap on, I don’t know, six or eight coming up pretty soon. So it’s on the right trajectory and doing what it needs to do. And I’m a happy camper having left that behind and doing what I want to do, man.
Andrew: All right. We kind of get a little bit of the background. We’ll pick this story up when you hit about $40,000, $45,000 a month in sales. Is that right?
Dan: Yeah, that’s where we caught up last. Yeah, it was about like one-fourth or one-fifth the size we were when we sold. Yeah.
Andrew: Why did you want to sell? Why didn’t you say, “Dude, I got a good lifestyle. I got to get out”? Why did you say, “I want to sell”?
Dan: Well, we didn’t go into this in incredible depth when you and I talked. We talked more about marketing automation and what we’re doing in Science of Skill. But what got me to start that business was because I had an idea of what I wanted to do with my life. So by the time I got out of University of Pennsylvania studying Cognitive Science for grad school, I was actually of the belief, Andrew, that I might have gone in for the wrong topic. I say that somewhat facetiously but there were whisperings at that time in academia of something called machine learning, which was essentially the science I was studying back in 2012, the cognitive science and neuroscience of skill development. The business called Science of Skill. Right? So it was based off my thesis work.
And I came to the conclusion that the furtherment of kind of intelligence and maybe even conscious awareness is probably going to be able to expand in a very ethically consequential way via technology outside of necessarily just how much we can learn within our human cranium so that trans-humanism and AI would probably be the kind of unquestionably most important ethical considerations that I could conceive of and if by golly I should dedicate my life to that. So there’s two ways . . .
Andrew: So you’re saying you left school saying, “This is what I want to dedicate my life to, this intelligent computing,” and then you ended up in jujitsu anyway.
Dan: Well, yeah. Well, I actually by that time it took me about a year after I left grad school to sell my Martial Arts Academy, which was a much smaller business. I mean, we were a quarter million dollar a year business.
Andrew: What did you guys do there?
Dan: We’re still a business. Quarter million bucks a year.
Andrew: No, no. What was the business?
Dan: Black Diamond Mixed Martial Arts was just a MMA [gym 00:05:28]. So my years . . .
Andrew: In person?
Dan: My ears are all fucked up because when you get a black belt in jujitsu you have to fight a lot of people. And so, a lot of seminars, a lot of competing.
Andrew: Okay. So you had an actual studio, people would come in, they would learn from you. All that work quarter million a year.
Dan: Yeah, man. The way I paid for college, including Ivy League grad school, was teaching people to choke people because I’m not good at getting a job. Right? So I’m just not good at it.
Andrew: Okay. Let me ask you this. Why . . . I see what you’re saying. You’re saying, “I got into this because I’m not good at getting a job.” Why didn’t you get into your passion then? You knew what you were passionate about in college.
Dan: No, no, no. I mean, when I was 20 and still an undergrad, I had no idea. This is at the end of graduate school. So by the time I’m at the end of graduate school, I’ve been running this martial arts gym since I was an undergrad. I’ve been running it for two and a half freaking years. So now it’s big enough to the point where I can’t get out of it. I got a lease for five damn years. You know what I’m saying? I got employees I got to take care of. So I need to get the systems up to place and blah blah blah.
So while I was doing that right after I got out of graduate school, I started writing and interviewing on kind of AI and ethics topics, and it came to the conclusion that I don’t know how to build a platform to facilitate this conversation about the big picture of AI. I knew I wanted to reach leaders. I knew that that’s kind of like the conversation why to facilitate is ultimately about ethics. Right now I kind of reel people in with business which is kind of what I have to do to deliver value for the company, but my passion is ethics.
But I didn’t have a business model, and I figured, man, I’m going to get out there to the old Silicon Valley and I’m going to make this thing something large. There’s two ways to move out to Silicon Valley in your 20s, Andrew. One is to move out broke and then give away a lot of your company on the back of a napkin to a rich guy. Right? That’s option number one. Option number two is go get $1 million for yourself and then start your own goddamn company with your own goddamn equity and don’t give away none of it off the bat until you feel like it. And that’s what I decided to do.
Andrew: Okay. And that’s why you got into this?
Dan: And so Science of Skill . . .
Andrew: And so you said . . .
Dan: Science of Skill was the sacrificial lamb. It was everything I needed. Recurring revenue, location independent and relatively easy to sell. Now, it was harder to sell than I thought, but compared to other kinds of businesses particularly services stuff, it was reasonably easy to sell.
Andrew: Okay. So you got into it. You were teaching people online how to do jujitsu?
Dan: That’s right.
Andrew: You’re filming yourself, you’re selling this, you’re getting smarter automation, and that’s why you wanted to sell, and when you went to sell you said that there was a problem. What’s the problem?
Dan: Yeah, we’ll go right into it. So when I . . . Science of Skill, like literally right when I was talking with you, we had done a big launch, we had gotten to about $45,000 per month in recurring revenue. I actually remember sending you our P&Ls;, so you got the copy of our finance . . .
Andrew: Yeah, because I’m such an asshole that even someone who’s nice to me, I still don’t believe them and I need proof.
Dan: I love it, man. I mean, if you want to publish like . . . Well, I actually don’t know the legal concerns. I don’t know like the sellers . . .
Andrew: It’s been a while. We’re talking about February 2014.
Dan: I’m talking the sale of Science of Skill, so you know that’s legit. But then I’m wonder would the buyers like sue me for that shit. I don’t know. But either way. Yeah. So in the P&Ls;, we were doing 45k a month. I thought we were about 13 months old at that point. I thought, “Okay. Well, surely now it’s time to sell.” I mean, I know what I want to do. By this time, TechEmergence was not just an idea, it was a full-blown site. I took a lot of my interviews and I script them up there. I was only working on it a tiny bit of time because I was spending so much time selling things online. But when I went to sell at that time and you’re doing about, again, 45k a month, a hair over a year old as a company, I realized that I could find buyers. I could find people who said, “You know what? I may want to buy your company.” But I couldn’t find banks that were willing to put a lot of lump money up front. And here’s . . .
Andrew: Tell me about that. That’s the thing that I wasn’t clear on.
Dan: Sure.
Andrew: Why would a bank need to put a lot of money up front?
Dan: This is tremendous . . . This was a . . . I don’t know why nobody told me this, Andrew. So I thought it was easy. I thought when you get to 45k a month, if it’s recurring, you just sell it. End of story. Right? I’m going to move on to AI, I’m going to move on to what I care about. Instead, I have to split my hours 40 here, 40 TechEmergence for three freaking years. So the reason is unless you find a buyer who, A, has like a tremendous amount of free cash for themselves, and, B, is willing to, for some reason, put it on the line instead of put the bank’s money on the line to buy your company. If you want a lot of money up front, like if you want 90% down, which is exceedingly aggressive. I’m kind of like . . . It was like a really aggressive asked on my part.
If you want 90% down, you normally need the Small Business Association or some other kind of arrangement with banks where they will actually loan that money to the buyer, the buyer will transfer that to you and then pay off the bank over time. So they’re not really putting their own kids’ college funds at risk. They’re using a bank. So if you sell a business under $5 million, top-line revenue under $5 million, a lot of the time you’re going to be using the SBA, a lot of the time. And if you want a ton of . . .
Andrew: I had no idea.
Dan: Yes. And if you need a . . . Now, here’s the thing, Andrew. If you want to sell for 30% cash down, maybe you don’t need the bank. But if you’re going to get aggressive as hell and you’re going to say, “I want 90% cash to my face,” then they’re not going to want to put their kids’ college funds at risk, right?
