Omer (00:11.680)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan, and this is the show where I interview proven founders and industry experts who share their strategies and insights and to help you build, launch, and grow your SaaS business.
This Week's episode is about a design agency owner who wanted to get into the SaaS business.
He didn't have any success building his own SaaS product, so he acquired one instead.
The SaaS product that he acquired already had some customers and recurring revenue, and he and his team improved the product and over time, more than doubled the recurring revenue.
So he acquired another SaaS product and did the same thing again.
And in the last few years, my guest has built a portfolio of six SaaS products, all through acquisitions, and he's still looking for more.
The remarkable thing is that he's grown recurring revenue for his products without any marketing.
He just focused on serving the existing customers better and improving the products.
In this episode, we talk about how he acquired his first SaaS product, what he did to grow recurring revenue, what he looks for when acquiring SaaS products, and how he manages multiple products and businesses.
It's a fascinating interview and he really has an interesting setup, so I hope you enjoy this.
Today's guest is the founder of Simple Focus, a design agency that helps create user interfaces and digital products.
The company's clients include brands such as Starbucks, Oracle, and the US Air Force.
But this agency is a little different because it also has its own portfolio of software products.
This includes Pulse, a cash flow management software for small businesses Sifter, a bug and issue tracking app for nimble teams and Ballpark, an invoicing and time tracking app that my guest acquired from Metalabs Feature founder Andrew Wilkinson, who was also a guest on this show.
And my guest recently just acquired another product called Curated, an app which helps you grow your audience by collecting and sharing engaging content.
So today I'd like to welcome JD Grapham.
JD welcome to the show.
JD Graffam (02:41.610)
Thanks for having me, Omer.
Omer (02:42.970)
Now, my, my, my head is just exploding, kind of trying to think about how we're going to have a conversation about all these products.
So maybe it's easier just to start by talking about you.
So tell me a little bit about, you know, what gets you out of bed every day to work on all of these businesses that you have.
JD Graffam (03:02.990)
Well, that's an easy one for me, honestly, because at the beginning and end of every day, when I think about what makes me happy, it's realizing that I'm doing my part to create jobs.
And as simple as that sounds.
It really is about giving people the opportunity to go to work and be happy and do what they were born to do.
I love the product world.
I love user experience and usability.
So that's the space we play in.
And those are the people that I've pulled together.
And at the end of the day, it's really just incredible to hear about all the wonderful things that they're doing with their free time.
And all that's really enabled by the salaries and the compensation and the benefits and the fact that they're not just completely zapped of energy when they go home at the end of the day.
Omer (03:55.670)
Now, your main business, Simple Focus, is based in Memphis, Tennessee, which is where you are.
And I know you also have offices in Portland, Oregon.
Tell me a little bit about how you started that business.
JD Graffam (04:09.570)
And Chattanooga, Tennessee now.
Chattanooga, person office there.
Omer (04:14.530)
My apologies, I forgot that one.
I do remember reading about that.
Yeah.
JD Graffam (04:18.850)
So I started simple focus in 2009 after I left a full time job working for Hilton Worldwide, whose headquarters are here in Memphis.
I worked at Hilton for three years, moonlighting and freelancing.
And before I was at Hilton, at one point I had been fired from a previous job because it just wasn't a good fit.
And when I was fired and on my own, I got a little bit of taste of what it means to be responsible for my own outcomes.
And I learned a great lesson and kind of got addicted to the idea of being self sufficient during that period of my life.
But then I went back to work, got a job and learned a lot working with Hilton and the wonderful people there.
It was a really difficult decision to leave there because the people were so great.
The experience was so wonderful.
But after three years of growing my freelancing business, it didn't make financial sense for me to make less money 40 hours a week than I was making as a freelancer and 20 hours a week.
So I put in my notice, I was real classy about leaving, and then started my company the following Monday morning.
And Simple Focus began with just me in a spare bedroom and then it grew to a 265 square foot office within a few months with my first employee.
And the next thing you know, I look up and it's been almost 10 years and I've got a portfolio of 10 businesses.
Simple focus is doing fantastic.
It's employed more people than I ever would have imagined and we're doing work that's better than anything I could have ever done by myself.
It's really been an incredible experience.
But it took a lot of work.
Omer (06:26.450)
So when you were freelancing while you were working at Hilton, were you doing the same kind of work that you then continued doing when you launched Simple Focus?
JD Graffam (06:36.850)
Yeah, it was mostly branding and marketing and website development.
And then when Simple Focus started, we took on any job that we could because we needed to, I needed to.
And then eventually we needed to pay for our livelihoods.
And you're just getting your business off the ground.
And we weren't well known or recognized at the time and so we were just doing good work for whoever needed work.
But I quickly found that I had a passion for and we were really good at UI design.
So over time we took on any UI project we could doing, whether it was doing favors for people or whatever it took to get a UI project to prove ourselves, and eventually built up a really good reputation as usability experts and user experience experts and really specialists in user interface.
And that of course translates well to the product world.
Omer (07:39.700)
Where did you learn about user interface design and usability?
JD Graffam (07:46.910)
I guess I learned about it at Hilton.
There's actually a funny story.
When I was working there, I just started and I was so naive.
I was a young 20 something and I had, you know, not grown up very well off.
My parents were hard working and provided well for us.
But when we traveled, we stayed at Motel 6.
You know, we didn't stay at a Hilton.
There was a project that I was on for a check in kiosk that Hilton was doing and I was going to be the designer for this project.
