Product Led Growth vs Enterprise Sales, Buying the Rights to an Out-of-Print Book, Lebron of Pickleball

Colin and Brent discuss growing a business with a broken funnel, buying the rights to an out-of-print book, and $20k AWS bill.

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Hello. And welcome back. This is Colin Keeley here and I'm Brent Sanders and we are two guys buying and building wonderful internet companies. Yeah. And,  I'm not even sure where to start. We got a lot to talk about this week, so I think the first thing that's going on is,  we've got a company. I don't know if we want to go into the exact name of the company, but it's, ,  like database backups as a catalog database backups coming. Yeah. It's helpful to understand. It's a database backups business and it's got a broken funnel. Like we've had it now for eight months. We stabilized it transitioned. We really just been focusing on, fixing the tech, but really slowly, right?

Like we've got debt on it. We don't really spend a ton of money, but we do spend, every month there's maintenance, there's progress happening. And we're trying to fix this funnel, but we're moving really slowly and. We've been trying something out that's been interesting is,  I guess to back up the, what was the, what are the stats on the conversion funnel over the last year?

We've added like five customers maybe. Yeah. So monthly,  it's like one to two signups a day. So 30 plus signups a month. And then I think only one of those is really converting to a customer maybe less. Yeah. So it's like basically 50 to one. Yeah. Which is not. It's not great.  abysmal is what I would say.

So we get a lot of people sign up. They try it. They may go through the process of connecting their database, connecting their servers. But it's convoluted. It's really hard to do. And it's not using a lot of the modern like tricks. And that's what we're doing on the product side.

We're like modernizing the UI, modernizing the flows to. Be way easier. But it's just taking a lot of time. So while we're waiting, we just decided to, Hey, let's just turn off the signup button. Like we are driving people to sign up and self serve. Let's drive them to a form instead and talk to me.

And if nothing else, we can have conversations with customers. And so far. I feel like it's going pretty well. Like I've had, I forget the numbers and we did some outreach as well. I think we've,  so far set, maybe three meetings I've had yeah. Three or four meetings now. And,  the funny thing is, the folks that we're reaching that are reaching out are so far, they're not fits right.

They're looking for something for a real problem. They have like they have, and I won't don't mean to get too technical, but they have databases that are like terabyte. And using a traditional, like logical backup solution just doesn't work. So we'll pass on all like the tech stuff, but they basically have a problem where their databases are too big and we can't help 'em anyways, which may be the case for a lot of our, a lot of the signups, but it's been really insightful.

Like it's definitely taking more time, but the other thing that's happened is the more enterprise customers we've had, two of them that have come through that are multinational organizations. They're. I don't really know the size, but,  they're not publicly traded, but they're of that scale where, you know, if you were to sell a solution they're trying to back up what 300, 500 databases at a time.

That would be the equivalent of, 30 customers for us. So it was like very much worth our time to have a call, do a demo, even though I suck as a sales person,  I can do well on the like solutioning, like the solution engineering solution sales I can do. And that part has been good cuz you're selling to a technical customer, but it feels weird to turn off the funnel, but it also feels like a good research experiment while we're working on the funnel.

Yeah. It's we almost have nothing to lose. We had like almost no conversions happening. So I think we're what two weeks in. I wanted to run it for a month and see if this is worthwhile. And so two weeks in, we have three meetings booked. So that's pretty good. I don't know what the conversion rate from a meeting to, an end customer is, but I guess the average value is significantly higher as well.

Cuz they're more enterprisey so our average customer right now, I think is $80 a month. But we have, there's like competitors in the space that focus on different things. A lot of 'em have a 500 K or a thousand Mr. Minimum . So I think you probably want to do that. If you're going to do like this sales led growth, instead of product led growth, you want those higher average order values.

You sign one customer it's,  proving that it's definitely worth it and way better than what we were doing before. Yeah. And if nothing else, I, I enjoy having the conversations from a like feature roadmap, cuz I think there's already starting to be a concentration around this problem of like, how do I back up a database that's too big to back up.

