Tenbound’s David Dulany speaks with Daniel Priestley, Co-Founder of Scoreapp, Founder of Dent Global, bestselling Author, Speaker and leading authority in scaling businesses.
With his new project, ScoreApp, Dan helps B2B marketers create campaigns that will generate interest from their target audience, sustain that interest, drive new product development, and turn data into useful business information.
Find out:
How to use Scorecards to gather key insights
How to build stronger relationships with your customers and grow your business.
How to become a ‘key person of influence’ in your industry
Ready to check out ScoreApp – click here https://share.scoreapp.com/0cfacda4 (Affiliate Link)
This is much listen and wide ranging conversation!
Transcript
David Dulany: Hello, hello, hello, everybody! Welcome to another edition of the sales development podcast. I am honored with my next guest. I really, he’s– I don’t want to gush, but he is a, I would say a business philosopher. And philosophy is really the love of wisdom. And this guest has more business wisdom in like just a few sentences than many of us have our whole lifetime. So dig in and enjoy. Daniel Priestley, how you doing today?
Daniel Priestly: You’re gushing, I’m blushing. There’s no way I can live up to any of the introductions that you do. Basically, it’s all downhill from here. They’re expecting Plato, and I’m going to be far from it.
David Dulany: Hey, you know what? I mean, philosophy you think of like, dead guys in marble busts, right? But it’s really, it’s an overall love of wisdom.
Daniel Priestly: Love of knowledge and love of wisdom. Yeah.
David Dulany: It’s the love of wisdom. And you know, you’ve been through the School of Hard Knocks, and have come up as an entrepreneur since day, you know, as far back as you can remember. You’ve seen the good, bad, and ugly. You’ve lived through it and shared it.
So Daniel is the author of, I didn’t realize it, five books and an e-book. And I’ve got a few of them here. You can’t see them. But if you haven’t read these as a business owner or entrepreneur, drop everything right now and read these. Just with the way that Daniel encapsulates big ideas and puts them down in a way that is digestible and useful, immediately, it’s amazing.
Daniel Priestly: Anytime I’m feeling down, I’m going to book a time, I’m going to book a podcast episode with you.
David Dulany: You can’t, dude, I’m here. It’s funny, because I want to dive into some of the concepts.
Daniel Priestly: Let’s jump in.
David Dulany: Yeah. I mean, one of them is you have to see someone, I think it’s seven times and you know, after a while, with the technology that we have today, you kind of feel like you know them, and you’re friends with them.
And I feel like that with you, because you do so many marketing activities and podcasts, and things like that. And sometimes when I’m like struggling with a business issue or something, and I was like, “I would love to just be, you know, on a yacht somewhere with Daniel Priestley having a glass of Prosecco, you know, chatting about my struggles,” you know, but this is the best…
Daniel Priestly: You know, this is the cool thing that the human brain doesn’t really know the difference between digital and analog, or real, you know, real life interactions. So provided you’re watching a yacht video on YouTube and listening to a podcast where we talk about business, your brain struggles to separate that from the real life thing, right. So it’s easier than you would think, to get pretty damn close to that experience.
And you know, you’re referencing an idea that’s in the book I’ve subscribed, this idea of 7-11-4, seven hours, 11 interactions, four locations. It’s a mishmash of research from Professor Robin Dunbar, who is an expert in how humans bond and form attachments. And some research from Google called, Zero Moment of Truth, which is how people buy stuff.
And I mishmashed all that up, and essentially, what both research projects were looking at is how much time and attention do you have to pay someone before they feel like they know you and that they like you and they want to do business with you, and they trust you. And Robin Dunbar, he said that it was about seven hours, and Google said it was about 11 interactions, and somewhere in amongst there was also this idea of being across four different platforms or multiple platforms was better than just one place, being in one place.
So anyone who wants to build relationships with their customers at scale, using digital technology, you’re shooting for 7-11-4. You want a seven-hour, 11 interaction, four location ecosystem of content that people can bounce around.
David Dulany: And the first thing that people do is Google you out after they meet you. I know that you talk about that a lot, and if it’s, there’s nothing there or it’s boring, it makes a difference.
Daniel Priestly: Huge. Everything great in your life that’s coming over the next 20, 30, 40 years is going to probably involve a Google search now. So if you’re single and you meet someone who seems like a pretty amazing catch that you want to form a romantic relationship with, if it’s going to get serious, of course, they’re going to Google you and their family is going to Google you, and their sister or brother is going to Google you, and you know, their best friends are going to Google you and check you out.
And you know, that relationship, isn’t it weird to think that that relationship may not go ahead because Google doesn’t have any good things to say about you, or it’s just boring or it’s dull? Or, that relationship may go really fast and move ahead, because Google says you’re an amazing, trustworthy person?
So a business partnership would be the same, a joint venture between two companies that want to cross promote each other would involve that Google search. So you know, Google is holding a velvet rope to your future opportunities. It’s really, you know, allowing people to pass through and become partners with you, and/or it’s preventing that from happening.
So we have to take charge of that. We have to make sure that when someone Google’s the founder of the business, when someone Google’s the business name, you know, when someone Google’s the person that they’re going to be meeting from your company, that we, what we want to have is a really good positive experience on Google.
And going back to that first concept of 7-11-4, we want that Google Search to kind of open up that ecosystem of seven hours, 11 interactions, four locations. So if I was to Google your name, I want to see positive things. And then pretty quickly, I want to be able to maybe watch a video or listen to a podcast or read an article, and start the process of the 7-11-4 journey with you.
So that’s all research-based, it’s all, it’s not just a good idea, it’s been looked at academically, and this is very much how the world’s working at the moment.
David Dulany: Yeah, and you really have to think about it, you know, key person of influence is a great place to start. And it’s funny because my kids Google, went to Google Images, and they put in David Dulany, and it came up exactly the same headshot, like 100 times. So one thing to think about is mix up the headshots, you know, get a photographer.
Daniel Priestly: Get more than one.
David Dulany: Right. Yeah.
Daniel Priestly: Yeah, so.
