Do you think you need a fancy website, and business card, and plenty of startup capital to start a business? If you do, you’re dead wrong.

Sam Ovens started his marketing consulting business with no clue of what he was going to sell, no idea who would buy it, no idea how he’d actually deliver the work, and with no savings to speak of.

In this interview, you’ll hear Sam and I talk about:

(4:37) His number of customers and revenue
(8:00) His background, and how he got started
(10:30) His start as a marketing consultant
(13:00) How he used email to get his first clients
(16:00) How success led to more success
(19:00) How he made $10,000 sales, and closed $20,000 deals with $3k/mo in retainer fees
(23:00) How he used lumpy mail to find his leads
(25:30) How he delivered services using elance
(30:30) How he transitioned to a trusted advisor
(34:30) The difference between a service business and a product business
(38:30) The cons of a product business
(40:00) The cost of version 1
(42:00) His Big Business mindset
(48:00) How he used Idea Extraction to get his rich niche to tell him their pain
(51:00) How he researched Property Management
(58:00) Mistakes he made along the way

More About This Episode

The Bright Ideas podcast is the podcast for business owners and marketers who want to discover how to use online marketing and sales automation tactics to massively grow their business.

It’s designed to help marketing agencies and small business owners discover which online marketing strategies are working most effectively today – all from the mouths of expert entrepreneurs who are already making it big.

Listen Now

Transcript

Trent: Hey there, bright idea hunters. Welcome to the Bright Ideas podcast.

I’m your host, Trent Dyrsmid, and this is the podcast for marketing

consultants, marketing agencies, and entrepreneurs who want to discover how

to use content marketing and marketing automation to massively boost their

business.On the show with me today is an entrepreneur by the name of Sam Ovens. Sam

is the founder of a very rapidly-growing company by the name of

SnapInspect. Just over a year ago, Sam barely even knew what an

entrepreneur was. He literally had to actually Google the term when he

first discovered it and that was a little bit longer ago. With that said,

this interview, if you are a new entrepreneur looking for a business to

start or you are already a marketing consultant looking to grow your

business, this interview is going to be absolutely a mind-blower for you.I don’t want to sound too hype-y, but I took so many notes for myself when

I was doing this interview with Sam that I absolutely promise that if you

invest the time to listen to it, you are going to come away from this

interview with some of the most valuable insights possible that will

literally be for you, as they were for Sam, massive game-changers.His app, his company, SnapInspect — so a year ago, nothing, didn’t exist.

He had to figure out how to find the idea, how to get it built, how to pay

for it, and then how to turn it into a very healthy six-figure business and

he did all of that in just over a year. And keep in mind, beforehand, this

guy barely even knew what an entrepreneur was. So get some pen and paper,

sit down. You are absolutely going to love this interview.Before I get to it, I want to really quickly tell you about something if

you’re listening, if you’re not yet a Bright Ideas subscriber, I’ve got a

new four-part video series called the Conversion Tactics Toolbox. It

teaches you — shows you, actually; it’s free–exactly how I get bright

ideas to add so many subscribers every day to my newsletter list and

therefore my marketing funnel and, of course, that causes products to sell.

Go sign up at brightideas.co.So, with that said, get ready, here we go. This is going to be a really

good one. Please join me in welcoming Sam to the show. Hey, Sam, welcome to

the show. Thanks for making the time.Sam Ovens: Glad to be here.Trent: So for the folks who don’t yet have a clear understanding of who you

are, take a minute and just please briefly introduce yourself. Tell us who

you are and what you do.Sam: Okay, so I started a software as a service company called SnapInspect,

which is basically a property inspection app for property management

companies. They use it to inspect rental properties and create reports.

Yeah, so that’s basically what I did.Trent: Is this your first entrepreneurial venture?

Sam: First successful one, yes, but including the failed ones, it’s

probably my third or fourth.

Trent: Okay.

Sam: Yeah.

Trent: All right, so you’re at a point now where you’re having quite a bit

of success. So let’s talk a little bit about where you are today and then I

want to back this up to the process that you went through and how you

started off as a marketing consultant and used that money to fund this and

where there’s a whole lot of really good stuff I want to get into. But so

that people know where you’re at, because you’ve accomplished quite a bit

here in the last year since you launched the product, I really kind of want

them to know the conclusion first, so maybe we can talk about number of

customers and revenue, how’s that sound?

Sam: Sure.

Trent: All right, so how many customers and how much revenue?

Sam: So, last time I checked, we’re around 1,400 paid customers and revenue

is around about $400,000 annually.

Trent: Very nice. And on a software business, how much of that is making it

to the bottom-line? Quite a bit, I would think.

Sam: I mean, our expenses run roughly right now about $16,000 a month, so

you could do the maths on that.

Trent: The point of it is — and this is what I wanted people to get —

because here you are, this guy who fell on his face a couple of times

beforehand and then finally, when you got it figured out, within a year

you’ve made a massive transformation to your life as a result of this

business. Would that be an overstatement, do you think, or do you think

that that’s pretty accurate?

Sam: No, I think it’s pretty accurate. I’ve tried to be an entrepreneur for

probably, I think, three years now, maybe not quite three but close to. Two

of those years, I was practically just spinning my tires and then when

things sort of clicked for me, which was about a year ago, it just all

moved so rapidly. SnapInspect is one year old in August. SnapInspect is

only one year old and all of my business stuff has really snowballed in the

last 12 months and it’s been a pretty crazy 12 months.

Trent: And a lot of fun, too, I’ll bet.

