Latest / The Growth Class with Phil Masiello / Fractional CFO Services: Turning Financial Data into Growth Decisions with Rob te Braake

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Fractional CFO Services: Turning Financial Data into Growth Decisions with Rob te Braake · The Growth Class with Phil Masiello

• 0:19
  SPEAKER_01: Hey everybody, and welcome back to Crunching Your Growth.
• 0:24
  SPEAKER_01: And today we're cutting straight through the noise of business finance with a guest who helps founders actually understand the numbers that drive scale.
• 0:31
  SPEAKER_01: He's the founder of Insight Matters, where he works as a fractional CFO and fractional co and financial coach, helping entrepreneurs turn messy spreadsheets into clear, actionable growth strategies.
• 0:41
  SPEAKER_01: So welcome to the show, Rob.
• 0:45
  SPEAKER_01: To break, to brak.
• 0:48
  SPEAKER_00: To braca, which is impossible for non-Dutch speakers.
• 0:51
  SPEAKER_00: To braca?
• 0:53
  SPEAKER_00: Yes, perfect.
• 0:54
  SPEAKER_01: All right, perfect.
• 0:55
  SPEAKER_01: So why don't you give us a little bit of background on uh who you are, what you've done, and how you help people, and and let's take it from there.
• 1:05
  SPEAKER_00: Yeah, so I'm originally from the Netherlands, uh, grew up there, uh, but why uh studied finance, uh, started my career in banking, and after a year in banking, I got sent to a project in China.
• 1:18
  SPEAKER_00: Uh, and after six months in that project, uh the bank told me to go back home, and I did what every sane person would do.
• 1:25
  SPEAKER_00: I quit my job and became an entrepreneur so I could stay in China.
• 1:29
  SPEAKER_00: Uh spent seven, eight years there building a local business there, and then uh moved out of that company and started Inside Matters.
• 1:40
  SPEAKER_00: Um initially, I left the other business and I worked as a fractional CFO for a friend of mine who ran a software business in China.
• 1:49
  SPEAKER_00: Uh, and that kind of got out of hand.
• 1:51
  SPEAKER_00: You know how it goes.
• 1:52
  SPEAKER_00: You add a second client, you get referred to a third one, and now a couple years later, uh, I have a team of 25 spread out over 13 countries.
• 2:01
  SPEAKER_00: So that got a little bit out of hand.
• 2:05
  SPEAKER_00: Yeah.
• 2:06
  SPEAKER_00: Um, what were you doing in China?
• 2:10
  SPEAKER_00: So initially for the bank, and later on, I ran a uh technology and investment firm.
• 2:14
  SPEAKER_00: So together with a partner, we would raise money from Chinese investors and from European investors, and we would buy the IP from European clean tech companies.
• 2:24
  SPEAKER_00: So if there's like environmental technologies from a small company in Europe, we would buy the rights for the technology and build a company with that in China.
• 2:34
  SPEAKER_00: Great idea.
• 2:35
  SPEAKER_00: I still love the thesis.
• 2:37
  SPEAKER_00: In hindsight, the execution was horrible.
• 2:39
  SPEAKER_01: Oh the execution on your part?
• 2:44
  SPEAKER_00: Yes.
• 2:45
  SPEAKER_00: So we try to do that in a very bootstrapped way, very lean, trying to be very agile and then sell into big Chinese corporates and state-owned companies.
• 2:55
  SPEAKER_00: Um and it took us, or it took me a couple years to realize that, again, the the technology was good, but we just didn't understand how to sell, and we didn't have the resources to sell into massive, massive Chinese state-owned corporates.
• 3:11
  SPEAKER_00: They didn't care about environment or profit or cost savings.
• 3:14
  SPEAKER_00: They cared about political situation, their positioning in the company, and we just were too small to play that game.
• 3:22
  SPEAKER_01: Yeah, it's a different uh it's a different environment there.
• 3:26
  SPEAKER_01: Um I never worked over there, never did any work over there, but I've I've visited a number of times, and I have some friends who have been over there and built businesses, and it's just a completely different sort of environment um in how things get done because you know it's number one, it's communist, but number two, it's sort of uh regional uh communist um leaders, regional communist leadership.
• 3:56
  SPEAKER_01: And it's a big country.
• 3:57
  SPEAKER_01: Yeah, you know, it's massive.
• 4:00
  SPEAKER_00: Yeah, and I wouldn't even call it communist, more state-controlled capitalist.
• 4:07
  SPEAKER_01: It's a good way of putting it, yeah.
• 4:09
  SPEAKER_01: Yeah.
• 4:10
  SPEAKER_00: Yeah, so that was a really, really fun experience.
• 4:13
  SPEAKER_00: I've seen every corner of China, uh the good, the bad, and the ugly.
