S3E28 – Joe Tolzmann – How to scale a B2B SaaS for Construction

Key Timecodes

• (00:49) – Show intro and background history
• (01:17) – Deeper into his history before creating the SaaS business
• (04:10) – When he started to develop the SaaS model
• (04:54) – Does he still run the property restoration management company?
• (05:41) – Deeper into his business model
• (06:11) – How about his pricing model
• (06:53) – Deeper into the human labor reduction strategies
• (07:45) – How big is his team
• (08:14) – How many engineers does he have on his team
• (10:13) – does he offer some trial period of the product?
• (12:51) – What are the marketing channels he uses to get exposure
• (13:32) – Is he doing some paid advertising?
• (14:26) – What is the biggest challenge he faces growing the business?
• (15:03) – Is his team remote or working at the same location?
• (15:34) – Deeper into the business funding
• (15:49) – How many customers does he have?
• (17:31) – A key takeaway from the guest
• (19:29) – What is the worst advice he ever received
• (19:58) – What is the best advice he ever received
• (21:05) – Guest contacts

Transcription

[00:00:04.500] – Intro

Hey, this is Sean Tepper, the host of Pay Back Time, an approachable and transparent podcast on financial independence. I’d like to bring on guests to hear authentic stories while giving you actionable takeaways you can use today. Let’s go. My next guest originally worked in the property restoration industry and faced a lot of repeated steps and time consuming activities. He decided to solve these problems by creating a SaaS platform that saves time and helps property restoration companies run more efficiently. Now today that platform has cut admin labor down by 50 %. In this episode, we talk about how he created the company, what he does for marketing sales, what challenges he faces today, and his exit strategy. Please welcome Joe Tolzmann. Joe, welcome to the podcast.

[00:00:51.580] – Joe

Thanks, Sean. Awesome to be here today.

[00:00:53.420] – Sean

Yeah, thanks for taking the time. So why don’t you kick us off and tell us about your background?

[00:00:57.490] – Joe

So my name is Joe Tolzmann. I’m the founder and CEO of Rocket Tech Plan. Rocket Plan is a B2B SaaS platform that helps property restoration insurance claims professionals run their business basically from a mobile device. In particular, getting all the documentation, reporting to insurance companies, and streamlining their entire estimating and billing process.

[00:01:17.410] – Sean

Nice. Now, this is a very niche product, very unique industry. Why don’t you just take a step back, tell us about what were you doing just before you created this business? And we’ll lead into the why. Why did you create this company?

[00:01:30.990] – Joe

Yeah. So back in 2012, I started property restoration company with two employees, and we grew it to over 100 with branches in B. C. And when I started, how’s the person taking the call? His emergency response 24 7, could be weekends, middle of the night, going to the sites, working with my crew in the field, doing the demolition, doing the physical labor, gathering all the documentation, then going home, generating all these reports, doing estimates, doing backup for billing, and pretty much running the whole business full cycle. As we grew, when we reached the point of about 20 employees, now we had field workers, office workers were implementing different software to streamline the operation. And we went through implementation of three platforms for this vertical. It was a very lengthy, painful process, 3 to 6 months to realize they don’t work. And the reason for that was that they were built before smartphones really became smart. So back in the day, the nature of the business was that you send crew into the field, they’re getting photos, they’re getting some notes, they’re filling out paperwork, gathering all this in one place, bring it to the office, and then you have someone dedicated full-time to enter that information into that centralized software.

[00:02:48.930] – Joe

Well, these days that doesn’t work because the amount of inefficiency is just unacceptable. The chaos this creates and it’s unnecessary. So after implementation of all these three platforms, I realized I got to hire software engineer, bring them on staff, and build something that actually works for the people in the field when that happens on a job site. So taking photos, taking notes on a mobile device. And we built this prototype. It looked like 1980s DOS, black screen, green and red buttons. It was pretty basic, but it worked so well. People were able to do what they’re doing anyways, but now they’re doing it on their mobile device without everything into one place, immediately available to people in the office to do reports, to do estimates, to have all the back up for billing. So we cut out over 50 % in admin and management labor, and we were scoring new business because other stakeholders involved in the insurance claims process, they depend on the data that comes from the contractor, property managers, insurance adjusters, brokers, carriers, and so on. So we’re scoring new business. We’re significantly more operationally efficient. And then one day I realized everybody’s got this problem.

