Caleb: Alright, on today's episode, we're going to be talking about how customers have no idea sometimes what they want and how to come up with a value proposition and then how to actually sell that to a customer. This topic came up because the last couple days, Josh and I have been talking about some of the stuff that I'm doing and where he works. They also have found A little bit of difficulty in clients or potential clients actually knowing what all goes into bookkeeping. So today we just kind of wanted to flesh out how to come up with a value proposition or how to think about it and then how to actually explain that to the customers that you're working with. So for me, the problem is AI is pretty much. everything now. There's there's not a whole lot that is not going into the word AI. So when I'm a person who does AI for small businesses, that is not very helpful. So I'm and customers also don't know exactly what they want either. They don't know what can actually be automated with AI in their business. So that's what I'm figuring out. ⁓ for you Josh in bookkeeping, what do you feel like is the hardest thing to explain to customers and then also how do you guys end up selling a customer or a client? 'Cause obviously I mean you have clients so at some point someone recognized what you do and and that it was valuable.
Joshua: Yeah, I think that in what we do, it's really hard to sell bookkeeping to a client until there's a major pain point for them that gets solved. Because the proposition of bookkeeping is super simple. Record your transactions properly in a ledger. And to most normal people, that's not something that you would hire somebody to do, but it it is can be quite complicated depending on what sort of business you're running. And so usually the way that we get customers that are very satisfied with what we do is it's gotten to a point where it there's too much volume or they've got complicated enough ⁓ transactions that it's becoming a headache for them. Or they're trying to get a loan and the bank's asking for specific doc like there has to be some major pain point that then they approach us and say, Hey, I think it's time for me to need bookkeeping. And then we solve whatever the pain point is or clean up the books or whatever. They move forward with life and they're happy with what happened. But yeah, it's a continual problem. Is I mean, if so and so is just bored with the books and has us do them. and they don't like spending money, then it I feel like it almost always eventually there's ⁓ why does this take so long to do? I mean you billed me for twenty hours of work and then you have to try and explain to them how it happens. And then there's always a couple of clients that leave and then realize because they're like, well I'll just do it myself. And then they realize how much work it is. ⁓ not saying you can't DIY it. It's it is in theory very easy to do by yourself if you have Google or good resources. But in practice it sucks. ⁓ I I don't know, do you think that's accurate? Was that an accurate description?
Caleb: Yeah. I I would agree with that. ⁓ I know specifically there were some clients who left, tried to come back, left, tried to come back, left, and then it was like, no, at this point you're not coming back because you're just gonna leave again. So especially in bookkeeping, that makes sense. T that brings up two questions for me. How do you find people who are
Joshua: Yeah.
Caleb: Who haven't come to you first because maybe they don't have like how do you pull the pain point out of someone who didn't feel it and then come to you? ⁓ and then the other piece is how do you when someone comes to you, how do you turn their pain point into an actual client? Because having a meeting is great, but then turning it into into a little bit of income is I mean as I've found difficult. So how do you guys or how does your boss end up doing that?
Joshua: We fortunately have a lot of ⁓ good word of mouth cli like there's a certain, you know, ⁓ critical mass where after you get so many clients, somebody that you did solve a pain point for knows another person who's having a similar problem and they s they can suggest it to you. So the the your c question about the conversion of pain point to client is sort of solved for us. ⁓ what was the first part of that? It was like how do you find them if they haven't had a major pain point.
Caleb: Yeah, which I guess referrals. But I guess because one of the things that everyone and and I don't mean that ⁓ I I truly mean that literally. Every single person that I've talked to at some point has like talked about how referrals are how they get more clients. ⁓ when I say that I mean like business owners and stuff who have clients. Obviously startup people, that doesn't make sense. But that's the problem is that every business owner that I talk to says the referrals are the best way to get clients. And I'm like, I appreciate the fact that you said that, except for the fact that you need to have clients first in order to get referrals. So I'm not talking about the once you get there, I'm talking about like the beginning, ⁓ to those business owners who I have talked to. So for where you work
Joshua: Mm-hmm.
Caleb: How did your boss get them in the beginning as well? And and now referrals definitely make sense at this point, but when even when he was first starting up, do you know how he would be able to get those first clients and pull out those pain points?
