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Unreasonable Hospitality Book Summary & Lessons

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[00:00:00] Colin Keeley: All right. Hello and welcome back. This is Colin Keeley here,

[00:00:03] Brent Sanders: and I'm Brent Sanders.

[00:00:04] Colin Keeley: And we are two guys buying and building wonderful internet companies.

[00:00:07] Brent Sanders: And the the weather's starting to get cooler, hopefully in your neck of the woods. And it's been a while since we recorded, so just wanted to kind of, drop an update.

Let let everybody know we're still alive.

[00:00:18] Colin Keeley: Yeah. For sure. Yeah, it's been quite a while. I don't know where we could do an update across everything. Definitely part of this is that my internet is , an issue, so my office isn't back. It's disconnected from the main house and . It's a small building, but the wireless for some reason doesn't connect super well, and it makes recording podcasts difficult.

[00:00:36] Brent Sanders: Yeah. I mean, zoom seems to do the best job. But yeah, we've tried a couple other things and it's been like, I think you're talking and then you'll stop and be like, Uhhuh. Yeah. It just

[00:00:48] Colin Keeley: so

[00:00:48] Brent Sanders: frustrating. Makes it kinda hard to have a conversation, but I'm glad to, glad to see it. It does seem to be working well.

I don't wanna jinx anything, but yeah, I mean that's, I guess Texas and and the internet. It, it's still evolving.

[00:01:00] Colin Keeley: There's no excuse. I mean, it's a hundred year old house, but it has, Google fiber, so it's like a thousand down or something. Yeah. Yeah. And then I have a wildly overpowered Oh, that's awesome.

Wifi set up. But the previous guy was like a, he is a developer of sorts. He retired now. He lives in, Greece. But he has a house all wired for ethernet and there's like 15 ethernet cables up in the attic, and there's an outlet here in the office, and I just cannot figure out which one's which. So I bought like a device to test them all.

Yeah. From that, it didn't work. I don't know. None of them work, so I think I have to hire someone to either run a new line or to test it better than I can test it for some reason.

[00:01:38] Brent Sanders: Yeah, I mean, if there's an existing line, it's easy to switch it, right? If it's broken or something, or it got cut, like I know when we moved into our house.

We cut everything there was, there was like, the old knob and tube and we just ripped everything out because it's like you don't know what's connected to what and it's just easier to just start from scratch. So that's one thing we did where, where there were existing stuff, you can just tie it to the old one, rip it out, put a new one in, and at least you know what, it's connected to something.

[00:02:05] Colin Keeley: I'm hopeful. I'm hopeful he didn't just put some like booby chap line in here that doesn't exist anywhere else. It must exist somewhere. So we'll figure it out. We'll get back to podcasting.

[00:02:15] Brent Sanders: Killer. Well, we should probably give an update on, , as far as acquisitions are going things are, , I feel like it's in a season of stability, right?

Like we're, we're a little bit out of the, , active stabilization trend transition phase, which I guess on Scout took about what, 18 months and we're kind of in the, we've reached an altitude and we're continuing to climb, but it's not like the. The same pace of change that things were, at least on the tech side, which is, is kind of refreshing.

Like things have definitely gotten into a rhythm. Support tickets are way down. , just activity is, is slightly decreased from the, the pace of what, Hey, we're switching databases, we're switching we're changing whole systems and things are, are wildly different. On the tech side, I would give an update on the tech side.

It's like, I think we might have talked about rolling out chat, like a realtime chat. And that's one thing that we chose a vendor. We chose a product called Sendbird to just kind of quickly get it it into the product and, and get people in a beta and we ran into a lot of issues with it. And it's an expensive tool.

It's an interesting, problem space, right? Like real time messaging. It's like multiplayer gaming, streaming data, streaming essentially, like socket connections and push notifications and bringing all that stuff together. But we're wrapping up, rolling that out ourselves. We just ran into too many issues in the beta of people having problems.

