Thomas has experience providing M&A advisory services to small to medium sized online businesses. He helps people understand the value of the businesses they’ve created. He has terrific insight about positioning your projects & businesses to grow that he’ll be sharing at LTV.
His company, FE International, finds a good home for businesses when it’s time for the founders to move on.
Life.Time.Value is a one-day, single track conference for only 160 people who don’t want to spend their working lives trading time for money. We’re hosting it on the 19th of April in Brighton in the UK.
For tickets to the conference more details go to ltvconf.com.
Garrett was a client of Thomas’, selling his bug tracking SaaS
Selling a Software Business
Patrick McKenzie sold his Bingo Card Creator app to focus on other projects.
Last year’s videos
The videos from Life.Time.Value. 2016.
How much should I charge for my digital product?
Blog post of George’s talk at last year’s LTV.
Hello and welcome to the Life Time Value Podcast, I’m Andy Croll. In this show we’ll be meeting one of our 2017 speakers, Thomas Smale. Hello, Thomas
Hey Andy, thanks so much for having me on.
I’ve sort of been aware of your work over the last few years through selling the businesses of, sort of, well-known people in the bootstrapping industry. Industry? Wrong word.
The bootstrapping community, absolutely. So rather than me introduce you, why don’t you introduce yourself?
Sure. So if we go back to, I guess, the very start of my career that was back in 2009/2010, I was still at university unlike most students looking for ways to make some extra cash. At the time, I tried various things but I got into buying websites which I had established as I was doing a business degree. I liked the idea of buying something and selling it on again regardless of what that was. I didn’t really have any technical skills, I didn’t really have any money. So I was buying websites for less than £100 or $100. Doing a little bit of work and learned to improve the business and then reselling.
So I did that for a little while, making a little bit of extra cash while I was still studying. And then when I graduated I decided to write a book about how to buy and sell websites, figuring that I’ve done it a lot of times, it would be a good way to kind of start off a business and not have to go get a real job. So it did really well, it got far more popular than I ever expected to a stage where I definitely didn’t need to go get a job. But off the back of it as well, people started approaching me saying, “Hey Thomas, I’ve read your book, it’s really helpful, I could get the concept of buying websites and selling websites but can you just sell my website for me?” So that’s how I accidentally fell into the world of brokerage where I would help someone sell their business, Although at the time it was nowhere near as sophisticated a service where we’d basically list their business for sale and manage Q & A throughout the process.
So I did that quite successfully for a while, continued buying and selling. And the first two years of FE International, so between 2010 and 2012 was a real variety of brokerage, buying and selling our own sites, building our own sites. And then in 2012 towards the end of the year, my current business partner Ismael joined. His background was investment banking and we’d got to university together and I actually asked him to join because I didn’t really have the skills to grow the business as business. I knew the industry very well but I was definitely not like the business guy as such. And I also didn’t really have the formal experience that he had in banking to do the bigger and bigger deals that we’re doing today. So he joined and then we decided to pivot and almost entirely focused on brokerage which is what we’ve done since 2012. Since then we’ve grown the company to a team of 23 at the moment. Very profitable. We have an office in Boston, which is our head office. A small office in Landon. Also, a small office in Saigon, Vietnam.
So that’s the team at the moment and that’s the company at the moment. We also run a 7-figure portfolio of sites, particularly in the SaaS industry. We found throughout the years that from a client perspective, it’s a much more credible story if you’re actually buying and selling yourself and actually running these businesses rather than trying to persuade other people to sell their million dollar business or part with a million dollars to buy a business. So that’s always worked well for us. And so we do focus on it a little bit just to make sure we’re keeping up with the times and also practicing what we preach in terms of putting our actual cash where our mouth is.
Some of these businesses that you own, how do you run those? Do you sort of – you buy them and then have people who sort of do the day-to-day and you sort of act as a board? How does that work?
That’s a good question. That’s kind of developed over time. Like when we first bought sites it would be me or maybe Ishmael or someone in the team doing the day-to-day. Now, we either inherit people who came with the business, the people who’re already working on it and we’ll keep them and then maybe bring some of our own team in. And then myself and or Ishmael will act as, I guess, a CEO or someone at the top kind of looking down but not really involved in the day-to-day.