Joshua: Well, I think it kinda depends on how quickly you wanna scale because I believe most of his have been just somebody he knows and somebody knows somebody, but he's been doing this for fifteen years or whatever. now if you want to grow faster than fifteen years, then you gotta work some other angle. I mean, he does have a website that brings some traffic, but as far as I know, he's not really ever done much advertising. In your case or in somebody's case like our bookkeeping business and just starting out, I do think there's having never experienced this, I do think there is some benefit to our previous podcasts about, or at least two of them maybe, about niching down. ⁓ because okay, we have a website, but we could make a website that specifically said we do bookkeeping for I don't know, builders and doing job costing and cash flow management in a specific industry. ⁓ I don't even know what that would be, you know, office building of 50 units or more. I I don't know. but if we niche down real specifically, then we could probably Right now, our website is like general accounting and bookkeeping because we do accounting and bookkeeping for a lot of things. But if you're to the point of searching for a bookkeeper or an accountant, you probably have a specific pain point or it's a volume thing. ⁓ and that conversion would probably be way more efficient if it was like, ⁓ wow, this is the This is a a bookkeeping and accounting place that specifically works with I don't know phlebotomists. And I'm a phlebotomist. And you know, you you could put a couple like, ⁓ here's specific pain points for people in your industry working with these vendors or managing, you know, insurance something. I'm giving really bad examples, really general examples, but I think the problem without a customer base when you're first starting out is well, what's the Steve Jobs quote about like telling people what they want 'cause they don't know what they want? ⁓ and it's like, yeah, you you really gotta push hard on the ⁓ this is this is a thing that you want. You didn't know it, but you do.
Caleb: Yeah. So with what I'm doing with AI, we talked about this a little bit, but I would also love to hear your thoughts on here. Knowing that there is a lot that you that can be done with automation, but obviously not every single thing that has ever been thought up can be done with automation or else everything would be automated at this point. How ⁓ I'm the AI expert and you're the client or potential client, what are the best ways ⁓ you see that I could talk through automation with you in order to help you understand what the bounds are of automation and then how AI can be more helpful in your business? ⁓
Joshua: Mm-hmm. Yeah, I ⁓ I do think that show, don't tell is always the best way. But depending on like I was thinking about in your situation, d depending on how much time you have and how much ⁓ how many resources you can burn on potential clients, it may not make sense, but ⁓ I was thinking about how people's Losing something is much worse than gaining a thing. ⁓ it's that whole like you'll ruin your kids' lives if they have a really bougie childhood. because their standard of of living will be so high that if they live under that as adults, they'll be super disappointed. But the problem that I have with AI is ⁓ like I know them automation exists, I have not had time to implement any of it. And I don't even know what tools to ask for. ⁓ like I generally do. if this were automated, that'd be great. But I actually don't know the bounds of is that simple to automate or would that take a crap ton of time? and so in your case, what I'm thinking is like, okay, you you go into a business, you sit with somebody, you look at their workflows. If it's a task where you see it and you're like, ⁓ man, it would take me it would only take me seven hours to spit out a a beta version of an automation for that task and that's gonna save them an hour a week or two hours a week or s you know, it's something that's useful, but it doesn't have to be save them days and a month. and here, potential client, I made this thing for you. You have access to it for a month. ⁓ If you want to have an ongoing relationship, you can pay me for it. ⁓ otherwise, you know, like you lose access. But then you get the ⁓ wow, look at this automation we were able to do. And ⁓ they get to use it and truly know if it's a value proposition for them. And then they've been using a tool that you made, and then they'll lose it if they don't pay. ⁓ and it's not like you're holding them ransom because it's not like a a critical tool to what they've been doing currently. ⁓ so they save money, you make money, and if they don't like it, you lost some time. ⁓ but that's if you're willing to lose some time.
Caleb: Yeah. If if I were to build a tool for what you do Would you like do you think it would be reasonable to pay ongoing for it? Because I think that's another piece to this is finding retainer type income versus just one-time project fees has been harder. So in your mind, what makes it worth paying for long term, other than just, hey, can you build this project for us? All right, we're gonna try and maintain it using AI to help us know what might be wrong.
Joshua: Mm.
Caleb: In the future.
Joshua: My experience with programming is you almost have to have some kind of if you're gonna build something, you gotta have to have some kind of retainer to maintain it because it's gonna break eventually. Maybe that's inaccurate, but I yeah, I think that's the the proper way to go. My my thing on that is like ⁓ have we ever talked about the the was it James Watt that sold the steam engine?
Caleb: Yeah. I don't think so.
Joshua: ⁓ so when he created the steam engine and came up with like the whole horsepower thing, ⁓ do you are you familiar with this horsepower?
Caleb: I I'm I don't think I've ever heard of that.
Joshua: So like, you know, the they talk about horsepower in cars or whatever, but it it literally was this roughly is how many horses, horse equivalents, because he would go to mine owners and ⁓ they would have I think it was horses for bilging water out of mines or like pumping water out or like moving pulleys or things for moving cartloads of
Caleb: Well yeah, yeah.
