Why you should build a sweaty startup instead of an indie SaaS - Flo Schirmer

Speaker A: I'm looking at more cash than I would say like the majority of tech startups will ever make in profit. All the businesses that I'd started before I always just around way too much for way too long with stuff that didn't actually drive revenues. And I just told myself whatever I do next, I'm just going to shorten the period between starting and revenue as much as I like possibly can.

Speaker B: Hello and um, welcome back to Indie Bites, the podcast where I bring you stories of fellow indie hackers in M15 minutes or less. Today I'm talking to Flo Shermer about sweaty startups. Old fashioned low risk businesses that are often service based and unsexy. I'm talking window cleaning, car washing, self storage, house moving and plenty more. We're going to discuss if you can do this as a side hustle, if you should do this over a regular software business and what you need to do to get started with some ideas along the way. But if you do get started, one thing you might want to do is set up an email newsletter for your sweaty startup. And for that I'd like to thank you, my sponsor, email Octopus. They're an email platform focused on affordability with a very generous free plan and ease of use without the boated features that some of these email apps have so you can focus on shipping and growing your audience, which regular listeners know is essential for growth in the early days. So to get started with an email platform that just gets out of the way where you can contact up to 2,500 people for free, head to email octopus.com or hit the link in the show notes. Flo, welcome to the pod, mate. How are you doing dude?

Speaker A: I'm doing good. I was just thinking if you, if all this failed for you, you could be one of those auction guys. I don't know. I've never heard someone speak so fast in my life with only a couple of mistakes.

Speaker B: Anyway, Flo, your side hustle. It's not like a side hustle. Making a little bit of the side flow. No, no, this at its peak in August made 40 grand. This is a big sweaty startup, but what the heck is that? I've heard this term going around. Nick Cuba made it popular. How would you define it?

Speaker A: So my background in terms of like entrepreneurship is I've done pretty much most of like the popular things that people do. So I used to own like a DTC brand. I built and sold a dog food business. I have built a little tech startup so I've done B2B SaaS that was sort of medium successful. I've done another sort of consumer SaaS which failed. But then I got a bit worried that AI was going to eventually take my job and it actually like kind of got to me a little bit and I was like, I need to see if it all does happen that way. Could I make a bit of money? And I read this great Nick Huber, uh, essay which is about how to start like a window cleaning or like a jet washing business. And he kind of gives you the step by step. It's literally what I did. So I just bought like some secondhand window cleaning equipment. I was on my honeymoon watching, um, like window cleaning tutorials so that I knew what to do when I got there and then just got back Saturday morning, set off with my friend. We borrowed a ladder and just knocked on doors all of Saturday, all of Sunday and we made like just under a thousand pounds. And I had this moment on the Sunday night where I was like, I'm looking at more cash than I would say, like the majority of tech startups will ever make in profit before they fail. And I was like, wow, I've tried so many different things, I've worked hard at so many different things, but this was actually like, work equals cash in my pocket. To me, it's basically businesses where, uh, the road from where you are to revenue is like incredibly short. You don't have to build like MVPs, you don't have to pitch investors, you have to do all this stuff. You can kind of just go out and in exchange for services or products, you make money.

Speaker B: But this isn't the side hustle you have now. Why did you stop doing the, uh, window cleaning?

Speaker A: So the window cleaning was kind of just like a gateway drug. Often these like sweaty startups get very glamorized, but for me window cleaning was like, low margin. Didn't really see a road to like being able to make money if I employed people, that sort of thing. So to me it's just like, okay, I could, could do this, but now I'm going to keep my eye open for like other opportunities, which is when I sort of came across my current business. So I, I run a business called Wentworth and we are in like the home security space. We sell like vehicle security, gates, alarm systems, those sorts of things. And that just came about from a year ago. I was driving through like quite a wealthy neighborhood, same neighborhood where I did the window cleaning. And I saw like quite a few houses that had these like, security systems to stop their Range Rovers from getting Stolen. And I was just like a little bit curious. So I started researching what the products are, uh, and just realized like, okay, this is how much it's going to cost me to get someone to install them. I looked at how much the products cost and then realized like, oh, I could actually make a margin on this. And then did basically what I did for window cleaning. It just went door to door. And that eventually, uh, grew through a bunch of steps that I took to. Now in our first year we've done more than 200k rev, 50% gross margins, about 28% net margin. So it's like actually become a pretty decent business. I have a pretty simple playbook that I followed, which is all the businesses that I'd started before. I always just fucked around way too much for way too long with stuff that didn't actually drive revenue. So I would spend like months building like amazing websites and business cards and all that crap. And I just told myself like, okay, whatever I do next, I'm just going to shorten the period between starting and revenue as much as I like possibly can. So starting this business, like I said, found like a product that I could sell, found a guy who could install it, and then I just created like a little PowerPoint on my iPad. The pitch was like, hey, I'm installing these things down the road. I always like to have a chat with the neighbors to see if anybody be interested. I didn't sell any that first weekend, but I came away with probably like 25 leads. Ended up working those leads, calling, calling, calling, calling. And then eventually someone was like, okay, yeah, I'm actually, I'll actually do this. Our first sale, I think it was like £700 revenue and we made £200 profit. Then the second sale was 1,100 and then the third sale was £1,599 and it was like we made as much profit on that day as we did the entire weekend window cleaning. I was, okay, sick, so this works. But, uh, I can't spend every weekend knocking on doors. So then it was like, okay, I know I can make money. I had a bit of money. Then it was like, I need a website and I need a way for people to get in touch with me. So built the website on Framer, just uh, use like a template, Took probably a day. Use ChatGPT, whatever, like good copywriting, everything else. And then just did two things, started writing loads of SEO blogs which took a bit of time to get juice. And then also just started running ads just like YouTube tutorial how to run ads for local services. And then slowly the phone would start ringing and then it just got to the point where it's like, hey, we have business coming in. We, we had profits coming in, we were expanding our product range, we were getting a little bit bigger geographically, so like getting a few more laborers and just following like the very simple playbook of scale from that point onwards. But it's really not difficult just get away from people to find your business, get in touch with you, work them m until you sell them or lose them, and then just rinse and repeat.