David Dulany: You got it. You got to think about this, because we’re, you know, and this is, this was the transition. So businesses almost had to become a media business, you know, between 2006 and ’16. And now, there’s so much media out there. Every founder and every, well not–
Daniel Priestly: Yeah.
David Dulany: So, you know, a lot of people have taken up the mantle. But now, there’s so much information out there that data becomes more important.
Daniel Priestly: Yeah, let me let elaborate on that. Let me dive down that rabbit hole. So in the USA, every four years, you’ve got this crazy thing called, the US Presidential Election, right? And the US Presidential Election is the Formula One of marketing campaigns. It’s winner takes all, it’s big budget, it’s brutal. It’s a bloodsport, and it’s the most highly contested marketing campaign in the world.
So what you want to do is you want to look at that through a forensic lens as a marketer to try and understand, was there anything that we can learn from the campaign that we can apply to business? Because in the same way, the Formula One is the absolute elite end of motorsports, and there are certain technologies and approaches that would apply, you know, to broader production cars.
For example, ABS Braking was something that was invented for Formula One, and then ABS braking was rolled out in production cars. So you want to look at what are some of the trends that could roll out to your marketing.
So in 2008, Obama, on his website, had this section called, Obama Everywhere. And I looked at this and I thought, “Wow, that’s really cool.” And it said, “Oh, here’s Obama on YouTube, and Twitter and on Facebook,” and he just listed off all of these social media places that you could connect with him.
And then when you click on any of those, it took you to interaction, you know, places where you could actually interact. You could watch consume content. You could interact, someone would respond, sometimes Obama would follow people back.
And when I saw this, for the first time, I was just slapped in the face by this. I thought, “Wow, every single business is going to have social media panel on their website.” I know that sounds crazy right now, right? Fast forward to today, it would be weird not to.
But I remember seeing it for the first time and thinking every business is going to have like social media connections linked to that business where you can go to the website and then have a look at the website– go on have a look at the social media, and it was like, whoa, right, we need to do that.
And I remember creating a similar thing on my website around that time, 2008, and it being quite cutting edge to do so. And then, of course, 2008 was the turning point where social media went from being something that the kids were doing to something that everyone was doing.
And there was this S curve, adoption curve that just took off, like a rocket, and it just exploded. And social media became the biggest, most hottest topic from 2008 to 2016. And basically, it started to mature around 2016, where everyone was on social media, and everyone was producing content, and everyone was talking about it, and started becoming more and more saturated.
And around 2016, we had another Presidential Election, the Trump versus Hillary campaign. And this was an interesting one, because when they looked at it, in hindsight, they discovered that behind the scenes of the Trump campaign, and behind the scenes of the Brexit campaign was a firm called, Cambridge Analytica.
Cambridge Analytica was a team of data analytics scientists or researchers. And what they would do is they would suck in all this data off of Facebook, and they’d crunch the data and they would do something called, hyper-targeted marketing or hyper-targeted campaigns, right?
So what they would do is they would get people to enter quizzes, and the– based on how you quizzed, how you answered the quiz questions, they learned things about you. They used something called, the ocean graph, which is per Big Five personality traits. And they could test things about you such as your openness, your conscientiousness, your extraversion, right?
So they could go through and they could have a look at these traits value. And they were looking for certain types of traits and interests that matched up with their advertising set that made them believe that you would be very susceptible to certain messaging. And they only doubled down on that messaging, if you fit a very narrow set of criteria.
So here in the UK, they had the Brexit campaign, and basically, they were looking for people who would be very susceptible to negative messaging about the EU. And they went in hard, right, so something like a billion ads were served upon a very small number of people, you know, a few million people got a billion ads targeted at them. And that was enough to create a very radicalized group of people who wanted to leave the EU. And you know, that campaign was just narrowly won by the Leave campaign, and it was all data analytics.
And when we look at it in hindsight, we think, wow, to a degree, it was almost like they weren’t fighting fair, they were doing something that felt a little bit like pernicious or a little bit, you know, cheeky or cheating. But look, separate to the politics, separate to the politics, what I looked at is I thought, OK, the future is no longer about social media engagement. The future is about data analytics. You’ve got to shift your game, right?
The Formula One of marketing, the Presidential Election is basically all being won or lost based on these data analytics campaigns. Same thing for Trump, Cambridge Analytica ran the numbers and they figured out a path to the White House, based on data, not based on engagement, wasn’t about social media or engagement, it was all about data.
So what they were doing is figuring people out using data, and then running hyper-targeted marketing campaigns to individuals. And that’s the future, right? That’s the big, the big innovation that’s coming.
Now, if I had have told a hairdressing salon in 2007, that in a decade-time, “In a decade from now, you are going to be a media business. You’re going to be posting videos and live video, you’re going to be doing before and after images, you’re going to be engaging with people, you’re going to be finding people in the local area and messaging them.” They would say, “We’re definitely not going to do that. We’re a hair salon.”
And then fast forward to today, of course, every hair salon is doing, you know, treating themselves like little media business. If I was to say to you right now that 10 years from now, every small business is going to be a data analytics business, and they’re going to be doing Cambridge Analytica style things, you’d go “Wow, that sounds pretty far-fetched.”
But I’m saying that. I’m saying every small business 10 years from now is going to be doing things that look like Cambridge Analytica did in 2016 elections.
David Dulany: OK, that’s, that’s crazy. And I, if it was anybody else, but you, I’d be like, “You’re crazy.” But it totally makes sense. And I guess, how, what’s the adoption curve of a hair salon to become a data analytics company? It’s got– is there a breakthrough on the horizon where somebody who’s a specialist in another thing can suddenly click a button and they’re a data analytics company. Is that available?
Daniel Priestly: Yeah. You know, when we see Instagram, it becomes obvious as to why a small business can be a media business. Because Instagram made it so easy and simple and pretty, and just push this button and go live, and push this button and do a little 30-second video, and push this button and put a photo up.
And you know, the whole idea of becoming a media studio, I mean, when I grew up as a kid, when I was a kid, when I was a teenager, when I was in my 20s, the idea that you could be a media business, I mean, that was completely far-fetched.
