How To Make $13,000,000 (Annually) By Helping Real Estate Investors Find Off-Market Deals w/ David Lecko (Founder of DEALMACHINE)

David, what's going on? My brother.

Hey Brian. It's really good to be here.

Man how we met was freaking sick we met at a club, but how did we meet a little bit differently at

a club? Yeah. And I'm not a club guy, so we had a mutual friend that ended up buying a like. Really nice v i p table at this brand new club in Austin called Superstition. And I think you know him because you're in the Go Abundance Mastermind together. Yeah, we actually had one of the go abundance founders there who I met for the first time, Mike. But our mutual friend is Aaron and he's got. I think 850 rental properties and he's been in Austin since 2019. I myself just moved here about a year ago and I always had a dream of starting my business. I didn't want to get caught in downsizing, or at least if I was, I wanted to be the one to make that decision, not somebody else. And I really was interested in real estate investing. Long story short, have had my business since 2016 and. just got tired of gloomy really cold winters like where I was experiencing, where I grew up in St. Louis and Indianapolis. And so I came to a couple trips in Austin and that got me thinking. I was like, man, it's , 70 and sunny. And I was like, man, I would really don't wanna go back to very frigid, one degree temperatures. And so I got this six week Airbnb, which was amazing that I had the freedom to do that. Then I got a seven. long-term lease, move some of my furniture down, and then now I'm in like a year long lease here downtown in a place that I'm very excited about. As you can see, I've gotten comfy, painted my wall, put up my sign, and so I just loved the fact and was curious. I was like, man, I got so caught up building my business. I never thought about I get to choose where I live. Is this the best place for me to live? And so I finally did that after six, seven years in. Freaking pumped about it, man, and so I'm glad that I get to meet Very cool and interesting people like yourself who seem to also be making similar decisions here in Austin, Texas. I just love that about Austin. Dude, and look

at our stories are so similar that it's insane. I didn't even realize it was like that similar, because I did the same thing. I got like a two month Airbnb actually down here, and I literally got this and signed a 12 month lease within the first week . Man, you've built yourself a really freaking sweet business. I remember hearing about it when you advertise with bigger pockets years ago. It may have been closer to the inception of your company. So before we get into what your company is and what you do walk us back. Is this the first run-in that you've had with entrepreneurship or were there any experiments before creating deal machine?

Yeah, great question. So I did several internships and at at and t. I thought I was going the corporate path. When it came time to graduate college and accept a full-time position. I got scooped up by somebody a little bit sooner. Called Accenture, so I went to go work for there. I never had as good of an experience as I had gotten at and t, and so I was like, ah. I regret not going with at and t. I kind of regret taking this early offer that seemed to be a little bit more money just for the money, and so I was of having some regrets, so I found myself working on side projects. This side project turned into something really cool. It was a recruitment software for fraternities and sororities. I ended up selling. To this company that coaches fraternities, how to recruit so it's called Chapter Builder and I sold it for like a nominal amount after working on it for a year and a half. But the point was then I went to work for them and I really just gained a wealth of knowledge. . I didn't make a ton of money, but I gained a wealth of knowledge by working for an entrepreneur that took my product that me and my friend made, and then I got to be right there with him as he grew it. So I learned a ton and I moved to Indianapolis for that reason. Worked there for a couple of years, but then, so I didn't own that business. I sold it for a nominal amount compared to how much effort I put into it. But that wasn't the point. I learned a lot of knowledge. Then I got interested in real estate investing cause this guy also had five rentals. and I was like, why do you have rental properties instead of stocks? By that time I felt very convicted that investing was important for me to retire early, like 40, maybe 50. , with that. . Yeah. I knew that compound interest was like the greatest force on earth, and that time was on my side. I needed to just start early, so I'd been saving a ton of my modest salary for quite some time and putting it into my four and. and he was like the stock market goes up and down, but a rental property will, as long as you manage it correctly, can always cash flow as long as you buy it correctly and manage it properly. It can always cash flow no matter what the real estate market may be doing. And so that was a very impactful thought for me and that set me on a path to go get rental properties. I read Rich Dad, poor Dad. I couldn't find any cash flowing properties that were for sale, but I did do this thing called Driving for Dollars. Which is the advice that they've given for decades to go find a first real estate deal. Like you go look for a rundown house, you get in touch with the owner, and you do that two, 300 houses, you'll end up finding somebody that would like the speed and convenience to just get rid of their problem property and they'll give you a discount to take it off their hands. So that's my entrepreneurial background. So a little bit. Yeah. And that,