And then we reached out to Sendbird, right? Like their support. And , when we signed up, and, and mind you, this is like. I think 3 99 to 5 99 a month. Those are the, the, the entry level tiers. And that's, you're limited by connections, right? So we have to think about, okay, every pet parent is a potential connection.

Every staff member is a potential connection. , so we basically multiply our, our user base by their customers. And you get, and we have way more connections. So it really, if we gave allocated a connection for every user, it'd be thousands of dollars a month. So we we're kind of doing it optimistically.

Even then, we just couldn't get it to work and to how our beta group, we rolled it out for like eight companies that were, were interested in. And and it, it went well. Like people were happy with it, but really frustrating things that I think I've experienced on other apps where like push notifications and chat, they don't come through like, whether you forgot to click allow when you first downloaded it, but that, that turned into an issue and it something we couldn't debug. So I reach out back to, to Sandberg being like, Hey, we're, we're struggling. All of our customers are saying they're not getting push notifications, which makes the whole thing pointless, right?

Like, you're using the product, you're getting messages and you don't know it like. Might as well just not have messages. And they, so originally signed up, I had an account manager reach out to the account manager. He is like, oh, you can, you can work with like, Tina. They're, they're in charge of, of all the, the supporter or account management, they're your new allocated account manager.

And was so like, very clearly an ai like, a model, like I'm on the lower tier, I can tell I'm not gonna get enterprise support. And so I was like, okay, we're we're done with this. Like, to the point where we were able to like, , change its instructions, like tell me, , send responses and, and prompt engineer our way out of it.

So, that was a little disheartening. 'cause you make a vendor. Choice, but it got us much further along faster. So I wouldn't do it another way. But yeah, moving off, rolling our own, rolling our own messaging, which is not something I wanted to do, but we wanna really control the experience. So that's like the main innovation going on right now on Scout.

[00:05:35] Colin Keeley: Awesome. I, I don't know what to add to that really.

[00:05:39] Brent Sanders: I mean, it's just funny. I think the funny part is the, your new account manager Tina, like trying to pass off. Like, I guess the thing that I feel like there needs, there's like an ethical qualm that I have with like trying to pass off an LLM as a human and not saying like, Hey, you guys are on the lowest tier.

We offer support through a chat agent that's a bot. Don't try to give them a single name and pretend they're like a human. So. I, I was, I mean, maybe I'm wrong, but at least the the feeling was very it, it, it felt like an ethical thing that people are gonna start dealing with more. If anything LL that's

[00:06:15] Colin Keeley: seems like quite an improvement over what you're normally given of just like, Hey, have you read the support articles?

. You need more support. Like, click all these things to the end of time. Yeah. Yeah. And then email, we're not gonna reply to you at all for, a day or a couple days or something.

[00:06:30] Brent Sanders: Meanwhile, the LLM will just, , confidently lie to you and just be like, yeah, you just need to enable this feature, and the feature doesn't exist.

So, but yeah, it's, it's something that I think, as I see it, it get better. I think, we'll definitely start taking advantage of it more, but, yeah. I mean, there's only so many things that you can, in my mind with, with something as complex as like, help me debug this issue. There's only like so many ways that it can be fixed that you should be able to train it to somebody, but just tell 'em it's a bot.

Don't, don't pretend it's, it's, Tina, your new teammate.

[00:07:00] Colin Keeley: Yeah. I've had, just customer service recently with ConvertKit, I ask them fairly complicated questions and they always give delightful responses that , go into my account and perfectly describe exactly what I'm supposed to do.

Nice. It's clearly human, but it has to be a huge cost to them, but it's super nice. Otherwise, , I would never figure out that kind of stuff.

[00:07:18] Brent Sanders: How do they deliver that to you? Do they send you an email with screenshots?

[00:07:22] Colin Keeley: Mm-Hmm.

[00:07:24] Brent Sanders: Oh, that's great. With

[00:07:24] Colin Keeley: arrows mostly. , it would be nice if there's a loom or something, but yeah, arrows work fine.

