Justin McGill on Leaving Services Behind And Going All-In On Products

Justin McGill on Leaving Services Behind And Going All-In On Products

Background

Today, on Hubstaff’s Agency Advantage Podcast, I’m talking with Justin McGill of LeadFuze who shares why he left behind a $360,000 a year service business to go all-in on a product.

Justin launched his first agency back in 2008 and built it into a 7-figure agency. Along the way he had his first idea for a software product. Thinking it was his million-dollar idea, he poured 10 months and $60,000 in development to launch the product, but the launch fell flat.

For his second startup, he wanted to do things the right way, and that’s how LeadFuze came about. LeadFuze started as a productized service agency that eventually released software tools for users who wanted to take a do-it-yourself approach. Business was going great, but Justin knew he needed more focus, so when the service side was doing $30k a month, he decided to shut it down and go all-in on the software, even though that side was only making $6k a month.

Since then, Justin has had his share of ups and downs, but today the business is bigger than before and the growth doesn’t show any signs of slowing down.

In our interview, Justin shares why he decided to shut down the profitable service business, the difference between selling software and selling services, and how agency owners can make the transition into products.

If you’re drawn to the software business like so many agency owners but need help finding the balance between your clients and your new project, then this is the episode for you.

Grab the transcript of my interview with Justin.

Key Takeaways

The decision to shut down a $360k/yr service business

When Justin decided to go all in on the software side of the business, they were making $6,000 a month from software, while the service side was making $30,000. This wasn’t an easy decision to make, but from the very beginning Justin wanted to build a software company, not a productized service business. In Justin’s opinion, you can only productize a service so far. You end up needing to hire more and more people to keep up with demand, which means that even as you’re making more profits, you’re incurring more overhead costs.

More importantly, Justin just didn’t want to run a service business. After all, clients expect to always reach a higher level of growth. No matter how well you deliver, you’ve got to keep scrambling to reach that next milestone. Justin wanted out of the rat race, and he made that a goal from the beginnings of his company. As he built up a traditional service business, he used what he learned from his own practice to build software that he could eventually release as a product to other companies. He also used the profits from his service business as a down payment to hire contractors and other employees to create the software product.

As soon as the software side started pulling profits, Justin pulled the plug on the service side. He wanted to make sure the software side had everyone’s focus, so the company wouldn’t get bogged down in the details of managing two very different products.

Learning to sell software rather than services

For Justin, transitioning to selling software instead of service wasn’t a stretch because of two factors. First, he got a good process in place to onboard customers. Clients started with a free trial, of course, but before they downloaded the product, they would first speak either with Justin or an SDR to make sure Justin’s product would actually suit their needs, as well as help set customer expectations on how to use the software and what it was capable of. After that initial contact, Justin’s product specialist gives the client the demo and another pitch for the software, selling not just the product but the ideas behind it.

Justin’s second secret was his network. He participated in a sales group, which led him to meeting Damian Thompson. Damian was a sales coach who asked Justin to stress-test his coaching process. Justin was so impressed with Damian’s skills that he ended up asking Damian to come on board at LeadFuze. Now Damian gets customers onboard with the software.

Advice to agency owners looking to launch a product of their own

Justin’s advice for agency owners who want to launch a software product starts with taking a look at your own business. If you have sufficient resources, set some aside to hire a developer to work on your software idea. Even if you’re a smaller shop, you can take something out of your own profits to hire a part-time contractor to create something to start with. Once you’ve got a usable product, you can then take a cue from Justin and launch it, then use its own profits to help improve it.

This might sound intimidating, but Justin argues that marketers have an inborn advantage in business. They might not be able to build a product themselves, but from their own experiences and experiences with clients, they know where market needs are. Once they’re ready to launch, they know how to sell their product and become successful. It’s just taking what you already know as an agency owner and applying it to your own product instead of someone else’s.

Transcript:

Andy Baldacci:Justin, thanks so much for coming on the show.

 

Justin McGill:You bet, Andy. I appreciate you having me.

 

Andy Baldacci:Of course. So today you run LeadFuze which was originally a productized service agency, and now it’s a software company that helps B2B sales team find contact information for prospects and [inaudible 00:00:15] email and follows up with them automatically. Can you share the story of how this all came about?

 

Justin McGill:

[00:00:30]

I guess it goes all the way back to my agency days. I don’t know where you want me to begin, but I can shorten that version up a little bit. Essentially, with my agency I launched it back in 2008. For me I was not a big fan of cold calling and spending my time doing that, but I knew that I needed to generate customers somehow.

 

 

 

[00:01:00]

I ended up building a couple different crawlers. One would do Craigslist for job postings that had SEO or digital marketing in it, for example. That would all get sent to me and I would respond like, “Hey, don’t hire someone, just use me instead for a fraction of the cost.” That was the pitch there. That actually helped me get my first paid customer on a marketing plan which ended up being close to $2,000 a month. That paved the way for the agency to continue quite frankly.