Joshua: s ⁓ slag or whatever out of mines. And he would come to them and say, Look, I've got this steam motor. And this steam motor of this size is this many horsepower. So you can get rid of this many horses and all of their poop management and their feed and housing and whatever and replace it with this motor. ⁓ now I in I think in reality he undersold a little bit because The motor could work like 24 hours, you know, and the horses need brakes. But his pricing was okay, you can replace the horses. And ⁓ I believe it was the motor is free, but you have to pay me a third of I can't remember if it was the replacement cost of the mot or the horses or main maintenance cost of the horses.
Caleb: Yeah.
Joshua: So it's like whatever a third of that many horse feed or whatever was, you have to pay me on an ongoing basis. So it was like a contractual relationship. He actually wasn't selling the motor. ⁓ but that's how he got because it was a a win for the it was an improvement for the mine owner, and that cost savings freed up the cash to pay him. ⁓ so I think in your case, it makes a lot of sense to Say, hey, here's this automation, which I think you're kinda already doing. It's gonna save you this much time. ⁓ so I and you pay so and so to do it this much money, pay me a third of that or half of that or whatever on an ongoing basis, and there you go.
Caleb: Yeah, I think one of the hard parts is some people do understand the automations regress and some people don't. So there are a few people who I've talked to about it that basically like, ⁓ why do I pay you 'cause this automation is supposed to work, you know? And I'm like, Yes, but you never know when some company changes an API or some piece of code changes or
Joshua: Mm. Mm. Yep. You should ask them if they've ever tried to go to a website and they got a four ⁓ four message. Or or it just or the website's not there or it says our website is down. That's all because some little thing changed and and somebody is panicking on the back end trying to make it work.
Caleb: People change feasible. Yeah. Yeah. I so I you you sent me a message, I haven't gotten to listen to it and I definitely will. ⁓ but along with whatever is in that message that I'll listen to a little later, I built ⁓ for context, I built the software that ⁓ for the audience's context. I built the software that ⁓
Joshua: It's okay, it's long and rambly.
Caleb: Business owners ask or answer questions about like how much what their role is, ⁓ what company they're in, ⁓ how much they are paid hourly, some pain points and some different ⁓ tools that they use, and then AI comes up with use cases and and some ROI stats, like how how much would this cost, how long would it take to to break even whatever. What do you think? Cause I would probably use that in ⁓ in addition to meetings rather than just like instead of meetings. What do you think wouldn't I would need to take from that software and bring to meetings in order to actually show someone one that like what's possible with automations? Because I mean they can see it on the software, but you know, it's it's probably better to explain it in person as well. And then the second piece is that they will actually need that ongoing retainer. How do you what in my situation, what do you think is the best way to go from software to in person to like actually selling a client on that?
Joshua: I I think this it goes back to the ⁓ what is it? ⁓ designers always say, like, my job isn't to make a thing, my job is to tell the client what they want because they don't actually know. because like the problem with the questionnaire is it still requires them to know the current state of what's possible. ⁓ Otherwise they're giving you kind of vague ideas of what can be automated and what can't. Like I s I still don't know what all could be automated and what can't. and it's gonna be better to show somebody a workflow than it is going to ask them a questionnaire because th you're filtering your possible business creations by what they can conceive of. ⁓ and I'm not sure teaching them what's possible with H where with AI is gonna be that helpful. ⁓ The the only thought I have to that is like ⁓ there's been several times recently with QuickBooks where I'm like, I just need a tool to do this one thing that interacts with the API. and if you showed up at my office and was like, Hey, I do automation, here are 10 projects that sort of show what we can do, like 10 out-of-the-box tools. ⁓ and here's a few things that work with I you're in accounting, here's a few things that work with QuickBooks, ⁓ that do bam bam bam. ⁓ you know, let me know if any of those look interesting to you as an example of like, okay, here's a little here's a little bot that does a little thing. And these are the kinds of things that are possible with AI automations. ⁓ so that's kind of what I think would be a better selling point. ⁓ I don't know. Wait it all is more work on your end than it is on the client's end, which is unfortunate. ⁓
Caleb: It makes sense though, you know.
Joshua: It's not a yeah. In theory, once you get the client though, it's high margin, right? Like maintaining doesn't take that much time. You're basically on call. but implementation is the rough part.
Caleb: Yeah. What do you think I would say in a meeting in person that would be different than what I could put in a software? Because if I if I could pull out the pain point in a meeting Talking to them. Why could I not then whether I need to change what's in the software or not, but not like actually then just put that into a software and instead of making them say like what automations do you want? Like trying which I feel like I've been trying, but maybe it's not quite there yet. But instead, like what are the pain points you have? What on a on a daily basis, like where do you where do you
Joshua: Mm-hmm. Yeah, what what makes you hate coming to work? What when what right. Uh-huh. Yeah. What what grinds your gears when you're at work? ⁓ or what were you what would your employees or coworkers say annoys you at work? ⁓ and you can't say you're a coworker. ⁓ the
Caleb: Yes. Yeah. What are the things you really don't like about what you do? I mean AI agents you never no replace your coworker.
