← Making It with Jon Davids
Making It with Jon Davids
222 - "This Guy is Making Millions of Dollars From Toilets" | with Dave Garden
00:50:58
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- [00:00]
John Davids
So, Dave, I came across this company and I gotta tell you, I thought about you right away. I want to tell you all about it right now. You ready for this one?
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Dave Sowers
I'm ready.
- [00:10]
John Davids
Company is about toilets. It's a toilet company. Okay, what's up, guys? JD Here. And on today's show, I'm talking to.
- [00:18]
Jon Davids
My buddy Dave Garden, who started a company in the 90s, made millions and.
- [00:23]
John Davids
Millions of dollars, then sold it a couple decades later, and now he's doing it again. We cover a lot of good stuff in this podcast that's coming up in just a sec. Welcome to the podcast.
- [00:33]
Jon Davids
My name is Jon Davids, but you.
- [00:35]
John Davids
Can call me J.D. if you're a fan of this show, make sure to let me know by.
- [00:38]
Jon Davids
Leaving a rating or review. Get my best stuff to your inbox@johndavids.com and now let's get to the show.
- [00:49]
John Davids
You're listening to Making it with John Davids. So this is back in 2004, and in Savannah, Georgia, there's this guy named David Sowers, and he's a banker. One day he's taken his two little girls out to a local festival. I think it was like a Shakespeare in the park kind of thing. And he's there, he's got two young daughters and he's got to use the bathroom. And I think his kids also have to use the bathroom. And all they got there are these big blue porta potties, construction site style Porta potties. Everyone knows them, everyone's seen them. So it's the worst kind of experience. Because I don't know about you, but if you've got your kids there and you're just there by yourself, you either got to bring them in with you. Can't really leave them outside if you know four year old, a three year old. So you're in this tight little space, you don't want to touch anything. It kind of stinks. And I think he had one kid on his hip and one kid is on the toilet and he's whatever. And it's just, it's a disaster. And this guy, David Sowers is in the porta Potty and he has a life changing moment. He thinks, I got to make this better. Why are we stuck in 1753 technology with outdoor plumbing? Like we're just taking a piss into a hole here.
- [02:01]
Jon Davids
It doesn't make any sense.
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John Davids
So he goes ahead and he gets in touch with a frat buddy of his back from school, this guy named Robert, who's an engineer.
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Jon Davids
And together they Put together this prototype.
- [02:12]
John Davids
For this outdoor washroom. But it's luxurious, it's beautiful. And this is the start of a company called Royal Restrooms. And basically the concept is simple. Let's just make a porta Potty, but let's make it way better. So weddings, backyard parties, small events. So they start shopping this thing around to their friends, family, neighbors in Georgia, and people start renting it. And then a big breakthrough comes with Hurricane Katrina, where they need these restrooms for all of the workers there to provide sanitation for relief workers, displaced families. And this is like a huge breakthrough for them. And I want to come back to that Hurricane Katrina thing in a second, but I'm going to throw a chart up on the screen here. So US Portable toilet rental market and the luxury rental market for portable toilets is actually growing really, really Fast. It's at 8.1 billion dollar industry over the next few years. And these things can rent out for 1,000 to $4,000 a day. That compares to like $100 to $200 a day for a typical porta potty. So 10x markup, great margins. Everything's great about this. All right, so what do I think? Like, big picture. Why do I love this business? And why is it reminding me of you? I'm going to tell you that right now. So the first thing is this fits into my framework. I have this whole theory in business that I call upgrade the blah. There are so many businesses out there where the whole concept of the business is they're just taking something bland, boring, dirty, ugly, and they're giving it an upgrade. And there's two ways to do it. One is to upgrade the whole business, where the centerpiece of the business is the upgrade. So an example like that would be take the Porta Potty, make the whole thing better. That's Royal Restrooms. Another example here is like BUC EE's take the highway rest stop, which is dirty and boring, and make it way better. Make it part of the destination, which is what Buc EE's did. And then the other way to do it is just to make it a part of the business. So one element. So, for example, like, if you ever go to a restaurant with your kids, sometimes they give you maybe a coloring book for your kids to, you know, entertain themselves while they're waiting for the food. But sometimes, like, I've been to a restaurant where they have an Etch a Sketch or they have like a magic kit so the parents can do magic with their kids. That's really in my mind, upgrading the blah for one element of the business. And you told me something. We were at lunch in LA a few months ago and you told me.
- [04:39]
Jon Davids
That when you had your last company.
- [04:42]
John Davids
One of the rules was that you had to answer the phone in one ring, which was pretty unusual, I guess, for companies in your business where it was like, hey, somebody calls us, like, we don't make them wait, we don't call them back, we answer the phone in one ring. So I wanted to get your thoughts on this. What do you think about this and how important is it to kind of upgrade all those, all those kind of boring parts and negative parts of businesses? Has that been something that's helped you over the years?
