Double Shot Interview: Sam Ovens

About This Interview

Date: November 2013

Interviewer: Andrew Patterson from Interest.co.nz

Original Source: YouTube Video

Transcript

Interviewer: (00:00):

So Sam, tell us about your journey as an entrepreneur because you are pretty young and you have achieved a lot in a very short space of time. So where did it all begin?

Sam Ovens: (00:11):

Well, I guess it began when I was about 20 years old which was about four years ago now and I was doing a B comm at Auckland university. Finishing it up and working at Vodafone. I’d worked hard through school, through uni, and now this was kind of what I’d been working towards. The job was just pretty boring to be honest, it wasn’t that amazing. I couldn’t imagine the next 30 or more years of my life doing that. Then one weekend I went away to a friend of a friend’s place who owned a private Island. I remember just sitting there on the Island and I was looking around at everything on it. I was like, there’s just absolutely no way that I could ever buy this or live like this doing what I’m currently doing.

Sam Ovens: (01:02):

And this guy has so much more free time than me and has all of this stuff and seems to be having way more fun than everyone else. I was like I want this. I asked what does this guy do? Everyone said he’s an entrepreneur. I didn’t even know what that meant. I remember getting back because there was no internet access on the Island. I remember getting back to Auckland and Googling “what is an entrepreneur?”. I guess that’s where it all started about four years ago. I just knew that I wasn’t really happy doing what I was doing and I wanted that, so that’s where it all began.

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Interviewer:  (01:39):

So it was a real sense of almost predestiny, you thought this is really what I want to do and doing the commerce degree was just going to take you down a career path that didn’t really engage you.

Sam Ovens: (01:52):

Yeah, well throughout school everyone said get a job in an office. That’s success. You wear a suit, you get a salary, you work in an office like that is success. I was like, okay because I came from a family where my dad was a builder and he had always said that is what success is. He pictured that as the next step up from what he was doing and that’s also what the teachers told me. Then you get to university and everyone’s making it sound like it’s hard to get a job and that you’re lucky if you get a job.I thought “Oh, I’m so lucky to get this job and I’m at the top of the world”. Then I got in there and I was like this is so dull. I was still living with it and it was all right but then going to that Island and seeing for one doing work that’s way more exciting and way more rewarding and two having way more spare time and three being able to enjoy all of the toys and things like that. I was like, I want to do this.

Interviewer:  (02:54):

How did you decide then to take that next step? It’s one thing to think about where you want to go but obviously you’ve got to then work on the idea. How did you go about that next stage of the process?

Sam Ovens: (03:07):

Sure. So, I mean, instantly I might’ve spent a month thinking what is an entrepreneur and reading all sorts of stuff on it. Then I figured I needed an idea which I think is what everyone first thinks about. SO then I was just thinking and I just thought “Oh, well I’ll start a job board website because I had previously hunted for jobs”. I figured it could be done better than Seek and stuff like that and so I just had an idea to do it. I then decided to do it. I sold my car, spent all of my money building it in a whole year and working on it. The whole thing failed. I lost all my money but I was still sort of fence sitting. I was still working at Vodafone and still doing the last pieces of my degree while doing this so I was always kind of hedging. Trying to bootstrap? Yeah. And hedging my bets because I was so unsure and so it was okay if it failed. I still had income coming in and I was still doing my degree and I could still hold on to that other world. It wasn’t until I burned my bridges and cut that off that I really started to make good progress as an entrepreneur. So I dropped out of university without getting my degree, quit my job and just decided I’m going to do this full time.

Interviewer:  (04:44):

Scary moment for you. I mean did you think about…. because obviously you’ve got all of those risk elements with doing something like that. How did you mentally deal with throwing it all away and literally chasing your dream?

Sam Ovens: (04:58):

Well I was flatting and so I moved back home. So I sort of gave that up. I moved back home and I just remember slashing every expense. I had my gym membership, which was only like $60 a month but I just cut everything. Even my phone bill, I went back to prepay. I seriously would even double think about going to get a coffee. I just tightened right up and just worked so hard. I’d get up at five and work through to eight or nine just because I knew that I’d burned my bridges and I had to make this work. It was worrying and everyone thought, even my parents my girlfriend at the time (Sam Ovens Wife Ashleigh), my friends, they think you’re doing the wrong thing because you did have what society calls success. I could wear a suit sitting in the air-conditioned building, get a salary package and have a degree. But that was never enough.