[00:07:29] Brent Sanders: Cool. Yeah. Yeah, yeah. That's, that's always good to see. I think that's like, one of the things as I use SaaS products is like, you can definitely like smell the state of the business based on the, the support level and the support engagement and like the quality of it.

[00:07:43] Colin Keeley: Yeah. I guess other stuff, kind of along those lines.

I read a good book recently, unreasonable Hospitality. So it's the story of a distressed restaurant in a, fancy high rise in New York, 11 Madison Park in over like, 10 years, 10, 15 years. It, rose from distressed to like the number one restaurant in the world and won all their words.

Kind of like a, a Linea in Chicago in that, style. And the guy wrote a great book about it, and I think it's super applicable to, I mean, not just restaurants, but kinda like any, any business with customers or clients, like any service-based business. One of the big things he touches on is like, he calls 'em systematic surprises or magical moments.

So like. Basically identify any recurring moments in your business and how could you make that, not more expensive or something, but just like more delightful, more thoughtful. And so, yeah, it's been it is a fantastic book. I think it's gonna become more and more important in this kind of age of AI where you could go hardcore on the automation route.

You could go like hardcore on the human touchpoint, direction.

[00:08:42] Brent Sanders: Yeah. Yeah, I agree. It is, I mean, it touches that exact same thing. Had it been a real person that's like Tina and the new teammate, and they didn't seem like ai, I wouldn't have been offended, and I would probably figured out my issue and not churned out of their, their company.

But I, when it comes to this restaurant, like the, the learnings are basically like, do the things for free, such as like remembering someone's name or, or whatever. I mean, what were some of the, like the key pieces that they were doing to make it like a better experience?

[00:09:12] Colin Keeley: So along remembering someone's name, route they.

You put down reservations months in advance. It's a big, expense for everyone. So it's a big deal. They would get rid of the host stand, so they'd make it more like, welcome you into a home. And they would Google everyone in advance so they would know what you look like. So they could, welcome you by name, which actually Alinea does as well.

'cause they, they knew me by name when we walked up for our reservation, which is pretty cool. The other thing that they do. So it's not about spending more money, like he's actually maniacal about, he says it's a 95 5 rule. So really govern your business down to the penny for that 95% and recklessly spend that last 5%.

But other stuff is just like really listening and trying to connect with customers. And if they mention anything and you could find a opportunity to really delight them just go crazy about it. So like one. It's a big event if you're doing it in New York. So people were doing it like on their last day and they're like, oh man, I really wanna try a New York hotdog.

And I never got a chance. And so they sent like a busboy down the street to buy a New York hotdog, and then they played it beautifully. And those stories are told to the end of time, and they would try to do those, constantly to the point that they hired full-time people, that that was their sole job is making those delightful moments.

[00:10:26] Brent Sanders: That's cool. That's really cool. I mean. You're not missing anything with a New York hot dog, not to talk shit, but from Chicago, that's the only hot dog that I would, I would really savor the New York hot dog's. Just a sad, sad event.

[00:10:39] Colin Keeley: I, yeah. I don't actually know what a New York hot dog is. I know what a Philly hot dog is, but, is New York just like a Chicago dog?

[00:10:45] Brent Sanders: No, it's just like, like a sweaty, weird, Nathan's hot dog. I just, it tastes funky. It's not Vienna beef. And then it, they don't do all the, the stuff on it like the huh onions, tomato, pickle, relish it's usually just mustard, but it's, they like this like footlong thing and it's just, ugh.

It just doesn't, ugh. Just it's an abomination. So. Okay. But yeah, I mean, well, so I guess here's the thing, like rather than being a snob about it, like me, like the chef might be just be like, Hey, let's get him. It's, it's part of the mix. It is part of the flavor of the city, and, so keep your ears open, kids that, that's the lesson I'm taking away from it.