Sam: Oh, yeah. It’s fun finally making money.

Trent: Yeah.

Sam: Instead of just finding ways to get more to spend.

Trent: Yeah, funny how that is. Being an entrepreneur is so much more fun

when you’re making a profit. All right, so let’s talk a little bit about

your background and then how you got into this and how you were a marketing

consultant, because a lot of my audience — and I really think this is

going to be a great interview for them — they’re either a new entrepreneur

like you were before this success came your way or they are a marketing

consultant looking to grow their business to the point where it’s providing

a very nice level of income for them and maybe some of them are at a point

where they’re already there and they’re thinking, “Well, how do I take my

business to the next level?” The pieces of your story, I think, will speak

to all of those people, so let’s kind of dive into that.

What did you take in college? What did you do before this? Were you born in

this entrepreneur whiz-bang family with a big silver spoon or is it

something other than that?

Sam: Sure. No one in my family is an entrepreneur or even in business. My

mum’s a teacher and my dad’s a builder and none of my friends are even

entrepreneurial. I think back home in New Zealand, I don’t even think I

know another entrepreneur and I never really was entrepreneurial. I mean, I

was obsessive with things, like if it was a hobby or a sport or whatever it

was, I’d always have something I was quite obsessed with and spend all day

and all night thinking about it and something like that.

Those are the only early traces I could think of what’s led to today

because I remember my parents and teachers always said to me, “If only you

could just get obsessed with school or college or doing something

productive instead of,” because my obsessions used to be race cars or go-

karting or something like that and that was me spending money and taking

time away from studying, so my grades were always below average and

everything.

Then I don’t know when the click was. I think it was, I went to a friend’s,

her dad was a very successful businessman and I went away to their island —

the guy owned an island — and I was sitting there and I was like, “Oh my

God, this is so awesome,” and then when I got back, I was like, “I want to

do that.” I think the first thing, my first move was Googling, “What is

entrepreneurship?”

Trent: No kidding, wow.

Sam: Not even kidding, just trying to get a definition on it because I’d

asked this girl, “What does your dad do?” And she’s like, “Oh, he’s an

entrepreneur,” and I was like, “I want to be one of those.” So I went back

and I Googled it and I bought a bunch of books and I guess that’s where the

journey began and that was roughly three years ago.

Trent: Wow, that’s cool. All right, so you fell on your face a few times

and we’re going to skip past those just because there’s so much good stuff

that I want to talk about what’s worked for you.

Sam: Sure.

Trent: Then you, at some point, started working for yourself as a marketing

consultant, is that correct?

Sam: Correct.

Trent: Okay, so when was that?

Sam: I joined The Foundation in October of 2011 and I learned a lot there

about how to start a software company from scratch. I got the idea for

SnapInspect and we started developing it, but I quickly realized I’m going

to run out of money. Development builds were coming in because we had

milestones with the original developers and I never even knew how I was

going to pay the next milestone, so I was constantly trying to figure out

ways, see which banks were offering student credit cards, trying to just

come up with money any way just to pay the development bills.

Then I was looking, I was talking to my developer like, “What do you think

server costs are going to be?” He gave me some numbers and I was adding up

the numbers and I was like, “Oh my God, I’ve got an awesome idea for a

company. This company’s going to work, but I don’t know if I’m going to be

able to keep it alive long enough for it to actually gain traction.”

So I quickly realized that I’m going to need a source of income to support

starting SnapInspect. At that point, I knew a bit about marketing and I

figured, “Well, these skills are probably helpful to other business,” so I

decided that I’d help consult other businesses on marketing and basically

sell my own services and use that cash to help get SnapInspect started and

survive through the early stages.

Trent: So let’s talk about how you did that. You’ve got no customers,

you’ve got some marketing skills which you’ve acquired as the product of,

presumably, your failures along the way. You’re out there trying to figure

out how to do stuff, it’s all on the line and you can’t help but learn

things. Then you made a decision, “Well, I’m going to go get some clients

because I need some cash flow or my business is not going to succeed,” so I

want to know what did you do — and I’m sure my audience would like to

know, especially the new entrepreneurs who are thinking, “Man, this guy’s

story sounds like mine,” — what did you do to get those clients?

Sam: Sure. My first attempt, like any of my first attempts, was pretty

weak. I just reached out to people I knew because I didn’t even know what I

was selling. I was like, “I know all of this stuff,” but I couldn’t put

into a sentence what I was selling. So it sort of started out with getting

a few cheap $2,000 or $3,000 website deals where I’d essentially just be an

order taker and help a business rejig their website and that’s how it

started.

Trent: These were all people initially that you knew? But you didn’t have

any credibility with them as a marketing or a website developer, did you?

Sam: No, not at all. I just reached out via e-mail. They knew I was in this

whole online space, which most people don’t understand that most business

owners, outside of the tech and San Francisco space, they actually don’t

know anything about websites and so you don’t need to know much to be an

expert. In fact, most of the people that probably had the ability to find

your content and listen to it probably know more than enough to actually be

valuable to 95% of the businesses in the world. You don’t actually need to

be that much of an engineer to help other people out. Now I’ve side-tracked

myself, what was the question?

Trent: It’s okay, it’s okay. I couldn’t agree more. I think that is

something people overestimate or maybe underestimate, I don’t know what the

right word is, but they think they need to be this guru before they could

ever go to a small business owner that runs any kind of small business

that’s in your town and say to them, “I can help you with your marketing.”