• 4:17
  SPEAKER_00: Uh but after eight years, it was time for me and uh it was time for me to go.
• 4:22
  SPEAKER_00: So when I set up Inside Matters, I had the choice.
• 4:26
  SPEAKER_00: Either I make it a local business and we're gonna work with four known firms in China, or, and that's what I opted for, is you know what, we're gonna work remote.
• 4:34
  SPEAKER_00: I don't care where the clients are.
• 4:36
  SPEAKER_00: Uh we're gonna do everything remote because that would give me the flexibility to uh at some point move out of China, which I did one or two years later.
• 4:46
  SPEAKER_01: That makes sense.
• 4:48
  SPEAKER_01: Um it's a good I mean, it's a beautiful country.
• 4:51
  SPEAKER_01: It's it's pretty.
• 4:52
  SPEAKER_01: Uh uh Beijing's a little rough, right?
• 4:55
  SPEAKER_01: That's where you were, right?
• 4:56
  SPEAKER_01: Yeah.
• 4:57
  SPEAKER_01: Um that's a little huh.
• 5:00
  SPEAKER_00: I absolutely love my time there.
• 5:02
  SPEAKER_01: Yeah.
• 5:03
  SPEAKER_01: Yeah, it's a great i it's a great country.
• 5:05
  SPEAKER_01: I mean, we've spent some time there and all over the place, and uh I it's it's fantastic.
• 5:11
  SPEAKER_01: It's just it's different, right?
• 5:13
  SPEAKER_01: It's different than what what what we experience in other other parts of the world.
• 5:18
  SPEAKER_01: So um but yeah, so so what does Insight Matters actually do?
• 5:25
  SPEAKER_00: So the the short summary is we provide fractional CFO, FPNA, and management accounting for online businesses that want to get more from their numbers.
• 5:34
  SPEAKER_00: That's like the tagline.
• 5:36
  SPEAKER_00: But essentially what it means is we try to get the accounting data and make it actually useful for the owners.
• 5:43
  SPEAKER_00: So too many owners typically see the numbers as, okay, I'm I want to know my revenue, and at the end of the year I need to file my taxes, and that's it.
• 5:53
  SPEAKER_00: While the way we look at it is no, you as the owner need to look at it on a, at the very least, on a monthly basis and actually make decisions based on it.
• 6:02
  SPEAKER_00: You need to see where which profits or which sorry, which products or which services are making money, where you're not, where your team is utilized or where it's not.
• 6:12
  SPEAKER_00: Um typically, if owners would look at revenue as one line and then cost of sales as one line, there's so much information hiding behind it that especially if you get well into the seven figures, you need to have that visible.
• 6:28
  SPEAKER_00: Uh and so we help them get that visible and interpret that, and then hopefully make better decisions.
• 6:36
  SPEAKER_01: Gotcha.
• 6:37
  SPEAKER_01: Um yeah, that's an I I think it's important.
• 6:40
  SPEAKER_01: I mean, what size companies do you go after?
• 6:43
  SPEAKER_00: Like what size e-com companies typically typically it's seven figures.
• 6:47
  SPEAKER_00: So if it's service businesses, it's it's mid seven figures.
• 6:50
  SPEAKER_00: If it's e-commerce, uh high seven or low eight.
• 6:54
  SPEAKER_00: That's like our sweet spot.
• 6:55
  SPEAKER_00: If it's much smaller than that, typically they are hopefully they are quite simple.
• 7:01
  SPEAKER_00: I mean, you shouldn't add a lot of complexity if you're in the in the six-figure range.
• 7:06
  SPEAKER_00: And if you go uh an agency over, let's say, 20 million, we can still work with you, but hope you probably want to have things in-house because there is enough complexity and enough workload that it just makes sense to have it in-house.
• 7:20
  SPEAKER_00: So it's that sweet spot where you do have the need for insights, but you don't need it full-time.
• 7:25
  SPEAKER_00: You don't want to pay for full-time.
• 7:28
  SPEAKER_01: I gotcha.
• 7:29
  SPEAKER_01: So um so so what how are you getting how do you get clients?
• 7:37
  SPEAKER_00: That's I like to say we are really good at keeping clients, we're not so good at getting clients.
• 7:43
  SPEAKER_00: We've grown relatively fast because we've done everything on reputation and referrals.
• 7:49
  SPEAKER_00: So our the the average duration that clients stick with us is very, very long.
• 7:55
  SPEAKER_00: I think it's over three years on average.
• 7:57
  SPEAKER_00: Um, and that's of course not counting the ones that are still with us, but so far it's all word of mouth.
• 8:03
  SPEAKER_00: It's we have somebody who's happy with us, they talk with their friend, or their friend has an issue, or is complaining about their accountant, then we get an introduction, and that's how typically how we grow so far.
