Episode Transcript
Speaker 0 00:00 Hello and welcome back to another episode of rogue startups. This is episode two 12. Today I sat down with Dave Schneider, formerly a founder or founder of Ninja outreach, which he sold a couple of years ago and is now moved on to found a digital marketing agency, shortlist.io. Uh, it's really nice to, to catch up with Dave. I think he's one of my oldest friends and the kind of bootstrap entrepreneur remote, uh, world and uh, it's really nice to be able to catch up with him as I followed his journey, um, from kind of starting and building Ninja outreach to selling it. Taken some time to figure out what to do afterwards and we'll, we'll go into that in this discussion and now to, to running a really successful digital marketing agency and we compare and contrast kind of how we both see, um, for me, you know, a product I service and a sass and for him, uh, a SAS and a digital marketing agency. Um, there certainly are our benefits and drawbacks of both. And so it's really nice to be able to chat with Dave about his experiences and kind of makes me think about, um, what, what I'm seeing right now and both the podcast motor and in Castillo's. Uh, so I hope you enjoy this conversation with Dave <inaudible>.
Speaker 1 01:18 Welcome to the rogue startups podcast. We're two start founders are sharing lessons learned and pitfalls to avoid in their online businesses. And now here's Dave and Craig. So yeah, I gave folks an idea of <inaudible>
Speaker 0 01:32 kinda, you know, Dave, where I know you from, which was I think in a mastermind group organized by dynamite circle. Is that right? Yeah, we met like five years ago.
Speaker 2 01:42 Yeah, it was you, me and uh, there's this other guy, I think he was like German or Scandinavian or something. We kept in touch with him. He's a nice guy though.
Speaker 0 01:51 Yeah. Yeah. And this was when you were working on like the very first iteration of nudge outreach, which if I remember it was like a desktop windows app, right?
Speaker 2 02:03 Yeah. It was really early on in Ninja outreach days. I remember one of our discussions was, Hey, should I start this other project or not? I was thinking of like a doing an additional sort of mastermind platform membership and I remember everybody including yourself advised against it. I decided to do it anyway and ended up being an awful idea. And yeah, so this was early on in Ninja outreach. We were kind of in that, in that beta very early phase. Um, back in like 2014 or so.
Speaker 0 02:31 What like I'm, I'm kind of looking back at my early days with cast, which is only like, you know, the business is about three years old now and yeah, those first, those first like six or 12 months are so hard because there's a ton of stuff to do and you're seeing almost no return on your time investment or the money investment that you've had. Like when you were going through that, I mean this is like six years ago, so it might be tough to remember, but like what did you kind of feel like emotionally when you were going through that that time? I've heard it, I've heard it described as the desert, like you can't go forward and you can't go back and you're just,
Speaker 2 03:08 yeah, if you're kind of pot committed. Um, and I think it's exactly how you use Skype it where you're basically putting a lot of work in and the monthly movement is just like, uh, so, so small. I mean, uh, for example, during those days, you know, the, the MRR increased might be like $100 a month or something like that. And so it's very much like a glass half full half, uh, half empty type of, uh, you know, approach whether you want to say, well, I mean, it's barely grown at all. I mean, I'll never be able to make ends meet with this. Or you could say, well, but it has grown, you know, and then if it does that again and again and again, like I said, eventually it'll kind of get somewhere. And so I think luckily we had that approach to kind of say glass half full. Um, it helps to be, you know, a little bit younger, uh, like in my twenties, a little more naive living at my parents, not exactly stressed out over bills and kids and things like that. So there were some benefits to that to sort of help yeah. Make, make me durable during that time period. But it's definitely, yeah, it's definitely kind of a, uh, not, not something that I, I sort of would look forward to doing again.
Speaker 0 04:15 Yeah. And then kind of fast forward a couple of years ago, you sold Ninja ratio. You had, you had a partner that you brought on at one point and then you guys sold Ninja outreach a couple of years ago, right?
Speaker 2 04:26 Yeah, that's right. A partner was from the very beginning, actually, there was three of us originally. One of them, one dropped off after six or 12 months or so. He just kinda got lost in the desert, uh, as you said. And um, the, the, the two of us, we basically built the business. Um, and then ironically, you know, just as things were kind of going really well in a sense, um, we had kind of gotten out of that period and the business was, it wasn't growing nicely and we had assembled a really good team and we had just done like a rebrand. Um, we decided to sell it. Uh, it, it kind of came almost out of nowhere. Um, and that was about March of March of 2018. Um, we, we started discussions in like January and then in March we had sold it.
Speaker 0 05:08 And it was inbound interest. Someone came to you and asked to buy it or did you guys try to kind of put it on the market?
Speaker 2 05:14 Uh, yes and no. Um, it was inbound originally. Somebody had come to us in July the year before and was interested in buying it. Uh, we've talked with them and we just felt that it just wasn't quite where we wanted it to be. Um, we wanted to work on it for a little bit for, you know, some more time. Uh, but then in January, um, I reached out to him, uh, about selling it.
Speaker 0 05:36 Gotcha. Gotcha. Uh, so two months sounds like a pretty, I mean, so longer than two months in total, but from when you guys got serious January to March sounds pretty quick. Or was it a pretty smooth process to sell it?
