Chief Growth Officer Running a Recession-proof Business
As a bootstrapped company, fuelling your own growth can be challenging and comes with many lessons learned. But, this also forces you to figure out how to run a recession-proof business. This is exactly what Matt Buchanan and his co-founder have done while leading a technology company that offers local lead generation solutions, based in Austin, TX. Matt sees a huge opportunity to bring technology to SMBs that help them understand how to optimize their processes around demand generation to achieve better results from any of their marketing channels.
We had a chance to interview Matt and asked about his story, how he started his business and the future of Service Direct.
Tell us your story. Why did you start your business?
We started the business in 2006 because we recognized there was a massive gap between consumer behavior (the majority had moved online to find what they wanted) and adoption of online marketing by service businesses (most still didn’t have a presence online). When we started, we had no idea what product or service we would offer to capitalize on that opportunity. We fumbled around with a couple of ideas that didn’t gain much traction, then decided to just start calling potential clients and asking them what they wanted and we kept hearing the same thing over and over again:
“If you could just make my phone ring with someone that needs my services and wants to talk to me, I would pay you for that phone call.”
So that’s what we built, what became the Internet’s second Pay Per Call platform.
How did you come up with your business name?
We were originally named Contractor Marketing Pros, as we had decided to focus on the home improvement space because we felt like that market had the lowest adoption rate and represented the biggest opportunity for us. As we grew, we recognized that our platform could help any type of local service business that needed their phone to ring with new customers, so we changed our name to Service Direct.
Tell us about your products and services. How do you help clients?
We work with thousands of clients across North America by offering them local lead generation and lead management solutions that are transparent, cost-effective and low-risk. Our clients are small to medium sized service businesses that are trying to grow and as part of that, need a consistent source of new customers. To accomplish that, most take one (or both) of the following routes:
They try online marketing on their own.
Unfortunately, the reality of marketing these days is that it’s incredibly competitive and the landscape is very fragmented, making the DIY approach frustrating and almost always a money-loser. Our clients are dentists, plumbers, mechanics, etc. They aren’t expert online marketers, and trying to be both is a recipe for failure.
They hire an online marketing company.
While there’s thousands of companies out there that promise growth through online marketing, most ask their clients for thousands of dollars and then go spend 80-90% of that money to try and help them get new customers. Sadly, very few are able to produce the one thing the client needs from that marketing: phone calls from purchase-ready customers.
So our clients have typically been burned by an online marketing agency that promised the moon and couldn’t deliver. We help our clients by taking out the risk and complexity of marketing their business online and offer them the one thing they need: phone calls from potential customers.
What makes you unique? What is your unique selling proposition (USP)?
We believe what makes us unique is our world-class technology. We’ve spent considerable resources building a best-in-class lead generation platform that gives our clients the control and flexibility to grow their business on their terms, and also provides them a level of transparency that allows them to make informed decisions on how best to utilize our platform to achieve their growth goals.
Where do you see your business in the next 3-5 years?
We’ve been in the demand generation space for a long time, and have developed a lot of technology that makes gaining new customers simple and cost-effective. But we’ve also learned that lead generation is only one piece of the puzzle and that clients experience wildly different results from our leads. It’s sort of a ‘you can lead a horse to water but you can’t make it drink’ situation. You can make someone’s phone ring all day, but if they can’t capture that call and convince the caller they are the right company for their needs, they won’t experience success.
So in the next 3-5 years, we see a huge opportunity to bring technology to SMBs that help them understand how to optimize their processes around demand generation to achieve better results from any of their marketing channels.
Any advice you would give to entrepreneurs and business owners?
We bootstrapped our company with $12,000 in initial capital and our agreement was if we couldn’t convince someone to pay us for our services before that money ran out, we would shutter the business. We figured that gave us about 3 months. We spent the first 6 weeks or so trying to sell stuff we thought they would like, but it wasn’t working. So out of sheer desperation we abandoned our ideas and simply started asking questions and listening. Through that process, it became immediately clear what we should build. Within 2 weeks we had a primitive prototype built and in month 3 people were paying us to make their phone ring.
So I give this advice recognizing fully that our experience entirely shaped it:
Ask questions and listen to your potential customers. Put aside your ideas or preconceived notions of what you think they want. Be completely agnostic and truly understand their journey and their challenges. In doing so, you’ll get a clearer picture of what needs aren’t being met and whether or not you can meet those needs in a way the market currently is not.
And lastly, if you’re building a technology or product get it in front of customers as fast as possible. You’ve heard the term ‘good is the enemy of great’? I think ‘great is the enemy of good’…oftentimes we think we need something great, and we spend too much time building bells and whistles we like, but that customers don’t care about. Get something that is good enough in front of them immediately, then learn how they actually use it and what they actually want. You’ll be shocked at how little utility they find in things you’re enamored with.
What is your favorite business quote and why?
I’m a big fan of the folks at 37 Signals/Basecamp, who said:
“Constraints drive innovation and force focus. Instead of trying to remove them, use them to your advantage.”
As a bootstrapped company, our entire journey from $12,000 in capital to $10MM/year in revenue has been shaped by our constraints. We couldn’t ever afford to not remain entirely focused on driving value for our clients. We’ve experienced a major recession and a pandemic that brought the world’s economy to a standstill. In both cases, many of our well-capitalized competitors had their wings clipped and panicked. But fighting to survive and thrive was simply a part of our DNA, so it was business as usual for us. We stayed focused on the things we could control, and came out of both events a bigger and stronger company. Our constraints have consistently been our greatest advantage.
What have been some of your achievements that you are most proud of? Why?
This year marked our fifth consecutive year on the INC5000 fastest growing private companies in the US, which was really fun to celebrate as a team. But when I look at the team we have built and how focused they are on our clients and how they react to challenges, there is an immense level of pride knowing we played a small part in creating that culture.
Anything else additional you want to tell our readers?
I’ll tell readers the same thing I tell our team: don’t be afraid to fail. In fact, seek failure. If you’re doing it right, it’s by far the most efficient way to get better and grow. And if you aren’t failing, you aren’t pushing yourself and your company far enough. So how do you fail the right way? It comes down to having the humility to set aside your ego and truly understand why you failed. If you can do that, you’ll learn so much more so much more quickly. Looking back, the biggest failures we’ve experienced ended up being the best things to happen to us. They can be for your readers as well if they fail the right way.