Spectora: Bootstrapping to $27M ARR by Serving vs Selling – with Kevin Wagstaff [457]

Omer Khan [00:00:00]:
Kevin, welcome to the show.

Kevin Wagstaff [00:00:01]:
Omer. Thanks for having me.

Omer Khan [00:00:03]:
It's my pleasure. Do you have a favorite quote, something that inspires or motivates you that you can share with us?

Kevin Wagstaff [00:00:09]:
Yes, I actually took it down off the wall to prepare, and it says what we think we become. And I'm just big on thoughts turning into words, words turning into actions, habits, and kind of who you are. And so I'm just very mindful of the thoughts and the things that I let enter my mind space. And it was huge along our journey too. Like our mindset.

Omer Khan [00:00:33]:
I love that. Tell us about Spectora. What does the product do? Who is it for, and what's the main problem you're helping to solve?

Kevin Wagstaff [00:00:41]:
It's a home inspection platform. It helps home inspectors. When you buy a house, you buy a residential house, you get a home inspection report. It helps them write the report through the mobile app. But then there's the desktop platform that manages their whole business, their employees, payroll, everything like that. And our customers are solo home inspectors all the way up to 100 person inspection companies and franchises.

Omer Khan [00:01:04]:
And give us a sense of the size of the business, where's the business currently in terms of revenue, customers, size of team?

Kevin Wagstaff [00:01:10]:
Yeah, we'll do about 27 million in revenue this year. Team of about 100, you know, got up to about 110, but then we pulled back a little and yeah, we're chugging along, oh, about 12,000 customers.

Omer Khan [00:01:24]:
Okay, great. And you started this business with your brother Michael with about $5,000. You guys effectively bootstrapped this from 0 to the first 10 million in ARR before you raised any kind of money. And all of that happened in about, God, like five years, let's see, 2017.

Kevin Wagstaff [00:01:55]:
To 2023, so about six and a half years.

Omer Khan [00:02:00]:
So there's a great story to unpack. Let's start with where did the idea come from? Were you working in the home inspection business?

Kevin Wagstaff [00:02:09]:
I was a realtor. So I had a background in real estate, real estate and marketing, little SEO, and my brother background in computer science. We knew we wanted to start a business together and we had a friend whose dad was a home inspector. And he said, hey, this is an industry that got left in the past with software. I think there's problems we could solve here. So he, he brought the idea to us. We all ran with it. Ended up just being Mike and I that wanted to kind of invest full time in it.

Kevin Wagstaff [00:02:36]:
So we kind of took, took the idea and started our research journey and started interviewing home inspectors. And so it Kind of found us. And we. We liked the idea of niches. Like, niches get riches. And we are big fans of the lean startup and kind of that mentality. So we liked that it was a small niche that seemed forgotten about.

Omer Khan [00:02:56]:
So how much time did you spend interviewing inspectors? How easy or hard was it to get time with them? And, like, how long did it take before you guys were like, okay, we understand this well enough to know what solution we need to go and build?

Kevin Wagstaff [00:03:10]:
Yeah, it was about six to nine months because we were doing it part time. A lot of people listening could probably relate to that. We had. We had jobs, we had families have families. And so we. It was hard to get a hold of inspectors because at the second they know you're trying to build something or sell something, you know, people naturally get on the defense. But I did my best to buy them coffee close to their kind of business or kind of where they were for that day. And she said, oh, yeah, I happen to be in the Littleton area.

Kevin Wagstaff [00:03:37]:
I'd love to buy you a coffee on your way to your first job. Look at your software, tell me what you hate about it. And they seem to really like that. That seemed to work. But it was about six to nine months of interviewing real estate agents and home inspectors and kind of asking pain points. Hey, are there things your software could do better? If you had a magic wand and waved it, what would your software do? And kind of these. These really insightful questions to get it out of them. But I'd say nine months at the end of 2016, it was like, okay, I think there's a gap.

Kevin Wagstaff [00:04:11]:
I think there's big efficiency gaps in workflows. Let's do this.

Omer Khan [00:04:16]:
A lot of founders go through this process where they interview potential customers and they collect a bunch of ideas that end up being not that useful. Like, yeah, they need this, they need that, and then they go and build it and then get it back in front of those people, and it's just crickets, right? Like, nobody's interested. As you collected this feedback, how did you figure out what was like, a really valid pain point that really needed solving versus stuff that people were just telling you because it sounded exciting or it might be nice to have.

Kevin Wagstaff [00:04:53]:
That's a great question. Incredibly insightful question. So it was zooming out enough. Well, one, it helped me watching home inspectors do a home inspection, being an agent. So like a ride along, you know, if it's an industry you're not. You're not in, do a ride along and just. You almost have to take yourself out of it. And I said, okay, why is it taking them three hours at the house? And then when everyone asked they take two or three more hours at home.

Kevin Wagstaff [00:05:18]:
I broke down their hourly rate. It's like, okay, that feels inefficient, I need to validate this. So then I would ask them like, hey, could you do more of this on site? Like, why are you doing so much at home? Like, oh, well, it's the software, you know, I gotta take pictures. And so it was more workflow and efficiency related was how I was thinking, as opposed to cutesy features. And I kind of started, I interviewed five or 10 and I started to get a sense for like, okay, this is a, this is a you feature versus they're not thinking about how to make their whole workflow more efficient. And so I started to like pull on those threads more as opposed to the ones that got out of left, that were a little out of left field. But it took 10 interviews or so to say. Okay, that one.

Kevin Wagstaff [00:06:00]:
I don't even understand why he would want that. Okay, he wants different colors on his report. Okay, that's not going to make him more money. And I really tried to hone in on like, save time, make more money. And that ended up being our two marketing pillars in the future.