Speaker 2 05:48 Yeah, it was super quick. Um, we went direct, so it was just kind of us, um, negotiating with the guy. I'm writing up kind of our own terms and contracts, sort of our own due diligence. Um, no one in the middle in that, uh, in, in sort of his initiative to want to buy it quickly in our initiative to sort of want to sell it quickly, allowed us to basically do it in two months, which I think is really quite fast.
Speaker 0 06:12 And now two years later, like, uh, I know we had Arvid and Danielle from feedback panned on a couple of episodes ago and there are about six or eight months past a exit. And so I think their perspective is just really sinking in a, but for you, like two years later, how are you feeling about the decision to sell?
Speaker 2 06:30 Uh, overall good. Yeah. Overall good. I definitely, you know, I don't feel like any major regrets, um, like, Oh, that would support a decision. I think there were pros and cons to selling versus not selling. And at the end of the day I think, you know, either path was, was going to be good, you know, like I could have just continued with the business and the business was, was doing well and it probably would have been fine and I could have sold it, which is what I did. And that also went well. And uh, this is, I mean I could speak like for the full hour just about just about that. So I'm thinking of like, what's the appropriate place to kind of cut myself off here? But I think that, yeah, it's just having now had a couple of years to kind of look back at it. Um, on the one hand I know that, you know, uh, Ninja oryx had more growth in it.
Speaker 2 07:20 We could have grown it to a larger business. We could have sold it for more money. Um, there was obviously, uh, the period after selling it where, you know, I didn't really have an income where I had to figure out kind of like what I was going to do next. Um, and so all those types of things could make somebody second guess kind of what they did. Um, on the other hand, I also know that I have started another business. I have built another team, um, that I, I do enjoy. Uh, I would not probably have, you know, been doing that if, um, I was still working with Ninja outreach. I've, I've learned probably more, um, in the last two years than if I had just sort of maintained the current role that I had an injury just because I was kind of in a little bit of autopilot and from a money perspective, even though, you know, full disclosure, this wasn't like, you know, never work again type of money, but it was a good payday spend, good to not be overly financially stressed into, you know, I bought a house. Eventually you would move back to the U S U S as an expensive country. I had a wedding. I'm having a kid. So all of those things are important. Um, factors too to know that I'd have, you know, savings in the bank and stuff like that, which you know, was not exactly the case. When I was running Ninja outreach, I was mostly on kind of a shoestring salary, just trying to kind of grow a girl guard for the majority of the time that I had it.
Speaker 0 08:36 Hmm. Yeah. I think a lot of us pay ourselves much less than we are worth much less than we should pay ourselves. Uh, especially early on. Uh, and I'm, I'm definitely guilty of that because I mean you look at your business is, is probably like the best investment you can ever make. If it's a successful and growing business then than keeping as much money as you can in your business is the thing that's going to have that opportunity for like a big exit. It might not be life changing, never work again. And I guess those are two different things. Like, it could be life changing, you might have to work again, but you're not going to get that kind of return by keeping an extra, you know, $200 or $500 a month in your 401k or something. Um, pretty much. Yeah. So I don't, I don't fault anybody for, for taking that kind of stance with how they pay themselves.
Speaker 0 09:22 I do think that if you, if you get, you know, five, six, 10 years out, you do have so much time that you have underpaid yourself that you got at that you got to start leveling that up, you know? And that's, I mean that's kind of where we are. Like with podcast motor, which we'd started when you and I first met is I'm paying myself a pretty decent wage there now. Um, yeah, just because, you know, one, I don't know that I'll ever sell it cause a product I service is less sellable I think. Not, not unsellable less sellable than a sass product. Um, so I look at it as like a, an income generating kind of business for me and not like a big exit potential. Maybe like a SAS business would be, but, but even then, I, I look at it and say like, every dollar I pay myself is a dollar less. I can invest in kind of marketing or team or something like that. So it's a, it's a tough balance. I don't think there's a right answer and it might change over time for all of us, you know?
Speaker 2 10:15 Yeah. It does really depend on your situation and sort of what money do you need at the time and things like that. But I will say that I think, you know, taking less salary, uh, from Ninja outreach probably pushed me to a sale, maybe more so than I maybe would have been otherwise, just because, uh, eventually it gets to the point where, you know, the only realistic way you feel like you're going to kind of get paid pay, like, you know, going to get a pay day from this business because you've been taking such like a low salary is to sell it, you know? And that, that becomes kind of like the, the logical option to pursue.
Speaker 0 10:46 Yeah. Yeah. What did you do after you sold?
Speaker 2 10:49 Uh, I rolled around in a bunch of cash. Now again, no, that's kind of happened. What, that that didn't happen at all? Um, basically, uh, you know, I mean immediately after selling, um, well I think I was, I can San Francisco with my friend and we were just kind of hanging out and, um, it was just like any other day, you know, it was just, we went and we hung out. We had a beer, we went and got something to eat. And you know what, the day after that was basically the same to, you know, it wasn't exactly a, uh, you got picked up in a private jet or anything like that. Um, so what did I do? Um, after sort of, sort of after selling? Um, so yeah, the F obviously, you know, uh, Lightlife more or less was kind of, uh, business as usual in many ways because you are who you are.
