How Dan Abbate Buys Struggling Businesses, Completely Automates their Processes and then Sells them at a Profit!

Owen: Hi, everyone. My name is Owen McGab Enaohwo. And welcome to Process Breakdown Podcast. On this show, what I do is I go out there and bring on successful entrepreneurs to come on here to reveal how they’ve been able to create systems and processes for their businesses which now enables them to run their businesses on autopilot without their constant involvement. And my guest today is Dan Abatte from Robotaton. Dan. Welcome to the show. I think I kind of butchered the name.

Dan: You got it. Robotaton.

Owen: So anyways, getting started, we want to understand what exactly does your company do and what kind of pain you saw for your customers?

Dan: It’s kind of a new implementation for us. What I’ve been doing over the last 12 years basically is using custom software and hardware in businesses that I’m either starting up or purchasing and then holding unto on purchasing and then selling and through this custom software and hardware, we try to eliminate as much manual labor as possible, any business that is currently operating that we see an opportunity to replace a person with a robot. It’s not necessarily the big goofy mechanical robots. You always think of them and people say robots. You know, either software or hardware or combination of both most times. We create that customization and then implement it into a business as many processes as possible can be automated.

Owen: So let me see if I get this correctly. So the business you have is about going out and looking for business where there’s opportunity in them that maybe did not do the maximum efficiency of what they’re supposed to be doing and you’re buying them and you’re creating custom software that you used to run an automated business. That’s kind of it’s just what it is, right?

Dan: That’s exactly what it is. That’s what I’ve been doing for the last 12 years for myself. Now we’re doing it for other people too.

Owen: Awesome. And so you’ve actually bought several businesses in the past using this framework. Can you just name a couple of them?

Dan: Sure. We have two theatre venues in Chicago. Live theatre venues, comedy, stand-up and that all sort of thing. Each venue normally would have five or six staff administrative type people and with our software, all the custom stuff that we have, hardware and the building, in terms of locking and unlocking doors, turning lights on and off are all automated. We really got to get away with some full-time staff member at each venue versus the 5 or 6 which are kind a bit our competitor’s venues. So obviously, there’s a big savings there on us and in both in terms of the cost of having all those people not to mention just the efficiency and predictability when you have machines doing these different tasks versus people. So that’s one set of businesses that we still own.

Another business that we purchased in 2009, I was like in this example. It was a legal video business, a company that sent out video guides to go to video production for lawyers for different trial presentations. So we had all the guys on the field, so we could replace them as well a lot because that will be kind of too sci-fi for the time that we’re at right now. But on the back side, they had five employees in the office, one of which was the owner. They just did administration and really just did invoicing and scheduling and getting everybody towards…

Owen: Maybe we should be able to hold off from them because I believe you’ve got example for that company to dive in deeper but I want my listeners to always kind of understand the scale at which you’re running your business. And so how many full-time employees you have right now?

Dan: Currently?

Owen: Yes.

Dan: Currently working in all of the companies [3:55] owned. We have 10 full-time employees, 50 part-time employees, they’re about to go up now a little bit and then just to kind of give you a perspective, we estimate that we would probably have 3 times net both in the full-time and part-time category if it wasn’t fully automation that we’ve been from that.

Owen: Wow. So because of the automation, you reduced the amount of full-time staff you have across all your different businesses. And also in terms of last year’s annual revenue and probably what you expect to generate this year? I always want to give me listeners a scale of [04:28].

Dan: Sure. The aggregate amount of the business is that we’re still currently operating that we haven’t sold, it should be about 4 million dollars by the end of this year and we’ve seen increase in our revenue every single year both in terms of revenue and in terms of profit because we’re either buying something or selling something to buy something else. So we’re always growing.

Owen: Awesome. So let’s use a specific example. Let’s use the legal video production Company that you bought. What would you say at the time when you bought that company was one of the lowest points in the business and describe how bad it got?

Dan: Good question. Yeah actually, when we looked at purchasing a company, we’re going to require a company. We’re really looking for not only how healthy and what the company looks like as is at the point that we’re buying it but we’re looking for kind of redundant processes, we’re looking for unequated processes like people using a lot of paper which was the case in this legal video company. It was a company that was 17 years old I believe when bought it. And they were 17 years back in 2009, they’re in the mid 90’s. A lot has changed technology wise and that’s 17 years and they didn’t update it at all from that time. They started out on a paper system and for the most part, they were using a combination of paper and Excel so they had all of these people in the back office that were really just manipulating this paper and Excel process system, I guess you can call it that just to keep the business operating.

