Ep 175: How Dave Bought 18+ Website Businesses & Replaced His Income with Dave Rodenbaugh

Jaryd Krause (0:00)

What can you learn from someone who has bought more than 18 online businesses?

Hi, I'm Jaryd Krause host of the buying online businesses podcast and today I'm speaking with Dave Rodenbaugh who is the owner of Recapture.io, which is an abandoned cart, SMS and email marketing service for WooCommerce, Shopify Bigcommerce, Magneto, and a bunch of other great online business or eCommerce business platforms now.

Recapture has processed over 2 billion in gross merchant volume and recovered over $200 million from stores worldwide. So, Dave started his entrepreneurial journey back in 2011. Teen having built a business directory and classified plugins from scratch and selling them both in 2020. He's also the co-host of RogueStartups podcast and the WP minute eCommerce show. And he's also bought a bunch of online businesses which started his career in online business. And he truly loves email marketing be lifestyle businesses and family.

And in this podcast episode, David I, such a delightful chat because Dave and I talked about how he got started buying websites and why he decided to start buying websites over starting an online business from scratch. And we talk about how many websites he's bought, we've talked about what types of websites he bought, Dave also shares his biggest win from buying one of his websites and what that was and how that actually happened, and how you can implement that in your business that you buy as well.

He also talks about what he learnt in hindsight about buying sites and the advice he would share to others who are first time buyers in terms of due diligence and questions and all those sorts of things that you should be asking yourself and how to build relationships with seller and why that's a critical part of the journey of buying a site as well.

And David is specifically talk about some mindset stuff about starting a business and buying a business and who is the right person to start a business and who is the right person to buy one and knowing who you are and what bucket you sit in, is really going to help you understand what journey you should take and how successful you can become and how long that journey may actually take. We do dive into how long it actually can take to replace your income as well when you're, either buying sites or just wanting to make money online.

And we also talk about due diligence quite heavily as you could imagine how to know what are the right questions you should be asking sellers when buying a site and how to really build that relationship and become an attractive buyer when buying site, so you can be the person who wins the business in a sea of competition.

We also lastly talk about Dave's last purchase and how he's scaled that SaaS businesses and how it helps eCommerce owners increase sales by up to 8 to 10%. And oftentimes, even more so this is such a valuable podcast episode, you guys are absolutely going to love it. I really enjoyed it, and I know that you're going to enjoy it too. Let's dive in.

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Dave, welcome to the buying online businesses podcast.

Dave Rodenbaugh (3:44)

Thank you for having me here. Jaryd. I'm very excited. Buying and selling businesses is something, I'm very excited to talk about. I've been doing it for a long time. And yeah, it's one of my favorite subjects. So, this is awesome. Thank you for having me.

Jaryd Krause (3:57)

Yeah, we're going to talk a lot about that. It's going to be the main theme of the podcast. But we'll talk about what you are doing with Recapture.io as well, you let me know that, over the past 11 years, you've bought and sold a fair few websites. I want to ask how did you even get into buying websites or discover it?

Because 11 years ago, it wasn't a big thing. I started buying sites around that time as well. And it was like, not too many people knew it existed or nobody was especially like myself, nobody. There's nobody teaching it. What got you into this. I'm very curious about that.

Dave Rodenbaugh (4:33)

So, around 2010 That was kind of when I started this whole journey. I ended up joining this group called the micro printer Academy, which is now like the microcosm SaaS world run by Rob walling and Xander Castro and some other and when I joined this group, they kind of split into two sides and one of us was very small and the other one was like much larger.

The larger group were the people that were like trying to build their own thing and they had some kind of itch, they were looking to scratch and they were dying to turn it into a business. So, they were all talking about how they were building their thing like that.

On the other side I was basically, I was looking for a way to exit freelancing. So, I had been a freelancer at that point for, I don't know, 10 15 years, and I kind of saw the writing on the wall, as you get older in the tech world, it's sort of like, are you really going to be able to command these freelancing rates into your 50s? And 60s? The answer is, spoiler alert, the answer is no. At some point, you become less and less hirable. Because they're just more desirable, younger, sexy tech folks that are cheaper than you.

Jaryd Krause (5:42)

Having less energy, and can get bogged down a lot quicker, because you don't have.

Dave Rodenbaugh (5:48)

There's just a lot of things that are competing today, they don't have families, necessarily, you probably are married and have a family at that point and other concerns. And okay, so I looked at that, and I was like, Alright, I need a long-term plan here, because I'm not just gonna be like waking up one day and be like, Alright, I'm out of freelancing, and I'm gonna start a business now, like, it just doesn't work like that.

So that's when I joined this community so that I could learn how to start that business and sort of find my exit ramp. And I figured, it might be two to five years, it might be a little bit longer, but I gave myself enough time to sort of figure that out. And when I was looking at, those two kinds of groups that were in this community, I was like, I don't really have an itch to scratch. But there was, there was a few guys Rob walling in particular that were buying and selling stuff.