I remember going into a TV studio once as part of a school excursion, and they told us that the cameras, the video production quality cameras were million dollars each, right. These big cameras that zoom around the studio, they were, they were between, you know, I grew up in Australia, so a million dollars was, you know, obviously, probably half a million US dollars. But, they were expensive cameras.
And you know, the idea that everyone could have that in their pocket, and the idea of doing a live broadcast to the world that people could zoom in on you live as you do a live broadcast on video. I mean, even just a couple of decades ago, that is insanity, the idea that you would– everyone would have that in their pocket.
So what’s going to happen with data analytics is someone’s going to make it really simple and pretty and easy, and push a button, and then here’s the data, or, and here’s how it looks, and here’s the segment, you need to go after. You know, let me enrich that data for you. Here’s all the data. Let me now segment the data, run this campaign to that list, run this campaign to that list. Let’s get some AI to start writing different campaigns for different lists.
So all of that sort of stuff will be super simple and pretty and work from your– work from an app on your phone, and you know, that’s where it’ll go.
David Dulany: Oh my god. OK. So, and you’re trying to…
Daniel Priestly: That’s only the near term, by the way, David. That’s the stuff that’s already definitely going to happen. I’ll give you a quick prediction before we move on. Can I give you a prediction on the next?
David Dulany: Of course.
Daniel Priestly: OK, here’s my prediction for the next presidential election. I think the next Presidential Election will use deepfake videos that will address you by name, and will address each individual voter discussing the issues that matter most to them.
So for example, you will get a deepfake video that says, “David, I know how much you care about your small business. And Tenbound cares about businesses that are in the tech industry in the SaaS industry. let me share with you three policies, David, that relate to what you’re interested in, and I just want to share with you some information. Thank you, David, for taking the time to learn about this. I’m hoping that I’ll become your president.”
And it’ll be an AI generated video addressing you by name, talking to you about the issues that you’re interested in. And it’ll be a one-to-one video conversation that will be generated by AI for– with the candidate, looking as real as we look on the screen right now.
David Dulany: Oh my god. OK. Do you ever sit back and go, OK, there’s a… I’m making all these predictions for the future and connecting the dots. Because I think you have a tremendous ability to connect all these things. I was just, actually, in Entrepreneur Revolution, the first part of it, I was reviewing this morning, and you were talking about how there’s these convergence of technologies that suddenly come together and create a new thing.
And it can go either way. It can go– it’s great and unlocking value and creating an entrepreneurial opportunities. And that can go, you know, sideways and create this, like weaponized data thing that ends up, you know, putting somebody in the White House that… I don’t want to get political.
Daniel Priestly: Yeah, they didn’t expect and upset, right political upset. Yeah.
David Dulany: Yeah, and was Brexit good for everyone else, but it can go either way. And do you ever sit there and go, I mean, you seem to really, really focus on the positive side, because there is such so much value unlocked in these convergences.
Daniel Priestly: Yeah, I focus on just surfing the waves. So, I’m very pragmatic. I have no– I don’t actually spend much time thinking about politics. And the main reason for that is I love Stoic philosophy. And Stoic philosophy says, you just don’t spend any time thinking about things that are outside of your control.
So you just, basically, you just bring it within– you look at where does this overlap with my area of control? What can I control about this? What can I do about this? And then how do I use that? So for me personally, I don’t care about politics all that much. It’s too big for me to control, other than voting, right? Fantastic, but I’m not going to use up my energy on it.
But what I do look at is I treat all of these things as waves to be surfed. So it’s kind of like, OK, there’s a huge wave coming and it’s, I’m getting the signs from that wave by looking at these kind of like big predictive events. And it’s like, OK, I can see that that’s going to cause a big wave, how do I surf that wave as an entrepreneur?
You know, so when I see– in the news, I see there are famous people who are upset because somebody has created a deepfake video of them in a pornographic situation, right? And it’s like, “That’s not me in that video. That’s an AI generated deepfake.” I think to myself, “Ah, OK, that’s interesting. That will turn into a marketing tool.”
That will actually turn– that’ll be weaponized in the next Presidential Election. They will use that type of technology. And then once it’s happening in the Presidential Election, then the big marketing budgets will want to copy and emulate that in traditional marketing channels. So it’s like, OK, so I’ve just kind of think, OK, if that happened to a celebrity, that will happen in the election, and then big brands will start using that in their channels.
David Dulany: Wow. OK, so that’s so interesting, because the average person and not, I don’t have any data behind this, but the average person would look at that and go, “Oh my god, that’s so horrible. The world is going to hell,” like, we’re all going down, right? But you looked at that and went– and had a completely different, you know, applying the philosophy that there’s so many applications for this. And is that a culture? You’re Australian, right? So is that a cultural thing? Is it just always…
Daniel Priestly: Maybe. Australians do have a global– we have a reputation of sort of being a bit chipper. I can give you that. But look, honestly, it’s more of a Stoic thing. I love Stoicism. Stoicism has been around forever, and I just I just purely and simply, it’s like it’s not positive, it’s not negative, it’s just a thing. And you know, what can we do about it?
So, you know, here’s what I keep in mind. I keep this in mind. For as long as humanity– for as long as humans have been around, we’ve always been predicting the end of the world. We’ve been predicting the end, like, original texts from 1000s of years ago have been predicting the imminent end of the world.
So that’s obviously a very human thing that we always think that society is about to collapse. And that’s been going on forever, whether it’s been plague, or whether it’s been gods, or whether it’s been disasters, or whether it’s been, you know, religious related, right? We’ve always had reasons to believe that the end of the world is very, very soon, just around the corner.
So that’s, I’ve got lots of data points to suggest that’s not special. And yet, despite all of that, humans tend to become more organized over time, more cooperative over time, we tend to lean towards cooperation, we have, we counter-trend, we obviously revert back to the main, with you know, with wars and disasters, we can be pretty horrible to each other. But we tend to, you know, society tends to become more cooperative.
And then the second thing is, is that I’m an entrepreneur, and entrepreneurs require problems to solve. If there’s no problems, then there’s no real job for an entrepreneur. Like, at our– at the absolute essence, at the absolute core of who we are, we’re trying to create solutions to problems. We’re trying to figure out, there’s a problem, there’s a frustration, there’s something that’s less than perfect in the world, and there’s got to be a scalable solution for that.