So limiting belief number one that hope Sam has just smashed for you guys

is that you already know enough. If you found my site and you’re listening

to this interview and you know what WordPress is and you know what hosting

is, you already know enough.

Okay, so you sent some e-mails, you got some clients, $2,000 gigs, $3,000

gigs here and there. Is that about right?

Sam: Yup.

Trent: What happened next?

Sam: So that was enough money. From what I was making, that was a big

change. I mean, $2,000, $3,000 compared to zero? Pretty sweet, so I was

pretty happy with myself and I did quite a few of those and then I guess

the more I thought about it and the more of these little deals that I won,

the more confidence I got and I sort of found my foothold and my market in

exactly what it was that I did. So instead of being a consultant that

literally would do anything for money, I now had a very specific thing that

I did for a specific market.

Trent: Which was what?

Sam: So I would help B2B companies, so B2B companies that had high-ticket

priced items generate more leads with their websites.

Trent: Okay, so did you do that by helping them to do better conversions or

more traffic?

Sam: The beauty of this was that it was so much easier than doing even the

$2,000 deals because essentially what I would do is I’d put just such basic

stuff, like their websites would have headlines and basic copy which,

instead of saying, “We are the best. We, we, we,” it would talk a little

bit about the other person, the customer and what pains they’re

experiencing. So I’d rejig the copy, put a headline in and I’d create some

sort of lead capture system, which would just be usually a like a MailChimp

opt-in form for a free consultation or a pricing booklet or some sort of

information thing that they had. Most of the time, they had these in their

business; they just weren’t putting them to work.

Trent: So this is really basic stuff for us but, again, for these small

business owners, they had no idea how to do this stuff. So how much were

you able to charge to do this?

Sam: Well, so, my average–to do something simple as that, I would charge

$10,000.

Trent: $10,000?

Sam: Yup.

Trent: To tweak a headline, fix sales copy, put a lead capture form on,

presumably write some kind of autoresponder sequence on behind-the-scenes,

and get them to take some content they already had and turn it into a free

report/lead magnet, $10,000 for that?

Sam: Yup.

Trent: I hope, my beloved audience, this is sinking in for you guys.

Sam: Well, you’ve go tot understand that they didn’t know that they needed

that. If they knew that they needed that, they could do it themselves or

they could hire someone on Elance to whack it together for a couple hundred

dollars, but . . .

Trent: But they don’t know that.

Sam: It’s the advantage of not being an order taker but an advisor or an

expert and knowing exactly what you’d do because the beauty of B2B high-

ticket item companies is one sale to them is usually worth $50,000 to

$100,000.

Trent: Yup.

Sam: They’re already making plenty of sales and they’re making them through

their website with people going to the “Contact Us” form and filling out,

like, 15 fields, which was hard to find and I was thinking, “My God, if we

could remove some of this friction, rejig the copy, even if I just got them

one more in a whole year, it’s still worth it for them to pay me $10,000.”

Trent: Absolutely.

Sam: And I did. They got way more than one a year so as far as they were

concerned, they were away laughing. They only had to pay me $10,000 but

that’s the thing about pricing on value instead of cost.

Trent: Mm-hmm.

Sam: The whole time, I anchor my deals on what’s a new client worth to you.

They know it’s $50,000, $100,000 and if we can get at least one or two more

of those a month, they’re sorted. That’s the advantage, that’s why I picked

that as my niche and as my specialty because once I had one of those under

my belt and I could get a testimonial, I just started reaching out to more

of them that were in the same situation and it was easy. I’d put retainers,

I started to build retainers in and I started to charge more.

I did contracts where I’d implement a CRM system too. For example, a

company, it would need the website rejigged, it would need testimonials —

which I’d have to find — it might include lead capture, basic

autoresponder, and then it would have to feed into a CRM system, which you

wouldn’t even believe that a $10 million a year company didn’t even have a

CRM.

Trent: They probably didn’t even know what it was.

Sam: I put a CRM in place, showed the team how to use it, we talked about

all of this new stuff. It was fun. I learned a ton doing it. The owner

loved it, the company profited wildly from it and that was a $25,000 deal

with a $3,000 a month retainer and still not even touching on any of the

stuff that the guys in your audience know, like split-testing and what

button colors convert. Forget that! This is simple stuff, right?

Trent: I’m loving that you’re sharing this because this is a perfect

example in this video that I mentioned to you before that’s on YouTube that

I get all these views on and we talked about before — I talk about my

green dot theory and it’s more or less the best way to succeed in business

is to be in business. Because once you start — and this is what I hope

that my new entrepreneurs who are listening to this will understand — you

don’t need a great idea to start, you just need to start. Then along the

way, like what happened to you, Sam, is the byproduct of the journey is

that you start discovering these rich niches that I talk about, the

importance of selling to businesses that have a high customer value, and

you discovered all the stuff. You didn’t think this up on a whiteboard and

say, “That’s what I’m going to do,” right?

Sam: Oh, so far from it, it’s ridiculous.

Trent: Yeah, fantastic stuff. Okay, and how, by the way — because I know

some people are probably thinking this — how did you find these companies

to go and you contacted them via e-mail always to begin with, was that

correct?

Sam: I tried lots of things and over time, again, I adapted my process. In

the end, my secret weapon was lump e-mail.

Trent: I love so much you just mentioned that because that’s one thing that

we’re starting to do, as well.

Sam: Yeah, that was my secret weapon in the end. I could send out pieces

and I knew that I was going to get a new client. I knew what my conversions

were off that and it worked, it really worked and I never paid for any . .