Speaker 2 11:34 Um, and you know, you're not just going to kind of like, well, maybe some people would just go out and buy a Bugatti or something like that, but, um, that, that wasn't, you know, that, that's, that's not me. You know, I think the main thing was trying to uh, understand what yeah, what to work on is, is a big one that's like the big gap in your day. Um, and I think, uh, there's a little bit of tension, uh, because you know, human beings are sort of just always, uh, unsatisfied or, you know, trying to make themselves unhappy with, you know, what, to what extent should I be kind of doing nothing and just enjoying myself and Hey, I've just kind of had this a little bit of success and I should just kind of like take this for 30 days and just watch Netflix or something like that versus, all right.
Speaker 2 12:15 You know, time, you know, what am I doing sitting around like trying to get back time to get back in the game. Like, I don't have an income anymore. Like, I don't have an audience anymore. Like, this stuff isn't just going to build itself from scratch, like someone's going to kind of do this. Um, and so, you know, what I tried to do was a bit of consulting. I thought that that was kind of a, an easy way to kind of get my feet wet, uh, make, making a bit of money, helping out people, um, with whatever it is, advice that I may have learned over the years of running my business. Um, it was, you know, not exactly a full time job or commitment. Um, so I kind of um, started with that, I started doing some, uh, consulting for a lead generation software called albatross and things kind of, you know, one, one from there that kind of turned into an agency. Um, I had also this other small software product that I was working on. So anyway, those two things, those two roads eventually converged, um, with me, like starting an agency and then that became more or less kind of what I was doing.
Speaker 0 13:16 Yeah, yeah. And so now like a, you'd running an agency is, you're kind of full time deal, right? Yeah, I would say so. Then what do you guys do? What's the, what's the deal?
Speaker 2 13:26 It's a digital marketing agency. It's called shortlist.io. Uh, we do SEO and link building. It was originally a sort of an SEO and link building, um, service, but we've kind of since added on, you know, design and dab and doing sort of growth, more general marketing and overall spin. It's been good. Um, because, uh, I would say that, you know, one of the big things I really missed about Ninja outreach was the team, you know, we had like a good team and like I kind of handpicked those, uh, all those people myself over the years. And you get used to, you know, having 20 or so people around you. We always had like a big team, like the team was sort of bigger than the business was, but so, uh, you know, I just kinda got used to that, that environment, having people to talk to, uh, you know, people to kind of, yeah. Work with. And so, uh, once I told the business, obviously the team didn't come with me. It became, yeah, there was no, there was no that. Um, and so building that up through the agency has been, has been really great. And then just kind of, you know, I think learning a little bit about a different business model and kind of the pros and cons of, of agency life and clients and things like that, um, has been, has been overall a good experience for the last, you know, one to two years I've been running it.
Speaker 0 14:39 Yeah. I um, so obviously kind of run, still run like it's not an agency but a productized service and assess business at the same time and in the same industry, which I think is, um, I think there's a fair of like unique perspective there because a lot of our customers are, are kind of the same and they have a lot of the same problems and desires and stuff like that. But I'd be interested from your perspective to go from like binary, like running a SAS business to running an agency. How do you feel about the two business models? And, and I think the big one that a lot of people have me included is like, Oh, client services you got clients to deal with and you got, you know, headaches around clients. I'd love to hear kind of how you feel about that relative to running a SAS business.
Speaker 2 15:25 Sure. Um, yeah, it's different. It's different and it's the same in a lot of ways. Uh, and I think that, uh, let's talk about sort of how, how it's different or how people perceive it to be different. Um, certainly on the business model is different and the way that they're valued is very different. And I think this is important because you know, you're working your work in one way or another, right? You're kind of working hard and, uh, building up, uh, an agency for example, is sort of like less valuable than building up a sass to some degree. I just did don't sell for the same sort of, uh, you know, multiples and things like that. And so I think, you know, that's one of those things where you think about, you know, how to best kind of put in your time. Um, how do you want to kind of go about it?
Speaker 2 16:07 I mean, you know, a SAS is generally more valuable and like a better business model, uh, but it's like a lot more expensive to start. The agency was kind of something that I was, I was able to basically get up and running, um, almost in no time with very little capital investment. Um, and it's grown, um, nicely sort of from there. And whereas the SATs, I mean, I felt like I had to put my whole life savings in that just to like pay developers to build a product that was actually good enough to just sell the people. Um, like literally I put in something like $80,000 probably, uh, which, you know, my twenties was, was everything I had. Um, you know, and so the agency wasn't like that at all. Like I, like I said, I don't think I put in any money in this.
Speaker 2 16:45 You know, it's like you kind of, you, you offer services, you get paid for them and then, and then they go. So the sort of the startup costs and, and the speed at which you can start up I think definitely favors agencies, but the long run play is I think favors kind of sass and just kind of like the business model, the stability, you know, how kind of uh, valuable it is and things like that. I'm definitely, we actually have launched, um, a small software product is part of the agency and I'm kind of hoping that that maybe that becomes a, a thing, you know, and kind of allows us to introduce SAS into our business bottle to kind of diversify and things like that. Um, but we'll kind of see where it goes is very early on in that. Um, but I do, I do in, in, when we were in a SAS, we also had a small agency component as well.
