How to Find Riches in Software Niches

Colin and Brent discuss niching down a software business to own one space to grow faster.

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All right. Hello and welcome back. This is Colin Keeley here, and I'm Brent Sanders. We are two guys buying and building wonderful internet companies. Yeah. And, and this last week or two we're going back to our first acquisition, which was now about just about two years old now. , so we, purchased Blink Sale. That was our, our first deal. We did. It was a great deal in the sense of like, it was very, newbie friendly. It was priced right. It had like a nice long seller financing that we were able to pay down monthly.

The seller was like really experienced and was just like very cool to, to work with. I think it warmed us to this concept, and it was a good one to start with. A little bit on Blink Sale. It's an invoicing platform. It's really broad. You can use it for anything. It is the pitches, it's the fastest way to get paid, which is as far as invoicing tools go.

It's like you sign up and you're launched into creating your first invoice and customer, and it's not like the product is oriented to like getting that first invoice out and then continued to just get those invoices out quickly. So, it's old. It was historically used for like the designer. Community and like the Web 2.0 era, it was one of the first web two, 2.0, apps, you know, and there still is the legacy version, which is, you know, loved by tons of customers.

People just don't wanna see that change. They don't wanna migrate to the new one. So we love supporting it. We keeping it in, in healthy, states, but, we're kind of like, it feels stagnant. Like people sign up, they use the new product. We, we've added features to it. We added like a crypto feature when we first bought it.

We had, you can accept payments for Coinbase. We added ach. We had all these like, things to kind of fix the funnel. Like the, the new version was a little weird, but like, we're kind of left with this. And we were talking about it at the beginning of the year of like, you know, what do we do with this thing?

Like we can, I guess we could sell it, but that's not really what we're doing here. We could, grow it. And then it kind of opens this question of like, it's just so broad that. What do we wanna do with it? So you started thinking of, or, or throwing out a bunch of ideas. I guess walk me through where you're at on it.

Yeah, so I mean, it's been a great, effectively cash cow. Like it's super stable. The customer support needs are minimal and it's like you could run it like that for probably ever, and it just puts along and that's fine. Maybe it grows 5% a year, maybe it doesn't grow. But if you really wanna push it, I think, and especially if we're going like this SEO approach, Horizontal invoicing is just super saturated.

It's just a really hard space to market in, even if we have like high domain authority and everything, which you do cuz it's very old. And so it made sense to just pick a niche and I went through probably the top 200 customers and kind of looked for groupings and then I also tweeted it out and posted the LinkedIn.

I've got like 50 plus kind of awesome responses cuz the reality is we don't have, like, we have a bit of a concentration. Small agencies and designers, but that wasn't really the space we wanted to focus on. And then we have a lot of these trades, so I would call 'em more blue collar trades, and we have a few of, kind of all of them.

So pest control, lawn care, plumbers, flooring, lawyers, movers, hvac, . And so I think all those were pretty compelling. Like I think that could be a startup studio. Basically business management for each one of those is a worthwhile company. Mm-hmm. , but we had to pick one. So yeah. I don't know. Do you have any, we already decided, but did you have any initial inclinations in this space?

I did. Yeah. I mean, so the most outspoken customer that I've had the most interactions with is a custom. , masonry company out on the east coast or in the, Massachusetts area. And it's funny, they're like, they do, you know, estimates, invoices, and it's like nails exactly what you accept. The estimate that approves the work that works in our workflow.

Like the, the product is a fit. They were on the old platform, moved to the new one, and they've given us lots of feedback and. , like anecdotally or sort of like my bias was around trades or at least like home related services where there's a custom component, right? Because it's, you gotta review the invoice so, you know, anything that has that estimate invoice sort of need works well.

And so, yeah, outdoor furniture, outdoor, you know, pool, custom pools cus but, that's where like the general domain I wanted to kind of land in. Yeah, I mean of that then you, you kind of focus in, okay, well what's in there? You got lawn care, snow removal. Those are two seasonal things, at least for folks like us in the Midwest.