And they were using Flippa, occasionally, eBay, and some other sites out there, that, some of them are defunct at this point. But those sites like it’s kind of excited me because as a tech guy, I didn't have a lot of marketing skills. I didn't have a lot of sales experience. I didn't really have I mean, I had some operational business experience from running my own freelance consultancy, but it was a consultancy of one.

So, I mean that, it's not very operationally intensive, right. So, I wanted to get some additional experience doing that. And I thought buying a website might be a really great way to get that experience. So, I sat down with my wife, and we had this conversation, and I said, Alright, this is what I'm looking to do. Here's why I want to do it. And I wanted to spend a reasonable amount of money to get something but at the same time, we didn't have a tone of extra money to throw it away. I had a very young family at that point. I think my youngest daughter was two.

No, she was one and my middle daughter was two and a half. And my youngest was like, five, I mean, small girls and, decent sized family. I'm like, I have to pay attention to this. So, I basically, we came up on an agreed upon sum of, like, $2,000. So, then I took that $2,000. And I went out and I just started searching, and I searched, and I searched. And I searched. And I from discussions I had with Rob, he kind of gave me an idea of like, what are you looking for in a business? What are some of the red flags that you're going to find? And when you're having conversations, what are the good questions to ask, and how do you vet this business and stuff like that? So, I ended up finding a business and it was actually something that I could afford, it was like $1,100, or something like that.

Now, when I tell you what this business is, it is absolutely embarrassing. It still exists today. I have no idea what their revenue is. But it's called crownless.com is the name of the site or is the address of the site. And it basically was online cron jobs. And I was like, kind of excited mostly because it was Cron. So Cron. It's a tech thing. So, like, if you're on a machine, it's basically like a fancy computer timer. So, you can set it, set the timer, and then at the when the timer goes off, it'll run something for it.

Right, but that it only happens on your local machine. So, this cron thing was you could basically set it up and then have it go run a task across the internet, like hitting a website on a specific URL and do something when that timer went off. So, I thought, Okay, I understand this business, okay, I'll try to figure out a way to grow this business. So, I bought the thing. And then I found out that like, they told me it was making $100 a month and when I actually got into the business and looked at it, it was not really making $100 a month there were like tones of fraudulent accounts in this thing.

And I had to clean house on this app and then just wipe the slate clean and kind of start from scratch. But once I did that, once I figure that all out. I've made a lot of changes to improve the operational aspects of the site and I improve the marketing site and I put it in a pricing page and all of these things. It's kind of funny because the website is not hugely changed from what I made these up. for regional changes back in 2011. So, if you go to crownless.com, you'll see roughly what this look like, 11 years ago. And in doing so I actually was able to make it, make $100 a month. And then I let it run for a few months, and then I listed it back up for sale because I realized this is not going to be like the business that takes me to the end of my free time.

Yeah, but I have learned a tone from it. So that kind of got me hooked. Like after that, I sold it. And I, had my same $2,000 again, and I was like really excited to go out and try to find something else at this time. So that was kind of how I got started on the whole thing.

Jaryd Krause (10:41)

Yeah, that's awesome. I want to continue the journey shortly. But I want to touch on something that you mentioned like this. And I think this is very, very important. But and I need to ask a question of you first, before I go into my explanation.

When you say, you were in this group, and you didn't quite have the itch. And when all these other people that want to have a startup had the itch. Are you saying they had an itch about a product or service that they wanted to create that they're really passionate about? Is that what you mean?

Dave Rodenbaugh (11:12)

Yeah, so like, I'll give you an example. So, Ruben Gomez was also in the group at the same time that I was and Ruben Gomez has run a number of businesses. One of them is called bid sketch, which does proposals for designers. He doesn't want to another one called doc sketch. And now he's doing sign well. So, he's doing online signatures. But anyway, bid sketch was his very first one.

And he was super passionate about building bid sketch at that time, like he was a designer, he had this problem of proposals and generating them for clients, and then managing the whole process. Like, that was his thing. Like he really wanted to make that happen. And there was another guy. He was doing stuff in WordPress, and he ended up doing like coming soon pages in WordPress, which was kind of a hole in the technology at the time. So, these guys like had found something and we're digging into it. And I kind of came into this like, hey, I want a business.

Jaryd Krause (12:08)

I think that's absolutely critical for people that are on the journey to make money online. And this is my message. And for everybody listening, I think this is very, very important, they tune into this is that there's two different types of people, there's one that should start an online business. And there's one that should, I believe should buy an online business, if your goal is to just make money online.

So, you can replace your income, have more time with your family and do the things that you want to do. Because you've replaced your income. I think it's why would you not go away and just buy an online business because it's already set up, you don't have to go through the startup phase. But then if you bid and also 90% of startups fail, so if you really do have an edge, and you're really passionate about something, they're the only people that I believe should start an online business, because the 90% failure rate, when you're super passionate about something that's gonna help aid push you past that 90% failure rate of a startup.

