Bo Blackburn, Chief Legal Officer of Sellers Shield shares how his team was able to take a repetitive process and turn it into a product that offered even better service and a scalable opportunity for his law firm. This one of the most effective strategies used to grow a service business with the accessibility of technology these days. Sellers Shield provides tools that prevent critical mistakes disclosing the condition of your home and helps protect sellers against buyer claims after the sale of your home.
Summary (If you have revenue of 100k+, skip to #10 ):
- Pay attention to your industry and look for painful processes that occur over and over again
- Whiteboard a solution and outline an MVP that solves the pain point
- Do focus groups with friends and strangers to get feedback on features and pricing
- Try to solve the pain in the process, but also try to prevent it entirely
- Be extremely picky about who you partner with for initial prototyping or software building
- If you’re not tech savvy, ask your network for someone who is who can help you vet your potential development partners
- Be extremely clear on your MVP and fight scope creep
- Sell to your network and ask for intro’s to prospects from your network
- Do the math on whether digital marketing can fit with your financial strategy
- When you know you have traction that you feel demonstrates true product market fit, consider raising money to grow market share – weigh pros and cons of institutional or angel investors
- Have clear financial and growth targets and track them monthly – if you miss, investigate why
- Consider all growth strategies – new markets, new channel partners, and even being embedded as a part of another business’s solution
Interview:
Chris: What is Sellers Shield?
Bo: Sellers Shield helps sellers of residential real estate fill out disclosure related documents when they go to sell their home, similar to how TurboTax helps people fill out their taxes. We also offer them legal protection in the event that there’s a claim made against them. We will hire a qualified real estate litigator to represent the seller in the even of a claim against them and we’ll pay the real estate litigator for up to 80 hours of time to represent the seller.
Chris: Chief Legal Officer – What’s that mean?
Bo: I don’t really like the term but it’s the best we’ve come up with. I’m one of the founders of the company and yes, I’m a lawyer. I went to UT and got a degree in Biology. Turns out that using the scientific method is extremely helpful when it comes to growing a business. I then went to Texas Tech School of Law and started my legal career after that. I started at the District Attorney’s office in Midland, Texas, but eventually joined the firm Almanza, Balckburn, Dickie, & Mitchell LLP. It was at this firm where I got into real estate litigation. We actually ended up working with one of the very first Keller Williams agents back in the early 2000’s when they were much smaller. In that way, we just got really lucky. At this point, I represent a significant number of the Keller Williams offices in Texas.
Chris: How did this incredible amount of experience in real estate transactions turn into Sellers Shield?
Bo: Three of the partners at the firm all do a ton of real estate litigation and we brought in another partner who was extremely knowledgeable in real estate risk and litigation, including the brokerage side and the Errors and Omissions risk of underwriting transactions. One day I was sitting in a deposition in Dallas, Texas about 5 years ago. I was so tired of seeing the same problem over and over again. And I finally said to myself, “This is ridiculous. Somebody should do something about this because we shouldn’t be having these lawsuits.” And I remember thinking, if I could just help the seller fill out these disclosure documents, we could avoid most of this headache. Immediately, I started thinking, I could just create a simple video and a single hand out that gave them some guidance that would stop most of this.
Chris: So what did it look like to go from that thought to having an actual product idea?
Bo: We all sat in the law firm conference room and we were trying to figure out how to take this from an idea to an actual product. So we sat there with a whiteboard and just tried to list out everything and boil it down to what a product would look like. Initially, we came up with the idea of just giving customers some information in a blog sort of written format and an accompanying video that walked them through the application. Then we decided we could sell what is now called our Home Sale Legal Protection. So they would digest the content and then we would sell them this service of having a qualified lawyer to protect them.
We weren’t technologists so we weren’t even thinking about any sort of interactive disclosure forms or a software solution of any kind. That took another year and a half before we realized that we could use technology to make this process even better for customers.
Chris: As small business consultants in Austin, we get a lot of inquiries about new ideas. We almost always encourage proving product market fit for as little investment as possible. How did you validate product market fit?
Bo: We did a fair amount of market research. Obviously, being in the industry for so long helped give us that initial instinct but because we had done a lot of mock trial type work, we actually had one of our partners bring in a group of consumers and do focus groups. We had probably 30 people come in at different times and we got feedback on pricing viability of the product. Then we went to the brokers who represented tons of people and agents and asked them about it. It turned out that they understood our product right away and that they actually pointed out that this would help them as much as the individual sellers. This led us to realize that there might be a different traction channel here than just going direct to consumer.
Chris: What was the thought that really helped you take the product to the next level?
Bo: At first, we were focused on protecting the sellers from liability on the back end of the transaction. But ultimately, we started focusing on preventing the lawsuit all together.
Being able to solve for a pain point is one thing, but being able to prevent it all together is a completely different thing.
Chris: Obviously, none of you knew how to code. How did you go from a rudimentary solution to having a fully digital software solution?
Bo: Well, we knew that we wanted to be like TurboTax but we had no idea how to implement it. So we ask for help. We reached out to our network and found people who were experts in software and web development and ask them to help us think through this. Ultimately, one of my oldest friends and my roommate at UT is a software engineer. He was the first person I reached out to (he’s also an investors btw). And he introduced us to more and more people and we kept interviewing people and ultimately found a development team here in Austin to help us get our software product set up.
Chris: How did you budget for the software development and R&D?