Omer Khan [00:06:15]:
And how many interviews did you do overall in these nine months?

Kevin Wagstaff [00:06:18]:
Probably like 10 or 15 in person and then maybe another 20 or 30 over the phone. Just anyone that would talk to me sometimes if I could just get them to answer an email, great, give me one thing. But it was a struggle. It was the loneliest feeling on earth. And everyone listening probably understands that when you're just firing off and you just get crickets.

Omer Khan [00:06:41]:
So you've spent these nine months, you've got a good idea of the workflow, the process. Tell me about what that first version of the product look like. What did it actually do? And then was it Michael who built the product?

Kevin Wagstaff [00:06:58]:
Yeah, it was basically my brother Mike. He had a background in building apps. Largely self taught too, by the way. It's not like he graduated and was just cranking out. He learned a lot of this on the fly in terms of building the mobile app in Ionic, like a hybrid framework that pushed out to Android and iPhone. So we were thinking of how to most efficiently and cheaply get out the mvp. That was kind of our goal. But the initial version, as I can't remember who said this, we were embarrassed by as you should.

Kevin Wagstaff [00:07:27]:
But you need to get it into the hands of people. It essentially Allowed them to take more pictures on the inspection at the house, label them, comment them. So then when they get home they're only maybe doing 30 minutes of proofreading. They're not actually constructing the majority of the report at home. So it's really like saving them time on that. So they're tapping around more in the mobile app versus snapping pictures on a DSLR camera. Because, you know, back in the day it was like, bring your canon snap 300 pictures, go home, spend all night writing reports. So that pain point was so plainly obvious that we were like, if we can save them time on the mobile app when they get home, they'll feel good about how much time they're saving.

Kevin Wagstaff [00:08:10]:
And that was kind of the initial emphasis was mobile first. Mobile first. Which I mean think about training a bunch of 55 to 70 year old home inspectors, constructions trades to say mobile first. It's in the cloud, like it was a big learning curve.

Omer Khan [00:08:27]:
And so this, you didn't sort of make a play to wholesale replace their existing software. This is more like, here's a part of the solution that make your job easier.

Kevin Wagstaff [00:08:39]:
Yeah, this is an interesting question. Software was fragmented in the space. So there was the report writing on one hand and then there was business management tools. And they usually everyone played nice in the industry, right? It was like, okay, good old boys club, you use this tool for your business management, but then you can use any of these 20 report writers. That didn't make sense to us. We said, hey, why wouldn't this all be on one platform? Like, let's do it all. So we didn't just do the report writer, we said, oh, we're going to let you bill the customer, we're going to let you send text messages, send emails and then deliver the report, because why not? And we can probably save you money if we charge less than your two platforms combined. So that was the other big, I think step function change in the industry was, hey, why are you using two or three softwares? Like we just have one that does it all.

Kevin Wagstaff [00:09:27]:
And some were resistant at first, but then that ended up being such a big competitive advantage to say, okay, with modern technology it's not that hard to do a Twilio integration. SendGrid, you know, at the time, SendGrid, send some emails.

Omer Khan [00:09:40]:
Okay. But initially it didn't do all that. Right. It was just focused on the photo.

Kevin Wagstaff [00:09:44]:
Solution, it was the report writing and then it was very basic like confirmation email. But we knew we wanted to take payment, we knew we wanted them to be able to Bill the customer, because I don't know if we were as thoughtful at the time, but anyone that has payments integrated in your system, it's a big multiplier effect down the road in terms of the revenue you can generate from it. And then acquirers really liked that. So I don't know if we knew that at the time, but we just thought it made sense. Invoice, get paid through the platform. So that was a stripe. That was like a stripe. Easy stripe integration.

Omer Khan [00:10:17]:
Okay, so the product gets built. How did you go about getting your first 10 customers?

Kevin Wagstaff [00:10:23]:
Yeah, so this work started a year prior. So, like my background in marketing and SEO, I started a separate blog called the SmartHomeInspector.com a year prior to start writing blog content on how to market your business as a home inspector. So I took the approach of, let me teach these guys something on the marketing, SEO, Google, my business side, maybe that'll generate some activity that'll build some credibility and trust. And then, of course, I would link back to Spector's main site and kind of integrate the two. So it was a lot of YouTube videos, a lot of blog posts, and then I offered to actually do free SEO audits and work for customers just to get them to talk to us about the software. So I got about 10 to 15 customers signed up on $100 a month SEO plan to let me manage their SEO, write blog posts for them, optimize their websites, basically do all the basics of SEO forum. And then eventually a couple of them were like, oh, you do software too? And said, yeah, yeah, let's do a demo, let's do a walkthrough. So I think five or six of our first 10 customers were agency clients first.

Kevin Wagstaff [00:11:32]:
And we still have an agency side to the business where we build websites. And so I built the websites of, I think of our first 200 customers because I taught myself that, because they were like, oh, do you build websites? I was like, yeah, of course we do. Go learn how to build websites.

Omer Khan [00:11:53]:
Okay, wait, so, like, building 200 websites.

Kevin Wagstaff [00:11:58]:
For.

Omer Khan [00:12:00]:
Clients while you're trying to get a software business off the ground seems like a huge distraction. But was it? Did it turn out to be actually the right thing to do?

Kevin Wagstaff [00:12:13]:
It did, only because now I think we host about 2,500 websites. We charge anywhere from 50 to $100 a month for hosting. It's maybe 10% of our revenue. So it's a good part of our business. And it's. It showed people we can do everything they need rather than like, piece out everything. And the sites were simple enough. So, I mean, we're talking, you know, if you go look at any general contractor, painter, electrician's website, you need five or six pages.

