Bad news, you just bought a failing business...What next? - MARKETING SECRETS - EP. 5

We made a big mistake. We shouldn't have bought this. It's losing money every single day. We wired tens of millions of dollars for this company. It went from being really, really profitable to not profitable almost overnight. Where now we were like losing money. We're every single day losing tens, if not hundreds of thousands of dollars. This is not the highlight reel of like, we bought this company. It's super successful. This is like all the rest of the stuff we learned along the way that I wish I would have known. It would have saved me so much time, energy and effort. It was. It was crazy. Hey, this is Russell Brunson and you are listening to the Marketing Secrets podcast. I'm so excited to have you here today. I could have paid cash to buy a private plane, but instead I took that money and invested in a hand doodle whiteboard software company that turned out to be one of the biggest mistakes in my life almost until we fixed it. There's some big ups, some downs, and a whole bunch of stuff I want to show you guys behind the scenes what we did. I'm going to talk about what the company was. One of the front end offers were why we were so excited by this specific company, what happened when we bought it, and how everything crashed to the ground. The things we learned to get people to actually migrate from their platform to click funnels, a bunch of things we're doing in the future and and a whole bunch more. I want to put this intention for you guys as you're listening this episode today. As you're listening to it, I'm going to again, I'm walking behind the scenes of this acquisition we did and you may or may not be looking to acquire a company. It doesn't matter. The lessons I learned along the way will be good for you no matter where you are. This episode is actually brought to you by a really cool software company called Doodly.com. if you go to Doodly, find about Hand Doodle SoftW, we'll talk more about that. But they are definitely sponsoring this episode. With that said, you guys, let's jump in the podcast and have some fun.

You're listening to Marketing Secrets with your host, Russell Brunson.

Backstory goes back to when I was in college and I was just first learning this whole Internet marketing game. And one of the guys I met also dabbling in Internet marketing and his name was Brad Cowan. So this had been like, man, early 2000s, 2001, 2002. He was a big SEO guy back in the day. Eventually he created a product Called fatloss factor, which was a weight loss offer, which literally was like my favorite funnel back in the day. He had hand doodle software, doodled out the sales video.

Hey, Brad Cowan here. I own an online video software development company, and I've been selling products and services online since 2002. So about.

And it converted great. He made tons of money with it, and then eventually he sold that business, that product. And I remember at the time, he actually joined my inner circle, and he showed up. And it's funny, because in their circle, everyone would get up and talk about their business. And Brad got up. He's like, I don't have a business. I sold my business. And we're like, oh, what do you want to talk about? He's like, I don't know yet. We're trying to figure out what to do. Shortly after that, I remember me and him messaged back and forth, and he said he wanted to create doodle software. He's like, I had a ton of success with it. I want to create doodle software. And I was like, there's a lot of people that have created doodle software. Like, that doesn't seem like that big of a market. Like, why would you even do that? But he really wanted to. And he created the product and he launched it, and I didn't hear much about it. And again, I have two or three friends that actually sell hand doodle software. So I just like, oh, yeah, it's hand doodle software. It's like a year or two later, I was messaging Brad, just asking him how it was going, and he told me, he said that we're selling like, 500 copies of this doodle software a day. And I was like, wait, a day? Like, 500 new buyers a day? He's like, yeah, this is amazing. And then he's like, I took the model we figured out, and I created new software called toonly. So doodly was like the hand dual software. Toonly was like a cartoon version. We have the cartoons and stuff. And he said, I have 500 buyers a day. He's like, we're making tons of money. But he's like, but I don't have what you have with clickfunnels. Like, I don't have a backend. Like, I wish I had a continuity program. All these 500 people a day. I could put them into where I was getting paid monthly, But I didn't have something like that. So the next two or three years kept going back and forth with him. And I remember he showed me he's like, I figured out this model and it's the reason why I'm able to sell 500 copies a day. So what I did is like, I created the doodly.com homepage. If you go to that homepage, you notice that there's the sales page for the sales letter software. And inside of it it's like $67 a month. The software. He's like, but I don't drive any traffic to that page. He's like, I have a special page. It's like doodly.com whatever, Facebook or YouTube or whatever, wherever he's driving traffic from is like, you go to that page instead of selling it monthly, we have a one time fee where you pay $67 for lifetime access to the software and the page. It literally says it's like special offer just for Facebook visitors. Normally $67 a month. If you go to the homepage because you're here, it's $67 lifetime access right now. So that was the first thing, like this irresistible offer where you go from $67 a month to $67 lifetime. That was the offer that got 500 buyers a day to come in. So he was making $67 for everyone came in. But then his first upsell was a whole bunch of templates for people who are using the software. And he sold that for $97 one time for like three or 4,000 templates. And his take rate on OTO1, which is $97 offer is like 60%, which is crazy. They'd upsell two and three and like. But the funnel was just killing it, right? All these buyers are coming in. But the biggest thing he says, he's like, I don't have continuity. I'm a click funnel, so I need to build something. So he spent the next couple of years building out this video, like a video hosting platform called Voomly that he was gonna let. He was gonna host all these videos on.