. I never used AdWords, never had Facebook, never had a blog. I mean, I

didn’t have anything. I didn’t even have a business card.

Trent: Did you have a website? You had a website?

Sam: Well, I mean, if you looked at samovens.com, it’s one static page that

just says “Direct Marketing Consultant.” The website took me five minutes

to build.

Trent: Mm-hmm.

Sam: It pays to note I don’t even know how to use WordPress. I built my

website using Unbounce.

Trent: I love it.

Sam: I still don’t know how to set up a WordPress website.

Trent: I love it. So how when you were actually working with these clients

and you wanted to fix a headline and improve copy and put the webform on,

did you just give them the code for the webform and have their team make

the tweaks on their own sites?

Sam: That’s a really good question. That’s the other part of it: I never

did any of the actual work. So I would win the deal — that part is

important — I put a lot of my effort into winning the deal and that was

where I spent the bulk of my time. Then I would sit down with the business

owner and I’d ask him questions to learn about how we’re going to rejig the

site and how we’re going to generate leads.

Generally, he would give me all the information I needed and then I would

set aside a day or two to write the copy and I’d design all of the pages,

I’d just write them up in either Keynote or later on I used Unbound, but I

started out using Keynote, and I had a guy that I hired from Elance who

would do all of my implementation.

So I’d essentially win the deal, create a list of what needed to be done,

jump on Skype with my guy from Elance, brief him. He’d go and do it all —

like build the website, put the code on, do the style, all of that stuff

that I didn’t know how to do — and we had an awesome arrangement where he

charged a flat fee regardless of how long it took: $200 to do the

implementation.

Trent: $200. So you’re selling a deal for $10,000 and it’s costing you $200

to deliver it, right?

Sam: Yup, yup.

Trent: I hope there are people listening to this podcast right now with

their jaw hanging open and then kicking themselves in the butt because

they’re doing too much analysis and too much paralysis before they get

going.

Sam: It sounds illegal, right? But what people aren’t understanding is that

I’m not selling the doing. If these people knew what they wanted, they

could go directly to the Elance guy.

Trent: But they don’t.

Sam: I’m the one that’s telling them what they need, like I’m creating the

real value. The real value isn’t in doing. The real value isn’t in typing

the code or putting the MailChimp form on the page. There’s no value in

that. That’s a commodity. You can hire people all over the world on Elance

that’ll do that for next-to-nothing. The real value is in knowing how to

get the client more customers.

Trent: Mm-hmm, and knowing what the client needs when they don’t know

themselves.

Sam: Yeah, and the best part about it is you get treated with so much more

respect when you’re not an order taker.

Trent: Mm-hmm.

Sam: Back in the day when I did $2k and $3k website deals, I mean, I’d show

them the site and they’d send me back a list of, like, 50 things to change,

like “move the logo a little bit to the left, a little bit to the right,

color of the font doesn’t look right,” just stuff like that and it killed

me because you’re essentially an order taker — you’re not an adviser or an

expert — and they don’t listen to anything you say because you’re

essentially just that Elance guy except a more glorified version that gets

paid $2,000 instead of $200.

That’s essentially what I was but when you’re the adviser and the expert,

they don’t fight you on anything. You never hear about a logo placement or

a color because what they’re hiring you for is the added revenue they’re

going to get, the customers. They don’t care about anything else and that’s

the way it should be. So, honestly, it really changed how I did the whole

marketing consulting thing because I went from busting my ass doing $2,000,

$3,000 deals to doing $10,000 to $20,000 deals where I was treated like

someone that was valuable and also not having a fight with the customer

over the color of a logo.

Trent: Just so that I make sure myself and the audience is crystal-clear on

the difference, the differences between starving consultant Sam and getting-

rich consultant Sam — and we haven’t even talked about your SaaS yet,

which we’re still going to get to — is you decided, number one, to focus

on a different niche, the rich niche, these high-ticket B2B companies. Then

you used your lump e-mail to get in touch with them and you positioned

yourself deliberately through the questions, I’m assuming, that you asked

them as a trusted adviser. Is that pretty much the difference between

“starving” and “getting-rich”?

Sam: Yeah, so, first of all, I mean, I would target companies that had

money to spend and I’d target companies where I honestly believed that if I

was to do what I wanted to do to their website, that they would value from

it more than what they would pay me. Because a lot of the deals I did early

on when I was what you’re calling a “poor consultant,” I honestly thought —

and there was no real added value to the company. I mean, sure their

website looked nicer, but I didn’t feel, I felt like this is a waste of

their $2,000, $3,000; it just looks prettier.

But with these other companies, I was happy to charge $10,000 or more

because they got the value from it. It sounds criminal and I used to feel a

little bit shady doing it but then when I really thought about it, because

a lot of the time after I had these big customers with $10,000, $15,000,

$20,000, $25,000, I felt guilty. I was like, “Oh my God, they’re going to e-

mail me two months later and they’re going to be like, ‘We want our money

back.'” But it was the exact opposite.

They told other people about me and I started getting referrals and they

loved it. They were like, “There’s a big difference,” and the people I did

$2,000 or $3,000 websites for, they still call me today because they say

something like their website isn’t loading fast enough. I mean, the

difference is I can’t even define.

Trent: Well, you’re doing a pretty good job of it so far and I hope that

the incredibly valuable message that you are sharing right now is sinking

in with the people that are listening to this. Folks, if you have

questions, there’s going to be a comment form on the blog post where this

interview is published. Make sure you use it and either Sam or myself will

answer them.

