When you want to purchase a product or service today, what do you usually do? If you’re like me, you usually run a quick Google search. Or, better yet, type in “XX review Reddit” or “XX review video”.
After selling his college video marketing agency, Sam applied his experience to make the world’s largest service for collecting high-quality customer testimonial videos. He entered the market at the right time and saw his business grow 240 percent in two years, ending 2021 with $3.4 million in revenue.
Here’s how Sam got his tech-enabled service off the ground and his advice for other founders building similar projects.
A Self-Taught Videographer
Sam got into entrepreneurship in college back in 2010 to make extra money. He helped local businesses do video marketing. By the time he’d graduated in 2011, he had enough clients to run a video production agency with two of his close friends. “I didn’t intend it to be like that but that’s what happened,” he says.
Over the next five years, Sam learned the ins and outs of videography at the agency level. He also learned there were a lot of challenges to running a generalist agency. “It’s hard to scale and it’s hard to remove yourself from day-to-day challenges,” he says. “When you are doing different things for every client you bring in it relies on high-quality founders that are on all the time.”
After five years of burnout, Sam was ready to exit. He sold his business to a national PR firm for a small sum and laid low. Then, in late 2017, he was ready to start another company.
How to Make a Video Production Business Different From the Rest
Back for round two, Sam wanted to create a service business that was unique and scalable. “The whole idea with a productized service is that you focus on a very specific thing,” he says. “That way it’s easier to market, sell, and fulfill.”
You want to find something that’s both valuable to the market and also scalable and repeatable.
Sam decided if he was going to excel, he needed to rely on things he was already good at: “I thought to myself, ‘What skills do I have?’ I did a lot of thinking and a lot of reading. You want to find something that’s both valuable to the market but also scalable and repeatable. There are a lot of things that are valuable but not scalable. Some things are the other way round too.”
Sam’s edge was in video marketing. But today, the market is saturated with videography agencies and he’d already had trouble scaling his own.
“I thought of all the kinds of video options I could do and tried to plot value and scalability,” he says. “I also thought about what I like to do. One of the things I liked to do was customer testimonials. Unlike advertisements, testimonials are based on trust. I had this deep, core conviction that the last decade of marketing was about persuasion, but that the next 20 to 30 years was about trust.”
Another concept Sam focused on was a concept coined by Dilbert cartoonist, Scott Adams, called talent stacking. “Basically you think about making a rare and valuable mix of talents by stacking them. I had video production but I also had B2B sales and marketing. I wasn’t in the top one percent at either of those, but combining everything, I thought I could be the best at B2B videography. I could be in the top one percent.”
Sam couldn’t sit around and think about his business forever, he needed to act. “You can’t steer a parked car is one of my favorite expressions,” he says. “You need to get in motion first and that leads to everything.”
By early 2018, he launched a new video marketing business focused on customer testimonials and saw immediate success.
A COVID-Proof Model
Sam’s big gamble was that we are entering an age where customer feedback trumps advertising at every turn.
“More and more people are doing their research before buying or talking to a sales rep,” he says. “They aren’t relying on salespersons to smooth-talk them into a deal and their BS detector is super attuned. By the time they’re talking to a sales rep, they’re already 70 to 80 percent through the decision process.”
He believes customer stories, specifically authentic, professional customer videos, are the solution companies need. “The best way to build trust and get buyers to reach out is to have genuine customer stories,” he says. “Anything we can say as marketers is better coming from customers.”
To start, it seemed many companies agreed with Sam’s hypothesis.
“At first, companies were flying us all over the world to film these customer testimonial videos on-site,” says Sam. “Then, we recruited and trained our global network of videographers to eliminate travel costs. In services, a lot of the benefits you accrue are from your value innovation. Our first value innovation was creating this global network of videographers much faster than many.”
But in 2020, COVID hit. Sam’s business model revolved around in-person interaction and on-site shooting, but with airline and border closures, it ground to a halt. He needed to pivot quickly to the next stage or risk losing the business.
But how could Sam create remote testimonials without sacrificing quality? “We usually were working with companies with at least 50 employees,” Sam says. “They came to us because they wanted the highest quality, and they wanted it done right. But we knew we would have quality issues without videographers on site. Our big question was, ‘What would have to be true if we could create insanely high-quality customer testimonials remotely?’”
Creating Testimonial Hero Today
To collect remote videos from customers Sam and his team needed to have a foolproof way to collect quality footage without filming in person.
“We asked ourselves what is the best camera people have on them?” he says. “It’s a smartphone of course. Then besides excellent video quality, we also needed great interview questions and editing. That was our first three key things there.”
Again, Sam’s vision was strong. In just a few short months, he and his team created a system for achieving all three of his testimonial criteria, launched it for their clients, and things took off. In 2020, they cracked $1 million in revenue and finished 2021 with $3.4 million.
To market the business, Sam claims SEO was key, along with a quality sales team. “Luckily, we started [SEO] 12 to 15 months before we needed it to pay off,” he says. “We also did ads and built a sales team. Building a commercial sales team is very powerful if you can make the economics work. An average contract value that supports the costs that go into it.”