Andrew: I love, by the way, how you put things. The way that you talk is so interesting, like, “I need 90% to my face.”
Dan: Yeah. Like to the grill. You know what I mean? Like, you just got to . . . It is where it is . . .
Andrew: Did you hire a broker at that point?
Dan: Yes, I went through a number of brokers. And it was really . . . I’m not going to blame any brokers for not selling it. They were working under a structural concern of, “We don’t have . . . ” You know, a bank, Andrew. A bank is going to say, “Okay, we’re the SBA. I see you make 40 . . . ” At that point we were doing $45,000 a month and we were at like 24% profit margin. So we’re actually like cooking in a bunch of cash every month for a small business with like functionally no employees. I mean, it was pretty sweet.
So they’ll say, “Okay, yeah, your numbers are nice. We’ll need three years of tax returns.” We say, “We’re only 13 months old, but we’re making some good money here and we still want to sell.” They’re like, “Yeah, we don’t put up money for that kind of stuff. So we’re going to be three years. End of story.” And so I got that a lot.
The other thing, Andrew, that you should bear in mind that maybe not you, but somebody looking to selling online business, is online businesses are also particularly challenging with the SBA because what does the SBA like? The SBA likes businesses they understand. What kind of businesses that banks understand? I don’t know. What did your grandfather do? Like . . .
Andrew: Yeah, you told me a list of questions that . . . or you told our producer, the list of questions that the bank came back to you with, like, do you remember?
Dan: Oh, awesome questions. Yeah. “Where’s your headquarters?” I was like, “My apartment, like, yeah.” “Where are your . . . You have $2 million in revenue. How many full-time employees do you have?” “One.” “Okay. Where do you have . . . Where is your warehouse?” “I don’t actually have a warehouse. I rent space in . . . There’s a firm that does this stuff for us.” “What kind of delivery trucks do you have?” “I’ve never delivered anything. I have no idea what you’re talking about.” And so we get a lot of questions like this because they’re used to the kind of businesses that the old banking books say that business works like. Right? Like, stuff like . . . Like, right after horses and buggies, like, when business was there, that’s kind of like what business is to banks.
The other thing, Andrew. And by the way, I don’t mean to insult banks. The other realistic concern for them is if the buyer goes under, so they might say, “Okay, this for jelly kid can make a lot of money, but these guys who buy it, they might not be able to pump out cash like this kid and maybe they’re going to go under. We need to sell something if they go under.” Now, this is a realistic concern for a bank and I respect this. If you have a pizza shop and you got ovens and you got trucks and you got all that stuff, they can go sell that for money. If Science of Skill went under because the buyers were inept and now luckily I think I picked about as good buyers I could have they’re doing a great job and I like the guys a lot. But if they had gone under, what’s the bank going to sell? They’re going to sell the CRM with all the email address. You can’t sell that.
Andrew: Right. And frankly, maybe what you did was, you just exhausted the list with all the launches or they don’t know what you did and they have nothing there.
Dan: Exactly, exactly.
Andrew: So I had no idea.
Dan: They don’t even know what an email is, never mind to launch.
Andrew:So you said, “I need to grow my business even more and I need to get three years of tax . . .
Dan: Tax returns.
Andrew: Tax returns. And at that point, so you started going back to work and building yourself up to that point. How much money did you say you had to make before you could sell? What goal did you set for yourself?
Dan: Yeah, I mean, initially, Andrew, I would have been happy to sell the thing for like 150k down. By the time I talked to you, I would’ve love $150,000 or $200,000 and I would have just ran away with that and been a happy camper. But by the time, like let’s say, six months after that, I say, “Okay. Well, I’ll sell it when I can sell it for half a million bucks. And half a million was my hard cut off. And then as it turns out, we were able to double it and then we were able to double it again. And so we were actually able to sell it for a little over $1 million, but my hard cut off is going to be half a million, unfortunately, because I needed the three years of tax returns not two, I had another year and we grew our revenues pretty substantially and we were able to sell it for more.
Andrew: All right. What did you do to sell it? So I’m curious about that.
Dan: Oh yeah. Let’s go in, man. So . . .
Andrew: No, sorry, not to sell. What did you do to grow it to that? That’s huge.
Dan: Sure, sure. I’ll tell you . . . I will give you the most important points.
Andrew: Okay.
Dan: Now, if you want to talk about what made it saleable particularly saleable for 90% cash, which is what would be called an egregious ask. I mean, it’s egregious to say, “I’ll give you one month of consulting and I’ll give you . . . and I need 90% of the dough, and then I’m out like a thief in the night.” Right?
Andrew: Right.
Dan: Like, that’s a very egregious ask. So the things that made it sell for that . . . And by the way, I did extend other consulting services with the guys.
Andrew: You know what? Let’s break it up into two different conversations.
Dan: It’s just growth. It’s just growth. Yep.
Andrew: Yeah. Growth first, and then what did you do to make it saleable because your type of company is not necessarily sellable?
Dan: You’re right, you’re right.
Andrew: So what did you do to grow from 45 to . . . What did you get?
Dan: This are different conversation. So by the time we sold, we were cooking it . . . I think the month I sold it was maybe 212.
Andrew: Two hundred and twelve. So yeah. So what did you do to 4X your revenue?
Dan: So a few things. Number one, when I talked to you, we were in a market that I was familiar with because I had a following on the internet. So there’s a video on YouTube called Dan Faggella Versus The Giant which is a video of me having a jujitsu match against this really big UFC fighter. His name is Pat Walsh. He’s twice my size. Huge guy. That video was getting a ton of views. And so I said . . . That was the beginning of Science of Skill, Andrew. I said, “Can I teach people how to do this to big guys and make money location dependent because I’m going to move to the West Coast?”
And that was the beginning of Science of Skill. So Brazilian jujitsu was my entry point. That market is pretty small. There’s only so many people that do jujitsu and there’s only so many traffic sources that can bring you jujitsu people. And a buyer who’s passionate about jujitsu is a pretty low likelihood because jujitsu guys aren’t necessarily wealthy fellas. Being one I can say that. So what we had to do was expand the circle to a market that could accommodate becoming a multimillion dollar company. And for us, that was self-protection and self-defense. So the people interested realistically on how to defend themselves is a much broader market, not a tight market, but it’s a much broader market than the Brazilian jujitsu market.
So one thing was, we expanded these systems. I talked with you a lot about email marketing, very tight segmentation, very tight automation. How do we extract the most recurring revenue per person based on their own interests? Right? That’s what I’m what I’m kind of focused on. Can we take those same systems? We’ve been able to squeeze a ton of juice out of this tiny orange. Can we take a huge watermelon and crush it the same way?
Andrew: Okay.
Dan: And so that was a big thing. These . . .
Andrew: So you started to expand beyond jujitsu to what? To self-defense in general?
Dan: Self-defense [inaudible 00:17:43], yeah.
Andrew: For regular people like me?
Dan: Yep. But generally actually, our audience kind of swayed . . . So there was a lot of audiences that resonated a lot with self-defense, one is the homesteading market. So people are interested in kind of living off the land, being off the grid. For some reason, I never would have known this. If you said, “Hey, homesteader people are going to send you millions of dollars,” I would have been like, “No, that’s probably not true,” but actually it was. So that market was extremely lucrative.