- [05:06]
Dave Sowers
Yeah, I mean, I'm kind of a shock and awe kind of guy in business. And I think when you do something that is just totally different from what everyone is doing, you make a difference and it creates a memorable experience for your customers. And the status quo these days is, especially in tech, is just, you know, try and not speak to the customer, do everything you can to not speak to the customer.
- [05:40]
John Davids
To get them to never call you and never email you and never need any support.
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Dave Sowers
Well, I mean, I mean, you know that. Have you tried calling a bank these days or, or your car lease, you know, finance company? They do everything possible, you know, with all the prompts when you call them to not speak to you. So, so true. At the end of the day, in my opinion, that just is counterproductive and a human could have handled that phone call five times faster than prompting people to every different step along the way. So I get it. It's. It's the present and it's the future. And it certainly is cheaper than having a real live human handle a call. But I've always been of the philosophy, just do something that people don't expect in business. And when you do that, it creates a memorable experience and people really come back and the loyalty is there.
- [06:40]
Jon Davids
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- [07:19]
John Davids
It's one thing to say that now the flip side of that is businesses try to do these things and for whatever reason, maybe they're not executing right or whatever, but like, they try to do something a little bit different and special and it doesn't actually have an impact on the business. But you've had a super different experience here. So tell me about your first company. Give me the recap. And like, what were one or two things that you did? Super different. And then I want to get to your Hurricane Katrina story, which is pretty epic too.
- [07:46]
Dave Sowers
Yeah, so my, my company sold electrical distribution products, primarily circuit breakers. It, it's, it was a very fragmented industry. And you know, back to the phone call part of it, when you called John Davids at ABC Electrical and I called up and said, can I speak to John? It was just standard where four seconds later I would get your voicemail. It wasn't. John's on a call right now. John is not in the office. John will call you back. It was just standard issue. You go straight to voicemail. So over the years, I, I, I kind of had a message of people when I called them, can I speak to John? And I don't want a voicemail. And people thought about that, you know, and, and said, okay, maybe like, there's an issue here. And we can't just send people straight to voicemail because it really is counterproductive because they don't return the phone call half the time. And then now I got to call back again as a customer. So with my company, I just put a policy in place and I said, we're not sending people to voicemail. It's that simple. Like, we're just not, that's not an option.
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John Davids
What year was this?
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Dave Sowers
We started the company in 96. So, you know, voicemails were very, very common back then. It was pretty standard. But, you know, we just changed that whole landscape of a phone call into a company. And I'm going to tell you, people really, really, really noticed it. People really talked about it and they appreciated it. And, and there's no doubt about it, it really changed our business because everything we did was similar. When someone ordered a product, it would ship the same day no matter what. If I had to send an employee, pay them overtime, and send them to Burbank Airport to ship an air package until 8, 10pm and that's what we did. And when you ordered the same item from any of our competitors, especially the big competitors out there like General Electric, Siemens and companies like that, you'd be lucky if it shipped in three to five days. So you know, we, we, we did Amazon before Amazon did it.
- [10:16]
John Davids
So there was more than one element then it sounds like you were answering the phone quicker, not sending to voicemail, but also delivering faster. Was that also part of the service.
- [10:25]
Dave Sowers
Level concept of customer service? It was the whole concept of treating your customer, you know, like they matter. It was, it was that whole concept. So I just hired more people than we may have needed to make sure that we got this right. I mean, let's face it, companies nowadays hire as least people as possible. And that's why you, you go ON hold for 42 minutes when you call bank of America. So you know, you either talk to someone who's not in the US or you're on hold for 42 minutes. It's one of the other.
- [11:05]
John Davids
So when you're in 1996 when you started the company, was that part of the early days or is that something where you're struggling for a few months, a couple years, then you say wait a min it here's what we should do different.
- [11:16]
Dave Sowers
It was day one. It was literally day one. It was respond to emails within one or two hours tops. Answer the phone in one ring, no voicemails, send a confirmation for every order that we received through fax. By the way, now that's pretty standard automated email stuff. No charge for shipping on any size order, no minimum order fees. This is all literally Amazon one year, two years before Amazon did it. And everyone thought Amazon was crazy. Everybody thought they would go out of business. But it's pretty simple. When you buy a three dollar item off of Amazon and you get free shipping and it's at your door tomorrow, what do you do? You buy the $50 item from them tomorrow.
- [12:13]
John Davids
If you're like my wife, we have boxes showing up every single day, all day. I have no idea what she's ordering every day.
- [12:20]
Dave Sowers
And by the way, she probably doesn't even look at prices. And she does it because she trusts Amazon and she knows that the reliability will just be there.
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John Davids
It'll be there and she can always return it. And so it's no issue. So this is pretty cool. So 1996, and I know that before this, didn't you work at like, what was it, Pizza Hut or where were you working?
