Email Marketing: Acquiring a SaaS Business in the Email Marketing Space with Dave Rodenbaugh

Hey guys, we're here for episode 29 of the e-commerce opportunity where I'm joined by Dave. Hey Dave, how are you? Good. Chase. How about you? I'm doing well. Thanks, man. I'm, I'm, I'm really excited to have you here. I was actually looking at our DMS before this and it was funny. I think you had reached out to me thinking I was a different podcast host. And I was like, this guy's interesting. Let me check them out. And I listened to your episode and I actually thought it was really good. Yeah, that was slightly embarrassing. So I confused you with Chase Clymer, uh, who is also another guy that's into email marketing and e-commerce and stuff like that. So yeah, good. Chase is just blend together. No, I'm kidding, but I did confuse you, but I'm glad that I did because that gave me an opportunity to reach out here and, uh, finally get to be on your podcast and chat about our favorite subject, email marketing. Yeah, man. I'm looking forward to, I just, I just had to mention that. Sorry to put you on the spot. I thought it was so funny and I'm happy that we're both here and your content on his podcast was great. And that's also why you're here. So, uh, do you mind starting with kind of what shirt you're working on right now? Yeah, sure. So, uh, my name is Dave Rodenbaugh. I run recaptured.io, which is an email marketing and SMS, abandoned cart recovery, wind back, et cetera, et cetera. Service. That's across a bunch of different platforms, but primarily we're on Shopify, WooCommerce, Magento, big commerce. And I've been running that since 2016. I'm actually, um, I'm not the original founders of this. The original founders were a couple of guys that ran their own stores on Magento. And they built this tool because they didn't like what they had available over there. And after a while, they also realized that, Hey, running a tool and running the store can be a little bit of a distraction. And one was six figures and one was not. So they're like, we're selling the tool and I bought it and I took it over. And, uh, it's become my full-time thing ever since. And I'm, uh, I'm excited to run it. I'm excited to be in the e-commerce space. It's a really cool place to be, you know, the whole pandemic where the COVID was just ravaging everything. E-commerce was like a rocket ship and you were strapped on by this tiny little harness holding on for dear life. Just hoping that you could continue to ride it all the way. So it's exciting. It's exciting. That's awesome. So can we talk about like, what were you doing before you took this over? And then how did you come across the opportunity? And like, what was that transition of going from whatever you were doing before to owning a software business? So, yeah, that's, that's an interesting story. Um, I have been, you know, looking for a SAS kind of business for a long time. So I started in about 2011 ish and I ended up buying a couple of WordPress plugins and that taught me about how to run a software business and how to do sales and marketing and, you know, things like customer support and, you know, I, I come from a developer background. I have a technical, uh, I have lots of technical experience and I know a bunch of different development languages and I've written tons and tons of software over the years, but what I really wanted was to run a business and, you know, that's not uncommon. A lot of technical founders end up wanting to do that. So I, you know, I got those WordPress plugins, I built them up to a certain level and then I was like, all right, cool. This is really interesting, but they're not quite a SAS and, you know, SAS being the holy grail of businesses these days. I wanted to find something. So I was out looking around for a long time. I contacted a broker, uh, FE international and. It was on their emailing list for a very long time, like 18, 24 months. And I was just going through their listings one by one, one at a time. And then all of a sudden this one came up and I, several of them had come up. I put in bids, I didn't get them. I was very disappointed. You know, it just sort of steeled my resolve to, to find something that I was going to be able to really sink my teeth into. And when this one came up, I was like, all right, I am pulling out all the stops. I'm not going to mess around on this one at all. I even overbid on what they were offering there just to make sure I could get exclusivity and, and prevent somebody else from jumping in on this. And I'm so glad that I did. Um, you know, there's a whole set of challenges that came along with doing that, that, you know, you had to overcome and figure out how does a SAS run differently than these one-off sales that I was doing in plugins and what does the infrastructure look like? Cause that's also very different compared to the plugins where they install it on their site and you're kind of out of that loop. Whereas with me running that service, you're especially with email marketing, like your service has to be bulletproof. It's just, it's insane. So, but I, you