• 8:15
  SPEAKER_00: So unfortunately, no sexy marketing tactics from my side.
• 8:19
  SPEAKER_01: Well, well, I think it's really tough.
• 8:22
  SPEAKER_01: Um it's really tough in today's environment to do uh sort of cold outreach, you know.
• 8:30
  SPEAKER_01: Um because there's so much garbage out there.
• 8:35
  SPEAKER_01: People's email boxes get flooded with garbage every day.
• 8:39
  SPEAKER_01: And then on top of it, um, when when you're using things like LinkedIn and such, uh I think people get flooded with stupid messages there.
• 8:50
  SPEAKER_01: So it's really difficult.
• 8:52
  SPEAKER_01: You have to have some sort of uh I think a um a really unique difference and and a unique pitch in order to break through the clutter for people to say, oh, you know, that's that's worth having a conversation over, you know.
• 9:09
  SPEAKER_01: Um because it's all any kind of outreach, any kind of business uh uh like a service provider is it's it's all about relationships.
• 9:18
  SPEAKER_01: It's all about you know making sure that they know who you are and that type of thing.
• 9:23
  SPEAKER_00: So I think there needs to be a fit or an alignment between what you're selling and the channel.
• 9:29
  SPEAKER_00: I know there is a fractional CFO firm in the US that is crushing with meta-ads, and I just can't wrap my head around how that works because for me, that kind of ad structure is relatively low trust.
• 9:42
  SPEAKER_00: So that works for low-risk products and services.
• 9:46
  SPEAKER_00: For four tick for a bit digits per month fractional CFO services, you want to have somebody who you trust.
• 9:54
  SPEAKER_00: So I think a higher trust channel like partners, like referrals, works much better because we don't need to add 50 clients a month.
• 10:04
  SPEAKER_00: We couldn't even handle that.
• 10:05
  SPEAKER_00: If we add two or three per month, that's a good month, and that's stable because they're gonna stick around for a long time.
• 10:11
  SPEAKER_01: How do you know the guy that's running the meta-ads is kill is crushing it just because of what he told you?
• 10:17
  SPEAKER_00: Uh I know him from a mastermind through community, so that was a setting where there was not much reason to brag how amazing he's doing.
• 10:25
  SPEAKER_00: I know he's crushing it on getting clients, but he's also churning a lot of them.
• 10:30
  SPEAKER_01: So um I'll tell you that uh the guys that run like meta-ads, first of all, you're not getting good quality clients, and that's probably why his churn rate is up, but you're not getting good quality clients because you're getting sort of, you know, these really small people that realize after two months that they can't afford the service.
• 10:55
  SPEAKER_01: But the other thing is, you know, there's so much distrust around those service ads.
• 11:00
  SPEAKER_01: Um that we I I don't run ads.
• 11:03
  SPEAKER_01: I don't run ads on uh Meta.
• 11:05
  SPEAKER_01: I don't run ads on uh on Google.
• 11:10
  SPEAKER_01: We we do direct conversational outreach on LinkedIn.
• 11:15
  SPEAKER_01: It's the only thing that we found works anymore.
• 11:17
  SPEAKER_01: Doing cold, I mean, these guys that do cold outreach, it's the dumbest thing in the world to me to say, hey, we're gonna take these lists of people, we're gonna make, we're gonna set up 50 URLs, and we're just gonna blast out, you know, a hundred emails per URL per month.
• 11:38
  SPEAKER_01: Well, even a blind squirrel gets a gets a gets a nut once in a while.
• 11:42
  SPEAKER_01: So yeah, you're gonna get people to react, but it's you know, then I'm gonna sit there and have to weed them out on phone calls, and that's a lot of my time, and it's just not worth it.
• 11:52
  SPEAKER_01: So, you know, we don't uh and then you know, we we we've done I'll tell you when the switch happened, actually.
• 12:00
  SPEAKER_01: We were doing outreach for ourselves for years, cold outreach, and we were doing a very good system, and um from like 2012 through 20 um 20, 2020, and then COVID hit.
• 12:15
  SPEAKER_01: And after COVID hit, it was like the floodgates opened up.
• 12:19
  SPEAKER_01: Everybody that was home decided that they were going to do outreach, and the floodgates opened up, and all of a sudden, like mailboxes just got filled, email boxes just got filled.
• 12:30
  SPEAKER_01: And it was that at that point that it was destroyed.
• 12:33
  SPEAKER_01: And the other thing that got destroyed, the scammers destroyed SMS texting.
• 12:38
  SPEAKER_01: So you nobody trusts SMS texting anymore.
• 12:41
  SPEAKER_01: You know, people are outreaching SMS.