Another market was actually the folks are interested in kind of firearm stuff. So a lot of these were like, law enforcement people or ex-military people, a ton of folks that are kind of into . . . Not collecting guns because I have nothing to do with that. And I’ve actually never owned a gun in my life, never shot one, but we had instructors who were Marine Corps scout snipers who were pretty talented and could teach that stuff pretty well. So there were military people and law enforcement people that were into that. So that crowd plus the homesteading kind of crowd together ends up being a massively broad market with a million different traffic sources, the same marketing systems, almost the same damn landing pages to a bigger market means more money and that’s what we did.
Andrew: What were the marketing sources?
Dan: Yeah. So, one of which was in the early days was affiliates before we wanted to risk a lot of our own money. So we would go to people who were targeting the broader self-defense market, we’d say, “Hey, we have these offers in kind of the ground fighting and jujitsu space, they’re doing really well. We’ll pay you like some ridiculous earnings like 85% or just something where we’re like almost going broke just to test it, because we really think it could do well and we’d be willing to go at risk to do it.” So we did that for a little while.
But really where it kicked in, Andrew, is we went to list brokers. So there’s a category of humans in the internet marketing space called list brokers and these people, essentially, go to huge Facebook pages, huge blogs, huge social followings and they asked the people that run these sites, they say, “Hey, do you have an email list?” The person says, “Yes,” they say, “What if I gave you money every time you send a newsletter to your email?” And most of these people that run a huge blog, they’re not necessarily email people, so a lot of them are going to be willing to go along with what the list broker says, then the list broker kind of owns or is able to license a lot of different email lists. And we don’t get the list, right? They don’t send us email addresses. We’re not like breaking the law. Instead, they send a sponsored message from Science of Skill Corp.
Andrew: And the whole message is your message just sponsored message.
Dan: Yes. Or we could sometimes do just a banner insertion. So they would have a normal newsletter where they’d include all kinds of stuff they normally talk about. They’d said, “By the way, Science of Skill is one of our sponsors for this week.” It’s just a little banner at the bottom and you could click it. So there were different options.
Andrew: What are the list brokers that you want to? What are their names?
Dan: There’s one called . . . I’m sure they’re going to love if I just shout them out right now. So I’m happy to do this. Why can’t I not think of the guy’s name? Scott. Oh man. Can I go to my . . . I’m in my email right now. I’m literally going to pull up Scott Smoliak. Okay, Scott Smoliak. Where do you work, Scott? Tell me where you work.
Andrew: I can look him up too. Emailabilities.
Dan: Emailabilities. Emailabilities. So Scott Smoliak, I just like Scott a lot so I’m shouting him out. But we definitely did business with Scott, so he’s a list broker in a number of niches and just did a lot of business with him. So he’s a good guy. There was another list broker. He’s over a year ago here.
Andrew: I had no idea these things existed.
Dan: Oh yeah, it’s an interesting quarter.
Andrew: I know at one point in the world that existed, but I thought this was all done.
Dan: Brian . . . Oh man. What was the other guy? There was a guy with the name of Brian.
Andrew: Okay. You know what? I’ve got one. If the second one comes to you, let me know.
Dan: Sure.
Andrew: I love that you’re doing this.
Dan: It’s very easy. Look at list brokers. Okay. The John R. Waylan [sic] Agency, W-A-Y-L-A-N. And sorry I’m a little sick. W-A-Y-L-A-N I believe is the last name. John R. Waylan Agency. They were another list broker agency that we worked with. They represent a ton of online websites. And so, yeah, that was really . . . Andrew, that was maybe 60% or 70% of our paid media was with these list brokers all the way for the last year the business to get us into the Inc. 5000.
Andrew: All right, let me take a moment to talk about my first sponsor. It’s a company that you know well. And then we’re going to come back and see once you did this, you found new list of people, how did you create new products and how do you grow sales. The sponsor is a company called ActiveCampaign. You use them.
Dan: Yeah, I do.
Andrew: Why do you? A person who is so into marketing automation, what do you like about ActiveCampaign?
Dan: Well, as you know, I was an Infusionsoft guy for Science of Skill because I needed all this crazy automation. TechEmergence, we need different lists and we need some automation, but I don’t need e-commerce there because I sell on the phone, I don’t sell via email, and there’s a lot of bells and whistles that we’re required, basic tagging, list management, and pretty looking emails that was easy enough to use and didn’t cost an arm and a leg. And there was actually a buddy of mine named Justin Brooke [SP] who is media buying guy was like, “You might want to go with ActiveCampaign.” I tested maybe four, five different vendors and I was like, “All right, I’ll go with them.” And so for the last three years, we’ve been using ActiveCampaign for TechEmergence.
Andrew: What’s the automation that you do right now or that you recommend people go into ActiveCampaign and use?
Dan: Oh man, there’s so much stuff here. So one thing that I do that I like a lot is, I have an automation where when you become a new contact and you have no other duplicate in the system or whatever, you’re a brand new contact into the system, there’s an 11-day wait, but then you’ll get a survey where I asked about what you’re interested in terms of TechEmergence contents. So we appeal to a lot of executives and we essentially educate them and connect them to vendor companies connecting to events to kind of make the most of AI disruption.
And I asked them like 20 questions. So it’s a super intense survey. So I’m going to ask them on day one, Andrew because that’s too much. So I don’t want a thank you page with 20 questions. Instead, I want an 11-day wait, send a couple of broadcasts, build a relationship, and then say, “Hey, I appreciate you being here,” if they don’t reply to that answer. Sorry. Reply. If they never open that email, I send a different subject line 11 days after that where I essentially send the same email with the same survey link. So it’s still polite but I’m still being nice, I’m not hammering. And if they read it and they didn’t reply, hands off. But if they never read it, I’ll hit them again, and just by doing that, that is probably . . . Man. I mean, that’s like 30% of determining what kind of content we’re going to build is from that survey and that’s about as simple an automation is you could ever make.
Andrew: Just 11 days later, check in with them. If they don’t fill out the survey, come back in a day later.
Dan: Come back 11 days later.
Andrew: Oh, another 11 days.
Dan: Yeah, we do 11 days later. Yeah.
Andrew: Oh wow. Why 11 days? Because you want them to experience your content for a bit.
Dan: Yeah, yeah, yeah. I kind of want to let them sizzle, want to let them understand the value. I think if people listen to three, four of our interviews and if they read the depth of what we cover in finance, healthcare, etc., there’ll be like “Okay, this place is cool. I’m going to stick around.” And if they get that hook I think they’re willing to give a little feedback and help us out.
Andrew: Yeah, you’re right about . . . The one shortcoming that you brought up I’ve found people actually see as a positive, which is they don’t do everything. They’re not going to be your shopping cart ideal, they’re not going to do your pop-ups, they’re not going to do all your form. They just do marketing automation really well and then go use whatever other tool you have. So with other email providers, because they have a shopping cart software, if you don’t use their shopping cart software, it becomes a pain in the neck to integrating and pain in the neck to keep track of affiliate sales. These guys said, “You know what? Use whatever you like. We’re going to focus on marketing automation.” And you don’t use any of their like onsite automation or onsite tagging, do you?
Dan: I really actually haven’t gotten too crazy with them. Now I will say this, we are redesigning the website and doing a bit of a rebrand of TechEmergence. And we’re going to be doing a tremendous amount more segmentation, not to the level of Science of Skill but to the level of kind of different industry segments and things like that, in which case, we’re probably going to use a lot more behavioral action than we do now, and also a lot more kind of tagging and different list segmentation. But right now it’s actually pretty darn simple.