Kevin Wagstaff [00:12:41]:
And it got them to engage with me. They told other people about it. It's a small industry. And so I was whipping those up pretty quickly, five to 10 hours. And it got us revenue. So our first year when we really didn't have much revenue, first six months, we didn't have much revenue. It was probably driving, you know, a thousand or two thousand a month to kind of build our morale and momentum. And so, yeah, so now we have about seven or eight people on our websites and SEO team that manage that.

Kevin Wagstaff [00:13:11]:
So it. I could see people saying, yeah, if that, don't mess with that. I think I was even advised not to.

Omer Khan [00:13:18]:
So you were building websites and doing the SEO for those sites as well and creating content, but then were you also doing SEO and content creation for sites that you weren't building and hosting as well? Because they already had something.

Kevin Wagstaff [00:13:38]:
I told them I would need to build the website to be able to effectively work on it. I kind of used that as a tool to say, Hey, $1,000, I'll build your website, but then I can be more effective with all the SEO if you host it with us. And a lot of new inspectors were like, hey, I just want everything in one place. I just kept hearing that they were like, hey, I just want everything. I just want one kind of owner of all this stuff. And so I was more of listening to the market as opposed to, like trying to do something that I wanted to do. But yeah, we were. Those were the 70, 80 hour, you know, work weeks, though, because it was like I'd knock out my agency work for those 10, 15 home inspectors.

Kevin Wagstaff [00:14:13]:
Then I would do the Spector stuff late at night, and then I would do customer service and QA testing in the mornings. And so it was kind of like wearing 26 hats, you know.

Omer Khan [00:14:24]:
Yeah. And how much were you charging for the software?

Kevin Wagstaff [00:14:28]:
We started out at 79amonth. We're up to 99amonth now and have a separate suite of products that's per inspection. So like a per unit cost on top of that.

Omer Khan [00:14:41]:
And how easy was it to get some of those initial customers back paying that?

Kevin Wagstaff [00:14:47]:
Very difficult because they came from a world where everything was pay once and download it. We all remember those days of like, hey, get your DVD or cd, you know, download it off the cd, it's on your computer locally, and you own it forever. And they were, a lot of them were very married to, wait, I can't just download it forever and own it. We're like, no, no, no. It's in the cloud. SaaS, it's in the cloud. You pay us every month and we keep working for you. We're incentivized to make it better.

Kevin Wagstaff [00:15:14]:
So it was not only like getting them to switch softwares, it's like getting them to understand the concept of SaaS and why it's actually good for them. That was tough. I got so much pushback. There was days I was dejected and I was like, this isn't going to work, man. There was days I'm like, these guys are not going to change business models and mindsets. And so, so much of it was letting them know. I was like, just give our service a chance. I was like, I'm not going anywhere.

Kevin Wagstaff [00:15:41]:
I'm going to be here 24 7. I was like, give our intercom chat a try and I guarantee I answer you within a minute. That was our guarantee in the early days, was a minute or less response time. And we stuck to that up until about five years.

Omer Khan [00:15:56]:
I know you felt that building trust in this industry has been a huge part of the success of Spectora. Is this something about trust building that you wish you had known from day one?

Kevin Wagstaff [00:16:14]:
I would say intentionally, and we did this instinctually, so I would say intentionally. When we would get face to face at conferences, we would try everything to not talk about Spectora. We would. It was the complete in like really living it, not like in a phony way trying to like anti sell. It was more just like, tell me about your business, man. Oh, you're from Jacksonville. What's it like there? Like, we genuinely took an interest in the person and anyone that's run a table at a conference, you know, half the time turns into nothing. Some of them don't care.

Kevin Wagstaff [00:16:51]:
There's how much it costs, then they huff away, okay, cool, that was a miss. But whatever, you know, and then you take an interest in the next person and the next person, you do that 10 hours a day for three days in a row. So to me, it was, it's. It goes. It's further than business. And when you genuinely, like, signal that and show that energy to people, they do feel it. And then they're just like, kevin's a good guy. I'm not going to use Spector, but I like him.

Kevin Wagstaff [00:17:14]:
And then guess what? A few years later, I see these signups rolling and I'm like, I'm like that was a three year sale process. But he signed up eventually because he saw me post on YouTube or on some somewhere else and was like, oh, I had a good feeling about him. So like, to me it was like, it's not being anything other than yourself and taking an interest in people.

Omer Khan [00:17:36]:
Yeah, I mean, I know one thing you did, and we'll talk about this a bit later, about being basically everywhere online and where these people were. But what you just said, I think strikes me. The part that I think is really valuable is that even if people don't become customers right away, if they know that you care about them, that is something that they never forget.

Kevin Wagstaff [00:18:06]:
That's gold. That could be quote. You should quote yourself on that and put that on a plaque somewhere. I was playing the 10 year game. I was like, I'll do this for 10 years, guys. I was like, I'm not going anywhere. I'm going to be here. And that was genuinely the plan was I was like, this might be a seven to ten year endeavor.

Kevin Wagstaff [00:18:24]:
And so I said, hey, I'll be here next year, man. I said, if you change your mind, you know, if you just want. I was like, if you just want to talk marketing or like the industry. I was like, come on, come on my podcast, we'll just talk shop. I was like, I don't care what software you use. And I genuinely had that confidence. And then it ended up in all of them, ending up coming back and not even. It wasn't even a game.