Joshua: ⁓ eventually that might be the case. ⁓ man, I had a thought in there somewhere in it. ⁓ So like a thing, a pain point that didn't even know was a pain point until we started working with a client. They this goes back to our subject of like simply just Google it. Just just Google how to do a thing. ⁓ What's this client? Who's paying us? what I consider to be a not small sum of money ⁓ for their size ⁓ admits that it takes them two full business days, entire days of work to put all the credit card transactions in for the month at the end of the month and reconcile the account. Why you ask? Because they weren't using bank feeds. They were taking their physical statements And typing every transaction into QuickBooks Online. And they've been doing this for as far as I can tell years.
Caleb: That is Wow, that's crazy.
Joshua: Wow. So we we got on a call and we had a let's learn about bank feeds call. ⁓ and I was a little gobsmacked. But then she was like, ⁓ this is great. This is gonna save us so much time. But it's like she vaguely knew that the feature was there and was too stressed out or busy or whatever to just like Google it.
Caleb: Yeah. Yeah. When how recent was this?
Joshua: This was I don't know, maybe couple months ago, a month or two. Uh-huh.
Caleb: Bank feeds been around for a long time. Yeah, that is very interesting that there's still people and businesses out there that just don't use some of the main features of software. I I'm assuming they well yeah, 'cause you said they typed in everything manually. So they were using QuickBooks. They just didn't use the bank feed version of it. How how did you end up finding out
Joshua: Yep. Mm-hmm. Yep.
Caleb: That they didn't use the bank feed.
Joshua: ⁓ yeah, we were working with the client and the they are kind of the point where they're busy enough where they need assistance. And I think maybe ⁓ they're not for profit. ⁓ and so they had some like auditing requirements. And so the lady that primarily does their bookkeeping who works in-house, ⁓ was wanting assistance with that. And we we've still got we're ongoingly We did clean up and we're still helping with ongoing bookkeeping. But she had talked about the credit cards and ⁓ we were like you we we can we can automate that. Like that's that's a pretty standard credit card management thing. ⁓ and I believe for she has a it's like a main parent with a bunch of sub credit cards, which is I if if it's the first time you've interacted with it, it can be annoying, but it's not that hard. But it just blew my mind.
Caleb: Yeah. Did you just ask her what their process is and then she explained different processes and one of them was, ⁓ yeah, you know, at the end of the month we spend two full days on putting credit card transactions.
Joshua: Yeah, she knew that bank feeds existed. That was the weird part. Like she knew that it was a possible thing that could happen, but she had done zero effort out on top of that. ⁓ and like she didn't even know that there was a function where you could upload a bank statement and have it pull transactions in. ⁓ no, she didn't know that one existed. But
Caleb: It's one with the lowest. She knew about that too? ⁓ okay.
Joshua: Yeah, just the the barrier to entry. For some people, it's like you even knew it was there and you didn't Google it.
Caleb: Yeah, see that's that's one thing that I guess I don't may I don't
Joshua: But it took a human showing her on a call how to do it.
Caleb: Yeah. I don't wanna be mean, but I guess sometimes I have a little bit too much faith in some people where there's something so low hanging that I'm like, ⁓ yeah, that's easy to Google. And then they just haven't or don't want to or chose not to. So maybe I yeah. Need to have a little less faith sometimes and be like You actually Googled this feature because most of the time it's actually a no. So it's just funny. Yeah.
Joshua: Mm-hmm. But that kind of goes back to the the questionnaire thing. Like I think for some people they don't want to do an assessment because it's another thing to do. But i if you come to their office like, ⁓ yeah, yeah, just go do that. Like, ⁓ yeah, I'm the wizard. I'm gonna make this happen for you.
Caleb: Yeah. Yeah. It's just hard to figure out how to to get all that information from someone Yeah. I mean when they don't know what their routines are that are sticking and keeping them from saving hours.
Joshua: Yeah. You basically gotta go sit with them and watch them like a creep. ⁓ w which is time consuming, but so is real estate. You know, any residual income stream is a lot of work on the front end and hopefully less work on the back end.
Caleb: Yeah. Yeah. Yeah, that makes sense. I I mean, honestly, I'll I have a call today, so I'll figure out if there's a way that I can just literally watch as many processes they have as possible and then figure out how we can automate. They specifically said they don't want to just blanket AI everything. They want precision and knowing exactly where to put AI in. So
Joshua: Uh-huh.
Caleb: Well I gotta be ⁓ pretty direct on this one and figure out exactly where AI would fit. But yeah. Literally I'll I'll try it today. We'll we'll see how it goes.