And so we started as a real opportunity. Hey. We’re buying a company that’s already profitable and already a nice little company and we also see the opportunity to streamline all of these and eliminate all of the overhead that’s associated with the labor. And now one thing that I mentioned too when you’re talking about automation, you’re not only talking about reducing labor, that’s only one part of it but it’s all the ancillaries stuff that goes along with that later. Obviously there’s a big conversation going on with employee benefits, payroll tax list, a place for them to sit. You don’t need an office anymore. When you go down from 6 employees down to one, you can take that one employee and stick him in a smaller office. There’s a lot of extra savings that you can generate by reducing the size of your full-time staff.

Owen: So basically, this very business when you bought it, though it was profitable at a time. You saw that there was an opportunity for you to literally streamline the business, make it more systematized and reduce the staff. So when you bought it you have four staff there and what I got from the pre-interviews now, how many staff you had now in that company?

Dan: Just one actually. I’m sorry about that.

Owen: And we’re doing it live. Go ahead.

Dan: Yeah. There’s just one actually. We have one full-time employee working with that company at this point. They’ve got their terminal and then for the most part, the automation software is handling all the communication with the guys out in the field who are actually doing all the video and the person at the desk is really just handling order entry, picking up the phone when a customer calls, that sort of stuff.

Owen: So I think we should probably even dive into specifics on how you solved the problem for this very company that you purchased. Let’s talk about the specifics on what was the first thing you did. I’m thinking from your standpoint as a guy who is trying to buy companies so that you can figure out a way to systematize or make them better and more profitable.

Dan: Sure.

Owen: So the first thing, what goes through that journey as to the very first thing when you come in and you see the chaos?

Dan: Okay. So we’ve identified the problem with the company which was all these unequated systems. So from a practical perspective, what we want to do as we’re making the purchase because we want to make sure that the day that we own that company, we’ve eliminated all of that overhead. We don’t want to run a company for 6 months before we’re getting rid of that overhead. So the first thing we start to do even during our diligence period is develop the software. While we’re going through other diligence, we’re checking up all the normal business staff, verifying all the tax returns and all that stuff. We have another set of people that are literally sitting down with the people at the office and they’re going through all of the paper and all the stuff that they’re doing and they’re kind of recreating those processes in software.
So for example, they had a form. This is a good example I’d like to use. They had a form that they made on PDF. It was a PDF form that they were typing manually all of the information they leave. So the guys, when they’re setting up the automation process, they would actually take that form and then kind of duplicate that in the system so that the system knows exactly all the fields that they need to be concerned with and all the information that needs to know about and it’s just a matter of taking that analog form and making it digital.

Owen: Okay. You just made an example of how that is a thing that can actually be automated. When you come to a situation like in this company that we’re talking about that you could literally automate them. What do you do? I want us to really dive in and let the listeners know what you do.

Dan: Here’s the difference between what you can automate and what you can’t automate. You can pretty much automate anything that is kind of a repetitive and predictable, kind of the process stuff that you’re kind of talking about too, if everything is repetitive, if people don’t have to think or be creative then it’s pretty much fair gain for automation. Once you get into a company and you realize that somebody is doing something like customer relationships for example. I mean that’s a really good example of it. You can’t get a computer to really get people a good customer experience because they want to talk to somebody. They want to have that connection to a real person. Sales people, designers, the video guys out in the field, you can’t automate them but pretty much anyone else who it is sitting at a desk handling relatively the same bits of information all the time, they have a pretty good possibility being automated.

Owen: Let’s put the things that you can automate to the side but for those things that you cannot automate, how did you guys go ahead to literally systematize so that the people who are doing the work always have to follow the same series of steps? What did you do?

Dan: That’s a good question. What we try to do is take the people aspects of it and instead of making the people work the software like normally when you’re using Excel or something like that software doesn’t do anything unless the person does it. So a week will go by and the Excel Spreadsheet will still be blank because the person didn’t do anything with it. What we try to do is because we do have certain processes that are automated, the parts that are automated we try to expect our employees to really kind of interface with the system in a way that is where the system is basically telling them what to do. So even though they’re being creative, the systems are reminding them what to be creative about so that at the point where the creativity stops and it becomes “Hey. You’ve got to talk to these 20 people today.” The system is telling them it’s not the other way around.

Owen: Okay. What I’m getting from that is when you come to a situation is even though you have literally mapped it out for the person on how to handle the task but then your system, the way you build it out is that it also verifies to make sure that the part of this depending on them is actually done and if it’s not done, it keeps prompting them into I guess… otherwise, it’s pushing it back to a manager. That’s what kind of what I’m getting from that.