Kevin Wagstaff [00:18:45]:
It was just like, hey man, I can't force you to do something. Do I think we're the best product? Yes, I do, but I'm not going to push it on you right now. Like, do you want to get a beer after the conference is over today? We could talk about the Eagles or the Yankees or the weather, whatever. Like, I don't care.

Omer Khan [00:19:01]:
So I think we mentioned this earlier. You went to like the first 20k in MRR in the first year, which was a combination of selling the software as well as the website hosting and you hit the first million in ARR. And I think around 20. Was it 2019?

Kevin Wagstaff [00:19:20]:
Yeah. End of 2018? Beginning of 2019.

Omer Khan [00:19:22]:
Yeah. So it wasn't. That didn't take that long. You mentioned conferences earlier. Was that the main channel that helped you grow and acquire customers and hit that first million in ARR?

Kevin Wagstaff [00:19:36]:
I wouldn't even say the main. It was pivotal and some good relationships that led to some sales, but it was the, I would say constant online presence and iteration and staying in the forums, the chat groups like my brother and I were kind of maniacs. It was like 10, there's literally 10 or 12 hours a day. We would be the first to comment on every Facebook group thread. So we had notifications on for all the home inspector groups. Anytime anyone asked anything, we just answered or chimed in whether, you know. And it wasn't with sales stuff either. It wasn't just like, oh, check out spectora.

Kevin Wagstaff [00:20:13]:
It was just like giving our genuine perspective over time and just integrating into the industry. And I think that led to a couple key signups that then went and told others about it because there's like home inspector groups and masterminds where they network and they talk about new fresh stuff. And we just tried to wake up every day, hit our customer service chat, hit the Facebook groups, hit the forums, and then get on with our day of like marketing, coding, sales. And that was kind of how like our 10 or 12 hour days look.

Omer Khan [00:20:48]:
What type of questions were they posting about and which ones did you guys feel qualified enough to answer?

Kevin Wagstaff [00:20:54]:
Yeah, some of them were highly technical, of course, like, hey, what plumbing pipes are these? And you know, like, how would I, how would I diagnose these? And you know, whereas, you know, those we just kind of like maybe would not answer or say something generic, but anything business building, marketing, definitely software related. We would hunt those down and we would even go find old forum posts that were indexed in Google and respond on them because some of those have like good legacy value. Like if you go find a 10 year old thread that still gets somehow surfaced in Google or gets referenced in say chatgpt, I would still go in and revive those. I'd be like, hey, I know I'm like nine years late to answer this, but I do think these are some good things you could do to kind of help get your business more visibility. So it was really just injecting myself and I got all kinds of hate. There's guys that hated me and just hated the fact that I was a vendor. That was it. And that's okay.

Kevin Wagstaff [00:21:48]:
But I tried to punch back with love and just be like, hey, sorry, I'm not going anywhere.

Omer Khan [00:21:56]:
What do you mean they hated you just for just showing up there and answering stuff.

Kevin Wagstaff [00:22:00]:
Yeah, some folks in the industry really hated vendors in general because they just were so skeptical that you were trying to hurt them or sell them something. And so there I won him over. I won him almost all over eventually because I showed I had good intentions and I, I genuinely wanted to help. Even if he never even wanted to use Spectora ever. And I was like, once he realized, once they realized I didn't care that I was still going to be like me, they softened up and I'd get good engagement with them online, you know, and so that. It took years, though. It took years of. There was no shortcut to that.

Kevin Wagstaff [00:22:35]:
Man.

Omer Khan [00:22:36]:
Tell me about this Sunday morning 6am demo. What was all that about? Because from what I understand, it was kind of one of the pivotal moments that helped get you to that first million.

Kevin Wagstaff [00:22:50]:
Yeah, there was a floodgate, a mini floodgate that opened. So there was this big group of exclusive inspectors that were. It's like another company that runs a mastermind group. And it was a couple hundred very successful inspectors that have been around for 10, 20, 20 years. And they go, they do like on site kind of retreats and getaways. And a member of that group messaged and was like, hey, this looks like some new, fresh stuff. I'm so busy, though. I can only do a demo at 6am on Sunday because I got kids, I got a family.

Kevin Wagstaff [00:23:19]:
And he was like daring me to say no. I could tell he was just almost like, I'm testing this guy. And without hesitation, I was like, okay, let's do it. And it might have even been 5am My time, because he was in Florida. So he was just like daring me. And I was like, in my head, I'm like, I was so, you know, we were so hungry in those early days where I was like, we said yes to everything. So I was like, yeah, let's do it. Blew him away with the demo.

Kevin Wagstaff [00:23:44]:
He went and told his group in about 50 or 75, like, and we were just like really wanting experienced inspectors at that time because we were, we can get new inspectors because they didn't know the difference. A lot of times we, we were like the fresh new software. So then we got a big flood of good feedback from those guys because they've been in the field, they give really crisp feedback on good features. And we leveled up so much as a company when we made those relationships. And so that was a very hectic time because I was, you know, me and Mike were juggling everything at that time, but I was like, I am not going to not answer a call or a text or an email. So I gave them all my personal numbers. We were like, all day, every day, feedback, feedback. Okay, this was broken.

Kevin Wagstaff [00:24:25]:
Okay, let me test that. And so that was big. And then we got a bunch of signups and then we ran a sale to capitalize on that momentum, and I think that really carried the weight of that kind of first and second year wave where we really started picking up good word of mouth off that.

Omer Khan [00:24:43]:
So that point you got to the first million in ARR, was it just still the two of you? Had you hired anybody else to help you out?

Kevin Wagstaff [00:24:53]:
I think we had one customer service person at the time and maybe our first dev. So I think it was like, you know, it was basically us. And then we started high, we started bursting at the seams personally and kind of mental health load and all that started really taking. Taking its toll at the end of 18. So I think it was a dev and a customer service helper at the time.