That sets us up perfectly, man. So first off I don't know where the heck you were back in the day, man, but I was the rush chair for my fraternity. Would you guys believe it? Right? .. I was the rush chair for four years, man. I set the chapter record.

New memories. Cool. Did you say, would you believe it because you thought we wouldn't think you were a fraternity man, or you thought that we you were definitely a fraternity man. , brian: I'd say probably Gotcha. Fraternity, local fraternity man grows up, goes to corporate quits. That becomes an entrepreneur. Moves to Austin, Texas. I think that's the pretty traditional Caucasian character. Arc man. But anyways, so you talk about driving for dollars and then you discover a problem with this because that was the advice that everyone's getting when they get into the real estate game. It's a lead acquisition or trying to find what properties you wanna offer on. And so for people that are listening, that may be new to the game. Driving for dollars is where you're gonna get in your car and literally drive up and down all the different neighborhoods, different areas, different zip codes that you target, and you're gonna try to find those nice neighborhoods with the crappy house. And then that crappy house is gonna be the one that you make the offer on because then you can fix it up and then that's what you can use for doing a flip, doing a wholesale, doing a bird project, whatever have you. So what problems did you find with this, David, and walk us through the genesis of Deal machine, because now you guys have grown pretty substantially. So I was having a blast looking for rundown houses. That was so fun cuz I got to learn parts of my city that I had never really explored before. Cause they're rundown. I don't go there very much. And that was just fun to drive around after work and look at properties and I was riding them down. The problem was with me. I actually did this for a few weeks and my heart san, when I saw one of these proper. Getting worked on it and I was like, wait a minute. I'm pretty sure I wrote down this property like three weeks ago. And sure enough, I looked it up, somebody had just bought the property and for a price that I felt would've been a great first deal for me, I could have bought it at that price and done a great deal. And so I knew the problem was with me because I didn't follow up with anybody. If I'm not communicating to these property owners, driving around is a waste of time. , I went to go start following up and writing letters to these property owners. It ended up being quite consuming, so I knew that with my computer background, there are tools typically that help you with sales processes, but there was none specifically for driving for dollars. And so that is what I set out to make was just this widget on my phone to help me, not meant to be a business. It was just to help. Get my first rental property, get my first off market deal, get my first amazing real estate deal that I couldn't find on the MLS, cuz nothing was cash flowing. But to put me in touch with somebody that really just needed the speed and convenience to get rid of a property and then for them to give me a discount for that. So I did make that just for my phone and I did end up getting my first deal off market that way. , which I'd be happy to tell you about. And I didn't even really intend for it to be a business at all at this point. The goal was just like, let me get my own rental property. Yeah,

dude. And, but that's how the best businesses start, right? So same thing with this podcast, and same thing with any massive business. What you start with. Most people think that you need to start really broad and then narrow, but the reality is you really wanna start narrow and then broaden out over time. That's the best enterprise strategy. So most people are solving a problem for themselves that just all of a sudden what happens next is normally then all of a sudden some friends start coming in. They're like whoa. What are you doing? And then it grows organically. So walk us through what happens next, man. So you've got this problem, you create a solution, it works for you. Walk us through the growth patterns here.