And we were talking about the user experience and the journey for checking in.
And the question came up about, you know, well, where should we place the check in kiosk in a lobby?
And I said, I mean personally I'd place it by the door of the hotel room.
Why would you force somebody to park and walk into the lobby and then go get in their car and then drive around and park by the door to their hotel room?
And they just kind of looked at me like, oh gee, you sweet little innocent boy.
People don't park by the doors outside at Hilton Properties, people usually walk into the lobby and go up the elevator because our doors are on the inside of the hotel.
And I was so embarrassed.
But you know, it was at that point, even though it was sort of an opportunity to laugh at my innocence, one of the information architects, what you would call a UX designer now, pulled me to the side and she said, J.D.
actually I really, it was fun to laugh at you, but I really wanted to Tell you that.
I could tell that your comment, even though you didn't understand our product and service, your comment showed that you really are thinking about the user experience.
And that sort of turned a light on in my head.
I was like, oh, okay.
So I'm naturally thinking about what goes into a good year's year experience, even though I didn't have the vocabulary and the vernacular at that time for it, because I was a young designer just with one of my first jobs as a real web designer.
And so I continued to learn more and grow my knowledge and.
And learn under these people at Hilton who already knew all this stuff, and they taught it to me, and I was like a sponge and I soaked it all up.
Omer (10:29.230)
So you launched Simple Focus.
How are you getting the word out?
And how did you start landing clients?
JD Graffam (10:39.470)
Man, the last year that I was working for Hilton, I went to lunch with somebody new.
And in the Memphis design or tech community, almost every single day of the week, I got on Twitter and all the social networks and found anybody in the business and said, let's go to lunch.
I didn't really even ask.
I said, hey, I'm in the business like you.
I'm a whatever and you're a whatever.
So I think we should know each other.
Military motives.
Let's do this Dutch.
Because, Omer, there's really something great about breaking bread with someone as a peer.
So I wouldn't let them buy me lunch, and I wasn't offering to buy their lunch.
I said, let's go Dutch and just get to know each other.
And I did that almost every single day for a year.
Omer (11:27.960)
Wow.
JD Graffam (11:28.360)
That was good for networking.
Now, I did it intuitively.
I did not do it in a scheme way.
Right?
I just did it because I was genuinely interested in meeting as many people, and I knew that if I did it authentically, it would be good for the business.
But truly, it was authentic.
I really did just want to get to know everybody.
And then anytime I would go to a networking opportunity or networking event after that year experience, and I would shake hands with people, it would do the old American thing where you say, so what do you do for a living?
You know, anywhere I'd go, anybody I'd meet, you know, it would always come up.
And when they asked me, so what do you do?
I'd say, well, I actually run a new web design company.
Do you need a website in the same breath?
And nine times out of 10, it gets the same laugh that you just gave because this kid's wasting no time.
But at the same time Omer, one in three people gave an honest answer of actually yes.
Omer (12:34.410)
It's interesting.
JD Graffam (12:37.370)
And at that time everybody literally did need a website.
If you were at all self employed or worked for a company, nobody likes their website.
Everybody thinks they need a website.
Right.
So that's how I did it.
I mean, I just got out there and pressed the flash, made friends, hustled, told them what I did and just got to know as many people as I could.
And then whenever it was time for them to think about somebody that needed a website, I hope was that they would think of me.
And enough times they did.
Omer (13:10.720)
And then how did you land some of these bigger brands like Starbucks and Oracle?
How did they come about?
JD Graffam (13:22.330)
Yeah, so I'll go ahead and pull back the curtain a little bit on Starbucks.
That was like a one time job as a favor for a buddy, but it was a project for Starbucks and no, we did not have a big contract with them, but we got the Starbucks logo and until they tell me to cease and desist, it's going to be up there.
Because we did do a project for Starbucks.
It was a really great project.
It was for a pledge campaign that they did to get people to pledge.
Five hours of volunteering.
It was a great program they put in place and they would give you a free cup of coffee.
We did a landing page for that or actually finished a landing page for someone who had to walk away from the project.
But Oracle is the real deal.
At the time, the company that we were doing the work for was called RightNow.
And we did the work for RightNow as a subcontractor with a partner here in Memphis, Tennessee that specialized in customizing and configurating or configuring RightNow's product.
RightNow is a CRM that's been bought by Oracle and it's called Oracle CX.
It's all CRM customer experience software.
And we've done a lot of projects on that platform over the years.
But how we landed it.
Almost right after I quit my job at Hilton, I got a phone call from one of these people I'd gone to lunch with.
And you know, the short answer is you plant a seed and then one day you look up and it's grown into a full grown tulip, right?
Well, I guess you would plant a bulb and it would turn into a tulip.
So, you know, whatever kind of pop up overnight.
Yeah, way to go with that metaphor.
In any case.
So there's a guy that I'd been to lunch with and he knew that I was good at the css, right?
And Helix had reached out to him as a possible partner to help them with the look and feel on a project that they were doing for right now.
And this guy that I went to lunch with said, you know what, it's not a good fit.
Why don't you call J.D.
so I, I drove out to these guys house and they were starting Helix at the same time I was starting Simple Focus.
And I went to his dining room, which was also his conference room because he was getting his business off the ground.
We met and talked about it, and in a whirlwind that was like on a Friday, they said, can you get on a plane on Monday?
And I said, sure, sounds like fun.
And we thought we were going there to pitch the Air Force.
We were in half a day of meetings on that Monday in San Antonio with the Air Force.