Omer Khan [00:25:13]:
So there's two of you, which is great. I mean, there's a lot of solo founders who have to deal with all of this. So at least you had to, you guys could at least split this, the workload and lean on each other and kind of be the sounding board and keep each other sane and everything. But even then, a struggle at this point is you don't really have much of a team around you. You have a million things to do. How do you decide? And how did you guys decide where to focus on? Is it the product? Is it marketing? Is it customer support? Is it all of these things? Because you have to do all of them, and you can do all of them well. So how do you decide? And what were you guys? What was the approach you guys took?

Kevin Wagstaff [00:26:04]:
At first it was instinctual. So it was like whack a mole. It was like, okay. And for all the founders out there, it's like, you're gonna feel like you're doing everything equally bad. And that was like, I. I got reassurance from a mentor. He was just like, hey, keep showing up, keep punching, keep swimming, whatever the metaphor. Because he was like, you're.

Kevin Wagstaff [00:26:23]:
You're failing at all these things is what it feels like. And then it started to become, okay, we have paying customers, we need to retain them. And then each day was a new challenge of, okay, I got these four demos, but then I got the customer service chat blowing up. But then I have. I'm behind on content. And then we have two interviews for another person we need to hire. And it was. Put more hours in was sometimes the answer.

Kevin Wagstaff [00:26:49]:
It was like, work till 10 or 11 at night. Okay, great. Got to get up at 4 or 5am, knock this out. So some of it was throw more energy and effort at it. And that intensity, I think, is a big calling card of ours. And we took it to levels we didn't think we were capable of. But it was a hierarchy of in the moment. Okay, this is a successful customer.

Kevin Wagstaff [00:27:15]:
I have to lock this down. I'm going to let the chat build up for 10 or 15, 20, 30 minutes. And that pressure, I would feel it while I'm doing demos. I'm like, I see intercom pinging and everyone can relate to this, I'm sure. And then you're like, okay, I have to live with that disappointment because if I lock this customer down, I know what it could lead to because they're influential, they're in these groups. So it was, it was a lot of just in the moment. How do you. What, how do you prioritize? And not getting stuck on a blog post because I think I need to fixate on it.

Kevin Wagstaff [00:27:47]:
It was more like the human stuff always came first.

Omer Khan [00:27:52]:
Sort of related to that is something like features. So the product is starting to grow. You're getting more usage, you're probably getting more feature requests. You guys have ideas on all the things that you wanted to build from day one and you feel like you've just scratched the surface there. How did you prioritize? How did you make sense of everything? Just ensure with your limited resources, you guys really were building the right stuff.

Kevin Wagstaff [00:28:25]:
We made a lot of wrong decisions and failed at this many times and still somehow succeeded because early on it was like the loudest voices, you know, the loudest voices, the people that raised the most hell oftentimes got heard. And that's something we probably do over again. In terms of finding a platform that lets you upvote, downvote. I think we went through four or five different feature request platforms. There's so many out there. But like, you know, we started with Trello and just really tried to get them to use that and it got messy and we wasted cycles on it. So at the end of the day, we kept anchoring back to like 70, 80% of our resources. And time is going to be, does it save you time? Does it make you more money? Okay, we know you really want orange arrows to point at the crack in the foundation.

Kevin Wagstaff [00:29:15]:
Like, we know that's important to you, Home Inspector, but, like, that's not going to get done. And we did not get good at saying that directly for a couple years. I think I was just default yes to everything. And that caused pressure kind of on. On us. But once we got good at saying, like, hey, we got these other things on deck that we believe help the most amount of people, we're going to Put this on the back burner. But we may revisit it in a sprint when we have time. So it was like getting our language down for articulating our business.

Kevin Wagstaff [00:29:50]:
Kind of like how we look at the business helped. Some customers won't care, of course, and they'll be like, oh, you guys are idiots, I'm going somewhere else. But anyone with business sense, if you say, hey, look, I'm managing limited resources here, Bill, this feature and this bug fix is a little more important at the moment, but that doesn't diminish. Its important to you, but I'll circle back with you. And I always circle back with them.

Omer Khan [00:30:15]:
So we talked about the acquisition channels that worked. The SEO, given your background, was a smart thing to start working on early. And I guess the world has changed now, but the same thing still applies to the ChatGPTs and the LLMs and whatever because people are going to discover you in different ways and you still need to have some kind of content to get discovered. Right? Maybe the mechanics of that have changed. Being online where your customers were and just trying to be helpful without pitching the product, the word of mouth, all of these things were. And then some. And the conferences as well. Let's talk about some of the things that didn't work.

Omer Khan [00:31:01]:
So first of all, there was you tried cold email and you, you learned quickly that your target market don't like cold emails very much like cold calls.

Kevin Wagstaff [00:31:11]:
Don'T like cold emails, don't like hard sells. I think they're just very resistant to that. And I don't know if that's a human nature thing or if that's, you know, if our demographics skews more towards the skeptical, cynical side. But that we take, we took a few good hacks at that and the return on time and the amount of responses you get just wasn't there. And so I don't think we still to this day do a ton of cold stuff.

Omer Khan [00:31:39]:
And then the other thing was you tried running ads but made quite a big mistake when you did this, right? Just explain what happened.

Kevin Wagstaff [00:31:53]:
So we got a little bit of money coming in. First year we were like, cool, we got 10 or 20 grand in the bank. Let's run some ads, man. Let's blow this thing up. And so we were all jazzed up, we were hyped. I know a little bit about that world. So we set them all up in Google and Facebook and we were all excited for the day. We were like, man, it's gonna be a flood of customers.