 

 

[00:01:30]

From there, built out some systems that would look up contact information based on keyword ranking. I would say “plumbers Phoenix.” I’m out of the Phoenix area, Phoenix Arizona. I would say “plumbers Phoenix,” and then I would pull in all of the companies that ranked on page 2 and whatnot. Basically there was a way for you to look up who is information and what not. I was doing this manually just to build out the process and then automated it.

 

 

[00:02:00]

Pulling contact information that way, and then I had an email template that I would use that would reference the company name and the key word I was looking up. Would send emails out that way ,and that got some more deals.

 

Andy Baldacci:Were you basically looking for people on the second page or after to say, “Hey let’s move you up to the first page?”

 

Justin McGill:

 

[00:02:30]

 

 

 

 

 

[00:03:00]

Yeah, that’s exactly it. Not having necessarily a sales background and not wanting to spend time cold calling, I wanted something more scalable so I built these systems up. Then, ended up scaling out the agency, built that into a seven figure business, put a team in place, but I was ready for the next challenge. I wanted to get into software. I was just done with the service side of things, so I ended up thinking I had an idea which was a product called [inaudible 00:02:48] which basically campaign management software was something we had built for our agency to manage ongoing, recurring marketing campaigns and the tasks associated. Must like task management apps or for one off projects like web projects.

 

 

 

 

 

[00:03:30]

I thought that was my million dollar idea. Let me run with that. Ended up basically doing everything wrong. Spent 10 months in development. Didn’t talk to anybody about it. Spent 60 grand on it during that. Ended up just launching out into the wild. Didn’t really put anything into a prelaunch effort. Didn’t talk to potential customers about it. Needless to say that fell flat. I was gonna shoot for a 30 day goal just to let me know if I’m on the right path or not.

 

 

 

 

[00:04:00]

For that particular business I said, “OK I’d like to be at at leas $500 in MRR within the first 30 days.” Monthly Recurring Revenue. When I launched that fell on deaf ears and never got to $500, so I was like, “All right, I don’t want to be stubborn about it. I need to re-evaluate what I have at my disposal, and maybe launch a different business instead.”

 

Andy Baldacci:What made you so attracted to software? You had built a seven figure agency. What was this draw away from that and towards something new, something different?

 

Justin McGill:

[00:04:30]

I guess my personality type. I like the challenge. I like using software products. I’m what you might call a SaaS-hole. I just love interacting with different tools that can potentially help me be more productive. I’ve always been drawn to it. Felt like I wanted to apply what I knew from a digital marketing standpoint towards my own product versus for client. I thought it would be a great experience just doing it for myself. That’s ultimately what led me down that path.

 

[00:05:00]Obviously that could have meant any type of business. I didn’t want to do service any longer. I just felt like software was this emerging thing. Software as a service in particular was this emerging vertical that … Especially in the marketing space there’s just so many market. It’s insane. I felt like I wanted to get in on that. That’s ultimately a big reason.

 

[00:05:30]

Andy Baldacci:

 

You launch [inaudible 00:05:27]. It’s almost launching to crickets. You learn a bit of your lessons, and you go back to the drawing board. What happens then?

 

Justin McGill:

 

 

 

[00:06:00]

At that point I decided I don’t want to spend 10 building out another software platform and have the same thing happen. I decided to look at what I’d already had. That was some of those legion tools I was tell you about, and said, “What if I provide a service around that just to validate the business and help fund it?” Knowing that it would transition into a software company, but initially it would allow me to charge more, validate that people were interested and they would pay for something like this, and allow me to fund the actual development and build a team and all that good stuff. That’s how it started.

 

 

[00:06:30]

 

 

 

 

 

[00:07:00]

I actually launched the business over a 24 hour period in December of 2014 and got it out there, got it connected to Stripe and could accept payments right away. This was like a week before Christmas and not the best time to lanch a business, but needless to say, I said wanted to generate $1,000 in recurring revenue in those first 30 days. I lined up conversations with people towards the end of that year. I think our first customer came on December 29th, so I was already about two weeks into my 30 day goal. At the time I was just charging like $300 a month because I wanted to test it out see if it could be sold. Didn’t know what I should price it out.

 

 Fast forward a couple of weeks, and we had a handful of customers and achieved $1,000 of RR. At that point I knew I could actually focus on that as a business. The rest is history, I guess, at that-

 

Andy Baldacci:So you’re doing this fully productized. Are you working with VAs?

 

[00:07:30]

Justin McGill:

 

Not initially. Actually going towards outsourcing the development initially. That was the plan. I was actually in a different entrepreneurial community called The Micropeneur Academy. It’s a group by [inaudible 00:07:43], and I got involved in that crowd. That’s been great.