And right before we took a break for lunch, the customer said something to the effect of, well, just let us know when you're going to start.
So we went out in the hallway for lunch and walked off to the side and looked at each other and said, I thought we were here to pitch.
I thought we were here to pitch too.
And so it sounds like, sounds like the deal sold and we can, you know, just get to work.
Yeah, it sounds that way.
How much are we going to charge?
I don't know.
How much do you want to charge?
So we figured it out and it ended up being a great relationship that was for the United States Air Force and that we did such a good job with that on such a tight turnaround that we made a really good reputation for ourselves and in the rightnow ecosystem and have just through Helix, have been really trusted partners since then, even through the Oracle acquisition.
Helix continues to do a lot of work with Oracle and we partner with Helix on these Oracle projects as well from time to time.
So there you go.
Omer (17:18.540)
Great story.
Now you have a portfolio of, I think six software products.
And it was something interesting that you pointed out to me before we started recording is that you and your company haven't built any of these products.
You've acquired all of them.
So just tell me about, like, how did you get into the business of acquiring all these software businesses?
JD Graffam (17:51.180)
So you remember back when Digg had a homepage that you got on the front page of Diggs, you know, you were, you were set 2,000, what, six, seven, eight?
So there was this, there was this time when agencies started getting just a bunch of noise on the Internet about how agencies wanted to get out of that client business and get into the product business.
And 37 signals made the switch.
And everybody looked at that as the shining example of how this is supposed to go down.
And all the agencies wanted to do that.
I did too, you know.
Well, in Memphis there were a couple of guys who built a product called Pulse around this time.
What they did is they shut down their agency for a month.
And so we're going to build a product to show everybody that we can build a product.
Because we want to switch our business over from coding websites for ad agencies to doing product design and development.
And we want to prove that we can do it.
So what we're going to do is we're going to promote ourselves with a little one month app promotion.
So they blogged every day for a month and built an app in a month and it got on the front page of Digg and was shared all over the Internet and got a little bit of buzz.
And that's great because without all that buzz, that product never would have gone anywhere.
The product was Pulse.
And so these guys are running Pulse for years and years.
And after they had been running it for about six or so years, they were ready to kind of move on.
And one guy wanted to go in the ministry full time, the other guy was like, he had a fat salary in San Francisco and they were splitting the revenue from the business and it was just kind of a distraction for them.
And so I talked to them about, well, hey, I want to maybe buy your product business.
And I didn't even, I didn't even know what the SaaS was, right?
I just knew that this was a product business, right?
And they didn't take me seriously because I was just getting going.
And so it took three years of me pestering them and then being unable to sell it because it wasn't big enough for anybody to really be interested in who had the money to afford it.
And then after a while they looked up and I was still pestering them about buying this business from them.
Omer (20:47.870)
What was it about this business that, that made you so persistent for three years to want to buy it?
JD Graffam (20:55.150)
Well, so a couple of things.
One is, I knew it was just a really steady income stream.
In the agency business, cash flows up and down and that'll give you a friggin heart attack.
And so I wanted to stabilize the cash flow a little bit.
The other reason was because like 37signals, I wanted to do product, you know, and we hadn't done product and we tried to do product and this is you know, one of my failures so far has been that I've never actually been able to launch a product, get it off the ground by myself.
But when I saw the opportunity to buy a product that was already off the ground, I was like, now that makes sense.
And if I can afford it, why wouldn't I just do that?
Rather than spending all this money and resources from the agency side trying to build something that we don't know if it's going to grow or not.
Because I've never really had a famous agency and I've Never really had 20,000 Twitter followers or anything.
So I don't have an audience that I can just say, magically tweet a link to this thing we built and have 100,000 people sign up.
I mean, that's the dream that everybody has and how it's supposed to be easy, but I didn't have the audience for that.
So it was hard to sort of imagine myself being able to do that.
And so what I did was I said, let's short circuit that and buy something that's got a customer base, that's got steady cash flow instead.
And so after three years, these guys looked up and saw that this freelancer who hired his first employee had been pestering us for years and years.
Now he's got like 10 employees.
Maybe he can afford this thing.
Let's take him seriously.
So we started talking numbers and put together a deal pretty quickly.
Omer (22:40.660)
I don't know if you can disclose what you paid for it or how much money the Pulse was making at the time, but if you can't get into specifics, kind of tell us a little bit about, like, how did you, what, what did the math look like on this?
Like, how did you figure out how much you should be paying for this?
JD Graffam (23:02.020)
Well, I mean, they came to me and, and said we just really want to unload this thing and offered it to me for one times the annual revenue.
I was like, hell yeah.
And then they sort of like, well, hold on a minute.
That was too easy.
So what about one and a half times?
Right.
So, you know, I looked at that and I saw an 18 month payback if I didn't change anything.
Yeah, that's, that's, that's obvious, right?
That's, that's a no brainer to me.
And you know, but the more interesting story is how much I stressed about it because I told you that the deal came together pretty quickly and I guess it did end.
But even they were wiffle waffling, as was I.
And so There was a six month period where I was pretty sure we were going to do a deal, but I was stressing about it because I'd never done anything like this, never spent this much money all at once.
And I would stress about it with my wife and she would try and calm me down.
And then after six months of this, finally made up my mind we were going to do this.
And she was cool with me taking some of our savings, our personal savings for this, and then keeping a little bit for a security blanket and then borrowing some from a bank and making this deal come together.
We've been stressing about it for six months.