Kevin Wagstaff [00:32:13]:
We were like, we're Just on intercom ready and we launch them. And then we just kind of sit there for like an hour, two hours, we do some other tasks. It was like, it may have been five or six hours went by. We were like, man, are these ads working? So I go in and check they're working. So then we follow one of them, click on it, go to our homepage 404. The homepage wasn't working. Homepage was down. So we were literally spending money to send people to an airbase, which is such a mass, such a great fail in the early days.

Kevin Wagstaff [00:32:48]:
So didn't QA test that one? That didn't work for an obvious reason. But ads, I think, were not a huge channel for us anyway, just due. Maybe it's the nature of our product or we weren't great at ad copy or kind of that funnel, but we probably burned through tens of thousands of dollars over the years in Google Facebook ads, never seeing huge return from them.

Omer Khan [00:33:13]:
I don't want to sort of trivialize this journey, because it's going from zero to the first million in those sort of five years was a tough journey. And we've sort of probably just touched on that and some of the struggles and challenges you guys faced. But what happened after that? Because once you get to the first million, it was only about, I think, like the next year it was like 2 million, and then like almost 4 million. And then by 2022, you're at like 10 million and still bootstrapping. Like, what drove that growth?

Kevin Wagstaff [00:33:59]:
Yeah, it was. It was a big combination. It was continuing to do the things that worked. So every time we'd go to a conference, we track trials, signups kind of relationships from that. We're like, okay, cool, let's. That's in 2019, go to more conferences. Covid happened, of course, and then there was a break on that. But then we still had the digital side that was.

Kevin Wagstaff [00:34:19]:
That was working. We eventually got to ranking number one, I think after about two years, for our money, keyword that people search for, which is home inspection software. And that was kind of what I had been working for all those years of writing blog posts, YouTube content, basically getting links from other places organically. And so I think that we had the. We started to get a consistent flow of new inspectors coming in from SEO, which is great. So we probably got 50 or 100 trials just from people googling home inspection software. Guess what? Spectora ranks first. Awesome.

Kevin Wagstaff [00:34:55]:
I was like, I didn't expect that for probably another couple years, to be honest. But it proved to me, that SEO worked and helpful content and showing up and doing it well worked. And then the word of mouth, honestly. And that's, and that's probably a tough answer for some people to hear because it wasn't like run ads, get money. It was like satisfy one person, then 10, then 100 and then continually do that with great service, iterate on features. And they just kept telling more inspectors. And so that was kind of the stew was like conferences, SEO, word of mouth. If I had to break it down into three pillars that continued that growth to the next tier.

Omer Khan [00:35:43]:
Now this is not feeling like a niche business anymore. Right. Very quickly things have changed. Tell me about like what point did you guys decide we need to get serious, we need to hire some leaders, we need to build an organization here.

Kevin Wagstaff [00:36:01]:
Yeah, so it was right around Covid, so like 2020, we were at about 13 people, about 3:30 in MRR, close to 4 million. And we were like, wow, we can't hire people fast enough at this point. But then I had maybe eight or nine, eight direct reports. My brother had like seven or eight, you know, as we hire the next few people and it started to feel it was running us ragged, to be honest. We were in meetings all the time. We felt less productive in terms of supporting the business. So it was like around 13 people, 4 million revenue. We were like, we need to have some heads of these departments.

Kevin Wagstaff [00:36:39]:
So we started promoting people from within. We brought in a couple great former co founders that were friends of ours, very experienced founders that ended up running our development and product teams. So then we, okay, we got some relief then of thinning out those direct reports because talk about a killer of your mind space and ability to think kind of creatively. And big vision is meetings and check ins. As helpful as is to those people on your team. It does take away from the top level vision, casting, thinking of next products, thinking of second acts down the road. So yeah, we just been on it. We just went on a hiring, kind of a consistent pace of hiring.

Kevin Wagstaff [00:37:24]:
And it's worth noting to the founders there, we always hire too late at the expense of sometimes our personal and mental health and our teams early. You know, our first 10 employees, workloads, hopefully they've been compensated well enough and you know, the equity and things to account for it. But man, with SaaS it's scary because you want to make sure that revenue's sticky before you hire. So we waited till the pain was so great and then like, okay, we'll hire another customer service person.

Omer Khan [00:37:54]:
One of the things you told me was that you felt like you were too casual for too long when it came to building this sort of formal structure. What do you mean by that?

Kevin Wagstaff [00:38:05]:
Yeah, I think culturally there's this magic around startups where people not in the industry romanticize, you know, five people in a room in a small office, you know, working so hard, eating ramen, whatever. And we did that. We were in a small office that we didn't fit in. We burst it out of the seams. We moved upstairs in the co working space to a bigger office. And there was this magic where we just never ran out of energy and we worked 10 hours a day. People stayed late because they wanted to. People had, people had equity, they earned it.

Kevin Wagstaff [00:38:36]:
And it was magical. And there was like no real like check. We'd skip check ins because we were like, yeah, we got customers to get, let's go, let's go sell more software, let's whatever. And it got to a point where new hires would come into that culture and not have that history and kind of that that necessarily same level of buy in and we started to feel culture shift and maybe break a little. Around 25, 30 people was when I distinctly remembered, oh, this is no longer we're all in a room and on the same page fighting together. And so formalizing KPIs, quotas, check ins, kind of what we do at meetings, it just, it didn't feel like the small hungry team anymore. And that's what I meant where we let that go on, you know, maybe five or ten hires too long and it resulted in either some poor hires or some shorter 10 years of people because of misaligned expectations.