Hi, I'm Brad Cowan and today I'm extremely excited to introduce you to Voomly, the first and only all in one software that can instantly and automatically upload, sync store, and then host your online videos.

And after he created it, it was actually really, really good. And so what he was gonna do is make it where when someone creates a video, then they could host it on his video platform. That would be the continuity he was gonna make from it. And then for some reason he created the continuity like the platform, and then it never really took off. I don't know exactly why. If I'm completely honest. I know he tried to launch it one way and then he tweaked it to be like this course creation platform and then he just never really figured it out. And Brad decided he wanted to sell the company and he actually reached out to me because about the time is when we were looking, you know, we were talking to people about potentially buying click funnels. He said, hey, do you have somebody that you could introduce me to? So I was like, yeah, I have this really good business broker. So I introduced Brad to this business broker and had even crossed our mind that we would be potentially, you know, that we were potentially going to buy it. And by the time we decided we weren't going to sell clickfunnels and instead we're going to build ClickFunnels 2.0. And then one of the big things that I kept thinking through is like, I want to figure out ways to have more non Russell based front ends, right? Like my face is on the front end of all of our front end products and our courses and our things that bring people in the clickfunnels, which is cool. But you know, if we ever want to sell someday or go public or whatever the next step would be. It's weird if I'm the only person if I get hit by a bus, like what happens to the company, right? So the question was like, how do we build more non Russell based front ends? That was kind of the thought. And then all of a sudden Brad messaged me one day, he's like, hey, we got three or four people looking to buy the platform and just want your opinion on something. We're talking. And also had this idea that popped my head. I was like, he's getting 500 buyers a day just on dooley.com. it's like counting toonly.com and the other ones, like, what if we bought that company and we put these 500 buyers a day, got them into click funnels, like what would that look like? That would, that would be the huge, like these are non Russell based front ends. They're software front ends. Like there's, there's this thing. He's figured out the model. He's figured out this thing. He's crushing it. Like we should just, we should buy that. And also now we have all these different front ends that aren't, you know, aren't my face on them. The opportunity seemed really, really good for us. We took all the customer lists from, for Brad's company and from ours and just to see if like, you know, if they're the same customers, there's only like, a 5% crossover. So, like, 95% of customers were not clickfunnels members, which in our mind was like, this is this huge thing. And so we all excited. We decided to buy it. It was extremely expensive. As you can probably tell, his company was killing it. So it was our first big acquisition. We had to get a bank loan. And, like, it was stressful and all those kind of things. First problem we ran into is, right, we're about to close this whole deal is the same time that Dave Woodward, who was our CEO at the time, who was running the company, got his brain tumor. And so that was the first thing of just like, we lost the person who was running the entire deal, which was a year later, still, like, just this been a really, really hard thing. Second thing is, we'd never bought a company before, so we didn't know how, like, how it works. So we're buying this company with Brad and all these products, and there's like 100 employees. And so we buy this company, and then the day we close, on the day we close, then Brad's like, hey, here's the company. Like, good luck, you guys. And. And we. I never even thought through, like, I think most companies have. That are buying companies have, like, a mergers and acquisitions department that, like, onboards people. We didn't think through any of that stuff. So we bought the company wired in the money and like, oh, we have this company, and it's all sudden, like, we have to hire 100 people. We have to, like, figure out contracts. We have to figure out. And it was a nightmare. We didn't have any migration plan. And again, I lost Dave. So I was like, russell, like, what are you gonna do with these hundred new employees? And I was like, I have no idea. So that was really, really stressful and painful. We also found questions we should have asked. The company was basically Brad. And Brad's insanely talented. So there's Brad, and then there was like, a hundred people that worked under Brad. There was no organization. There