All right, so I kind of want to transition the interview now to the

SnapInspect story. So, obviously what you’ve shared with us so far has

communicated how you got some cash flow so that you could build this other

business, which has a bunch of pros and cons. Before we get too much into

SnapInspect — and this is something that when I was a new entrepreneur, I

didn’t know anything about — there are some pros and cons to a consulting

business and there are some pros and cons to a software business. I don’t

think many people, especially in the beginning, even have the belief system

that they could ever possibly even create a software business.

So, very quickly, just tell us the pros and cons of the consulting model

and the pros and cons, mostly what you just told me before the interview,

the pros and cons of the software model.

Sam: Consulting is one specific example but it’s really the pros and cons

of any service business and the pros and cons of any product-based

business.

Trent: Sure.

Sam: But in my specific example, I’m going to use consulting and SaaS. The

pros and cons of a consulting business or a service business is, the pros:

you can get into business immediately. All you really need is a laptop and

a cell phone, plus the barriers to entry, there’s none. You don’t need to

build a product, you don’t need to invest in development and it doesn’t

cost anything or really anything. You can get into business straight away.

The other pros of the consulting business is you start to make decent money

pretty quickly so I started to make $3,000 where I had to pay my developer

$200. That was still $2,800 and while that’s not much money, that was a lot

to me back then, more than what my product business could do at the time,

so it can generate cash pretty quickly. Within a year, the consulting

business got pretty big. I grew it up to $35,000 a month.

Trent: Within a year.

Sam: Yep.

Trent: Fantastic.

Sam: It’s still at that today and, yeah, that was quick. It grew to $10,000

a month so much faster than SnapInspect did and the profitability of it was

much higher. It was very profitable. It was pretty much a cash business.

Now, the cons of a service business or a consulting business: firstly,

there’s no asset value. If you’ve got a consulting business, someone’s not

going to come along and acquire it because you are the business. It doesn’t

have an asset value, it doesn’t have a multiplier. You can’t say, “Well, I

earned $100,000 this year and using a ten times multiplier, the market cap

for my consulting practice is a $1,000,000.” That doesn’t work.

Trent: I do want to interject, though, from my own experience, I did have a

service business but it wasn’t just me — I had a dozen employees and we

had a lot of recurring revenue, MRR, monthly recurring revenue — and I

sold it for $1.2 million because the asset value was the recurring revenue

with the people behind it to do it all, so I just want to make sure that

the audience understands that service businesses can have an asset value if

you build them correctly. Not as good, necessarily, as software, but–

Sam: You want to make sure you are not the business.

Trent: Correct.

Sam: But I was the business, so if you can make your consulting or service

business run without you and it’s got some sort of reliable income that’s

predictable . . .

Trent: That doesn’t depend upon you.

Sam: Yes, then, absolutely, that’s a real business, that’s an asset. But

most consulting, it’s essentially the person, it’s just them and people buy

because it’s them and you can’t leave. So, yeah, you’re right, thanks for

correcting me, but my one was I definitely had no multiplier.

Trent: Mm-hmm.

Sam: And so–where was I, that was my con . . .

Trent: Yeah, now you’re going to talk about, I believe . . .

Sam: And also scaling.

Trent: Okay.

Sam: To scale a consulting business, there really is only two ways: one is

to charge more; the other is to work more hours; or the other one, which is

actually hiring more people, and there’s a limit on how high you can scale.

Now, on a product business, the cons: there’s barriers to entry. You have

to have a product. To do that, you need to develop it, you need to work

with developers, you need to pay money to build the product, test it, all

that stuff. That takes time, so speed-to-market, cost-to-enter is high, and

then also when you launch, you’re not making much money.

I mean, I had about 10 customers when I launched, paying around $150 a

month, that $1,500 a month. That’s still pretty good but my costs were

higher than that, so I was losing money and I was losing money for quite a

long time. Eventually it starts to pick up and scale but by the time it

gets out of that trough, it’s sucked up a fair bit of time and money.

Trent: How much do you think you burned through before you achieved

breakeven?

Sam: I don’t want to scare people — to get the product to market, version

one to market with 10 paying customers, cost me about $10,000.

Trent: Okay.

Sam: To build it up to where it is today, it’s not that same $10,000

product. There’s been a developer full-time on it for over a year now,

developing every single day. We’ve really built it out and invested in it.

I mean, it’s more than six figures — I don’t mean more than six figures,

but in the six figures range.

Trent: Mm-hmm.

Sam: So it’s under $300k but above $100k.

Trent: Yeah, it cost me probably close to $300,000 and several years before

my service business — which was not just me, it had a staff, so it had an

asset play achieved to break even. It’s expensive.

Sam: Yeah. Now, and also I don’t want to scare people off of the product

business costing that much. To get in there and to start selling, $10,000,

but I grew it without investing much money to a pretty decent income where

it was profitable pretty quickly, within six months. But I had this

realization that I just didn’t want a six-figure product business. I really

wanted a big business, like multi-millions, and so I figured, all right,

it’s time to turn the company into a loss and start making a loss with a

plan to scale.

Trent: But you had your consulting revenue to cover the loss for you.

Sam: Precisely, so I’ve always been a massive fan of big business. A lot of

people like lifestyle and all that sort of stuff but me, I’ve always been a

massive fan of just big business and so I’ve always followed people like

Warren Buffett and J.P. Morgan and Rockefeller and all of those guys and

been fascinated with how they think. I was reading the letters of Warren

Buffett–have you ever read those?