One of the SaaS companies we own, we’re actually hiring for a CEO at the moment because it’s mid five-figure MRR business, needs a little bit more focus than a few hours a day for myself and Ismael. I really need some more fulltime work. There’s a full-time team of five on that already. So we generally don’t get involved too much in the day to day, we really just try and dictate the strategy and then build a good team around us which, I mean, – kind of spoiler alert, is a little bit of what I’ll be talking about at the event in April because that’s really one of the things I focus on, it’s kind of strategies to grow your business but also make it more sellable. And one of those is putting a team in place that can do a lot of the work. So it’s not relying on you or your business partner or whatever it might be
Looking at the FE International website, you’re still sort of part of the onboarding team. And what you just said about how you brought Ishmael on, it seems that’s very much where you’re focused, that initial sort of exciting stage, I guess, both for you and for the – that’s probably a quite scary stage for some people who are selling their companies.
From a day to day perspective, I spend a lot of time at conferences and events now and doing things like podcasts like this, for example. Where I am involved in the day-to-day would be origination and onboarding. So a lot of our clients spend would have spoken to me at some stage, whether they’ve seen me speak at a conference, they’ve met me at events, they’ve heard me on a podcast. But with regards to the actual physical day-to-day, I don’t have a huge amount of critical involvement. The team are much better than I would be at that job. I get businesses through the process, get them listed very efficiently, valuation process, like, extremely accurate and industry-leading and then our brokers team will say, “Good.” good team in place. But where I am involved is in bringing clients in the door, I guess.
So it’s sort of a fascinating origin for FE. So at unit you were buying and selling websites for 100 quid here and there. Your LinkedIn said you spent a little bit of time at a couple of other companies; Morgan Stanley and somewhere else. But FE appears to be have been since the beginning. You said you really liked the buying and selling. How did you sort of pick this at the university? I mean, when I left the university I didn’t know what I was doing.
I’d say I’d be lying if I knew exactly what I was doing at the time. If you got on my LinkedIn, I did two internships, one at Morgan Stanley, the investment and one at Innocent Drinks which is a smoothie company, for those of you who aren’t familiar with it. So I did two six-month internship there. Part of the reason I decided to work for myself or set up my own company is having done those two internships I realized that an investment bank wasn’t for me, I didn’t really like the big company culture and just being like one of many in a huge company. Which actually, we’ve found – as we’ve hired people over the years, a lot of people who work for us now come from a big company either like consulting or investment banking background and the pool for them is the fact that we don’t have that big company culture. It’s a small company, they’re not just one of many. Like, the work you do is really making a difference.
And then at Innocent, again, I realized that I didn’t really want to do, like an operation-type role and the idea of running my own business was a lot more desirable in that respect. So in terms of buying and selling, I mean, to be honest, getting into websites is just really coincidental. I don’t have the technical background, I could probably just about put together a Wordpress side but I couldn’t write a line of code or anything like that. I did a business degree, so I mean, I guess that was kind of the influence in that respect. But it was really just quite random at the time. And then when I got into it I found that quite fascinating.
And if you go all the way back to 2008/2009, things like Facebook were really just starting. So it’s significantly different what the industry is like now.
You used the word small but as soon as you have a business with a number of employees it’s a lot of money going in and out every year. But you seem to be very focused on human scale businesses.
Yeah, I think so. I think the term small business like you say can be quite ambiguous. But if you ask the government, they’ll tell you it’s a company that makes less than 50 million a year.
Anyone running a 50 million a year business will tell you that it doesn’t feel small.
Yeah, precisely. So the human side is really probably one of the most common types of business where the owner is quite involved in the day-to-day depending on the different business model. Particularly in SaaS where you get the bootstrapper community, like we spoke of at the start, who probably have a technical background. It’s rare to find someone who owns a SaaS business, who’s bootstrapped it and is not a programmer or a developer themselves. And they will, I guess, build up that product and eventually hire people as it scales. So, yeah, very much focused on people. I spend a lot of time with clients before they ever list their business. Whether that’s me speaking and saying to people, “Hey, this is what we need to do” or on a private phone call. And it’s really a case of sort of figuring out how to replace yourself as an owner which doesn’t necessarily mean you have to do no work and have no involvement what so ever. But it’s similar to what I’ve don’t at FE International where, yes, I’m still involved but the company doesn’t require me to run on a day-to-day basis. And that’s realty the differentiating point. If I disappear tomorrow and went on holiday for a month would the company crash and burn? And the answer to that is no. well, hopefully not at least – that’s the really the way I look at it with clients.