There was somebody who came to town. Once a month to buy 30 properties per month, which blew my mind. I was like, what the heck? 30? How do you buy 30 properties per month? Her name is Britney Wick and she worked for a company that was selling turnkey rental properties to rich people in California who had these big W two salaries, and then they could reduce the taxes they pay by buying real estate and getting the depreciation benefits while at the same time. Having the property cash flow and earn them additional income. And so she just, people in California couldn't believe you could buy a property for a hundred thousand dollars or less that would meet those criteria. And so she was just, she couldn't buy houses fast enough to sell these types of properties to her se to them. So she ran this meetup as part of her strategy to get more deals where she would educate people who were new like me on what they would pay. For finding houses in certain parts of town. So it literally said like three, two, this many square feet in the Washington Township of Indianapolis, we will pay $80,000 or whatever. And so that was super helpful map to be like, all right, if I can lock up a property, , if that meets this criteria, I know exactly what I need to get under contract for. And anything less like I get to make. So if I got it under contract for 70, that means she'd pay me a $10,000 finder's fee. And so I learned about wholesaling, cause that's what that is. When you get a property on your contract, then you assign that to somebody else with cash so that they can close on it. And then I can charge an assignment fee for doing that, not using any cash or credit of my own to actually buy that. , but I, so I used that as a guide. I still wanted my own rental property, by the way, but I used that as a guide because I'm like, if she buys 30 properties like this per month, I feel confident in my own deal that I want to do if I'm paying in the same ballpark. Do you get what I'm saying? . And so I showed her one of these meetups. I was like, Hey, this is what I'm doing to find my own properties, by the way. And she was like, oh. Is there any way I could get that thing you have on your phone? On my phone? And it wasn't on the app store cuz when you're a software developer, you could just plug it in your computer and get it on your own phone. It doesn't have to be approved by Apple and stuff. But she was the reason why I put it on the app store because she was like, in my line of work, I will pay a thousand dollars to try any type of new marketing. And I was like, What, oh, . I'm not even trying to sell this thing. I just thought I'd show you what I was doing, and so I figured out how to get a payment processor set up. I did get it on the app store. , it didn't have a name or an icon, but to get it on the app store it, you had to have a name and an icon. So I went to 99 Designs and I picked the logo that we still have today. Picked the name. And so that is how it started and that is how it turned into a business. And being a smart, savvy businesswoman that Britney is, she actually negotiated. $700 instead of a thousand. She was just paying for the mail cuz the app would send mail to the owner as well now, so that was what she was paying for. The app was free at the time. She would just pay for the mail that she would send through the app. And so that's how it got started.

Awesome. So before we get into the app, talk a little bit about 99 designs in that process, because that's what I recommend to anybody doing this. I see a lot of people spending hours and hours thinking about, oh, what logo should I do? And that's just not any of our strong suit. And that applies with businesses, that applies with podcasts because I did the same thing, 99 Designs for action Academy. My cover art was through that contest. So talk a little bit about that process.

I think it costs 99 bucks, right? Costs? Costs.

No. 300 bucks. Yeah, it's 300. Yeah.

Yeah. Okay. It's been a while since I did it. Maybe they upped their prices, inflation, but we actually, it's a really great fast process because you actually do get, I think I got 20 designs for my submission, and I didn't like most of. , but two of them were pretty good, and so I had picked, I like these two, I don't like the rest. Then all 20 people get to take another shot at it. Yeah, and so the design gets refined that way and dialed into something that I like, something that I wouldn't have come up with directly myself, but really liked it. It's like the power of brainstorming. You're not literally that bad ideas, except you get 20 people a brainstorm for you with legitimate. Tangible things that you can look at and accept or decline. And so after a couple rounds of that, I picked the winner and then I got all of the actual design files for it. And I thought it was really efficient in the money that I spent, but also the time. Yeah, because sometimes if you're just working with one designer, you can go back and forth and they get frustrated because you just don't like what they got going. And so the 99 design was pretty awesome cuz I, I got to see 20 at once. Yeah,