[00:04:00.020] – Joe

It’s an industry systematic issue. So I figured scalability factor and a good thing to help the industry to streamline the process. I started Rocket Point.

[00:04:11.130] – Sean

Nice. Okay. And with this company, when did you start it?

[00:04:14.880] – Joe

We started Rocket Point in 2020 just before COVID, just before a lockdown. And we felt pretty lucky. We were able to build the product work remotely right throughout the whole pandemic.

[00:04:28.150] – Sean

Nice. And is that when the product launched, or is that when you started developing the product?

[00:04:33.550] – Joe

That’s when we started developing. So we launched the market about a little bit over a year ago.

[00:04:38.810] – Sean

Got it. So it’s probably about a two year build, is that correct, to build the app?

[00:04:42.840] – Joe

Yeah. It’s an iteration over and over again, testing it.

[00:04:46.180] – Sean

I hear you. Our MVP took about a year to build the first version. So I know the pain. A lot of beta testing, a lot of bugs.

[00:04:56.390] – Joe

It’s a rough test.

[00:04:57.870] – Sean

Yeah. Do you still run your property management or your restoration management company today?

[00:05:03.700] – Joe

No. When I decided to start Rocket Plan, building SaaS company, it’s a major undertaking. Running another company, it’s a major undertaking. Given the size of this opportunity, I decided to fully focus on Rocket Plan.

[00:05:16.450] – Sean

Got it. And did you go full-time with Rocket Plan right at the time of development or did you do development in parallel with offboarding your last company?

[00:05:24.640] – Joe

I got all in. All in. Okay, good for you. The magnitude of this opportunity is just uncomparable to anything else. So I figured, why drag it on? Why waste time? Just focus on it and get it done.

[00:05:37.280] – Sean

That said, you got a SaaS business, time to go all in. I hear that. All right, so let’s dive into the business a little bit. It’s a B2B. It sounds like you’re probably serving more small and midsize businesses as opposed to enterprise, right?

[00:05:51.890] – Joe

The greatest discovery about it was that solution we built, it applies to small family run business but also national, international company because everybody’s experiencing the same problem, getting the documentation from the job site into one place so they can report, estimate and invoice.

[00:06:11.990] – Sean

Nice. Okay. I’m on your pricing page. Your prices are very clear, very clean pricing model. It looks like it starts at 99 a month for up to 10 users. And then you do have an office or enterprise with a contact us button, which is smart too, allow you to have that conversation and see, vet them out, how many people do you have? And how do you price? Is it really based on the number of users?

[00:06:37.110] – Joe

Yes, it’s per seat per user per month. There you go. This comes from annual subscription. It works out to be only $2.60 per person per day. And the amount of inefficiencies and labor hours is removed. And just chaos and confusion. It’s incredible.

[00:06:54.120] – Sean

Just to circle back, you mentioned, I think it was 50 %… Just to clarify that, it was that 50 % reduction in human labor?

[00:07:02.080] – Joe

Even admin labor, yeah.

[00:07:03.510] – Sean

Admin and management. Admin labor. Impressive. That’s impressive.

[00:07:07.710] – Joe

Yeah. It’s incredible the amount of work that goes into capturing the data. And you got multiple people doing this on a job site. Now, everybody’s got this in their phones or some different apps. Nothing is really connected. Then people tend to email that information to one person. That person was not necessarily at the job site. I magine when you have multiple apartments affected, each apartment has multiple rooms, how photos can get mixed up. Then the notes, what happened in this unit, in this room. To sort it all out, it takes weeks, sometimes even months before contractor is able to get all this documentation and invoices to insurance companies.

[00:07:45.130] – Sean

Sure. And today, how big is your team?

[00:07:48.740] – Joe

We’re growing, we’re experiencing explosive growth. And the core company is six people. These are people that started with me, but we’re hiring. So if there’s any good salespeople, B2B SaaS, specific to construction technology, prop tech, or insuretech, we’re always looking to add more to our team.

[00:08:09.030] – Sean

B2b salespeople with construction experience. That’s the key there. Okay. then how many engineers do you have on your team? Is it about 50 % of your staff?