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Dave Sowers
I worked at Domino's Pizza, tcby, Yogurt, Baskin Robbins and a place called Long's Drugstore, which is no longer around.
- [12:51]
John Davids
And so where did you learn? Like, how did you actually have the insight to say, okay, I'm going to do circuit breakers, but we're just going to be better, faster, quicker, like, I know it sounds so simple, but like, if it was so simple, everybody would do it. So there's got to be something that happened. What was that entrepreneurial instinct for you?
- [13:10]
Dave Sowers
Yeah, I actually worked for a company in high school that did something that was in the same space that didn't do exactly what we did. And I just saw the industry that was just so broken. And you know, this is a several hundred billion dollar a year industry. Everywhere there's power on planet Earth, you must have a circuit breaker. It's, it's just that simple. You can have solar, you can have whatever you want, but there's still a safety mechanism in place which is called a circuit breaker. So I just saw that, you know, it wouldn't be that hard to compete with the competitors out there and just decided, you know, let's just do this differently. And, you know, it worked. I mean, people were just very, very welcoming to the fact that you can now deal with someone in this industry and not deal with all the BS that comes in with it. I mean, by the way, I always compare Amazon because Amazon really is similar. Other online shopping back in the day was walmart.com target.com and every other product that you can buy on Amazon. And Amazon just did it a hundred times better.
- [14:26]
John Davids
Amazon did it better. And I've talked to some early employees and early investors actually in Amazon. And the funny thing is, and it's hard to know how much of this is true, how much of it is myth, but it started off as books, and it was going to be books for a very long time. But there's a story about somebody calling up and wanting to buy a windshield wiper. And then that's how Bezos got the idea, hey, if we're doing this in books, why not do it in other categories? And so got into hard goods. Windshield wipers, I guess were one of the first categories. But you're right, you actually could have. And maybe you thought about this at some point. Like, we're going to start with circuit breakers. It's a great product, it's a great category, whatever. And we're going to just move into other categories. Did you ever think about expanding horizontally.
- [15:08]
Dave Sowers
Or is that we expanded to every other electrical product known, known to man, but it just all started with circuit breakers. That's just what I knew at the time. I actually, I mean, the way it really started. I went and bought a van from an auction in LA for 1500 bucks. And the first year before the business started, I literally drove around the country and filled it up with surplus excess products from electrical contractors by cold calling them and drove it back to LA and filled up a few garages of product.
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John Davids
And that's how you got your supply in the early days.
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Dave Sowers
We got the supply in the early days. We would cold call electrical contractors and say, do you have any excess inventory that you want to sell? And the majority of them said yes, come on by. And these were in cities that you've never even heard of. I mean, Wichita, Kansas was a big city compared to the majority of the cities that I drove to.
- [16:15]
John Davids
This is before gps.
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Dave Sowers
It was, we use yellow pages to call these companies. We had a stack of yellow pages in a room up to the ceiling and we would literally get yellow pages from each city out there. So you had hundreds of them. And you would go through the yellow pages and cross out the ones that you know that said no.
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John Davids
So you start this business with a van driving around picking up other people's scraps. How long was it before this was a million dollar a year company?
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Dave Sowers
We were profitable the first week of business. We didn't even have a down month for the first, probably five years of business. Never had a down year. Every year was double digit growth. I've always said too that the win in business, in a, in a consumer business or a distribution business is in the buy, not to sell. If you buy it right, you'll make money. If you buy it wrong, you're gonna have a hard time selling and profiting.
- [17:21]
John Davids
That's the old real estate adage, of course. Yeah, the money is made in the buy.
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Dave Sowers
So we, we bought right for sure. There's no doubt about it. We bought right and it and it, and that's what made it work.
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John Davids
So you're, you bootstrapped this company starting with a van. You're driving around and there's a Hurricane Katrina story. I don't know if this was your biggest sale ever or just one of the crazier stories. What was that story?
- [17:45]
Dave Sowers
Definitely the biggest single sale ever. Hurricane Katrina happens and the cleanup is starting and we get a call one day from a company in Mississippi and I'm trying to remember the city. I think it's Pasagula. And I get a call from them saying our city's underwater basically and one of the utility companies in the city needs to buy product X. The actual part number was a JL3B400. I know that's Chinese.
- [18:23]
John Davids
Oh, my God. That was like 20 years ago, man.
- [18:25]
Dave Sowers
That was the actual part number of. Of what they were looking for. And they were looking for a 400amp in that product along with a bunch of variables to go with it. Two hundreds, three hundreds, 350s, one hundreds, whatever. And that was an obsolete product at the time, so it was no longer made, and there was no replacement for it. A circuit breaker is like a battery. If you have a double A battery in something, you can't put a AAA battery in it. Just the way it works, you can't put a 9 volt in that spot. It has to be that exact product. So I knew a guy who was making. And by the way, the original manufacturer of it was Siemens, but they discontinued it simply for. The reason is because they want you to buy whole new electrical panel setups and not just replacement parts. I knew a guy, Apple strategy. What's that? Yeah, exactly.