But that’s not an instant thing. That’s taken me many years to get to that stage. And it’s the same for a lot of other entrepreneurs, I know. Which is why I like speaking about it on stage because then people hear about it and while they might not necessarily be ready to sell right away, they might start working on some things that in a year or two is going to make a significance business to the value of their business also help grow it because with FE International if I was still involved in the day-to-day, and it’s exactly the same with Ismael if you ask him. The company just physically can’t grow if everything is relied on your as an entrepreneur or in Ishmael’s case, a CEO. You need to have people around you who can do things better than you can. That’s really the key.
I mean, it’s not just in terms of the healthiness of the business or making it saleable, it’s also quite a good life lesson to make yourself removable for the business. Like you said, so you can’t go on holiday for a month, right?
Precisely. Yeah. So when I first started out speaking, I used to talk about more strategic things. So like how to make your business sellable, how to prepare for a sale. And what I found is that the vast majority of people aren’t thinking about selling at the moment. Most people aren’t even thinking about it at all because they’re at a very early stage in their business or they might be very happy running it. So when I speak now I talk about things you can do to grow your business but also make it sellable. So there’s a lot of considerations on that respect. And if you work to remove yourself from the business, whether that is hiring people or putting systems and processes in place that’s going to make your business more valuable because from a buyer perspective, it’s easy to take over but also make your life easier. Because either you’re going to have to spend less time with the business at the level it is right now or the business is going to scale and you’re going to have a business. You might still be spending the same number of hours but the business might be two or three or four time the size which – assuming you’re trying to grow your business for monetary reasons then that’s never a bad thing.
You hear the term working on your business rather than in your business. There’s two sides of that. So I know a friend of mine basically organized his small business so that he could keep programming. So he could go home and do the thing that he loved doing and let the business itself run and scale whilst he fixed the website because that’s what he loved to do. It seems to me that that’s sort of how you’ve set FE International in a similar way. You’re able to do the bits of the business that you really love doing whilst leaving the rest of the business to run with your guidance but not with your hands on everything.
Yeah. I think the key is really rather than necessarily what you like, although these things usually correlate, it’s like figuring out what you’re good at. Most of clients you speak to are going to be good at sometimes but absolutely terrible at others. So there’s various things I’m really not very good at, it doesn’t make any sense to me to be doing them. If I am doing them on a day-to-day basis it’s just disruptive, to be quite honest. So bringing people in to do so and focusing on strengths. In my case that seems like dealing with clients, speaking, doing podcasting and anything along those lines. That’s what really driving the business forward.
As a business owner sometimes it’s a little bit glamourized and in reality there’s still a lot of work I do, I guess, I shouldn’t be doing, theoretically. Or I don’t necessarily find interesting or I don’t enjoy. And it’s exactly the same for Ishmael. But sometimes in the small business, that’s just what happens. You can’t expect – regardless of how well we’re doing I can’t expect to just spend my time turning up at one event a week and that’s all I have to do. That’s on paper and in theory that’s what it is but that’s not really how it works in reality. So they are always things you can do to remove yourself from the day-to-day and kind of bring in better people in those roles. But I don’t think you can ever get to a situation where you’re only ever doing things you love and only ever doing things you’re good at because sometimes it’s just the case of getting stuck in and figuring out, to be honest.
So what are the reasons that people typically come to you to sell? I mean, I know that as you said earlier most people are not looking to sell at any point. But then what are the reasons that prompt people to do that?
The main one that comes up with us specifically is they have something else going on, that means they need to sell. So that could be a job offer, if they have a small business. They might be moving for some reasons. Maybe they’re moving for work or maybe their spouses work or something on those lines. Some people sell because they have other projects or other businesses they’re working on and are requiring more of their time or they find more interesting. Just like we were talking about a minute a go; maybe the business you’re working at the moment is completely the wrong business for you and it actually makes sense to sell that and create a business that you do actually love and is passionate about.