Speaker 2 17:29 So I, I actually think, you know, it's kind of a nice idea to combine multiple business models under one brand. And so that's what we're going to try to do there. Regarding, um, the clients, uh, as you mentioned, uh, that one's kind of a funny one because I do think that people who run agencies are like, Aw man, clients, clients just awful. Like I just, I just can't, can't sort of deal with it. And there's definitely some truth to that. I, no offense, of course, to any of my clients who might be listening, but they're not the ones you're talking about bird, you know, from what I've heard from other people who run agencies, um, that, you know, clients, clients are very difficult and, and that is true. But here's, here's the thing, and this, this might just be me. Um, I don't know, but like I just find people in general to be annoying, like customers in general, clients or customers of a SAS usually.
Speaker 2 18:20 Um, it was the same case with named y'all each people like customer support was, it was kind of a nightmare. Software could be buggies. Things are broken. Somebody was complaining. I mean, I mean January some somebody threatened to Sue me. I mean, that was one of the, one of the reasons I sold it. Um, so I mean, you can, you can see the level of, of negativity, uh, that really can be a part of sort of any business. And while with client services, you maybe have, um, uh, you know, a deeper relationship with the clients and they can be more demanding and that you're supposed to deliver something for them and things like that. Um, but the SAS, I mean, you could have a thousand customers or something like that, so it's just like a little, a thousand little pricks, you know, versus a sore through your stomach basically.
Speaker 2 18:59 That's, that's kinda how it goes. And so what I found is that I was going to sort of have a difficult time with customers or clients in one setting or the other. So the best thing I could do is just remove myself from the situation entirely. Um, and Ninja reach. I felt the best about Ninja outreach when I got myself off customer support, which I had done for years. Um, and basically had customer support reps and customer support team sort of handle that and I was sort of blissfully, somewhat kind of buffered from what was going on there. And same thing with the agency. I really don't work directly with the clients. Um, I basically, you know, the team does and I kind of like I talked with the to meet team and I work on the organization and you know, our, our operations and processes and systems and all those different types of things to a lot to allow myself to contribute without directly having to sort of be involved in the clients and the client meetings.
Speaker 2 19:51 And that is sort of the only way that I just personally kind of stay saying as a business owner. So I feel like, you know, it's a little bit of a grass is greener type of thing, you know, sometimes I look back, Oh man, you know, you have a, you hear some news about a client being kind of like a angry or something. You're like, Oh, I wish, I wish those days when I used to run in GRE to them, my wife will be like, who are you kidding? You know, I remember the days you used to run in GRH and you'd be upset about this and that and this guy said this or this review it got posted. And you know, bottom line is I feel like it's, if you're in business, you're taking stuff personally, like people are going to complain. So you kind of have to develop a thick skin and also just shield yourself from, from that daily, um, potential negativity, you know?
Speaker 0 20:32 Yeah man, I think this is so important and it's something that is a, is a transition as the business grows and as your value in the business changes. You know, at the beginning you're running an agency or a product or a service or a SAS business. You being frontline customer support or the the customer facing person for your business is absolutely the way to go I think because that's how you develop like product market fit and get that feedback and those, those quick loops of, of iterations of, of your service or your product offering or your pricing or prod, you know, features in your product. But over time I agree. I am a huge believer that like as founders we have a bunch of other stuff to think about and as we're able to elevate above, and it's not just customer support but it's marketing and it's development.
Speaker 0 21:29 Um, I think product, you know, products being like what we offer and what our development roadmap is, is still something that is like the vision kind of for the company, for a software product and for a service business. It's like what kind of services are you offering? I think that's something that maybe it's just me personally, I still do and plan on doing for a very long time. But yeah, I think that founders who are able to replace themselves with customer service, I S are going to see that they're happier and able to think about the business in a different way than always having this like emotional drain. And again, yeah, it's not, it's nothing to do with our clients. I love our clients at podcast motor or our customers at Costos. They're, they're great. A lot of them are my friends, but it's just the fact is like that on top of all the other stuff that we have to, to kind of carry with us as founders is, is too much.
Speaker 0 22:24 And I, I've, I struggled with this a lot in both businesses to, to feel comfortable and find the right people and the right processes for how to, how to separate myself from customer service until it's really, really, really necessary. But at this point we're at a pretty good place, um, with both businesses. And yeah, even when those questions do come up, I talk to our customer service or customer facing people and then they go talk to the customers. Um, because you do have to shield yourself from this stuff, it will just wear you out like two to like a seriously unhealthy place, you know? Yeah. I would like to hear about like how you guys run your agency in terms of like your, your stack kind of, cause I think this is a question a lot of people have, like, okay, when you're fulfilling client services, you know, things like payment processing through Stripe probably are, are reasonable, but like how do you organize your team and how do, how do they interface with clients?
Speaker 2 23:21 Sure. Um, I think, uh, in a, in a lot of ways there's similarities and just sort of running a rural remote business. Like we use Slack to communicate internally and we use a lot of, uh, you know, Google docs and spreadsheets and those types of things. And we do use Stripe to, to take, uh, on payments. However, um, and this is something that I only very recently realized is that there are other payment other than Stripe and in, you know, while I think when you're running a software business, um, Stripe is kind of usually considered best in class and like a great API. They integrate with a lot of things. It's things like that. Um, when you're using payment processing just to kind of like process invoice from clients, there may be cheaper alternatives like significantly cheaper that don't have a flat rate commission of like 2.9%, but instead have like a monthly fee of like $99 and I'm like 15 cents a transaction.