[00:08:19.300] – Joe

A little bit less than that.

[00:08:21.260] – Sean

A little bit less?

[00:08:22.110] – Joe

Okay. A little bit less than that. We did the majority of the heavy lifting in the beginning. It was pretty much all engineers. Once we built the product, then we focused on customer acquisition, customer success. We build this product so it actually requires no onboarding. Anybody who can take a selfie, they’re ready to go within minutes. We build a feature for the person who is already working on a job. So it’s very specific if they know how to do demolition work or they know how to do drying logs after water mitigations, so they already know that part. We made it so easy for them to do it on their mobile device. So literally no training required.

[00:08:58.620] – Sean

Right on. And you guys are based in Vancouver? Yes. But is this a global SaaS?

[00:09:04.950] – Joe

Absolutely, yeah. Nice. We got some of the major globally, some of the largest restoration companies already on board. We got many other networks coming on board, franchise networks. It’s really a systematic issue throughout the industry globally.

[00:09:20.090] – Sean

Right on. Okay. All right. And then let’s talk about your customer acquisition strategy. How are you marketing? How are you selling?

[00:09:27.970] – Joe

So construction is the second least digitized industry. Farming is number one. So it is a challenging part to get people on board it. And it’s majority due to the nature of the business because people work on a job site. It’s physical labor, hammers, saws flying around. Using some technology is just like, I don’t have time for that type of thing. That’s why we’re really focused on the user experience and easy onboarding. So it takes minutes to onboard two people or 200 people in one company in one shot. It’s that easy. We found just leveraging our connections in the industry, trade shows, talking to people and just letting them know how easy it is. It’s a no brainer for them to get going.

[00:10:12.880] – Sean

Got it. Do you offer some trial period? You see a lot of SaaS have a 14 day or 3D day or something like that?

[00:10:19.440] – Joe

No, nothing really. It’s more showing people what this can do for them and then they jump into it and use it. Because we’re taking off immediately from day one, they see the savings. All the information is in there. Two days later, the job is completed, they can invoice on the same day. All the backup information is there. Makes it super efficient for them to create an estimate, to create an invoice, and to send it out without any delays. So they get paid faster as well.

[00:10:48.620] – Sean

So in your sales process, are you doing a demo with a lot of the customers, or do you get people naturally coming to your page or your site, seeing the pricing model, signing up on their own without your team and just moving forward?

[00:11:00.930] – Joe

Yeah, it’s all over the map. We had people where they purchase annual subscription, they get on boarded without even talking to them. But we have people where they just need to hear it, they need to feel it, get up walking to it. So we jump on the call, we show them it’s usually 15 to 30 minutes call with question. And yeah, it’s that simple.

[00:11:20.910] – Sean

They’re off and running. The reason I asked that is based on my experience with B2C and B2B, especially at the SMB level, is there some touch point. It’s not like a low touch like Tykr in our case, is a B2C, low touch SaaS, so we don’t even get an equation, but our price point is a lot lower than yours. But at that B2B, it’s nice to have a human. You can just see a demo, ask some questions. And as you said, 15 minutes to a half hour, they’re pretty much on their own thereafter.

[00:11:51.520] – Joe

Totally. The biggest challenge for any business is they have their own workflow and they know it could be improved, but they’re not always willing to take the risk because if they start changing things, it’s unknown how this will affect their operation. It could be better, it could be worse. And that’s the part after we show them how easy it is and what value Rocket 1 delivers, it’s like no brainer to get into it right away.

[00:12:14.230] – Sean

Sure. Let’s take a quick commercial break. Hey, this is a quick heads up that we have a second podcast titled Top Stock. With Top Stock’s podcast, I talk about investing, business, and finance. The audio content is published on your favorite podcast platforms such as Apple, Spotify, Google, or Amazon. And the video content is published on the Tykr YouTube channel, so you can either watch or listen to each episode. These episodes are just me, so no interviews. And the overall goal is to help you become a better investor. Go ahead and look up Top Stock’s podcast or check out the Tykr YouTube channel. All right, back to the show. So this is good at that touch point, that conversion point. Let’s take a step back. How are you getting the name out there? I think I heard you say trade shows. Talk about the different marketing channels you use to really create exposure.