That's the first thing we're seeing is that there's actually a bigger question around, in the industry, there's just a gap. And so finding those gaps is it's interesting. I'm not saying we, we need to rebuild the product and go after some new, solution. That being said it's way better than trying to guess at why people are turning.

We have some intelligence around that we can watch their sessions, but it's a lot of guesswork and we reach out to folks and say, Hey, why didn't you sign up? And we, I think we got an answer. Like a month or two ago from somebody that was great. They were just like they analyzed the product.

They gave us, they were just like, this is wrong. The UIs messed up. It's doesn't make any sense. I don't even trust it because of the experience. I don't trust you with something like my database backups, if it feels broken, even if it isn't, if it feels broken, it is broken. And I would say like, all our companies are product led growth.

We don't really have any sales led or sales driven things as much. Yeah. It's definitely, valuable skill set and worth, probably exploring more, especially as we get bigger companies that are like more enterprisey, but not our strong suit right now. Yeah. I think I need to do like a recap of like driving to a close, I think or sales training 1 0 1 again, cuz I haven't been on a sales call in a long time and I just it felt a little rusty.

I was on with somebody and I was just like, they were a fit. I think I could have converted them. And I, so I'm like, okay, I didn't even think about what am I driving towards? Cuz usually what I'm expecting. Yeah. It's usually they have the enterprise customers usually have some sort of Hey we're specifically looking for this and can you do this?

If, so let's move on to a demo, let's get access. Let's start, let me help you get set up. And that's where I can Excel by being technical. I can say. Send me, whatever information I'll put an architecture together. I can sneak in as a value add there. But like when it comes to just getting someone to okay, now it's time to give me your credit card.

It's like, how do I ask for that without they still have to give me a bunch of information. So I think that's where again, we're informing the product led growth of okay, we can see how to have an entry point, but man I'm rusty when it comes to closing it's it's something I need to brush up.

Yeah. Any other thoughts on that company? Or what else do you have for topics you wanna talk about? We could talk about our AWS bill. Oh yeah. This, I, I guess this is really a,  a masterclass in managing state, like your own state. So we, as part of this business, we've been reworking the infrastructure.

So we've built a whole new staging environ. Updated all the servers, all the services, everything is getting not a rewrite, but just like it was running on old infrastructure. So we're fixing that. And as part of that, we use,  some ECS services, which is an Amazon on demand service out. Basically every time you use it, you get charged.

And whether it's a valid. Use or an invalid use. So if you send it data and say, Hey, run this and it's, there's nothing. It will, it's a quarter, it's a quarter, it's a quarter 50 cents, 75 cents down, whatever it is. And in our code, when we were setting up a staging environment,  unbeknownst to me, it was just hammering.

And it was sending messages to Amazon for about two to three days straight, equally about $5,000 a day. I guess four, four to five days straight. So this was over, a a holiday weekend and we have a team that manages this and that's their responsibility to,  to look at this. But that team was on the dedicated member was on vacation that day and he didn't have somebody checking on it perform.

It's ultimately falls on my shoulders cuz I'm managing the technology here. I wake up on Monday morning and I happen to hop into the AWS account and see a $25,000 bill. And it wasn't even the bill. It was like your usage to date is, 8,000 something times what it normally is.

And it was like, oh my God. Okay. I think the lesson learned for me is not even lesson learned. The thing that I did at the time, and I continue to do is not gonna lose sleepover. Like we'll figure it out. Be positive about it. Look for a solution immediately, let AWS know what's going on. I thought it was a bug.

In their system, of course. But yeah, worked with AWS immediately worked with my team to shut down whatever was happening. It was basically something was broken in our code and it just kept trying to retry. And the retry logic was just continuing. So we just shut the service down, go to check my emails that had the notification sent.

And there were sure enough, there were emails saying Hey, you're above your threshold for billing and. So lesson learned, I need to have those emails going to my actual email, cuz we had a business dedicated, like a support ad email that was a shared impacts. Set those up for slack, but reach out to AWS immediately talk to them about what was happening.