And you're usually if you're passionate about something, you're gonna do it for more than five years, you're going to do it for probably 10 or more years there. And That's my belief, and that's my philosophy that if somebody wants to make money online, why don't buy something that's already making money, rather than go down something that's really, really hard to do. Yeah, what do you think about that?

Dave Rodenbaugh (13:28)

You totally nailed it. So you, you, you basically just expressed, the thing that I discovered after like, the first 12 to 15 months of doing this right here is that the process of buying a business hugely De-risks, what you are trying to get into like, you're basically you're Yeah, you get you get a product that's already been validated against an audience that is currently already buying it. So, you have customers product, and a market like those things that you have to generate all of that if you're building this thing from scratch.

And that's not an insignificant amount of work. And the reason that 90% of them fail is because there isn't product market fit or you can't find the audience so you can't reach the audience. So, they don't want to pay for your product. Like all of these things, these forces conspire against you. So, if you can start with a product that already has some traction, that to me is a huge advantage.

Jaryd Krause (14:21)

Yeah, I think what people get muddled in it is that there's a main message out there if you want to make money online need to start your own online business that's a toxic message to I would say a big majority of the people that want to make money online and replace their income and I also think that people have a goal but they forget that the to get to that goal. There’re so many different vehicles, so many different strategies.

And sometimes if you want to get to like say from Australia to London, you could catch a flight. It might cost you a lot more money right to go business class to London, but you could get there cheaper by catching a bus or taking a long boat, but a very long boat, how much how much of your life you're going to waste, right? And that's what I think is like people will have a goal, but they will, they can try to do it the cheap way, because they don't have much money.

And understand that, my message is like work out how you can earn a bit more money, stay in your job, don't quite try and quit too early, and set yourself up for success. So, you can achieve these things a bit faster. But that's I just wanted to touch on that. Because I really identified that, that's the process that you kind of had. And I don't think people understand that enough. If we can have that conversation here and save some people, some trouble would be great.

Dave Rodenbaugh (15:44)

Yes, I hope it really does like you, you have to begin with the end in mind. So, we're going with the Stephen Covey approach, you absolutely have to know what is it that I want to have an end goal on this. And so, and the end goal that you can have like little end goals in between, you don't have to have like, alright, in 10 years, I'm going to do this.

And that's the only goal I've got like that you're setting yourself up for failure if you don't have something that's a little more attainable in the short term. And so, having that in mind is going to make a huge difference in both your mindset, your success rate and your ability to execute on it right? If it's so big and so far, out, you're never going to get there.

Jaryd Krause (16:21)

Yeah. And coming back to the due diligence on this one that you did, I made mistakes on my first site as well. I bought it and there was a bunch of like a bit, it was like a directory sort of thing as a bunch of businesses listed that were just non-existent anymore. I didn't know that I should be checking that sort of stuff. Same with you and the financials.

Sometimes you're like, Okay, it's easy to see some, fake accounts, or easy to see a lot of accounts you don't know, to identify if some of them are fake, because you may not even know that that's the thing, right? So, let's go through some more of your science that you've purchased. And then then let's look, break into some of the things that you learned, like the experiences you had through due diligence.

And what some of your things where you learned looking back in hindsight, so yeah, what were some of the next sort of businesses and why did you go down those business models?

Dave Rodenbaugh (17:12)

Well, at this point, after I kind of got hooked onto the whole idea of buying, then the next step was, well, what business bought model out their kind of suited me best. So, I tried a lot of different stuff. I did an affiliate site, I did some AdWords AdSense stuff. I did. It's hard to classify this one. But it's basically I was selling WordPress plugins, it's not totally recurring revenue. At the time, it was more like one off revenue.

Ultimately, my goal was something for SaaS with recurring revenue, because that was the Holy Grail. But I felt like I still didn't quite have all of the pieces put into place like I didn't have the confidence that I could go after a SaaS site, buy something that was good, and evaluate it well and be able to run it Well, like I still had a lot of things to learn, I was still kind of green on marketing and sales and customer support. So, I felt like I needed a little bit of a proving ground there to figure that out first. So I kind of dabbled in a couple of things.

So, I tried that affiliate site first, for somebody else, that I was basically wrapping their course. And the site was very inexpensive is like 600 bucks, I'm like, Oh, sure, I'll try this out. And it turned out that the guy that sold it to me had actually just basically bought like 30 different versions of the same domain and kept reselling it, the same site under a different domain. So, I got a duplicate content penalty is basically crap. And so that was $600 wasted, but I learned something right, I learned, hey, this is something you got to check.

This is a question you should ask. And maybe these content affiliate sites aren't necessarily the strongest thing if you're trying to learn marketing, maybe you want something a little easier than that something that has some customers built in instead of trying to convince customers cold, yeah. Then I looked at a couple of AdSense sites, and those were actually easier. But, I only had a certain amount of money to spend on them. So, I couldn't get anything really big at the time. So, I saw that as a potential play. But and this was before Panda and Penguin, the big first algorithm changes that that Google did back in like 2012 2013, something like that.