Joshua: Mm-hmm, mm-hmm. Okay. Yeah. Let me know. It's fun backseat quarterbacking.
Caleb: Yeah. That's pretty much all I have, all the questions I have. So you got anything else? Cool. Well, that's the podcast for today. If you're watching on or listening on Spotify, we would really appreciate a five-star review. And if you're watching on YouTube, a like and a subscribe would be awesome. ⁓ we'll see you on the next podcast.
Joshua: Great. It's all the thoughts I have too.
Joshua: Yeah, I think that in what we do, it's really hard to sell bookkeeping to a client until there's a major pain point for them that gets solved. Because the proposition of bookkeeping is super simple. Record your transactions properly in a ledger. And to most normal people, that's not something that you would hire somebody to do, but it it is can be quite complicated depending on what sort of business you're running. And so usually the way that we get customers that are very satisfied with what we do is it's gotten to a point where it there's too much volume or they've got complicated enough ⁓ transactions that it's becoming a headache for them. Or they're trying to get a loan and the bank's asking for specific doc like there has to be some major pain point that then they approach us and say, Hey, I think it's time for me to need bookkeeping. And then we solve whatever the pain point is or clean up the books or whatever. They move forward with life and they're happy with what happened. But yeah, it's a continual problem. Is I mean, if so and so is just bored with the books and has us do them. and they don't like spending money, then it I feel like it almost always eventually there's ⁓ why does this take so long to do? I mean you billed me for twenty hours of work and then you have to try and explain to them how it happens. And then there's always a couple of clients that leave and then realize because they're like, well I'll just do it myself. And then they realize how much work it is. ⁓ not saying you can't DIY it. It's it is in theory very easy to do by yourself if you have Google or good resources. But in practice it sucks. ⁓ I I don't know, do you think that's accurate? Was that an accurate description?
Caleb: Yeah. I I would agree with that. ⁓ I know specifically there were some clients who left, tried to come back, left, tried to come back, left, and then it was like, no, at this point you're not coming back because you're just gonna leave again. So especially in bookkeeping, that makes sense. T that brings up two questions for me. How do you find people who are
Joshua: Yeah.
Caleb: Who haven't come to you first because maybe they don't have like how do you pull the pain point out of someone who didn't feel it and then come to you? ⁓ and then the other piece is how do you when someone comes to you, how do you turn their pain point into an actual client? Because having a meeting is great, but then turning it into into a little bit of income is I mean as I've found difficult. So how do you guys or how does your boss end up doing that?
Joshua: We fortunately have a lot of ⁓ good word of mouth cli like there's a certain, you know, ⁓ critical mass where after you get so many clients, somebody that you did solve a pain point for knows another person who's having a similar problem and they s they can suggest it to you. So the the your c question about the conversion of pain point to client is sort of solved for us. ⁓ what was the first part of that? It was like how do you find them if they haven't had a major pain point.
Caleb: Yeah, which I guess referrals. But I guess because one of the things that everyone and and I don't mean that ⁓ I I truly mean that literally. Every single person that I've talked to at some point has like talked about how referrals are how they get more clients. ⁓ when I say that I mean like business owners and stuff who have clients. Obviously startup people, that doesn't make sense. But that's the problem is that every business owner that I talk to says the referrals are the best way to get clients. And I'm like, I appreciate the fact that you said that, except for the fact that you need to have clients first in order to get referrals. So I'm not talking about the once you get there, I'm talking about like the beginning, ⁓ to those business owners who I have talked to. So for where you work
Joshua: Mm-hmm.
Caleb: How did your boss get them in the beginning as well? And and now referrals definitely make sense at this point, but when even when he was first starting up, do you know how he would be able to get those first clients and pull out those pain points?
Joshua: Well, I think it kinda depends on how quickly you wanna scale because I believe most of his have been just somebody he knows and somebody knows somebody, but he's been doing this for fifteen years or whatever. now if you want to grow faster than fifteen years, then you gotta work some other angle. I mean, he does have a website that brings some traffic, but as far as I know, he's not really ever done much advertising. In your case or in somebody's case like our bookkeeping business and just starting out, I do think there's having never experienced this, I do think there is some benefit to our previous podcasts about, or at least two of them maybe, about niching down. ⁓ because okay, we have a website, but we could make a website that specifically said we do bookkeeping for I don't know, builders and doing job costing and cash flow management in a specific industry. ⁓ I don't even know what that would be, you know, office building of 50 units or more. I I don't know. but if we niche down real specifically, then we could probably Right now, our website is like general accounting and bookkeeping because we do accounting and bookkeeping for a lot of things. But if you're to the point of searching for a bookkeeper or an accountant, you probably have a specific pain point or it's a volume thing. ⁓ and that conversion would probably be way more efficient if it was like, ⁓ wow, this is the This is a a bookkeeping and accounting place that specifically works with I don't know phlebotomists. And I'm a phlebotomist. And you know, you you could put a couple like, ⁓ here's specific pain points for people in your industry working with these vendors or managing, you know, insurance something. I'm giving really bad examples, really general examples, but I think the problem without a customer base when you're first starting out is well, what's the Steve Jobs quote about like telling people what they want 'cause they don't know what they want? ⁓ and it's like, yeah, you you really gotta push hard on the ⁓ this is this is a thing that you want. You didn't know it, but you do.