Stop the charges, show them that we did. We do have alerting show them that, Hey, this actually wasn't production data. This was just something retry. And I'm proud to announce 30 days later and no, no sleep loss. Like I really tried not to let this stress me out and not that paying it, would've been an option to be clear.

Like I, I think we had other contingency plans. I'll leave it at that of like how we would've dealt with this, but we didn't, I don't think we really. Would've had the stomach to, to pay for that bill. We would've, had to look elsewhere for, or hosting or whatever, but,  reached out to sport and they were,  generous enough to credit all of it.

So our entire overage, which was like a $25,000 amount, we got credited, which,  I just wanna say thank you, Jeff Bezos for your,  generosity and,  understanding. I would say, I've heard from other folks. And I spoke to a lot of other people that have never really seen, maybe a couple thousand dollars here on a big bill that, that UC overruns on.

And I'm not really sure what to account for other than I just took accountability immediately. I never accused them with Hey, why would you know, why would you bill me this? I get it like, This is clearly from something I was doing within the first 15 minutes of figuring out what the issue was.

Again, I thought it was a bug cuz it, it had a different label, but if you're out there and you have a similar issue, take accountability, stop the service, update your notifications, show them that you did work with them. Be nice and maybe have, do some prayers or. Sacrifice animals, burn some Sage, whatever you gotta do.

I did none of those things, but,  did you have to push 'em or you just, said we fixed it, this was a mistake. Can you refund it? And they just replied no problem. So the way that it happened, it was the support person was like, I'm gonna escalate this to our C two team, which is like a dedicated team for the service we were using, which I didn't associate with EC two, but, and it was under the layers Fargate is what we're using.

Under the layers E C two is what's driving it. And I just, they asked for specific, points of documentation to, to prove that, we have this again. And,  the funny thing I learned that I should have known in diligence, this was actually another,  fuck up on my end of, looking through the AWS support history of this happened to the prior owner about two years ago, not to the extent, but about a day of, so it all comes down to there was just a stupid line of code where.

If it doesn't work, just try it again. That's really not intelligent enough for this business. So we fixed that line of code, so it won't come back and bite us ever again. But,  yeah, it was something that the prior owner ran into and I was nervous that cuz this is like a one time,  thing that they weren't gonna be like, Hey, you had your one time credit and now you're gonna eat it.

We had contingency plans for that, and I was half expecting that. But,  yeah we escalate the way that we did. It just remained very nice. It's not, don't get upset even though I was like, stirred up, just let that kind of pass, let go of it and just focus on the facts, be scientific about your responses.

And of course be very like apologetic and say, yeah, I think you have to take accountability. I think that's the thing where. If you say, how could you let me do this? That's the nature of that platform is you get the power tools and you get the bills. And I think they know though, cuz we're using a credit card that like we have some protections there.

So I don't even wanna go down that route of trying to explain to your credit card company, why you're getting billed, the equivalent of like of buying a new automobile or at least a used automobile  for something. We wouldn't expect. So it was a roller coaster, took about 30 days to resolve.

I would say mindset was a big part of this though managing my state and mindset of either way. I felt that we had an option to do something. So like never felt like there was a major risk, but,  still it was bumpy and we navigated it. Lesson learned to those out there.

Run into a big AWS bill, be nice and be accurate. And you could get out of it. Maybe, I don't know. I was blown away. I think I thought they were gonna ding us for some of it. Just be like, this is still our not our responsibility, but I think that the fact that the payload, we were like the work that they were doing, like their cost basis, I think was really low because it was just an.

And it was almost like a function of you're starting the system and then it's immediately shutting off yes, that's using traffic and that's using,  compute. But I don't really, I didn't get the sense that they're gonna come back and say, Hey this cost us to run because it, but I think it was more of like a metering technicality of if you invoke this, there's a minimum.