And slapped everybody. Right. So yeah, and so I was kind of hanging on to those little ones. I'm like, Ooh, this is cool. I'm getting like $100 Check a month. I like that. But the one that kind of really, really stuck was the WordPress plugins. So, I actually bought this from a woman, she was a freelancer, and she was building WordPress themes. And she had kind of accidentally created this classified plugin for WordPress. And I say accidentally, because she obviously created it with a purpose intent in mind here, but I think she did it for one of her freelance clients.

And the freelance clients, of course loved it. And then she just sorts of threw up a site ad hoc as a, oh, let's just sell this thing. But she wasn't really serious about selling it, like, she was handling customer support in the comments of all the posts.

Dave Rodenbaugh (20:15)

If you wanted to buy the plugin, you had to basically pay pal her money. And then she would turn around and email you a zip file with whatever the thing is that you bought. So, it was a completely manual process. And I'm like, Oh, this place is right for, making it better. And I also saw that, that she had like a bunch of these different modules. I call them later. But they're basically just different add-ons to the same plugin.

So, there's the plug in that was free and wordpress.org. And then she sold all these add-ons. I was like, I could bundle those altogether and have one price and get a better sales package here something that would be more interesting to sell the customers and make more money at it. So those were things that just were totally lacking. So, she had listed this thing up for sale on Flippa. Again, of course, because that was the main site at the time, right? was the only one really, it was the only one worth paying attention to at the time.

Everything else was either garbage or scummy. Yeah, I mean, one of the two, And, I went through and with my experience that I had already had on these other two sites, I went and asked her lots of questions back and forth, I did some revenue proof. So, she could actually show me like monthly pay pal statements for the past few months, and they were making like, $300 a month. And I was like, Alright, that looks fairly legit. And she was asking a very low price for it, because this was a huge burden of work for her all that, she's constantly going through and trying to answer all these posts all the time and do these manual sales. Daily thing.

Oh, I just sort of like, Oh, I've got some solutions here for you. But yeah, I think I paid like 1300 $1,400 for it when I bought it from her. And it was making $300 a month. So, it was actually undervalued for what, what it could do at the time, but I don't think she really realized where it was at to her, it was just a burden, she wanted to get rid of it. So that one was good. And once I got a hold of it, all those things that I just told you about were broken, I fixed. So back then I didn't do like email-based customer support, I just did it all on a forum. And then there was also a contact form.

So, people could email me more formally and get that I did the bundle and I put it in a shopping cart so that people can handle this stuff automatically. I wasn't like dealing with manual sending emails and stuff like that. So as soon as I could put all that stuff in place, it basically went from about $300 a month to about $3,000 a month, in about a 12 14-month period. I mean, that that was like the first real win I had, that made me feel like wow, this can really do something here. I was very excited about that.

Jaryd Krause (22:54)

Congratulations, that's absolutely awesome. I actually bought a business that was doing a manual process in like the tailor made garment space, and changed, like, I bought it and then spent a bunch of money on developing a tool that people could, design their own thing, and it could be automated, just say I could remove, it made the business more money, but what actually did save the business a lot of money.

So, in fact, that allowed it to become more profitable. And I think, obviously the same with yours. If you look back, the manual work saved you time and also money. So make the business more profitable to so that's awesome. How many sites do you reckon you've bought? Roughly?

Dave Rodenbaugh (23:42)

Well, so I went and did this count for a talk that I gave last year. And I think when I added them all up all sudden done, I think it was like 18 or 22 depending on how you wanted to count it because some of my BOD is like a package and sold them as a package.

So, was that one or is that five? I don't know. Yeah. But yeah, just like between 18 and 22 is the number and currently I only own the one I only own Recapture so all the rest of them are all gone. Or defunct? Some of them didn't pan out at all. Yeah, there is that too.

Jaryd Krause (24:15)

Well, congratulations. I think we should probably highlight that 10 11 years ago a decade ago, the site's you could get better multiples for the sites, you could buy something for, under $5,000 and still get a decent deal. Now it's very different with the amount of people that are finding out that you can buy an online business so I think we should just touch on that because some people go well if Dave went bought something for $1,100 and I can do Yeah, then I can.

Dave Rodenbaugh (24:45)

It was a that was a decade ago that was a very different time. Are these days on micro acquire or some other similar kind of marketplace, you're not going to find a business of equal Um, potential, I guess is the best way to put it for that kind of price. A lot of the times what I'm, what I'm seeing is that a lot of people overvalue their businesses at the lowest levels, they basically have like, oh, well, I put in this many hours’ worth of coding, and it's making $100 a month, and they're like, adds were $7,000.

No, it's not worth $7,000 I realize you put $7,000 into it, but it is not worth $7,000 It's usually worth what it's making times a certain multiple, depending on the history that's a fan standard kind of way to evaluate businesses and SD if you're below like a million dollars or something like that. But yeah, the valuations get really weird at the low end, and at the high end, both.