Interviewer:  (06:03):

It wasn’t for you. No. Then you decided to come up with this idea about focusing on the property sector. How did that come about?

Sam Ovens: (06:14):

So I learned from my two failed businesses before I started the current one that I have called snap inspect, which is my main focus right now. Both of those businesses failed basically because I just created something out of just nothing. I came up with an idea and thought it would be cool so I did it. I think that’s honestly why so many businesses fail. I had this massive realization that you need to solve a problem. You need to find a painful problem that exists within a specific market and then create a solution to it. You cannot create desire in a market. It’s impossible to create desire. You can only harness desire that already exists in a market. So I picked property management companies and I started phone calling them and just saying “Hey, look, I’m not trying to sell you anything. I just want to learn on a day-to-day basis what is the most painful part of being a property manager?”

Interviewer:  (07:22):

Before we get into that, What did you discover from the failure points that you were trying to take into the new business that you thought were the key learnings that you had to hit to address in the third time around?

Sam Ovens: (07:35):

Number one was solve a problem. Number two was go after a specific market. Don’t create something for everybody pick a niche. So I’d create something and people would ask me who is it for? And I said, “Oh, it’s for everyone, everyone can use it.” And that’s a big problem because when you come to market it and sell it you don’t even know who you’re supposed to be talking to. You could just be walking down the road and stopping people and saying hey look. You want to have a small group, and that was lesson two. Lesson three was that making money is extremely important. If you have a business and someone asks you how is it going to make money? And you say I don’t know, I’ll worry about that one later.. That’s extremely dangerous because you burn money fast and you need money to survive. Without it, the whole thing will collapse. It’s extremely important for it to make money from day one. When you’re testing the idea.. So this is probably the biggest one actually.. Is to thoroughly test things before you put the commitment into building them. And not just by asking. So first of all, you have to work out is this a problem? And does everyone in the specific group believe that this is a problem? That is step one, the next thing is do they see value in having this problem solved? So if you said to them “if I could solve this problem for you, is that something that you want?” Yes. So they want it, but that’s only two levels, two layers. That’s still two layers more than what most New Zealand entrepreneurs I see do when they validate an idea. But the third level of validation is would they be willing to pay for it? So this is a problem, you see value in the solution, Would you be willing to pay for it? If that’s a yes, you’re three. But you really ultimately want to be one level further, which is four layers deep, four levels of a market validation and that’s actually getting people to pay for.

Interviewer:  (09:50):

Right, which is getting them to sign up in advance.

Sam Ovens: (09:53):

Yeah. Pay money. I’m sure most people have played poker with their friends with no money and everyone’s just all in and just completely irrational. Same thing in business. Even if you ask someone “would you buy this?” And they say yes, that doesn’t mean that they’re going to buy it. They actually have more of a chance of not buying it than actually buying it because there’s no actual risk in it. So just like in poker, put in five bucks and everyone’s all of a sudden serious. Just like in business you say “okay, well this is how much it costs. Let’s get you signed up.” And as soon as they actually have to pass money the real side comes out. You want to have all four layers of validation before you start any new business.

Interviewer:  (10:46):

This was the approach you took with the property sector. So you start finding people around and you start getting to know some information about the sector. What are you discovering during that process?

Sam Ovens: (10:58):

Okay. So first of all, I picked a market which is one of the lessons. I picked property management. Then I found a problem, and it’s amazing, people like to talk about themselves especially when you have no hidden agenda and you’re not trying to sell them anything, you just want to learn about them. They feel like celebrities, people love to talk about themselves. So you’ll be shocked. You’ll think “Oh, a stranger won’t want to talk to me” but I had an hour long conversation with strangers over the phone and met up for coffee with people who I’d never met before. They would just tell me about their problems as a property manager and I’d just listen. After I spoke with about 20 of them which was over the course of only three or four weeks I was like “Oh my God, everybody has this problem.”

Sam Ovens: (11:51):

That problem was doing property inspections. The way they were doing them was with a digital camera, a clipboard and a pen and they’d do them manually. Then they’d go back to the office, type it all up on word, create a report and then email it manually. It took so much time and they all hated it. It was never going away and It was a real problem. Everyone in the market had this problem. Everyone saw value in it being solved and everyone agreed to pay money for it. Then I took it to that fourth layer by coming up with the pricing for it and getting people to pay for the product before it even existed. So I didn’t have the product built, all I had was a concept on paper and I still got people to pay for it even though it didn’t exist. That for me was validation. People are willing to pay for this. It’s a specific market, solves a problem, I’ve collected the money, this is a solid idea. So then I decided to build the product.