I especially the night before we were going to move the money and take over the app.
Laying in bed, I can't sleep and I'm stressing.
And my wife says, she puts her hand on my chest to calm me down and she says, look, honey, you said it makes sense, I believe you.
It does make sense.
You know, in five years, you're probably going to come home from work one day and tell me, oh, hey babe, I bought another app and it's like gonna be five times as much money.
She says, I know you, and that's, that's how this is gonna go down.
Omer, it didn't even take two years for that to happen.
Omer (25:15.480)
Wow.
JD Graffam (25:17.400)
So.
So, yeah, I mean, at the end of the day, you know, specifics aside, this was an app that wasn't making enough money to support anybody's salary and especially wasn't making enough money for two people to split the salary for it to be worth it to them.
You can pretty quickly figure out that we're not talking about a million dollar business or anything.
We're talking about something that wasn't making $100,000 and, and since then we've doubled it, which is fantastic.
But I'm not trying to 10x any businesses that I buy, trying to get my hands on them, improve them conservatively and modestly over time, and grow them in a healthy and organic and natural way.
And that's what I've been doing ever since then.
Omer (26:15.820)
Okay, so Pulse, we talked about this earlier as a cash flow management software for small businesses.
So you kind of, you make the deal, you now own the business.
I guess there's the logistics of actually transferring over the domain and the code and the back end and everything
JD Graffam (26:43.630)
to
Omer (26:43.910)
kind of finalize the deal and sort of officially get you in the driving seat.
Did you sort of, did you sort of have a strategy on, on how you were going to grow that product from the Outset or were you just sort of initially like, hey, even if I do nothing for the next 18 months, I'm good.
And so, like, just.
I'm just trying to figure, like, when did you feel comfortable and sort of when did you see success from your own efforts to.
To acquire new customers for this business?
JD Graffam (27:17.840)
So when I bought Pulse, priority number one was don't screw it up.
Omer (27:24.320)
Good priority.
JD Graffam (27:25.760)
I'm not gonna say that we didn't change anything, but what I will say is I didn't buy it with a roadmap in mind.
If I'm being completely honest, when I bought it, I still didn't really even get was a cash flow management app.
It obviously had value to the people who were using it for three plus years at a time, because the customers that use Pulse stick around for a long time.
But as a fairly young business owner at the time, I didn't really get the pain of cash flow management.
I had always fairly easily made more money than I spent in the agency business.
And while I had cash flow fluctuations up and down, they were always so far above zero that it wasn't a huge deal.
I just wanted even less stress when I went to buy SaaS.
But when I got my hands on Pulse and I didn't want to screw it up, what I did do was talk to customers and go about understanding the product.
And I spent a long time doing that.
At first I was like, okay, we're going to spend six months and just really just do customer support and talk to customers and understand why they like Pulse so much.
What is it that they get out of it?
And I was going to use the product, and I did.
And frankly, what we realized was it does what it does really well.
It was just.
It just had some really bad technical debt.
And that technical debt was causing crashes.
And even in spite of the crashes, for three years before we bought it, every month or two, it would just go down hard for about 24 hours.
Customers still were patient and stuck around because the tool had that much value and the business was flat for that three years.
We came in and did really good customer support, responded a lot more timely to sales inquiries, and we fixed the performance and speed and, you know, got rid of some of the technical debt.
Those two things alone and like a slight release skin on the marketing site where we didn't really even change the strategy on the marketing site, we just kind of freshened it so it looked a little bit more contemporary.
Those are really the only three things we did in the first 18 months.
While I was paying it back because I don't want to take any big chances.
And in that amount of time, you know, it grew because we were just taking better care of it and fixed some of the really bad problems.
And, you know, it's doubled and it's on its way to tripling.
So that's really.
That was really.
The strategy was, was don't go in there and screw it up.
Go in there and be really conservative, make sure they get my money back.
Because that was the promise I made the wife was, I'm not gonna lose his money, babe.
It.
I'm going to make sure that it pays itself back before I try anything.
And Omer, I'm not bragging about this, but there was one thing, for example, that I didn't change in 18 months until it was paid back.
When we ran your credit card, we didn't send you a confirmation email because I was scared to death that if I started emailing people confirmation emails, they're going to get ticked off and be like, oh, I was just paying for this when we cancel.
Omer (30:45.490)
Wow.
JD Graffam (30:46.690)
So it hadn't been doing that, and so I didn't start doing it.
But when it was paid back, once it was paid off, I was like, okay, we need to do what's right here.
So.
So, you know, we had moved it over to Stripe, and it was a lot easier to get confirmation emails sent out.
Just a check, a check box.
And so we did that.
Omer (31:03.890)
And did you.
And did people start canceling?
JD Graffam (31:06.450)
No, no.
People watch their bank accounts.
They know.
I have a hypothesis and it'd be hard to test, but I have a hypothesis that it's well under 5% of customers on any SaaS app with significant revenue who have said it and forgotten about it.
And I bet only half of them care.
Half of them blame themselves, and they say, well, I should know better.
I do get the emails and I still forget.
And then the other half are the ones that are like, well, you should get my money back.
You know, and it's not because they blame you.
It's because they probably just need the money, you know, and can't afford to just be wasteful with their money, you know, even if it's, you know, quote, unquote, only $14 a month, $14 a month is a significant expense to a lot of small business owners.
Omer (32:03.910)
So you wanted to get into the SaaS business.
After years of persisting, you're able to acquire Pulse.
You.
You've kind of.
The priority is to make sure that you.