Jaryd Krause (25:45)

Correct, so for example, people that are looking at something that's sub $10,000, will I recommend people to not buy anything under the $10,000 range, if they're want to buy something that's already making money, because anything I see at the moment under the $10,000 range usually is a startup.

And then it's people that have put a lot of their time into it, like you said, and trying to sell their sell their time that they've worked on and sell their sweat equity. But when you're buying a business, you shouldn't be buying a business based on how much time somebody's put into it, it should be back buying it based on how much it's making, and how much time it costs to run the business. Right.

Dave Rodenbaugh (26:25)

And like we said before, remember, the whole point of buying a business is to de risk. At least that's my philosophy of it. Maybe that's not everybody's philosophy. But if you're buying something, the whole point is to de risk parts of it, maybe not all of it, but some of it right? When you buy something that doesn't have customers isn't making any revenue, and just has a product, you've de risked nothing, you maybe have given yourself a head start in a product, but you don't know anybody's going to buy it.

You don't even know if it's that good. Like, you still have two fundamental hard problems to solve. Where do I find the audience? And how do I reach them? Like, those are way harder than building a product? So yeah, I see those things that get listed up there, and I just kind of shake my head. And I'm like, I wouldn't touch that with a 10-foot pole.

Jaryd Krause (27:09)

It is funny. What's getting popular now is people wanting to buy businesses to quickly do like a flip and grow the business. And they want to do some quick wins, or some easy wins and add in opportunities to have the business make more money, but they may only last a certain period of time until another update may come or something in the online landscape changes.

And they don't understand that. This is what the way I like to grow businesses is that when you put in a de-risking strategy, it actually increases the value of the business and by default, allows the business to earn more money, but with less risk, which allows you to when you want to sell it, sell it for a higher multiple, because the business has less risk.

And that's what people are buying businesses for. So, there's a funny thing going on where people like I want to buy something and see how much opportunity it's got to buy the business. And I just think it's silly to buy something based on opportunity alone.

Dave Rodenbaugh (28:08)

Yeah, you really, you need to understand what that opportunity really is, before you dive into it. You just can't blindly say, Hey, I'm going to ride on the opportunity here. Because I remember we used to say back in the day that you can't sell potential, because potential is different for every single person out there. And in some cases, you'll never be able to recognize that potential.

Because you might have like, you can say, oh, there's all this potential to reach this particular audience. And maybe you've got some secret way to reach that audience, you have a list of 27,000 email addresses stashed away, but you're not selling that as part of the deal. Like, okay, that's potential Yes. But a you didn't use it and be it's not coming with the sale. So, it's worthless. And that potential doesn't mean anything to me, because I don't have access to that list.

Jaryd Krause (28:52)

And that's, and sometimes people even do that. It's like, even if you do get the email list, and it's got 10,000 emails on it, people go cool. It's a massive opportunity. They got 10,000 emails, but hang on, when did they subscribe? It was at five years ago, how many of those email subscribers are actually active on the list and opening and consuming the content that, like, it's there's so much in due diligence.

And so I want to ask you now, like, what are some of the things that you learned either the hard way doing due diligence or some things that you learned looking back now in hindsight through through buying sites?

Dave Rodenbaugh (29:23)

Oh, gosh, a lot of things. So, one of them is being able to ask the right questions to the seller. There's always some key things that you have to know about upfront. So, you really have to have a complete visibility into all the revenue sources. And I don't usually like to look at anything less than a year and a really good seller will open up their books and say, Alright, here's the 12 months you ask for here's another 12 months prior to that, it just adds confidence to your transaction and it tells you a lot about the seller. Like how old, When are they going to be? If you ask them a question?

Do they go above and beyond? Or do they just answer to the letter and then shut you down like those sellers? Kind of I wouldn't say it's a red flag, but they definitely present a yellow flag maybe where you you're like, Okay, are you hiding something? Are you just kind of a jerk? I don't know. I mean, I can't really tell, the willingness to share information, the willingness to disclose, warts about the business, I would rather know about those warts during the due diligence, I am totally comfortable. If you tell me Yeah, we had this massive algorithm change. And it totally hosed the business for the last three months over here.

But now we've recovered and see there's some growth right here, like, tell me about the wart and tell me how you fix the wart. Correct. Now I know something about the business like, oh, it's kind of resilient. And I know that I can do these things to fix it later, or something like that. But if you try to hide that stuff, it always comes out eventually. So finding a seller that is willing to have an open discussion with you is a is a big deal. Like the best sales I made were the ones that were the most open sellers, because I could literally go in and ask them anything. They told me everything. It gave me tones of confidence. And I was totally willing to plunk down my cache. Yeah, that was a big one.