Trent: No, I have not.

Sam: Letters he writes to his Berkshire Hathaway . . .

Trent: Oh, yeah, the shareholders’ letters. I have.

Sam: Yeah, yeah, the shareholders’ letters and I was reading them, I still

read them. In it Buffett and Munger, Charlie Munger, were talking about

this concept of cash float, which is they use insurance companies such as

GEICO and I think they’re the largest insurance company holder in the

world, and they use insurance companies to generate cash float. So GEICO

and other companies, they charge the premium up-front, so you pay the 12-

month premium up-front and generally there’s 12 years before a client will

make a claim. So let’s say someone pays $1,000 a year over 12 years,

Buffett and Munger essentially have $12,000 of cash which they can invest,

and so they call that cash float. The reason they love insurance so much is

it produces huge amounts of cash that Buffett and Munger can take away and

invest in companies that need start-up money and money to get to scale and

get into profitability.

I was reading this and all of this clicked that my consulting business was

generating quite a bit of cash and I sort of thought of that as my GEICO,

my cash float business. So I started shifting the revenues from my

consulting business into SnapInspect to help it scale more rapidly. I could

get very detailed here, even into the tax things — but if you have a group

structure, you can shift revenue from one company to another company and

expense it in another company and it’s expensed against the revenue in the

other and it’s amazing how powerful it is.

You can essentially take money out of your service business, invest it in

your product business, and get a 10 times ROI on it. So let’s say you make

$10,000 in your service business. Shift it into your product business,

invest it wisely, get a 10 times ROI: that’s $100,000. That’s essentially

what Warren Buffett and Munger did and that’s why they’re so successful. I

use that same strategy today to scale SnapInspect, so shifting revenues

from my marketing consulting business into SnapInspect to help it scale.

Trent: Thank you for sharing that because I think that that type of

thinking is not commonly talked about, especially in the “Internet

marketing communities”. People there are all talking about getting rich

quick and a fast buck and all that stuff that is more or less a load of

crap.

Sam: Well, I found the perfect mix is to mix Internet marketing, like all

of this IM stuff, in with the big thinking that the big guys have and sort

of see ways that you could do what they’ve done in the traditional old days

and into today’s thing because Internet marketing, it’s very tactical. It

really lacks any form of where are we going with this. You know what I

mean? Like what’s the 10-year strategy? That doesn’t exist in the IM world;

it’s about making a buck today.

Trent: I couldn’t agree more. I have a course called the “Best Buyer

Formula” and right at the very top of the sales page, it says, “What would

you rather build: a business that’s going to make you a couple of quick

bucks or something that’s going to be around for years that you can one day

sell to somebody else for a big pile of cash?”

Sam: Yeah, well, I mean, yeah. I was broke for a long time and I lived at

home with my parents up until 12 months ago and my office was in my garage

and all I’d dreamed about was making that quick buck, because it would be

very nice to go to a restaurant and actually have a car that maybe had

leather seats, after being poor for so long. I mean, I can definitely see —

but as soon as you make that quick buck, like as soon as I was able to buy

a nice car and stuff, it gets old so fast that you immediately realize that

this is a long-term thing and you’re looking to build something. The quick

buck isn’t attractive any more.

Trent: That’s so true. I used a subject line once — and this got one of

the highest open rates that I’ve ever had — is “How to Build a Business

You Can Be Proud Of.” That’s the problem, I think, with a lot of the quick-

buck businesses, is that it’s not something you necessarily would want to

hang your reputation on and tell your family all about even though it’s

putting some money in the short-term in your bank account.

Sam: Yeah, I honestly think if you can’t tell your friends and family about

your business without cringing, then you’re never going to do well in it

ever.

Trent: I agree. All right, so let’s talk a little bit then about — I want

to talk about how you found — because I think this is a huge hang-up for

people, as well, and this applies to both people who are listening to this

who are thinking about starting any type of service business, as well as it

does to people who would be interested in potentially starting any kind of

product business and that’s how do you get the idea?

I want to give a shout-out to Dane Maxwell because I’m pretty sure that you

learned from him, he calls it “idea extraction.” Do you want to talk about

that?

Sam: Yeah, this is big. This is actually how I took Dane’s thinking and

applied it to, basically, consulting to even find the market and what to

sell. This is a really powerful thing which Dane, I’d never heard anybody

else mention it before Dane. It’s called “idea extraction” and it’s

essentially picking a market, a decent market — so, I mean, most

entrepreneurs go out and they just target everyone. That’s failure number

one. You have to pick something specific and you have to make sure those

people have money to spend and it’s a decent market where money can be

made.

So step one is pick a market, step two is talk to the market and find out

what their most painful problems are. Instead of coming up with an idea of

what you believe might help them or what you believe might be “cool,” I

mean, you don’t assume anything; you talk to them and you talk to them

about what the most painful part of working in that particular market is

and once you’ve found an extremely painful problem, you essentially build,

you come up with an idea to solve that problem.

I picked the market property managers and I started e-mailing and calling

property managers and asking them what the most painful part about their

job was and they said “property inspections.”

Trent: Sorry to interrupt you, but why did you pick property managers?

Sam: A lot of people ask me that and I wish I had a cool answer but it

literally was just in my mind. I mean, I had been at a dinner two nights

before, a family dinner, where there was a guy that owned a property

management business there and I was asking him questions about it and it

was doing really well. I mean, he had an Aston Martin so I figured this

dude was the man.