So that’s one of the main reasons that people come to us and want to sell. Another one is just financial. So I think, traditionally, when people think of a business sale they think, “You sell your business and you retire.” I think my business experience with that is more realistically – in the offline world the actual number of people that have successfully sold their business is a tiny percentage whereas online, I think that’s significantly higher and just continue to be significantly higher. And part of that is because the businesses can be run from anywhere in the world. It has a huge buy pool for an online business that you don’t really get with an offline company as such.
I mean, the other is really just a financial thing and not necessarily retirement but it might be paying off a mortgage, paying of your kids to go to college, being able to take a few years off or whatever that might be. I think taking money off the table is never really a bad thing. You get to a certain stage of your business where sometimes that needs to happen. Another quite common one we see is people just get their business about as big they think they can grow it themselves and they either don’t want or don’t think they can grow any further. So that might be quite a common situation there as kind of a bootstrap developer who’s built up the SaaS appusually 5,000 to 50,0000 MRR and that level they probably have a small team. And if they don’t they’re probably working 60 to 80 hours a week to keep that business going. And if they don’t want to hire people or haven’t really had much luck hiring people that’s often when they’re allowed to sell because they realize that for that business to scale any further it’s going to need someone to come in and run it.
Another common one we’ve seen quite recently is that they contractually have to sell the business for some reason. So sometimes it might have a conflict with their day job, other times they might be working on a startup that’s just got funding and as part of that agreement they have diverse of any kind of competing assets of business they might have. But obviously things really vary depending on the size of the business. I mean, we do business anywhere from 20,000, 30,000 up to 10 million. It’s unlikely you’re going to sell your $10 million business your $150,000 a year job at Apple says you have to. But if you just have a small SaaS app worth a $100,000 then you may well do.
So what does a sale look like? So people reach out to you via website or perhaps in person if they meet you at conferences? How does the process work from there?
So the very first thing we do, or in our case the team will do, is assess your business. So that usually starts with a valuation but also a qualification process to make sure it’s a good fit for us. We don’t want to be wasting people’s time if the business is not going to be a good fit and not going to be something we can sell. We’ll assess it upfront to figure out if it’s a good fit and then we’ll also figure out exactly what the business owner is looking to do. Not everybody is looking to sell right away. Some people just want to get an idea of what their business is worth and then they want to come back in two years’ time and get to a target valuation. So they might come in when the business is worth a million and then they’d say, “Okay, well I want to sell for 5 million, what do I need to get that?”
We always encourage people to put together or get a valuation which we don’t charge anything for – no obligation to do that. Put together an evaluation, which is the only real way you can figure out where your business is right now. I don’t think there’s any point deciding on a specific timeline before you know what it’s worth because it might be worth significantly more than you think or conversely it can be worth significantly less. So making decisions without knowing that, I think, is usually not the best idea.
Once we’ve valued the business, assuming someone is happy with that valuation and they’re kind of keen to move forward, we then put together a detailed prospectus for the business. So at the moment, that will really vary between 25 and 35 page document depending on the detail of answers we get back from the seller to our various questions and also the complexity and the size of the business. Once we’ve put that together we then go out to our buyers. We have a large buyer database and we’ve put a lot of time, focus and results over the years into building our detail data on buyers, they don’t just sign on to our buyer list and then that’s that, they’re just kind of tens of thousands of people on a list. I guess, much like being on employee in a company of 100,000, I don’t think that’s effective from an employee perspective and also don’t think that’s effective from a customer perspective. So we always encourage potential buyers to tell us exactly what they’re looking for, so give us more data, like jump on a phone call, fill out a little bit more information and then from that we can be extremely targeted with the businesses we’re sending people.
There’s no point sending a million dollar SaaS business to someone who has a $100,000 and want to buy an ecommerce business. It sounds obviously but it always amazes me how many brokers just randomly blasts out their listings in that respect and just see what sticks. So we’ve always been very keen and spend a lot of results on segmenting our list our list to make sure it’s extremely targeted. So we’ll always go out to our segmented list first which because they’re so targeted, to be honest, it’s usually where the business will sell because these people are motivated to buy a business, they have cash and they want to buy a business. We wouldn’t send someone a SaaS business if they’re looking for an ecommerce business and vice versa.
So that’s always worked very effectively. And then we’ll do various other promotions around the sale depending on the privacy of it, usually sales are kept very private both, pre-listing, while it’s listed and even post sale. I know there have been – particularly in the SaaS space you’ve probably seen quite a few of our past clients who’ve blogged or posted about some of their sales.