And we can leverage, you know, intellectual property, media, technology, and come up with something that would be a scalable way of solving that problem. So whenever I see problems in the world, I think that’s great. There’s more opportunity there. That’s, that’s pretty cool. There’s going to be a bunch of entrepreneurs that pop up around that.
David Dulany: That’s, that’s amazing. And it’s, you know, you state a lot that we are living in an amazing time. I mean, and you have a commencement speech that came out recently, and people should Google this. It’s basically like an amazing pep talk for the people in the audience who are going out into the world, and they’re like, “Dude, what the hell is going on here?” And it’s like, wait a minute, let’s reel it back. Like, you’re actually walking into an amazing opportunity, depending on how you look at it.
Daniel Priestly: Yeah. Yeah. It’s the greatest time in history. There’s more money on the planet than ever before. Inflation by definition is too much money looking for too few goods and services. So when you see rapid inflation, you should actually say, “Oh, wow. That means there’s too much money flowing around the economy, the pace of money going– is accelerated.
That’s great, right? If you’re an entrepreneur, that’s great. There’s too much money around and too few goods and services. What a great opportunity. So you know, there’s never been more money, there’s never been more technology, there’s never been more mentors, there’s never been more transfer of knowledge and information. There’s never been more resource, allocate– you know, the opportunity to move resources rapidly.
So for all of these reasons, there’s never been more data and information on the planet. So for all of these reasons, it’s the greatest time in history. There’s never been a better time to be an entrepreneur. This is the peak of humanity right now. We’re at the absolute best we’ve ever been, and you know, we love to fight about it, we love to have, you know, arguments.
A lot of the things that we argue about, you know, it’s almost like if you had a beautiful big house, and there was, you know, on the windowsills, there was some dust or there was some, you know, stuff buried in the basement, and you want to clean that stuff out. You know, that’s where we’re at right now. We’re mostly arguing, I mean, a lot of people are arguing about stuff that’s, you know, historical, and a lot of people are arguing about stuff that’s nuanced, or esoteric.
So you know, it means that if I told you that I was really worried about my house being dirty, because I found some fluff in a corner, you’d say, “I bet you have a pretty clean house.” Because if you’re worried about a little bit of fluff in the corner, then the house must be pretty clean by and large. So you know, what’s happening at the moment is we’ve actually got the space to examine all sorts of problems that were too nuanced, too esoteric to worry about it any time, up until now.
David Dulany: Yeah, and it’s, you know, the information is in your pocket. It’s a feed, a constant feed. And like, if it bleeds, it leads. And that, you know, all the expression, right?
Daniel Priestly: Yeah, social media is an outrage engine, right? The, you know, the whistleblowers have already come out and said that they were instructed to build algorithms that were about outrage, anything that made people experience upset, frustration, anger, outrage, got engagement, and that got fed. So you know, this is– we shouldn’t be surprised that some of this polarization is happening. You know, it’s algorithmic by design.
David Dulany: Yeah, it’s funny, because, you know, some of the– I looked at some of the interviews that you do on YouTube, and it’s like, you’ve got this business philosopher who’s super successful in doing, you know, out there and making it happen. And it’s got like 1,000 views. And then the next thing is like, a cat falling out of a tree, you know, and it’s like, 4.5 million views. And it’s like, what the hell is wrong with this [0:27:51] [Indiscernible]?
Daniel Priestly: Well, we’re pretty, we’re pretty simple creatures.
David Dulany: Yeah. It’s crazy.
Daniel Priestly: But it’s really, but it’s really good. Because here’s the thing, the number of people who are actually interested in doing something, and doing something big and meaningful and valuable is infinitesimally small. Most people are just watching cats fall out of trees. Right?
So thank, like, I sit there and I go, “Thank goodness that my videos don’t have 4.5 million views. Because I’d be competing against 4.5 million people who are really damn committed to entrepreneurship.” I’m thrilled that the vast majority of people can live full and happy, fulfilled lives, just watching cats falling out of trees, right? If that’s all it takes, I, you know, I wish, I wish I was that way inclined that I could get through my day and say, I’ve had a good day because I saw some funny cat videos.
David Dulany: No, but you can’t. You’re fucking– that’s something really different. And it’s funny, because just really quickly, you know, we’ve been– the tech industry is going through a little bit of a hiccup right now. And I did a, I think it’s a Stoic exercise where I just wrote down on a whiteboard, what are all the things right now I can do, and I can control to help the company, you know, survive and thrive through this?
And it’s been it’s been amazing because it’s like, every day I can come in and just start knocking stuff off of this controllable list. And so I definitely would look into that philosophy of…
Daniel Priestly: Simple philosophy, right? Yeah, what can I do? What is my locus of control? And just, and which is my highest priority that I can control? What a hiccup are you talking about?
David Dulany: Yeah, I mean, so right now, it’s almost like people are willing a recession into existence, you know? So the macro numbers are really, really good, but it’s just ever– and the tech industry is a herd mentality. And so all of a sudden, all the VCs start to post that we’re going into hard times, you know. And then they, the other VCs see that and they start pulling their funds back. And then the startups are all the sudden, cut everything and lay everybody off, and you know, it’s just, it’s almost like a self-fulfilling prophecy. And I’ve seen it happened, this is like the third time.
Daniel Priestly: Yeah. Yeah, exactly. Regarding this, I personally, I don’t necessarily think it’s a negative thing. I think that, you know, when you get companies that are valued at, you know, 15 times revenue, they may not be profitable, and they may not necessarily… You know, it’s very hard to, it’s very hard to see whether the underlying assumption of that business is sensible when the top line valuation and the money that can be thrown at that company is not sensible. And it attracts, you know, it attracts the phenomenon of money riding on fools.
And you know, and that goes on and on. You know, people just showered with any idea or any team, any sort of concept starts attracting capital, and the capital allocation gets so detached from reality, that there has to be some sort of a pullback. The tide has to go out a little bit, just to sense check, are we allocating capital, the things that need to exist? Or are we allocating capital to things that that sound good, but don’t actually serve humanity in a great way, they’re not really solving a problem in any great valuable way?
