Colin and Brent discuss transitioning and growing Scout since they bought it.

Apple Podcast / Spotify / Google Play / Overcast

Sign up for Colin's cohort-based course on acquisitions.

Enroll in Colin's Micro-PE Course & Community at IndiePE.com.

Reach out if you want some tech and product diligence done.

Reach out to Colin Keeley and Brent Sanders on Twitter with any feedback.

Sell your SaaS at VerneHQ.com

Hello and welcome back. This is Colin Keeley here, and I'm Brent Sanders. We are two guys buying and building wonderful internet companies. Yes, we are. And we are, what, two weeks or three weeks into being the new owners of Scout for Pets?  It took 14 days to get the bank account transferred, so we're like, we're 20 days in.

Okay, good. Yeah, and it feels like we're, We feel, it feels like we're in an appropriate spot. Yeah, a couple weeks in and we've spoken to, I think all of the, like the top, what, 10 customers or so. And then you blasted out a, an introduction yesterday. What was in that? Yeah, so this is what we like to do.

Normally it's you export everything, and export like the top a hundred customers from Stripe and then send an email. This is nice. It's all set up in Intercom. So you can just tag users. And I sent like a three line email saying, Hey, we're the new owners. We're really excited to invest heavily in the product.

We'd love what, the founder has built. And take this three question survey. So my three questions are, what's the most annoying thing about. What feature or features would you like to see added? And then how likely are you to recommend Scout to your friends or colleagues? And it went out to, everyone that's a user and I didn't have time to set up notifications quickly enough, and it was just, it was flying through.

So we probably got 50 in an hour or something like, really blew up our inboxes, but passionate user base for sure. Yeah, it's great. And I found this, the other weird thing is people had pretty serious complaints, but still rated the would you refer us to a friend? Would you refer Scout to a friend?

It was like, I saw, maybe a couple lower than fives, but Mo most were 8, 9, 10. They love the software, they love what it's done for them, but. Oh they're frustrated that there hasn't been updates to it and bugs are happening and it's affecting their ability to operate their business.

It's hilarious. So it's app barely works. All these complaints super glitchy. I only get paid, 50% of the time. It's not that extreme. But then it's and I likely are you to recommend it to a friend. 10 outta 10, 100% . Yeah. I think it's also a testament to the space that, you know and that's been interesting to kind learn.

Everybody is transitioned from something else that's far worse, right? There's a lot of, there's a couple other players in this space. Some of 'em are, dated. I think that's like the biggest complaint. And sure, they have complaints about this software and they wanna make things better and it can be frustrating, but they're, it's way better than the competition.

It's way better on the alternative. A good place to play and come into with fresh eyes and, We're jumping all over the feedback. I would say the vast majority of the feedback we already knew from running support for a couple weeks around the mobile apps being, glitchier on Android and we've already, we already are all over that.

We've got, a new version going out. We've, the seller had been working on this as well. He was not unaware of this. So picking up where he left off and getting a faster build turnaround, I think is gonna be an easy way for us to Win some hearts and minds here with, the new ownership and then continue, rolling out improvements.

There's a lot that can be done and I think we've gone through, I put one of those feature quadrants together, which is like high value. There's probably a business school for, what are those things called? But I was thinking McKinzie, McKinsey's the one that always puts everything on quadrants, I think.

Yeah. High value, high effort, low, you end up with a section of stuff. That's, what's the stuff that's high value, low effort. Let's do that first. We're gonna do some of the high value, high effort stuff first, but that's because it really is incredibly high value to our customers. But, yeah, excited.

Like we, there's a lot of room for improvement, yesterday. I was I've had to do a lot more support. I've been very busy with this business as opposed to any other business, just cuz there is no real interface for an admin or a support person to do anything. You have to go into the database, you have to go into the code, you have to like, manually do a lot of work.

But with that, yesterday we found, Most of the push notifications, which people were complaining about, I'm not getting notifications. Some of them haven't been getting notifications for over a year, , right? Like the, their push notifications certificates were expired. So I started updating those and so I think it'll it's a great spot to be walking into because it, there's just a ton of low hanging fruit where the, the sellers didn't have time for it.

He didn't have time to, to deal with this stuff. And it's probably, these little improvements will. And to be able to do 'em quickly, I think is the most important. We introduce ourselves and then the next week we're releasing the mobile app, and then the week after that we're releasing it to, general availability and, pulling the users onto our side and letting 'em know that we're on their side and we have their backs.