You recoup your investment don't screw anything up.
And then you're talking to customers and figuring out what they like about the product and how you can make it better, improving support and so on.
And then you're starting to see some results from that.
Now Tableau.
At that point, a lot of people would have said, okay, great, we're in the SaaS business.
Let's figure out how we can take this from, you know, a business that's doing less than six figures a year to multiple six figures, maybe $1 million business.
Most people don't say, let's go out and acquire another software product.
So when did that happen and what was the decision that drove you to do that?
JD Graffam (33:03.850)
Well, I wasn't really actively looking to grow a portfolio at the time, but I think it was like New Year's Eve.
I just happened to notice a tweet from Andrew Wilkinson that Ballpark was for sale.
And I remembered Ballpark because in the footer of their marketing site, in my competitive research for Pulse, I had come across it before because it said it did cash flow management.
And I thought, okay, well, there's some overlap there.
Maybe I ought to ask him about this.
Turns out Ballpark had been for sale for a year and hadn't sold.
Andrew's got a great post out right now about probably why it hadn't sold.
Because selling a business is a huge pain in the butt.
I came in and said, hey, Andrew, I've done this before, I know what I'm doing.
I love Ballpark.
I kicked the tires.
It's a great product.
I looked at the numbers, we struck a deal and we were done within like four to six weeks.
Happened really fast, really simple.
The reason I liked Ballpark was because in four to six weeks with a transaction, and I was fortunate enough to be able to scratch together the money.
You know, that's not lost on me.
That's not easy and everybody can't do it.
But because I could, I was able to, you know, grow my revenue in a four to six week transaction rather than over 18 to 24 months of just scratching and clawing with Pulse.
Omer (34:35.959)
Okay, and so you've got the.
So Ballpark was the second product that you took on, and then you've acquired, I guess, four more products after that.
And the most recent of which is curated.
So you can say, okay, the first one got you into the SaaS business.
The second one was kind of just, I guess an opportunity that you kind of came across.
You weren't necessarily thinking about growing a portfolio and, you know, sort of.
Andrew's sort of tweet was timely because it kind of opened up another opportunity for you.
And then it just turned into growing this portfolio.
Now, the thing that's interesting for me is a lot of, well, most of the time, you know, the conventional wisdom we hear is focus on one thing, right?
You know, don't try to get distracted with too many things, you know, whatever.
And I think generally that's, you know, that's solid advice.
And a lot of people have said, hey, when I was trying to juggle too many things, I really wasn't having the breakthrough in my business that I wanted to or hoped for.
But when I really was disciplined about saying, I'm going to focus on one thing, I really started to see significant results or growth in my business.
And we've read books like, I mean, it's a Gary Cameron, the guy's name, the guy who wrote the One Thing, which I remember reading some years ago and trying to sort of talk myself into the importance of the one thing.
But I'm somebody who struggles with doing one thing because when I'm motivated and energized by three different things, I want to do all three things, right?
Why do I have to choose when.
When all three things are interesting, they give me joy.
I feel like they're moving forward.
Maybe if I was doing one, I'd move forward a lot faster.
But I'm less interested in that because I have the variety and the opportunity to work on these other things.
But.
So I guess my point is that there may be a few people out there who maybe enjoy that, but generally anybody going into this sort of business would be told, no, don't try to buy all these products.
Focus on one thing.
And so.
But it seems to be working for you.
So why do you think that is?
JD Graffam (37:19.600)
I mean, nobody tries to tell Richard Branson to focus on, right?
Like, why not?
I mean, he's all over the place, too.
I mean, the truth is, I'm really fortunate in that Simple Focus grew up and became a very profitable agency, very healthy business.
And because of that, I have a lot of firepower at my disposal.
And by firepower, I mean a very motivated, very smart, very loyal, and to me, very big and effective and efficient team to whom I can delegate and trust to do what's right by the customer and make a good user experience.
So I am just feeding them.
And the apps are treated by simple Focus as clients, and agencies are already set up to manage multiple clients.
Omer.
So the model works great.
Omer (38:23.830)
Oh, I see.
So you kind of Almost treat them as another client.
Yeah, that's an interesting.
Yeah, I never even thought about it that way, but yeah, I mean, if you're running an agency business, it kind of totally makes sense.
JD Graffam (38:37.270)
They don't have employees.
The businesses, the apps, they don't have employees.
There's standalone LLCs that pay simple Focus.
Now, there are times when Simple Focus clients come along and have more money to pay and they get precedent.
And that's where the glory of SaaS comes into play.
You can put it on maintenance mode or a couple ticks above maintenance mode for a month if you want to, and it's not going to go away.
The customers are going to continue to get the service going, to continue to perform.
It's going to continue to do what they want, whether somebody's sitting there freaking out over the semantics of the code base or not.
Omer, I'm like you.
I get bored when I've got to stare at the same thing day in and day out.
But on the other hand, you know, my area of focus is building this portfolio SaaS apps.
And when I put that hat on, that's what I'm doing.
And sometimes I'm in agency mindset and that's my focus.
I switch between those two things.
So I see the portfolio of apps as a single unit.
I don't see it as a scattered brain collection.
A lot of our customers on the apps are similar types of customers.
It's all B2B.
They're all small businesses.
So it's not as.
It's not as manic as it seems.
Omer (40:04.190)
So who, who thinks about the product and what direction to take it?
Is that something that you get involved in or you, you delegate that to members of your team?
And then secondly, who thinks about marketing and growth or do you really sort of build off the customer base that's already there?