Caleb: Yeah. So with what I'm doing with AI, we talked about this a little bit, but I would also love to hear your thoughts on here. Knowing that there is a lot that you that can be done with automation, but obviously not every single thing that has ever been thought up can be done with automation or else everything would be automated at this point. How ⁓ I'm the AI expert and you're the client or potential client, what are the best ways ⁓ you see that I could talk through automation with you in order to help you understand what the bounds are of automation and then how AI can be more helpful in your business? ⁓
Joshua: Mm-hmm. Yeah, I ⁓ I do think that show, don't tell is always the best way. But depending on like I was thinking about in your situation, d depending on how much time you have and how much ⁓ how many resources you can burn on potential clients, it may not make sense, but ⁓ I was thinking about how people's Losing something is much worse than gaining a thing. ⁓ it's that whole like you'll ruin your kids' lives if they have a really bougie childhood. because their standard of of living will be so high that if they live under that as adults, they'll be super disappointed. But the problem that I have with AI is ⁓ like I know them automation exists, I have not had time to implement any of it. And I don't even know what tools to ask for. ⁓ like I generally do. if this were automated, that'd be great. But I actually don't know the bounds of is that simple to automate or would that take a crap ton of time? and so in your case, what I'm thinking is like, okay, you you go into a business, you sit with somebody, you look at their workflows. If it's a task where you see it and you're like, ⁓ man, it would take me it would only take me seven hours to spit out a a beta version of an automation for that task and that's gonna save them an hour a week or two hours a week or s you know, it's something that's useful, but it doesn't have to be save them days and a month. and here, potential client, I made this thing for you. You have access to it for a month. ⁓ If you want to have an ongoing relationship, you can pay me for it. ⁓ otherwise, you know, like you lose access. But then you get the ⁓ wow, look at this automation we were able to do. And ⁓ they get to use it and truly know if it's a value proposition for them. And then they've been using a tool that you made, and then they'll lose it if they don't pay. ⁓ and it's not like you're holding them ransom because it's not like a a critical tool to what they've been doing currently. ⁓ so they save money, you make money, and if they don't like it, you lost some time. ⁓ but that's if you're willing to lose some time.
Caleb: Yeah. If if I were to build a tool for what you do Would you like do you think it would be reasonable to pay ongoing for it? Because I think that's another piece to this is finding retainer type income versus just one-time project fees has been harder. So in your mind, what makes it worth paying for long term, other than just, hey, can you build this project for us? All right, we're gonna try and maintain it using AI to help us know what might be wrong.
Joshua: Mm.
Caleb: In the future.
Joshua: My experience with programming is you almost have to have some kind of if you're gonna build something, you gotta have to have some kind of retainer to maintain it because it's gonna break eventually. Maybe that's inaccurate, but I yeah, I think that's the the proper way to go. My my thing on that is like ⁓ have we ever talked about the the was it James Watt that sold the steam engine?
Caleb: Yeah. I don't think so.
Joshua: ⁓ so when he created the steam engine and came up with like the whole horsepower thing, ⁓ do you are you familiar with this horsepower?
Caleb: I I'm I don't think I've ever heard of that.
Joshua: So like, you know, the they talk about horsepower in cars or whatever, but it it literally was this roughly is how many horses, horse equivalents, because he would go to mine owners and ⁓ they would have I think it was horses for bilging water out of mines or like pumping water out or like moving pulleys or things for moving cartloads of
Caleb: Well yeah, yeah.
Joshua: s ⁓ slag or whatever out of mines. And he would come to them and say, Look, I've got this steam motor. And this steam motor of this size is this many horsepower. So you can get rid of this many horses and all of their poop management and their feed and housing and whatever and replace it with this motor. ⁓ now I in I think in reality he undersold a little bit because The motor could work like 24 hours, you know, and the horses need brakes. But his pricing was okay, you can replace the horses. And ⁓ I believe it was the motor is free, but you have to pay me a third of I can't remember if it was the replacement cost of the mot or the horses or main maintenance cost of the horses.
Caleb: Yeah.