And then, it's a good place to. Oh, I think they're gonna be, yeah, so excited. I think it's worth talking about like the transfer cuz everyone, from the outside maybe it looks like it's all up to the right. So as soon as we bought the business. So the payment processing is on Braintree and then like analytics, where we track is on profit wealth.

And so immediately upon transfer it seemingly dropped 5%. Like we thought it was like Monday morning, 20 customers churned like the first Monday of owning the business. And it turned out those weren't real churn, but to manually update expired credit cards, you had to do it yourself. Yeah, so that was, not super fun, but it turned out not to be a real, and it was just a lot of work for us.

Yeah. Yeah, that, that was a little scary. That's the funny thing. When you do actually buy the company and see what's actually, the bank account information the, we had access to everything. We looked at it and had, did diligence. But there's now just this new, I don't know, it's just a very difficult thing to see when you're like, we didn't even do anything like it, but that it had also been growing on its own.

So I. We ran our renewals, what, on Monday, Tuesday. And everything was back on track and back, back to growing actually, right? Like we, we just had a blip in profit. It is really hard to see, in Braintree it's just like you can search transactions, but unlike Stripe, where they show you a nice suite of reporting and you have an idea of, customers and plans and in the way it's set up, it's a little hard to follow at face value, but it makes sense.

It feels. , I'll share one experience with, a customer conversation, which I would say, one regret, and I'm not a big regrets person, but I think one regret was not talking to more customers before the acquisition. Yeah. Not that it would've changed anything, but I think just knowing what we were gonna get into.

But again, one of the largest customers basically coming off a really rough week with our product, with Scout and basically saying, Hey, You guys gotta fix this. I need to know what's going on. Cause we're gonna switch. If it wasn't so hard for me to switch, I would've done it already. They basically said you have to the end of the year cuz we're gonna use the holidays to switch if you can't fix this stuff.

Which was a shock. Like we knew it was bad. We didn't know it was that bad. Where it's oh this is like one of our largest accounts at risk already. Yeah. Which we should have caught in diligence. That being said, we've. Just been really responsive. Like our resources in comparison to the seller was they're just way better suited towards, serving these customers.

So we've had two calls already. We've talked to their admins, gotten all their Android users on our, beta Android app. And, hopefully just showing progress. Cuz that's the thing I think I'm realizing is that the switching cost is massive cuz you're running a business where you're, you need that schedule up every single day.

And so you can't have a foot in one system and a foot in the other system. And so yeah I think it's been a challenge and I think we're gonna see it grow more than the, any of the other businesses we have just because of the amount of ferocity with the user base. Oh yeah. Like we get people like neither of our other business.

Would have our intercom filled with people that just want to upgrade, want to do the branded app, want to do the branded website, like just cash opportunities that are, they're begging us for, Hey, when can I get started? And we even slow because the app, we wanna get the new app out first or we're still figuring out a process for onboarding, people to get branded websites.

Like we don't really know the best way to do it. We wanna switch to Stripe. We have all this stuff that we're trying to coordinate while we're fielding. 40 support requests a day. What it feels like is kind of hair on fire, but, it it's huge opportunity. I think this is I'm really excited about it.

I'm dug into the tech and, the tech is great by the way. It's out of date, but it's, it's really simple. It's easy easy to follow. It's easy to understand. So there's all this stuff that we can do that's oh, that'll, boom, we can make this faster and just bring modern best practices to it.

And, Yeah have a really happy customer base. I'm super pumped for this one, so yeah. I've been doing some research on Constellation and how like they operate when they acquire companies. And so one of the big things that, why I put the NPS score, Not Promoter score in the survey is like they really closely track the results of that and they pull their customer bases all the time.

And if it ever heads in the wrong direction, they like quickly take corrective action. But for. These vertical market software, like acquisitions, a high NPS score with low market awareness, it's like the best thing ever. Yeah. Cuz it means like you have a super sticky product, really happy customers, and it just needs sales and marketing.

And so it's like the perfect setup to grow quickly and like relatively easily. So that's exactly what this is. This is what product market fit looks like. Like your intercom's blowing up, your MPS score is amazing even though there's huge, like real significant issues, fix school issues, but.

At the time, real significant ones. So I was I'm super excited about this company. Probably the most excited I've been for an acquisition. Yeah, I agree. I agree. It's, and it's not in a, like a glamorous place, right? Like the market isn't where I thought, but in talking to these customers, you realize there, there's a significant amount of cash being, generated on a weekly basis.