• 12:43
  SPEAKER_01: I don't know anybody who's who's uh using it effectively anymore.
• 12:48
  SPEAKER_01: The only people that will tell you that it works are the people that are put put say trying to get you to sign up.
• 12:53
  SPEAKER_01: But anybody who's done it, it lasts through you know a month or two.
• 12:57
  SPEAKER_01: Because then you go, this isn't working.
• 12:59
  SPEAKER_01: And it there's so much distrust out there.
• 13:02
  SPEAKER_01: And then the meta-ads, I mean, God, there's so much garbage out there.
• 13:06
  SPEAKER_01: Guys that are like, I mean, I look at the ads just because we're on social media so much because of managing other clients, I look at these ads and I think to myself, is anybody buying this crap?
• 13:17
  SPEAKER_01: I mean, this guy, you know, you you sign up for my course, you know, and I'll teach you how to sell on Amazon.
• 13:23
  SPEAKER_01: And, you know, you're like, if you're good at it, then you'd be selling on there and you'd be making the million dollars that you're telling this guy is gonna make.
• 13:32
  SPEAKER_01: There's a system out there right now.
• 13:35
  SPEAKER_01: Um, I'm not gonna mention the name, but they claim that the instead of selling, uh they'll they'll sell, they'll sell you audience information on who to go after, right?
• 13:47
  SPEAKER_01: And they put a pixel on your website and and they can pull uh who those people are, right?
• 13:54
  SPEAKER_01: Which is it's not uncommon uh technology.
• 13:57
  SPEAKER_01: And they sell it like an MLM plan, right?
• 14:01
  SPEAKER_01: You you sign up for it and then you can go out and sell it and white label it and blah, blah, blah, blah, blah.
• 14:07
  SPEAKER_01: And it's garbage.
• 14:08
  SPEAKER_01: Absolute garbage.
• 14:09
  SPEAKER_01: Yes.
• 14:09
  SPEAKER_01: And yet people still look at it, and I think to and they they ran an ad the other day.
• 14:14
  SPEAKER_01: Why is why isn't daddy a millionaire yet, mommy?
• 14:18
  SPEAKER_01: Well, he's not a millionaire because he's he's still doing things the old way instead of selling data, you know, and I'm like, this is just such a scammy ad.
• 14:27
  SPEAKER_01: And and, you know, thankfully, the comments were, this is a scammy ad.
• 14:32
  SPEAKER_01: This is disgusting, this is ridiculous, blah, blah, blah, blah, blah.
• 14:35
  SPEAKER_01: And I thought, you know, this is the kind of ad that uh, you know, should get them shut down, but you know, whatever.
• 14:44
  SPEAKER_00: Unfortunately, the the barrier to get shut down seems to have gone up quite a bit.
• 14:49
  SPEAKER_00: Yeah.
• 14:50
  SPEAKER_00: Um, I've seen not some more clients, thank God, but I've seen companies that I know run ads that I'm like, I think you guys should get banned for that.
• 15:01
  SPEAKER_00: But apparently they know exactly how to uh stay in the light enough gray space.
• 15:09
  SPEAKER_00: Yeah, it's it's remarkable.
• 15:11
  SPEAKER_00: And by the way, you mentioned MLM, it's a garbage.
• 15:14
  SPEAKER_00: I don't think I've ever seen any MLM business with actually a quality product or a quality service.
• 15:21
  SPEAKER_00: If you have to resort to MLM, it's kind of like the guarantee that that's crap.
• 15:26
  SPEAKER_01: Yeah.
• 15:26
  SPEAKER_01: You know, and then people go out and sell it and they think they're gonna do fine, you know, and it's and and it's really uh, you know, it's it's it's not good.
• 15:36
  SPEAKER_01: So, you know, I I am a big believer that, you know, we can't, you know, you can't go out there and and just sort of pitch people with bad ads.
• 15:46
  SPEAKER_01: The only ads that I see are good are the ones that are creative, and you say to yourself, okay, well, you're a creative agency and you're selling this and you just did a great creative, okay, I could buy the congruency there.
• 15:58
  SPEAKER_01: But if you're just a guy and you sit there going, you know, I can I increase people's email conversion rates by blah, blah, blah, blah, blah.
• 16:05
  SPEAKER_01: Well, if you're so good at it, why aren't you doing it yourself?
• 16:08
  SPEAKER_01: You know, if you can build an e-commerce business and teach people how to sell on e-commerce, why don't you do it yourself?
• 16:13
  SPEAKER_01: Because I did, you know, I I took my own money, I did it, and that's how, you know, I position it for for crunch growth.
• 16:20
  SPEAKER_01: Like we we did it.
• 16:21
  SPEAKER_01: I know how to do it.