were no managers there. No, like, all the kind of stuff that you have in a typical company. Brad didn't have any. He's just super talented and managed all these people. So when Brad's little company was gone, all of a sudden, like, I had a hundred direct reports reporting back up to me, and everyone asked me a thousand questions, and I was like, I don't even know what to do right now. Like, it was. It was kind of crazy. The operations was not in place for that company, Brad was running his own ads. He was, you know, he would be checking ads hour by hour, minute by minute, making tweaks and changes and like, so when we had our ads to take it over, you know, they're not checking every single ad set multiple times an hour, like he was able to do so. He was optimizing constantly tweaking the funnel and tweaking stuff. And like, it was his sole focus for, you know, four or five years. He was building it up. And so when we took it over and we're plugging into, like a machine with media buyers and people and all sorts of stuff, and there's different divisions from funnel team and from ads team and like, it went from being really, really profitable to not profitable almost overnight. Where now we were like, losing money. We're every single day losing tens, if not hundreds of thousands of dollars. But, right. It's okay because we have this huge customer list. People are coming in separate one, let's get all these people into clickfunnels. Maybe we'll add 10 or 20,000 people. In clickfunnels. We promote this big webinar to the doodly and the tunely and all the customer lists. We had three or four thousand people registered. And, like, this is gonna be amazing. Hey, my name is Russell Brunson, and first off, I want to thank you so much for registering for special web class we are doing for doodly and toonly customers. And about halfway through the presentation, I look over to the comments. They were not. They were not going well. People were upset. They were complaining. This is a sales pitch. I quickly realized is that the customers who were buying Dooley and Tunley, were not who I thought they were. I thought they were marketers using videos to market their business. When I found out really quickly as people were buying, were people who are course creators, not business owners and marketers. These people had never done a webinar, never been sold to. It was bad. We sold a few on the webinar, but it was not slam dunk by any stretch. Yeah, that night we were all, like, stressed out. I'm like, we made a big mistake. We shouldn't have bought this. It's losing money every single day. The buyer's not buying click funnels. And we got 100 people messaging us for support. We didn't know what to do. I sat down and I wrote an entire script that we're going to hand animate. We found one of the animators who did a lot of work with Brad to do doodle videos. Like, here's the script. Doodle this video out. And then we found someone who did the toon leave videos and said, here's the same script. I tweaked some things for toonly. I need you to make a toonly version of it. And so now someone went and they spent a month or two going to making a doodly hand doodle video and a cartoon video. The whole goal was to take people from who are buying doodly or buying toonly and bridge the gap. So they would want to become funnel builders. Okay? And so much of marketing is just bridging gaps. You guys understand that, like, if you think about it, whenever you're trying to sell whatever your product is, like you're selling a book, someone may not like, why do I need traffic secrets? This makes no sense. Well, I need to bridge the gap. Like, what did you have? A business. A business needs customers, right? Customers are traffic. That's why. So I had to bridge this gap with like, oh, I actually need that thing, right? So all business is about that. Figure out, like, what is the result that you offer people? What is the thing people are looking for? Like, how do you bridge the gap between those two things? And so doodleyfunnels.com and to the funnels.com were a sales video to bridge the gap between where they were today and where I need them to go to actually buy click funnels. And from that, it was cool because we started seeing people actually start signing up four click funnels through these different funnels, right? Oh, thank heavens. Like, not all is lost. Like, we can, we can bridge the gap. We can convince these people why funnels is what they need to really get to the next level. So we made those bridges by me just taking my existing webinar that converted for Internet marketers for the last 10 years and trying to put it on these course creators. It wasn't a bridge that they were able to follow, Right. I had to create something very specific for them. And then after we had those things and they were working, then we went back and said, okay, let's go and let's actually add the doodly funnels