Some of the companies have 40, 50, 60 walkers. Average price per walk is what, 25 to $35? They do some walkers, do 18 walks a day. Do the math. And you'll see there's actually a lot of volume to be transacted here. And so actually one of the calls that I was having was, letting 'em know, Hey we're gonna switch over to Stripe.

It's way better. You can do this, you can do that. And making sure they have a competitive credit card processing fee is like one of the things that I like. Oh yeah we didn't, Think about that. And thankfully, I think A, we can negotiate that because of amount of volume, but b I think the other payment options and opening that up to customers to say, Hey, you can take ach, you can take, Yeah, these are all US based customers for the most part.

I think there's one Canadian, one Australian, so ach, could be a another game changer where you're saving instead of roughly 3% per transaction, you're less than 1%. And just, again, all these like little things that now we're gonna dust everything off and. Things around we get a lot of opportunity to, please the customer and keep 'em around longer.

Yeah. So I guess like the transition. So we have customer support people that we have on other companies and we just immediately move 'em over. So like they're answering it, I would say within a half hour. Basically everyone that reaches out more often, like a few minutes.

So like amazing customer service is one of the first big switch. And then I started working on a web flow site almost immediately when it was like clear this acquisition was gonna go down. So we made that switch as well. So WordPress to web flow, it's faster pages, better design, better seo, way easier to spin up for me at least.

Yeah. New landing pages to test new messaging. And it looks awesome. So that was a, really big win, I think over. Pretty quickly. Yeah. I think the support thing was that was one thing that people were like, I just don't get responses and , think that was the case. The seller was saying, Hey, I, I responded like the top 20 customers, but if you're smaller, I'm just, I don't have time for you.

And which is true, you didn't have time. The other thing is our support guys know, like they're trained on our process, so if things need to get escalated to tech, how they need to be escalated, and how to write tickets, how to write bugs, how to prioritize bugs, how to message to customers like, Hey, we're working on this, and how to set expectations.

I would say that's, that has turned into our, like superpower, especially for these phases where, you know, the, I think we knew before, we obviously knew that the support volume was higher, but that Monday, our first Monday was rough cuz we had all these payment cards, that didn't work and there was no way for people to, easily update their payments without literally me going in the database.

I have to go to the database, enable their accounts. It was just, It was hard, but, I think from then on it's been a really pleasant experience for the customers as well as our team just testing our operating procedures for Okay. They don't know anything about this business, obviously. We started training them probably a month before, got them access to an, like a paid account and, they documented every feature and, but no real world access of okay, this is how people actually use it versus just signing it and comprehending the.

But yeah that's been the lifesaver I think for us. Had we had to put that together and started hiring, maybe around the closing we'd be toast. Yeah. And then, so I guess going forward, so we gotta handle on things. Things are getting more smooth. What's your plan going forward here for, I guess the product and tech side?

Yeah. Product and tech side. Get the new mobile apps out. That was the thing that we. So you and I ran avocado audio that had a cross platform mobile app, and it was a nightmare. Like it's just painful to deal with to release. We wanted to make changes, bug fixes. It's super slow. So we've built out a team.

We have two mobile developers that are, fixing bugs, pushing features, but the main thing is building that deployment pipeline. That's like the biggest thing too that we've invested in this last week we have in place. Pushing new versions out is easy. Building white label. Version, which is a big part of the model here, like being able to just do this at a click of a button, that is, is number one.

So I think, by next week, collecting user feedback and getting this, this mobile app in everyone's hands. And so looking at by the end of this month was the fourth, by the end of the month, like deprecating the old apps, making the new ones, the official apps. Reports is a big one I'm hearing from customers is we have the data, we have the, the data in the database.

So reports improving the customer experience, making the system faster. Our infrastructure is overloaded. It hasn't really been, looked at or really treated and measured, we have a server that's powering, large part of the application and is, it's just, it's got steam coming out of its ears.

So alleviating that, resizing the infrastructure, but basically getting things to a point where it feels like, So a big part of what we do is appointments, it's dog walking, so it should feel and look and act like Google Calendar, be fast. I don't know if you've been on any larger accounts, but the load times are 30 to 60 seconds to load the application.

Yeah. Which is insane. I'm surprised it. And people wait, like they're fine. They're like, Yeah, we look at that loading thing. It takes a while. It only happens like once, but still it's huge. And so fixing that, adding reporting, adding, giving people direct access to their data and getting the mobile apps in a much better spot.