• 16:21
  SPEAKER_01: I could do it again.
• 16:22
  SPEAKER_01: We've done it again, we still do it, you know.
• 16:24
  SPEAKER_01: So I do understand that one.
• 16:26
  SPEAKER_00: So if you're running an e-if you're good at email, but you're not good at supply chain or not good at product, I understand why you would run an email agency.
• 16:34
  SPEAKER_00: The ones where it's like, I'm I, especially in the finance space, I've seen them.
• 16:38
  SPEAKER_00: Like, I'm gonna teach you the trading mechanisms to become whatever multimillionaire.
• 16:44
  SPEAKER_00: I have the same thought.
• 16:45
  SPEAKER_00: Why would I pay you a hundred bucks if you were apparently allegedly making millions a year?
• 16:52
  SPEAKER_00: It doesn't make any sense.
• 16:54
  SPEAKER_00: Um but in the e-com space, there is such a different skill set between the supply side, the product side.
• 17:01
  SPEAKER_00: I fully understand you want to be there on one of the verticals.
• 17:05
  SPEAKER_00: But if I look at how fast our clients are turning over paid ad agencies, apparently most agencies don't know what they're doing.
• 17:15
  SPEAKER_01: Well, I think there's two, I'll tell you, from my perspective, there's two reasons for that.
• 17:20
  SPEAKER_01: And one of the reasons we're so picky about who we do business with, um, because we're not a burn and churn type agency.
• 17:28
  SPEAKER_01: Like I don't care if I sign up one client every six months, makes no difference to me.
• 17:33
  SPEAKER_01: And the reason is because a lot of brands come to you and they say, you know, we want to go from a million to five million, five million to ten million, ten million to fifty million.
• 17:46
  SPEAKER_01: And we look at it and go, okay, what's the product?
• 17:50
  SPEAKER_01: And then they'll say, you know, this is what the product is.
• 17:52
  SPEAKER_01: And I go, okay, what why are you different?
• 17:55
  SPEAKER_01: What makes your product different?
• 17:57
  SPEAKER_01: Okay.
• 17:58
  SPEAKER_01: If you come to me and say, I have a pasta sauce, okay, how's that different than the 4,000 pasta sauces that are out there?
• 18:05
  SPEAKER_01: Now, then you look at the innovators, right?
• 18:08
  SPEAKER_01: You look at a brand like Truff, where they took hot sauce, probably the lowest barrier to entry business that you've ever seen, because you can make the stuff in your kitchen and bottle it and sell it.
• 18:19
  SPEAKER_01: So anybody could make hot sauce.
• 18:21
  SPEAKER_01: But Truff took it and said, we're going to elevate it, number one, put it in a beautiful bottle, and we're going to add truffle to it.
• 18:27
  SPEAKER_01: And so it's unique.
• 18:28
  SPEAKER_01: It's not just hot sauce, it's a truffle hot sauce, right?
• 18:32
  SPEAKER_01: And then they took that and they made truffle pasta sauce, one or two, you know, and they stuck to it pretty much keeping the number of skews down, but all focused on that one product.
• 18:42
  SPEAKER_01: You look at Graza, olive oil.
• 18:44
  SPEAKER_01: It's 10,000 olive oils out there.
• 18:46
  SPEAKER_01: Everybody's confused about olive oil because it's like first growth, first harvest, for, you know, um, you know, all this stuff.
• 18:55
  SPEAKER_01: Uh uh, extra virgin, extra virgin, first cold press, blah, blah, blah.
• 19:00
  SPEAKER_01: So people are confused.
• 19:01
  SPEAKER_01: Grazie takes it and says, okay, we know the market's confused.
• 19:05
  SPEAKER_01: We're going after the people under 45 who don't know what to buy, because all anybody wants to know is what's the olive oil I should cook with, and what's the olive oil I should put on my salad?
• 19:15
  SPEAKER_01: So they came out with sizzle and drizzle in a unique bottle.
• 19:20
  SPEAKER_01: Okay.
• 19:20
  SPEAKER_01: So their marketing hitch was unique.
• 19:22
  SPEAKER_01: Okay, that to me, that you can take and run with.
• 19:26
  SPEAKER_01: You can do PPC campaigns, you can do UGC campaigns with that, you can do social media campaigns with that.
• 19:32
  SPEAKER_01: When you say to me, I got, I'm a popcorn company and I want you to grow my business, I say, I'm not interested.
• 19:40
  SPEAKER_01: Unless you come to me and say, I'm a popcorn company that uses some phenomenal thing that changes it and becomes like this fan, then it's a different story.
• 19:51
  SPEAKER_01: So most of the time when you say they're that they turn over PPC agencies, I blame the agency and I blame the brand because the agency isn't smart enough to say, I don't want to take your business if you don't have a product, a point of difference.