JD Graffam (40:29.780)
You're assuming we think about marketing and growth.
That's an assumption I want to challenge.
The growth that we're achieving is through acquisitions.
That's my primary source of growth.
I have acquired apps that are stable, some of them are growing a little bit.
But I'm not trying to hockey stick anything as far as the product side.
I mean, that's what we're already set up for at Simple Focus.
That's how I'm wired.
That's how my team is wired.
I take a lot of responsibility for the product vision on Pulse because I'm a business owner and I get it.
Like I told you in the beginning, I didn't get it.
Now I Get it now.
I am frankly a cash flow expert.
I know everything that goes into managing cash flow and I am, you know, I am the main driver of the vision behind where Pulse is heading.
And Pulse is heading in some great, direct in a great direction.
Discuss some great features that we just launched.
The product's vastly expanding and I'm really excited about that.
But there's a guy on the team that our customers know and love.
He's there for them.
He is the, the product manager for all the products and he does all the customer support.
And frankly, the customer support volume is so low because they're B2B and we don't have tens of thousands of customers that he handles and the customer support for all of them and does context switching pretty well.
Calvin Morris.
Calvin Morris is a great asset to have on our team and really gets the vision here and is excited as we, we continue to grow.
And he kind of groans every time I tell him about something else that I found out that's for sale.
But then when it's time to close, he digs in and onboards the new product and figures out who's going to be doing maintenance on it, anything that needs to happen to the product or the ui, the usability, and then he settles in, in and gets to know the product over the first six months, gets to know the customers over the first six months before we go in and start screwing with the founder's vision.
You know, we really want to take a conservative, long term and patient approach to these businesses because they're already in a good place when we buy them.
And kind of like with Pulse, when I bought it back in the beginning, we don't want to screw it up.
And I know people are sometimes a little bit more impatient about that, want to see us make more bigger changes right away.
But frankly, that's just not the business we're in.
What we're going to do is we're going to take care of the customers and make sure that we don't break any promises that have been made to people about what the product is there to be to do.
Omer (43:24.620)
Cool.
Yeah.
Shout out to Calvin now.
I want to, I want to go back kind of when we talked about growth because let's say you're bringing in a product, it has an existing set of customers.
If you're not thinking about marketing and growth and unless you have a product which has zero churn at some point people are going to start moving on or canceling their accounts or whatever.
So, sure, you have to be doing some Sort of marketing, if nothing else, to maintain the number of customers that you have.
JD Graffam (44:02.360)
Sure.
Well, one of the things I look for when I'm buying an app is something that, and this is just common, common business sense.
Right.
It's in a crowded market, more than likely, which gives you your market validation.
It's not faddish.
Right.
It's got a good marketing website that tells its story and converts people and it's got good inbound organic SEO and referrals.
And frankly, I can't do anything to make make that perform any worse.
And so if it's already getting 200 visitors a day, 300 visitors a day organically, and has been on its own because people are looking for invoicing and time tracking software and we're doing okay on Google for that and we've got articles that link to us and that's going to build people's awareness organically.
And so we are thinking about marketing, but we're being very conservative with it.
We're dipping our toes in the water.
And that's one of the reasons that I pursued the curated deal is because it is a marketing platform, it is for building an audience.
And I think that that's what we need to, you know, add into our arsenal is a growth and marketing mindset.
But on a fundamental level, high growth is not a requirement for me.
I am first and foremost concerned with having a good product that takes care of the customers and managing it in a way that if it grows, it's probably growing slowly and organically over time rather than trying to pour gasoline on it.
And I'm not proud of that, so to speak.
It's just something that being very patient about.
And as we grow our own marketing expertise, we'll get better at marketing and that's naturally going to make its way into our products and they're going to start growing from that marketing.
But right now, you know, we're just getting started.
Omer (46:10.180)
Okay, so if I understood this correctly, when you're thinking about acquiring a SaaS product, you're looking at, number one, is it in a, in the right market?
Is, is there a sizable market opportunity there for you?
Secondly is, is there a good marketing website that clearly explains what the value prop is and, and provides the, the funnel for people to, you know, either sign up for a trial account or pay for the product or whatever it is?
And then thirdly, you're looking for some existing organic SEO type traffic that's already there.
And so if those three things are there, then it sounds like what you're Doing isn't saying, okay, if we acquire that product, number one, you're going to focus on customer retention above everything else in terms of trying to improve the product for the existing customers, provide great customer support.
Secondly, potentially through conversion of, you know, the marketing website and getting more of that organic, existing organic traffic to, to sign up for the product and then growth is sort of something that you're now looking more into.
But even without a.
A kind of a concerted effort on that, you've still been able to successfully acquire these.
These different products.
JD Graffam (47:45.760)
That's exactly right.
It's like you're in my head
Omer (47:50.160)
now.
Have all the products that you've acquired been successful?
Has it always worked out for you so far?
JD Graffam (47:57.920)
Well, by.
By my measurements, yes.
By many people's measurements, no.
And that's been something that.
That is kind of an itch for me, right.
Because, you know, there's conventional wisdom out there that says if you're not growing, you're dying, you know, and frankly, something.
Losing 10% revenue over a year's time is not the end of the world for me because like I said, I'm really, really patient in business.
And so what I want to do is understand why it lost that 10% revenue, not panic and start throwing features and marketing at it, you know, because I want to just be a good steward of product.
And so as far as returns financially are concerned, I am well within the guardrails of my plan.