Interviewer:  (12:55):

How long did that whole process take? And what were the challenges that you faced in actually turning that idea into a product?

Sam Ovens: (13:03):

Okay. So only honestly it only took four to six weeks to pick the market and to find the problem and get people to pay for the solution because there was no development of any product in there and it costed me nothing. So I spent no money, took no risk, wasted no time and essentially had in my hands a really valuable validated business idea. So there’s the lesson for most entrepreneurs, you don’t need to take massive risk. You don’t need to waste lots of time or be insanely smart or come up with a miraculous idea. I didn’t do any of those things. I’ve never written a business plan in my entire life and I don’t intend to either, nor do I ever intend to just have an idea. The market gives me the ideas.

Interviewer:  (13:54):

How much did you try and piece some stuff together on paper though? Did you do any of that or did you just have it all in your head?

Sam Ovens: (14:03):

So I had a concept drawn of how the product would work and I had it on paper. I modeled how much it would cost on Excel and how much I could probably make with this thing. But I was never trying to get investment from outsiders or anything like that. So really the only person I’d be doing a business plan for was myself and why does anyone need one for themselves? I just knew what was important. I knew what was important was money because of my other businesses. So all that was important to me was customers. If I had 10 customers that had paid for a product and wanted it, that’s all I needed. That’s better than any business plan

Interviewer:  (14:52):

At this stage you presumably had some debt accumulated as well from the failed businesses and so forth. You had some credit cards fairly extended. Was that concerning you at that stage?

Sam Ovens: (15:02):

Yeah, but it was small. I was in debt maybe like 15 grand on credit cards, different ones, which is quite a lot of debt for back then I was 22 years old. It’s quite a lot of debt. But it didn’t really concern me because it’s not that much money, not much more than a student loan. Even if you had to get a job at McDonald’s you can pay that back. Like I wasn’t risking my family’s home or anything like that, you know what I mean?

Interviewer:  (15:34):

And therefore the next stage was obviously the construction of the app. So how did you go about that process?

Sam Ovens: (15:40):

So another thing for entrepreneurs is you don’t need to know how to build whatever it is that you want to sell. So I knew the problem. I knew what the solution was. The solution was an app, a piece of software but I don’t know how to code. I don’t even know how to build a website that would say hi on it. I don’t know anything about it. But that didn’t bother me. I figured, well, I’ll get someone else to do it. So not having much money I went on the internet and found a company in India that looked at my plans and said they could build it. They said it would take about two or three months and cost around $10,000 New Zealand dollars. Which was around six grand US at the time.

Sam Ovens: (16:28):

And they had milestone payments so payment 1 was only like $2,500 payment. Payment 2 was at a certain stage of development when that was more and I only just had enough from pre-selling all of those other companies to pay for milestone 1. I didn’t even know how I was going to pay the rest of them, but I just said all right let’s do it. So we did it and then I figured out ways to make those other milestone payments. That’s how we got version one of the product built. It’s difficult working with people on the other side of the world and on another time zone with communication barriers, it was not easy. They said two to three months and ended up taking about five and ended up going two grand over budget. But that’s just what you’d expect.

Sam Ovens: (17:20):

Lots of hiccups along the way but we got the product ready. Once it was built, we gave it to all the customers that had paid for it in advance. We made sure first that they were all happy with it. Once they were happy with it we started to sell it to more and more companies slowly. Over time we were able to sell it and slowly we were adding maybe two to three customers a month. As we learned how to sell it and who to sell it to we got better at it and started scaling it up quite rapidly.

Interviewer:  (17:59):

Because one of the interesting experiences you discovered was that initially you were selling to smaller clients and they kind of gave you the runaround but then you discovered that there’s actually some very large clients out there who don’t really have a lot of demands placed on you once you’ve made the sale. How did you sort of work through that sales process from there?

Sam Ovens: (18:19):

Yeah, well one of the major things again for entrepreneurs is their confidence and their mindset. So what they believe and as a young guy you think “well, I can only sell into New Zealand because that’s what most new Zealanders think like my market is New Zealand”. So that’s one thing I thought, the other thing is all the big guys will look at me and they won’t listen to me. So I was focusing on the smallest companies in the smallest country in the world. The lowest of the low of the market and they were worth not much money. They didn’t have much money to spend and they were difficult to sell and I learned that. So I started targeting the medium size ones and then eventually the big ones. I realized that it’s easier to sell a bigger company than it is to sell a smaller one.