Jaryd Krause (31:16)

That's a good one. So, it's like people work with people based on the level of trust they have. And how do you gain trust? Well, you first you usually need to start a relationship. And a relationship via email or text just isn't the same as least having one phone call with this with a seller and them seeing like, oh, this person actually asked good questions.

And they actually like they know what they're talking about, can make you become a far more attractive buyer. And the seller has built a relationship with you when they probably didn't expect to do so. And then that connection there can really help you go along with the purchase. And I'm just going to put in a shameless plug here day because we're talking about due diligence and questions. If you guys listening don't have my doodles framework, which has all the lists of questions you should be asking people, when you're doing due diligence, go away and get that it's on buying online. business.com forward slash free resources.

That's my doodles framework. It's what I use, and all my clients use. It's, it's helped us so much, Dave, in terms of saving money on bad deals and, and buying great deals.

Dave Rodenbaugh (32:22)

Yeah, and, I haven't seen your specific list of questions. But having a solid list of good questions to ask, was something that took me quite a while to develop over the years. And I would literally write all these things down as sort of like the base questions. And so if you're doing due diligence, like the diligence actually goes both ways, right, this seller is evaluating you as a buyer, how serious are capable of running this business? Do I feel good about selling to this person? So they're asking questions, too, right?

And part of how you can be a good buyer is, number one, know what questions to ask number two, read through the prospectus, or the listing or whatever, and see what questions already get answered, and then figure out what additional questions to ask like, don't ask the obvious ones. How much money is this making? Well, if they put that in the listing? That's a dumb question, right? You don't want to ask the questions they've already answered. Do you want to be the smart buyer to ask the questions that they haven't asked? Or to dig deeper into that say, Oh, I see your revenue fluctuates over in the summer here. Is that a seasonal effect? Or was there something else going on at the time? That's an example of a good question to ask.

So you want to look at those things, have that list of questions, and then figure out what applies what are the biggest risks that I see in this business here and help form that relationship because you do have a very limited amount of time but the way you're going to get a good relationship started is to have that call with them. I like video calls for buyer seller discussion, because it puts people at ease to be able to know that there's another human being there and you're not just like shooting emails back and forth, that's fine for onesie twosie stuff, but the real good deals that I've done have been, face to face kind of stuff.

So that's huge. Like being able to ask good questions, ask the right questions, and having a list like Jarrett's here is going to make a huge difference in whether you're buying really crappy businesses or really good businesses.

Jaryd Krause (34:23)

Yeah, that's right like you said, it took you a long time to work out what questions to ask and it's taken me a long time to reiterate different questions that in fact, I was going through some of my old documents and stuff just getting rid of a bunch of stuff, throwing it out and I came across a an envelope that was I was used to be a plumber.

It was a plumber’s union envelope. And on the back of that plumbers union envelope was my flipper questions that I would ask people this is like, back almost a decade ago, just in writing and pen so on one side, I've got my plumbing curry on the Other side, I've got my online business career actually posted online somewhere, it's quite hilarious.

And it was only like Come to think it was like looking at as like only six or seven questions on it. And they were just now I look at those questions like they're, they're pretty easy, outdated questions I should have been better.

Dave Rodenbaugh (35:16)

right? Well, you live and learn, right? This is how we get better at this you make mistakes, you're like, oh, I should have asked that. Add that to the list for next time. But that gets expensive to make all those mistakes. So, having an existing list to start from makes a huge difference.

Jaryd Krause (35:31)

Yeah, for sure. Now, I want to touch on Recapture.io, what you're doing with email, I'll let you explain what it is, abandoned cart sort of stuff. But I want to ask, did you buy this business? Or did you create it out of an itch and a purpose?

Dave Rodenbaugh (35:49)

I did buy this. I'm still a firm believer of this. So this was an established business. It had been around for about 18 months, and I bought it in 2016. The guys and I'll tell you what Recapture is here in just a second, I'll just give you this finish the story. But the two guys that I bought it from they were brothers, and they ran their own e commerce Store, they did custom carved wood iPhone cases.

So they had their own, co2 laser, and they would put these blanks in there and carve out whatever thing you wanted on there. And then it was fit to your iPhone. So it was a very good business. It was very lucrative. They're making like six figures a month time, right? So they built this solution, because they didn't like the other email marketing, abandoned cart emails that were available for their e commerce platform was, which was Magento.

So, when I looked at this, I was salivating for multiple reasons. One, it was SaaS, it was my set years. It's real good SaaS business I could sink my teeth into. But second, it was on E commerce. So, this particular business was something that was very clear in the return on investment that you could display. So, I had a report that could show you, I am making you this much money. So, you're so close to the money, that it just made the sales and the marketing that much easier. Because you could just basically say, Look, you pay me this, I'm giving you back 20x This much, why their investment will be Yeah, right? Right, it becomes very predictable.