- [19:25]
John Davids
It's the Apple cord.
- [19:27]
Dave Sowers
Knew a guy who was. Who was making these out of. Out of Miami, actually. He was making replacements for them out of Miami. And the patent had run on the product, so he was doing nothing wrong, and he was just making replacement parts for these items. And at the time, we were. We were retailing them for $1795. Our cost on them was about 500 bucks. So this company that called me said, we need. And I forget the exact numbers, but they said, we need up to 12,000 or 15,000 units of this item yesterday. Okay? Like yesterday, the power in. In this state depended on these things, believe it or not. And I called up my guy in Miami and I said, you know, I need as many as you can manufacture, like yesterday. And he said, we can only do 200amonth. It was just some, you know, he was a small guy. He was nothing, you know, and. And I said, we'll pay you double whatever it takes, get 24 hour shifts going. I call up the guy in Mississippi. I tell him the story. He says to me, why don't you charge us $4,000 a piece for these things? Hire overtime, hire more people. Just do whatever you need to do to get these things going. Wow. So the stars align for sure. My guy in Miami said, we'll do it. As he started manufacturing these, he calls me up, and I think he was worried about losing the business for it. And he said, because you're buying so many, I'm going to lower your price dramatically for them. So it got to a point where we had him down to $195 apiece for each unit, and he was pumping them out as quickly as we needed them, and Mississippi was still paying a lot of money for them.
- [21:39]
John Davids
Wow, wow, wow. This was the ultimate arbitrage.
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Dave Sowers
Yeah. And we never even touched the product. It would ship directly from Florida to Mississippi in. In trucks, and that's it.
- [21:53]
John Davids
You're talking millions and millions and millions.
- [21:55]
Dave Sowers
And millions of dollars, like pay on the spot. No issues with payment. I mean, it was just endless. It was just an endless sale, essentially. And it went on for probably 18 months to two years. So that really helped to put us on the map. It was a. It was, it was great. I mean, look, FEMA and the US Government was spending money, you know, taxpayer money, like it was going out of style during that time.
- [22:23]
John Davids
It really is. There's the expression. Luck is when preparation meets opportunity. And it's moments like that. And there, there are lots of moments like that. You had a big one right there. But, but people can say, you can look at anybody's success and have this feeling of, oh, he got lucky, right place, right time. But it's like, yeah, but you knew the guy in Miami. You hear 20 years later, know the part number that from 20 years ago, you had the relationship, you were, you know, busting your butt so that.
- [22:50]
Dave Sowers
Know the address in my head of. Of where they shipped from. I know the whole. You know, I can probably tell you the PO number off the top of my head, for what it's worth. We actually landed up giving a significant portion of the profits back to the hurricane areas from this deal. It was just the right thing to do. And, you know, the country was pretty turned upside down from, from this natural disaster. So, you know, we did give something back. And of every sale that went to Louisiana, Mississippi, and I'm trying to remember the other states that were affected by.
- [23:36]
John Davids
It, but, yeah, you built this business and then you sold it in what year?
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Dave Sowers
Sold the final piece of it in 2011.
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John Davids
And you were making money the whole time, and then you sold it and you got a huge payout. So you, you kind of, You, You've had a, A lot of money for a lot of years. At one point, after you sold, didn't you tell me that you got into angel investing?
- [23:57]
Dave Sowers
I did.
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John Davids
And what was that like?
- [24:00]
Dave Sowers
Could have been better. You know, I, I invested in a lot of random, random startups, supporting friends, family, friends of friends. And, you know, frankly, I didn't do as much diligence as I should have. I, I didn't take active roles in any of these investments. And I find that when you invest in companies, it's really important to, to have a say or take some type of active role in, in whatever you're doing. They tend to not work when you're not somewhat involved. And I don't mean micromanaging. I mean just transparency for the most part is what I mean.
- [24:47]
Jon Davids
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- [25:25]
John Davids
So I talk to a lot of entrepreneurs that sell and what, you know, there's a couple things. So everyone gets into real estate. Everybody at some point sets up a family office. Everybody tries to angel invest. And the skills that make you really, really good at being an entrepreneur, being an operator, are really not transferable to being a good angel silent investor in general because you want to be active, you want to get your hands dirty. At least, as you said, you want to have the ability to know what's going on and to have some kind of contribution. And your story, when you told me your angel investing experience, it's actually super normal, Dave, that people get into angel investing and it's like it doesn't, it doesn't have work. It's very, it's very glamorous and fun. And you probably even have stories that you could share today of businesses that sound good on the surface and for all kinds of reasons. They just, they just never panned out.