Yeah. What else there? But yeah, I, I'm, I, things that I, I think we're really close and able to do from a product perspective are like invoicing and estimation. And then the other thing is like, how far away are we thing I wanted to stay away from it. We're, I don't wanna deal with time. , that was like a common request from the designers and the, it's like, go use harvest.

That's a way better product for time tracking. And like, I don't wanna build time tracking. I don't wanna shoehorn it in and have it be like kind of a, a second rate time tracking tool. So there, yeah. It's like designers and web development agencies, those are exactly the people that have this problem.

And like, why don't I just build this product? So that's a super saturated space and we don't want to go after it with like a, a subpar feature set because everyone else with the capability that we have are doing that. So trades is interesting because those people don't have, you know, development experience.

They're not gonna go hire dev agency to build their perfect solution. Yeah, yeah. And so like, the domains that I've lived near or sort of worked near, like a lot of the people in my family have been in the, the home building industry or the real estate industry. And it's like just hearing from them again anecdotally, like, Hey, the trades are my drywall guy, my carpentry guy.

Like, they never invoiced me. They like, they come outta the woodwork six months later and like, Hey, yeah, I never got paid on that job. It's like you never sent an invoice. And they're really bad at that. So, you know, I guess from, again, putting my product lenses on, the things I'd rather build than time track.

Scheduling, like a mobile app, like we could, you know, blink Cell had a mobile app. People have asked for it. We could definitely step on that as we have mobile resources with other products. So, you know, I think we have things that we've learned with, like Scout that it already does, that we already have sort of in-house methods of supporting and working that we can kind of borrow or even, you know, there's this idea that like, you can.

You have three businesses that are separate, but there are some centers to that Venn diagram that you could say, Hey, we could actually like, you know, blend these two things together, which I don't want to do, right? I don't wanna like z, you know, make a Frankenstein product. But I'd much rather build those things in time tracking.

I'm not really sure why. But I don't think we really need to build anything for blank. So that's the fun part, is that we already did the work. , you know, we'll see if there are gaps. I'm sure there's like nice to haves scheduling. One thing that somebody asked us for who was in the, I feel like they were in the snow removal space and they had reached out like, Hey, can you gimme just like an address list?

You know, like you can get your a, you can do it, but it's like it's by customer and it's like kind of, it's like, yeah, we could so easily just give you a view that's like, here's, here's the list by zip code or however you want to filter it. . Like that's an easy win in my mind to, to verticalize it. So my initial inclination here was all trades, cuz we have a few of all of 'em in like their, it's kind of a common set of problems that they all deal with.

And I, so I'm in Florida right now, as you could see through the window, and it's like if you walk down the street, the neighborhood, it's all these people in trades like trying to keep nature. and it's all these trucks. Yeah. And they, many of them do like it's pest control and lawn care. Well, it's not snow removal, but it's like tree trimming.

So it's a lot of overlap. But then if you do that, it's not like one ideal customer to market and to build for, which kind of puts you in a similar position again, where you just are turning out SEO articles for like everything under the sun. So I wanted to be the best offering for one. and I think where we ended up is landscaping, which is also a bit of a broad umbrella or like the green industry.

Mm-hmm. . So it could range from snow removal to like lawn care. But we already have customers there, so our product as is, serves 'em pretty well. It's big fragment, fragmented market and other trades like HVAC are just dominated by Service Titan and so it doesn't have a dominant player like HVAC does.

And if you have enough money, you're big enough company, you should be on service. Titan, you shouldn't be on blink sale. , they have complicated estimates and invoices, so things are custom. So you're, you're always changing. You're doing the approvals like you talked about, and then there's a good chunk of recurring revenue, which if you do payments through us and set up your recurring revenue through us, it makes you just way stickier.

You're way less likely to churn. So all those are like kind of appealing aspects to this kind of green industry? Yeah. I'd say like, some of the parts that, again, I keep going back to the product, but. , looking can at sort of the, the business problem for, for these folks, it's like just getting paid quickly.