Speaker 2 24:12 Um, and so I've just very recently kind of looked, looked into those and I think we might, uh, we might switch or at least incorporate an additional payment processor. And I think the savings could be, yeah, like several hundred dollars a month. So I think there's this, there was a small lesson there and just kind of like, you know, don't you got a question? Sometimes you have a bit of your assumptions and what you kind of, you know, what applies in one case may not make sense in another. And just kind of the times that we're entering with a potential kind of recession, things like that. I was looking at cost cutting and I realized we were spending like $1,700 a month on payment processing. I was like, wow, that's a lot. Um, and then we looked at other ways and I realized, you know, actually I can get this for potentially a lot less.
Speaker 2 24:52 Um, so that's my aside about payment processing. Otherwise, um, you know, we, we use a lot of marketing tools, um, because you know, talk, you know, AA traps, SCM rush, things like that. Um, you know, maybe like Hotjar or something like if you're doing some sort of UI, UX type analysis. Um, so anyway, no shortage of tools, uh, which is always the case, whether it was a SAS business or an agency business. I think, you know, the way that we communicate with clients is a little bit, um, different or at least unique in the sense that we often, um, we'll sort of dive into their Slack, um, and kind of dive into their environment and sort of communicate with them there and work with them there. And, and I think that's a little bit of a nuance because typically when people think about maybe agency work, there's always this kind of barrier between the client and the agency and the, you know, essentially the client almost like submits a request and then the agency kind of fulfills it, but everything is kind of handled on the backend and they just start kind of getting the client updates their meetings and things like that.
Speaker 2 25:50 But we really kind of jump into the conversation into their Slack channel and almost like it's this idea of almost like becoming integrated with a client, you know, almost becoming like their, their marketing department or something like that. And so that's a little bit of a way that, that I think we do things that's unique, that we don't do it with every client. It kinda depends on the situation and on the level of, of like the relationship and things like that. But that is kind of, you know, something that we do. Do, you know, we use Trello for project management, which, which I've just always really liked. And you know, some services that we offer, like link-building is a lot more like a productized service. Whereas things I designed in dev or are much more custom even when they obviously follow a process in terms of the information that you need to collect from the client in the way of the deliberate, it's still a very custom sort of job.
Speaker 2 26:39 You know, as the agency has sort of grown we have, I don't know. So for me in my mind everything's always, you know, 1520 people. It's a sort of, that's kind of like we're Ninja outreach wise. That's where the agency was. I guess it's a kind of like the size, the glove size of the age of the business that I like. And you know, we have sort of different departments, um, and their department heads. And so somebody manages kind of link building and SEO, somebody manages business development, somebody manages branding, somebody manages growth and kind of those department heads are the people that I, I meet with often and they have their sort of cascading people that kind of report to them and work with them and they have their individual KPIs and we look at, you know, you know, how the department is doing in terms of margins and the revenue that I was bringing in and things like that. So you know, I think in many, many ways similar to kind of Ninja outreach, you know, just, you know, different departments. But we had product there, we had marketing there and you know, people have KPIs and we so rework, similar. So know with the exception of, you know, the really kind of getting in deep with Slack with the client. I'd say it's very familiar. I just kind of, I guess I built it how I knew
Speaker 0 27:46 this is something that we're, we're looking at more and more, especially, I mean with, with coronavirus and, and the economy going in. The tank is looking at our profitability at podcast motor, specifically by customer or by product type or service that we offer. How do you guys analyze that? You mentioned you look at profitability by kind of division or product service offering. How do you measure that?
Speaker 2 28:09 Um, yeah, so essentially, you know, uh, and this is, I mean this is all fairly recent type of stuff. I mean, normally I, I may have just looked at profitability, um, just overall for the business. Um, just cause I look at the accounting every month, um, but now that we have different departments, um, it makes sort of more sense to kind of, um, have those be unique and separate in a way and kind of to measure them separately. And so we look at, you know, clients that come kinda come on. Uh, their revenue is kind of assigned to a particular department based on, you know, the work that they're sort of doing. So in a perfect system, sometimes there's kind of overlap or somebody who's kind of working to two angles but, but more or less it kind of works. And then we just kind of think about the labor costs that kind of go into servicing that client.
Speaker 2 28:51 Um, and basically, you know, what are the profitability margins of that. Um, there are other things, um, you know, like, uh, paying for office space and tools and things like that. And that kind of goes into just when I look at the business as a whole, I don't necessarily assign it to any particular department because, um, it would be a little difficult to kind of like, you know, how do you allocate the office across the departments? You know, you could share, you could spread it across evenly or something like that. I mean, I'm not saying it's, but you know, it just introduces a lot more estimations and things like that. Um, you know, with business development, that one's a little bit different because it's not necessarily, uh, like they're not necessarily performing a service on behalf of clients. So I almost look at more like the return on investment in terms of like new money that they book.
Speaker 2 29:34 Um, so for example, if they close like $30,000 worth of deals in a month or something like that. And then I think about, you know, 20% of that is your average profit. Um, so that's like basically six grand. And so what are the costs of the business department? So to operate that month it costs four grand. And so it's kind of almost like a 50% ROI. And so, I don't know, I'm making stuff up, but this is the way that I look at it for me to kind of say like, um, is this profitable? Is this kind of like, are we getting enough juice to be worth the squeeze? Um, so that's, that's kind of how we do it.