When I thought about, “What’s a profitable business to target?”, well, I

thought, ‘”This guy has an Aston Martin, he’s in property management, it’s

going good. This must be a good market.”

Trent: Okay.

Sam: I wish I could give you some sort of science to it but that was how I

came up with it.

Trent: But the thing I want people to understand is you didn’t get lucky

because some dude showed up in an Aston Martin. Because property

management, if you don’t go and do what you’re about to explain in a

second, you still didn’t or would not have come up with the idea for

SnapInspect, so what happened next after you saw an Aston Martin and

thought, “Okay, property management must be at least profitable?”

Sam: Sure. I did some other things to figure out whether it was a good

market to target because my old mindset was very doubtful, like I didn’t

just start looking into property — I mean, this thought was lingering for

two weeks and so I was looking at job websites and seeing what industries

were posting the most jobs available because I figured if people are

hiring, then industry must be good and I was Googling things like “what

industries are going well” and all sorts of things.

But property management still seemed to be good, I hadn’t ruled it out, so

I decided, “Oh, I’m going to look into this. This is my market to start

with,” and I basically jumped into Google and started searching for

property management businesses and started building a list of them in

Microsoft Excel, just going to their “About Us” page, copy-pasting the

company name, copy-pasting a couple of contacts from the business into

Excel and I built a list of 100 people and then I sent out one e-mail,

blasted it to all 100, subject line was “Strange Question” and I go, “Hi,

my name’s Sam Ovens. I’m currently doing some research on the property

management industry and the most painful problems in it.” Then my question

was, “On a day-to-day basis, what is the most painful task-related problem

you face as a property manager? I’d love to hear your answer, even if it’s

just one sentence. Thanks, Sam.”

I blasted that out to 100 people, got maybe 20 responses with people giving

me a couple of different answers. Then I e-mailed back those 20 people and

I said, “You sound like you know your stuff in this industry. Would you

mind jumping on the phone with me for just 5, 10 minutes so I can ask you a

couple more questions?” I think about 10 people said yes, and so I called

them up and we had deeper conversations. I think it was my third phone call

where someone told me property inspections were their most painful problem

and that’s where it all started.

Trent: I hope that the audience is understanding the gravity of what you’re

explaining and I’m going to repeat it because I think it’s so incredibly

important. You sent 100 e-mails to people who did not know you from Adam —

anybody can do that. You didn’t try to sell them anything in the e-mail;

you just asked them a question. Then you got 10 conversations out of that

and then you got an idea out of that.

Sam: Yep.

Trent: So that is the big golden nugget, folks. I mean, there’s been many

golden nuggets in this interview, but that has got to be one of the top two

or three.

Sam: Oh, if there’s a way to start, I mean, I might have got a bit too

advanced with the whole “cash float” concept and stuff, but this was the

major breakthrough, I think, for me, in the beginning, was you didn’t have

to come up with ideas in the shower or be a creative genius. You could just

find problems and build solutions to them. I think even Mark Cuban said

recently, “Innovation is dead. You just solve problems.” I’m pretty sure he

said something exactly along the lines of that, like you don’t need to be a

creative genius; if there’s a painful problem that someone has, you have a

solution to it, they’re going to buy it.

In business, people don’t buy things that are “cool,” people buy things

that solve problems and the more pain associated to a problem, the easier

it is to sell a solution to it and that’s true. I applied that same

thinking of idea extraction into my consulting business, so step one, which

is a pick a market, pick a profitable market, I picked a profitable market,

which was high-ticket B2B companies.

Then the next step was, “Well, find out what their most painful problem

is.” I started talking to a lot of these people and they just wanted more

customers, more leads. They wanted more in the pipeline and I figured,

“Well, instead of building a software product to solve that, I could just

provide this service.” So it’s not just for SaaS, and it’s most certainly

not just for SaaS and it’s most certain not just for products. That line of

thinking can be used to sell anything in the world.

Trent: By the way, folks, if you don’t know what SaaS is, it’s “software as

a service,” software that’s hosted on the web that people pay a monthly fee

to use.

Sam: Mm-hmm.

Trent: Sorry, I didn’t mean to cut you off. I just wanted to make sure that

people didn’t get confused by that terminology.

Sam: Yeah, no, that’s no problem. So, I mean, yeah, I used that same line

of thinking to come up with my service business and I still use that same

line of thinking today. I’ve got some other businesses and investments that

I’ve got going on on the side now, too, because of that cash float. Once I

understood that concept, I wanted to put it in more places and I’ve still

used that same line of thinking to pick good markets, find painful

problems, and provide solutions to them.

Trent: Let’s talk about mistakes, because I want people to understand that

you’re not like this thousand-IQ rocket scientist and, “Hey, I can’t do

what Sam did. He’s way smarter than me, blah, blah, blah,” because that’s

just a limiting belief that inexperienced entrepreneurs let get in the way

or some of them do, let get in their way. I’m willing to bet that, just

like me, you made a truckload of mistakes along your way.

Sam: Oh, man, there’s a lot. See, that’s the danger of people listening to

me now. They might think, “I can’t do that. I can’t do this. He sounds like

he knows so much.” Well, geez, you should have heard me a year ago.

Honestly, a year ago, I didn’t even know what a lead was. I didn’t know

what SaaS meant. I actually Googled SaaS. I didn’t know about headlines, I

didn’t know about copy writing. I honestly knew nothing. I didn’t know

anything about software, I still know nothing about software. I mean, I

didn’t know anything, literally.