I think it’s a good thing, the tide going in tide going out, you know, that there’s seasons, where things get funded easily, you know, and seasons, where things, you know, where things get cut back. You know, I’m not against it.
David Dulany: Yeah, I mean, it’s interesting, because if you serve, so I want to talk to you also about the ascending value ladder that we put out. Because we serve the tech industry as advisors, and coaches, and trainers. And we also do tech events, bringing the community together.
And some companies that are in our industry are going up like a hockey stick. They’re hiring, they’re– they’ve really hit, you know, product market fit and go-to market fit, and they’re doing great. And then you have a lot of companies, where, to your point, they, maybe it was an iffy idea to begin with. And you know, the, it maybe shouldn’t have been funded in the first place. And so those companies are just like, let’s just cut everything and that type of thing.
So you know, when you when you think about the ascending value ladder, there’s a free component, there’s sort of, you get into the product component, and then there’s the really, the financing of the BMW, you know. And I think that a lot of companies, they try to– we even have this thing called, PLG, you know, the product lead growth, where they just give away the product and hope that somebody will upgrade. And you know, first, what is that ascending value model? And then let’s go… Yeah.
Daniel Priestly: So the model, the model that we work with, we’ve applied this to a few 1,000 companies is four products. So the gift is essentially giving away something of value for free, which is often content, quality content, explaining the problem explaining, you know, entertaining and educating the marketplace, but doing it in a really nicely packaged way. And also, a free gift can also be you know, free versions of the product and that sort of stuff.
And then the next product is what we call the product for prospects. And product for prospects is essentially the first commitment that a customer has to make, where they commit a small amount of money or time or data in order to essentially give a warm signal of interest that they’re interested in this product that they’re testing the product, that they’re in the exploratory phase, that they’re trying to build some trust with the with the company, with the brand.
And then the next product is what we call the core offering the main guts of what the business does and this is the main source of revenue. And then the final product, the fourth product is called the product for clients and this is the recurring revenue, the ongoing journey.
And ideally, really great companies that don’t require a lot of money to scale relative have all four products. So they have something that they can give away for free, they have something that’s easy for a customer to test and measure, they have a strong core product that is typically a bulk purchase.
So, you know, essentially, you mentioned BMW. Buying a BMW car is a bulk purchase, let’s say it’s $50,000. And the, and it’s a high revenue, but it’s a very low margin. So it’s only about 4% profit. And then the ongoing products and services attached to the car, you’ve got finance and insurance and servicing. And those are high margin, those are typically 30% to 40% margin. But they’re only 30% to 40% margin, because the cars, the big revenue purchase to cars, actually covers so many costs associated with building that brand and winning that customer.
So if you look at the greatest business model in all of history that made more billionaires than almost anything else, there’s actually there was an explosive growth of mobile phone businesses around the 2000s, 2000 to kind of 2000– like, late ’90s to early 2000s was like huge wealth was created in mobile phones. But the business model was sell the handset for a few $100, and then sell the data in the minutes every, on the monthly recurring contract.
And the beauty of that business model is that they could be cost neutral on the customer with the handset purchase, and then they could be profitable every single month, for years at a time. And then every probably one to two years, they could just get a boost of profit with the handset upgrade, and then they could go on to make money off minutes and data.
And that was the greatest business model ever. It was just such an amazing one because you didn’t have to go backwards on customer acquisition, and then you’ve got the recurring revenue straight afterwards. So anything that looks like that is a really powerful product value ladder.
David Dulany: OK. So, and then taking a step back, if they’re trying to find product market fit, like they haven’t quite caught that wave of, we know that we have a product, that core product is selling. We’ve got some customers, you know, we know our niche really well, we’ve got some customers, I think we’re on to something here. So at that point, they probably just have the core product. Is that right? And then they start to build out the rest of the ladder.
Daniel Priestly: So, you know, it’s funny, what’s funny with SaaS businesses is that SaaS businesses are really good at creating product for prospects, which is a free trial. And then they’re really good at creating product for clients, which is the recurring revenue, but they almost never do the core product, which is a bulk commitment.
So let’s say for example, that a SaaS business does 29 pounds a month, or $29 a month for whatever it’s selling. You know, best case scenario, you make $350 for the year. You got to absorb quite, you know, if the cost of winning the customer is $500, you’re not going to be breaking even on that customer until like month 15.
So you’ve got to have one hell of a retention in order to break even on that customer. So all you’ve got to get that cost per acquisition right down. Now, if instead you put in there a setup fee, that is training and support to get set up. And let’s say that setup fee is $300, and that you’re going to get someone who’s going to spend a couple of hours with you getting you sorted and getting you set up and people can buy that.
Well, now, the cost to acquire the customer gets absorbed into that setup fee. The relationship also becomes more sticky, because they’ve made that commitment. So especially in the early days in SaaS businesses, having a quite a substantial setup fee can be a phenomenal way to alter the outcome of the business, because it gives you an excuse to be hands on with customers, and also to get a chunk of revenue upfront and not have to wait 15 months for it.
David Dulany: I love that. And I’m just thinking in the back of my head, we should do a show where people come on live, like, and do a business breakdown. And so they tell you, they have to do, like they have to give you five pieces of kind of, you know, a little bit behind the curtain, financial information, growth information, and then you just sort of, you know, break it down. And either they cry and take, or they’re really…
Daniel Priestly: Well, you know, a lot of stuff is simple stuff. A lot of a lot of it is– you know, one of the things that I recommend with a lot of software businesses is having like a customer conference or a customer group setup, where you get, you try and get about 30 customers in a room together, where they actually all turn up to a location with their laptops.
And you bring your trainers and you bring your dev team, and you just kind of basically help them and support them to set up. And you talk them through the process and you help them use the software. But what you’re looking for is to try and figure out where they’re getting stuck, and what are they talking to with each other? What do they all have in common?
And where you’re trying to get them all in the same room so you can see them and you can be over their shoulder while they’re trying to achieve what they’re trying to achieve, and you can eavesdrop on conversations. Things like that for product market fit. No one does that stuff, and yet that stuff’s like the really, the really useful stuff, you know.