Andrew: All right. And you know what? That’s one feature that I want to highlight for people. If you’re going to be working with ActiveCampaign or you’re on ActiveCampaign right now, you should know that you could do onsite tagging which will allow you to do smarter marketing. So for Dan’s business what that might mean is, if he sees that someone’s going on pages over and over that have to do with interviews, you might want to email them interviews. Just tag them as someone who’s interested in interviews and send them that.
If he’s noticing that someone is clicking on pages that an executive from a bigger company would go to, just tag them with that and that way you could send them email marketing that’s catered towards business executives. All right. So many features on here. You’ve heard many entrepreneurs who I’ve interviewed use ActiveCampaign. If you want to see for yourself why it makes sense, go to activecampaign.com/mixergy. They’ll let you try it for free. A lot of other software providers now are charging setup fee which is expensive. Do you have to pay that with the other service that you’re using?
Dan: Oh infusion, yeah, for sure. We definitely do. Again, it’s for different folks, different strokes, man. ActiveCampaign is a good tool for lightweight stuff.
Andrew: It keep it simple, lightweight, it works, there is no setup . . . To get started, there’s no setup fee. Just hit the Try It For Free button in the upper right of activecampaign.com/mixergy. While you’re there, there are three big benefits to starting on that page and you’ll see them. Go to activecampaign.com/mixergy. All right. You expanded your reach. Did you have to change your content at all or . . .
Dan: Yeah, we definitely did. So this kind of crosses over into making it saleable, but, yes, we widen the circle to self-defense instead of jujitsu which is a massive market, and then we were able to kind of replicate the same systems but bring in a much bigger lead source which was this list broker universe which is a very fruitful source of leads in that space.
In terms of changing the content, yes. So one of the reasons we had to do that is because I’m only a jujitsu guy, so I feel very confident teaching people about ground fighting and grappling. I don’t feel confident about bladed weapon defense, like knife defense and things like that. I don’t feel confident with other kinds of hand to hand weapons. I don’t feel confident with firearms. But we had kind of like SWAT team trainers and Marine Corps scout snipers and black belt and all kinds of other martial arts and we brought them in as kind of the star. So I kind of faded into the background and I wasn’t even at the bottom of the emails by the time I sold the thing. I was like an invisible man. And these other people were the stars.
Andrew: So you go out and you find someone who could do it and you’d say, “I’m going to pay you to shoot video of you. I’m going to bring in a crew. We’re going to shoot video. And that’s going to be the product that I sell.”
Dan: You bet 100%.
Andrew: Wow. All right. How’d you know which of those products to sell to create first?
Dan: Yeah. Surveying the ever loving heck kind of people. So a couple of big things I like to do. So when I go into a market, we did this from jujitsu . . .
Andrew: Wait, wait. What’s that beeping in the background? Is that you?
Dan: It might be a bus.
Andrew: All right, okay.
Dan: I’m right in SF like on the street.
Andrew: Where in San Francisco are you?
Dan: Son of a B. I’m in the corner of Hayes Valley. I’m near the Opera House.
Andrew: Okay. I love that area. I thought it was a little quieter than that. It’s hard to find a place there.
Dan: Oh man. The number of bottle breaks and late night brawls that no one tells you about this stuff about SF, man. Nobody tells you, you know.
Andrew: Yeah.
Dan:It’s all, “Hey, Uber headquarter is right there. It must be cool.” But anyway, pros and cons regardless going down.
Andrew: Yeah. How’d you know what to create?
Dan: Yeah. So two things. We survey people a lot. So with Science of Skill, we have the same survey strategy. We’re always sending out an automated survey where we’re getting a sense of what the heck do you care about, what are you interested in, why are you here, what do you want to learn, what are you frustrated about, can’t learn anywhere else. Things along those lines and that would get us a lot of ideas.
The other thing that I advocate everybody do is if you’re selling into a given market, every first . . . If you sell to your first 200 people in any market, call them right after they buy. And this is like, “Oh no, but surely, he’s saying this metaphorically.” No, no, like actually legit just call them. And it’s one of those things that you hear them saying like it’s like a startup advice or something, but super-duper recommend actually doing it because you’ll get a sense of like, “Why did this guy buy? What else does he own? What was his motivation for purchasing? What else does he want to purchase in the future? What does he think you specialize in? Is that totally different than what you thought?” And those first, let’s say, 20 phone calls with brand new buyers and a new market you don’t understand is going to be incredibly educational.
Andrew: And so you personally called them up to understand why they bought.
Dan: Myself and Marcus. Marcus was kind of one of our part-time guys who’s an awesome team member and was looking for a long time for Science of Skill. And then those early chats were actually what told us that we should probably chat with folks who have an interest in firearms. It would never would have crossed my mind, but as it turns out, ex-military, ex-police folks, they learn some of this stuff and they’re still into it and, like, they kind of feel proud that they got to learn a little bit and they want to learn from other people like them and that kind of let us know who should be our next instructor.
Andrew: And you then found instructors, but you also had to create content for them, right?
Dan: Yeah.
Andrew: Who did that?
Dan: So we would . . . It was a process. So we had a big company wiki. So there’s a company called . . . I forget . . . Like editme.com or something where they make like company wikis. And we had company wikis for everything for every process in the business which made things very simple.
Andrew: Oh, that’s how you kept your process documents, not a Google Doc?
Dan: No. Yeah, we actually used this wiki thing.
Andrew: But wiki. Okay.
Dan: Now, I like Google Docs and to be honest, I think they work just as well 90% of the time. So no issue with Google Docs, by the way. But for some reason, we ended up just going with these guys. It actually costs money every month which was kind of like annoying. But regardless, content creation was a process where we would take what we thought was the cloud of things that our readers were interested in and our listeners were interested, and then we would talk to the experts. We would find somebody to agree on a price that we were with, and then our first like 40-minute call would be taking this cloud and turning it into a curriculum that would be maybe 2 hours of video.
And so we would organize it with their brain and their experience, but with what our people wanted to know. And we had a certain way that it had to be laid out, certain intro section, certain conclusion section, a certain number of subsections that were reasonable for us. And then once we felt okay with the outline, we pulled the trigger and get to filming.
Andrew: Oh, that makes so much sense. And so you’d always have the article written by someone who’s on staff but in collaboration with someone who’s experienced and can talk about this stuff.
Dan: Yeah, yeah. And it would be an outline. We wouldn’t maybe even necessarily publish it as an article, but it would just be an outline that would help us structure exactly what we need to film. So when the film crew shouldn’t . . .
Andrew: Oh, this is . . . Wait. What about the free content?
Dan: Oh yeah. So we actually, to be honest, we didn’t create as much free stuff as we did back when I first talked to you. So back in those days, I think we were publishing maybe four articles a week on the website. And Science of Skill by the time I sold we were maybe only publishing one or two articles a week. I mean, so we were doing a podcast about self-protection and skill development with all kinds of different experts in different areas. And then that was like an article week.
And then we had some guest writers. We had a guy named Jerry . . . Jeez, his last name is escaping me now. I’m sure he’s on the instructor’s page at scienceofskill.com. I’m sure he is. But Jerry’s a really cool dude, he’s a California guy and teaches kind of police officer corps how to defend against knives. His whole thing is bladed weapons, so safety around bladed weapons. And so he actually did some freelance writing for us for a while. So we had like some people writing and then we did the editing, but honestly the free content we really toned down we focused on a lot of robust courses to sell into paid programs.
Andrew: Okay. And so at that point, it wasn’t a content machine, it was a course machine.