It's six. So right now it's, I think 2 99. So what it is like a design contest for people listening. So what you do is you go on here and you say, Hey here's my business, here's, and you click these different. Pictures that like are different, like design styles that you like. So you could pick like an eye context, like minimalistic, all these different styles, and then it throws it out to all these people and it says here's your prize. And then you put an escrow, basically 300 bucks. It goes in there and then it makes it a competition. So anybody can submit their designs to work on it, and then all of a sudden you'll get this influx of designs. Most of 'em are gonna be terrible. And then you start, you can do a one to five star. . And five stars means I love it. Four stars, eh, and then so you can start selecting your final list, and then all their other ones are gonna be like, okay, let me copy that one and iterate. And then all of a sudden you, through that process, you spit out a really cool design. So I highly recommend that for people listening. So let's fast forward a little bit to the creation of the app. Now you have the app. Walk us through what is

the deal. , so many people started downloading it cuz I put the keyword driving for dollars in the app store description, which was the decade old advice for, it has nothing to do with an app. That was just what people did. People were, that was key. That was key to the app. Success is we weren't trying to change any behaviors. We were just making something that everyone was already doing a little bit easier. And and by a lot of people. , three per day . So not a lot, but it was pretty time consuming because the app didn't look good. It was just made for me. And so every time somebody signed up, I would call them on the phone and walk them through what to do in the app, because otherwise they had absolutely no idea. . It wasn't user friendly at all, but that three grew to six and now I'm doing six 30 minute calls per day and I'm like, damn, this is taking the whole day. . And so I called my buddy from middle school and high school. His name's also Dave. I know he's a good software developer cuz he helped build the fraternity software that I mentioned, chapter Builder with me before. And I was like, I've got this. , and it wasn't supposed to be a business, but now I think it really can be a business because I didn't try to sell it at all and somebody paid me $700. So do you want to be my partner in this? And I would love for you to remake it. It needs to just look a lot better so when people download it, they actually know what to do. and at the time, and I think he thought that I had lot already going. So he was like what do you think would be fair? 20, 30% for me? And that was really like humble of him and I was like, no, 50. We each need to be 50 50 because want to trust you. We work together on quite a few things and then two, this is like a long haul project, so I don't ever want it to be, I don't ever want you to resent. My equity percentage because you are so critical, you will be so critical in the work that you do. And I just feel really thankful that he said yes. And so we've done 50 50 and one huge thing that I will say about partnerships is it's helpful if you know the person beforehand cuz it's a serious thing to start a business with somebody and then write down the agreement as soon as possible before. you get going, you kind of wanna figure that stuff out when you're at your best, not when you're mad at each other or disagree with each other and you're at your worst. Sure. And then the third thing was suggested by a friend now named David Bull. runs a company called Arc Financial Genius when it comes to helping business partners stay business partners. And he said, input this thing in our operating agreement called a push pull agreement. So if we ever have a disagreement that we just simply can't resolve, one of us can say, okay we need to split up. That person can initiate the price. They could be. The business is worth 10 million. And then the other person decides who buys it from who at that price. So you would never get stuck, low balling or groveling over what the actual value of the business is because the initiator names the price, then the second person names who buys it from whom for that price. And so I thought that was really good. Obviously. So

you conceding por, you're just conceding portions of the,

of the decision. I think that is a way you could say it, correct. Yeah. So we've never had to use it, but it's definitely nice to know that it's there because it's just like a clear option of what we would do. And I've heard some horror stories about partners that do break up and, they just get in really long legal proceedings and stuff about how this would, how the breakup would go. So yeah, luckily we've been really good partners, but I just really liked that tip. I thought it was really,