[00:11:26] Colin Keeley: Yeah, I would say, takeaways for your business is like, look at all your touchpoint and what can you do that, makes your business seem really thoughtful. Doesn't have to be expensive or anything, but like tactically at Jules we're kind of going through it of like, what is every touchpoint with the customer and how can we, systematize that, not so like the recruiters or the account execs like.

Or put into a box, but to make sure we're talking to them constantly, they're always updated and when they're updated, they're updated in like a really nice format. Yeah. So it's like, what can we take off their hands and make nice? Another example from the book is like, this is kind of olden times where it was quarters in a meter.

And so they would always have a stack of quarters and whenever someone parked, they'd add a few more quarters so no one was ever stressed about, whether they're gonna get a ticket or not, or they're eating.

[00:12:08] Brent Sanders: It's a nice touch.

I guess, what do you, how have you been spending time? What? What's been going on your end?

[00:12:13] Colin Keeley: Yeah, scaling up Jules has been, it's just a people heavy business, so, we lost our kind of operations manager. I was happy for him. He took a job with a friend doing like a short-term rental management. It seems to be going well, but he was like a, a core. Touchpoint to the business. And so we replaced him.

And then, just scaling up, hiring more recruiters. We've been doing a lot more, I'd say finance, like accounting roles, so accountants. Mm-hmm. Bookkeepers, that kind of thing. And then scaling up like the size of customer. This has just come inbound. We haven't done like outbound to them or something, but.

It's just quite a process. I don't, I've never worked at a big company before. How they operate seemingly is crazy of like, endless meetings. Yeah. You start a meeting and it's like, it's one person on our side and 10 on their side, and so the first 10 minutes are people introducing themselves and like, I'm in charge of this, I'm in charge of that.

I, but yeah. Potentially it's, a great customer, with a lot of hires for us,

[00:13:06] Brent Sanders: a, it, they talk about the enterprise sale, right? It's like. You get a committee in and it's just so easy for everyone to go, well, let's, you need to have that champion, right? You need to have that person in those environments that's gonna actually like, put you under their arm and carry you through those meetings and continue to push you and then ask their peers, the tough questions of like, what do we need to do to get this moving forward?

Versus if you don't have that person, everyone's gonna be like, great, thanks for coming. We'll keep it in mind. Let's book another follow up in the quarter. And, yeah.

[00:13:37] Colin Keeley: It was like, I mean, they asked us probably 200 questions. I think I have a, we have a RFP to fill out, which is just taking forever.

[00:13:43] Brent Sanders: Oh, you're responding to an RFP.

Okay.

[00:13:46] Colin Keeley: Yeah. That's a new level of

[00:13:48] Brent Sanders: hell.

[00:13:49] Colin Keeley: Yeah, it seems that way. So a lot of it's just like, I don't know, not applicable. I'm just writing NA for a bunch. But it's been good, otherwise continuing to grow, continuing to scale the number of recruiters and, trying to give unreasonable hospitality to the people that we can.

[00:14:02] Brent Sanders: Yeah. Very cool. Yeah. In the meantime, I've been working on a, a handful of like independent tech diligence projects. Probably some people that, maybe listen to this podcast found, found me, found us that way, and, it's been really fun. It's, I'll just say that I'm not gonna, I, I've signed NDA for all of 'em, so I can't go into 'em on the podcast, but the, the fun part has been just, you're digging into legacy software and just digging into to security issues and different dispositions at different companies.

And there it is just wild out there. Like the amount of, I would say from, from what I'm seeing, it's like there are a lot of people still really interested in, in doing SaaS deals. I know as a, as a market. Indicator like, you know the, I think. The general sort of expected returns or the, the general amount of revenue in the space is decreasing.

Deal size is definitely like decreasing, but , at the scale that I, you and I really deal with it, it's, it's kind of a different market, right? It's it still is very, people are very interested in, in buying them as they're either, first business side business or they, have had an outcome and they want to get into a new, line of work or, or doing a search fund type thing.

I'm. Specifically, speaking of like one to $10 million deals. And there's just a lot of like interest in there. There still seems to be more demand than there is supply. So people are looking at stuff that you'd otherwise like run from trying to see, hey, is there a hidden gem here? Is there a deal to be had?