- [26:18]
Dave Sowers
Well, they, they all sound good on the surface. I mean, the deck is always, is always great. But I think the key word to what you said is silent. And if you're silent, then you're just going to be that. So I feel like, you know, when, when you take money or when you invest in something, if the founder, operator, the company wants zero involvement from you, then I think it's a red flag. I mean, I do. And, and I think that when a very, very smart person is investing in something as the person taking the investment, I would be crazy to not want their involvement in some capacity. So I think that's a huge red flag. I mean, look, it's different if you have 500 investors, but if you're raising money from 10, 15, 20 people from 10 different walks of life, I mean, by all means, give me all the advice that you have. You know, let's strategically collaborate. Give me some intros.
- [27:22]
John Davids
You know, did it ruin any friendships, or did you kind of patch, you know, patch things up and. And call it a day?
- [27:29]
Dave Sowers
Definitely ruined some friendships over the years. I've always had a philosophy with it, though. You know, if you put in 110%, if you're honest, transparent about what you're doing, if you give regular investor updates and it fails, I. I have no problem with it. You know, if you gave it your all, then I have no problem with it. I'm a big boy, and I know investments don't work sometimes, and I'm the one that made the decisions that I made to invest in whatever I invested in. So I think it's a similar concept, everyone out there that. That they should have, but it's the guys that, you know, don't report monthly, the guys that, you know, kind of hide stuff, the guys that, you know, or gals that don't keep you updated, and then you wake up one morning and. And the business failed. Yeah, I think that's the part where relationships have gone sour, for sure.
- [28:27]
John Davids
Whenever I talk to investors on both sides, so the people that are investing and also the people that are taking the money, the business operators, there's always trouble. Like, especially, like, I've heard so many stories, you know, in real estate, the market goes bad, and so now you got a whole bunch of debt, you can't make your monthly payments. And in every single case, the advice is listen, just be upfront, be honest. Our favorite thing is when people pay their bills. And our second favorite thing is if they can't pay their bills, they tell us and that we know and that they work with us and we collaborate on this, as opposed to being surprised. The last thing we want is any kind of surprise. We don't like surprises.
- [29:07]
Dave Sowers
Just don't. Just don't ghost. Right? I mean, answer your phone, respond to text messages, and things are a lot better, and they're a lot easier, for sure.
- [29:18]
John Davids
Now it's a couple decades later, and you're doing something crazy. You're doing it again, but in a whole different space. So you're the kind of entrepreneur, honestly, where, if you told me that you were starting a new business, I would think you're building another circuit breaker. Company because you did it once, you'll do it again, but you're doing something totally different. So what are you working on today?
- [29:39]
Dave Sowers
I actually had a 10 year non compete and it expired a few years ago. And I did look into starting the same type of business all over again and voted against it because the landscape of the business has changed just so dramatically. So it would have been a pretty big barrier entry for me to start it from scratch. So that's why I voted against it. But starting a tech company now, it's called Kiwi with Two Eyes and we are, what I like to say, the first true real time geotagged deal app on the market. And I know there's a lot of other platforms out there that claim to give consumers great pricing on items and what have you, but we really are the first of our kind to do it the way we're doing it.
- [30:38]
John Davids
Deals on what?
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Dave Sowers
Anything you can think of. There's 33 million small businesses in America. The reality is, is when you walk into 90% of them during off peak hours, they're dying, they're dying. There's no one in their store, there's no one in their restaurants. And how do you get business, how do you drum up business? So what our platform does is it puts all the control in the business owner's hands. They can turn a deal on and they can turn a deal off whenever they want. If you're a barber shop and you have no reservations for the next four hours, put a deal on our app, get someone in your door, fill the seats, turn it off, you can cash out from us anytime you want. You don't have to wait 30, 45 days like other platforms out there. Most importantly, we are charging a fair and honest and manageable commission amount for the merchants, unlike other platforms out there. And that's what we're doing. So our plan is to get millions of users on hundreds of thousands of merchants, match them together, go hyper, hyper local. When you're walking down the street, there's a restaurant that puts a deal out. You want a taco, you walk in, you get a taco.
- [32:00]
John Davids
And that's the deal is the idea. So it's obviously geared towards small business owner operated type businesses on the merchant side. And is the idea that it's hyperlocal, what is the differentiator here that you think if you could hang your hat on one feature or one point of this, what would that be?
- [32:20]
Dave Sowers
Hyper local for sure. Hyper local, geotagged real time. That's, that's the big factors and frankly, the other big one, and I'm not going to mention names of, of the competitors, I think we all know who they are because these are all billion dollar plus companies. Those are all necessary evils. When you talk to 98 of merchants out there, whether it be a restaurant, a Pilates studio, a yoga studio, a gym, a barber shop, a contractor, plumber, electrician, they all say the same exact thing. I have no choice but to use them because they give me great exposure. But I don't profit off of redemptions and deals from these other platforms. They just absolutely rape the business. They just completely rape them. And by the way, as a consumer, it's the same thing. I guess I will mention one. Have you looked at your last DoorDash bill?