Yeah, I like that. Do you listen to my first million at all? Sam Parr. He's another Austinite. . david: Yeah. And they actually do, they, I think the guys that do that have this crypto newsletter called Milk Road. Yep. Sean. Yeah. You heard that one? Yeah. Yeah. So sh so Sam was talking about how he, when he does partnerships for business, what he will do is he'll write out, he'll, him and the other person will write out where they see this thing going, and like three to five years, like what their vision for this thing would be to make sure that they're at the same ambition. because if Sam's trying to make this thing a hundred million dollar thing and the other guy is trying to make it a $10 million thing, then their values are just gonna be so outta whack that it's not gonna work out. So then they write out everything that's important to them in the business, everything they want the business to become, and then they bring it back together. And then they're like, okay, cool. How far apart are we And is this gonna. And so that's advice that I've heard from him. I'm like, holy crap, that's another good piece of advice. But

walk us. Yeah. Always write it down even if it's on a napkin.

Yeah, of course. Always run the back of the napkin operating agreement, man. I love it. For people that are unfamiliar with the app at all, walk us through what a user gets by logging into the app store and downloading the Deal. Machine app today.

Yeah, so it very much started by helping you drive for dollars better. Instead of writing it down, writing your own mail and then repeating that mail to the property owner, you can pin the property on a map that looks run down. It could track the routes, the streets that you've driven on, and it can also look up the property owner. And you could press a button to send mail to the property owner. So not the property, but wherever the owner lives. And you could snap a picture, put that on the postcard, and it says, do you want an offer on your house? If so, I can close quickly and with cash. Please gimme a call or text. Have a great day. You can also press a button to get their phone number and email to give 'em a text call or email. and you can hire somebody to drive for you and it'll track where they've driven. And so you can compensate them based on hours or miles or houses that they've added and see the photos of properties they're adding too, so that you can verify, oh yes, they are distressed. I see that gutter hanging off. So that's what deal machines started as. And then we help with a few other aspects. We're, our mission is to give everyone the. Of real estate investing. If you're just starting real estate investing, this is a very good tool. You are the type of person that we really help find those first few discounted properties. And if you've got a little bit more money, , you may not wanna drive around yourself, but you may just wanna pull some data, like utility shutoff lists or foreclosures or maybe some absentee owner equity, 35% or more. That just expired from the mls they didn't sell their house. So you could pull that data. and then send marketing to those types of lists. That usually costs a little bit more in marketing because the easier the lists are to get, you're not making that time investment to go make the list yourself. The more our competition, the more people are mailing to those lists. And so you do, you can get deals faster that way, but it just does cost you a little bit more money. We have both options available in the mobile app, and then once you get somebody to call you back, you're gonna want to know like, how. Should I actually buy this house for? And so we've got a MLS comping tool that shows you comps of recent properties that sold in that area with the same square footage in bedrooms. You could see the MLS listing pictures to make sure they're exactly the same type of fit and finish. And then you could put, you could see what the comps are in your mobile. using that so you don't have to like bug a realtor or feel weird about asking a realtor when you haven't done a deal before and you don't really necessarily offer them anything in return quite yet. So that's what the app does. And then we just wanna make it every type of tool and data you need to start investing in real estate. . brian: Awesome. So now we're on year what seven. Since 2016 started. Yeah. It's like unofficially in 2016. And then I, we formed the business with me and my partner in 2017. So 18, 19, 20, 21, 22, 23 would be six years. So what,

so now a, after these couple of years, what types of wins are we seeing from investors that start using the app? What's a customer journey? Some

customer. I was just talking with Philip Vegas, who's actually in Austin. He runs a business called Key Glee. They have franchises across the country. They advertise as we buy houses, and they end up buying from people like Hoarders who don't want. The hassle of cleaning up their house and having a bunch of people walk through it. Like they're very private people, so Sure they, they'll end up searching like, how do I sell my house, Austin, Texas. And then they'll talk to somebody like he glee the house will need a lot of work. And then Philip, anyway, he took this wholesaling challenge. He took $5,000 out of his wife's ira and she was like, I believe in you. And then he turned it into $35,000 in 14 days by finding one of those distressed property lists that I mentioned, cold calling every single one of them doing 15 hours a week, cold calling, asking if people wanted to buy their house. And he found somebody that was like, wow. I'm like, so glad you called me. And he was like, whoa, I'm surprised I found somebody who's really happy to be getting my cold call . And then so he got it under contract and then he sold it to a hedge. That has cash. And he charged them a $35,000 assignment fee. So he took the $5,000, turned it into 35,000 in 14 days. Now that's a pretty crazy fast story. took me like nine months to get my first deal, but I, you do hear those fast stories quite a few times. We've helped people close 10,000 deals in all 50 states like. Dude. That's