[00:13:07.350] – Joe

Standard things like calling people that we know, calling suppliers, social media campaigns, just connecting with people.

[00:13:15.440] – Sean

So you really leverage. It sounds like you’ve got a guy you’re close with, maybe a customer, Joe will use just make up names here. And Joe knows John. You’re like, Hey, you think I could get an intro to John? And it just works like that.

[00:13:29.140] – Joe

Yeah, totally. Sweet.

[00:13:30.940] – Sean

Okay, that makes sense. Are you doing any paid advertising? You mentioned social media. Is that organic or paid?

[00:13:37.610] – Joe

We’ve done both. So on social media, it could really hit and miss because we’re in such a niche space. So what we found, retargeting works really well. Generating new leads, not so much.

[00:13:52.550] – Sean

But.

[00:13:52.870] – Joe

That’s how we focus more on direct approach with people that are in the industry. We know them, they know us, and then keep the conversation from there and then get introductions to others.

[00:14:04.000] – Sean

Yeah, there you go. It’s that relationship methodical sales there of talking to people, understanding pain points and asking who knows who. I’ve seen that to be more effective, too, because if you’re doing this shotgun approach with Facebook ads, especially for niche product, you may get a lot of leads and maybe not the quality customers you’re looking for. Yeah, that makes sense. What’s your biggest challenge you’re facing with growing the business right now?

[00:14:32.230] – Joe

The most important thing is to have team that it’s aligned. And with explosive growth, bringing more and more people in a short period of time, I take a lot of time to make sure that everybody’s on the same page because this is where things can get out of control pretty quick. People come to work with intention to do the best job they can, but then everybody’s got a different perspective to it. Not everybody knows overall strategy, and that’s why it’s important to spend sufficient time with a team to get everybody aligned.

[00:15:04.000] – Sean

Got you. And now, are you a remote team? Are you all located in the same location?

[00:15:08.200] – Joe

Mostly remote.

[00:15:09.380] – Sean

Good for you. Okay. And the people, are they all over the globe or in the Canada, US area?

[00:15:15.560] – Joe

Mostly North America, Canada, US.

[00:15:18.080] – Sean

Got you. Are you open to other people from other parts of the world?

[00:15:23.060] – Joe

Maybe for some development, yes. Projects here and there, but for the most part, local people because we’re selling to the local market primarily here.

[00:15:33.710] – Sean

Sure. Just to take another step back here, I didn’t ask this question, are you bootstrapped or is this venture backed?

[00:15:40.890] – Joe

Yeah, we’re bootstrapped in the beginning, and then we open up angel round to friends and family to bring them in on the opportunity. So that’s all it is for now. Got you.

[00:15:49.590] – Sean

I know we talked about for the podcast, we won’t jump too far into the revenue numbers, but can you give us an idea how many different customers you have?

[00:15:59.070] – Joe

Yeah, we’re we signed on one of the globally largest restoration company. We got networks coming on from 100, 150 locations in one shot. The pipeline is pretty packed. We got Yeah, we’re probably going to be exiting in a year or two.

[00:16:18.130] – Sean

I was going to go there next. Bootstrapped, looking to exit. You’ve probably done the numbers, but to the listeners out there, with a SaaS business, you can go 10 X EBITDA, or sometimes 10 X even revenue. It’s even better.

[00:16:33.160] – Sean

Or more. Or more, correct.

[00:16:36.000] – Joe

Yes. We have overwhelming inbound interest from different M&A’s private equity groups, OVCs. There’s a lot of exit options available and a lot of interest early so far. So it’s definitely a unique opportunity. And the big focus is just to keep the product with the best user experience and keep driving this velocity of growth.

[00:16:59.340] – Sean

Absolutely. Are you the sole owner or do you have partners?

[00:17:03.780] – Joe

We have a few investors, friends and family. Okay, got it. A couple of co founders.

[00:17:08.740] – Sean

You do have some co founders. Got you. Okay. All right. Well, good for you. That’s the roadmap. I have seen these very niche markets, very niche industry solves a big problem in a space that not too many people know about. Unless you’re in the space, then you know the pain and they can sell for a pretty penny. Good on you. There’s a lot of listeners on this podcast that are investors, but people who want to start a business, including the more I talk about SaaS. They want to learn how to create a SaaS. Do you have any key takeaways you can give our audience about, Hey, you want to create a SaaS business? What’s the first step?