Sam Ovens: (19:16):

I also realized that my product could be sold in other countries. So I took those lessons and then focused on the upper end of the market in the best countries in the world. So the upper end of real estate market in the United States and in Australia, the United Kingdom. I was selling my product to companies in New Zealand that would pay me $49 per month and they were hard to sell and then I sold a company in the United States that was $10,000 per month which was so much more than $49 a month that it’s ridiculous. Just to sell one of those companies is already a six figure salary and it was surprisingly easy.

Interviewer:  (20:21):

Did you surprise yourself there? How quickly things were starting to grow for you?

Sam Ovens: (20:26):

Yeah. I couldn’t believe that you could sell a piece of software that originally cost me 10 grand to build and just give access to it to someone for $10,000 a month.

Interviewer:  (20:39):

So you recovered all your costs in one month.

Sam Ovens: (20:41):

Yeah. Well at this point it’s fair to say the product had advanced from its original version. But yeah. Another thing I’ve seen New Zealand entrepreneurs do is they charge too little. So charge high, don’t be afraid. With companies there’s so much money out there. You can charge ridiculous prices for things. The other thing is target the best companies with the most money to spend. The other one is you can sell anywhere in the world. It’s not just New Zealand.

Interviewer:  (21:17):

Particularly with apps. I mean it’s a global business.

Sam Ovens: (21:19):

Even with everything I’d say. I’ve got a few companies now and I’d say that 99.5% of all the money I’ve ever made has come from America. That’s where most of my money has come from. There’s just more out there than there is here.

Interviewer:  (21:42):

With the app, were there any competitors in the market at the time you developed the app?

Sam Ovens: (21:49):

Yeah absolutely. When I first entered the market there was one in San Francisco that was funded so they had investment money and they were in Silicon Valley. So pretty intimidating. There was another one in Australia that the people behind that looked like they had a bit of money and both of them were already established. So it was kind of intimidating but I still decided to enter the market.

Interviewer:  (22:15):

And was your belief at that point that you could do something better?

Sam Ovens: (22:20):

No. All I thought was that when I talked to the market this was still a problem. I figured these companies had very little penetration into the market because everyone I talked to still had no solution.

Interviewer:  (22:35):

Which is a good point because simply because something exists doesn’t mean to say somebody is going to be using it.

Sam Ovens: (22:41):

Precisely. The way to think about it is this. Think about when cell phones came out, right? When cell phones first came out, only a very small percentage of the world had them because that was when they first came out and the market was very unsophisticated. Now there are 1.5 cell phones per person so it’s more than one hundred percent penetrated. It’s 150% that’s because the market’s become so sophisticated and developed. Now we have crazy products like iPhones and all sorts, but when it started they were so basic and it had a small market share. That’s what happens with all markets. When I entered this market, which is the property inspection app market, because of lots of market influences like mobile data didn’t exist, back then it was too slow. Then it was too expensive. So mobile data was right. Phone cameras were right. People were used to apps already and people had smart phones. All of those things around the time when I entered this market made it the right time for this market to develop. I got into it early where it was maybe 2% penetrated and over time over the next few years every single property management company will have an app, just like now everyone has a cell phone. So that’s how all markets work and that’s how I saw the market when I entered. That’s a really important lesson to understand, market sophistication. If you go into it let’s say the cell phone market now, well I’m up for some serious competition. Yeah.

Interviewer:  (24:29):

So Sam, what does success look like for you now and what spaces are you pushing into? And you’re only 24 so you’ve got a lot of time to go into lots of other things. So how are you focusing the business? How has your life changed? I presume the $15,000 debts are well paid off by now.

Sam Ovens: (24:48):

Yeah. So business is pretty good, we’ve grown SnapInspect from a one man business in a garage to an international business now with an office overseas and 1,600 customers. That’s three times the size of the New Zealand property management market. There’s only 500 property management companies in New Zealand. We have 1,600. So that’s another lesson for going global. So Snap Inspect’s going good. My main focus is growing that. There’s still plenty of market share out there and we’re trying to get more of it. That company is doing really well and as for other things I don’t know. I’m sort of starting to think of what happens after Snap Inspect and I’m honestly not too sure yet. I’ve thought about getting into investing in earlier stage companies and probably more along the investment side of things, but I never really think further than one year to be honest. I’m only ever really thinking one year ahead at a time and right now that’s just growing snap inspect.