awesome. Yeah, and it all goes back to the Alex Hormoze value equation, which is I'm obsessed with Hormoze and I've been going back and forth trying to get him, he kinda looks like podcast, man. Dude, that is the greatest compliment I've ever gotten in my life. Thank you. Best friends forever. So for him he's, he talks about the value equation, which is the top is. you have this equation. Top, top of the equation is gonna be your dream outcome and likelihood of achievement. So you want to increase these as much as possible. So for you, you're like, okay, I'm gonna get you under contract on one of these properties and I'm gonna make it a lot a hell of a lot more likely because I'm gonna give you all the information cuz we're gonna do the skip tracing. We've already got the templates for the mail. All you have to do is click a button, which is the bottom side of the equation for the value equation, which is time. And perceived effort. So you're like, I'm gonna make it fast and I'm gonna make it easy for you to do this really complicated thing and make a bunch of money. Because $35,000 is nothing to shake a feather at. That's some, sometimes that's what people make in an entire year, and that's another transaction. So I think you did a really good job at crafting your. For deal machine. And that's one of the reasons I wanted to have you on here was I was just like, it's a really freaking cool business model. And so on that note, how do we, how do you run the business model? Is this a recurring service? Is this a monthly, annual? How do you run this? Yeah, so

we've really tried to pay and charge as little as possible for the mail and for the skip tracing. And for those who don't know, skip tracing is a term that comes from when a criminal would skip. They would hire a detective to go track down that person. And part of the process was finding all their contact info, their relatives contact info, what addresses they might be staying at. And so now we're not dealing with criminals. But skip tracing. Tracing that. Skip is where the term came from, is just way to get data on somebody that has the addresses, phone numbers and emails. So we really try to charge as little as possible on that stuff that you consume in the app. And what allows us to be a business is actually the monthly recurring fee, which starts at $59 and the highest plan is like $300 if you've got a team of 10 people and you wanna use every single feature and make sure everybody has access to it. So that's how we do our pricing model at Deal.

Sweet. So how many active users and what's the revenue look like now? Because now it's the

fun part for me. . Yeah. A active individuals, I would say 15,000 a month. Now some of those are team members and whatnot, about 6,000 actual accounts for us. And then what was crazy is our revenue. When the app was free, we charged like $2 a postcard. We made $20,000 that year. We, when I say make, the top line revenue, then we changed to the monthly fee and reduced the mail to a dollar per postcard, and we did $1.3 million that year just by switching to a monthly fee instead of giving the app away for free and charging a lot for. So then what we did again was we reduced the price, we increased the monthly fee about 20%, and then we reduced the mail price again as far as we could go down. I think it's now like 42 cents, which is first class tracked, barcode, scanned in, postage included. And then so that is how we ended up. Getting our revenue from 1.3 million to 6 million in revenue that year. And then the following years were like 9 million and 13 million. So that includes the subscription and the mail. And so that's our story. What was really interesting to me about that was. people used the app a lot more when we made the consumables cheaper. Does that make sense? Genius. There was a mental block, there's a mental block when the mail is $2, they're like can get that somewhere else. A lot, a lot cheaper. So we had to make it as cheap as possible and then charge for the value where they felt the value was being received, which was like the actual software and the convenience of it. So that was a shift that was very helpful and critical for. Man that's

awesome that you saw that because as soon as you started talking, I was like, immediately, like my brain started working exactly how you did the business. So you had like the commoditized portion of it, which was the mail and the deliverables. And then so you were able to take that price down, lower that fixed expense, which was what percentage was that on your bottom line? Like I'm sure that was like the majority.