 

 

 

[00:08:00]

There was a developer in there that was interested in working on something with me. He knew I had the marketing background, so we talked through different ideas. We were actually going to explore even a different one if LeadFuze wasn’t taking off. Luckily, that happened, so he really wanted to get involved. He came on board instead. I canceled the original agreement with the other developer that was building because this was actually going to be done in a different language. That’s how that all got started.

 

 

 

[00:08:30]

A few months into it I was just overwhelmed. I was needing to write all of the email copy that was going to be going out. I was needing to run our software in the background which was not really ready for this type of use. It was built for me initially. It just got overwhelming, so eventually I brought on a virtual assistant to help. Then actually brought on somebody that I had worked with at my agency to help write email copy. That way I could just focus on sales. That’s how that happened initially.

 

Andy Baldacci:What was the time on when did this early edition of LeadFuze launch?

 

Justin McGill:As a productized service or-

 

Andy Baldacci:Yeah.

 

[00:09:00]

Justin McGill:

 

The productized service launched just before Christmas in 2014. Then, basically in July of 2015, so about eight months later, we launched the first version of the software product. That was just a prospecting tool at that point. Now it’s evolved quite a bit. At the time it just gathered contacts and trying to find email addresses.

 

[00:09:30]That was something we were using internally to actually look up leads for customers. By then we had three or four virtual assistants that would actually go and build lists for our done for you customers. Eventually we started to phase that out. After the software was launched we wanted to get more exclusively focused on the software. My long term vision of this was never to stay in the service side, so wanted to make that transition which was a pretty big decision actually.

 

[00:10:00]It was decided the end of 2015 to really exclusively focus on software. We phased out acquiring new customers. By the end of April 2016 we completely eliminated the done for you service.

 

Andy Baldacci:When you made that decision to start phasing out, roughly what was the MRR of the service side of the business?

 

[00:10:30]

Justin McGill:

 

Great question. Around 30,000 MRR on the service side. The software was at about 6,000. It was a gamble, there’s no doubt about it. I’m a poker player, so I’m okay with those types of gambles. It was definitely a big risk. I ended up taking a loan out in the business as well just to try and bridge the gap a little bit. Luckily, shortly after …

 

[00:11:00]

 

 

[00:11:30]

In April we ended up closing the done for you service, and we entered April at 11K MRR with the software. That month we added 13K in MRR, so we got up to about 24K. We really maximized our email list at that point. We put out an exclusive offer to write people’s email copy which at the time that was just unheard of. Now it’s actually just a built in part of our package offering. At that time, it was like an exclusive offer for a week timeframe. It was actually like five days. A week later we ran a special for an increase in leads. Those two timed specials ended up working out pretty well. Drove a lot of conversions.

 

[00:12:00]We ended up havign quite a bit of churn in May just because people just wanted email copy written. There was some drawback there for sure, but we’ve obviously since been able to stabilize. But April was a key month for us. It was the most we officially closed everything off on the done for you side, and luckily we were able to exponentially grow the revenue on the software side. At least soften the blow, so that we weren’t negative.

 

Andy Baldacci:

[00:12:30]

I want to back up a little bit to when you’re making that decision to go back and shut down the service side of the business because I know you’re friends with Brian Casel. If you follow his productized model, at least as an outsider, it seems like you had a lot of systems in place. You had your [inaudible 00:12:44] delivering that. Why couldn’t you just leave that alone and let it keep operating? Maybe not spend a lot of effort marketing, but why did you have to actually shut it down?

 

[00:13:00]

Justin McGill:

 

 

 

 

[00:13:30]

 

Actually Brian and I talked about this for awhile. Productizing a service can certainly help scale revenues beyond if you didn’t have some sort of system in place, but I don’t necessarily believe that it’s truly a scalable process. You’re ultimately just going to keep needing to hire more people, and you’ve gotta expand the team on a consistent basis to fulfill that service. We had a little bit of a debate about this on the scale podcast in a episode awhile back even.

 

 

 

 

 

[00:14:00]

Essentially, I didn’t want to be in a service driven business. I did not want to dilute the marketing message either. I wanted our website and everything to be … When you thought of LeadFuze, it was a product. It was a platform. I didn’t want the confusion around this service site, frankly, as part of it. I think the focus. I think ultimately if we we’re trying to sell both, we would have not been as successful at either one compared to if we just focused on one or the other exclusively.

 

 

 

 

[00:14:30]

At the same time it was still a headache to manage. We had a lot of processes in place. This is something where, and I’m sure a lot of agency listeners can attest to this, where in SEO if you get a client to rank well in search results. Now they want more key words. It’s never like, “Oh this is great.” It’s always more more more. If you’ve generated five leads for a customer that their average value is $10,000 that seems like it’d be great, but now they want it 10.

 

 

 

[00:15:00]

So gotta set expectations obviously up front and during the sales process which we try and do, but at the end of the day, they’re always just gonna want more. Even going back to my agency days where I just did not want to provide a service. I wanted to be removed from that. It served a great purpose in the fact that it allowed us to validate the market and ultimately what we were building.

