"Why Am I Splitting Focus Between Two Customer Types?" — Transcript

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1. 0:00I sell cleaning services to
2. 0:03homeowners as well as vacation rental
3. 0:05hosts.
4. 0:06We do 1.2 million in sales. Uh I would
5. 0:09like to be at 3 million in 18 months.
6. 0:12>> Okay.
7. 0:12>> And what's stopping me is similar to
8. 0:13her. It's an avatar issue, I think.
9. 0:15Um like I said, we sell to uh
10. 0:18homeowners and then vacation rental
11. 0:20hosts.
12. 0:21So, about 60% of our business is
13. 0:23recurring for uh the homeowners and then
14. 0:26about 15% is the vacation rental hosts.
15. 0:29So, not sure which one to focus on or if
16. 0:31I
17. 0:31>> LTV to CAC.
18. 0:33>> LTV to CAC for the recurring services
19. 0:359:1, vacation rental hosts 6:1.
20. 0:38>> Okay. And are there more residential
21. 0:39than
22. 0:40than
23. 0:42tourists?
24. 0:42>> A lot more.
25. 0:43>> So, why do you What's Why is this a hard
26. 0:45decision?
27. 0:46I'm being gen Like I'm not trying to
28. 0:48like you know, why is it a hard
29. 0:48decision?
30. 0:49>> It's not. I kind of knew the answer
31. 0:50coming up here.
32. 0:50>> Okay.
33. 0:51>> [laughter]
34. 0:52>> So, I've got this thing where I've got a
35. 0:54ton of these customers and it cost me
36. 0:55less and they're super sticky and then I
37. 0:57have these other ones that are super
38. 0:58price conscious and I have lower LTV to
39. 1:00CAC and there's fewer of them. Which one
40. 1:01should I do?
41. 1:02>> Yeah. I guess I was attracted to the
42. 1:04vacation rentals because they're higher
43. 1:05frequency. Homeowners is like max you
44. 1:08can do is weekly cleaning services.
45. 1:10>> I still care about LTV to CAC though.
46. 1:11>> Okay.
47. 1:11>> That's As long as I mean as long as
48. 1:13logistically there's not a huge
49. 1:15operational difference between the two
50. 1:17besides the fact that each Basically,
51. 1:18it's like should I sell homeowners or
52. 1:20HOAs? So, this represents, you know,
53. 1:23many cleanings or many at once and I
54. 1:25have to drive down my my my my net
55. 1:27profit per, but my absolute is higher.
56. 1:29So, like my margins lower, but my the
57. 1:31absolute ticket size is higher. It's a
58. 1:33classic decision. But long-term, I would
59. 1:36just rather have like unlimited demand
60. 1:37where I'm making, you know, 9:1.
61. 1:40>> That makes sense.
62. 1:40>> And then just continue to machine that
63. 1:42thing cuz the thing is is like if you
64. 1:43just focus on just that thing, your life
65. 1:45will get a lot easier.
66. 1:46>> So, just completely eliminate vacation
67. 1:47rentals?
68. 1:48>> I would let it just die.
69. 1:49>> Cool. I can do that.
70. 1:50>> As cuz I'm as I'm assuming that the the
71. 1:52customer journey and the process is
72. 1:53different for that avatar.
73. 1:54>> Correct.
74. 1:55>> Right. So, why have two businesses?
75. 1:56>> Yep.
76. 1:58>> Like if you're like, you know, we're
77. 1:58doing 100 million a year and we see this
78. 2:00is a segment that we want to attack,
79. 2:01that's a different question than like I
80. 2:03want to start it from the ground up. Uh
81. 2:05where's my yoga chocolate factory?
82. 2:07Thank you. All right. So, last night we
83. 2:09talked about uh her business which is uh
84. 2:12a yoga studio. There's a point to this.
85. 2:14There's a yoga studio uh that also it
86. 2:16says aerial silks and there's also like
87. 2:19some therapy and wellness components,
88. 2:21wants to build an empire of wellness.
89. 2:24And bought a chocolate factory
90. 2:27uh that's vertically integrated cow to
91. 2:29bar, wanted to use the one store as
92. 2:31distribution for the for the chocolate,
93. 2:33right?
94. 2:35Right? Okay. Um
95. 2:37and because she wants to build this kind
96. 2:39of uh empire, right? With all these
97. 2:41different Don't want to leave money on
98. 2:42the table. Um can't can't let those
99. 2:44Hershey bars you know take it all.
100. 2:46Um I'm kidding. I know it's special
101. 2:48chocolate. Um
102. 2:50But
103. 2:51but the point is
104. 2:52um
105. 2:53a business like that doesn't you don't
106. 2:55It doesn't grow like this. Businesses
107. 2:57will grow like this and then all at once
108. 3:00and then all at once. And so, it's you
109. 3:03you have to get so much bigger before
110. 3:05you start really attacking verticals and
111. 3:06that's when like M&A things like that
112. 3:07become more in the conversation. Do we
113. 3:09buy it or do we build it? Because we've
114. 3:11actually maxed out our addressable
115. 3:12market. You probably haven't even gotten
116. 3:14close to maxing out the market. So, it's
117. 3:16like it just begs the logical question
118. 3:18like why do we have a second service for
119. 3:20a second avatar? The answer is just like
120. 3:22we need the money and we said yes
121. 3:24because YOLO. But like from a business
122. 3:26discipline perspective, it's very like
123. 3:27straightforward.
124. 3:29Here's a ton of customers. We make $9
125. 3:31for every dollar you put in. Let's do
126. 3:32this as much as we can as well as we
127. 3:33can. And the thing is is that you might
128. 3:35with operational efficiency,
129. 3:37improvements in process, be able to get
130. 3:38to like 12, 13, 14 to one and it makes
131. 3:40that side even sexier, but you won't get
132. 3:42that if it's split in terms of your
133. 3:44attention. And then what happens is both
134. 3:45become kind of mediocre.
135. 3:47>> Is there Is there a point that I would
136. 3:49look at adding the vacation rental
137. 3:50service?
138. 3:50>> Not even close.
139. 3:51>> Not even close. Okay.
140. 3:52>> Yeah.
141. 3:53Like, we'll keep working with you for
142. 3:55another 2 years and then we'll be at,
143. 3:57you know, 10 million and be like, "So,
144. 3:58am I ready yet?" We'll be like, "Let's
145. 3:59get to 30." And then we'll talk about
146. 4:01it. And then at 30 we'll be like, "Hey,
147. 4:02what if we talked about it at 100?" And
148. 4:04I'm just going to keep deferring this
149. 4:06decision until eventually you're like,
150. 4:07"I don't think we should do anything
151. 4:08besides this cuz we're absolutely
152. 4:10[ __ ] killing everyone." And I'm like,
153. 4:11"Yeah."
154. 4:12But I would But it's very hard to say no
155. 4:14forever. And so, just say no for now.
156. 4:16>> [snorts]
157. 4:17>> Yeah, thank you.
158. 4:18>> You bet.
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