How I Found Profitability by Fixing My New Business's Painpoint

Hello, what's your background and what are you working on?

Hello, I'm Tyler Gillespie and I run ApplauseLab.

My background has largely been in the service business industry — ever since I was 16, working with my dad, doing projects related to property management, real, and vacation rentals. So the service business realm has been where I've played. Which I think really developed my sales skills, both offline and later online.

I'm originally from Colorado. But about six or seven years ago, I decided to travel a little bit and fell in love with the digital nomad lifestyle. Jumping around was amazing, but it was also hard, so I ended up settling in Columbia while working on a variety of different online businesses.

Last year I sold a productized service business I made to a private equity fund and since then I've just started a new productized service called ApplauseLab.

ApplauseLab is a video testimonial service that focuses on e-commerce companies. Essentially it makes it frictionless to capture video testimonials and leverage that social proof to grow your business.

What motivated you to get started with Applauselab?

With a variety of the previous businesses we had I always knew how important social proof was. And even though we were able to capture written testimonials, the idea of using video seemed really useful. But the problem was that the available tools and resources online just didn't make it really easy or frictionless.

AppleauseLab home

So, instead the process sort of downgraded. We wanted a video testimonial, but that was hard so it turned into a written testimonial, and then that turned into let's just write this for my customer and have them approve it... So that good idea gets pushed down just because of a lack of tools, and that didn't seem right. That was the genesis always in the back of my mind.

After I sold my previous business I had a lot of time on my hands, as many people do. And this idea kept floating around. Then I ended up testing out the idea, leveraging The Seven Day Startup by Dan Norris approach. So I went through the book with this idea, with no intention other than thinking it would be a cool idea to apply the principles of the book.

But as I talked to people about the process and this video testimonial idea, it turned out that a lot of people were interested. I had a ton of great feedback and within the first couple of weeks I already had two or three paying customers. It just grabbed on and evolved really quickly because it was a pain point in the marketplace that I think other people were feeling as well. I guess my motivation was just trying to scratch my own itch around a problem I had in a business.

What went into building the initial product?

I started very lean. There's a lot of moving parts, obviously, since it's a tech-enabled service. So we have the capture element and then we have our real editors on the other side. When I was first proving the idea, before we leveraged any technology, I was just doing the interviews myself via Zoom, because I knew that was part of the element. But I quickly found out that that was not going to scale. So a lot of this was manual and obviously building out the team, product development, finding really high quality video editors and project managers for the team. I started putting these pieces in place early on and kept adding manually until everything was working how I wanted it to.

But at scale I knew it wasn't going to be in alignment with the ideal business that I wanted, or else we were just going to have to have someone doing interviews full time. In the beginning, there were times where it might take two to three weeks just to get on the phone with someone to do the interview. And I realized that was just a lot of friction. Plus it's an hour of my time, it's an hour of their time, and then there's three weeks of waiting.

So we really tried seeking different solutions, and eventually we came across this idea of asynchronous video capture. Essentially it allows you to pre-record questions, and then send that question to X person. Then someone could respond and record their answer.

We started putting together sets of ten very powerful interview questions that we'd pre-record and then send that link to the customer to let them answer async. They could answer one at a time, and then our software would automatically take them to the next question, and so on. It's seamless, like you're getting interviewed by someone, it's just not live. Once we had that figured out, and got a couple editors to check it at the end, we had our product.

You mentioned that you had the list of powerful questions. Did you create that whole list in-house? How did you come to those questions?

One thing I've learned is to try to see where I can learn and find help from people that have already done this.

I consulted with another guy who runs a similar testimonial service, but he focuses on the higher end of the market. He does in-person video testimonials for SaaS companies. I actually just paid for a couple hours of his time as a consultant and asked him for his most commonly asked questions. He'd been in industry for 15, 20 years at that point, and since we weren't competitors directly and I was paying for his time, he actually gave me all of his top 15 proven questions and helped me out with some operations as well.

It took me a bit, to be honest, to go from seeing this pain point to figuring out where we could fit in the marketplace.

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That was a huge value add that let me push the skip button and save a lot of time. We were able to leverage those questions immediately upon its launching and integrated those into our process. And we might tweak them now, but we still use a majority of those questions today as our starting point!

How have you attracted users and grown ApplauseLab?

When I first started, obviously there was a little bit of hype just going through, showing people what I'm building and sharing the journey. I think when you're transparent that helps get initial like momentum. After that, that momentum was over, and there was a lot of networking. I co-run a Facebook group called Product Community, and I was able to share a lot of the journey there. I don't think I've gotten a ton of customers from it, but there have been a couple!

Growth-wise I've tried a lot of different things, from cold email to some LinkedIn campaigns to referrals. There's an element of vitality in the software. For example, especially when you're in the B2B space. We actually have a surprising amount of people who, after they've left a testimonial, ping us and say they're interested in working with us. It's been a source of some new customers. So that's been really interesting and helpful.

The company's still fairly new as well, and 2020 has been weird, of course. But I'm still charging forward!