Because it was immediately, it wasn't running like it was running for zero seconds, but you still get billed. So I think that might have been the other saving. Grace is we weren't actually, it wasn't like we got hacked and somebody was actually minding Bitcoin or something on our servers.

Other funny stuff this week. So I'm reading a book on another guy that   bought a bunch of like local newspapers with a bunch of debt. Huh. I'm not gonna say the name of the book. I'll talk about it in the future, but it's been outta print for it's published in the sixties.

Author's been dead for 30 years and it's been outta print basically since then. And so you have to get a hard cover and it's like really hard to source, but I saw it on Twitter and people like it. So I bought it. I'm reading it. I was like, What happens to these books? Can you buy the rights to an auto print book?

So I was looking into it this week and I posted it to Twitter and bill deandro told me how you do it. So I don't know if you know him from acquisitions anonymous. Yeah. Finds a bunch of like e-commerce companies. So the way to do it is you reach out to the publisher. And they could tell you who owns the rights now.

And it sounds like if it's been on a print for quite a while, the rights go back to the state of the author. And so sounds like the publisher or the former publisher could give you the contact into a forum. So I haven't done it yet. I'll keep you updated as I do it or report back. Oh, that'd be awesome.

So I was gonna do that and you probably end up with the state of this guy who's been dead for 30 years. It sounds like the way you structure this often is like a small upfront payment and then. Normally with publishers, the book,  author only gets 10 to 20%. So like I maybe give a small apartment payment, I pay to make it into an ebook, an audiobook.

And then I give 'em like 20% rev share or something like that. It's probably the deal you end up striking. But I just thought it was interesting. There's so many of these great books out there that there's just no digital copy of them. Yeah, the licensing gap, right? You see this in film, you see this in, you're gonna see this even more and more.

Where, it doesn't, somebody doesn't wanna host it. Somebody doesn't want to deal with the licensing where it has like the estate of a family is, has no interest, or doesn't want to, maybe the author or creator said, Hey, I don't want you to do this. And that was their lineage, but there's a lot of great works.

I, I'm more of a, I think of film. When I think of this stuff of all the awful films I used to watch in the eighties that they're gone. You can't find them. Obviously they were awful, but there are some that, you're fond about. Or if you come back on a new lens, like if you look at this, I assume that your interest around this is similar to what we're doing.

It's just, if you change newspaper to SAS business, know, exactly recurring revenue, it's, it, the story's the same. And so that's where I think. That's super exciting. Yeah. Yeah. I thought it was fun. It's something I could push like on my media channels as well. I don't know. I think the likely outcome here is if the publisher still owns it, there's oh, there's demand, we'll turn it into an ebook and audiobook, thanks for letting us know.

That would be my guess what happens, but either way it'll be fun. Yeah. Other stuff on my end, I have my Maven course going live in a month. Just started getting, people buying in. So that's cool. The pre-orders are coming through. This is like your Rite of passage, right? So it's like the cohort based, you're all gonna be live. Yeah, exactly. So this is what I feel like is missing. People love my prerecorded course, but there's not like that,  peer group or like pressure to actually go out and buy look, talk with owners and stuff like that. So that's, there's gonna be a lot of homework assignments, a lot of exercises.

And then the real goal is like peer. And then online workshops where you like, I it's office hours basically ask me whatever questions you want. That's awesome. So are these. Specifically going to be B2B SAS businesses, or just SAS businesses. This is interesting. So it's just how to buy a small business is the course saying like the course topic, but I've had some people reach out that have taken my course that were like, I want you to basically like hand hold me through it.

And I think this could be an interesting approach for us. In the future of like basically backing search funds. And so a limitation with us is like deals, but deals are like coming through and then over time it's like operators and really well incentivized operators. Yeah. And so we could, have a cohort of five to 10 and then we have companies cuz our deal flow like is gonna be ever increasing.