And so, you know, that's certainly the case.
But, you know, anytime I've tried to start a product, I haven't succeeded.
And that's been a source of frustration for me.
But that's not because the products haven't been good.
It's just because, you know, we haven't figured out how to, you know, communicate the value and do the marketing piece yet.
There is one product I bought that we ended up selling because it was underperforming, but I don't count it as a failure because I made a return on it and walked away with a profit.
The product was pop survey, and it had a lot of technical debt and it was shedding customers.
The problem was it was such a small app.
It started out with like 30,000 in revenue, and it got down to less than 20, and it was continuing to contract a little bit.
Someone reached out, interested in buying it.
They weren't interested in buying it for the revenue.
They wanted to experiment with a pricing model because they were already in the survey business.
And so we made a quick deal and sold it to him for A fair price.
And I walked away.
And, you know, that was, you know, for some people, a failure, but for me, just a learning experience.
I learned that there is a threshold for how small I can go on an app, no matter how good the price is, that an app that's making less than about $50,000 a year doesn't give me the margins that I need or want.
Even though I am looking for small apps, something that's under $50,000 just isn't worth it.
And I learned that lesson.
I was able to get out without getting burned.
Too bad.
One time I bought an app that was the annual recurring revenue was, I don't want to say inflated, but the multiple that I bought it on was based on an influx of cash from about 10 months ago that we didn't get to realize.
And so the price was a little bit inflated.
And all it means is that I paid market rate for it rather than below market rate like I thought I was paying.
So I didn't really get burned there.
I just learned a lesson.
And I think that's the takeaway is anytime something does come up that I've failed at, I don't let it make me feel like a failure.
Maybe I'm spending it for myself or maybe I'm spending it for you, but at the end of the day, they're just lessons learned and there's enough stability in everything else that it just feels like part of the business.
Omer (51:41.310)
I don't think that's spin at all.
I think that's a fantastic attitude to have.
And, you know, we're all going to have those setbacks, failures, you know, whatever you call them, but in many ways, what you call them is going to determine how you overcome them.
Right.
Or don't overcome them.
So I think that's a great, great attitude to have.
One thing I'm curious about, in terms of the technology, do you always look for the same kind of tech stack, like all these kind of Rails apps?
JD Graffam (52:12.710)
Absolutely.
Because if these were all on different tech stacks, that would be a huge pain.
So I am looking for Rails apps.
We have one that's like on Node, and it's just.
It's a thorn in our side.
And, you know, we thought it wasn't going to be that big of a deal, but it just takes longer because the developer who we have on it, she's got less experience with Node and more experience with Rails, and so she's faster on Rails apps than she is on this one.
Omer (52:39.660)
Yeah, I think it's fascinating that, you know, we Started out talking and you said, hey, I've never had any success building a SaaS product yet.
At the same time, that hasn't stopped you.
And you've gone out there and successfully acquired six SaaS products and have found a model to keep all of those running very efficiently, from the sounds of it.
And now I think as you start to focus more on growth, it's going to be really interesting to see how, even if there isn't a hockey stick kind of growth there, what you can do with these businesses.
And so, you know, that's something I'd love to follow up with you, you know, maybe in the next year and we see how things are going there.
But, you know, it's a really unique approach that you're taking, and I think it's fascinating.
JD Graffam (53:33.870)
Thank you.
I'd love to do that.
I mean, where we're at now, these businesses are all operating between 80 and 85% margins, and that's sort of.
My target is to get about a 40% return annually so that if I can pay them back in less than three years, I'm happy after I cover my expenses, and then after that, after their debt is serviced, once they paid themselves back, then I'm willing to take a significant cut, I think, in their margins and start investing more heavily in them.
So in a lot of ways, the way I did it with Polygon in the beginning is let's take our time.
Not over invest, not screw this up and then when it's paid for, do things the right way.
So just like I turned on the email notifications once, it was once all the risk was gone from Pulse and it was all, you know, free money, so to speak.
I plan to continue to do the same thing with all of my acquisitions.
Take.
Take my time in the beginning, get my feet under me, make sure that the business is giving me the right return.
And then.
And then once.
Once everything's paid back, you know.
Katie, bar the door.
Omer (54:50.050)
Love it.
I love it.
All right, let's get on to our lightning round.
I'm going to ask you seven questions.
Just try to answer them as quickly as you can.
JD Graffam (54:58.290)
I'll do my best.
Omer (54:59.570)
All right, let's do it.
What's the best piece of business advice that you've ever received?
JD Graffam (55:04.930)
Business is more common sense than you think.
Omer (55:08.320)
What book would you recommend to our audience and why?
JD Graffam (55:12.480)
I'll give you two answers.
The first answer is.
Books about war.
War?
Yeah, books about war.
Specifically books about war that are written by the warriors themselves because they're easy to Read.
They're simple stories that document what happened that this person observed, and you could draw your own meaning from them.
And they're also very inspirational and motivational.
The courage that comes across in these books is just very inspirational to me.
And these people have good hearts, even though they're in a very difficult situation.
The second answer is you should read Bit Literacy by Mark Hurst.
It literacy turned my life around.
I don't think I'd be in business today if he didn't teach me how to manage my email.
Omer (56:07.500)
Wow, I haven't heard of that book.
I'll have to check it out.
JD Graffam (56:14.140)
It's a great book.
I mean, it gives you the tools to manage all this data flying at you and all these bits that you have to process from emails and newsletters and all this and.
And all the things you have to remember to do.