Dan: Yeah. And there was a pro and a con. So we really were leaning on those list brokers, and so we don’t really need SEO as much for traffic because we could kind of spend $6,000 and make $10,000 and so we’re just kind of addicted to that, and so kind of dropped the content emphasis a little bit. If I was going to be in Science of Skill and I wanted to grow it to 50 million myself, probably I would have stayed with content, but I was spending a lot of my time in TechEmergence and always so much.
Andrew: I’m looking at where they’re getting traffic from now. I use similar web. And I could see Gun Tips Daily is a big source of traffic for them, for example, which gives me a sense of how things have shifted from jujitsu to guns. And also sites like Newsmax are sending them traffic and Newsmax is a conservative site.
Dan: Newsmax is actually . . . They’re not a list broker, but they rent their lists. So they have . . .
Andrew: Oh, they do. I see even the website for Newsmax is sending you guys traffic.
Dan: Oh yeah, yeah. Okay. Could be. Yeah, could be. I mean, they might be doing sponsored content there. Yeah, Newsmax does a lot of like affinity based segmentation of their email list and then you can pay for rentals. And so I was doing a little bit with them but it sounds like they’re probably doing more than me now that I’m gone.
Andrew: Wow. All right. So then that’s how you changed the business focus. I’m starting to see also how you said, “If this business is going to be sold it has to work without me. I’m not even going to be the sig line.” What else did you do to structure it? The Wikis must have helped a lot because now on your processes. What else?
Dan: So there was a great advice that I got. There’s a few critical things, so, one of which is getting your metrics and your finances to be crystal clean. So I’ll tell you the moment when I think the buyers thought to themselves, “I’m probably going to buy for this guy.” And the moment was, when they were asking questions about the P&Ls; like month by month and I wasn’t looking at the P&Ls;, I was just answering them in exceptional depth in terms of like every marketing campaign that happened that month and all the ups and downs that we’re seeing and all the different line items and whatnot and just like not breaking eye contact and just hammering them with answers that were like robustly in-depth that we’re all backed up by what we had in the other metrics.
That’s when you’re like, “Okay. He’s probably not lying.” So that kind of clarity is immensely relieving. It’s almost never the case when people sell. I had a lot of brokers emphasize how important that was. So for the three years of frustration after my interview with you, I focused a lot on, “Okay, I’m going to have dashboards with metrics and spreadsheets that we use that are always clean, they’re always formatted well, we’re going to be super rigorous about making sure they’re clear, and I’m going to talk to my bookkeeper once a week.”
And so I talked to my bookkeeper once a week. I asked short questions. We had a 20-minute call once a week. And basically, I’m not saying everybody should do this but basically like you could get me drunk, I don’t drink, but . . . I’m not against it, I just I don’t like drink in a party. But you could get me drunk, you could like hit me over the head with like a pillow really hard and like throw me down a flight of stairs. And if it was 14 months ago, you could then asked me a random question about July 2015 and I would just know. Like I would just know.
Andrew: You know those numbers because . . . And you’ve told our producer, “I’m not good with finances. This isn’t my skill.” But once you get on and you’d scrutinize the income statement, where are we spending money, where it’s bringing in money, how are these campaigns doing, every line.
Dan: Yes, yes. And so I wouldn’t be able to answer the questions about what levers do I move that hit my bank that actually money metrics. I don’t want to . . . And I came to the conclusion just probably four years ago that the best software for small business in order to master is QuickBooks. If you’re . . .
Andrew: And that’s what you use to keep track of your books.
Dan: Yeah, yeah. By the way, I’m not promote . . .
Andrew: Right, right.
Dan: I like QuickBooks but . . .
Andrew: But I get it. Because that gives you the best . . . The one class that surprised me at NYU that I loved was Accounting. I didn’t think I would care about it. I thought it was all about taxes. It’s not. It’s about keeping score of your business. Really helpful.
Dan: Crazy. Crazy stuff, yeah. So, I am definitely not a finance guy. I definitely learned the hard way that you can’t just look at your bank statements and look at your credit cards and look at your revenue and say like, “Okay, things are fine.” You really need to know the minutiae of how certain kinds of campaigns affect your finances two months down the line.
Andrew: So give me an example. What did you discover that you learned? Did you find expenses? Talk to me. Yeah.
Dan: Yeah, yeah. So, all kinds of stuff. So I noticed that, for example, like I started to get hints that the customer lifetime value for people that saw us through banner campaign. So we had some stuff where we were using banners in different mostly websites, and that it was possible that even though it was a kind of a lesser expense, the customer lifetime value might have been a little bit higher on those guys because for some reason it seemed as though when we had months where we had a lot more of that, we kind of retained a little bit more of that recurring than I would have expected for a normal, let’s say, CLV or normal stick rate for one month, two months, three months.
And so by kind of scrutinizing the finances, I was like, “Okay, well that’s worth doing homework in. Maybe we should separate these instead of saying, “Here’s our stick rate.” Maybe this is a line where we should actually do some auto testing, which, as it turns out, Infusion doesn’t have that reporting internally. So it’s a lot of spreadsheets, it’s a lot of mess, but maybe we should do that mess and deal with it and we cook that stuff out.
Andrew: And you started to do that mess.
Dan: Yeah, I started to do that mess. So what mess do we want to do that’s going to move the money math? Well, when you’re looking at the money math you actually can figure out where you just spend your time, otherwise, you could study anything, and why do it? Just focus on revenue. But other areas. Let me think of other areas that will kind of . . .
Andrew: Were there expenses? I always forget that my profit grows when I cut my expenses. I always think about, how do I push myself to generate more sales, more audience, etc., but it’s often just easier to say no to an expense.
Dan: Yeah. So we had some areas where I think probably like three weeks into doing this weekly checking with the QuickBooks and with the accounting folks, there was probably nothing that was like hiding that was a recurring expense that I didn’t know about. So that stuff goes out the window fast, like that wasn’t like major discoveries later on down the line. A lot of it was really like, okay, based on . . . Here’s the biggest area where it affects us, biggest area.
Okay. Based on how much money we believe is going to hit the accounts in the next, let’s say, 20 days to finish up this month, and based on how much I’ve already spent on advertising, how much more should I spend on advertising to hit the amount of margin I want to have? I want 40k or whatever it is, right? I want X thousand dollars, let’s say, $30,000 on the bottom line and never below $30,000 because when I sell this business I want to show consistent bottom line. Right? And so this was a big emphasis for me.
For the last 14 months of running the business, I was asking myself in real time with my bookkeepers, “Okay, we should spend this amount on advertising. We’re projecting this amount to become [inaudible 00:41:03] accounts. Where could I spend on ads at what amount for what offers that would maintain the margin and make sure that I have the right amount of sales start the next month right?” I don’t want to say, “Okay, no more advertising. We want our margin.” Well, now your next month is going to look crappy. So how do we continue to roll that forward in a way that’s going to maintain the net and is also going to keep the top line where I need to be or growing. And that was probably the biggest week by week decision that we made based on finances.
Andrew: Where do we spend our money that’s going to bring back the results that we need? And then if you do spend money on a campaign and it doesn’t deliver, were you at that point still tweaking the sequence of emails that go out, were you tweaking the follow-up sequence, anything like that?
Dan: Yeah. Luckily, by the time I sold it. So Tim Reiss was my right-hand man at the time of growing Science of Skill. Tim like . . . But when I was talking with you, Tim was like sleeping on my floor, like banging away day and night in this business. He’s my boy. He’s super, super talented, very good copywriter. We kind of learn copywriting together because neither of us knew it. By the time, I don’t know, maybe even two years before I sold it, he was doing almost all the tweaking of the copy because he was getting much better at it than me. So I wasn’t actually doing it just in.