My other businesses were like a daily deal website that failed and a job

board website that failed. I mean, they were just the sort of businesses

that people start because they see a couple of other ones that are doing

well. There was no good thinking or logic behind starting those businesses.

Trent: No idea extraction.

Sam: Yeah, and so all of this, big mistakes I made, biggest mistake in the

world I made was starting a business before talking to the customers. For

example, I started my first business, which was a job board website, I

started it, I didn’t talk to a single person because I thought they’d steal

my idea. Even when I talked to people about it, like talked to my developer

at the time, I’d close the windows. I thought I was sitting on some sort of

Facebook version two thing, and that was bad because it never got any

oxygen and I never talked to a customer about it. I mean, it took me a year

to build. I spent $10,000 of my own money on it, which I had to sell my car

to get that, plus all of my income at the time and then we launched it and

there was just crickets. No one joined, so I thought, “Oh, hell, I’m going

to have to do the unthinkable and talk to some customers.”

So I started talking to some customers and they’re like, “What is this? I

don’t need this,’ and I thought there was something wrong with them but,

no, everyone just said that. So the business just died because no one

needed it. It didn’t solve any problem, it was just some cool thing and

cool things don’t sell. Well, that’s not true. I mean, I guess you could

say an iPhone’s cool but I guess an iPhone solves a lot of painful problems

that people used to have. But if something’s just got some little “cool”

factor to it and you’ve invented it just out of your own head without

solving any problem or talking to a customer, it’s going to fail.

Trent: Unless it’s a game or something like that.

Sam: Yeah, I mean, there’s always exceptions to the rule but talking about

the bulk, I mean, yeah.

Trent: Mm-hmm.

Sam: What’s another big mistake? I guess building something without first

trying to sell it. So, my second business solved a problem and people

thought it was good. I talked to the market, they said this was a problem,

they thought this was a good solution. They said they’d use it but I never

tested whether they’d actually pay for it and you’d be amazed at how many

people, even the customers in a market, will tell you that they’ll use

something and that something’s awesome and, yeah, they’ll pay money for it,

they’ll even say they’ll pay money for it, but when you actually get them

to pay money for it, it’s a very different story.

It’s like playing poker with no real money. I mean, I’m sure everyone’s

done that and watch the dynamics of the game; no one is sensible. They’re

all-in every hand and they don’t care sometimes. Pretty much, the game

never finishes because everyone just leaves because it’s so boring. But put

real money in, even just $10 a person, and everyone is dead serious and no

one is going to do any moves that aren’t sensible.

It’s the same in business. As soon as you bring money up and try to sell

it, people start squirming in their seats and you get the real

conversation. So talking about money and trying to sell something before

building it is huge because what I always thought is think about what’s

going to happen once I’ve built this product. So with SnapInspect, I

thought, “Once I build the product, I’m going to have to sell it to people

and then when I talk about money, they might not want to buy it,” so I

figured, “Why don’t I have that conversation now before building the

product?”

That was huge. I got to see the real responses and the real squirms and

objections and things of the market before building it and that would be my

second major thing, I’d say.

Trent: And those are two pretty common mistakes, absolutely.

Sam: Yup, for sure.

Trent: All right, we are coming up on an hour here and I generally like to

keep my episodes to about that length of time. So unless there’s something

else that you think that we should talk about, I think we produced a really

fantastic interview here, Sam. I want to thank you for that. So before we

sign off, again, is there anything else that you wanted to talk about?

Sam: No, I think I’ve covered pretty much my whole story from when I got

started in business.

Trent: Okay, so if anyone wants to get in touch with you, I’m assuming they

can just go to samovens.com because I can see your e-mail address right on

it, so I will link to that website from the podcast or rather the post on

brightideas.co and at the end of the interview — I don’t know what the

shortcode is — but I’ll give the exact path to get to this interview.

Sam: Yeah, samovens.com is my website and sam@samovens.com is my e-mail and

if the e-mails are short and they actually have a specific question in

them, I typically reply to them.

Trent: Okay, terrific. Well, Sam, it has been absolutely wonderful to speak

with you, to have you on the show. I just want to give you a huge round of

applause for going out and Googling “entrepreneurship” and then becoming a

very successful one. I think that your family is undoubtedly exceedingly

proud and you should be, too, and I think it’s just fantastic what you’ve

accomplished and thanks for sharing your story.

Sam: No problem.

Trent: All right, and you can come back on the show any time you like. As a

matter of fact, I may reach out to you as I may want to do another

interview more devoted to your SaaS app because I’m sure there’s another

whole other hour or so of conversation that we could have around that, but

for now I think we’ve got it covered.

All right, to get to the show notes from today’s episode including the

transcript, head over to brightideas.co/69. Now, if you’ve really enjoyed

this episode, I need to ask you for the smallest favor ever: just head over

to brightideas.co/love where you will find a link to leave us a rating in

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you that we can help to massively boost your business.

So thank you very much. That’s it for this episode. I’m your host, Trent

Dyrsmid, and I look forward to producing the next one for you. Take care

and have a wonderful day.

Announcer: Thanks very much for listening to the Bright Ideas podcast.

Check us out on the web at brightideas.co.

About Sam Ovens

Sam Ovens is an Entrepreneur, Marketing Consultant and the founder of SnapInspect – a property inspection app for property management companies.

Sam started as a marketing consultant and used the money from his consulting business as “Cash Float” to start and scale his main business SnapInspect.