He gives you a methodology for dealing with that in a way, without using gimmicky software.
Cool.
Omer (56:33.910)
What's that one attribute or characteristic in your mind of a successful entrepreneur?
JD Graffam (56:39.350)
I'd say it's gumption, maybe perseverance.
The reason I say that is because there's this thing that there's a story I like to tell.
And I'll be brief omer.
When I was in high school, there was.
It was a really windy, choppy day on the lake, but me and some friends went out on the lake and the ski boat was pulling us around on an inner tube and you were to hold on to the inner tube while they tried to sling you off.
And it was really wavy and choppy and nobody could hold on.
Everybody was having a good time getting thrown off.
And when it came to be my turn to get on the inner tube, I held on and refused to let go.
And they rode me around for 15 minutes trying to sling me off until they just had to stop the boat and say, jd, let somebody else get on.
Nobody's having any fun.
And I slid off almost completely broken because my hands hurt.
It wasn't fun holding on.
It was painful, but I did it anyway because I'm that kind of person.
And I think that is a characteristic that business owners need is that ability to persevere.
And even though I was in so much pain and it was miserable, I wasn't going to let go.
I'm not the kind of person to let go.
I don't give up.
Business owners don't give up, even if they're not having a good time.
They're having a good time because when I slid off of there and I floated in my life vest and I caught my breath and I began to feel the sting in my hands from holding on for 15 minutes to that rope.
It felt good to know that they couldn't throw me off.
Omer (58:21.230)
I love that.
Love that.
What's your favorite personal productivity tool or habit?
JD Graffam (58:30.110)
Well, it comes from bit literacy.
I learned about text expanders.
These things saved me more time than anything else.
And I guess the whole bit literacy methodology.
Omer (58:42.190)
What's a new business idea you'd love to pursue if you had the extra time?
Or what's the next acquisition that you've got cooking you want to talk about?
JD Graffam (58:53.390)
If I could start a business and walk away from the technology world, I would design Trace.
And what I mean is like the kind of trailers you hook up to the back of a truck or a car and that you might pull up a four wheeler or a lawnmower or a motorcycle around in.
Here's why.
Because if you know anything about trying to hook a trailer up to a hitch on the back of a pickup truck or your car, it's not an easy thing to do.
So these things are like designed and built and manufactured by know welders, like guys in a shop.
There's no, there's no artfulness or usability to them.
It's just pure function and it creates an intimidating product that, that makes people think, oh well, trailers are, I don't, I don't know how to do a trailer.
You know, and even me having grown up around TR trailers my entire life and hooking up my pontoon boat to my truck, I still find myself trying to, you know, pinching my fingers and having to hop up on the back of the truck and jump up and down to try and get it to connect and like I'm kicking it and, and trying to get this thing to connect.
I feel like I would start a business that would, that would do to trailers what OXO did to kitchen utensils.
Omer (1:00:19.040)
Love it.
JD Graffam (1:00:20.140)
All right.
Omer (1:00:20.700)
What's an interesting or fun fact about you that most people don't know?
JD Graffam (1:00:27.580)
I had a job in college repossessing cars.
Omer (1:00:31.260)
I guess that you must have been popular.
JD Graffam (1:00:35.820)
And another one is that I am actually a poet as well.
Omer (1:00:39.340)
Wow, that's quite a combination.
JD Graffam (1:00:42.460)
Yeah.
I think the answer to the next question you want to ask me is about passion outside of work.
I love writing and I'm a poet, but I have to say that truly it is being the husband and father, you know, that I was meant to be my wife and my kids and my mom and dad and the Son, you know, just being a family person.
Omer (1:01:07.630)
What's your wife's name?
JD Graffam (1:01:09.230)
My wife Katie.
Omer (1:01:10.430)
Katie.
So that conversation that she had with you those years ago when you were maybe second guessing yourself about that first acquisition, and she kind of gave you the reassurance you needed to move forward, I guess that that belief in you has kind of paid off in many ways.
Right.
And in terms of you're doing exactly what she described all those years ago,
JD Graffam (1:01:36.000)
she's what keeps me going.
Omer (1:01:37.160)
That's awesome.
Awesome.
Love that.
Jd, it's been a pleasure.
Thanks for making the time to do this.
I love this conversation.
I'm sorry we went kind of over scheduled a bit on this, but it's
JD Graffam (1:01:49.810)
really no big deal.
Your listeners deserve it.
Omer (1:01:53.010)
Yeah, I agree.
I do.
Awesome.
Now, if folks want to find out more about Simple Focus, they can go to simplefocus.com and you can also check out JD's personal website, which is graphgraf am.
And both from there and SimpleFocus, they can link off to all the products both in terms of Simple Focus and clear function is another agency business that we didn't even get a chance to talk about, as well as the software portfolio that you have all the products there.
If people want to get in touch with you, what's the best way for them to do that?
JD Graffam (1:02:41.330)
You know, I love it when people talk to me on Twitter.
It's just JD Grapham on Twitter.
You can also just email me JD SimpleFocus.com Sweet.
Omer (1:02:53.330)
That's awesome, JD.
Thanks a lot.
I wish you all the best and I would love to stay in touch and follow up and see know how things progress with this portfolio that you're growing and building.
It's awesome.
JD Graffam (1:03:08.460)
Thanks, Omer.
And if you hear of anybody selling an app, let me know.
Omer (1:03:11.340)
I will.
Yeah.
So if you're listening and you're selling an app, go and talk to jd.
Cheers.