So this takes me to my second point about our salability, Andrew, and this is unplugging yourself. This comes in two flavors. Unplugging yourself from the brand and unplugging yourself from the operations. So the operation is a critical part. If you the owner are . . . If you the owner must be there for the normal engine of the business to churn and turn problems like you don’t sell businesses if you have to do critical stuff. So by the time I sold the company, I was doing basically quarterly planning, weekly planning and meetings and I was doing no doing. I didn’t talk to affiliates, I didn’t touch emails, I looked at finances, I held meetings, I helped with planning. That was it.
Andrew: Was there a systems doc or a wiki or something for how to structure the email or were you dependent on . . .
Dan: Yeah, totally. So we had a number of different kind of like templates and formats, but Tim also would do a lot of creative stuff, like, he would get an idea somewhere and he would just totally rock it. And he’s . . .
Andrew: And just pop it into the system. Is Tim still with the company? Tim Reiss?
Dan: Tim actually left the business about a year after we sold. He’s got his own company and he’s already doing seven figures with basically selling instruction in the fitness space. So it’s similar model.
Andrew: So then how do you know that if Tim Reiss or whoever’s doing your copy leaves the business will still survive? How do you make sure that the knowledge is in the business?
Dan: So this was critical. So a couple things sort of stuck around here. Number one, the massive majority of marketing processes was all in the doc. So essentially any core . . . I mentioned the churning gears, just the stuff that makes the business run. Anything that was part of the churning gears is robustly documented in video and/or inline items and wiki. In addition, Tim was getting a cut on profits month over month. So Tim was actually . . . And Tim never asked for that. I just gave it to him because like he sacrificed a lot in the early days, he’s my boy, and I thought he deserved it. And it ended up being pretty exciting for him because he saw the immediate impact of him doing great work. And so that kind of kept him really eager to keep things growing and doing great.
In addition, when we sold the business, there’s kind of probably like a recommended amount of money that I should have doled out to the different, only the critical folks to kind of get them to stick around. For Tim, I mean, I always had plans to have Tim be paid pretty substantially when we sold, and so the buyers kind of wanted to drip that out over a bit of time. That makes sense. So some of that kind of helped as well. Oh, I’m losing your audio.
Andrew: They wanted somebody to stay on board because you were going to leave within weeks.
Dan: Yep.
Andrew: Okay.
Dan: Yeah, yeah.
Andrew: All right, let me talk about my second sponsor. I’m already late to talk about them. It’s a company called Toptal. You haven’t used them but you know about them. What do you know about them from reputation?
Dan: Yeah, I know that their folks are good, that it’s not the cheapest place in the world, but the guys are good. And that the other things I know about the business is that they are 100% remote and I think I learned that by listening to one of your interviews. So, I know that they’re super-fast growing remote, exciting company. I know they’re not cheap, but I know that apparently, their guys are good and that they have people not just in Eastern Europe but kind of all over the world. I mean, that’s about as much as I know.
Andrew: You know what? That’s pretty much all you need to know. The only other thing that I would add to it is that one of the big draws for them is that they make it really hard for developers to be within their network. They make it so hard that developers, I’ve seen write blog posts about getting in, not getting in, the challenges of trying to get in.
Dan: Oh, wow.
Andrew: And as a result, they have phenomenal network of developers. Anyone out there who wants to hire the best of the best developers should go to Toptal. Do you even work with developers, by the way? You don’t.
Dan: Yeah, I have two who are in Eastern Europe.
Andrew: How do you find them? I’m just going to finish the ad in a second.
Dan: Originally through Upwork, honestly.
Andrew: And you got good developers from Upwork?
Dan: Well, it took a while.
Andrew: Okay.
Dan: It took a while.
Andrew: So I’m going to challenge you to consider going with Toptal. I have no problem with Upwork. I think that with Upwork what you end up getting is someone who could be an extension of your fingers like you’re telling them what to do and they do it. They add a little bit of intelligence, but great. What you’re not going to find is someone like a Tim Reiss level of intelligence for developers, someone who could . . . Like not Tim Reiss when you started out, but someone like Tim Reiss today who can say, “I know what you’re going through. I got those solution because I’ve done it a million times. I’m going to solve this better than you know how to solve it.”
And so that’s the advantage of going with someone like . . . not someone like Toptal, but specifically with Toptal. And that is why bigger companies end up spending a lot of money and resources and time finding the best of the best developers. And frankly, you know what it’s like.
You live in San Francisco. It’s not the cheapest city in the world. Why does Google, why does Facebook, why does Airbnb, why do all these companies build over here? Because they know that the developers are here. You can find salespeople anywhere, you can find customer service people anywhere. They spend this money for the developers because they know the impact that great developers have on your business.
Guys, if you’re out there and you’re looking for cheap, tons of freelance sites where you can find cheap. If you want to challenge yourself to find someone who’s really good, don’t hire from Toptal, instead go to this URL that I’m about to give you and set up a call to talk to someone from Toptal. Challenge them the way that I challenged by guests. Be prepared to be impressed and if you’re not impressed, go back somewhere else. Here’s the URL where you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours and you’re going to get a no-risk trial period of up to two weeks. That URL is toptal.com/mixergy. Top as in top of your head, tal as in talent .com/mixergy. Since I always like speed up, I’m going to say toptal.com/mixergy. I have a problem where I talk way too fast.
Dan: That’s all right. I share that issue with you for sure.
Andrew: You know what I noticed about you? The thing that I remember from our previous conversations is you use the word “heck” and “jeez” a lot and I felt like “heck” and “jeez”. Even I went right now to our transcript. The word “heck” in our previous transcript was used three times, the word “jeez,” “jeez” was used twice.
Dan: Oh yeah, that’s a pretty high percentage of jeezes for a normal interviewer.
Andrew: And then even in private you did a lot. You even might even use the phrases, not exactly jeez, but like that. My sense was, this is a really smart guy. Dan is thinking, “How do I communicate trust? And this is a good way to do it.” Someone who says the word “jeez” or “heck,” but that’s not . . . I’m seeing that you don’t think that’s how thought out you were.
Dan: Well, you might be onto something. I think it’s not that much of a gag. I do have a lot of weird lexicon stuff because I grew up in like a random little small town in Rhode Island and my dad’s from New York and so he has kind of like New Yorky stuff, so he calls like money like bones instead of dollars, you know, stuff like that. Like oodles of those. Like endless number of those. I mean, like in my town is like a lot of slangy stuff, but then I also read a lot of Emerson and Montaigne and Plutarch and Cicero and . . . And so there’s sort of this very ugly kludge of kind of those two and so my language is kind of goofy. But also I sometimes will kind of put in stop words when I need to make sure I’m not talking too fast or too aggressively.
Andrew: What’s the stop word? How do you do that?
Dan: Well, maybe the jeez one would kind of be like a fit. And I’ve had people tell me about this, by the way, that this is actually a thing. But yeah, I think that could be part of it. So it could in part be just the natural like complete oddballness of where I draw, how I speak which makes it pretty weird, but also could be sort of a conscious effort to kind of slow myself down in communicating things or kind of two things level and cool and cruising as opposed to like fire hosey and flamey.
Andrew: I have a friend who’s so confident. He’s a good-looking guy. He would be the kind of person who he walks into a room and women are drawn to him. What I find then he does is . . .
Dan: I could use that. I tell you what.