David Dulany: Do you think it just, they think it’s too hard to do, and they’d rather just sort of push a button and get all the product market fit data from the comfort of their own home?
Daniel Priestly: Yeah. Look, there’s a winning formula when it comes to, you know, software companies that take off. And you’ve normally got a very technical co-founder and a more what, you know, what is favorably called a vision aerial, you know, the front man of the of the company, and the people person.
And those ones tend to work because the technical person solves problems through data and insights and capturing information at arm’s length from customers. And the people person tends to like to get in front of people and get people around. And both approaches work, you know. Sometimes data doesn’t give you an intuitive leap, and sometimes just being around people trying to use the product and eavesdropping and listening in on what they’re talking about, and you know, that’s where you can get some intuitive leaps that you don’t tend to get just purely on the data.
David Dulany: Yeah, you got to be able to get a– and it’s funny because I’ve been stuck here for two years, you know, working on Zoom, and it’s great. You know, it’s scalable, and we can do this. You’re in Zoom right now. But I finally was like, I got to get out. And we get a lot of our business through VCs. So the VCs will hire us to work with their SaaS companies on their go-to market stuff. And I finally get out and I go to this VC conference, and I had some good meetings, talk to a bunch of VCs, and I got COVID.
Daniel Priestly: Yeah, don’t do that again.
David Dulany: It’s like, yeah, that, I learned my lesson there. Yeah, and it was bad, man. I mean, I, oh, like I had avoided it for two years, but I’ve finally caught myself.
Daniel Priestly: All right. So if you run a customer conference, or set up event, don’t give your customers COVID.
David Dulany: 100%. And actually, we’re doing one. So you’re speaking at a virtual one. So you’re fine, you don’t have to worry about it, in September. And then we’re doing a live conference in November in Austin, Texas, and nobody’s going to get COVID. So don’t worry about it, folks. Just come.
Daniel Priestly: Just be there.
David Dulany: Yeah. And Daniel, I got to say one thing. I noticed you’re, you’ve got the Gibson guitar behind you, and you’re really into Gibson’s. And when I wanted, I was trying to send you a gift and it was this Gibson book that was this illustrated really nice, like 100 years of Gibson. And you said, give the money to a homeless person and take a video. And we’ve got a lot, I live in San Francisco, so I just haven’t, I haven’t been outside of my house and the car for a while, but I’m going to get on that and support the community here. I promise.
Daniel Priestly: Well, you don’t even have to do a video. Just let me know, let me know how it goes. But I was just simply saying. Yeah.
David Dulany: Yeah. You’ve got enough stuff and…
Daniel Priestly: I got stuff for real things.
David Dulany: I mean, you run, I mean, we didn’t– dude, we got to do this again, and you’re going to speak at the conference. So you run Dent, which is this amazing Accelerator where people can come to you and start businesses. And then, I’ll let you tell me about it. But you’ve got this whole service support system behind it. And then you started ScoreApp, you know, and spun that up as a tech company, just based on your… So tell us about that. How did that… Yeah.
Daniel Priestly: Well, you know Indiana Jones?
David Dulany: Yeah.
Daniel Priestly: Right. You know how he’s a university lecturer, but he also goes off and he has adventures. Right? So he’s, he teaches, he lectures on archaeology, but he’s not just lecturing on archaeology. He’s off, you know, he’s off exploring the archaeological ruins, right? He’s out there.
So for me, personally, I, you know, look, I geek out on entrepreneurship. I love teaching entrepreneurship, we run an Accelerator, we’ve worked with about 4,000 companies globally, offices in London, Sydney, and Toronto. And we, you know, I went and bought a group of services companies that are kind of universally useful to our clients, and put together, I constructed a group of six companies that are all services, like, basically, activation, you know, customer activation kind of customer companies.
And that’s been great, right? So that’s been that. But I also, like, I really love going off and having adventures myself. So I wanted to start my own SaaS company and scale it up. So I launched ScoreApp, and ScoreApp is data analytics for small business. So it’s basically, we’re trying to achieve Cambridge Analytica for small businesses, right?
So I’ve been talking about this stuff, and just trying to figure out what does it look like, what would it look like. So I’ve got an amazing technical co-founder, Steve, and we’re trying to make it really fun and easy and pretty for people to capture more data, enrich their database, segment their database, and have a really personalized conversation with people. We don’t have deepfake videos built in just yet, but we’ll work on that.
David Dulany: Now, so did you bootstrap that from your own funds? Or did you– do you take, what are your– what’s your philosophy on investment? I mean, you’re obviously, you know, what–
Daniel Priestly: So I have a pretty unique view on investment. It’s probably due to my circumstances, more than anything else. But I took on, I wanted to deliberately take on a large number of strategic angel investors. And I’m going to say a large number, about 40.
And what I wanted to do is get about 40 people who I knew were really useful to the business to put in a small amount, like 10 to 30,000 pounds, US dollars, like 15 to 50 grand. And what I wanted was people who could help me with go-to market, and they could help me with influencer campaigns, and you know, just various strategic things that I wanted to achieve.
So when people, you know, own a small stake, or they’d make an angel investment, they obviously want to see that company succeed. And most, you know, most founders are pretty guilty of, they try and get as big a check as possible from as few people as possible, and then they want to spend as little time with their angels or their investors as possible, and they get their head down.
I’m the opposite. I want as many angels as I can with small amounts of money invested. And I want to engage with them every month or every other month as a group and treat them essentially, as my army, my allies. You know, I want them to be active. I want to give them, I want to give my angels every month or every two months, I want to give them something that they can do to help.
So I want to give them my list of things that would be helpful. And I want to communicate with them regularly, and I want to say, “Hey, this month we’re trying to achieve this. Any introductions to these types of people would be great. If you can boost this post on social media, that would be great. If you can share this with your email list, that would be great.”
So I’m kind of, what I’m wanting to do is kind of have an army of, you know, 40 or 50 people who are invested in my– in the success of the business. So it’s not so much about the money. We raised about a half a million pounds, so maybe what, $800,000. And you know, we’re now, you know, we’re doing about 1.5 million ARR on that business.