Joshua: So it's like whatever a third of that many horse feed or whatever was, you have to pay me on an ongoing basis. So it was like a contractual relationship. He actually wasn't selling the motor. ⁓ but that's how he got because it was a a win for the it was an improvement for the mine owner, and that cost savings freed up the cash to pay him. ⁓ so I think in your case, it makes a lot of sense to Say, hey, here's this automation, which I think you're kinda already doing. It's gonna save you this much time. ⁓ so I and you pay so and so to do it this much money, pay me a third of that or half of that or whatever on an ongoing basis, and there you go.
Caleb: Yeah, I think one of the hard parts is some people do understand the automations regress and some people don't. So there are a few people who I've talked to about it that basically like, ⁓ why do I pay you 'cause this automation is supposed to work, you know? And I'm like, Yes, but you never know when some company changes an API or some piece of code changes or
Joshua: Mm. Mm. Yep. You should ask them if they've ever tried to go to a website and they got a four ⁓ four message. Or or it just or the website's not there or it says our website is down. That's all because some little thing changed and and somebody is panicking on the back end trying to make it work.
Caleb: People change feasible. Yeah. Yeah. I so I you you sent me a message, I haven't gotten to listen to it and I definitely will. ⁓ but along with whatever is in that message that I'll listen to a little later, I built ⁓ for context, I built the software that ⁓ for the audience's context. I built the software that ⁓
Joshua: It's okay, it's long and rambly.
Caleb: Business owners ask or answer questions about like how much what their role is, ⁓ what company they're in, ⁓ how much they are paid hourly, some pain points and some different ⁓ tools that they use, and then AI comes up with use cases and and some ROI stats, like how how much would this cost, how long would it take to to break even whatever. What do you think? Cause I would probably use that in ⁓ in addition to meetings rather than just like instead of meetings. What do you think wouldn't I would need to take from that software and bring to meetings in order to actually show someone one that like what's possible with automations? Because I mean they can see it on the software, but you know, it's it's probably better to explain it in person as well. And then the second piece is that they will actually need that ongoing retainer. How do you what in my situation, what do you think is the best way to go from software to in person to like actually selling a client on that?
Joshua: I I think this it goes back to the ⁓ what is it? ⁓ designers always say, like, my job isn't to make a thing, my job is to tell the client what they want because they don't actually know. because like the problem with the questionnaire is it still requires them to know the current state of what's possible. ⁓ Otherwise they're giving you kind of vague ideas of what can be automated and what can't. Like I s I still don't know what all could be automated and what can't. and it's gonna be better to show somebody a workflow than it is going to ask them a questionnaire because th you're filtering your possible business creations by what they can conceive of. ⁓ and I'm not sure teaching them what's possible with H where with AI is gonna be that helpful. ⁓ The the only thought I have to that is like ⁓ there's been several times recently with QuickBooks where I'm like, I just need a tool to do this one thing that interacts with the API. and if you showed up at my office and was like, Hey, I do automation, here are 10 projects that sort of show what we can do, like 10 out-of-the-box tools. ⁓ and here's a few things that work with I you're in accounting, here's a few things that work with QuickBooks, ⁓ that do bam bam bam. ⁓ you know, let me know if any of those look interesting to you as an example of like, okay, here's a little here's a little bot that does a little thing. And these are the kinds of things that are possible with AI automations. ⁓ so that's kind of what I think would be a better selling point. ⁓ I don't know. Wait it all is more work on your end than it is on the client's end, which is unfortunate. ⁓
Caleb: It makes sense though, you know.
Joshua: It's not a yeah. In theory, once you get the client though, it's high margin, right? Like maintaining doesn't take that much time. You're basically on call. but implementation is the rough part.
Caleb: Yeah. What do you think I would say in a meeting in person that would be different than what I could put in a software? Because if I if I could pull out the pain point in a meeting Talking to them. Why could I not then whether I need to change what's in the software or not, but not like actually then just put that into a software and instead of making them say like what automations do you want? Like trying which I feel like I've been trying, but maybe it's not quite there yet. But instead, like what are the pain points you have? What on a on a daily basis, like where do you where do you
Joshua: Mm-hmm. Yeah, what what makes you hate coming to work? What when what right. Uh-huh. Yeah. What what grinds your gears when you're at work? ⁓ or what were you what would your employees or coworkers say annoys you at work? ⁓ and you can't say you're a coworker. ⁓ the
Caleb: Yes. Yeah. What are the things you really don't like about what you do? I mean AI agents you never no replace your coworker.
Joshua: ⁓ eventually that might be the case. ⁓ man, I had a thought in there somewhere in it. ⁓ So like a thing, a pain point that didn't even know was a pain point until we started working with a client. They this goes back to our subject of like simply just Google it. Just just Google how to do a thing. ⁓ What's this client? Who's paying us? what I consider to be a not small sum of money ⁓ for their size ⁓ admits that it takes them two full business days, entire days of work to put all the credit card transactions in for the month at the end of the month and reconcile the account. Why you ask? Because they weren't using bank feeds. They were taking their physical statements And typing every transaction into QuickBooks Online. And they've been doing this for as far as I can tell years.