What is your business model and how have you grown your revenue?

Our business model is fairly simple: we charge per video testimonial. When someone first signs up we do have a setup fee, but that opens up what we call our launch package. That includes the setup, the strategy around customizing any of your questions, and then it includes either one or four video testimonials. After that, we really lean on asking people how their experience was and trying to create momentum there. After the one or four testimonial starting package you can either get a yearly subscription or continue a la cart, with the latter priced a little higher.

That's really our core model. Most of our customers, if not all of them, are on yearly subscriptions on the backend, which allows us to customize a video testimonial package to their needs. Based on the size of your business you might say you'd like 12 video testimonials a year, at least one a month. Then you as a customer would have 12 orders in your account, and we can produce those as video testimonials come in over the next year. And we work with that, but then offer a series of upsells.

So let's say we capture a video testimonial for you. We produce it and you love it. But let's say you want to also run it as a Facebook ad, or you want to put it in your Instagram feed, or add it to your Story. Our team can export the video into any format you'd like. And then say you want captions added, or you want some special editing done, and our team can do that, too. We offer all these additional features for a very affordable price, and that's one way we've grown revenue.

Do you think that there's anything you could have done to reach revenue goals or even just profitability sooner?

My previous business was in the content writing space and ApplauseLab is still the same service business model, but now I'm dealing with video editors. I didn't know the going rate for video editors. So I probably paid at least some initial people that I brought on the team a much higher rate during the early days, which did cost me more, and that was a discovery.

How AppleauseLab works

But I was building things out, building processes, SLPs, defining what the flow was going to look like. So I don't really regret it. I think it was a natural part of the process. Once I was able to familiarize myself more with the process and what I could charge for what I needed, that allowed me to make those big adjustments.

As I mentioned, I had started out doing the interviews myself. I did then hire someone to do the interviews manually for me, so that was an additional cost. And then once we built out the asynchronous video capture then we didn't need to pay someone to do all the calls anymore. Obviously that saved us money as well.

There's a lot of things like that that I think were just natural progressions. We started with more, and then just by asking the right questions, we chipped away at all the extras, so we're saving a lot more now.

What's your tech stack?

On the back end I use a software called ManyRequests for project management.

We use ClickUp for some of the project management and inner team communication.

Also, we use G suite for storing all the customer videos and testimonials we record. So we keep everything organized there that makes it easy for sharing

Is there any tech that you used to use that you don't anymore?

Well we don't use Zoom anymore! That was a big one, I think, and for currently obvious reasons. I also don't use Slack.

Overall I've kept it pretty lean so far, so there's plenty we don't use, but those are the only ones that really stick out.

What are some of your goals for the future?

I love productized services. ApplauseLab is a productized service, it's an awesome business, and I want to make it better. My goal is to build it up to where I can afford to have someone else running it day to day off of the revenue. It's a really fun business, and it's been fun to work with video editors, and our customer success team is amazing. I want to grow this into a business that can really be self-sustaining. For me that's the the 50K MRR mark.

We're also niching down a lot, and expect that to be a great growth avenue. We work with a lot of different customers, but we found e-commerce to be, across the board, the best type of customer we could work with and that we want to work with. If you go to our site you'll notice that it's very e-commerce focused, which is a fairly recent pivot, based on all the market feedback we'd gotten up to this point. So I'm excited about that.

In terms of other projects, I run a website called Productize My Service and that's a community around helping service businesses scale their business from five to six figures a month by productizing their service to try to avoid all those common service business traps. From a bigger picture that's what I'm building and I'm using ApplauseLab as an awesome model and a business reference as I build out that community.

Which of those goals would you say is the most important to you?

I want to be able to give back and help a lot of service businesses grow the way we did. I think it's more doable than a lot of people think, as far as dreams go. Obviously I've done it, and I want to help others do it.

Learn from who you can, the people who've already been doing it, and surround yourself with as many mentors and advisors as possible.

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So the Productize My Service group and the productize mentor group is my way of helping people and giving back. And then ApplauseLab is definitely part of that as well. I guess you could say it helps me be a practitioner: someone that can help and teach and coach all at once.

What are the biggest challenges that you've faced and obstacles you've overcome?

There's definitely been challenges around not being super familiar with some of the aspects or the mechanisms of the space. When I look at a business, I look at a customer mechanism; customer plus mechanism equals the results and the mechanism and this business is video editing. And that's something I didn't have a background in! So that was definitely a hurdle I had to get over so that I could fluently talk to my team, work with them, help them succeed, and actually get the result that I wanted.

I think the other one was trying to find a solution in a market that's very all over the place. You have people who come to you and do a video testimonial with a film crew and they'll charge $3,000 to $10,000 per video testimonial. You could picture that like more enterprise, more for big companies. Then you have agencies that charging anywhere from $800 to $2,000 for a video testimonial. And there wasn't really anything else on the very low end. There's maybe some do-it-yourself software that's available out there, but you still have to prepare and film and edit it alone.