Sam also prides himself on prioritizing a strong company culture. One where people enjoy working and that supports a great lifestyle, encouraging people to do their best work.
“I created core values before hiring and then just built the team around them,” he says. “Ultimately, if you’re going to attract great people, people want to know what you stand for and if the mission they are joining is ambitious and exciting. We now have a fantastic leadership team, and just a fantastic team of amazing people all around. I think we got very lucky for some of it, but having strong values and a strong mission and vision helps a lot.”
Getting Real About Services Businesses
While the big buzzword today in startups is SaaS, Sam thinks he has some compelling counterarguments for why tech-enabled service businesses can also be profitable and scalable.
“It’s very trendy to have a bootstrapped SaaS, but on a risk-adjusted basis, most people should start with a services business,” he says. “You can create a profitable, cash-flowing business very quickly. It’s easier to quickly build up a high-ticket service compared to high-ticket software. Also in software, there is a ton of competition, much of it venture-backed with considerable resources to outcompete you. “
Sam explains that he believes a successful service business can provide the backing founders need to take bigger risks.
“With a good services business, you can also build what’s called a ‘launchpad business.’ That gives you a stable platform from which you have a runway to take bigger, and relatively riskier swings,” he says. “You can then pursue things like SaaS, which has huge upside but also a very high failure rate.”
He also believes the SaaS founder’s dream of owning a business that runs itself is also not only the territory of tech companies, “A lot of people write off services, but if done correctly, a productized service can be a great vehicle for achieving income and lifestyle goals faster,” he says. “I’m not super involved in the day-to-day unless I want to be.”
There you have it. You can own a service business and not be trapped in it.
Sam was even kind enough to share exactly how he was able to make his business autonomous enough it could run without him.
“In services, the first thing you want to do is remove yourself from fulfilling the projects,” he says. “My first hire was our Creative Director to oversee the quality of our deliverables. We got insanely lucky and found the perfect person from, believe it or not, a Craigslist jobs post.
“Next we hired a fantastic guy on the operations side through Dynamite Jobs. He’s been continually taking on more and more responsibility and completely crushing it. We recently promoted him to GM. There can be a lot of blind spots if you bring people from outside to fill high positions. It’s great to promote from within whenever possible.”
And even though Testimonial Hero is not a pure tech product, Sam claims he has made his service very tech-enabled. “We’ve been automating as much as possible,” he says. “We automated over a million tasks last year between Zapier and our internal tools.”
Delaying the Search for Funding
Sam hasn’t taken any funding yet, but he’s not opposed to it.
If you can build a sustainable, fast-growing bootstrapped company you have a ton of options for outside capital down the line.
“The short answer is, never say never,” he says. “I think all things being equal, the longer you wait to take it on, the better position you are in. If you take on funding, your exit bar can get way higher. A relatively small $5 million exit often becomes more difficult. I won’t say we’ll never take on funding, but if you can build a sustainable, fast-growing bootstrapped company you have a ton of options for outside capital down the line. It’s a great place to be in.”
Sam also thinks most founders are unlikely to receive much VC interest unless they’re tackling huge opportunities. “In general, VCs expect a significant return,” he says. “You often need to have a minimum of a $100 million opportunity to be of interest to a VC. Even good VCs will tell you this. It’s not a fit for 99 percent of businesses.”
That said, Sam thinks we’re living in an era where it’s much easier to pick up outside capital. “Today there are new funds that are more structured for smaller exits,” he says. “A lot of people bootstrap because VCs are interested in them too. Now it’s getting more diverse.”
Don’t Fixate on MRR For Services
Sam gave us what he believes to be the formula for success in any service business. His first thoughts are that you need to be, one, selective about your market, two, able to build up your domain expertise so you actually have an “edge”, and three, open to different payment plans.
“Pick the right market you want to serve,” he says. “Don’t default to selling to other small bootstrappers and your friends. If you can sell to a bigger company, they’ll be willing to pay more for quality. Two, if you have a service, it’s easy to focus on MRR. However, not all services are purchased on a monthly cadence. Don’t feel like you need to put a square peg in a round hole to have MRR. Many businesses are doing growth a disservice by spreading cash flow over months. Focus more on having a high customer lifetime value.”
He also thinks founders should put more effort into team-building: “The quality of the team and culture is all-important,” Sam says. “It’s never too early to think about core values. Don’t settle; take it very seriously. Think about how you want to market yourself in this amazing global talent space.”
Finally, Sam emphasizes doing what he did: Create valuable skill sets and find ways to make them intersect each other.
“Back in my video days, I was building a rare and valuable skill,” he says. “Everyone is looking for the shortcut, but the biggest shortcut in services is to be good at what you do. You can’t shortcut being an expert. Testimonial Hero grew relatively quickly, but I put in the hours before that to build up these skills. You don’t need to get your experiences from a prior entrepreneurial venture, like in my case. It can also be domain expertise you’ve built up from your job or hobbies.”
A startup doesn’t always have to be a gamble. It can sometimes feel that the founders in the news all just happened to hit the right industry at the right time. But there are also founders like Sam, who pump out reliable startups because they’ve thought it through and stuck to their guns. What are your rare and valuable skills, and what audience would benefit the most from them?
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