• 20:05
  SPEAKER_01: And I blame the brand for saying, I don't have a point of difference.
• 20:09
  SPEAKER_01: So they're both sort of not good.
• 20:12
  SPEAKER_01: What we do is we look for that point of difference.
• 20:15
  SPEAKER_01: And if you don't have one, then Phil puts his coaching hat on and says, Look, I've built, you know, X number of businesses on my own.
• 20:25
  SPEAKER_01: I can help you get to where you need to be.
• 20:27
  SPEAKER_01: If they take it, then that's great.
• 20:29
  SPEAKER_01: Then my business, then I can help them get there, and then the business can take over, which we've done successfully.
• 20:34
  SPEAKER_01: If not, I don't want to do business.
• 20:36
  SPEAKER_00: Then it raises the question.
• 20:38
  SPEAKER_00: Because the examples I'm thinking about are econ companies that they hit between five and ten million run rates.
• 20:45
  SPEAKER_00: So they must have done something correct because otherwise you don't hit high seven figures.
• 20:52
  SPEAKER_00: Could it be possible they just they have that angle, they just don't know it themselves?
• 20:57
  SPEAKER_01: That that's possible.
• 20:59
  SPEAKER_01: And again, that's why I do what I do on the coaching side.
• 21:02
  SPEAKER_01: But I'll also tell you this.
• 21:04
  SPEAKER_01: I'll bet you when you start looking at those e-com companies, that they're buying customers and they don't realize how little they're making buying those customers.
• 21:16
  SPEAKER_01: Because I've seen guys go out there on Amazon, I've seen them go out there on platforms on their own and just go out there and buy customers.
• 21:25
  SPEAKER_01: You know, they'll spend, you know,$40 to get a$45 sale.
• 21:29
  SPEAKER_01: Now, granted, they may get that and they may get a percentage of those customers come back and buy a second, third, or fourth time, but eventually that catches up with you.
• 21:38
  SPEAKER_01: So I've seen a lot of businesses that are between five and ten, fifteen million, even twenty million that stall because they at that point they realize they they don't really have anything to get them to the next level.
• 21:52
  SPEAKER_00: It's interesting that you mentioned those kind of metrics because that's one of the things we typically point at.
• 21:57
  SPEAKER_00: And if you're what you're describing.
• 22:00
  SPEAKER_00: Describing as an ACOS of like 80-90%, that's absolutely insane.
• 22:05
  SPEAKER_00: My rule of thumb is you have to be cash flow positive, ideally on the first purchase, but definitely within the first 30 days.
• 22:12
  SPEAKER_00: If it's more than 30 days before you're cash flow positive on a customer, it's very tricky.
• 22:19
  SPEAKER_00: Or the harder you scale, the bigger the problem you're gonna get.
• 22:23
  SPEAKER_01: Well, I'll I'll tell you, there's a razor a shaving company out there called Harry's Razors.
• 22:29
  SPEAKER_01: And every year they do this thing right around the fourth quarter where they sell a shaver, a razor, uh, two cartridges, and a small thing of uh shave cream in a in a in a little box for five dollars.
• 22:45
  SPEAKER_01: Big brand, five dollars.
• 22:47
  SPEAKER_01: Okay.
• 22:48
  SPEAKER_01: And they sell the crap out of it because it's so low risk that everybody takes advantage of it.
• 22:54
  SPEAKER_01: Now, I know from looking at it and the cost of shipping and the cost of the product and all that stuff that it probably cost them$15, right?
• 23:04
  SPEAKER_01: Now, the cost of acquisition of a new customer in that channel, in the shaving channel, is probably between$40 and$60.
• 23:11
  SPEAKER_01: So they're out there acquiring customers for$12 to$15.
• 23:15
  SPEAKER_01: Now, customer goes, they take advantage of this$5 thing, they get to the website, but they're exposed to all this other product.
• 23:23
  SPEAKER_01: So the average sale on this$5 package is over$60.
• 23:29
  SPEAKER_01: Then their long-term value on that$5 customer is somewhere in the$250 to$300.
• 23:36
  SPEAKER_01: So the reason they do it is because they're it's so low, such extreme value that nobody could pass it up.
• 23:43
  SPEAKER_01: And then once they get you, they're they're gonna get you to spend more.
• 23:47
  SPEAKER_01: So it pays in the long run.
• 23:49
  SPEAKER_01: In the short term, losing money on each package.
• 23:52
  SPEAKER_01: But in the long term, absolutely works.
• 23:54
  SPEAKER_01: So I'm not opposed to that type of thing, but they have a very good positioning.
• 23:59
  SPEAKER_01: You know, it's a high quality shave, they've got great products, all that stuff.