It took me a bit, to be honest, to go from seeing this pain point to figuring out where we could fit in the marketplace. We wanted to price competitively but also help businesses solve these problems.

I don't know if anyone ever nails product-market fit immediately. It's always a lot of testing and work in progress, which I think we're still trying to dial in!

If you had to start over, what would you do differently?

I don't know if it's necessarily a wrong thing, but I sprinted pretty quickly once I got a little bit of traction. I think I might have hired one too many video editors too quickly. So in retrospect I would have definitely want to pause, slow down, try to get more feedback and help around hiring the right people.

I think I jumped right into Zoom calls and I wish I would have looked for some other solutions. Obviously we ended up coming up with a tech solution for the asynchronous side, but I might have saved myself time and tedium.

Also, I think I would have brought on that consultant I mentioned much sooner than I did. When you have someone that's been doing cyber for 15 years and you're in week two they have so much advice that you can use. That's why I'm such a huge proponent of hiring a mentor to have a second pair of eyes to help you as you're building whatever it is you're building.

But doing those thing led me to where I wanted to be and overall it was because of my service background that I was able to grow as quickly as I did. I think someone without that background wouldn't have been able to do that.

I think all these things, even though they were hurdles or struggles or I didn't necessarily do the right thing, they all ended up leading me to better things.

I try to make fairly quick pivots with this kind of stuff. And I think that helped in going through some of these processes and refine my model.

Is there anything that you found to be especially helpful or advantageous?

Like I just mentioned, having a mentor, personal or productized, is really helpful.

Clarity.fm is a great resource. Obviously the indie hackers community is amazing, having a place where can you go to find other people that have been doing what you're doing and talk with them is great. You can even find specialty Facebook groups, too. It's important to have great places where there's community for your specific type of project.

Book-wise, I think when you're building a service business or a tech enabled service in this case, The E-Myth Revisited and Built to Sell are great. Both are all about processing systems and building out teams. There's another one called Clockwork. If your goal is to build a machine that could potentially run without you down the road, those three are the books you want to read.

Those books have been pretty pivotal, and have been for awhile, but I enjoyed rereading those again as I dove back into building mode.

Is there anything that you've tried or looked into or any advice that you heard that you found really didn't help you?

Yeah. I did have one buddy, who I won't name, but his advice was to really, really dial in operations. And some people can really spin their wheels internally perfecting processes and hiring the team, but then never do any sales. And I think there's a balance. And that really tight focus didn't work for me.

AppleauseLab in action

I think I like to stair step up instead. You sell and then you can start to notice where you can make changes, return to selling, then iron out tweaks, and so on. Because nothing is ever going to be perfect, perfect is an illusion. So don't focus too tightly on trying to perfect things before you actually open your business.

Right at the beginning of the interview you mentioned really embracing a digital nomad lifestyle. Could you talk a little more about that? I know that's something that really interests a lot of indie hackers.

Sure! When you're thinking about like a digital nomad lifestyle there's a romantic element of it, of just traveling and going to a new city every single day.

When I first did my first trip, it was at the beginning of 2010-ish. It was around the time when I read the Four Hour Workweek, which so many of us probably have a connection to in some way or another. But I booked a ticket literally the month after I read that book. I just randomly packed up and went to Costa Rica for two months. That experience kickstarted my digital nomad journey. It will get easier once you've done your first couple of trips.

And these days that's easier than ever; infrastructure is easier, resources are easier. So now it's even better, especially with Airbnbs and the sharing economy, to just go and plug into a city and develop this routine.

For anyone who's looking to do this, start researching the cities ahead of time. I think always take into account that you're going to have the settling cost whenever you move to a new city. Finding and apartment, gym, grocery store, getting to know the area. Take that into account whether you're remote working or you're actually running a physical business. Moving around a lot can be hard when you're trying to concentrate, and there's a switching cost to doing anything, even when it is kind of fun.

And it would be a lot more fun if I didn't have anything to do! If you were purely on vacation, you don't have any worries and you're just bouncing around. But as a digital nomad, you're more than likely working and traveling at the same time. So I found that traveling less frequently was a much better fit for me. And I wish I would have done slow travel much earlier on. You can pick a city or a country and go there for three to six months and build a routine. You have elements of productivity, you can also build deeper relationships. Think about that before you start jumping around or doing the digital nomad thing!

I'm curious if there was one big takeaway that you'd hope somebody could get from this interview or just from you, what would that be?

Take action as quickly as possible and leverage as many other minds' expertise or advice as you can during that process. Most of what you think you're doing has already been done. Letting that ego go and just embracing the fact that so many others have done it already is only going to supercharge the speed at which you're going to go towards your goals.

And don't just say "Hey can I buy you coffee and pick your brain?" Offer to pay them for their time, make them a consultant, and you'd be surprised how much people will give you for that.

Learn from who you can, the people who've already been doing it, and surround yourself with as many mentors and advisors as possible. I think that's a great place to start.

Where can we go to learn more?

Follow me at ApplauseLab and ProductizeMyService.

Tyler Gillespie , Founder of Applause Lab

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