Yeah, people like Patrick McKenzie or Garrett Dimon.
Yeah, precisely. It would be like Garrett and Patrick opposed to the big public figures. So they’ve kind of built their reputation based on transparency. But in reality over the 475 sales we’ve done not, probably only 20 of those have ever been made public. We’ll go through the process with buyers and then we’ll start negotiating based on our initial valuation. So when we value a business, we’ll tell them what we think the business is worth and that’s based on evaluation model our team has created which pulls in data points from all of our past deals. It has tens of thousands of data points and then we’ll effectively establish where a business is going to sell based on past sales we’ve actually completed.
So it’s not just evaluation based on speculation or anything like that. It’s based on what we’ve physically seen businesses sell for and that kind of means that we can be extremely accurate with expectations upfront. We should always give people a valuation and then also a list price as well. So it may as well be we value the business at 1 million but we decided to list it for 1.1 million because you always want to leave a little bit of room for margin of error with our valuation and also give buyers room to negotiate. I think, psychologically, buyers always like to sell like they’re getting a discount. So that’s always a way we’ve setup. Although in reality, particularly in the SaaS space a lot of our businesses do sell for full asking price and above just because they’re so much buyer-demand for SaaS companies and from a broker or advisor – or whatever you want to call it – perspective, we’re pretty much the only ones that ell SaaS business. Within last year we probably did more SaaS sales than our next closest 20 competitors. Basically, there’s isn’t anyone else who’s doing them.
So from a buyer perspective, they know that when a business comes on negotiating on price is probably not going to get them that far.
So in terms of assets – we talked earlier about online businesses being more of a saleable asset than an offline business which is great for people like me. Or the particular things; metrics or numbers that make a business worth selling. Are there particular where it’s just not interesting? What level does a business become interesting as a saleable asset?
From our side, when we started out I really kind of started at the bottom in terms of did a lot of small deals. I mean, we still do. The smallest deal we did recently was about $20,000. So put in perspective, we have a minimum fee of $5,000. So generally that means anything below $20,000 valuation isn’t really viable to sell because you end up paying more in fees than you’re going to make or close to that, anyway. So that will generally be a business that’s making about $10,000 a year or somewhere on that level is our usual guideline.
Is that dollars or pounds?
U.S. dollars. Although if you look at the current exchange rates I don’t think it’s much different! That’s our usual low limit. And I would say at that level that’s still interesting to us, to some people and to a lot of people and to me still, $20,000 is still a lot of money. I think a lot of people look at it and go, “Oh, well, my business is not making a million a year therefore no one wants to buy it.” And actually they do, there are a lot of people out there looking or small businesses. And what’s small to someone is not small to someone else. Just like I used earlier; the government example. I don’t know if they had a business making $10 million a year r $20 million a year, who would describe that as a small business as such? There’s tons of buyers out there, we still do them. That’s one of the reasons we kind of got ahead of a lot of our competitors. Most of the brokers don’t bother doing deals at that level. So some won’t touch anything below 10 million, others won’t touch anything below 1 million, others won’t touch anything below 200,000. And we figured that if we build good systems and processes and a good team then there’s no reason why we can’ profitably sell $50,000 businesses.
We work on much larger deals as well. I’ve always felt that if you have a small business, you should be able to sell it. I really want to be in situation where someone came to me that this is making a $100,000 a year and I’ve actually sold it as too small because if you sell that business for $250,000 then you can probably pay your mortgage or whatever that might be.
Yeah, it’s an asset in sort of the house-sized scale.
In the business world it might not be huge but it’s still significant and a significant amount of money. So yeah, from our perspective we’ll pretty much sell anything if it’s profitable. The main thing for us is making sure it’s a good fit. So making sure it kind of fits in the business models we sell, making sure it’s making some money and it’s going to be valuable to our buyers. And there really are like a ton of people out there looking to buy business and specifically online businesses.
Is there a length of time that people have been working in a business before they come to you? Do you have a feel for that or it’s entirely random?