[00:17:47.080] – Joe

I think the very first thing is to be focused on what problem you’re solving, crystal clear. Before we become valuable, we have to provide value and we got to be clear on what it is. Then working backwards from there, how is that possible? I want to achieve this, what I need to do right before that, and then right before that, right before that, lay out the path and figure out if it’s feasible.

[00:18:13.130] – Sean

Right on. Great advice. All right, Joe, well, let’s dive into the rapid fire round. This is the part of the episode where we get to find out who you really are. If you can, try to answer each question in 15 seconds or less. You ready?

[00:18:26.180] – Joe

Ready.

[00:18:26.950] – Sean

All right. What is your favorite podcast?

[00:18:29.580] – Joe

The Playbook, David Melzer, Jason Calafatis is pretty good, and obviously, Payback Time. I made.

[00:18:38.400] – Sean

The short list. Thank you. Now, I don’t know Jason personally, but I have heard him before. All right, next question here. What is a recent book you read and would recommend?

[00:18:50.910] – Joe

The most recently I reread Blue Ocean Strategy because it’s such a good book to read on pretty much on a regular basis.

[00:19:00.010] – Sean

Amen. I actually just read the book within the last two months. Great read.

[00:19:04.180] – Joe

For any new entrepreneur, I think one of the best ones is The Hard Things About Hard Things.

[00:19:10.950] – Sean

Yeah, another good one. Nice. All right, movie question. What is your favorite movie?

[00:19:16.230] – Joe

That’s a hard one because I can’t even remember what was the last movie I watched. But probably the classics, Casino, Goodfellows.

[00:19:25.590] – Sean

That’s, of course, Hazy.

[00:19:26.910] – Joe

Yeah.

[00:19:27.960] – Sean

Right on. Good choices. All right, few business questions here. What is the worst advice you ever received?

[00:19:35.080] – Joe

What if it doesn’t work? Do you have a plan B?

[00:19:38.450] – Sean

I love that. You know the problem you’re solving and this is the path.

[00:19:43.080] – Joe

Yeah. I get a sound like how many times people focus on things that can go wrong instead of focusing on what can go right and follow that path.

[00:19:52.660] – Sean

Absolutely. If you know the path forward, that’s it. That’s where you’re committed to. I love it. Yeah. All right, flip the equation here. What is the best advice you ever received?

[00:20:03.470] – Joe

Just do it. It could be better than you thought. Nice.

[00:20:08.730] – Sean

All right. And last question here is a time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?

[00:20:17.470] – Joe

I would tell myself to learn the word scalability because I work in construction, restoration. It’s a good business to be in, but scalability factor is not there. And then when I discovered SaaS, the scalability, I wish I knew that word a long time ago.

[00:20:36.540] – Sean

SaaS is the definition pretty much should be right there in the dictionary next to scalability. I know. Really enjoyed your back story here. Thanks for the context on what you were doing before because there’s a lot of people are in positions where they see pain in either the job they’re working, maybe it’s a business they currently have, or maybe they work for a company, and they’re like, Oh, my gosh. I could solve so many problems by doing this and this, and this. How can a software automate that? And that’s exactly what you did. Cool. So with that in mind, where can people reach you?

[00:21:08.570] – Joe

Probably best, Instagram, Joe, @tollsman, LinkedIn, and just my email address, Joe@ rocketplantech. Com.

[00:21:16.060] – Sean

Great. We’ll make sure we promote all of those when your episode goes live. But thank you so much for your time, Joe.

[00:21:21.840] – Joe

Thanks for having me. It was awesome.

[00:21:23.450] – Sean

All right, we’ll see you. Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. Also, if you have a moment, could you please head over to Apple podcast and leave a review? The more reviews we get, the more Apple will share this podcast with the world. So thanks for doing that. And last thing, if you do hear any stocks mentioned on this podcast, please keep in mind this podcast is for entertainment purposes only. Please do not make a buyer sell decision based solely on what you hear. All right, thanks for your time. Talk to you later. See you.