Why Commodity Services Need a Stronger Story — Transcript

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1. 0:00I own a exhausted cleaning business in
2. 0:01San Diego. So, we sell like
3. 0:03>> Exhaustive?
4. 0:04>> Exhaust hood cleaning.
5. 0:05>> Exhaust hood cleaning, got it.
6. 0:06>> Yeah. So, we do like grease removal from
7. 0:07ducts, fans, hoods, um in restaurants in
8. 0:10San Diego.
9. 0:10>> Cool.
10. 0:11>> Where we're at right now, just hit month
11. 0:13six. Um
12. 0:14>> Is that like 18-wheelers, like semis
13. 0:15that you that you do that on?
14. 0:17>> Mhm.
15. 0:17>> What is that Is that a
16. 0:18>> have like a van with a hot water
17. 0:20pressure washer and chemical. We roll in
18. 0:23the restaurants.
19. 0:23>> Guy with water and truck. Okay. Oh, so
20. 0:25restaurants. That's Okay, got it.
21. 0:27Understood. Okay.
22. 0:27>> So, like in all the restaurants, there's
23. 0:29a hood system above where they cook.
24. 0:30Grease gets in there. It's like a fire
25. 0:32hazard. So,
26. 0:33>> Yeah.
27. 0:33>> everyone has to legally do it.
28. 0:34>> Yeah.
29. 0:34>> Um It's a great business. I
30. 0:36It was described to me differently in a
31. 0:38different setting. So, yeah, it's a cool
32. 0:39business. Very similar.
33. 0:40>> why I kind of explain or else people are
34. 0:41like, "What the hell are you talking
35. 0:42about?"
36. 0:43>> Yeah.
37. 0:43>> So,
38. 0:44uh we just hit month six. We're doing
39. 0:46like 6K a month right now. But, we have
40. 0:49people on It's a subscription-based
41. 0:50business. So, um our book right now for
42. 0:54like yearly recurring revenue is like
43. 0:55right around 100K.
44. 0:56>> Cool.
45. 0:57>> Um I think what's stopping us right now
46. 0:59is just like not a clear offer.
47. 1:01>> All right.
48. 1:01>> Because I deal with restaurant owners
49. 1:03who only care about their bottom line.
50. 1:05>> Sure.
51. 1:05>> thing. They're like
52. 1:06>> Most business owners.
53. 1:07>> Yeah.
54. 1:08>> True.
55. 1:08>> And they're like, "Well, if you can give
56. 1:09me a better price, I'll give you a
57. 1:10shot." And right now, I'm just like the
58. 1:12hungry kid that's like, "Yeah, I'll beat
59. 1:13your price easy." Right? So, I think
60. 1:15what's stopping us is
61. 1:18figuring out pricing and offer with a
62. 1:20service that more or less is the same no
63. 1:23matter who you go with, but we have
64. 1:24added value adders with like customer
65. 1:27portal, streamlining, back-end support,
66. 1:30things like that.
67. 1:31If that makes sense.
68. 1:41>> So, you say that to the business owner.
69. 1:43>> Say that to the business owner? How so?
70. 1:45Can you give me
71. 1:46>> There's good, fast, and cheap.
72. 1:48Pick two.
73. 1:49>> Mhm.
74. 1:50>> And so, the problem is you can have
75. 1:52somebody else who can do this. Like, to
76. 1:53your point, like you started with the
77. 1:55premise that this is a commoditized
78. 1:56service.
79. 1:57I would just break I would just erase
80. 1:59that from your memory.
81. 2:00Because at the end of the day, like you
82. 2:02have to believe you have to believe
83. 2:03before anybody else that it's not a
84. 2:04commoditized service. And so, I would
85. 2:07say, "What are all the reasons that
86. 2:08somebody who sucks at this sucks?"
87. 2:10>> Mhm.
88. 2:11>> And let's fix all of those things.
89. 2:13>> Mhm.
90. 2:13>> And so, what's really interesting about
91. 2:15good like what does good even mean,
92. 2:16right? So, good is basically the absence
93. 2:19of hard.
94. 2:21Right? And so, I think about this when
95. 2:23I'm creating a product or service and
96. 2:24this has actually been really helpful
97. 2:25for me in terms of like how you
98. 2:26operationalize value in terms of quality
99. 2:29is you think what are all the things
100. 2:30that suck about the existing services?
101. 2:32What are what what makes it hard? And
102. 2:34so, a lot of people use the term
103. 2:36friction, right? And so, something that
104. 2:38is easy, you can't make something easy,
105. 2:40you can only make it not hard.
106. 2:42>> Mhm.
107. 2:43>> Right? Like if I said, "Make it easy."
108. 2:44It's like
109. 2:45when something's easy, all the hard
110. 2:46vanishes and all that's left is the
111. 2:48outcome, right? And so, if we want to
112. 2:50make our products or services easier,
113. 2:52which then means more valuable, we have
114. 2:53to remove all of the elements that make
115. 2:55it sucky.