• 24:03
  SPEAKER_00: So on the finance side, I hope that they have enough scale and enough work capital because if they have enough data, historic data, that this method works, and you want to fund that customer for the next, I don't know, six months before you are uh cash flow positive, have the financing ready.
• 24:22
  SPEAKER_00: Because I've seen companies implode because they grew so fast, they couldn't they and they ran out of cash because they were financing every customer for a couple of months, and the bank car was empty.
• 24:34
  SPEAKER_00: Their sales were through the roof, and they actually imploded because they grew too fast and they couldn't, they didn't have the time to hit that break-even point.
• 24:43
  SPEAKER_00: These guys that you described, sounds like they're a bigger brand, more data, access to funding external.
• 24:49
  SPEAKER_00: Sure, that's a deliberate play based on data.
• 24:52
  SPEAKER_00: Amazing.
• 24:54
  SPEAKER_00: I think for the ones that are in the seven-figure space, eight low eight figures, uh if they have the buffers, great, but I would say that's quite high risk.
• 25:03
  SPEAKER_01: Yeah, oh, it's absolutely high risk.
• 25:05
  SPEAKER_01: But it's it's you know, they've been doing it since the beginning when they started.
• 25:08
  SPEAKER_01: And yeah, they raised a ton of money.
• 25:10
  SPEAKER_01: But the beauty of it is that they get you to the site with that five dollar purchase.
• 25:15
  SPEAKER_01: People make the purchase, but that's not the only purchase they make.
• 25:19
  SPEAKER_01: And so, you know, it's they're acquiring you for that$5, right?
• 25:24
  SPEAKER_01: Which is probably costing them$15.
• 25:26
  SPEAKER_01: Okay.
• 25:27
  SPEAKER_01: So they're they're in they're in for$20.
• 25:30
  SPEAKER_01: And then, but if you buy two, three, four things, then you're cash flow positive.
• 25:36
  SPEAKER_01: So that's the beauty of it, is they figured out that funnel to use that$5 to get you to the site.
• 25:42
  SPEAKER_01: And people take advantage of it.
• 25:44
  SPEAKER_01: And it's and it's great, it's been great for them.
• 25:46
  SPEAKER_01: I thought it was smart.
• 25:47
  SPEAKER_01: They're very creative, they do a great job with their uh imagery and making it look really high quality, and it is really high quality for that price, that you just can't can't turn it down.
• 25:57
  SPEAKER_01: So their conversion rate on on their conversion rate on ads is astronomical.
• 26:04
  SPEAKER_01: It's astronomical.
• 26:06
  SPEAKER_01: But I wouldn't recommend it for everybody unless you have a really good funnel and you have a really good product that you know you can sell them in 30 days, 60 days, 90 days, you know,$100 worth of product or$200 worth, you know.
• 26:21
  SPEAKER_01: If if you're just out there, you know, with a$5 product, it's not gonna work.
• 26:29
  SPEAKER_00: I don't yeah.
• 26:32
  SPEAKER_00: No, not at all.
• 26:34
  SPEAKER_00: Um, but that kind of offer at that kind of price point on the consumer side, and and maybe I'm a bit brainwashed by seeing so many companies from the inside, I would wonder what's the catch.
• 26:47
  SPEAKER_00: How shit is the quality, or what's what funnel do I get into, or what's the catch behind it?
• 26:52
  SPEAKER_00: Because the offer is too good to be true.
• 26:54
  SPEAKER_01: Right.
• 26:54
  SPEAKER_01: So sure.
• 26:56
  SPEAKER_01: And then people go and search Harry's Razors and they see it online and they go, man, this is a great product.
• 27:00
  SPEAKER_01: It's just to get you in and they reel you in with it.
• 27:03
  SPEAKER_01: Extreme value.
• 27:04
  SPEAKER_01: They've been doing it for 14 years.
• 27:06
  SPEAKER_01: 14 years.
• 27:08
  SPEAKER_01: And and and they're, you know, I think they're pretty close to a billion in sales, and uh they started out as a startup.
• 27:15
  SPEAKER_01: So I mean, they're and they've got great metrics.
• 27:18
  SPEAKER_01: So, you know, but but again, they've got a very unique positioning, they've got a very unique story.
• 27:23
  SPEAKER_01: They they uh I think if you know you have to be unique in this world.
• 27:29
  SPEAKER_00: Yes.
• 27:30
  SPEAKER_00: And maybe again, I'm biased here.
• 27:33
  SPEAKER_00: You have to know your LTV.
• 27:35
  SPEAKER_00: You have to know your acquisition costs.
• 27:37
  SPEAKER_00: Absolutely.
• 27:38
  SPEAKER_00: Because you can, if you know your numbers, you can pull this off.