It's basically just placement. You place,  you give like you give them equity. We take the rest of the equity and. It's more of a search fund to funds approach. But that's, or the, yeah, it reminds me of the studio model, right? Which we've, experienced and that's always the, in my experience that has been the constraint is great operators, great leaders, great executives to come in and be the CEO.

That's the hard part. Like the demands I've seen here are like, people want that. They want like a much more hand holding experience of they wanna be paired with the business. And then the brand is a service is,  appealing as well of like, how do you find teams in Pakistan? Or like Armenia or whatever, and vet em, and make sure they're good.

Cause a lot of these folks are like, they're MBAs that maybe they ran a PNL in the fast, but they've never run a tech business or they've never, been hands on with the tech at least. Yeah. Yeah. Or even. Find how to find a brand. Cause I think there's a lot of brands out there that it's funny.

I'm seeing folks in my network starting to do similar stuff where they're buying businesses, buying. I saw a gentleman that I worked with, I dunno, five years ago, he's buying up WordPress plugins and he was a WordPress developer. But instead of continuing to consult and work at an agency or whatever, he's no I'm gonna go.

And actually, in this direction, cause it is really the desire. Way to create leverage in your life. It's a definitely a better existence from a what are you reporting and spending your time on you're building your own wealth. I think there's a lot of developers that know how to do these things that don't really know how to get, make that leap as well.

So I, I don't think it's unique to me or even, folks, it's just a matter of,  I think a mix of technical and management skill. Yeah, that may go back to the first idea of this, I'm gonna run this cohort and then like things will get progressively maybe more hands on. And then maybe the result is that, we raise a small fund and busy back people in handhold with the experience.

There you go. But yeah, otherwise I think there's like a tech outsource tech head hunter service that's, definitely could be interesting as well. My other interesting learning is,  the pro pickleball tour just came through Chicago and I was out of town for it, so I didn't get a chance to sign up, but I played with a bunch of people that like metaled in it.

and I think I could become a pro pickleball player. I don't know if this is my pursuit, but I'm playing more and more with these people. It's been fun. And by the way, like where are you playing? Cuz like Elizabeth. So my wife and you were there, she had. I don't know, was it like, not really an informal housewarming,  party for her new office in Chicago, but they had a portable pickleball court and she's we should open a pickleball court in, in, in Ohio.

We should this is like a she's super caught up in it. She's it's super fun. Especially in the winter. It's get a warehouse space and just let people I'm like wait, talk about insurance. All this. I don't know, it, it seems like the fun thing to do. Where do you play in Chicago?

the best people in Chicago play at horn park, which is like. Do you know where this is? I don't know. It's relatively far Northwest of the city. Yeah. Irving park area. So that's where like the best people play. They play late until the night. It starts at five 30 and goes to nine 30. So that's like, that's awesome.

ING my bedtime. So I don't really do those much, but,  what it struck me as like the best players, they're just like, They're normal people. Yeah. It's not I've played like high level basketball and they're not LeBron James. Like they don't have the height to athleticism or anything. So they're just super accurate, which, you could get, if you have the hand eye coordination,  it's also just an immature sport.

So like in the basketball world, you reach certain levels where it's oh God, no amount of training would let me move. Yeah. Like that person. But that is certainly not the case in pickable at least not yet. Yeah. That's awesome. It's cool. It's cool to see. Cause it's. I don't know the rules, that's the one thing I would say I'm a casual, very, not even really a player. We played like ping pong basically. But I can totally see there's nothing like chasing after ball. I don't know. We're like so dumb at our, like our caveman brains take over and it's go after the ball with a paddle and it's just, it's a blast.

And you run around. Although I hear this more from my folks. All the old people get hurt. All the old everyone seems to have pick ball injur. I've seen a few people fall down for sure. It's a lot of starting and stopping and the stopping doesn't always go so well, but, Yeah. Anything else going on in your end? What did I have in my notes? Yeah, no, I think that's a big thing. I We're doing this weird sales thing, this like a dabbling in enterprise. And I think the one thing that made me think about it, it's does it make sense to start looking at having.