 

Andy Baldacci:

 

 

[00:15:30]

Right because it seems like it wasn’t even as though you launched as a productized service. Thus what you’re doing is really an MVP just to validate that the market is there. Almost being like the man behind the curtain like you’re going to be selling it like this. You’re going to be doing a lot of the work behind the scenes while you build the software to be able to do it more automatically. Is that a fair way of phrasing it?

 

Justin McGill:That is a perfect way of phrasing it. That’s exactly what it was. The productized service was really just an MVP service. It was a sellable MVP that we could charge for right away. It was obviously key to being able to self fund it. I didn’t want to spend 10 months and another 60 grand hoping that this next product was gonna be better.

 

[00:16:00]

Andy Baldacci:

 

So you’re experience up until this point has been selling services. You had your agency, and even when you were selling the done for you service, it was still a service. What were you thinking when you were getting ready and when you were releasing the software? Did you think about, “All right are things going to be different?” Did you try to just approach it the same way? How did you get ready for the change from service to software in terms of your marketing and sales?

 

[00:16:30]

Justin McGill:

 

 

 

[00:17:00]

 

It was interesting because with the sales process with an agency, it’s tough. There’s a lot of competition. Everybody’s a marketing expert these days, so you’re up against that. Price is obviously a big factor. At the same time, it’s not necessarily like, “Oh my god if I don’t do this, I’m going out of business.” I would argue that it’s a asprin. It’s a must have. From a company perspective or a perspective client, there perspective is that it’s more about, “Well this would be great, but my doors are still open.” So that sense of urgency just wasn’t there. Those sales cycles were rather long. They can be.

 

 

[00:17:30]

 

 

 

 

 

[00:18:00]

With LeadFuze of the productized service, it was pretty interesting because oftentimes these were just one call closes. That helped prepare the sales process for the software in the sense that there wasn’t this long robust sales process where you needed the right type of sales content and different [inaudible 00:17:42]. It was basically if I felt like they were qualified when they would fill out a form, and the form just asked about their target market and what they business was and everything, if I felt from there that they were a fit, we’d hop on literally a 15 minute call. I got a very strict script that I stuck to time and again and then would ultimately end the call with, “Is there any reason why you wouldn’t sign up?” That would uncover objections or it would get them to commit. That was it. I had a follow up canned message in my Gmail once those sales calls were over. That was just directing them to the sign-up.

 

[00:18:30]That process carried over into the software side where obviously we started with a free trial. We still do, so we get them into the trial. Then for … Right now we’re actually doing this whole qualification process, so there’s a discovery process that happens. We’ll have an SDR actually call the free trial sign-up, qualify them, make sure that we’re a good fit for them too, then if so they’ll schedule a call with what we call a product specialist which is my chief sales officer.

 

[00:19:00]Then he’ll actually deliver the demo. We got a process for that about just the world is changing and you need to adapt. Then we showcase LeadFuze, and then from there we know typically then if they’re going to sign up or not.

 

Andy Baldacci:Is that process required for someone to sign up for LeadFuze today? Do they have to talk to someone to sign up?

 

Justin McGill:

[00:19:30]

 

 

 

[00:20:00]

No, as of right now, no. You can actually sign up yourself. You can then sign up to a paid plan. You don’t have to go through any rep or anything like that. That may change. We’re seeing that customers that cancel or raise a lot of support tickets. Those are ones that typically are not people we’ve spoken with during their onboarding process at least on the phone. We kind of want to get them into our way of thinking and be able to set expectations and do all those great things that you just can’t do without being on the phone with them. We may change that a self-service option right now. For now the plan is just to continue on, but obviously look for opportunities to improve it.

 

 

[00:20:30]

We just hired three SDRs, so we’re trying to make sure that we’re reaching out to free trial sign-ups more quickly. We weren’t doing it at all really and just relying on them to convert which was doing okay. The free trial to paid conversion was about 8%. Not requiring a credit card up front. We obviously [inaudible 00:20:41] that, but that’s why we were the SDR team. Now we want to actually reach out and facilitate those conversations up front.

 

Andy Baldacci:

[00:21:00]

For someone who’s, I’m imagining agency owners who are listening right now and even you, that when you’re coming from the service side of business, you have people who close deals. You have people who manage the accounts. You have that process, but you don’t really have the more Silicon Valley, SDR account executive kind of clear structure of how a sales organization works in this type of business. So where did you get that expertise and experience to actually start building that out?