- [33:21]
John Davids
Yes, I have and it is crazy.
- [33:24]
Dave Sowers
It's disgusting. It's not crazy. It's disgusting. It's not, it's, it's just simply not fair. I don't.
- [33:31]
John Davids
So is it DoorDash? So here's the thing.
- [33:33]
Dave Sowers
So if we're just being transparent, Uber eats the same. You know, it's all the same.
- [33:36]
John Davids
Right, but it's, it's DoorDash, UberEach. But I would also think like, I mean, when you mentioned Jim, I would think Class pass or I would think the same Groupon. Yeah, I mean like my, my, my gym where I go to like, you know, the owner tells me he's on class pass because that's, that's where the exposure is. But when someone just uses Class pass and then leaves after, doesn't come back, he's not making any money on them.
- [33:57]
Dave Sowers
Yeah, I mean, I, I, I know, I know someone that owns a bunch of Pilates studios and she tells me that when someone walks in off the street, she gets 20 bucks a class. When someone walks in using Class pass, she gets a fraction of that. Like not even close to that. A fraction. And the same goes with every other app out there. If I walk into a restaurant and buy food for four people, the total bill is $64. If you buy that exact same food and get it delivered to your door on one of the apps that are out there, it's $125.
- [34:38]
John Davids
Right. And, and so the, the, the reality is, and I'm just checking here, like, I don't even know. Okay, so DoorDash has become profitable and I think it became profitable in 2024. So for a long time these guys are really just renting or buying up market share by keeping their prices artificially low. How do you think about making Money and being profitable, if these guys were only able to do it when they, as you say, started raping the, the merchants and the consumers.
- [35:05]
Dave Sowers
Well, if it wasn't for Covid, by the way, none of them would be around. That's, that's for starters. I mean, Covid truly put all these companies on the map. They needed them to really, really exist. Postco. Look, it, it, it's simple. I, I, I run a company in a lean way. I don't, I, we don't need to make 50% off of each redemption to make money. I know what the economics are on it. And capping a commission, if you want to call it that, at 15% of a deal makes us a very profitable company, period.
- [35:42]
John Davids
Are you raising money for this?
- [35:43]
Dave Sowers
We are, we are.
- [35:45]
John Davids
And, and what's been the reception from investors?
- [35:48]
Jon Davids
Great.
- [35:49]
Dave Sowers
Everyone's been incredibly positive about it. We've spoken to over 100 merchants so far. Just walking in the door in real life, and everyone's been very receptive to it. Users have been very receptive to it, very positive about it. People are just worn out by what's out there. People are very fatigued. People want something fresh, something new. And, you know, that's what we're here to do. We're launching in the city of Long beach, by the way, at the end of November.
- [36:20]
John Davids
So, you know, it's crazy. Going back to the beginning of this conversation when I was talking about this framework of upgrade, the blah, you actually kind of hit it on the nose for this because this is, you could take any one of those apps, the doordashes, the class passes, whatever, and the big pain point, the thing we all hate about it is that, yeah, you, you, you fill your cart, you look at the bill and you go, why am I paying $52 when I go to the restaurant? It's, it's 17 bucks, and now I got to pay three times the price. What you're doing is you're saying, hey, let's, let's do the same thing, but let's just not make it outrageously expensive. Let's make it a reasonable price. And I love the hyper targeting, because that's the other thing I was going to say there's a lot of. I could shoot a hundred bullets through this idea. I'm sure anybody could. But the reality is, I think the hyper targeting thing here is actually phenomenal because you don't need to worry about being in every city all the time, every day. If this was successful in five cities and you were just super penetrated in Those places. This business is super successful, even if that's all it ever gets to.
- [37:20]
Dave Sowers
Sure. I mean, there's 340 million people in the U.S. the city of Long beach has 480,000 people. It would take a long time to actually own the city of Long Beach. Like there's, that's a lot of people. There's 17,000 businesses in that city. So, you know, expansion is definitely on our mind and in the future, and there's no doubt about that. But yeah, there's no reason to open up in New York and Miami and everywhere else before you perfect one city and just crush it in that one city and build the web and just expand and replicate what you're doing.
- [37:58]
John Davids
What's it been like for you as a founder who comes from your first business was around when fax machines were a big way to communicate. And now you're building a tech first company. What's that been like?
- [38:10]
Dave Sowers
Yeah, I mean, I'm not going to sugarcoat it. It's taken me a little while to get adjusted to the post Covid tech world. Remote is standard, you know, in tech. And I'm used to a roll up the sleeves, go in the office, hit the streets, hit the ground running. So, you know, that's my work culture. That's not the culture of, of the tech world these days. But we're getting there and we have a team of people that, that are on board with rolling up their sleeves and making it happen and walking the streets and doing whatever it takes.