know, this whole time, it's not like when I bought that business, it was enough for me to go full time. So I was also doing freelancing as a software developer. So I was doing this crazy juggling act where I was doing freelancing for, you know, anywhere from 20 to 40 hours a week. And then I was also doing plugins stuff for anywhere from two to 10 hours a week. And then I was also trying to run recapture, which would be another 10 hours a week. And if you add all that up, you can see that on some weeks that got really bad. And it, you know, it's obvious that at some point you're going to burn out on that. So I eventually sold the plugins that happened last year. Uh, they finally reached a point and I'm like, I'm done. I've got, I'm good. And, you know, with the whole growth, uh, that happened during the pandemic for a lot of e-commerce businesses, recapture certainly was one of them as well. It got me to a point where it's like, all right, I don't have to freelance anymore. And, you know, then it was like, Oh, not only do I not have to freelance, I can afford some people to help me on this job too. Oh, look, there's a little cushion. I can start doing marketing experiments too. Like all of these things just kind of came together and, and yeah, actually I just started going full-time on this, uh, probably about three weeks ago at this point, but, uh, prior to that, you know, the recapture has been around since 2015 and sending out, you know, 10 thousands of email and processed 1.5 billion in gross merchant volume and stuff like that. So it's been very successful. I've been very happy to, to have this and, you know, live a life. I've got three kids and I've been married for 17 years. So, you know, this very much fits in with what I want in my life. You know, I don't want to work that 40 hour job. I don't want to be tied to a desk or a location or have a 10 o'clock meeting every morning, all this kind of stuff. So this is very much in line with what I wanted to be. And so, you know, 10 years later, here we are, I'm running recaptured. Happy as a clam. That's awesome, man. Not asking what you pay, but do you remember the multiple on the SAS, the time that you bought it and like, what does that multiple today, if you were to sell the business, like in terms of like, what did you buy to the reacts? Was it more? Was it less? And what would it go for today in terms of the multiple? I think it was around three. I'm trying to remember. It was a little, I ended up, I think they priced it at three and I maybe paid 3.25 or something like that. So, you know, it was a little bit higher than what they had priced it at. And today I would say, you know, the SAS multiples are just crazy. Like if you're looking on certain marketplaces, I see people just posting things on these wackadoodle multiples. They'll say, yeah, we made $2,100 in trailing 12 month profit, 3.1 million. And I'm like, Nope, that's not, that's not going to happen. I would say realistically, I could probably get six X because it's, you know, it fits into that, the Venn diagram. If it's a SAS, it has recurring revenue. It's got a good history. It's got growth. It's got all of those little things. And so sitting in the middle there, you could definitely sell it for that. But I certainly wouldn't do that right now. It's it's everything right now for me. Cool. No, it makes sense. And was this your first entry point into email marketing or did you have experience prior to email and that's why you're interested in a tool like this? So my friend, uh, that I got involved in the whole, uh, single founder community is Rob Wallin. And you might know that Rob Wallin was the founder of Drip. So we were talking about email marketing years and years ago when he was like very interested in email marketing in general, before he founded Drip. We would go to these conferences, MicroConf, you might've heard of it. Uh, and at MicroConf email marketing was like all the rage in 2011, 2012, 2013. Everybody was talking about it for their SAS business. And that got Rob super interested in founding that business. So, you know, I was hearing about email marketing, email marketing all the time for just everything. And certainly email marketing in 2012 was nothing new. Like if you went back to internet marketing five years prior to that, they were all hammering on that with Infusionsoft and Aweber and things like that years before this. Anyway, he had founded Drip. So I started using his tool for my plugins. And so I got to cut my chops in 2012 on email marketing and figure out what are, you know, what's an auto responder campaign and you know, how do you actually craft something so that people build up and that you do the right call to action and you've got the subject lines, like it's, it's all an art form and each one requires so much care, you know, I, my very first campaigns, I'm embarrassed to say I slapped them all together and they were just, it was disastrous on the, my open rates and conversion rates. And it took me so long to sort of figure out what was it I needed to say, how did I need to say it? How did I need to take