 

Justin McGill:

[00:21:30]

 

 

 

[00:22:00]

I actually had, through the Zero Scale Podcast I had someone reach out to me that was in similar circles named Damian Thompson. He was launching a sales coaching program and offered to have me come in to that program for free in exchange for feedback and helping him create his process as well. I took him up on that and we talked regularly, weekly had regular calls, and that was about 9 or 10 months into it. I just brought up him coming on board at LeadFuze and putting it all together. 24 hours later we hammered out a deal, and me came aboard. He’s literally in the conference room right now doing a live demo call with a couple of trainees over his shoulder. That’s how we put that all together and built that system.

 

Andy Baldacci:

 

[00:22:30]

If someone is listening and they don’t have access to a network where they immediately know someone who they could reach out to or who would reach out to them to help compliment their skills, what advice would you give on how to find a partner like that?

 

Justin McGill:

 

 

 

[00:23:00]

First I would recommend reading The Sales Development Playbook by Trish Bertuzzi. It’s a phenomenal book. It talks about sales process. It talks about how to compensate sales people. It’s just a really good read. That’s for anybody. Anybody listening should have that book on their nightstand. It’s a really good book. That’s for if you don’t know anybody. But even if you do, I still think you should read that.

 

 

 

 

 

[00:23:30]

If you want to find a coach, I could certainly introduce you to several. I know now that I’m in this space. There’s a couple of options. You could join a mastermind with people that are like minded. You brought up Brian Cassel. Him and I were in a mastermind together. A mastermind is just a group of people that they get together say once a month. It could be more often if you like, but once a month or once a week or however often. Ultimately, just talk about your business challenges. These are people that are in similar situations as you, so they may not always have the perfect roadmap for you to follow but there’s some great advice that can come from that.

 

 

[00:24:00]

If you’re looking for more of a coach, Google it. There’s courses. There’s actual people just Damien was for me that would take me under their wing and pass down their knowledge. I’m a sponge for that stuff. I just want to soak up as much as I can. Those are the [inaudible 00:24:14]

 

Andy Baldacci:

 

 

[00:24:30]

No, I mean those are all great suggestions. I think, at the end of the day, while there are going to be best practices, while there are going to be different pieces of advice that help people get to that next step, get there, you really do need to be curious. You need to be willing to put in the hard work to learn.

 

 It’s funny because, when you were talking about what was necessary to figure these things out, you dove head first in. Obviously Damien reached out, but you’re still taking course. You’re still spending a lot of time learning these things. Reading books and all of that. It seems like that curious, willing to learn attitude has helped you a lot to this point. Do you think that’s fair?

 

Justin McGill:

[00:25:00]

You just nailed it. Curiosity for me is one of the number one traits I look for during the interview process. For us, we have three core values. Number two is a thirst for knowledge. We want people that are trying to educate themselves. They’re reading books. They’re listening to podcasts. They’re doing whatever they can to improve themselves both professionally and personally. It doesn’t’ always have to be business books. Expand your vocabulary by reading any sort of book.

 

Andy Baldacci:Just do something.

 

[00:25:30]

Justin McGill:

 

Do something. We had to let go of one of the trainees after their first day because that was not their personality. They were not going to read. They just weren’t a good culture fit. For us we want to be around smart people. We want to be around people that get shit done. That’s our other … I dunno if you allow swearing.

 

Andy Baldacci:Too late for that now.

 

Justin McGill:

[00:26:00]

The thirst for knowledge, the desire to learn is a big thing for me. Something that we vet during the hiring process, and we hire and fire based on that. It’s certainly an important trait.

 

Andy Baldacci:How big is your team now?

 

Justin McGill:Right now we have six full-timers and we have two more part-timers right now. We’re hiring for a content person. We’re hiring for sales as well.

 

[00:26:30]

Andy Baldacci:

 

At this point, have you surpassed the MRR that you’ve given up by getting rid of the service business?

 

Justin McGill:

 

[00:27:00]

Yes. We’re at 36K MRR now and this is early Feb. We went through just a brutal stretch of … Our original CTO left in August of last year and just ultimately wasn’t quite cut out for this business. Over the next three months the product just stopped working. We were failing to deliver on our promise, so we were just losing customers left and right. We were at 30K MRR last July, and ended December right at 30K MRR. It was crazy.

 

Andy Baldacci:

[00:27:30]

Is a lot of that because of churn? I’m guessing it didn’t just stay literally flat. You had new customers coming in, some leaving.

 

Justin McGill:

 

 

 

 

[00:28:00]

Absolutely. We were adding $8,000 a month in new revenue and losing $8,000 a month in revenue. It was pretty wild. The product was just not working. We were a SaaS company. We had no engineers on the team. It was a brutal three, four month stretch. Obviously it was just a hard core focus on getting the product straightened out. I went through several different contractors. I went through part-time developers, but ultimately when you’re doing something like that, it’s not their primary focus. Because of that, you’re never a priority, so you’re sense of urgency is not theirs. The product was not getting fixed at the rate we needed it to.