Speaker B: So what are you doing to find customers at the moment? You obviously had that August, which was 40k. Are you doing sort of similar to that? Uh, now it's not recurring revenue, so I'm guessing new customers every time.

Speaker A: That's the really tricky thing about the business is not recurring. On average, I would say since August, we've done probably around about 20 to 25k a month. Our channels are we post on Bark, which is like a platform where you can find local services. We run Google Ads, we do SEO and then we get a lot of word of mouth coming in now and that's basically the only channels that we hit. So we still have a ton of room to grow into Facebook ads, uh, Facebook groups, content, TikTok. Like there's still a ton we can do, but right now it's pretty much purely like Google.

Speaker B: What sort of pros and cons of doing this kind of business? Is it really that good versus just going and doing software that they used to to get that recurring income?

Speaker A: I used to be really like, yeah, sweaty startups, like, it's the best, but for sure it's hard. Like the revenue numbers look really good and the profit numbers look good, et cetera. But then if you actually factor in like just the harsh reality of it, you got to pay the taxes and the VAT and all that stuff, like it's. It is hard to make a good amount of money, especially when you come from like tech land where you've probably got a great salary, I don't want to say that it's like utopia. I've always felt that if you've got this skill set and apply it to an industry where there's been pretty much no innovation, you've just got so much more of an edge than you would in an industry where the people that you're competing against are the people that are already kind of. It's just table stakes. A good example would be giving someone the ability to book using Like a calendar to book, uh, an installation is mind blowing for people. Whereas in our industry, James, like in tech that's just table stakes. Business is already so hard, startups are already so difficult, you try and find your edge. That's kind of why I like to do sweaty startups. I, I'm not a genius but you can look like one quite quickly if you just take the stuff that we know in SaaS and apply it to home services.

Speaker B: Mhm. You're right about this edge we have as people in tech. Apart from like calendar stuff. How can you use your edge to make a sweaty startup more effective?

Speaker A: So a big one is like I know a lot of people in these industries, they're running everything out of like a notebook. And it's funny, my co founder, he runs everything out of a notebook and I literally have, we nearly have like fist fights of me telling him to just please use the CRM, otherwise I can't do my job. Secondly, a lot of trades spend a ton of time on like paper invoices, accounting at the end of month, that sort of thing. If you just like build a couple of zapier automations with notion, that sort of thing. Another great example is I would say like most companies don't even run Google Ads. The ones that do probably have an ad uh, that's been running for three years. But if you can layer on like some sophisticated ad accounts, set up, you know, copy testing variants, landing pages, all those sort of things, you can crank that conversion rate. And again I think most people in this industry wouldn't even know how to approach that. And then finally a huge one that we did in the early days is when we would send quotes out to people. I would get on VEED and I would record a little video of myself talking through the spec sheet. First of all, most people in this industry never send great spec sheets. But if to get like a great video of the founder being like hey, this is what you get, this is why it's good. A lot of people just respond to being like this is mind blowing. The other thing that's really big is like in my opinion you should always charge a whole bunch of money for your services. I think a lot of people in the trades charge not enough and it's kind of a race to the bottom. And a great way to justify high prices is to give people like a really great experience, let them pay contactless on site. You know, all those things can help you build like really high margin business.

Speaker B: It's interesting as you're saying that uh, I'm thinking of like all the local services that I use. There was a cleaner that I hired to clean my flat and actually cleaning window cleaner. First of all, so hard to find and so hard to differentiate.

Speaker A: Oh my God. Yeah.

Speaker B: Like when I don't know who's better. Like your brands all look the same. M Usually my process. I'll put a message out on Facebook, see who gets recommended and send them a Facebook message. The guy came around, I went to like pay him. I was like, what's your bank details? He's like, no, cash only. Uh, mate, this was £400 this clean. It was outrageously expensive for what he did. Second of all, cash only. So I'm like, oh, uh, all right, well I'm gonna go and get cash then.