We get a lot of people. One of the main reasons we turn people away is their business is too young. I think one of the good things about online businesses, but also makes them a little bit more risky from a buyer perspective is often they’re very young and you can get them from naught to a hundred, whenever a hundred might be in the case of your business in a matter of months. So we quite often get businesses that come to us 3-6 months in and they’ve done really well, they’ve got some initial traction and then they want to sell. So we generally turn those away, we usually look for businesses at least a year old depending on the size. If the business is worth $100,000 at a year old, there’s enough buyers out there who are willing to take that risk. But if it’s making $5 million a year then there’s significantly less buyers willing to pay $10 million for a business that’s a year old.
So we look at that in context. I would say the average business we sell is between two to three years old and they would really vary anywhere from a year to maybe like 15 years old. Like, almost back to the beginning of the internet. And a lot of the companies we deal with as well, particularly in the ecommerce space would have started out as retailers or something like that and then they’ve transitioned into ecommerce and then they’ve actually become entirely an entirely an ecommerce business and look to sell. That’s obviously a little bit less common in SaaS or business models like that. But it’s not uncommon to see a SaaS company that has actually been a software business that’s been in business for, say, 20-30 years and they just kind of applied their skills.
Two same people who have pivoted is not that uncommon although obviously we will just look at the age of the business as it is now and you could have a 30-year-old company but if you’ve only changed it in the last year then effectively have a year-old business.
And is there any sort of people size? Like, do you see many $10 million companies with one person or – obviously there’s a minimum because of people’s salaries. But do you see a certain size of team where people look to sell?
Yeah. The median is one. Like, a lot of the time it’s just one person. And, often, it’s quite rare to find somebody who works entirely by themselves. Often they’ll have virtual assistants or services they use or part time people they use to help run the business. It really depends on the different business model again. So if you have any commerce business you might use a fulfilment center which should be similar to having your own warehouse and employees in the warehouse. In a SaaS company you might use a development agency to kind of help get new features deployed quickly and efficiently. So not necessarily have employees as such. So anywhere from one to up to like 50, depending on where they’re based. But I’ve seen relatively small businesses with large teams and I’ve also seen $10 million companies that have, literally, three employees.
It really does vary. And I’d say from our side, the main criteria is making sure that the owner is not working full-time and the business is not entirely reliant on them and if it is we’ll work with them to transition out mainly based on our own experience. I’ve been there, done it, whether that’s within FE International or other business we’ve owned and bought, acquired and sold over the years. So that’s really one of those things that really requires experience – kind of a major thing you should focusing on. So yeah. Teams really do vary – one and up.
I guess my last question – it’s sort of a side question. Do you have any dealings with the VC startup world, funded company world?
Yeah. One of the big deals we did last year that probably a lot of people who listened to this podcast would have heard of is Drip sold to LeadPages. LeadPages are a funded company. So from a buyer perspective we do deal with quite a few who have venture funding or some form of funding that they then want to use for acquisitions on the sales side – with clients on that side. Less so, I mean, we do have quite a few who, like I said, get funding for another business and then they have to divest. It’s quite common to see, particularly in SaaS where people have raised some seed or angel funding. So they might have raised $20,000 or $50,000 and built the business up. Generally, what you find with a VC is if the business hasn’t significantly grown and then they don’t think they’re going to make 10 or 100 times their investment. They’re not interested at all and that business just tends to flounder and go nowhere because it just doesn’t get any focus.
Scraped for parts.
Precisely. I mean, they don’t even bother even thinking about selling. So I guess one of my challenges is figuring out how to reach these people and say, well it might be failed for you but actually there’s people looking to buy a company just like this.
Yeah. Let’s not destroy the asset because you’re not getting return you need.
It always kind of saddens me when I see people who have businesses and then you see them blog about how they’ve just shut it down. And they’ll be like, oh sorry, this is the last day, were closing the doors because I’m too busy.
And then there are a bunch of sad customers at the end of it, right?
Yeah. And I kind of wish that maybe they’d come to LTV Conf and see me speak or whatever that might be, because they really are. I mean, obviously, not every business is sellable and I’d be lying if I said they are. And also, not every business could be positioned to be sellable. But in my experience, a vast majority can, particularly, with time. Time heals a lot of things. Wherever that’s pivoting your business model or putting in systems, processes and people to replace yourself. It’s definitely not overnight but overtime it can be definitely be done.
Speaking of LTV, you attended last year.
I did indeed.