Omer Khan [00:39:33]:
One of the things that you said you didn't work was sort of initially building team of account managers. What were you trying to do and what actually happened?

Kevin Wagstaff [00:39:44]:
Great question. So we were trying to follow the typical model of typically VC backed enterprise SaaS companies where it's just like oh yeah, you have account managers and they upsell products and they go get accounts and then they upsell existing. But we had a slightly different kind of customer. And so I think we, we like tried to do something above maybe our pay grade or you know, got too big for our bridges by saying okay, you guys are on these accounts, you upsell on these products over these, this this year and you keep them happy. You know, it, it and it ended up that our customers wanted to talk about features and to have product talks more often than you know, than they wanted to get sold obviously. And then we didn't properly train Outside hires. We thought we could bring in ams from other companies and the function was just very different than our version of an account manager. And so that was kind of a blunder.

Kevin Wagstaff [00:40:41]:
And then when you don't have proper management kind of of the, the systems they're using, we didn't start on HubSpot. We had kind of a home baked system so where the logging of calls and quotas and how many dials they're making wasn't logged and dialed in. So then it just felt like the wild west. And that felt like we tried to small start up that function and it was like no, no, this needs to be a big boy. Managed well with clear goals, expectations, proper training. And that was, that was a big thing that happened on my watch that broke and that was a big learning experience for me. Was like I would, I would formalize so much more and delay doing that six months to do it.

Omer Khan [00:41:20]:
Well now we said earlier that you guys didn't raise any money until after you hit 10 million in ARR. What was the, what was the decision that you guys made about raising money? Like why raise money at that point? What were you trying to do?

Kevin Wagstaff [00:41:37]:
Yeah, so really it was, we had a couple acquisition offers throughout the journey at different stages. Had one very early from a big public company, very low offer and we said no and a couple more and we said no to some cash and bet on ourselves. You know, it was a couple in hindsight, glad we didn't do it of course. And it wasn't raising money in the traditional VC sense, just so people know. It was more of working with private equity who buy your shares from you and what they call secondary offerings. And so it was really just buying our shares and then put, they usually want to put a little bit of cash into the business, but we historically ran 50% EBITDA margins. And so that was our pitch to the private equity partners was like, hey, the business is profitable. We would like the cash to cash out our shares because you'll generate cash and keep a lot of money in the bank.

Kevin Wagstaff [00:42:33]:
But we had an arbitrary goal in mind of getting it to 10 million. I'm not sure why we picked that number early on. Maybe our instincts told us things would break and it'd be a lot harder to go from 10 to 20. But sure enough you get to 8 or 9 million. In hindsight I started feeling uncomfortable with managing and running the business and the way things changed. I was in more meetings, I was getting pulled in so many directions. I feel like I was out of My element in my zone of excellence. And that was a signal to us to say, hey, maybe we should take some of these calls and have some conversations with some private equity sponsors and see what they have to say.

Kevin Wagstaff [00:43:16]:
And so I started taking calls, answering emails from private equity folks. And we don't have to get too deep into it, but if people are starting to get those calls, I'm happy to answer questions and kind of peel back the curtain a little bit because, man, private equity is a much bigger world than venture capital for people that don't know.

Omer Khan [00:43:34]:
Yeah, I mean, maybe we should just do a follow up and just deep dive into that topic. Something that I haven't done much of.

Kevin Wagstaff [00:43:41]:
It'd be fun. I wish, I wish I had that because I was running around trying to find Reddit threads, asking mentors of just like, what's growth equity? Like, what is it? Is it really as good as they make it sound where you can sell to them once and then sell to them again and then sell with them down the road? You know, they call it two or three bites at the Apple and it's kind of all playing out the way I was told. So I'm like, wow, this is beautiful. I want every entrepreneur, it's like, I want everyone to have this win. Like, this is great.

Omer Khan [00:44:07]:
So last, I think August last year, you decided to step away from the CEO role. You brought in an external CEO to run the business, and now you're on the board, but you're not involved day to day. Did you feel like after nearly a decade, did you just feel like you wanted to just step away and take a break or, or was it more like you knew this was the right thing to do based on what you said earlier about, you know, feeling like outside of your comfort zone. But it was still hard to just do, do that.

Kevin Wagstaff [00:44:48]:
It was a, it was truly a blend of both. It was feeling like an imposter in my own company running it at a certain point. But then I also, like, I felt some long term burnout where it was like, man, when you carry that kind of weight and kind of the, you know, all the stuff swimming in your head for years and years, I know everyone listening can relate. You kind of want an out at some point. And I, you know, I feel for the people that don't have a way to gracefully kind of exit or transition. But it started to feel like the right decision to bring in a seasoned CEO because it was a different ball game north of 10, you know, and our private equity partner agreed and they said for what it's worth, they said only 15% of the time they see CEOs go the distance from, you know, inception to kind of like a public or final exit. So they said it's very common. And so it.

Kevin Wagstaff [00:45:42]:
That gave us almost. It almost made us feel validated to say, like, you know What? We are 0 to 10 guys, or 0 to 1, or 0 to 10 kind of guys, because it's such a bias to action. It's a different ball game.

Omer Khan [00:45:56]:
So what are you doing with all your time now? What's the plan? What happens now?

Kevin Wagstaff [00:46:01]:
You know, I read so much on this topic from other exited founders, and they all were like, you'll get bored after three to six months and get back into something else. I found the game of golf about three months ago, and my possibly obsessive personality that led me to be, I think a great founder and entrepreneur has led to me spending lots of days at the range practicing. So I have been grinding four or five days a week, week on golf, consuming it, and I watch it. I watch every tournament. So I am a complete golf nerd now. And I'm at home supporting my wife. She's seven months pregnant. We have a boy on the way.