- [38:47]
John Davids
Do you have a remote work culture? Is that, is that, have you succumbed to that culture?
- [38:53]
Dave Sowers
We don't have a physical office. Everybody works from wherever they want to work from. But we do have a lot of times where you have to be in Long beach to do what we're doing. Everyone's on board with that, everyone's great with it and, and it's working well.
- [39:10]
John Davids
So my business went, I mean, we were in an office in Fluidity for six, seven years and then Covid, we went remote and we never went back. And all in all, it's been fantastic because we're hiring talent all over the world and, and we're working with more clients now than ever before and we're able to meet with them. So I, I think all in all, for some businesses, it's actually a great way to go. So I'm building a new company now, a new, a new tech first company also. And the founder, my co founder in that business, a guy named Tom, he and I have actually never physically met in person we met online and we sort of just been WhatsApp buddies. What's that?
- [39:49]
Dave Sowers
Have you signed a partner agreement?
- [39:52]
John Davids
Oh, yeah.
- [39:53]
Dave Sowers
That's pretty special that you haven't meet in person.
- [39:56]
John Davids
It's crazy. And like, it's not that we actually, we were going to meet over the summer and then he was out of town when I was in his city. We're in different cities, so. But it actually is kind of crazy. And this is what I mean. You know, you've been doing this since 94, 95. You've been, you've been in this for a minute. And so to go to the world you started in and now you're building a business like it is today, it's got to be like a complete culture shock for you.
- [40:17]
Dave Sowers
Yeah. I will say one thing about that. So, you know, I understand where the world is at with, with, with that, with remote. But I don't care what anyone says and I will debate this until, until the cows come home. You will absolutely, positively be more productive if you are physically in an office with somebody. Collaboration and communication is everything in business. It's just everything. And I'm not saying it can't be successful remotely, but it just works better if you're, if you're spitballing across the table from somebody instead of being on slack. Slack is great, but when you have a team of X amount of people in a slack group, I've noticed what happens. You send a message out, one person responds an hour later, another person responds four hours later. So I just think you're a lot more productive if you're collaborating and communicating in person. But I do understand the picking from the pool of people around the world, which we were never able to do back in the day. So the fact that we can do that now is certainly, certainly helpful. And then certainly the fact that you can do, you know, things that we did back in the day a million times faster with AI and stuff like that. There's no doubt there's give and take and there's pros and cons to, you know, to pre. Covid, if you want to call it that and post Covid.
- [41:53]
Jon Davids
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- [42:00]
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- [42:30]
John Davids
How are you using AI to build this new company? I mean, is it down to like, do you, I would imagine even having a big dev team like you don't need a lot of developers probably with AI, do you? Are you using AI in the product? How does that play into all this?
- [42:44]
Dave Sowers
We're still developing it, the real old school way of developing it. We're not using an AI platform to develop the software, far from that. But we do have a big, big AI component in the platform itself. So there's 33 million small businesses in America. Seven to 9 million of them speak very, very little English. English is their second language. So think about owning a Thai restaurant and you need to get people in your door. How do you do it? You just don't know how to go on Google Ads and create an ad. Not to mention it doesn't get created immediately. So on our app you have two options as a business owner. You can create the deal yourself or you can have our app create it for you, which is when the AI kicks in and creates it for you based on your menu, based on information we know about your business.
- [43:41]
John Davids
That's really cool. Yeah, no, I didn't even think of that. But you're 100% right. You walk into a lot of local restaurants and, and English is their second language.
- [43:48]
Dave Sowers
I mean I personally walked into 70 businesses last week in the city of Long beach and I would say that seven or eight of them legitimately did not speak one word of English. So you know, customers don't discriminate. You know, if you have amazing food and your restaurant is hot, you'll be busy. But the majority of them are not busy from 1:30 to 5:30 or to 5:00'. Clock. So you know, you got to figure out a way to drum up business. And if, if English is your second language, you know, most platforms out there just don't allow you to solve that. But ours will allow that with our AI component for sure.
- [44:33]
John Davids
So what did you do in the decade plus? You had a 10 year non compete and you just started kiwi recently. How did you spend your time? Like all these years you're a guy with a, with a whole bunch of money, a whole bunch of time, like what do you do?
- [44:47]
Dave Sowers
I ask myself that question every day. If I had to do it all over again, I never would have stopped working, that's for sure. I mean, I officially retired at 37 I moved to the beach. I played a lot of poker.
- [45:02]
John Davids
Okay, all right, yeah, yeah, that explains a few things.
- [45:06]
Dave Sowers
I played a lot of poker, gambled a lot, took a lot of risks, and, you know, in business, even at the tables and what have you, you know, it was amazing for the first year or two, lived on the beach and, you know, thought life was just going to be smooth sailing from there on out. And it gets boring. I mean, it gets really, really boring.