I presume that you were attending as your role as business development for FE International, getting involve in the bootstrapper community as it exists in the UK. What did you take away from it last year?
Yes, so I had really interesting talks. I mean, I do a lot of events and like I said, LTV is more for networking rather than, I guess, the talks themselves. One of the talks that’s really interesting was pricing. So they were talking about the difference prices that people sell digital based products at. I thought that one was really interesting. One of the things we focused on since, not necessarily with the brokers business because we’re have value-based pricing, 15% of the sale and that’s that, that doesn’t really change. Whereas, a lot of businesses we see, particularly in the SaaS space don’t ever really think about pricing. Most people think firstly about product. So is my product good? Do I have the right features? And then they think, do I have enough customers coming in the door? Is my marketing good? What’s my content marketing like? What’s Facebook ad campaign like? But then they completely ignore anything around pricing. So they don’t think about how their product is priced, they just think, “Oh well, my competitor charges $30 a month therefore I will charge $30 a month.”
And they don’t focus at all on anything like churn, so their customers come in and they don’t really bother retaining them. They don’t really work on making more from those existing customers. So I found the talk around pricing interesting. Just to kind of get a little bit of data about where people price because it seems that the more and more businesses I look at, the competitor-based pricing really is the most common. People look at where their competitor’s price and what the average is. I believe $97 was the most common price point. I don’t think most people finish a book and go, this is worth $97. I think a lot of people will go, well, everyone else is selling for $97 therefor I’m going to sell $97.
Yeah. So the pricing side of things really resonated with me because I know that so many people just don’t think about pricing and they’re focused on all the other things. Which obviously you have to do as well but I think there’s a lot of opportunity, particularly in SaaS for kind of optimizing your pricing and increase the revenue.
And do you have any recommendations for people who will be attending this year to make the most of it?
I think my main tip for events is always do a little bit of preparation in advance and figure out who is going and who you might want to talk to. And if you can, email them or tweet them or find them on Facebook or wherever that might be. Because you can find speakers – I think a lot of events you go to, like big events, the speakers are really non-approachable. But I think knowing most of the other speakers on LTV Conf this year, most of them are actually pretty approachable. So if there’s somebody you want to meet just email them and ask, “Can I buy you a beer or a coffee?” Or vice versa. I think most of them would be pretty happy to do that.
Another thing is make sure you get there a little bit early, make sure you make notes and then also hang out for the networking at the end. That’s really where conferences tend to be the most valuable to a lot of people. I mean, while the talks are great – I don’t want to discourage you from not watching my talk – but there’s a lot to be gained from the networking after the event. So get there either the day before or make sure that you’ve got a hotel booked that evening so you can hang around and maybe go for dinner with some other attendees.
But that’s always the way I found it best, particularly if you don’t know that many people. I know when I first started getting in conferences I literally knew no one. And I still go to events now where I don’t know a huge number of people. People often know me or recognize me but I don’t necessarily know that many. And that’s always what I found is best. And you find that a lot of people who go to events are exactly in the same boat as you, they also don’t know anyone. If you go into a software-type conference I would usually suggest that most people interact or relatively interacted so don’t be afraid to email or tweet someone to reach out.
Absolutely. I mean, that’s one of the things that we like about LTV, it’s a relatively small conference. Very much the audience in some cases is as qualified, if not more qualified than the speakers. There’s a lot of benefits to just being in the room with those people. At least that’s what we try and do anyway.
Yeah. The other thing is you never really know who’s at these events. I have bumped into so many. You find a lot of people with – again, I use the term small business, but they’re a small 20 million a year business will often just sit in the crowd quietly in a softer way so you’d never have any idea who they are. And these people will often be really, really useful for you. So yeah, don’t just focus on speakers. Obviously, you’re more than welcome to come talk to me but, I mean, there are lots of interesting people at events like that and you never really know who you can meet.
All that remains is to say thanks very much for joining us today and we look forward to seeing you speak in Brighton in April.
Thanks very much, Andy. Look forward to it.
And where should people look for you online?
feinternational.com is our website. If anyone wants to email me, if they’re maybe coming to the LTV Conf and they want to come have a chat, it’s firstname.lastname@example.org. You can also find me on Twitter @ThomasSmale always happy to chat.
Brilliant. Thank you very much.
Thanks, Andy. Thanks for having me on.