So the it's like the physical male. physical mail. Yeah. There's not much margin in it at all now, which is that what you're

asking? Yeah, but I guess that's the point because you realize that in the beginning for people that are listening that are maybe like new to the whole like business game. What he was doing was he was trying to make a bit of a margin on the mail and then he realized that the margin game that he needed to play was in the recurring revenue through the app service because people were paying for the convenience.

Yeah, I was making all the margin in the mail and giving the app away for free at first, and I realized it was better to switch those around. Heck yeah, man.

How sticky is it? What's your retention? . david: So it's really Nine out of 10 small businesses fail within the first year or two. So a lot of people using deal machine are actually starting a business. They have not done a real estate deal before. , which is our specialty, which we're equipped to help out. But just like any other business, it's, it is hard and it's not something everybody can succeed at. They need more than the app to do it themselves. For real. Yeah, our average customer sticks around about a year, and so as we've had people may quit because they decide to go invest in Bitcoin or, something totally random or different, they're not even doing real estate anymore. Or we do have individuals that end up, they're the, they've done a million dollars in assignment fees, they're now more advanced than what we can serve them with the tool that we have today. Now, of course, we're. So that we can continue to grow with people. But, so that's of where we're at right now. And for the two reasons why somebody might stop using Deal Machine is our sweet spot is really to help get that first deal all the way up through, I, I'm starting a podcast. My co-host is somebody who's done like 350 deals in outside of Kansas City, Missouri since 2019, exclusively using deal machine plus his personal relationships now in that small town. But, so yeah, that's, that. Our sweet spot is definitely starter in like growth mode, but not like huge mode. Does that make sense? Sure. No, that that's a perfect avatar. So we're looking at a $600 ltv, right? , which is lifetime value. On average, you have somebody, oh no, it's

more than that. It's a thousand. It's a thousand. So people yeah, cuz people spend on mail and skip tracing and they may be more than that $59 a month plan so that, yeah, the average is over a thousand dollars. Okay.

Sick dude. You've got a sweet business here, man. I like it.

So where dude I feel very thankful that it turned out that way cuz it didn't start that way. It didn't start out to be a business. It just started out to be a rental property. So I always tell myself, Hey, if something's not going quite right, I gotta be thankful cuz I just wanted a rental property. That's what I got. Everything else is just icing on the cake. What's your team look like now? So we have 30 people. It's about 10 on the engineering side. 15 on the support side, and then about five on the administrative side, like me, including my assistant. We have a head of finance. We've also yeah, that's roughly what the breakdown is. Dude,

This is six. So what's your vision? What's the plan for the next three years? For Deal Machine we

wanna help everybody get the power of real estate investing. So right now, we've really niched into somebody who's starting getting their first deal in wholesaling . And so I think a huge part of our mission is to expand our reach. What I will, just to be totally honest with you because I always love podcasts that give people the success stories, but. always get the most value from the podcast that also share the learnings, right? . Yeah. So I wanted to do that if that was okay with you, is the way we grew. Was not through our own effort. I think we got really lucky. I think it was a really good product. I think that it was timed well and it obviously solved the need cuz I was trying to do the advice that everybody was giving at the time and we really grew through word of mouth and YouTube individuals, right? People that were on YouTube explaining. This was like the time when this information on how to start real estate investing really started getting pumped into. So we were timed right with that. Luckily a few select YouTubers liked the app, picked it up and just shared it. And then that those people started growing really fast. And then everyone else wanted a YouTube channel. And everyone else just talked about deal machine too, cuz that was the model that was working. And so we really rode those waves, which was amazing. But we got to this point where our business reached a like capacity. Yeah, it's called a growth ceiling. Okay. So the, especially when you've got like high churn like we do, the growth ceiling happens if you're if you're losing, 15, 20% per month, that means the average person stays nine months. So if you sign up 3000 people per month, which is numbers that we do every month eventually you get big enough. 15% of your total base is also 3000 people. So if you're losing 3000 people and you're gaining 3000 people, now you just don't grow anymore. Yeah. So it's like really hard to grow. We've been there for a couple years and it's been a good business, but to continue to grow it, that word of mouth, it was never something that we actually had done anything to achieve other than make a good product. We've really had to learn how to get more exposure to the app, how to make sure more people know about it, how to help people get into real estate investing because the app alone won't do it, and it's our responsibility to help them along that path. And I've spent a lot of time focusing on, organizing my thoughts, sharing my thoughts on that. And so that's something that I've had to. Which is quite humbling when you've got a business that grew that size, but then you're really not in control over the most, one of the most important factors, which is marketing. So that's been something I've been learning this year. I've gotten a lot better at it, and I'm pretty excited about just learning those skills rather than just relying on others to share word of mouth and explain why it's a good product to use and how to. But how