a customer through the journey? I had to understand like so many things to sort of make that all work. So when the email marketing tool came along here, that was specific to e-commerce, I was like, that's what I want to be in because I finally have some understanding of how cool that can really be and what a huge difference that can make to somebody's business. Yeah, absolutely. For me personally, I think I've been an email now for since about 2015. And it sounded like you've been doing this since, you know, around 2010, 2011. Uh, what would you say like the biggest similarity is and what's the biggest difference between, you know, email back then and, or the way that you were using email then and what's like the biggest difference to the way that you use it now, like, what are the similarities and differences over the let's call it 10, 11 years. Wow. Uh, yeah, so there's a lot of stuff, but the first thing that just sort of pops to mind is that it used to be, you know, we were a lot of the time you were just doing spray and pray marketing and honestly it worked like you could, you could spray and pray and you got something out of it and it wasn't terrible, like you, you could get some results out of that and they didn't totally suck, but these days, like that doesn't work anymore. People are way more sophisticated about it. You know, people don't want to just be constantly contacted and bombarded by stuff they're not interested in and they're much more willing to unsubscribe from junk. That's just unappealing, uninteresting, unhelpful. So your, the, the, the level of content that you have to provide these days is so much higher than it was nine years ago. It's crazy. The, so that's, that's one huge difference right there is your level of content has really improved quite a bit. And you can't just rely on the crappy old. Put some stuff together and call it good. Like you've got to very carefully craft that email, not just the subject line, but the preview text, your body texts, like from paragraph to paragraph. Um, the stuff that, you know, I watched people like, uh, Joanna Weeb from copy hackers talk about where each paragraph, their job was to make the next paragraph something you wanted to read and you just, each piece of the email made you flow through it and if you don't do those things today, your email gets ignored. It gets skipped. It'll get marked as spam. And so I would say if anything, it's a lot harder to be an email marketer today because the, the bar has been set a lot higher. People expect more. And as a result, like it's great for folks like you or folks like me, because you can bring in some expertise and say, all right, look, I'm sorry, but your emails kind of suck and here's why. And here's how I can really help you make them better. And those are things that are very valuable, but it also means that if you're starting out in email marketing, there's a lot more to digest. So yeah, it's gotten harder, but in a way it's also gotten easier because now we have so many better tools. You've got address validators. You can make sure that your list is a lot cleaner. We didn't have that back then. You just sort of threw it out there. If there were a lot of unsubscribes, eventually you just tossed them out of the list, or if there were a lot of bounces and things like that, you took them out of the list manually. We don't have to do that stuff as much anymore. So that part has improved quite a bit. That's a fantastic answer. Now that wasn't an easy question. So, so thank you for that in terms of like a recapture, right? Why would someone use like a recapture over using something, let's say within a Klaviyo that comes native, what benefits do you bring to the table? That's a great question. And, you know, it actually took us quite a long time to sort of figure that out. When I jumped into e-commerce, I was like, all right, we're going to be the email of e-commerce. And then it was like, whoa, wait a minute. Klaviyo kind of already took that mantle. You can't really do that. So yeah, I mean, there's definitely a fit. I think, you know, if you're just talking Shopify for just a second, which I think is the vast majority of your audience, you basically start with Shopify basic emails, and then you've got Klaviyo that gets talked about a lot. And that gap is not like this. It's not really close together. It's fairly far apart. Like there's, there's definitely room in between those two for somebody to put their solution in there that I think works pretty well. And so when somebody is getting started, I think Shopify's email is perfect. Like if your store is brand new, you don't have a lot of revenue, like don't pay for an email marketing solution. That's totally inappropriate. Don't buy recapture. Don't buy Klaviyo. You're not going to get your money's worth out of that until you're making, you know, a decent amount of money a month, which might be like over $2,000 a month or something like that. And then the ROI starts to make more sense. So what we look for in recapture for somebody, and this is kind of our target market is somebody who hasn't reached