- [45:31]
John Davids
Did you win or lose more money in business or in poker?
- [45:35]
Dave Sowers
I lost more money in poker. For sure. Yeah, for sure.
- [45:43]
John Davids
Well, if you take risks, I mean, that's going to happen right at the blackjack table. What's your game?
- [45:47]
Dave Sowers
A lot of Texas hold' em, poker, Pot limit, Omaha, I mean, casino games as well, blackjack, stuff like that. I don't do drugs, I rarely drink, and, you know, that was what I did. L A has a very, very, very appealing gambling scene. A lot of glitz and glamour.
- [46:09]
John Davids
Did you gamble with anybody whose name we would know?
- [46:12]
Dave Sowers
I did quite a few of them.
- [46:14]
John Davids
Are there stories about those people? Without naming names, of course, that would surprise us.
- [46:19]
Dave Sowers
I mean, just the mere fact that they're there would probably surprise most people, but, yeah, I mean, you know, some serious A list people, for sure. I mean, a list in, in the celebrity world and the business world for that matter. So, yeah, I mean, that was a very appealing group of people to be around. No doubt about it. Humbly speaking, now I can say that.
- [46:43]
John Davids
And so is that part of your life behind you, or do you still play poker all the time?
- [46:47]
Dave Sowers
It's behind me. It's all business now. It's 15, 16 hour days of kiwi and I'm going to blow this up into a billion dollar business for sure.
- [46:57]
John Davids
It's exciting, man. Like I said, business is all execution. I mean, these ideas like you were talking about with angel investing, I'm sure all your buddies had ideas that were, that sounded great on paper and their decks were Shiny and their PowerPoints were fun, but it's all execution and you've done it. So I'm super excited to see where this goes.
- [47:16]
Dave Sowers
Yeah, no, so am I. I think we're, we're six months in development now and it's going great. I got a amazing team on board of people, and there's two things that really make a business successful. I know a lot of people, you know, you go on Shark Tank, you see it, and all those guys always say it's about the team. And let me tell you something, you can have the best team in the world. If you don't have a good product, it's not going to work. So it really takes a combination of both. But it does take both for sure. And I think we have an incredible product that small businesses really, really, really need. There's. There's nothing out there like it. And when that day comes, when, when businesses can say, you know what, we're good, we don't need any improvement in our sales, no problem. But we're nowhere near that. The whole world needs more business.
- [48:11]
John Davids
Where can we download the app? It's only in Long beach, though, so we can't all use it, right?
- [48:15]
Dave Sowers
You can, you can download it in. In mid to late November. We'll. We'll obviously put a bunch of stuff out about it and then, yeah, we are starting just in Long Beach. So you're in Toronto, right?
- [48:27]
John Davids
I'm in Toronto, but we're. But I'm in LA too, a lot. So can I use it in other parts of LA or.
- [48:32]
Dave Sowers
No, but when you come to LA and you want to go through Long beach, definitely get on it for sure. And then, you know, you can follow us on social media as well.
- [48:42]
John Davids
But I do love, I want to just leave the listeners here with this idea because like everybody, every entrepreneur I talk to, amateur entrepreneur, I say is they just have these visions of world domination from day one. And I love the fact that you're in Long Beach, California, and that's it. And as you said, 480,000 people, it could take you a long time to get them all on board. And you don't need to go to 15 cities, just start with one.
- [49:07]
Dave Sowers
I mean that, by the way, that, that was one of the downfalls of, I would say, one of our competitors. The company was once valued at $40 billion. Google offered them $6 billion in 2010, and they decided to open up in 49 countries. So, you know, they had five vice presidents in all those countries. And I just scratch my head and I say, I don't get it. Like the US, 340 million people. Why do you need to open up in Portugal? It. It. So, you know, it just doesn't make sense to me why, why companies try and do that. And I think that's one of the big downfalls of a lot of businesses out there, whether big or small. If you have a successful restaurant and you want to open up another location, go ahead, but there's no reason why that location can't be down the street.
- [50:01]
John Davids
This was awesome, man. That's it. Thanks so much.
- [50:04]
Dave Sowers
You got it.
- [50:05]
Jon Davids
Thanks for listening. Get my best stuff to your inbox@johndavids.com I'll talk to you next time. This episode is brought to you by Influicity's new tool, the AI Ads Generator, available now at johndavids.com ads Great ads aren't about luck. They're about leverage. The brands that win are the ones who can launch faster, test smarter, and outspend everyone else without wasting a doll. That's exactly what the AI Ads Generator gives you. Instant ad copy that speaks to every customer and feeds the algorithm high performing variations your competitors can't keep up with. It's like strapping a jet engine onto your marketing. And right now, it's free. Yes, it's free. Go to JohnDavids.com ads that's JohnDavids.com ads.