 

 

[00:28:30]

Eventually we got an awesome engineer in place now, and the product’s stabilized. In the last month we’ve added 6, 7K profit to our monthly recurring revenue. Now we’re back off to the races again. We’re just coming out of that, so that’s been quite the interesting experience. Very difficult but thankful for the situation we’re in now.

 

Andy Baldacci:

[00:29:00]

I had asked you before the interview what was most surprised you about making the change from the service business to SaaS, and you said you didn’t realize quite how much was involved on the tech side. For someone who say might currently run a marketing agency, how could they best prepare for some of these features if they are going to get into the SaaS side of things.

 

Justin McGill:

 

[00:29:30]

 

 

 

 

[00:30:00]

One of the things I did, if you’re not a technical person, is try and find a technical person. Maybe you’re not gonna hire them. Maybe they’re just crazy successful and they’re making 10x what you could pay them and all that good stuff, but if you could have them maybe interview a couple of candidates for you and actually do code review and just do some vetting for you up front, it’s worth it. I did that myself. I had a super senior guy out of the Silicon Valley actually agree to do some interviews of candidates that I brought to him. Through that process I was able to find the guy that we’re using that’s just awesome. He’s on the team. He’s a stakeholder in the business. That came from this guy’s reviews.

 

 

 

[00:30:30]

Just reaching out, and I had not relationship with this person that did that for me. Just finding a senior person to vet your potential freelancers or early stage CTO or something. When you’re not a technical co-founder or founder, you don’t know. You don’t know what the skill sets are. That definitely proved worthwhile. I’m very thankful that we had the opportunity to do that.

 

Andy Baldacci:How important was it to actually get that engineer full-time on staff rather than working with freelancers or part-time people?

 

Justin McGill:

[00:31:00]

 

 

 

 

[00:31:30]

He was part-time initially. He just had a exit from a company and was find just doing part-time but wasn’t really too interested in taking on a full-time job. I basically just got on my hands and knees and asked what do we have to do. He’s actually out of the country, so I was like I’m willing to fly there. What do we gotta do? We have to make this happen. I want you to just stop any other little side projects. I want you to come on board full-time. This has just gotta be 100% focus. We were able to hammer out that deal and get him on board full-time.

 

 Then we got a junior developer to work with him as well. That’s just worked out tremendously. That’s strong now. I mean I basically just had to beg.

 

Andy Baldacci:

 

[00:32:00]

 

 

 

 

 

[00:32:30]

It’s interesting the way I listened to you tell the story because working with some early stage startups myself and seeing how things work is that people love talking about churn and marketers love writing about churn, but so much of the churn advice is on little hacks and different ways to do onboarding and to do these different things. That stuff is important of course, but in the early stages of a startup, a lot of your churn is going to come from having an unstable or unfinished product. It just doesn’t have what the users need. That’s what up front it does make sense to really heavily invest in engineering resources to fix those things because it doesn’t matter how great your onboarding and your direct emails and all of that are if your product, at the end of the day, isn’t stable.

 

Justin McGill:

 

 

 

[00:33:00]

 

 

 

 

[00:33:30]

Absolutely, and there’s product market fit that you need to find early on. The little churn hacks that you read are certainly later stage. Those are problems when you’re a little more mature. Early on just having the technical side of it. I don’t think you can ultimately be … Obviously it depends on what success means to you. If it’s a $5,000-10,000 sign business or full-time business but that’s your income and you feel like that’s successful, then great. For me I had bigger aspirations, so I could not have launched the business and gotten to this point and where we’re going without somebody full-time dedicated versus a contractor or something like that that’s building it out in stages. That’s the typical path you go down is, I’ve got some money here that I can invest into it. Let me find a contractor, and in three months we’ll have the product. Once you do that, now you need to iterate on that product and you’ve gotta fix bugs and add new features. From a project standpoint, it might work initially, but for you to get any sort of scale you’re just not going to be able to do it that way.

 

[00:34:00]

Andy Baldacci:

 

I think also, speaking to that point, if you didn’t have bigger aspirations, you probably wouldn’t have shut down the service side of the business.

 

Justin McGill:

 

 

 

[00:34:30]

Absolutely ’cause I could have turned that into some bigger business easy. We were well on our way. I ended up shutting that down pretty early. If that was what I was after, then I could have done that. Like I mentioned earlier my personality type, I wanted the next challenge. For me, I want to 10x the agency at minimum. I just didn’t feel I was gonna get there with [inaudible 00:34:37].

 

Andy Baldacci:Assuming this is going to at least settle down the churn problem for now and it’s gonna help with growth an all of that, what is the next challenge that you really think you need to face going forward?

 

Justin McGill:

[00:35:00]

I think there’s always going to be challenges for every stage you’re in. For us right now it’s scaling out a sales team. It’s actually doing more all in the marking side. That’s obviously my background. Our key word rankings are continuously going up. Our traffic levels are continuously going up which is great, but we’re not even scratching the surface. We’re doing some in depth blog posts that are performing well. That’s about the extent of it from a marketing standpoint.