Andrew: That is amazing. And I literally have seen this happen. And what he does is he brings his mom out not for dates, but like if he’s hanging out with someone if his mom is there, it totally softens him up. I think he does it intentionally, but if it’s not sit down going, “How do I make this feel a little bit less like weird and make them feel like I’m safer?” It’s not him sitting down, thinking about it that way. It’s, “I know that this happens and instinctively I’m going to invite my mom.”
Dan: That’s a really, really wild thing to do. I mean, it’s not wild like in San Francisco terms, but it is pretty wild.
Andrew: It worked for him. But yes.
Dan: I think . . . God bless him. If you’re getting your mom out there, gets it done for you, go with it.
Andrew: I’m finding that, you know what, especially here in San Francisco, the level of like thought and planning and systems that people put into relationships even is mind-boggling.
Dan: Yeah.
Andrew: One of the past interviewees that I interviewed, I remember he is in a relationship, he’s now married to someone, they would just . . . He hated chore conversation. He forced his girlfriend, now wife, to spend an hour a week, just that hour a week, to do chore conversation and never again. Like that’s a [inaudible 00:51:47]
Dan: To do what conversation?
Andrew: Chores. Like, “What are we going to do to hire someone to clean up the house? I hate talking about that. Let’s just fix that in that one hour.”
Dan: Oh yeah, yeah. That’s intelligent. That’s intelligent. I don’t think that that’s . . . So there’s like some hardcore like [artists 00:52:01] stuff out here because, like, that’s where we are. But then there’s also like just kind of pragmatic straightforward stuff. Like if you know that this is kind of where like disputes and just annoyances happen and you can tackle it, I actually think that that’s pretty rational and maybe smart. I think it’s different than sitting in auto campaign of texts for like your Tinder profile, like wacky weird stuff. Like I’m really, really happy to be married, man. I can’t tell you how.
Andrew: You are married. Do you have anything like that with your wife? Do you have any like married hacks that work for you?
Dan: Oh, man. Yeah, I’ve got the best marriage hack in the world. Well, first and foremost is, we like the same kind of books and literature. So every week . . . I’m always working 80 hours, but every week, we’ll go for a walk and read from different biographies or books in history. So I like to read you know Robespierre and Jefferson and [Galie 00:53:00] . . .
Andrew: So you go for a walk while each read to each other or you’ll sit down somewhere and read together?
Dan: Yeah, we’ll sit down somewhere and one of us will read out loud. She has a prettier voice than I do, so normally she’ll read, but I often read as well. And so we’ll go walk somewhere in the woods and read of lofty literature or have a worthwhile biography. So everything from Louisa May Alcott to Napoleon and sink our teeth in it. And that’s about as great of a hack as I could have, man. And no matter what the hell happens to my week, if I take a freaking walk in the woods and you can read me a little Bonaparte, I’m a happy camper, bro.
Andrew: Yeah, just being able to set that time way to do it. Jeremy Weisz our first producer Mixergy was married to a therapist, I think a family therapist, and what he and his wife insist on doing is once a week they get a sitter and they’ll spend time together. And if they don’t feel like going out, they’ll get a sitter spend time with the kids and then the two of them will just be in the bedroom, even if it’s just watching TV and spending time together, they force it and I got to get better at that. All right. The broker. Who’s the broker that you hired?
Dan: So the broker I ended up closing . . . Again, I’m sure all these people are going to be really happy now that you’re asking very pointed questions. This is great.
Andrew: Yeah, good.
Dan: So Jason Yelowitz was the guy’s name, Jason Yelowitz. He is with a firm called Quiet Light Brokerage. Now, I do . . . Closing is kind of a wild process. Jason’s better at it than me. Jason also had less in the game than me, so easier to keep your cool. But definitely, the thing I liked about Jason was he had sold a lot of seven-figure businesses. So I had worked with some brokers in the past where the business I was selling and asking price of two commas on it was kind of pushing the boundaries of what was normal for them and they could do it but it may be what it felt like a stretch to ask.
For Jason, it was like, yeah. Like it was just like completely inconsequential. And so his real nonchalance and just regular every day like, “Okay, next step,” like it was a $20,000 little WordPress site somewhere. That really kind of conveyed the right degree of seriousness and I think attracted only the right kind of buyers to the table. And the other thing that helped Jason a lot was we had three years of tax returns. So he’s the only broker that I had that. So that combined with I think his experience, we were sold in five months.
Andrew: Five months.
Dan: Yeah.
Andrew: Any tips about going through the process?
Dan: I’m telling you, like if anybody has a takeaway of, “Oh yeah, five months I’ll sell my business,” like, dude, listen to the whole interview, like, this is a lot longer than that. But yeah, the process basically if you have your metrics down pat really well, if you have your finances down pat really well, if you have a great idea about how the transition needs to happen to make it clean, already you’re going in with way more than most buyers go into it with, and so your brokers can appreciate the heck out of you for that.
Andrew: You said to our producer, “I thought it was going to take maybe 14 months to sell it. It took years and it was really hard on me emotionally.”
Dan: Yeah.
Andrew: I didn’t get the sense that you were put upon emotionally. Maybe I just wasn’t sensitive to it. How did it come across . . . What didn’t I see as I was looking at you from a distance?
Dan: This is what? About three, four years ago?
Andrew: No, after that. Like I watched you since then. Maybe I didn’t get to see much.
Dan: Oh yeah, yeah. This is awesome. You said, “I didn’t get the feeling you were put upon.” This is great. Look at the words you’re using. I’m going to use that. Why I feel awful put upon. He seemed careworn. Like these are like very like old-timey. Anyway, yeah.
Well, I mean, I wouldn’t say like I was like I’m brought to my knees or something, but basically, Andrew, like, when I was 24 and not yet 25, I kind of had this full idea and commitment that the future sentience was kind of what was after people. Hardcore trans-humanism AI stuff in the coming century maybe was really the most valuable thing I could focus my time on. And now when I talked to you in our first interview I was feeling pretty good, like, okay not great. I didn’t feel like I was patting myself on the back, I just said, “Okay, I’m at $45,000. I’m going to sell it. I’m going to need to focus all my time on what I believe is the most morally consequential use of my life.”
And as it turns out, year after year went by, we’re growing right, we’re making money, I’m spending some time on TechEmergence, but I’m not able to write about the ethics and the consequences of these technologies near term or long term for really any meaningful amount of time because I’m back to the freaking grind, you know, and that sucks for two and a half, three years, man.
Andrew: So what’s the business model behind TechEmergence?
Dan: Yeah. So TechEmergence is kind of a media platform for artificial intelligence. So we basically help business leaders with everything that they need to survive and thrive in AI disruption. So what does that mean? One place where you can find market research specific to your sector: manufacturing, healthcare, pharma, banking, whatever. Really in-depth interviews in your sector, vendor companies who can help with specific needs like fraud detection, machine vision in your sector.
Andrew: But for artificial intelligence.
Dan: Yes.
Andrew: But isn’t that such a big, big field that . . . Go ahead.
Dan: Oh, there’s a whole plan behind this.
Andrew: Okay, go ahead.
Dan: So I’m going to read your mind and then we’re going to address it and you can tell me if I’m wrong.
Andrew: I saw that you picked up one of those things.
Dan: So AI it’s very . . . It’s proper for you to see AI as broad and amorphous like the internet, like an internet company. Nobody says that anymore because that means you’re a company. Now, AI currently, Andrew, is at a point where if the global spend on GDP is, let’s say, $5 trillion, $7 trillion on the amount of that that goes to, like, AI specific like for a particular stuff is a massively tiny sliver. And these are experimental use cases. There’s not that many vendors that have like really powerful consistently useful products. So we try to hunt for them and bring them to bear on the platform, but there’s not that many of them. There’s a lot of people that do AI, but not that many that deliver results.