Like they, I think for these smaller customers, it, it should be an easy place to, to get started. Cuz like, who does our lawn? And we, we don't use somebody all the time, but I get paper invoices. They don't have a, I mean there still are a lot of people that haven't made that leap yet that. semi large players.

I mean, I, the, the company we use, they've got at least 40 trucks, right? It's like, it's not a small, small operation, but they just, you know, they, they do it old school and they're, they're not, it's not like a retiree running it, it's a younger guy kind of our age. But yeah. The, the other product idea that I've been thinking about across Scout and this, especially as it relates to any services, like really digging into reviews, like, , you know, we have an opportunity by issuing emails to actually help these people, like get their, just get your Google business set up and then help us just drive traffic for reviews.

And you know, if it's, you know, this person's not happy with you and you're, you know, maybe not gonna send them the review request, but maybe on every invoice or a follow up option. It's just easy. Just get in front of them with our view, cuz those are our goal to, to service providers, especially in the long care space as.

recently moved to a new place. That's how I looked for people. And you know, it's, it was all about the reviews. That's the only way I was able to kind of figure out. Yeah, so this is interesting. We've looked at a number of startups in this space. They're like, you know, small local businesses, this is the way to get reviews.

So like, you seek 'em out and then to manage them. It all, those businesses seem to be doing great. And there's like, there's bootstrap ones, there's venture backed ones. You keep tossing out as a product feature idea that it should be added to like all, basically most of our local businesses. Should this be a feature or should that be almost a separate company that could get integrated across into like, you know, into scouts, into big sale?

Yeah. Right. They'll get two customers off the bat. Yeah. I mean, that would be an interesting way to do it. I think, you know, from the get-go, like, I'm just. , like we have people that are reaching out to us on Scout that want this feature that are willing to pay someone else more than they pay us for reviews.

And they are struggling with like, Hey, I just want to be able to like request reviews and I wanna make sure I don't send reviews to the wrong people. Like request reviews to people that like I know are, are unhappy with me. And you know, it ends up like tarnishing my name, as far as tracking them. , you know, that's a whole thing.

I don't really feel like I want to get into to that space as much. But yeah, I mean it's, I think that will be one of the more popular features requested by our users. I think it'll be welcome by everybody. So, yeah. It doesn't make sense to spin it out probably. Right? Like if we build this on one platform and then we build sort of a different version, it's like, well, that's a waste.

Could we port it? Could we build it as a service for both? Yeah. I think that there's, there's probably some. . All right. I'm gonna say it. There could be some good synergies. back to the startup studio. It keeps dragging us back in. Yeah. Podium. Podium was the one that a scout customer wanted to integrate and it starts at $400 a month, I think is minimum.

And they're not paying us $400 a month for Scout. I'm not sure what they were paying us, but it was maybe half that or something. To be fair, it, it sounds like they are not gonna move forward with it cuz. I, I can't afford it. Like, and I think that's all they wanted. They wanted to do a bunch of stuff. But the main, like, so the, I was on a call with the account rep, you know, these, these are longtime customers and I always try to get on these calls.

Just seems like a waste of time, but it's actually some of the best market research, customer and product research is like, wait, I just wanna understand like, what, what are you using? And so the, the rep was like, oh, you can do this, this, and this. She's like, I don't care. I just wanna send, I just wanna be able to send for reviews.

Like, okay. And, and you know, what ended up happening is, she needed someone to integrate it. And I'm like, okay, well, you know, we'd be happy to help you. And she's like, you know what? It's just, it's just, this is all too much. It's all too expensive. And yeah. So it's like great opportunity for us to, I mean, we wouldn't charge, I mean, we should charge that much, but like, I feel like we would have an add-on for an extra 20 bucks a month or something.

And, and we already own the emails, right? So like we already have that territory. You know, you're getting the, the, in the post walk email from Scout. It's like, it's a great opportunity to be like, Hey, give us a review. Yeah. And so podium's the most expensive version. Like all the other versions are more like, you know, start at $19 a month or something like that if you're just a little small business than then at scales, basically with usage two, 400 or whatever a month.