the complexity level of Klaviyo, where you need all these complicated flows and you've got interesting products and you want to segment this thing by SKU and have this welcome series that's targeted to these users and things like that. Like that is definitely a level of complexity that not every merchant needs. And in a lot of cases, like it takes somebody like yourself to set all that stuff up, the average merchant just doesn't walk into Klaviyo and is like, all right, I can totally do everything in here. You got to watch tutorial videos. You got to read the documentation. You got to talk to an expert or get somebody to set it up for you. I mean, it does take some time and effort. And Klaviyo is a fantastic tool. I will never, ever disc Klaviyo because they are absolutely fantastic. They've really set the standard in the industry and I'm glad that they have. For us, we're kind of sitting in between those two right there. Like you're a store owner who knows, gosh, I gotta do email marketing and I know it's on my top five things to do, but it never reaches number one because you've got something else that's burning every single day. It's inventory management. It's order fulfillment. It's customer support. It's, it's something else. It's always something else, but you have to do email marketing. And so if you can just get it set up, let somebody else have the best practices in place and be there to support you, that's where recapture comes in. Like, that's where we really shine, where you don't have a dedicated marketing consultant or a dedicated marketing department and you're a store owner, maybe you've got one or two other people in there and you need the stuff set up and you know, we're great for that. We, we really Excel in that space. We're also, you know, super easy to use. So you don't have to like take a lot of time to set it up. Cause you're again, you've got those five other things to work on. Email marketing is not that one. Awesome. So the way that I'm kind of interpreting this, right. It's almost like Shopify is like elementary school, right. In terms of the emails. And then you kind of graduate to something like recapture and maybe that's like middle school or high school. And then you graduate from that and you go to Klaviyo for college. Is that like, are you guys kind of like a step like on the stone where people eventually use Klaviyo? Or how do you think about retaining customers? We're like, you're easy to get onboarded onto and they stay with you. How does that all kind of work? And how do you think about that? Oh, that's, I think about that a lot. So we have definitely seen where customers will be using our tool for some period of time. And then there'll be like, yeah. And then I, they leave and I asked them and they'll say, oh, we're, we're upgrading to Klaviyo. And then I'll say, well, what is it about Klaviyo that you're, you need? And they'll say, well, we're missing feature X. Oh, you know, and then I'll talk to somebody else and they'll say, well, it's feature Y. So there are some patterns in there that I found. So there are definitely things that we're adding to recapture. In fact, this month, that's why we've added SMS is launching the end of the month, and we're also adding broadcast emails so we can basically have a broader time for somebody to stay on the platform because when you're missing those key things, it makes sense that they would want to move up. But if we've got that stuff that you can stay there and add it on, like the other thing I hear is, well, you know, they'll have us installed to have Klaviyo installed and they'll have some other things installed at the same time. And they're using like little bits and pieces of each of us. And eventually they're like, I just want it all under one roof. Like I want to see all the stats on one place and nobody's got the integration to go talk to everybody else and pull that together. So, you know, they'll end up just switching to one. And they might say, well, this has got really good pop-ups, but not so great abandoned carts, or this one's got great abandoned carts, but not so great SMS. And, you know, they wanted to kind of all under one roof. And that's, that's the other thing that we really looked at is if we can put enough features so that we are useful enough for you to stay for a long period of time, and then when you need that, you know, college level, PhD level workflow stuff that Klaviyo offers, great. You know, that's not something I'm going to do. I don't have 657 million sitting in the bank for recapture like Klaviyo does at this point. So they can clearly afford to do more things than we can. So we just have to sort of pick and choose what that looks like. So we've expanded to those features that I think are sort of generally useful to everybody. And then, you know, when you get to those advanced levels, it's like, okay, it's time to go to college. High school isn't serving you anymore. And I get that. And it's totally okay. Yeah. And I think, I think going back to that analogy, right. It's almost like, so let's say that Shopify is elementary school. You, you