 

 

[00:35:30]

There’s so much more to do there. We’ve done no paid advertising. We don’t do anything really on social media. It’s basically been blog posts. We’re really focused on a lot of guest blog opportunities this and producing … Our goal is to have over 100 blog posts published on our blog this year. We want to do at least 50 guest posts this year, so we’re well on our way there.

 

 

[00:36:00]

From there obviously I want to tie more into attribution. Where these deals are coming from and what content is driving revenue. There’s all these things that we’re not doing. There’s a ton that we’re not doing, so I’m looking forward to starting to dive into those challenges.

 

Andy Baldacci:

 

 

[00:36:30]

You have, not necessarily a common story, but it’s a familiar story to a lot of people who are maybe currently running marketing agencies and they do want to get into products because they think to themselves, “OK I have all this marketing knowledge. I’ve been doing this for clients for years. If I get this product built, then I can just focus on the marketing, and I can just shoot it to the moon right away.” As you’ve found that once you really let that product out into the wild, a thousand other things popped up. It just made it that you couldn’t really even find the time to actually work on what originally drove you the business it seems like.

 

Justin McGill:

[00:37:00]

That’s a great point. Very limited time to actually perform any of those marketing activities. Right now one of our hires is actually a marketing person, but we’re two years into the business now. It’s been on my shoulders up until this point.

 

 

 

 

[00:37:30]

I will say that I do think agency founders, digital marketing agencies in particular, have a great opportunity with any business they want to get in to. As long as there’s a market of people that will be willing to pay money for whatever it is that you want to do or build, having a marketing experience just’s been so helpful. We would not even be sniffing where we’re at if I had no marketing background.

 

Andy Baldacci:

 

 

 

[00:38:00]

It talks to what you were mentioning earlier about the importance of validation is that you can’t just skip that step, but once you’ve done the step, once you’ve validated that something is there and that there’s a market that wants, which basically is validation I guess, but once you’ve done that, once you’ve hit that step, then that’s when those marketing seals come to play. Because, at the end of the day, if there’s a problem, people are willing to pay for it, and there’s enough people, it’s really just all about marketing to get to those people.

 

Justin McGill:That’s exactly it. I know for us we’ve had 120 inbound free trial sign-ups in the last three day. It’s moving fast, and that’s with limited marketing effort.

 

Andy Baldacci:Where do those come from?

 

[00:38:30]

Justin McGill:

 

 

 

 

[00:39:00]

 

Just our content. It’s all inbound. Our sales team is literally in training right now. We don’t even have an outbound sales team going right now. Everything’s coming inbound. That’s from search engine rankings. That’s obviously my background and [inaudible 00:38:46] content. We’ve been producing content since really the very beginning of LeadFuze. I had a focus on that, so those efforts are starting to compound now. More and more key word rankings. More and more traffic which is nice.

 

 

 

 

 

[00:39:30]

Now from here it’s like now that I actually am starting to be able to focus on marketing, those results are coming in. I could not have been able to do that with a broken product, though. That’s what we had, so obviously my time was fully there for several months. I’m still the one that’s overseeing the product development. I’m not doing anything, but I’m involved in the direction and involved in daily standups and all that good stuff with our [inaudible 00:39:37] team. It’ll be nice to be able to start focusing on what I’m good at for sure which is on the marketing side.

 

Andy Baldacci:It seems like it’s easy to underestimate just how difficult it is to get a stable product built.

 

Justin McGill:

[00:40:00]

 

 

 

 

 

[00:40:30]

Especially when you’re using multiple data providers because sometimes your product won’t work because of a data provider. Sometimes just [inaudible 00:40:00] companies like Trello we just have this platform and really you don’t need to do anything to it anymore. Obviously they’re gonna continue to try to innovate, but it’s just so basic, so simple, there’s not a whole lot to it. Our software there’s so much happening, and when a user adds a lead, we’re calling several different data providers. It’s not just loading a variable from a data base. There’s more to it. When you’re doing that, there’s more that can go wrong. Different parts of the app can break. You’re fixing things you fixed last week. There’s all kids of little nuances like that. It’s important obviously to try and have a stable product first and foremost.

 

Andy Baldacci:

[00:41:00]

Throughout this interview we’ve talked a lot about different pieces of advice for agency owners. I thought it was pretty cool the way you kept just adding in reaction stuff. I appreciate that, but I want to say, before we start wrapping up, do you have any advice either to yourself at the point when you first go into this or to other agency owners who are at the turning point where they’re ready to start building their own SaaS? Do you have any advice that could help make it easier for them?