To be Fair, podium had a bunch of cool messaging features if I'm, but again, this customer was not really. Wanting to go down that path just yet, but it had a bunch of like automatic SMS and, you know, cool things that, you know, we are also getting into. So I think once we, step our game up. And on that note, you wanna talk about some product updates.

I guess let's finish Blink Sale. So I guess just next steps here. So update the Webflow marketing site. You'll work closely with kind of existing customers. Potential customers that are friendly to us. Mm-hmm. , like there's some folks that are rolling up landscaping businesses on Twitter that ask me to reach out to and just like, Hey, we'll be like your software arm.

We'll just build what works best for you guys. So, and then cold outbound, like landscaping companies? I think, I mean, we'll see, I guess if they answer emails, otherwise, maybe it's a call, cold call situation cuz they're, you know, ancient mailers. Get some mail. Yeah, mailers, and then yeah, pump out more articles, pivot to this spot.

So that's what I've been telling our writers is like, this is our focus going forward. Uhhuh . But yeah, that's our plan. Riches in the niches. Yeah, I love it. But yeah. You wanna talk about other product updates? Yeah. So, scout, we got a bunch of things finally happen, it feels like. So we are just past the 90 day point, on that business.

So we're. Getting to the point where we have some initial releases that we did, but I'm pretty excited we're finally migrating everything to Stripe. It's been a total bear trying to figure out how we're going to get all of our customers. I, I don't know, did we talk about this previously? How bad Braintree support and everything.

It's been like we can't even get new customers that sign up that want to use Braintree to use Braintree because of the the hoops they jump into. But what we were informed finally what was they said it was gonna take. , take them to the end of the calendar year, which it is February 10th today. So it's going to take 10 months to migrate all of our customers customer carts.

So you just said forget it. Give us our customer. Like, so our direct customers, we've now migrated and man, it just feels good to have people on Stripe. I don't know, people hate on Stripe cause they're starting to raise their prices a little bit, but like, it's just such an unbelievable difference between like the next nearest competitor as far as.

Going go back to auth or even Braintree. It's like working with their api. It's just, yeah, NCR is, we have some of blank sales at ncr. You just can't get reports out of 'em. So yes, Stripe is expensive. Maybe more expensive for sure, but it's so worth it. Like if any one more customer converts, it's worth paying that extra fraction of a percent or something to them.

Yeah. And so like we're making this product decision across all of our businesses that like, I'm not building more. Payment portals or invoice platforms or like I'm cutting all that stuff out of our products and moving it. And when I say invoicing, I mean like our product generates an invoice every month for your subscription and we gotta email it to, it's gotta have your VA number and we gotta have tax.

And it's like everybody does it differently and it's like they have a Stripe customer portal and it's like, just let them own it. And like one of the biggest issues we had when we first, the first day we took over, scout was like, oh, my card expired. And it's like, wait. There are certain situations where they, you had to like, call us and give us your card number.

It was like insane. So just cutting that part of the product out, putting it on Stripe, and then having a really clear and transparent pricing. And it's funny, it's like, It's forced us to change. We're, we're gonna be changing how, scouts, so they had this flexible seats system where at the end of the month it would check and see who on your staff, you know, is active versus not.

And, and bill you only for who's used it. And it's like, that's not really a standard practice. That's kind of a, a very nice thing. But it, what it creates is some weird, like, you're gonna have multiple subscriptions and it's really hard to do the math and figure out like, okay, what do I owe each month? And so, It's, it's a good litmus test for like, Hey, your subscriptions are weird.

And if they don't work easily in Stripe, it means something's weird and you should probably simplify. And I, I, yeah, I'm optimistic that we're gonna see just a lot more like conversion, definitely new customers signing up and using Connect. There's just a whole lot of, of, of good stuff coming out there.

And then we also have a new member who's joined our team. We've got an intern or an apprentice. , local guy, named Dominic, who is about two weeks in and he's a high school grad. It's funny, he's, we should have him on the pod at some point. But I wanted to kind of talk about Dominic briefly. So Dominic, is a reference from a friend of ours from, prior business in the automation space.