And then I think we can take a breather, we're sprinting towards that. We'll take a breather step back. See, A couple of things that on the business side is then I think shifting our gears toward, towards more sales of these branded apps, branded websites, those are in high demand and will be easy for us to do.

It's just while things are in limbo, I think that it's just hard to onboard somebody new and say, Okay, we're gonna give you this app, but we're gonna replace it in a couple weeks. So I think just starting to build a list of folks that will sign up for that and ready to get implemented in the next.

So I read through, there's tons of reviews out there. So on Capra, this is really highly reviewed. And what is most important to people is interesting. So it's simple, easy to use. I think the biggest thing is that it just impresses their end customer. Yeah, like I think they make significantly more money because they have Scout as an app.

So I, I love this angle of impress your customers, make more money. I think it's the easiest sale in the world. And so I we're really doubling down on content, producing a lot of stuff, a lot of blog posts on how to build a dog walking business and then how to grow it. I think we could be the go-to for that.

And I think it's a kind of a crazy way. Like a lot of these dog rockers can make six figures, like as an individual, which is wild. Walk multiple dogs at 20 plus dollars an hour, it adds up pretty quick. So I think it's just really cool. Like we're powering a lot of small businesses, like making them all better.

Yeah. Or better yet, like the thing that I've noticed from a couple of sales calls that I've taken is, I, they're somebody who has done dog walking, they just are hiring other people to do it, and they're using this product. To enable that cuz otherwise that's like a Google sheet, like trust.

Yeah. But we have all the safe cards built in where you have to be in the location. You got a gps, you gotta have a report card, you gotta take pictures. So it actually allows any entrepreneur who knows of the demand and can connect demand to the service like the platform to do that. Which is, That's the coolest part to me.

Yeah. And then this kind of plays into pricing. So the pricing is, it's super low right now and I was like thinking how it should be of going forward so you could easily just match what competitors do. And that's like a straightforward way to do it. But I like the idea of. Keeping it relatively low for solo, for the individual dog walker, making it just a no brainer.

Like you start with Scout always. Yeah. And then we just have a tremendous amount of education on like how you grow and you get multiple dog walkers, and then I think you really make your money on these bigger, bigger dog walking operations. And so we more raise those prices. And by the way, like in, almost every single call with the, and again, I'm spending my time on these calls with the.

organizations usually, but every single one has said, Hey, if we approach you guys with something that we wanted and we're happy to pay you for it, could you build it? And so that, that's another first where, we've entertained that with other companies, but this is a place where, there's clear demand and they have both sides of the market that makes sense.

Like they're collecting the funds. They will see a bump in revenue and they want to fund a certain feature, a development. I've never seen the amount of interest in that. And maybe it's because the prior owner has been a little bit more delayed on making any changes that they think, Okay while we have you let's take advantage of this.

But that's another sign that, there's a lot of room to grow. And I think to your point, like the larger companies have a fair amount of budget, I think, to work with now, not to say they, Company's trying to be effective, but I think that there are things that they have in mind that they could charge a premium for.

D different pricing models, different scheduling models, ways that they could do subscriptions. They're all super viable, as it is right now impossible for them to change how they run their business because of the software they're on. I'm pumped for this. I don't know if you saw the base camp guys that are doing a podcast where they explained their thinking.

So they've been playing around with pricing and they moved it to I think it was, like a hundred dollars minimum in. They were like provides a bunch of value. Like it kinda makes sense. Cuts back on customer service. But then they just rethought that and they're like, We basically killed our low end For companies like it just, if you have a small team, it just makes sense to use base cam cause it's too expensive relative to all these solutions.

So I don't wanna end up in that situation. So I kind of wanna, customer service is, will be brutal I guess for like a bunch of, little dog walkers paying not a lot of money a month. But just as a pipeline to grow, I think it makes sense. And then you monetize when they are making, a bunch of money.

Yeah, I think the natural expansion, we're already seeing the benefits of that. And, I'm wondering how much of this is. What I've noticed from all the conversations, everybody took a hit in covid and a lot of customers came to us during Covid because they were like, Hey, things are slow.

We hate our software. We wanna get on something new. Which explains a lot of the trends now that we're talking, it explains a lot of the trends that we were seeing where, hey this kind of went down during Covid at least at the beginning, but then, came roaring back and was a bigger business than it necessarily was, or at least has the opportunity to be the bigger business now.