So it’s a tiny part of the sliver. Now, in 10 years, when that’s like, I don’t know, culturally in or something or like 10 trillion global IT spend, so global IT spend is 10 trillion, maybe that then becomes like 15% or like 20% or something. Maybe at some point, it’s 50%. So the goal for us is to ride these zeitgeist waves to get in initially when it is a very narrow experimental domain and to ride that into what eventually, Andrew, will be software 2.0. So we’d like to be the best place where people get educated while it’s complicated and then by the time it’s everywhere so will we be, and that’ll . . . Yeah. Oh, your mic’s off again, I think.
Andrew: Sorry. I was on mute. So the founder of ActiveCampaign as I interviewed him said that he knows that it’s hard for people to figure out what email to send out based on what people have done on your website and he wants artificial intelligence to eventually do that for you. It will know what the right courses, for example, for Science of Skill to send out to the right person on the list. That’s AI. You imagine that he’s going to come to TechEmergence to understand how AI works and then bring that back to his business?
Dan: Yes. And so he won’t actually be the one to pay me. He may go to our site and look at all the CRM and email folks that we’ve interviewed about the near-term future of AI in that space. You may want to understand that possibility space for PhD level people and that’s why people come to us. Business people want to learn from people who actually know this stuff and they want to hear it through us because we’ll take away the jargon.
So he may come to us to learn those fundamentals, but I’ll tell you this, he may find an article there that might be promoted on the right-hand side of some other article that somebody else is paying us many, many thousands of dollars to have promoted on the side of our site. So we let people contextually get exposure to our audience. So if a fellow like your guy there. If he’s working on some degree of recommendation engine for content, there are sites like, there’s a million of them, but Liftigniter is one example. There’s a lot of people working on real deal AI, hardcore technical AI from marquee companies like Google where are working on content recommendation stuff.
If you want to learn about that possibility space, you might come to us but a company like Liftigniter might pay to have a two article series that goes into extreme depth about what will be possible in the next three years in terms of content recommendation, what data is required, what it could allow for, etc., and he may or may not be more likely to buy from Liftigniter but he’s likely to now know their name and Liftigniter probably paid us, let’s say, $10,000 to have a campaign to reach out and they might even be on retainer for something long.
Andrew: Okay. And so, advertising is going to be like that, it’s going to be content. And you’re also doing consulting with companies? You personally are doing it?
Dan: I’m actually not doing that much of it. So every now and again, I’ll do things that don’t scale if I think I can learn stuff for what will eventually scale. So a little bit of that every now and again will be some company wants to launch a product and they’re interested in what’s realistic or what’s not for this product we’re coming out with, and who might be the vendors we could talk to first, what are consulting firms that might be reputable, we don’t really know how to pick them, and they might want half a dozen hours and I’ll charge something that I think will scare them away, and if they take it, then great.
And I’m pretty clear about. I’m pretty clear that consulting is not the main bag. Speaking is kind of in the same light but that’s kind of where that stuff sits. It’s pretty far in the distance. The real ball game for us, Andrew, is annual subscriptions for real exposure to AI focused executives in particular industries, so targeted industries, AI focused executives. Where do you find 8,000 pharma execs who have an actual interest in AI, like a legit interest, like it’s not something they heard a tweet about it they don’t care, they’re actually are interested in? Nowhere, except for our site. And so the same with banking and other spaces. And so that’s the value prop and exposure to that with annual contracts is really the way the business grows.
Andrew: And the subscription will give them access to membership which will give them a way to message other people who are in there?
Dan: It’ll actually give them exposure on the site and the ability to create relevant content. So it’s actually . . . It’s always going to . . . So the way I try to design the business is that whatever the advertisers pay for, should as much as possible be value-add for the people on the site. So we actually don’t really do webinars and white paper stuff very much. We do a lot of content. And so we don’t talk to the CEO whose job it is to talk marketing. We talk to the tech folks who understand the business and we shake out business insight from them.
So when people are paying a subscription, they’re paying to have a consistent line of educational resources created with their experts as the people who are educating the market, not directly promotional and it’ll say, “Here’s where you can learn more. Here’s the company that sponsored this,” but it’s not pushy, it’s not promotional. For that reason, we have hundreds of thousands of people on the site because it’s not a marketing push fest, it’s education fest, and people pay to educate the market.
I mean, as it turns out, when I was doing customer research this is like two years ago. I talked to all these vendor companies. The most common phrase I heard about how they need to sell something cutting edge that people don’t understand is, “Well, we really need to educate the market. Well, we really need to educate the market.” So I said, “Maybe that’s why I should sell them and maybe that’s going to be a win for the market too.” And so that’s the design
Andrew: I’m going back in time to the early version of your site from the first month it was up.
Dan:Oh yeah.
Andrew: I see you were the one writing the content back then. Are you still writing the content now?
Dan: I write a little bit on TechEmergence but we have some great writers. Raghav, Kumba, John, a whole bunch of folks that write for us now both contract and also full-time.
Andrew: All right. It is techemergence.com for anyone who wants to go check it out. And of course, Science of Skill if you want to see what Dan worked on before and sold. Congratulations on doing that. Why are you doing this interview with me? What are you trying to get?
Dan: I think I learned more from selling than from growing Science of Skill in many respects. And that was what kind of prompted me. I think I talked to Yaro [SP] at like a conference.
Andrew:Mutual friend.
Dan:And then it was kind of like an excuse to like talk to him again to be on the show. And my conversation after his show kind of was like, “Oh, maybe I should talk to Andrew too.” So it was a little bit haphazard how I got here. I didn’t have necessarily something to sell but, yeah, I learned a lot, I thought it’d be cool, and TechEmergence is what I ultimately care about and I think for folks who are interested in how AI is going to affect their industry, hopefully, they can pick up a bunch from us.
Andrew: All right, techemergence.com for anyone who wants to check it out. And if you want to use email marketing automation done right, check out activecampaign.com/mixergy. If you want to hire a phenomenal developer, go to toptal.com/mixergy. Do you know why I’m hesitating? The first person I ever hired in business asked me to do one freaking favor. She’s done so much for me. She even took in my dog. And I’ve got a note here to bring up the one project that she’s working on that’s such a freaking good fit. I got to find it. I got to find it. Well, I even found it here before we’re done. Hang on a second. Where is my calendar? I put it somewhere here.
Dan: We’ll do it [inaudible 01:06:47]
Andrew:Oh, I’m such a bad friend right now.
Dan: In the meantime dance. Jeopardy music.
Andrew: Come on Google Calendar, make it easy for me. This is what happens when I have to do things manually that I forget where I put them. Okay, I got it. All right. She is working on nyhealthchallenge.com. It’s an entrepreneurial boot camp and pitch competition with $25,000 in prizes for products and services that strengthen the relationship between patients and healthcare providers. So basically, if you’re working on a company that helps strengthen the relationships between patients and healthcare providers, you should enter this pitch competition. They’ve got $25,000 in prizes and really good introductions to people who could help you build your business. Go check out and nyhealthchallenge.com. I’m still a shitty friend but now like 2% better.
Dan: Yeah. No, you did okay. I think you made up for it.
Andrew: You are a good friend. You didn’t know me from Adam. I remember how much time you spend with me. I appreciate it.
Dan: All right. I hope it was handy, man. I hope it was handy.
Andrew: It was. It was great. Thank you. Thanks, everyone.