• 27:42
  SPEAKER_00: But if you're just speculating on your LTV, that's probably that's risky.
• 27:46
  SPEAKER_01: Well, that's what it comes down to is your cost of acquisition versus your LTV.
• 27:51
  SPEAKER_01: Those two numbers are some of the most important ones, but there's a ton of people that don't know it.
• 27:56
  SPEAKER_01: A ton of people just going out there getting transactions.
• 27:59
  SPEAKER_01: Get me as many transactions as possible.
• 28:01
  SPEAKER_01: We we we have a client now that the the it's the the CEO said to me, I don't care about profit, I just care about transactions.
• 28:09
  SPEAKER_01: Get me as many sales as possible.
• 28:11
  SPEAKER_01: And I keep saying to him, dude, you are losing money on every transaction and you have no long-term value.
• 28:17
  SPEAKER_01: This is a losing proposition.
• 28:19
  SPEAKER_01: I don't know why you want to do it.
• 28:20
  SPEAKER_01: You know, this is bad, it's bad, it's bad.
• 28:23
  SPEAKER_01: I don't care, I want to do it.
• 28:25
  SPEAKER_01: He's got his reasons, you know.
• 28:27
  SPEAKER_01: I mean, it's uh so you know, we did it.
• 28:29
  SPEAKER_01: It's that's the direction.
• 28:31
  SPEAKER_01: I don't feel good about it, didn't feel good about it, tried to sway him in a different direction.
• 28:35
  SPEAKER_01: We tried to, you know, say, look, this is what you need to do, doesn't want to hear about it.
• 28:39
  SPEAKER_01: He's uh uh it's a unique product, and he I you know, what can you do?
• 28:44
  SPEAKER_01: So corner the markets and deal with profitability later.
• 28:47
  SPEAKER_01: Yeah.
• 28:48
  SPEAKER_01: Well, that's what it comes down to, because eventually he's gonna be able to do it.
• 28:50
  SPEAKER_01: If his pockets are deep enough, it might work.
• 28:52
  SPEAKER_01: Yeah.
• 28:53
  SPEAKER_01: No, he's gonna have to raise, you know, it's gonna need about 20, 25 million in another six or eight months in order to continue to do it.
• 29:02
  SPEAKER_01: But, you know, we told him, put it in writing, sent it to him, got plenty of emails.
• 29:08
  SPEAKER_01: Don't come back to me and say I didn't warn you, I warned you a bunch of times.
• 29:12
  SPEAKER_00: Yeah, but it comes back to the question, you need to understand what you're optimizing for.
• 29:16
  SPEAKER_00: This guy is clearly optimizing for revenue growth over everything.
• 29:21
  SPEAKER_00: Over everything.
• 29:22
  SPEAKER_00: And there's there are cases where that if it's a winner-take-all market or where you want to be the number one player that is the default, that might make a lot of sense.
• 29:32
  SPEAKER_00: And apparently you're gonna burn through 10, 20, 30 million dollars then.
• 29:36
  SPEAKER_00: That might be worth it.
• 29:38
  SPEAKER_00: But for most bootstrapped guys, that's that's it, that's a disaster in the making.
• 29:44
  SPEAKER_01: Yep, absolutely.
• 29:46
  SPEAKER_01: All right, man.
• 29:47
  SPEAKER_01: So we're pretty much out of time.
• 29:49
  SPEAKER_01: Any closing things?
• 29:50
  SPEAKER_01: I know you know your whole focus is on people understanding their numbers.
• 29:53
  SPEAKER_01: So any closing uh statements.
• 29:59
  SPEAKER_00: Um time flies.
• 30:02
  SPEAKER_00: So most important thing is indeed know where you want to go to.
• 30:05
  SPEAKER_00: Second of all, is make sure your numbers are reliable.
• 30:07
  SPEAKER_00: We've seen too many people get into problems because their numbers were unreliable and they make wrong decisions because the numbers were wrong.
• 30:15
  SPEAKER_00: So make sure you check those and that you're a hundred percent confident in the accuracy there.
• 30:21
  SPEAKER_00: Yeah.
• 30:22
  SPEAKER_00: And where can people find you?
• 30:25
  SPEAKER_00: Easiest place is LinkedIn.
• 30:26
  SPEAKER_00: That's where I'm most active.
• 30:28
  SPEAKER_00: Uh, or alternatively, connectrob.com.
• 30:31
  SPEAKER_00: And what about your website for your business?
• 30:34
  SPEAKER_00: Uh FinanceInsight Matters.com.
• 30:36
  SPEAKER_01: Okay.
• 30:37
  SPEAKER_01: There you go.
• 30:38
  SPEAKER_01: So uh thanks for everybody for joining in, and we will see you guys next time.