And he and I kept talking. He's like, you know, my nephew is. . You know, he is a high school grad and he doesn't wanna go to college, and I kind of think he's right. Like he wants to be a software engineer. He wants to, he went to some community college and he just didn't like it. And he loves the code. He lo he's working on a product of his own and I'm like, okay, yeah, send him over.

And so first week, like I saw, like, and I've hired a lot of CS grads, CS grads with master's degrees and it's just funny, it. And by the way, I'm self-taught. So this comes with a, a lens of like, I went to music school, so I don't have a CS degree, but you can tell when someone's passionate about something and someone like has put in the hours to just like hack on their computer.

They know their way around. Like we spent a day or two just dealing with like problems, like couldn't get his build set up or something wasn't working, but just seeing and screen shares like how he worked through the problems. I was like, oh, you, you're in a really good spot and I think you're making the right decision.

Spending four years in, in the money to go to college. Like you'd just be deferring, you'd, you'd come back four years later and be working with somebody like myself and starting this process. Not to say college is useless, but he's been taking the lead on some of our, our Scout mobile development and crushing it.

Like we've had several other folks try to get involved in this space and kind of, you know, struggle and move a lot slower. And it's like this 18 year old kid who works at Whole Foods is, you know, obviously now gonna come work with us. , absolutely crushing some of, the expectations that I had. So I'm, I'm super excited about the help.

That's super cool. I mean, it's, it's a cool job for anyone. It's a cool job if you went to, like, you got a Harvard mba, but it What an awesome job for an 18 year old kid that didn't go to college. Are you, you are, are you good at bringing on these like, I don't know, mentees is the way of putting it. Yeah.

Like you seem to always have a few kind of circling around you that want to get into development and you take 'em under your wing and kind of train. . Yeah. When I had an agency, we had a, a, again, a high school grad, and he went, he went to school. This is when we were in Chicago and he went to school at DePaul and he would work with us over every summer and he, and then we ended up working later in our career.

It's such a great thing because even if they kind of go out of your orbit and come back, they know your style of, like, you've trained them on like, Hey, you create poll requests and you do this, and it's like, and we just spent like the first hour together talking about values and like how to work and like what, what expectations are like.

And, you know, it, it's just an awesome foundation to, to serve for somebody. And it's weird, these, these things come back. So, yeah, I try to give him, at least a couple hours a week of pairing time and just, you know, brainstorming ideas together. And, I'm, I'm super pumped on it. . And so, yeah, this is a, by the way, this is like, part of the plan is like, you know, I'm in Ohio, I'm in Cleveland.

Like there's not a lot of technology here. There's a lot of manufacturing and, banking and lawyers and it's like, I'm trying to, to increase that and, and figure out ways to build up the community here. Cause I think there's a lot of talent. It's just like, yeah, you can go work at Progressive or some corporate.

And by the way, he wouldn't have made the filter because he doesn't have a college degree. Mm-hmm. . So it's like, I just think that there, there's so many interesting alternatives. So there's, there's a whole bunch of cool stuff I'm excited about there and, and seeing him grow. But yeah, so on the scout front, like we now have a, a, a mobile dev developer that's just fixing up all the, the missing pieces we've been waiting to do and, excited to kind of, you know, have that resource.

So are you like becoming the tech king of Cleveland then? So you've been on the news, you've been on Cranes, , . I've been on the news twice. That is funny. I, I don't know how that first one happened, but yeah, I remember, that was like the first month or two I moved here. It was like somehow got connected.

But I, you know what? I think the reality is it's a slow news city. People shit on Cleveland pretty hard. And when there's good news people. You know, I, I think I've said this before, but the mayor even mentioned, you know, I went to a talk, the mayor was there and he's like, you know what, just don't rag on Cleveland.

That's, that's the only thing I can ask you to do. If somebody had asked like, you know, what's one thing you can do to, to help Cleveland? So, yeah, that's about, that's about the, the, the most important thing that, that I'm trying to do right now. But yeah, I, I would love to build a community here. I'd love to improve it.