Speaker A: Yeah, that sucks. I mean, mate, I mean, I had a similar experience. I had a guy, a roofer, come and, and fix like a little thing on the roof and it was 80 quid and he was like, he was like, yeah, I'll WhatsApp you. And he's never whatsapped me, I've never paid for it because he's probably just drowning in messages from customers and everything else. And that should just be fully automated. This is why I care so much about home services. It's because it's like an um, unoptimized field. So it's just like easy stuff to get ahead. Getting the easy things right makes a huge difference.

Speaker B: Are there any other examples of sweaty startups like this? Like they've got a really cool brand or are doing really well.

Speaker A: Pinks is a business that I would love to run. All the guys wear these like really cool short sleeve shirts, almost like 60s kind of vibe. They wear like pink checkered vans. And they've built this really, really interesting brand that looks incredibly compelling and it's like young dudes that I think they only hire people from like universities. And they've built their brand up to a point where they actually make money selling merch now, which is just nuts to me. They're not really doing anything differently. They're not cleaning your windows differently. They are probably just using the same sort of software that most other people doing, but they've just really differentiated through brand. There's a great brand in California called Cabana, which is a pool cleaning company. And uh, it's run by a guy called Jeremy. Jeremy used to own a lawn care business which he, he was actually in Y Combinator with this lawn care business like 10 years ago. Sold it for 50 million or whatever. They've got a very simple business model. Pool cleaning Companies in the US are something like 79,000 pool cleaning brands. It's a complete fragmented market. So the majority of them are like one or two guys with a truck. Super simple business model. You either clean a pool, you change your chemicals or you like replace a filter. So he's buying these companies for like 4 to 5x revenue. He's stripping out the marketing to like one centralized marketing location in the U.S. he, he's stripping out all ops and moving it to the Philippines. So finance, legal, hr, that sort of thing. He's layering on top like a ton of amazing funnels, SEO, that kind of thing. He's implementing a routing algorithm which means guys are cleaning 12 pools a day instead of eight because they're just more efficient with the way they drive. And then finally he built a tool where uh, you put in your postcode and it uses Google Earth, uh, to look at the size of your swimming pool and then how many trees are around the swimming pool to estimate how big dirty the pool is going to be every week so that you can get like an instant price and book and pay on the spot. Because he knows if you get someone a price in less than three minutes, the conversion rate increases by 60%. And by consolidating a business in that way, it's kind of like classic private equity, but in kind of a sexy way. After about four or five years or whatever, you can probably exit those business like 15 to 18 x multiples. It's just multiple arbitrage. And he said with a straight face, he was like, oh, I think we'll have a billion dollar pool cleaning brand in like five years. And I believe him.

Speaker B: So Flo, uh, if people are interested in taking this approach, what kind of sweaty startup should they start?

Speaker A: If I wasn't doing the home security thing, there's two businesses that I find really interesting. The first one is around garage organization transformation. So I think a lot of people have garages at home which are like completely stuffed to the brim with crap. And what they really want is they would really love like a beautifully organized garage with like nice boxes and shelves, like space to breathe. I think what you could do is go door to door in rich areas and basically pitch people on a uh, service where you go in and you transform their garage. The second one that I think about a lot is around like handyman subscriptions. So I'm currently looking to sell my flat and there was like this long list of things that I have to do in my Flat. Like, there was a couple of areas that needed a bit of painting and like, there was a drip on this tap and this toilet was leaking a bit. And I got a handyman in and he sort of sorted it all out. And it made me think you could do like a handyman subscription thing where you go to, again, wealthy people with big houses and you say every single month, whenever you call us, we're going to come round. These are the type of things that we can do and these are things that, like, fall outside of our scope. So, like, if your roof's leaking, we can't help you, but if the toilet's leaking, we can. And then you just get a couple of handymen on your books. You subcontract the work to them. You basically just try and get sales. And the funnel would be pretty easy. You run ads on handyman. You know, you solve someone's problem, then you upsell them to the subscription. And there's a second revenue stream there where you get all the subscription money. But for anything major that needs doing, you either do that work and charge a bunch of money, or you partner with like, a plumbing company who gives you kickback and all of that. Those are like two sweaty businesses that I think have, like, real scale, you can make real margin on it. And I think they would just be a ton of fun to run.

Speaker B: I end up every episode on three recommendations, a book, a podcast, an indie hacker entrepreneur podcast.

Speaker A: It's got to be my first million. Everyone knows my first million. But, like, these guys do a really good job at shining a light on, like, these sort of scrappier, um, type businesses. There's only one book if you're gonna do this. It's called 100 million dollar leads. Alex Hormozi, I know that he's like a little bit of a meme sometimes. And he's got the other book, which is 100 million dollar offers. I find that this book in particular, if you're gonna start a home service business or any sort of sweaty business, just do this.

Speaker B: Well, mate, that's superb. Thank you so much. Coming on this episode of Indie Bytes.

Speaker A: Yeah, mate, congrats on all your success. Thank you for hosting me.