Speaker 0 30:06 And you use like a time tracking tool and people assign their time to a project. Is that how you do it? Uh, to, to make this come easy? Or is it super manual, like in a Google sheet?
Speaker 2 30:17 No, I know it's, uh, it's, it's essentially time-tracking I've always used time tracking with any sort of remote business that I work, which is to say that kind of like, you know, people, people get paid for the hours that they work. They're not really on like a, uh, like a fixed payment each month. Um, and then, you know, we, uh, the department head for each client is sort of responsible for, um, sort of saying how, how many hours did each person kind of work for, for the client, like kind of, uh, uh, aggregating those figures. Um, firstly just, you know, for client invoices and things like that and it's kind of necessary anyway, um, to get that data. Um, and then we can kind of use that to kind of come up with, ah, you know, what all the labor costs are. So, um, that, that we can, you know, and obviously it's sort of an estimate and stuff, but that's, that's kinda how we, how we look at it.
Speaker 0 31:04 Yeah. My mind is reeling cause we don't, I don't have any idea of what this looks like at podcast motor. And I've thought about it of like, you know, we offer several different kind of levels of service that I wonder sometimes is like is our cheapest, like just audio editing package more profitable than our higher priced, but admittedly a lot more involved service. And then like are they even priced appropriately based on the profitability of those? And, and so I've thought about, because we pay some people hourly and some people kind of by the project or by the episode depending on kind of where they work in the business. And so I've thought about yeah, introducing time-tracking even though not everyone is paid by the hour, some people are paid kind of by the episode or by the project. Even just, you know, once a month, you know, like in a month, maybe like twice a year or something, just to get a snapshot of it. So as we're talking about this, I'm thinking I gotta do that. Um, cause she's like Hubstaff or something like that.
Speaker 2 31:58 Yeah. We a foot for the town talking for sure. And, and then I, I think it's, yeah, I think it's a worthy kind of endeavor. Um, you know, for the link building. That one also, I like that particular service because it is much more productized. You know, I kind of have that one down to, you know, what's the average cost of a writer, what's the average cost of a blog, you know, w uh, those types of things to really kind of see what is the profit on a link or a, you know, based on the tier. And you know, it doesn't mean that, okay, well this one's less profitable. I'm just going to stop providing this service. I don't, I don't necessarily think that's the point. Um, but it is sort of good to know, uh, for example, if, uh, where you might want to push, uh, clients to, you know, where, where the margins of better and things like that.
Speaker 0 32:40 And your team is all remote.
Speaker 2 32:41 Yeah. It is all remote. It's largely Eastern Europe and nowadays, which, uh, in, in Mingy Irish days, I sort of had a more of a presence in other parts of Asia, the Philippines, Bangladesh, and things like that. Um, and that was good. But I, I sort of started towards the end of my, uh, reign there, uh, to start to incorporate people, more people from, from Eastern Europe, um, you know, Ukraine and things like that. And that, um, I was always really impressed with, uh, with, with the, with the people that, that I found there. And so when I started this agency, I've kind of looked there first. Um, I found one guy in Macedonia, which is not a place that I had. I was, you know, thinking that we'd find somebody, but he was, he was great. He became sort of like the, the, the original, uh, the OJI, uh, and basically he, uh, you know, and then my, my strategy is always like, um, who do you know, who do you know, who can you bring on?
Speaker 2 33:36 Um, I like to kind of bring people on through referrals, uh, because, uh, for the most part I just kind of feel that like, I don't know, experiences is, it is a little overrated. Um, and that in the Mo in most cases you kind of end up, uh, teaching and onboarding somebody kind of how to do it the way that you would like it to be done. So in that case, you know, if I'm not necessarily valuing experience super highly, um, I'm valuing things more like obviously like the, you know, the personality, the attitude, the fit, you know, the loyalty. And if it's somebody that somebody knows, um, it's just going to overall help me trust them a lot more, right off the bat. Um, and then just naturally kind of leads just a, a nice work environment where it's like, ah, it's this guy sister is these guys his friends and it's just kinda of this group.
Speaker 2 34:22 It's like almost like this family here. Um, so we've kind of still sent, I was actually, it was originally my goal to, to only hire in Scopia Macedonia because, uh, even on the team's remote, I really wanted to have like an office presence, which was something we didn't have a Ninja salary and which I always felt was just kind of like an inefficiency that like not everybody was kind of in the same room at the same time. And so we do have an office in Scopia. I think there's like, I dunno, eight or so people there right now. And so it's, it's been, it's just been great. Um, just really kind of, yeah. People working together, working in the same language and working on the same time zones and things like that, but it just wasn't really possible to find all of the help that we needed when we needed it. I'm in Scobey Macedonian, so then we've sorta brought in some people from Serbia and Ukraine and Coratia and, and other parts. But overall, I mean, still very similarity in terms of the geographic kind of, uh, overlay.
Speaker 0 35:15 Yeah. Yeah. And, and culturally too. I think that, um, yes, certainly slight differences, but you know, cultural difference between there and sell these Dasia or you know, certainly the U S or South America. Yeah. We, we, we were trying to go more and more into kind of like buckets with podcasts and one or at least we have folks in the U S about half maybe of our audio team is in the U S and about is in uh, Europe or Eastern Europe at this point. We had some folks in the Philippines and still do, but the time zone is just really hard. And you know, me living in Europe, you know, Ukraine or Serbia is or Montenegro for castles, we have developer Montenegro is great, great, same time zone. Um, so yeah, I think Eastern Europe and I have some friends that run on agencies like dev agencies that are all in Ukraine and Kiev.