I don't know what it looks like, cuz I'm not a networker, like I am a, . You know, maybe a Slack community is the way to go, but Well that's where this podcast is. It scales conversations, right? So yeah, people reach out to you all the time. People jot to me all the time and all we're doing is talking on a little zoom call basically here, and Yeah.

And they, you know, relevant people talk. Yeah, I would, I would say over the last week I've had three or four people reach out and I would encourage more people to do that. A i, I appreciate it. But especially if you're a developer and you're working on something or you want to do this kind of work, like reach out.

I would encourage it. It's, it's kind of the, like, again, I'm not a big networker. I'm not super outspoken. I'm usually heads down trying to finish things and do my work or whatever. But, my favorite part of doing this podcast is, has been the, the wonderful conversations with Colin, but also the outreach from, from like-minded people that are trying to do this, that are trying to get involved with this.

Cuz like I, I was complaining about before, it's like we do need help. Like we do need, resources and we're growing. You know, if you're into this space definitely, and you're thinking of reaching out, shoot me an email, like shoot me a tweet, whatever. Yeah. I think that, so people ask me all the time about like the content I produce or we produce, , and I think the vision is kind of coming in to be more clear going forward.

Like ideally, you know, as things scale up, we're just like matchmaker. We're a matchmaker between these companies that are selling, you know, capital and then like operators. So you pair a really good sales guy with a really good full stack developer that's pretty senior and it's like, hey, you know, congrats, who's your new company?

It's capitalized properly. It's got a lot of, you know, potential go run with it and you get a bunch of equity and you know, we're happy to support you however we can. Agreed. Agreed. I mean that's, that's sort of the long term vision. But I guess, you know, in the short term, going back to Blink sale, it's like we gotta figure out how to grow these companies and, you know, make sure we, I think we think we know the best practices.

I think it's, it'll be nice, I'm enjoying the, the sort of fight part of this, of like, Hey, we have, we've got ground to cover. And I'm looking forward to kind of proving ourselves to that extent, whether. Done through leverage, whether that's done through ourselves doing the work, you know, however you make it happen doesn't really make a difference.

But I'm excited to, like, you know, you see a lot of people and I think there's been a lot of tweets recently of people showing, you know, they're, they're stripe, you know, it's always going up into the right. It's like the reality is it's a kick in the pants every day cuz it's like there's stuff happening.

There's people probing our servers constantly. There's, you know, customers that are, you think might churn out that are big. You know, it's, it's always scary stuff and let's like be real. It's like, it's, it's day to day. And so, you know, I'm excited to get it to a spot where, you know, we can get that track record and kind of show the things that we, that we've learned over the years and, and apply those, whether that's from a go-to-market perspective or a software development perspective, or.

Customer service. I don't know. You know, it's, it's just bringing a lot of different disciplines together. Yeah. You just gotta keep putting, I guess, numbers on the board, right? You gotta build a track record. Like this week I talked to a top five sovereign wealth fund in the world, , and it's like, yeah, you just gotta keep stepping up and then you do bigger and bigger deals and you can get to that point, but, you talk to some people that are family offices and their minimum check size is like 50 to 75 million and it's like, oh, there are a lot of different levels to this game.

yeah, just on like, you know, level one over here. Yeah. Yeah. It's okay. I mean, honestly, I kind of am nervous and not nervous. I mean, this is like a good problem to have, but it, it's like this is always the most fun phase when you're still learning, growing and like working from like, maybe this won't work to, okay, this is working, and I think that's, , the fun part to be when it's like still getting your hands dirty.

I mean, I don't want to, you know, be running three software companies like the tech side of 'em, you know, or four or five. I'd like to have more leverage and I think we'll we're, you know, on the path to doing that. But, it's definitely the most fun I've had in any job, so, I can't complain. Well, on that note, anything else you wanna cover?

Otherwise, I think that's a good end. Yeah. No, I think it's a good, good place to pause. Keep listening, reach out if you're looking for a software internship or mentorship and, yeah, just, keep listening, keep trucking ahead. Awesome. Take care everyone. Yeah. Thanks for listening.

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