A salesperson across the companies. And, is that still, even if you have, product led growth, is there still like an idea of having a, multi role salesperson that could come in and field enterprise always having an enterprise option on every product, essentially. And just having that go to a person that's actually good at sales and dedicated maybe to.

Fielding those responses and a split between that and customer success manager. So it's let me make sure you're getting the most outta the product, but also let me make sure that this is right sized to your organization because yeah, these, there are some of the, some absolute hippos of companies that ha happen to sign up for these products that, 80 bucks a month wouldn't really be fair, right.

Or even our highest tier. And by the way they want enterprise features that we have right. SSO. They want to have, a certain amount of,  integration that we can provide that we're just missing by letting them, sign up on their own. But by the way, nothing, I hate more when I'm trying to use a product than let's talk to sales.

I'm like, Nope. Yeah. It clearly works though. Cause so many people forced you to talk to them. Yeah. What do you think that looks like if we wanted a part-time person like to test out, more senior person that maybe we can. Pay for right now. Like you give 'em 50% of the first year revenue or something.

Yeah. Just commissions, big commissions, share with them, as much as you can I think. And I think you could find folks that would do, especially if we are doing a good job of building a top of funnel where Hey, there's every day you come in, we've got at least two to three leads you can call on.

Or every day that you're, let's say they work three days a week on it. And it's You're coming in with at least a handful of warm leads to kickoff. If they're having a, cold call, which by the way, all the best sales folks I know are great at cold calling. But,  without building that proper structure of Hey, you've got the inside sales folks, setting meetings and, SDRs and the whole structure.

I think it's hard to short circuit that it's hard to not, I think build, a proper sales org. At least I've always seen it with that form of Hey the roles and the different people are executing the roles and it works really well and scales really well. But,  I'm not so sure if half-assing it really with somebody who's great.

Maybe. But that's my sense. It would be halfing it where it's yeah, they're gonna be parttime. They're just gonna take in, some of the leads and some of the inbound, I don't know. It gives me a little bit of pause of is that the best way to go? I definitely would love to try it.

Yeah. Cool. I guess the only other update here is I'm gonna try to start publishing video podcasts on YouTube and elsewhere. This is the first video podcast and the same week that I was told, I have a gross face that harbors bacteria, it is linked with early death.  that's right. So where did that? I, so for context here, you were on a podcast with,  The micro choir guy, Andrew.

Good. Yeah. Andrew ucky. The second time on his podcast, actually, it was cool. I like his podcast a lot. He ha he has good guests on. But then he has a weird audience. This guy. I saw you, you like shared a screenshot. Was this a YouTube comment cuz then it would make sense or was it LinkedIn? It was a YouTube comment.

Yeah. I just, I saved it cuz Andrew deleted it and I was like, oh man, I love that. I'm sad. You deleted it. But he wrote like a, it was actually right after it got published, like a nice little essay about how,  unshaven faces, Harbor bacteria gross out women and are linked with early death,  cardiovascular disease too.

Yeah. Wow. All the things people have said to me,  no one has ever said my face grosses out women before, so that was a real headline for me.  and it was almost like spam, but it wasn't, it was clearly like too well written where it's like new, next generation AI that it's insulting you. I don't, if you've seen record Ralph two and you don't have kids yet, but,  I have not, my son watches this.

And so the whole premise of record, Ralph breaks the internet. There's a scene. So he is basically on the internet and he is making videos to make money. Cuz he has to buy the controller for some game to go back to his arcade. The plot's great, but he wanders into everything's like a physical version of YouTube and he wanders into the comment section and sees all the comments that people have been writing about Ralph.

And he gets pretty upset and everyone's don't read the comments, Ralph, don't read the comments. Yeah, you have your, you have yourself. So don't let it, don't let it, don't let it sway. You. Like I'm back on camera this few days later, I've recovered from this hardship.  cool. I think that's all we got.

Yeah, no, sounds good. All right. Take care, everyone. All right, byebye.

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