Speaker 0 36:04 And um, I agree. I think the value is really strong. The communication is really good work ethic, um, in generally whatever. But you know, you, you find good and bad everywhere. But, um, I agree. I think if people were looking to start a rote team, I definitely agree that this like pod or bucket approach is nice because you might go visit, right? Or you might open an office like you did and like, you know, with us with as a is, I, I was a little less intentional about it. And so we're, we're five people in four different continents and it's just like, you know, this is, this is really hard. Like we were going to get together before all the current of our stuff we were going to get together and you're like, where are we going to get together? You know, like in the middle of the Atlantic ocean or something. I don't know. But, um, yeah, it's, it's challenging in that respect.
Speaker 2 36:52 Yeah. With, um, Ninjago rates, you know, we never did a team retreat. Like I traveled around and I kind of went to the Philippines that I went to Bulgaria and, and, you know, different parts of the world that I was able to meet with like a couple of people like at once. Um, and I thought that was cool at the time. It was cool at the time, but it just was not really feasible to kind of get, get the whole team kind of together. And then, uh, you know, last year I finally got to do like my first team retreat for, um, for shortlist, um, you know, and it was largely the Macedonia and then, uh, a guy or so from Ukraine at that time. And we all went to Turkey and I, that was awesome. And, and now we're kind of thinking of, you know, depending on how this year goes, uh, but doing another team retreat. Um, and it's just a lot more practical when everybody is basically coming from similar parts of the world.
Speaker 0 37:41 Yeah, yeah. Yeah. That's cool. That's cool. Yeah. I think, um, I mean we're, we're, I, I'm very happy that our team at casitas, but I think that's maybe the one, not regret that that I have, but, um, if I had it to do over again, I would try to, to pod our team a little better. And maybe, you know, I think having a European or an Eastern European pod, one of our developers in South Africa, which I think for development is a really great place to go. It is a long way from here and certainly from the U S it's a long way to go, but, but I could see us kind of building a pod in South Africa at this point to since our kind of lead developers there. Yeah. Nice. So two years later, I mean it sounds like a, sounds like you're happy with the decision you made and it sounds like where you are with shortlist is, is really good. I think building that team again, sounds like it's something that's been important for you. Like emotionally and like the support you get out of the team with work is, is really important. It sounds like that that's fulfilled for you now. Is that right?
Speaker 2 38:35 Yeah, I would say um, it's been good. Um, I've like, it took me, like I said, it took me time to almost, uh, transition, I guess from that, that group at Ninja outreach, we had built like a really nice team and a good group. And then when I kind of started, we're working with a group, I shortlist says, who are these people? You know, it's like, this is my game. Um, you know, and it, it took, yeah, it took time, you know, like to, to really feel like, okay, this is a, this is kind of the family now. But it does feel, it feels good. I, in the back of my mind, I, I do always have that sort of, um, Oh, you know, but it's an agency and it's just like, I mean, I think, you know, Craig, like just, it's just such like a, a hatred of like agencies, uh, not, not, not in, not in the world, but like among like entrepreneurs have kind of like, this is, this is not the way to go.
Speaker 2 39:22 You know, when we go with SAS and things like that. And I do get that. Um, and so in that is <inaudible> that is why we are sort of working towards, you know, maybe developing, you know, developing our own product that we just don't, we just kind of put out there and trying to kind of diversify a bit and, and things like that, you know, but you know, but at the same time, uh, you know, for what it is right now, um, it's, it's been good. And you know, obviously there's always a little bit of just concern about, you know, the state of the world and kind of where we're at and kinda like how that could affect business and, and things like that. And I don't think that's just an agency thing. I think there are plenty of, plenty of, plenty of SAS businesses are just business owners everywhere that are a little worried. So, you know, that's never, I guess never 100% comfortable but a sister wall kind of how it is.
Speaker 0 40:08 Yeah, I agree. I mean, I think in the, especially in the kind of like the bootstrapper, you know, a microcosm for indie hackers space, like the stigma around client services is, is really strong. And I've said for a long time, like if you're just getting started going straight into SAS like you did is definitely the hard road. Um, starting out with a, a service, an agency or product, a service is so easy. I mean, you spent it up in a day, you know, WordPress and gravity forms and Stripe or whatever and you're there and you can start making money if you want to replace your income, that's 100% of the way to go. And even, and dude, like five years later, there are a lot of months where now podcast motor brings home to me more money than Castillo's even though I think both are really successful businesses just because like, you know, we're pretty high priced, productized service with decent margins and it's not that hard of a business to run.
Speaker 0 41:00 Um, I think that the differences, you take that kind of home run life changing money, exit out of the equation. But if you're the type of person like, like I am and I think like you are who, who probably will never stop working. That's not so important. You know, like if you think you're never really going to retire, then like designing the business around your life for these kind of best 30 years of your life gets really important. Um, and that's something I'm thinking about these days a lot. Yeah. So I, I would be kind of remiss if I didn't you cut a, your opinion on kind of how your, not your opinion, but to kind of get your take on how you're doing with, with Corona virus, um, and kind of where you see things from a business perspective and the kind of medium term.