And it becomes very, who doesn't want to buy something that is making them money, right? That was an obvious thing. So anyway, Recapture is basically an abandoned cart and email marketing and SMS solution for a variety of E commerce platforms. So this was one of the things that I was able to expand. Originally it was on Magento, then we moved it to Shopify to WooCommerce. It's on big commerce. Now, some other smaller WordPress solutions. But, this is it. This is definitely like, I don't want to call it a Forever Business. But it's definitely my long term, hey, I can live my life now support my family have a staff, it was the ultimate goal of what I started in 2011.

Jaryd Krause (38:13)

Congratulations. I'm so thrilled for you. So, if we go back, I think we should think about this. If we go back to 2011, and you've got a business that is making decent income, you support your family, you can hire staff, and you're going to be in it. And it's a lifestyle business goes people that are listening, need to understand, like you've bought 18 websites, sure, there was a bunch of smaller ones and, fiddly stuff, I tell people to buy it, spend a bit more and can reduce the timeframe. But still, I mean, it's a over a decade, or you bought this in 2016.

So Close to close to a decade, maybe under a decade to get to a point where you're like, in a great position. How important is understanding that you feel Dave knowing that you need to just invest some serious time that's not like I'm going to put three years or one year into making money online and achieve what all these other fake gurus say like what's your take on that?

Dave Rodenbaugh (39:17)

Yeah, I mean, I cannot under understate what I am about to say enough. The average small business takes from three to five years to achieve sustainability. That's the average three to five years. And that's, you can be a little bit above average or below average, for me here with Recapture was probably close to five from the time that I bought it to the time that I was able to go full time on it. So, I'm right at the average right there. And, there's a lot of other forces that kind of, helped me move along probably a little quicker than I would have by myself.

You have to be patient with this stuff. I mean, the stories that you hear of people that are overnight successes, what you don't hear is that they were grinding away five to 10 years prior to that. And then suddenly that overnight success happened. It's because they put the time in. There's a friend of mine, Justin and Jason from the texting podcast, they like to talk about luck surface area. And I think that this is probably like one of the best things that you can do is you have to cultivate as much luck surface area as you possibly can.

So that when an opportunity strikes, it's within your big luck surface area, if you have a little tiny slug surface area, and these opportunities are zinging along, it's not going to hit your area right here, right, it's like you're trying to shoot BB gun at a very tiny target. If I have a very large piece of paper, it's very easy to hit that target with these tiny little BB, it's the same kind of thing, you have to find ways to, to get out there so that those opportunities collide with you.

And it can be in a variety of ways, whether it's working in the business, learning different skills that you don't have, like sales and marketing, or maybe you're not a tech person, and you need to learn development. Like that's a different skill set, too. You can learn going to conferences, doing networking, hanging out with smarter people than you are talking to people who have already bought these businesses and try to figure those things out. That was the that was the big learning that took me kind of years to figure out.

And when I finally got enough money up to buy Recapture, I realized that for that to be successful, I really had to expand that leg surface area out as much as I possibly can. In fact, that's what my goal in job is, as a CEO today is to keep pushing all those boundaries, and all those fronts. So, more people are aware of the product, more people want to work for me on the product, more people are buying the product, just all of those things

Jaryd Krause (41:49)

that's so juicy. So, luck surface area, I also learned something from Roger Hamilton in a book called your life your legacy. And he talks about luck as well. And I think this really lends what I'm about to say he's going to lend to the luck surface area and maybe a framework on how to increase your luck surface area. How he explains luck. Davies, it stands for, it's an acronym like location, understanding, connection, and knowledge.

And if you're in the right places, and you understand what's the niche, you understand the opportunities, and you have the connections to facilitate those opportunities and the knowledge to take action on those, you can increase your luck, I believe you can increase your luck surface area.

And I think that's just, I'm so glad you mentioned that. Because for me that's like, as I listen to you explain luck surface area, I'm like, wow, like I can just now combine these two, two learnings in these two frameworks to increase that. That's Thank you, personally for me.

Dave Rodenbaugh (42:58)

No, you're absolutely right. I mean, you just Rogers framework puts that whole thing together in a neat acronym. But it's the same thing. And I think luck is an underappreciated attribute of being an entrepreneur. And people just think, Oh, well, you just get lucky just out of the blue. It's like, No, you don't, you get lucky. Because you put yourself out there, you get lucky because you understand where to be at the right time, you get lucky because you've talked to the right people, and that something's coming because you're in that connected loop right there.

And you get lucky because you learned about what it is that's going on in this space to know this is the stuff I should pay attention to. This is the stuff I can ignore. All of that generates luck for you. And that's where people get those boosts in their business. Every single successful business that I've ever worked on, that any of my friends have worked on in my masterminds, all of them have had specific lucky events.

But those lucky events were the result of putting in a lot of time and effort beforehand to be at that right place at that right time. So yes, there is a there is a grind aspect to that, that I think everybody likes to ignore on the luck and that's the part I think we should emphasize here.