Yeah, it's, I think this is a good example of, where you're gonna see seed expansion just happen naturally as time goes by, because if you have two walkers, I think in any geo, at least that I've seen so far, there's a demand for okay. People are pushing people away saying, Hey, we don't have the time that you want, or the slot you want, or the location you want.

Yeah maybe tools. How to get more delegation or more leverage from your staff. But yeah it's a cool mix. The other thing that I found interesting is the demands that, or the requests that people have are so different. Even in these big companies, they are based in larger cities for the most part, but some are based in.

Not, I wouldn't say rural, but let's say Daytona Beach, Florida, where the walkers are driving from location to location versus, a company in New York they want people to be able to walk from appointment to appointment. No bikes no, train needed. And so it's funny to see of the differences, but yet there's a lot of similarity across them.

I'm pumped. I don't know. Anything else you wanna talk about for scout? No, that's, it. Just heads. I'm digging into code, doing the stuff I like the most and building a team. I think that's the, the challenge that I think we always have is finding the right people. Thankfully we have some people from prior businesses that this has some similar pieces.

So on the infrastructure side, that's been nice to be able already have a resource base built out to just tap people and say, Hey, we've got something for you. And they know how we work. I know how they work. We trust 'em and they can move really fast. Cool. My one other update, I guess I've been looking into Constellation more and we're like modeling out a deal we're working on.

So how they do it is the first Chicago method. So they do a weighted four scenario approach to assess investments. So another way to phrase this is, M E C E. So mutually exclusive, collectively exhausted, exhaustive scenario. Mey. Yeah. So I thought that was a McKinsey thing. Maybe it is. But never knew how they actually did it.

And so the, they basically modeled it out, assign probabilities to like best case, base case, worst case scenarios, and then they decide whether that meets the, hurdle rate or not, and that's how they do investments. Yeah, that was always my, it was funny. Mey was always the thing that we had to do with, our tougher customers on estimates.

They want all the estimates and project plans to be. And it was from ex McKinsey, people that were beating me up about, my development estimates not being, clear enough and like I, we won't get into estimates, but yeah it's an interesting statement. Mutually exclusive, collectively exhaustive.

It means like you need to do all the work and be, the exhaustive part of it, but, Tie every single scenario into its own set and, finish the job and be exhaustive. Anything that feel like McKinzie just likes to have exhaustive in anything that they do. Yeah, we did all the work for you, right?

We covered all the bases. I then it's all on you. What's the probability in, like what is really the worst case scenario? Does it go to zero or does it like worst case actually stays flat. Yeah. So a lot of flexibility in there. Yeah. When they, they have these four scenarios, like how bad is, cuz any business could get cratered, but it's always like the, is it like a probability that they assign to it?

I don't, I would love to see like a true analysis of a deal that they've done. I haven't seen anything. If you, if anyone has anything out there, please share it with me and I won't say your name or anything. That would be awesome to see. But yeah, for vertical market software, it's. I don't know what the base case should be.

I don't think it should really ever decline, Marina software or something. I don't think they're gonna, all of a sudden churn out and, rip out their stuff. So realistically the base should probably be around flat, but, or factor in some like inflation price increases.

That should probably be okay too. Yeah, we're gonna have to find that Marina softer one day. Cuz we keep talking about it. The other thing that's been inspirational going back to scout is, learning about the competitors and wondering, I think it's enticing to think about rolling all these up.

I don't think it's a huge, a big enough space to probably merit that, but, it seems like there are two other major competitors, maybe three and even I've, had conversations with folks that either have been on them or are now currently on them. Nobody's happy. Everyone's just taking what is the least amount of pain for my business.

it's some amount of brain damage that you're incurring with any of these platforms. And I wonder if that's just the case everywhere and you're just never gonna be super happy with any of 'em. But, in, in these verticals, right? Like invoicing, database backups, those a little more broad maybe.

But like when you have like literally an operating system for this type of, is there just, there is no like fully content customer, it's just some variation of unhappy. Yeah. It's a always an interesting question. What is the best path to gross? Is it acquisition? Or if the competitors aren't very good, you just eat their lunch and you just keep taking, people away from them.

Yeah. But yeah, I would, I know who they are. I'd love to meet with them. See if there's something you work out in the future. Cool. Very cool. I think that's all I got on my end. Do you got anything? You wanted to talk through? No. Nothing really Cool. Excited to do this scout thing. Yeah, I'm pretty excited.

I wanna get back to it. All right. Take care everyone. Thanks for listening.

‍