So it’s pretty, pretty reasonable, considering we haven’t really raised all that much money. We’re mostly bootstrapped. And we’re growing at about 10% month on month.
David Dulany: Amazing. And you’ve got this army of allies who has skin in the game and they wanted– What is their exit strategy? Is it like at some point, I mean, you can’t probably answer this, but it’s like at some point, they’re going to try to 10x the investment or something like that?
Daniel Priestly: Yeah, absolutely. So the idea is that, you know, I bring people in based on the idea that we need a plausible pathway for them to make 10x on their money. So, you know, for those who came in at 400 a share, we want to give them a pathway to 4,000 a share, and they need to see a really clear pathway.
One piece of very practical advice I’d give to anyone listening is that when you’re a founder, you think in terms of percentage ownership, and you think in terms of market cap of your entire company. So you think, “Oh, I’m going to get angels to come in and invest in 15% of the company.” And I’m going to, you know, give up, you think I’ll give up 15% of the business, right?
So that’s kind of you think in terms of the whole company and how much you give up to angel investors. And then you might think, in terms of the businesses today worth 10 million, but I need it to be worth 100 million or a billion or whatever the numbers are.
Angel investors or investors, in general, they think in terms of what is the share price that they’re coming in at, and what is the plausible pathway for the share value to appreciate and to achieve liquidity? And is there any benefits along the way?
So for example, when I constructed the deal for my angels, I said, for 15,000 pounds, which I think, you know, let’s call it 20 shares at 750 pounds per share, right? Then I’ll say, OK, at that level, you’ll get the premium access to the platform, which is worth 89 pounds a month. If you are going to use the platform anyway, that’s effectively 1,000 pound yield per year. So you’re getting, you know, you’re getting some sort of a yield.
On top of that, we’ll give you a bonus. On any introductions that you make, you’ll get a higher commission, so that, you know, whereas normal affiliates will get 20% commission, you’ll get 25% commission. So you’ll get a higher commission on that. We’ll also run an annual retreat where you’ll meet each other and you’ll get, you know, additional networking opportunities with other angels. So I’m creating a value package of valuable benefits along the way.
But also, in all of my modeling, I model the share value. So I basically say, you know, at 750 pounds per share, when we achieve this target, we’ll get to 3,000 per share. And when we achieve this target, we’ll get to 5,000 per share. And when we achieve this target, you will get the seven and a half 1,000 per share.
And then when they say, “Well, what about liquidity?” Well, there’s three pathways to liquidity. There’s a VC pathway, there’s a private equity pathway, there’s a strategic buyer pathway, there’s a cashed up incumbent pathway. And essentially, these are all companies or individuals or organizations that would be motivated to give you an a liquidity event so that you move out of the way and they can move into your position. All right, so this is why they would do that.
And this is the other thing, we have to model when we’re doing a financial plan for investors. We have to model the scenario as to why that acquirer would actually get involved. So the hard thing about raising capital in a very real genuine way is that you can’t just, you can’t actually just simply have a plan in place for 10x growth. You have to have a plan in place for about 40x growth.
And the reason that you have to have a plan for 40x growth is because your angel investors want 10x, and whoever is going to buy it off the angel investors want a minimum of 4x. So you know, if I’m going to get angel investors into the 10 million valuation, I have to show the minimum that we’re going to get to 100 million valuation. If I am going to sell shares at 100 million valuation to the to the acquirer, they’re going to have to understand what gets this to a 400 million or 500 million valuation.
So realistically, you’ve got to be able to model and scenario a plan that sequence of events that is these are the liquidity events, this is what would motivate each buyer along the way. And you got to kind of put that together in a chain. When you do that, then it’s unbelievable how much money you can raise if you want to. And it’s unbelievable how you can then identify who would be the best strategic fit to carry the business equity, you know, across the line.
So my theory is pretty simple. It’s a lot easier for 40 experienced entrepreneurs to kick the valuation up to over 100 million than for one. So yes, I’m leading the charge, but what I’m really trying to do is get 40 experienced entrepreneurs to be pushing the wheelbarrow a little bit.
David Dulany: Yeah. And I think, as a founder, that you tend to focus on that ownership, like, I don’t want to give up, you know, one percentage point of blood, sweat, and tears over the last five years that I’ve put in. But you really, I mean, you had one suggestion that you carry out the globe marble in your pocket. I don’t know if you remember that.
Daniel Priestly: I did.
David Dulany: You know, did you still have them? Everyone’s like, what? And essentially, it was like, yeah, you have to understand that there’s this whole world of… just coming back to people and opportunities, and we live in a global interconnected world. And if you’re a founder sitting there going over, you know, I don’t want to give up at one percentage point in my company, you’re really shooting yourself in the foot, you know?
Daniel Priestly: Well, you’re also, you’re actually also missing the point as to how businesses grow in valuation. We don’t give up percentage points, we actually issue shares, right? So when– the actual mechanism by which we bring investors and bring people in is a new issuance of shares.
So for example, if I have 10,000 shares in a company and I bring in a new angel investor, I’m issuing 1,000 new shares in the business, let’s say. So I go from 10,000 to 11,000 shares. If I then bring on, let’s say, I do a merger, and I want to buy a new business, I want to bring in, you know, I want to acquire a company, I’m probably going to issue another 1,000 shares to buy their business. If there’s an incredible hire, and I want someone to quit their job and come and work with me, I’m going to issue 100 shares to that person. So now, I’m up to 12,100 shares.
So when we think in terms of giving up percentages, we’re actually kind of imagining a fixed pie, and that we’re slicing the pie up. And that’s not the– that’s not in any practical sense, that’s not what’s happening. What’s happening is that we are not in a lovey-dovey hippie-dippie peace, love and Hari Krishna kind of way. We’re actually genuinely issuing new shares where the pie is expanding.
We’re built, you know, you got to see yourself as a bakery that makes pies, not as someone who has a pie that’s been cut up. So the shares, you know, the shares that you’re issuing, you’re– you know, in many ways, you’re kind of like, in like a country that can issue its own currency to get things done. You are a company that can issue shares to get things done, provided people believe in the value of those shares. You’re in a position to issue your own currency to make things happen.