Jaryd Krause (44:13)

Yeah, for sure. Because luck. It's I think it's got this weird how people understand luck or majority of the world understand law and understands luck may actually be in a broken in a broken way that doesn't help or is not helpful or can hinder. David, I want to I want to ask you about Recapture.io. So, with Recapture.io What's the say I have an E commerce business and I'm like, Alright, I am making say $2,000 a month and we want to increase sales from abandoned carts. I know you guys do email and SMS texting and stuff like that.

Is there like a calculation that that allows you to work out what roughly An E commerce business may get back from abandoned cart sales. Is that something that you've learned alluding to before?

Dave Rodenbaugh (45:07)

Yes, actually. So, over the past six years, I've discovered that stores at a particular level and by particular level, like I mean, you, you're selling something that customers want, you already have some existing sales and you kind of have a marketing machine that's going and doing something whether that word of mouth stuff, organic traffic coming in, you may be running paid ads on Facebook or Tik Tok, or whatever, it doesn't really matter, you've got some kind of machine that's already running to some level, it doesn't have to be perfect and doesn't necessarily have to be at the highest level.

But if you have that, on average recapture can get you back between eight and 12%. Now I've seen stores go much, much higher than that, like I've had stores, there was a guy that sells aquarium supplies, and his abandoned cart recovery rate was up to 36%. So, like, he really had it dialed in, and he had some little secrets about what things were being put into the cart, and how to approach those. So, he'd have a very segmented campaign that says, Alright, if they have this product, I'm going to talk to him about this concern. And I'm going to hit him like four times in a row, and boom, those things just track like nobody's business.

But yeah, I mean, on average, about 10%, depends on the vertical kind of depends on your store, but 10%, across all verticals, all niches that are out there. And that's just for abandoned carts. And then you can add other kinds of emails later. So you could do like post purchase upsells. Or you could also do things like wind back, so maybe you've got a product, maybe you're selling T shirts, and you have a new release of a T shirt every quarter a new release of a batch of things seasonally, you can send a wind back email and say, Hey, come back and do this thing over here, we have this new sale, we also do promotional emails.

And then of course, you mentioned the texting part as well. But all of those things together can just basically boost the bottom line of your store at a bare minimum, if you have the marketing machine going about 10%, adding other stuff will boost it even further than that. And it's all it's kind of free money. Because if you don't have these things in place, and you're just asking people to come back and buy, they were already going to be customers, you're just nudging them off the fence, right, you're just using hot leads, right? They're very, very hot leads.

And so, you're just using like psychological persuasion techniques, to get them to come into your store and finish up the sale there or come back. Like if you have existing customers, they're usually five to six times more likely to buy than brand new customers. So those existing customers are really good, you want to keep them, you want to keep them happy. And that's why Winback email is so successful. So, the kinds of emails that Recapture is sending are the ones that are designed to basically boost your average order value and your customer lifetime value in the store as much as possible.

Because these are the two levers that really move the profitability of your store up to a new level. So, people are getting started in email marketing, or people that like do in house email marketing, we are really good at that. It's an easy to use tool. It's something that doesn't require a dedicated staff or an expensive agency. And we're not going to be so priced out that you can't afford us. That's the kind of the store that really benefits from Recapture.

Jaryd Krause (48:21)

I love it. Wait, I absolutely love it. I think that's great. Congratulations. So, what's the link? Where can we send people to check out Rcapture and more about what you're doing?

Dave Rodenbaugh (48:31)

Sure. I'm on Twitter at @daverodenbaugh and that'll probably be in the show notes here. I'll send you the social link for that. But you can also check out Recapture.io

Jaryd Krause (48:45)

Awesome, everybody. Thank you. Thank you for that. There'll be links in the show notes. Check them out, guys. But Dave, thank you so much for coming on. I I've really enjoyed this chat personally. So, thank you, it's great.

Dave Rodenbaugh (48:58)

you for having me, Jaryd, it was always it's always a great time to sort of go down memory lane and revisit all of those buying and selling there. And if there's, something that I can do to help new buyers that are out there, or buyers that are struggling to find that site.

I love doing that. Because that's part of my desire to give back is to make sure that those who are earlier in the journey can benefit and reach down and help pull up other people so that they can be successful too.

Jaryd Krause (49:26)

Wow. Awesome. Thank you. Well, we met you may have just roped yourself into another net another episode in the future. I'd love to come back. Please be great. Yeah. Cool. Thank you so much, Dave, everybody that is listening. Thank you for listening. If you're looking at buying a website, do yourself a favor and listen to this again and actually take notes. Not just physical notes, but mental notes because there's so many little intricate things that Dave and I mentioned about buying sites that is going to aid in your success.

And if anybody else that is thinking about hey, I want to make some money online. Dave out my discussion around the startup versus buying a site and the mindset around that and who who's better for each one of those is such a valuable message for people to hear that do want to make money online. So please do them a massive favor and share this podcast episode with them. Of course, it's great for us we help to grow the podcast and get more listeners and eight and helping more people but you'll be great to at least the people that money online understand that message. So, thanks again guys, and I'll speak to you soon!