want to recapture consume middle school and high school then. Right. So maybe if you're playing in middle school right now, you want to be able to graduate the tool, being able to keep people and retain people in extra six months, an extra 12 months, 18 months, 24 months. Right. And then eventually if they graduate, that's great. It's a, it's a win for everyone. You got more LTV, right. You got more recurring revenue. So that's really interesting. I guess like one or two last things kind of like, and this on a really kind of tactical or actional standpoint with all the data and everything that you're seeing on like the abandoned cart side, for example, either a on email or a B on SMS, you can talk about either or both. Um, what are some of like the best practices or tips that you're seeing for people that really have a strong, you know, engagement and conversion from those sequences? Sure. Uh, yeah, there's, there's a lot. So let me see if I can pick some of the bigger ones here. Well, the one that still surprises me when I got into e-commerce is that there is this reluctance, huge reluctance to send email. Like people still feel like they're bothering their customers. And I still don't understand that. Like you are selling to these people. They want to buy what you are selling and they, you have proof of it with sales and you are still scared to send them emails. It blows my mind. So, you know, first and foremost, I would say you're just not sending enough email. You really aren't. So when people sign up, I noticed that when they're coming from Shopify. They'll activate one campaign and then they'll be like, that's enough. And I'm like, so our data actually shows that if you do three campaigns, instead of just one campaign, you on average recover a hundred percent more on your abandoned carts than you do from that one campaign and that's average. I've seen people do significantly more. 157% is like one of our, uh, one of our case studies with, uh, a woman who sells yoga pants and other fitness wear on Shopify now, so, I mean, it can be substantially higher than that, but that's like the one thing I think the merchants seem to have the hardest time getting over is that reluctance of sending stuff. So that's the email tip. I'll throw out an SMS tip out there. SMS is it's new to everybody. It's new to us too. But at the same time, you know, we've done some study on it and we've looked at, uh, merchant behavior and we've looked at how people tend to use this. And as a channel, it's so much more personal than email. Like you can't treat it like email. If you treat it like email, it will blow up in your face. And the other thing is that, you know, it's, it's definitely harder and different to start collecting those numbers from people. So you have, you know, people are thinking about it like email, but you can't really look at that. You have to think of it like you're having a conversation with your best friend or you're having a conversation with a relative or somebody, somebody like that. So you have to keep it personal. You have to keep it relevant. You have to keep it something that's interesting and you can't like, you know, you can't be thrown out promotion after promotion, after promotion, just like that's the bed, bath and beyond approach. And I have watched them just blitzkrieg me with all these coupon offers and the bed, bath and beyond in my area here has shut down. So I'm like, this is all useless to me. And that's all they ever send me. That's all they ever tell me about it. Here's another 20% off coupon. Don't forget your 20% off coupon. Oh, by the way, here's a new 20% off. Give me something else. You know, you see other merchants out there, they're doing this much more successfully. Olipop is a great example. And you know, they're, they're having conversations with their customers about like, Hey, here's a new launch of a new flavor we have out here, you know, or come vote on what you think should be the next flavor and they'll send out a survey. So they're engaging their customers with stuff that's interesting and relevant and personal. So you gotta be super careful with that and SMS. Um, you know, that's, it's an emerging thing and we're all going to learn more from it as time goes on, but yeah, I mean, the two channels are very complimentary and it's great because like with abandoned carts, you can send out an email and you can send out an SMS or vice versa and, you know, find different ways to sort of recover from somebody. But yeah, it's a, it's a brave new world and you have to tread carefully there. Dave, man, that was fantastic. Thank you so much for your wisdom and insight and your time. Uh, what is the website URL? Is it recaptured.io? Is that correct? That's right. Recaptured.io is where you can find and sign up there. Again, we shop, we support Shopify, Woo, Magento, uh, big commerce, and a bunch of others. And, uh, we also hang out on Twitter at recaptured.io or at recaptured.io and, uh, at Dave Rodenbaugh. Awesome. I'll drop those below Dave. Thank you so much for your time. Thanks for having me, Chase. Of course. Cheers. Bye.