David Dulany: Wow. OK. And it all comes down to the trust that you’ve built, you know, in the marketplace, that those are going to be worth something. Like, at some point, I could just say, the United States dollar is worthless. And if enough people think that, then it’s a piece of paper.
Daniel Priestly: Well, if you’re… Yeah, one thing that countries do tend to do, including the states is over issue. They debase the value of their currency through over issuances. And essentially, if I was a startup entrepreneur, and I over issued shares, then those shares very rapidly become worthless. So there is an odd form to this, there is a value, you have to be an experienced, ethical entrepreneur to understand at what speed and what proportions, and at what value do you peg the value.
Now, for example, if you get someone to quit their job at Google, and come and join your startup, and they give up a million-dollars’ worth of salary, and they change– and they exchange that for 100 shares, that’s pretty powerful basing. That’s powerful basement of valuing the shares.
If a very experienced angel investor is buying shares at 5,000 per share, then that is a very significant marker of why those, why that share is valuable, and why you can continue to issue shares at a similar valuation, provided you continue to have the same reverence and respect for the value of the share that you have reverence of $5,000 per share, you know.
But yeah, the idea is that you’re trying to create something that acquires talent and resource and innovation at a faster speed than what the cash would be worth on its own, and that the value of those shares is continually going up, despite the fact that you’re debasing them through issuing more.
David Dulany: So you’re expanding the pie. This is so interesting, because we have Shark Tank over here. You probably, yeah, [1:00:12] [Crosstalk].
Daniel Priestly: Kevin Harrington.
David Dulany: Yeah, Kevin Harrington is a co-author of one of your books. And the people come in, and they’re like, “I want a million dollars for 20% of my company.” And the sharks just like, the shark attack, right? Like, they laugh the guy out because they have… yeah.
Daniel Priestly: Yeah, it’s… Well, here’s the thing. If the million dollars was coming off the table, right, let’s say you came to me with a million dollars and said, “I’m going to give you a million dollars for 20% of the company.” Essentially, what that means is that I can take that million dollars and run away with it, right?
Because you gave me a million dollars for 20% of the company, so therefore, the million dollars is able– it’s mine, I can take it and go and buy houses or chocolate or custard with it, whatever I want. I go and buy, go and go and fill up a little lake full of custard and go waterskiing. That’s, it’s up to me, right? So, you like that example.
But if the million dollars is coming into the company, then I didn’t give up anything, right? There was no debasement of my shares, you added something in. In the same way, let’s say, two next door neighbors, each own houses, and they say, “We could make this into a property development,” we could actually, we– the land required to do a big 10-storey high rise would require both of our properties to do that.
Why don’t we put both of our properties into one company? And now, that company owns the two, and we’ll have 50-50. Now, neither of them gave anything up, right? They now own 50% of a company that owns two properties, as opposed to 100% on one property. So they didn’t give anything up.
So when a shark comes in and says, “Well, I’m going to give you a million dollars for 20% of the company, it’s actually to a– someone who’s not well versed in how these things actually work. What they’re actually doing is adding a million dollars to the balance sheet of the business, and they’re expecting an issuance of shares in exchange, in recognition for the million dollars’ worth of capital that they’ve just added to the balance sheet.
So, you know, for the audience, they do a million dollars for 20%. But realistically, what you need to be doing is saying the company is valued at 2 million, you’re going to add 1 million, so you’re going to get 1 million out of 3 million. So you’ll have you know, 1/3 of the business because you added a million dollars’ worth of capital to our balance sheet, you added a million dollars to the net assets in the business.
David Dulany: Got it. OK. And so, question for you. This is really get back, the guy that you worked for at McDonald’s, who owned all the different McDonald’s?
Daniel Priestly: Yeah, Randy. Yeah.
David Dulany: What would he think, right, I mean, do you keep in touch with him? What would he be thinking of you?
Daniel Priestly: I don’t keep in touch with Randy. I do keep in touch with my very first boss, who I worked for from 19 to 21. I keep in touch with John. And John has become insanely successful. He owns hundreds and hundreds of houses. He basically uses his business as an amazing cashflow engine, and then he uses the cash flow to buy houses. And he just buy, like he’d buy, I don’t know how many hundreds of houses he owns in Melbourne, but he owns hundreds of houses in Melbourne.
Amazing wealth creation vehicle that he’s been through. But he, he was my mentor when I was 19 to 21, and he set me on a path, and he told me to how to think about business. I keep in touch with him. And it’s great, you know. He said the other day on Facebook, he watched the video about the commencement speech at the graduation. And he said, “Isn’t it amazing how…” you know, for him, I was not a big part of his life. Like, I was just one of hundreds of people he employed.
But for me, he was a big part of my life. And he, you know, he kind of acknowledged that. Isn’t it amazing that you can have an impact on people. You can have an impact on people’s employer. You know, if you hire someone and treat them right, that could have a massive impact, you know, that you may not be aware of. So John sort of like realizes that he had a big impact on me, and you know, and that’s been great.
David Dulany: Yeah. And it takes us back to the power of these networks that we have that somebody could just go on for free, find this thing, maybe get inspired and start to buy the books and maybe even join the Accelerator and next thing you know, they’re a successful business person. So it’s, it is making an impact for sure.
Daniel Priestly: Yeah.
David Dulany: Well, Daniel, this is always enlightening. I’ve got all these different questions that I didn’t ask you. I wanted to ask you about the old grandma who drives the Opal, and how she can actually go 80 miles an hour versus somebody who’s doing a lot of positive affirmations and is stuck. But we’ll do that in the next one. I love that analogy, you know.
So, we’ll do that in the next one. I just want to thank you for coming on the Sales Development podcast and sharing your wisdom. And we’ll see you next month at the at the virtual conference.
Daniel Priestly: I can’t wait. Looking forward to it.
David Dulany: Yeah, I’m really excited. I’ll get with the team and we’ll put a great conversation together. I’ll try not to be involved because I take you on all these weird directions and you’re just like… But we’ll make that an awesome, awesome talk, and we’ll get you on the podcast again real soon.
Daniel Priestly: Cheers! Looking forward to it. Cheers, David!
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