Caleb: That is Wow, that's crazy.
Joshua: Wow. So we we got on a call and we had a let's learn about bank feeds call. ⁓ and I was a little gobsmacked. But then she was like, ⁓ this is great. This is gonna save us so much time. But it's like she vaguely knew that the feature was there and was too stressed out or busy or whatever to just like Google it.
Caleb: Yeah. Yeah. When how recent was this?
Joshua: This was I don't know, maybe couple months ago, a month or two. Uh-huh.
Caleb: Bank feeds been around for a long time. Yeah, that is very interesting that there's still people and businesses out there that just don't use some of the main features of software. I I'm assuming they well yeah, 'cause you said they typed in everything manually. So they were using QuickBooks. They just didn't use the bank feed version of it. How how did you end up finding out
Joshua: Yep. Mm-hmm. Yep.
Caleb: That they didn't use the bank feed.
Joshua: ⁓ yeah, we were working with the client and the they are kind of the point where they're busy enough where they need assistance. And I think maybe ⁓ they're not for profit. ⁓ and so they had some like auditing requirements. And so the lady that primarily does their bookkeeping who works in-house, ⁓ was wanting assistance with that. And we we've still got we're ongoingly We did clean up and we're still helping with ongoing bookkeeping. But she had talked about the credit cards and ⁓ we were like you we we can we can automate that. Like that's that's a pretty standard credit card management thing. ⁓ and I believe for she has a it's like a main parent with a bunch of sub credit cards, which is I if if it's the first time you've interacted with it, it can be annoying, but it's not that hard. But it just blew my mind.
Caleb: Yeah. Did you just ask her what their process is and then she explained different processes and one of them was, ⁓ yeah, you know, at the end of the month we spend two full days on putting credit card transactions.
Joshua: Yeah, she knew that bank feeds existed. That was the weird part. Like she knew that it was a possible thing that could happen, but she had done zero effort out on top of that. ⁓ and like she didn't even know that there was a function where you could upload a bank statement and have it pull transactions in. ⁓ no, she didn't know that one existed. But
Caleb: It's one with the lowest. She knew about that too? ⁓ okay.
Joshua: Yeah, just the the barrier to entry. For some people, it's like you even knew it was there and you didn't Google it.
Caleb: Yeah, see that's that's one thing that I guess I don't may I don't
Joshua: But it took a human showing her on a call how to do it.
Caleb: Yeah. I don't wanna be mean, but I guess sometimes I have a little bit too much faith in some people where there's something so low hanging that I'm like, ⁓ yeah, that's easy to Google. And then they just haven't or don't want to or chose not to. So maybe I yeah. Need to have a little less faith sometimes and be like You actually Googled this feature because most of the time it's actually a no. So it's just funny. Yeah.
Joshua: Mm-hmm. But that kind of goes back to the the questionnaire thing. Like I think for some people they don't want to do an assessment because it's another thing to do. But i if you come to their office like, ⁓ yeah, yeah, just go do that. Like, ⁓ yeah, I'm the wizard. I'm gonna make this happen for you.
Caleb: Yeah. Yeah. It's just hard to figure out how to to get all that information from someone Yeah. I mean when they don't know what their routines are that are sticking and keeping them from saving hours.
Joshua: Yeah. You basically gotta go sit with them and watch them like a creep. ⁓ w which is time consuming, but so is real estate. You know, any residual income stream is a lot of work on the front end and hopefully less work on the back end.
Caleb: Yeah. Yeah. Yeah, that makes sense. I I mean, honestly, I'll I have a call today, so I'll figure out if there's a way that I can just literally watch as many processes they have as possible and then figure out how we can automate. They specifically said they don't want to just blanket AI everything. They want precision and knowing exactly where to put AI in. So
Joshua: Uh-huh.
Caleb: Well I gotta be ⁓ pretty direct on this one and figure out exactly where AI would fit. But yeah. Literally I'll I'll try it today. We'll we'll see how it goes.
Joshua: Mm-hmm, mm-hmm. Okay. Yeah. Let me know. It's fun backseat quarterbacking.
Caleb: Yeah. That's pretty much all I have, all the questions I have. So you got anything else? Cool. Well, that's the podcast for today. If you're watching on or listening on Spotify, we would really appreciate a five-star review. And if you're watching on YouTube, a like and a subscribe would be awesome. ⁓ we'll see you on the next podcast.
Joshua: Great. It's all the thoughts I have too.