Speaker 2 41:46 Uh, yeah. You know, it's, it is relatively new territory for me. Um, even though I've, yeah, I started NIOSH in 2014. Right. Still a bull market. Uh, not, not, didn't go through Oh eight or any of those types of recessions. So it is, you know, I mean, I'm trying to be cognizant of the fact that like, this is new ground and, um, things, you know, may not be, uh, as rosy as they kind of once were. I do think that, you know, I'm certainly not a predicting, uh, end of the world or anything like that. I think, uh, some, some businesses are already seen, you know, significant drops like 30% or something like that. I in some businesses are closed. I mean, thank you. If you're just, you know, retail, restaurant, things like that. I'm not, I'm not saying that, but, you know, just in the online space, you know, we're seeing people with significant drops and then there are other people, uh, I've talked to who have not noticed anything at all.
Speaker 2 42:37 Um, and even, uh, you know, I shortlist, uh, March, March, 2020 has been our best month ever. You know, and I don't know what April is going to be. I mean, you know, maybe they'll drop off a cliff, but, you know, if I didn't know any better, I would think like things were, things were going great and there's kind of business as usual, you know, I mean, bottom line is I'm expecting something, you know, that is like, obviously with, uh, all of the businesses being closed, uh, and kind of people being sent home from work and things like that, it's just not going to be a great business environment in the short term. Uh, if regardless, you know, people are just going to become a little tighter with their money, I'm probably not the best time to launch something new. I'll launch a product or, or something like that.
Speaker 2 43:20 I'm just not really kind of where everybody's heads at. Um, in, in, I've seen it with a couple of clients as well, like drops in organic traffic, uh, because people are searching for different terms and they maybe were before. So I think, you know, the smart thing to do is if you, obviously if you have a business to make this a time to kind of think about, uh, how to be durable, um, how to maybe cut costs or something like that. Um, this is why I talk about payment processing in the beginning of the call. I was kind of one of the things that I looked at. And then, you know, obviously, you know, labor people are kind of the last thing that you want to, you want to dip into 'em if it needs to be done, obviously it needs to be done. Um, but I would also say that, you know, there are measures that can be taken perhaps before having to let somebody go completely consider, you know, could somebody work for less money or work less hours or something like that as a temporary solution.
Speaker 2 44:11 Uh, I'm sure that, you know, people would be understanding of the need for this to be done and we'd prefer, you know, to be making something rather than nothing. Um, so I kind of think of, you know, you know, I'm obviously the, the LA, the worst thing that would ever happen is I just kind of had to close up shop. Um, I think, you know, I hope, I don't think that's super likely. Um, but it's always a possibility. Uh, but then the next thing would be, you know, having to kind of like cut people and lay people off. So I'm kind of hoping that it doesn't kind of come to that, that we'd kind of keep business strong. Um, in that, you know, before that there's a number of levers that we sort of are able to try. Um, like I said, you know, obviously cost cutting and just around the agency as a whole and then, you know, if needed to be, you know, docking people's salaries a little bit or time or something like that, just to kind of weather the storm.
Speaker 2 44:54 You know, I just, I'm not much of an economist or a, you know, GOP political, you know, type of a type of an individual. It seems that the actions that, you know, the fed is taking in the U S are really meant to, uh, stimulate the economy. And, you know, from the few kind of people that I've talked to that I do think know a bit more than I do, they kind of feel that, you know, we're probably in for like a rough couple months. But after that, um, you know, things could not only just go back to normal but even actually accelerate from there just because some of the measures that, you know, the, the government and stuffs are taking, uh, they're, they're obviously looking to sort of stimulate the economy, lowering interest rates, things like that. Um, and so for all we know, you know, that could be, uh, that could end up being a nice boost. So, you know, the key is to just kind of be around for when it happens.
Speaker 0 45:41 Yup. I agree. I agree entirely. And I think the one thing I would add to that, um, is, you know, folks who are able to pivot and maybe have some money to invest in a business or to expand their business into new market as we come out of this are, are really going to have nice opportunities I think. And you know, that, that's not everybody, but for the folks who, who do have that kind of privilege, I, you know, and that I, I'm, I'm, I'm kind of, you know, talking about myself, I'm looking at like, okay, in six months there's going to be opportunities, you know, of all sorts of different sorts. And so I think between now and then, like you said, we're looking at our efficiency and this is a nice excuse and opportunity to look at at some of our costs and productivity efficiencies, um, and weather the storm.
Speaker 0 46:26 And then afterwards, hopefully see kind of where things are and where we can go. Once people, you know, can leave their house, they can resume life as normal. Cause yeah, right now it's really weird and it's just weird. It's, it's sad and weird. I'm not scared anymore, but it, it is just weird to to not leave your house. Yeah. Yeah. Dave is really cool. A great to catch up and thanks for, for Sharon, kind of your, your story and your journey and everything. Um, for folks who kind of want to check out more about you and what you're up to, where, where's the best place?
Speaker 2 46:56 I would say my agency shortlist that IO.
Speaker 0 46:59 Awesome. Thanks man. Appreciate it. And we'll catch up soon. Thank you, Craig.
Speaker 1 47:04 Pleasure. Thanks for listening to another episode of rogue startups. If you haven't already, head over to iTunes and leave a rating and review for the show for show notes from each episode and a few extra resources to help you along your journey. Head over to rogue startups.com to learn more. <inaudible>.