freaking sick is that? Let's take a second. So you're basically what, you said what like 9 million ARR right now?

13 is what we got up to.

Okay. So you're 13 ARR right now. 13 million a r, and you are just now learning

marketing. Exactly. Yeah. . brian: That's freaking awesome, dude. Like just now I've been learning over the last two years hard lessons.

So 13 million a year in organic growth, essentially. . david: That is definitely true, dude, what I love how you've structured your business. I love how you've built your business because what you did was you started with organic demand, you grew it organically, and now you've got such a strong base that it's time to pour gasoline on the fire. And now your fire's already burning. So now you can just pour the marketing dollars on and then get a return on that ad spend, and then you're just gonna take off to the freaking stratosphere. Man, that's

awesome. You wanna hear another mistake that I made, dude, everyone's always. Why didn't you accept, why didn't you raise money? We didn't raise money. We, yeah. So you bootstrapped Yeah. Yeah. So actually looked at where we were at two years ago. And I was like, okay, what got us here is making a really great product. So to get to the next level we should triple down on our product and engineering teams. Okay. And so I did that, but obviously that didn't make us grow anymore. That's not what actually got us to grow. , we didn't even have a marketing team. Could you imagine that? Just building more product than engineering, but no marketing. That's exactly the spot that we got in. And so we, we had to let some natural attrition happen instead of backfilling those extra product and engineering positions like focus on hiring on the marketing side to round out and provide that critical engine for our business. So that would be like another key learning that hopefully by sharing it feels like. Stupid mistake. Like I, I feel like an idiot, but, had we taken money and invested it the way I said that, that's not the growth lever I thought it was, but that wasn't the growth lever for us.

No, that's a huge realization and I think that it speaks to your business even more so everyone's focused so much on their top line production, that they're not actually looking at the product that's underlying and making that so freaking good that it sells itself and making the offer so good that it sells itself. And I think that you've done a really good job of that, and I think this is a fantastic app. I think it's a fantastic service that everyone that's listening to this, if you. Looking for your first couple of properties or if you know somebody that is looking for their first couple of properties, definitely direct them over there. So on that note, David, where can people find you and what can people find? The app?

Wow. Find me on Instagram. DCO is my handle. And you can find the app in your Google Play and Android stores or iTunes App store or just deal machine dot.

Awesome, dude. I can't wait to see where you go with this. And I'm gonna come hang out with you and Austin here soon. So buckle up, man. We're gonna be best friends. Sorry about it. Hey,

let me throw a few things at you and see if you're interested. So I I love playing sand volleyball and I love doing these social third Thursday night bike rides, like a hundred people go just ride around casually throughout Austin. Let's see. I'm sure Aaron might go to the club again. I'll be. And then I love going to see standup comedians, so if you're interested in any of those, let me know and I'll give you the next invite. D.

All the above. Going once, going twice, sold. All right. Ladies and gentlemen, this has been Brian and David with the Action Academy Podcast, signing off.