 

Justin McGill:

[00:41:30]

 

 

 

 

[00:42:00]

I guess it depends on where you’re at with your agency. I would recommend blocking out some resources at the agency to actually try and put those resources to work on a different product or a new product that you could launch. If you’re a smaller shop, I would just think about the agency kind of being the tool that will allow you to self-fund that development. Depending on [inaudible 00:41:53] if you’re a [inaudible 00:41:53] shop that can be tough because you need to get the bills paid. In that case you probably don’t have much else of an option but to find some sort of a contractor, and perhaps even an offshore contractor depending on where you’re at financially.

 

 

 

[00:42:30]

 

 

 

 

[00:43:00]

Sites like Upwork can be helpful. I’ve had a ton of success through Upwork. I’m in the top 1% of spenders in Upwork. Two different companies. My agency was and even LeadFuze is. There’s really good talent there. I fee like from a software standpoint, for that business to end up scaling and becoming successful, you’re going to need somebody that has CTO material that [inaudible 00:42:46] experience meaning they know something our original CTO didn’t have. That hurt us when we started to grow beyond what he built the system for, so we have to move over to AWS. We weren’t on AWS initially. He had no experience in AWS himself. Luckily our new guy, he knows all about it. In fact I’m actually looking at dashboard right now inside of AWS that tells me all these key metrics within the app and alerts me if something’s going wrong. So just finding somebody with that level of experience as well, not just coding, can certainly make your life so much easier later on.

 

[00:43:30]

Andy Baldacci:

 

Honestly you’ve given us a ton about tips to follow, things to avoid, all of that. I think, if people out there are running a service business right now, don’t necessarily throw away 30K MRR and dive right in. You might not have the risk tolerance that Justin has, but at least he has given you a ton to start making the transition and start getting your feet wet to see what works. Justin thanks a ton for that.

 

 

[00:44:00]

What I like to do before I wrap up is I like to ask all the guests if you just quick rapid fire questions. Don’t worry about shortening your answer, I’m just gonna ask then one after the other. We’ll go quickly with them.

 

 The first one is: What do you spend too much time doing right now?

 

Justin McGill:Probably talking to the team in slack. Need to spend more time shutting that down and focusing on what needs to get done.

 

Andy Baldacci:What do you not spend enough time doing?

 

Justin McGill:

[00:44:30]

Marketing. That’s my background and it’s what I want to focus on. Just other responsibilities and things popping up. We just moved into a nice, new office here near Scottsdale, so a lot of energy being spent there. Marketing is where I want to focus.

 

Andy Baldacci:To that point, in the next quarter what are you hoping to accomplish?

 

Justin McGill:

 

[00:45:00]

Want to roll out some major, game-changing features with LeadFuze that are being worked on now. That’s gonna be the big things. We’re gonna be rolling a new explainer video on the website as well to comp on that. More content. I’d like to have a content person hired as well that can oversee all our content production process. Have our sales team running and have these guys last and be successful. All that in this next quarter.

 

Andy Baldacci:What is the biggest obstacle to actually achieving that in your mind?

 

Justin McGill:

[00:45:30]

I think just being pulled in too many different directions. We’re talking about the three pillars of the business. The product and its marketing and its sales. Those are the three things, and all of those need to be working together for us to ultimately achieve all of those things.

 

Andy Baldacci:Early you had mentioned about having big aspirations, so the last question I just want to ask is: What are the actual long-term plan for LeadFuze?

 

Justin McGill:

[00:46:00]

By the end of this year, we want to be at 120,000 MRR. By the end of next year we want to be at 500,000 MRR. Ultimately we want to have 5,000 paying customers in our average plan on our middle which is automate which is $500 a month. Our WiFI password is 5Kcustomers. That’s our long-term focus.

 

Andy Baldacci:

 

[00:46:30]

Justin, before we say goodbye, where can people follow along with your journey and see what you’re up to and just get different. This is something I’m definitely going to have to edit. I don’t know why I’m so tongue tied on this one. One last shot for this one, Justin, one second. Gotta reset the brain.

 

 Justin, before we say goodbye, if people want to follow along with your story, if people want to get advice from you and see what you’ve been up to and how the journey is going, where is the best place for them to go?

 

Justin McGill:Probably just LeadFuze.com. They can shoot me an email if they’ve got questions. Justin@LeadFuze.com as well.

 

Andy Baldacci:

[00:47:00]

Awesome and we’ll make sure to get all that linked up in the show notes. I won’t put your email address here ’cause I don’t want you to get spammed into oblivion, but if listeners want to shoot you an email, they are more than encouraged.

 

 Justin, thanks so much for your time. I really appreciate it.

 

Justin McGill:Thanks a lot, Andy

 

Want to learn more?

The best place to contact Justin is through his website, LeadFuze.com. If listeners have questions, they can email Justin: Justin@LeadFuze.com.

Resources mentioned:

FounderCafe

Zero to Scale Podcast

The Sales Development Playbook by Trish Bertuzzi

Brian Casel on How to Profitably Launch a Product as an Agency

Thanks for listening!