116. 2:56>> Mhm.
117. 2:56>> And so, if we're thinking about the
118. 2:57competition that you're competing
119. 2:58against, like maybe a lot of them are,
120. 3:00you know, not that personable. They
121. 3:02maybe have terrible service. Maybe they
122. 3:03don't do a complete job. Maybe they're
123. 3:05not willing to come back if something
124. 3:06happens. Um like is there um like what
125. 3:09risks does the restaurant incur if it's
126. 3:10a shotty job? Is there a cadence that
127. 3:13they have to like maybe we can treat it
128. 3:14in a way that allows us to come half as
129. 3:16frequently, so we're more per
130. 3:19uh more per cleaning, but uh they they
131. 3:22don't have to pay it as often, right?
132. 3:24So, we have higher gross margins and
133. 3:26that actually works fine for us and it's
134. 3:27less for them. Like you're I'm going
135. 3:29with this?
136. 3:29>> Yeah, yeah.
137. 3:30>> And then
138. 3:31and then from a from an economies of
139. 3:32scale perspective, it's like how can we
140. 3:33increase Now, you're super early on
141. 3:35this, but like over time it'll be how
142. 3:36can we increase route density? Um so
143. 3:38that like we don't waste as much time
144. 3:39and so we get more efficient with the
145. 3:40routes.
146. 3:41Um and we can ultimately make more than
147. 3:43our competitors or at least increase our
148. 3:45gross margins even we keep our price
149. 3:47fixed.
150. 3:47>> Right.
151. 3:48>> No, that makes sense. One more question.
152. 3:49>> Yeah.
153. 3:50>> So, everybody has to get it done at
154. 3:51least twice a year. So, we're signing
155. 3:53people up a year agreement anywhere from
156. 3:54twice a year. Some people do quarterly,
157. 3:56some people do like three times a year.
158. 3:58So, based on what you just said, would
159. 4:00you recommend potentially going more
160. 4:02towards just pushing semi-annually, but
161. 4:05keeping price higher so that they feel
162. 4:06like they're paying less over the year?
163. 4:08>> Yeah, I would look at my gross margins.
164. 4:09I mean,
165. 4:10real real I'd rather sell someone more.
166. 4:12>> Yeah.
167. 4:13>> Right.
168. 4:13>> Start at four, down sell to two,
169. 4:15um if you can, and then probably play
170. 4:16with payment terms. Which is like, can I
171. 4:19stack more of that cash up front
172. 4:20>> Right.
173. 4:21>> versus getting paid quarterly,
174. 4:22>> Paying in full up front.
175. 4:23>> Yeah.
176. 4:24>> Okay.
177. 4:25>> Got you. But big picture, I mean, we I
178. 4:27would like if I'm you, I'm putting all
179. 4:29my effort into trying to figure out how
180. 4:30to decommoditize my service.
181. 4:32>> Mhm.
182. 4:32>> Um
183. 4:33because it is probably the most
184. 4:34important thing.
185. 4:35>> Mhm.
186. 4:36>> Otherwise, you're right. You will just
187. 4:38consistently be dealing with If you are
188. 4:41the same to the customer the first
189. 4:42chapter of offers, right? Like, if
190. 4:43you're the same thing to the customer,
191. 4:45these two things are about the same,
192. 4:46I'll buy the cheaper one. It's the worst
193. 4:47comparison. It's not the fight you want
194. 4:49to fight.
195. 4:49>> Mhm.
196. 4:50>> So, it's like I put all my effort
197. 4:51whenever I start any business or any
198. 4:52product line into like, why is this
199. 4:54different?
200. 4:54>> Mhm.
201. 4:55>> Like that's my full Like I don't even
202. 4:57think about pricing. I don't think about
203. 4:58anything until I answer that question.
204. 5:00>> Mhm.
205. 5:01>> And I have to at least be able to
206. 5:02articulate it to them really simply,
207. 5:04which is like, here's the five things
208. 5:05that happened that suck. Here's how we
209. 5:07don't have any of those five.
210. 5:09And for that in exchange, instead of
211. 5:11paying this, you pay this. But this is
212. 5:13why it's worth it.
213. 5:14>> Right. And then in that, our only form
214. 5:17of outbound right now is just like
215. 5:18door-to-door, knocking restaurants, and
216. 5:19then cold email. So, then building that
217. 5:22offer out with the decom- decommoditize,
218. 5:25if that's even a freaking word. And then
219. 5:27put that into the offers, the emails,
220. 5:29the texts, the cold outreach, basically,
221. 5:31and just sell the out of it.
222. 5:33>> Sell the out of it.
223. 5:35>> Heck yeah.
224. 5:36>> [laughter]
225. 5:38>> Thanks, dude.
226. 5:38>> Here you go.
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