Bo: Poorly. As you’d expect, it ended up costing a lot more than we thought and taking long than we expected.
Chris: What advice do you have for other people offering services right now that could be productized and digitized that are non-technical?
Bo: The first piece of advice I’d give is to do your due diligence on the people that you’re going to hire. This is the most important thing you can do when getting into business with people. Having a great team has made all the difference for us. Since I’m not a tech guy, I relied heavily on my friend, the software engineer, to help me vet people. I had him sit down with the teams as we interviewed them. He helped me understand what I don’t know and was able to help us weigh the pros and cons of each option.
The second piece of advice I’d give is to fight against scope creep as hard as you can. Scope creep is just like remodeling a house. You’re already in for so much time and money, what’s a few thousand more and an extra week to have that great tile in the bathroom or that extra feature on your web app? That being said, new ideas and features are going to come to light during the build so the best way to fight scope creep and to try and be logical about what may be a great idea is to have extreme discipline around your MVP. Know what you are trying to accomplish for your first customers and which features are “need to have” and which are “nice to have”. You’ll always be able to add more features that can be financed by revenue as opposed to your own or your investors money.
Chris: You’ve got the team, the MVP, the target customers. How do you decide on pricing?
Bo: We did more market research. We sat down with brokers, with realtors, we explained the product and got a ton of feedback. I’m really glad we did because we actually learned that we could charge more than we were planning on entering the market at! We looked at comparisons of products that did similar-ish things like warranties. We didn’t really have competitors but we knew this problem was being solved in other less digital ways and were able to cost out what those less elegant solutions were. That helped us get to our price.
Chris: How did you get your first, second, 100th customers?
Bo: It was a bit easier fro us because I was able to go to clients I’d been with for 20+ years and say, “Hey, look at this thing. I thin it has value for you and for your team.” What helps us as well is, as I mentioned earlier, it helps not only sellers but the brokers as well. Whenever a seller gets sued, the listing agent and the listing broker gets sued as well. So the product solved pain for everyone in the transaction, not just one party. The business case was so solid, it gave me confidence to go directly to one of the largest E&O insurance companies in the country. They loved it and started offering it to all their brokers.
Chris: Why didn’t you consider going directly to sellers as well?
Bo: We chose the channel partner model because going to all the potential sellers was just outside of our ability at the time. We just couldn’t do it. Based on our pricing, it would have cost so much to find sellers at the right time and acquire them as customers, it wouldn’t have left enough profit for the business.
Chris: Now that you’ve achieved product market fit, and you’re in the $1-3M revenue range, how do you think about growth? What levers can you pull on and what is your strategy?
Bo: Right now we are in 10 states, soon to be 11. We are looking at growth through a few different metrics. We are looking at new territories that we penetrate and we’re look at the number of new partnerships that we are forming. We want to work with more large transaction management software companies in real estate and get our product integrated into theirs. So we’re looking at new markets, new channel partners, and ultimately, getting embedded into other people’s software solutions.
Chris: What does your sales team look like for this sort of growth strategy?
Bo: We have a sales team and a customer success team. The sales team is out getting new brokers aware of our product and getting them to use it with their agents. Then our customer success team is making sure that those brokers who agreed to use our product are being supported with implementing it with their agents and helping those agents understand the value proposition with their clients.
Chris: What tech stack are you using to manage your sales pipeline?
Bo: We use a combination of Hubspot and Zoho.
Chris: How do you set a budget for how much you’re willing to spend to get into a new market?
Bo: We focus on where the fish are. I mentioned before that we are in 10, going on 11 states. But those 11 states are part of the 15 states that make up about 40% of real estate transactions in the country. So we look and say, “Where are the transactions because that’s where we want to be.” We then can look at the number of brokers in those markets and what that means for us revenue wise. Then we can track newly onboarded brokers and the number of available listing and monitor those numbers because it helps us track how our sales and customer success teams are doing.
Chris: Being a small business consultant in Austin means constantly weighing the bootstrap versus raise money game. You bootstrapped for a while then raised money. How did you know it was time to take outside money and why did you go with angels instead of institutional money?
Bo: We bootstrapped for three years. Once we felt that we had enough traction in our home state, we wanted to put the pedal down and really move into other states and we knew we wanted to do it in an expeditious manner. We knew we needed outside funds.
We did speak with some institutional investors but we had raised money before and had a lot of deep connections and felt like we could get it done faster and with more friendly people on our cap table by using our network.
Chris: What is the next big milestone that you guys are laser focused on?
Bo: The big thing we are targeting next is the number of transactions through the system. I am obsessed with that number and look at it every day. I’m looking at how many agents are inviting sellers to use our disclosure solution. And then I’m looking at how many of those sellers or agents are buying the Home Seller Legal Protection. We have had record months in 2020. We just want to keep breaking records each month.
Chris: What are the biggest challenges you’ll face in this growth plan?
Bo: We need to keep hiring the right people. We need to get our message out clearly and in the most efficient way that we can. We think our product is a great fit and we’ve proven that. There is no extravagant game plan. It’s just execution of block and tackling. But the hardest part will be getting the right message out to the right people efficiently.
Chris: How do you manage financials and use them as part of your strategy?
Bo: I handle the books right now. We have a monthly cadence and we obsess over some very specific goals. We put our financial goals into QBO and then we run an actual versus goal each month and track our progress. We try to learn from why we hit or why we missed a number.
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