And the, the tech and security debt that I, I've seen on some recent stuff has been like mind-boggling. A scenario where. Somebody has been paying just a dev team for 10 years and they've never actually, like, looked under the hood or asked any questions. And they come to find out when they're selling the business that, actually they're, they're handling credit cards in a way that, or they're handling, I.

API requests that could, end their business or get them a lot of trouble. So it's been a, a handful of those deals, which has been actually really rewarding. 'cause it's, it's stuff that I'll do initially in the engagement, like the first, I break it into two parts essentially, first to be like, hey.

Let's do a, a quick sniff test. Let's look at, the product and see is there anything like wildly wrong. And then the, the second part is like the real engagement. 'cause I don't want like, dead deal costs, right? I don't wanna go down with this and then be like, oh, at the end of, five to $10,000, you're like, oh, I'm not gonna do this deal.

And now I still have to pay Brent, which I don't wanna be in that position. But yeah, it's been a lot of like quick rejections or quick projects that way where there's some. Some wild suffer for wild value valuations that, needs to be quarantined. It's it contains a ton of risk. So, yeah, that's, that's what's been going on my end.

[00:16:38] Colin Keeley: Quick kill. I mean, what's the, the kill? It's like you have the, some crazy credit card, potential danger that it's not worth walking into

[00:16:45] Brent Sanders: existential, existential risk to the business. Like, API requests that, we've seen it's, a lot of it is stuff that we've seen on, on the business that we've run and manage where it's like, oh, somebody can use a real account and they can send 10,000 emails. Well, like what if they could send 10,000 requests to like a banking API or 10,000, like you'll get disconnected or an API that you have proprietary access to that could be shut off if you abuse it. And if you're not monitoring it, someone else could abuse it if they knew that every time they click this button it sent something or that every time it, it.

The button gets sent, they can maliciously, like that's 10 cents and they could just hit it a million times a day and, draw in a bankruptcy. So like really critical stuff that is like the, the critical functionality of pa like critical path of functionality, like getting, disrupted if it was abused.

And thankfully, no one's abused their system be before or yet, and hopefully they won't. But, coming in as a buyer, being like, oh God, I'm gonna have to like, rewrite this or rebuild this, or, essentially come up with a different way of, of working. And, and that's what you're buying.

You're buying the existing path. You're buying the existing customers. And as like we've gone through, Hey, let's change, from Braintree to Stripe, or, there's gonna be headaches with that. There's gonna be problems with that and it's gonna be disruptive. So when you're looking at a new acquisition, it's like people just not willing to take on that risk.

[00:18:09] Colin Keeley: So is it, I mean, those seem like, well-defined issues, which would scare me less, right? Because it sounds like something that's fixable. Is it really a quick kill situation or it's like it is a serious risk on day one. This has to be sorted, or is it like it's so bad it's not even worth doing.

[00:18:26] Brent Sanders: Yeah, well, so if like, my thinking is, and my advice usually is if, hey dude, if I can, find this within an hour of clicking around, like, what else?

This is stuff I can find. I don't even have a login to their product, like I'm on public facing stuff. If these principles are being followed here, like what else is on it? Like, then you're playing this game of like, what, what else is gonna come outta the woodwork? And so my advice to buyers is to go back to the seller and.

Be ready to negotiate and say, Hey, can you, you want 6 million for this? Let's talk more like three and see if there's still a deal there. And some that has worked for folks that I've, I've, I've done diligence projects for like immediately I come in and it's like, whoa, this is, this is bad.

Like. You, you're gonna have maybe not existentially bad like this, the business could evaporate overnight, but you're gonna have to invest a lot and go back to them. And, and people have gotten great deals because of that. So I would definitely advocate for trying to negotiate your way through it.