Omer Khan [00:46:38]:
Congratulations.

Kevin Wagstaff [00:46:39]:
Yeah, thank you. I'm opening boxes, I'm breaking down boxes. I'm moving stuff upstairs, so. But yeah, I'm not in any rush. I'm doing a little bit of light mentoring and consulting for some startups that I'm interested in. You know, a golf one, possibly a beach volleyball, you know, SAS product that's interesting someone's doing. So there's some things I'm starting to touch on and maybe offer up just any, any of my journey that can help people.

Omer Khan [00:47:06]:
Cool. Sounds like a good way to spend your time. If it's not. If you're not getting bored, like, you know, I wouldn't complain about it.

Kevin Wagstaff [00:47:14]:
Yeah, exactly. Like, I'm good at relaxing because I feel like I did work so damn hard and sacrifice so much for the last decade that, um, you know, we'll see. That might change, but I think, like, early fatherhood. Anyone that's parents. I have an older daughter, but anyone's been through it, knows it's like, yeah, don't overload yourself in that, you know, first year because there'll be some challenges.

Omer Khan [00:47:36]:
Definitely. All right, let's get on to the lightning. Round 7 Quick Fire Questions for you. You ready?

Kevin Wagstaff [00:47:43]:
Yeah.

Omer Khan [00:47:43]:
What's one of the best pieces of business advice you've received?

Kevin Wagstaff [00:47:47]:
Default to. Yes, I think early days. I didn't even think I just said yes and tried to show up for everything. And then at a certain point it flips to default to no. And it was Derek Sivers that said hell yeah or no. And there's a certain point, as a founder, it's like got to be hell yeah or no.

Omer Khan [00:48:04]:
What book would you recommend to our audience and why?

Kevin Wagstaff [00:48:07]:
I got three and I'm sorry for this, but they all were influential in my first couple years. One is you are a badass. The second one is 10x and the third one is get rich, lucky bitch. And they're not what you think because everyone says the lean startup. Yeah, yeah, yeah. But these are money mentality and blocks that we might be creating to prevent our own success. And so it's like digging into a lot of that of your self belief and your money beliefs and kind of things like that.

Omer Khan [00:48:36]:
I think all three of those are unique. Like almost 500 episodes and I haven't had any of those books recommended, so you did pretty well. What's one attribute or characteristic in your mind of a successful founder?

Kevin Wagstaff [00:48:50]:
I have to say intensity.

Omer Khan [00:48:51]:
What's your favorite personal productivity tool or habit?

Kevin Wagstaff [00:48:56]:
It sounds old school, man, but like time blocking. Time blocking and sticking to made a bigger difference than I thought.

Omer Khan [00:49:04]:
What's a new or crazy business idea you'd love to pursue if you had the time? Well, you do have the time, but when you were bored of golf.

Kevin Wagstaff [00:49:12]:
Yeah, after I exited, I was like, man, I was like, I have these interesting, somewhat diverse interests of sass, beach volleyball, golf. I was like, how do I find the people that are interested in those three things? I'd want to see a Venn diagram. And so then it was this social platform of a simple Venn diagram. Three to five interests, and it matches you up with people across the country that have those similar overlaps to kind of say, like, okay, know you, you nerd out about the same three things. You should connect. It was something I wish I had because when I exited it did feel a little lonely, to be honest. When it was kind of like, you know, some founders are in the grind day to day, some are exited, but like, how do I find them? So that was something I thought of. Who knows if it'll, if it exists or if it'll go anywhere.

Omer Khan [00:49:59]:
What's an interesting or fun fact about you that most people don't know?

Kevin Wagstaff [00:50:02]:
I was a pretty darn good basketball player. Had an opportunity to play on a semi pro team in the Philippines after college, got a tryout with a pro team, went over There worked out with the team. Ended up coming back after a short time because I had a daughter early. So, yeah, that was the shortest pro career ever. And I'm glad it was short because then I got into SaaS and maybe made more money SAS than I would have invested.

Omer Khan [00:50:30]:
And finally, what's one of your most important passions outside of your work right now?

Kevin Wagstaff [00:50:34]:
It's golf, man. I'm passionate about it. I dive into sports and I dive in deep. I'm a full immersion guy, and so I can say I'm passionate about it. I'm a nerd now.

Omer Khan [00:50:46]:
Yeah. All right, Sweet. Kevin, thanks so much for joining me. It's been a pleasure.

Kevin Wagstaff [00:50:50]:
This is awesome. Appreciate you doing this podcast, man. It's something I think I wish I would have found kind of as an early founder. So thank you.

Omer Khan [00:50:57]:
Thank you. Appreciate that a lot. And like, you and I were talking sort of before we started recording. I just feel like there's so much more to your story. I hope we or I hope I did justice to like, you know, sharing it as well as we could in the time available. But I just feel like there's just so much more we could talk about. And maybe we do do that follow up and go deep into a couple of topics. If people want to check out Spectora, they can go to spectora.com and if folks want to get in touch with you, what's the best way for them to do that?

Kevin Wagstaff [00:51:32]:
I'm on X and Instagram, so if you search Kevin Wagstaff, you'll probably see a guy that looks like me with a hat on, maybe at a beach somewhere. So, yeah, let's connect. I'm on both of those quite often.

Omer Khan [00:51:42]:
Great. We'll include the links in the show notes. Thanks, man. It's been a pleasure.

Kevin Wagstaff [00:51:47]:
Yeah, appreciate you.

Omer Khan [00:51:48]:
All the best. Enjoy the golf.