offer as upsell number three in the funnel. And so went back through and added upsell number three. So now when you go, if you buy doodly, you'll see, you know, doodly for $67. And there's 97 lifetime pack and then there's another offer and then it's clickfunnels trial, which is basically doodly funnels video. And then we push people to trial with that on the doodly funnel and the toonly funnel built into the funnel. Now doodly.com like that funnel is one of the top ten click funnels affiliates. That's how much new trials they consistently bring in. It's one of the top 10 lead sources we have right now, which is amazing. So it's finally starting to work. I need to credit where credit is due. When all this stuff was happening and Kevin Richards, who's been one of the man, one of the greatest gifts of my life over the last year and he came in and has become like our CMO and COO of ClickFunnels. Kevin's the one who like took the doodly funnels to the funnels and after I built the sales video and the initial sales layers weave them into the click funnels funnels and so like he's been just insanely good helpful for us to get these things in place. And so like how do you juggle all these things when you're struggling? Like it's finding more help, it's finding the right people, it's getting the right people who can whose skill set is to do these things. And so I was lucky I was able to find someone to help with that. It took us a year to get the structure, the people, the offers, the, the bridge points like all those things in place to where now this becomes a really good front end engine to bring people into click funnels and things like that where we're going so that you guys can watch over the next couple of weeks, months and years. I told you guys before that Brad had built a video hosting platform called Voomly. Video hosting is like the big thing, right? Like we can do video hosting with Voomi just as well, if not better than them. Plus plus Brad had built this really cool engine into it, like a video funnel engine where you can build super complex video funnels through the Voomly player, which is insanely cool. And so you'll see the new version, it hasn't launched yet but basically if you buy doodly or toonly they're all kind of cross sell inside of the software. On top of that we're also going to be taking these video Voomly video funnels technology and plugging into ClickFunnels so ClickFunnels members will hopefully stop using Vimeo and Wistia and YouTube to host their videos. But we start using Voomly instead because first off it's a better platform. Second off, you're able to do video Funnels, things like that. And third off, it's just going to be super easy integration. And so over time I think voomly just the video hosting platform could be a 20, 30, $40 million a year business just by itself. There were a lot of things we learned on the way. We learned that like you need to have somebody in place of like migrating people over. We learned that you got to make sure when you're buying companies you're not just looking at like ooh, the marketing, like the ads are converting, the funnels are good. It's like who's looking at the operational side of things? Like who's gonna manage these people? Like what's it gonna look like? Is there a process for running ads? Is there one super genius who is like doing all this stuff and if he leaves and he is leaving because he sold the company, like what happens? Like do the ads just crash? Like we've known now to ask the right questions. So hopefully that helps some of you guys. If you haven't used doodly or toonly yet, you should go check it out. But I would go to the homepage, you'll see it's $67 a month and then just wait and we'll retarget you and you'll get an ad somewhere that'll give you the lifetime due deal. So there's your guys homework is go let us stock you some ads and go find it out. But then look behind the scenes like buy slowly, watch the funnel, look at the process. Like for you to go and funnel hack that and look at the process is worth at least the price of buying the software. So go buy the software, funnel, hack it, watch it and then figure out how could I reverse engineer a funnel like this for my specific business? Thank you so much for listening this episode. If you enjoyed it, please share it with somebody you know who could benefit from it. Let them listen to it. Hopefully you guys enjoyed it. And again, if you have any questions for me about this episode or any episodes, go to marketingsecrets.com on the homepage you can submit a question that's come directly to me and I'll answer them on the next podcast episodes. On top of that, when you go to marketingsecrets.com, you can see the video version of this podcast, you can see the show notes, whole bunch of other stuff plus all the other past episodes. You can go and binge watch them there. Thank you guys again for listening to the Marketing Secrets podcast.