I'm much rather, see a deal get done than not. But if it's like, Hey, there's, there's a bunch of cash on the line, and it could literally evaporate and. But yeah, you can, you can mitigate all that stuff. I guess it's, it also comes into like the profile of the buyer. Like if they are the buyer that wants to do a turnaround versus like they're buying cashflow and they expect it to keep rolling and not, make any changes.

[00:19:50] Colin Keeley: Okay. Yeah. I would definitely end up there where, if it is millions in revenue and it's recurring revenue and people are paying for it and getting value out of it, it's almost like. At some scale, if it's big enough, there's like no tech debt. That would be so bad that it's not worth something.

Yeah. Like it would be worth, renegotiating and getting it sorted. But yeah, it's, people are paying for it, people are happy with it. Making millions of, of dollars. It seems like there's something there.

[00:20:14] Brent Sanders: It's always easier to say no, right On these, on any deal. It's always easier to be like, okay, this isn't gonna work because there's some tech debt.

So I, I usually go in with that mindset of like, don't come out and just say no, and it's all, it's terrible, but in certain cases it's like, Hey, this, if this were to get abused and you, you could slap fixes on it. But again, it, it then, then comes into will they negotiate and then are you the type of buyer that you know, would you be better off?

Just building something else or buying something else. 'cause it's, you're gonna, you're gonna end up putting more into it than you'll get out to it. But truly, yeah. If it's millions of, of revenue, put it in a container, figure out how not to touch it, pour concrete over it and, and, and, and keep it going.

Right.

[00:20:57] Colin Keeley: Yeah. I just, yeah. Make sure you pay Brent to identify the issues so they're not hidden issues. As long as you know what's going on, like you could deal with it.

[00:21:05] Brent Sanders: Yeah, true, true.

[00:21:08] Colin Keeley: I don't know. Anything else you wanted to cover?

[00:21:11] Brent Sanders: No, just just getting ready for fall, getting ready for trick or treating season.

Ready for spooky season. The kids are already picked out their second Halloween costumes already. They've already gone through their first and yeah, pretty excited for it. They're, they're finally getting the age where they're, they've been like more of the handing out candy age, like staying at home, and I think they're ready to, to venture out and go on their own and.

And do some trick or treating. So I'm pretty excited. Nice. Might, might shed a tear.

[00:21:38] Colin Keeley: I'll leave one more book recommendation. I just finished it. Money Trap. It's like you, have you heard of the vision fund? The like a hundred billion dollar venture fund that was throwing money around like crazy. So this was written by like the finance Maan is like the, the main guy, the CEO of SoftBank.

And this is like the right hand man, the finance guy behind it. And so he wrote this book and. You think it's horrible? 'cause investment banker wrote it, it was gonna be bad, but it's actually beautifully written and like really engaging. So money Trap is great to see like the ba behind the scenes of these multi-billion dollar deals.

[00:22:10] Brent Sanders: Oh, I'll check it out. I'll check it out for sure. It sounds good.

[00:22:13] Colin Keeley: One little teaser is wasn't in the book 'cause he didn't wanna get sued. It sounded like. It came on after the fact. Wall Street Journal did expose it so the like. Clear front runner to be the replacement to the CEO. They kept getting these weird, like personal attacks and like legal suits against them and they could never trace it 'cause it was like bouncing all around the world.

And it was like the number four in line was secretly funding. It, these like, TA attacks and they tried to do a honey pot, so they'd hire like a prostitute to try to like seduce. One of the guys,

[00:22:43] Brent Sanders: oh God.

[00:22:44] Colin Keeley: But it, it kind of is woven throughout the story and it didn't come out till after, words what the deal was, but yeah, crazy stakes, I guess.

If you're trying to control a trillion dollars.

[00:22:53] Brent Sanders: Yeah, I bet. I bet. Very cool. I'll check that out.

[00:22:58] Colin Keeley: Cool. All right. That's all I got.

[00:23:01] Brent Sanders: Cool. Sounds good. Well, thanks for listening everybody. Great to catch up and we'll be back soon.

[00:23:06] Colin Keeley: All right. Take care.

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