Dan: That’s exactly what it does. What it does is like for example the one guy at video company that is left in the back office, right now while I’m talking to you, I can click… By the way, everything that we do is Cloud-based so it doesn’t matter. It’s not location dependent. You can do all the stuff from anywhere. We can have a multiple locations. I’m in Florida right now. All of our businesses for the most part are back in Chicago. But to answer your question, yeah I can click on part of the software and I can see what he’s doing right now, what tasks are set up for him, when the computer asks for him to complete those tasks. You know, how long it’s been, how quickly he’s completing things. We don’t regularly draw this out but we could. I mean we could actually draw a graph based on the data that we collect to judge his response time. We can kind of see that, “Hey. 6 months ago, he’s more responsive and now his time has been going by. He’s not as responsive for some reason, so what’s going on with that?” that sort of thing. So when you’re gathering all these data because it’s the computer asking for the information or asking the person to do something versus the other way around. It really gives you a lot of control as manager or an owner or whatever your position is to really kind of see what employees are doing so that it makes easier to manage them and it’s easier for them too because they don’t have to be thinking, “Oh I’ve got to remember this. Oh yeah, I am really after that.” Like it’s very clear, “Here are the steps.”

Owen: So it’s kind of like that whole thing, trust but verify or trust and measure kind of things. The custom software that you guys build for each company you take over, does that mechanics in placed to make sure that you’re trusting but you’re also verifying that he’s doing it.

Dan: Right.

Owen: I think one of the things that you mentioned during the pre-interview that you guys literally got the company to the point where all the minutia that you’re focusing and eliminating all those things and now you’d be able to focus more and more on those tasks to actually drive revenue for the company because everything else is managed by the system. I’m just imagining the listeners now listening to this saying, “Hey. Do you see a company that has this chaos and you’re coming in. But how do you figure out the very first point to attack?” Because I’m not sure that you’re attacking everything at once and the business is becoming systematized immediately like that. There is a process you follow. So how do you figure out was the best point to start from?

Dan: Usually the place that we’re going to look at right away again is usually start I guess on the accounting or bookkeeping department. I guess it’s a good place to start because for the most part bookkeeping, invoicing, accounts payable, PO’s and all that stuff from business-to-business, it doesn’t matter what business you’re in. It’s relatively the same, so we usually kind of start there because we really want an end-to-end solution. We don’t want to just focus in an “Oh, we’re going to go worry about scheduling.” We can start at scheduling and make sure we have a really good scheduling program because if the scheduling program doesn’t directly interface with all of the accounting and invoicing and bookkeeping and all that stuff as well then it doesn’t do any good. And then you just built two separate tools which there are standard solutions for those two set of tools. And so we generally start kind of in the middle of the company which I generally think of this kind of bookkeeping. You know, kind of watching the money come in and out, watching the jobs come in and out and then just kind of connect everything on both sides to that central system for the most part.

Owen: So after going with the bookkeeping and accounting as the first thing you attack because we assume that it’s going to be technically the same with all businesses but then what are you doing next with this very company?

Dan: It depends on the business. In the case of the video business, it was scheduling and communicating with the video guys, with the guys that are actually out in the field. How do they communicate? How are we communicating with them both in terms of like their availability? You know, how do we make sure that every week we know who’s available when and to go where and then when we actually have a job, where are they going, what information they need to get there, what information they need about the job? And then feedback as well during and after the job, how do they communicate with us? Are they just calling us up to tell us stuff? Do they have their own interface which is actually what we ended up doing? We actually gave everybody tablets and they actually do all of their notes and all the stuff with them interfacing with us.

They can actually be at the job to get all these information. So honestly by the time they close the job, the soon as they say, “We’re done. This is the amount of hours we did.” And all of the other details they put in. The server generates some invoice. So it happens spontaneously. There’s no, them having to deliver all of the thing. Before what happened is they deliver all these paperwork back to the office and then there will be all the people again deciphering all the paperwork and setting and building an invoice and putting them to their accounting system and it was like a big ordeal. Now it happens on-site for the most part.

Owen: And so you mentioned that, yes, okay, the accountant site is usually the same with all business so you stop from there. But you said it’s going to be different, the next thing you do might be different for all businesses. I’m afraid I forgot. Is there a general framework that you are carrying around from each business and you’re just literally apply that same framework but the pieces that go into that framework is going to be different depending on the business. And if so, I want to know what that framework you’re using?

Dan: Well how it works is that we’ve built again on over 12 years, a little over, we’ve built kind of a core software system which has a bunch of standard protocols. I mean it kind of works the same way with any type of open source project works. I mean for those people who are familiar with the open source software and that sort of thing. The idea is that you get a lot of people working at the same project to develop some sort of software. We kind of do it sort of similar and that we’ve created a base structure that we can then manipulate and hand things to as we go from business-to-business. So although the business itself might be different, the base that we’re drawing from software-wise has a lot of ability to add everything that we need to actually build into a customer solution for that business a lot quicker than if you were just starting from scratch at that time.

Owen: What I’m trying to do is relay this interview to someone who sees the value in creating software but then not at that stage that you would or already have, help us understand from that person who is not there yet.

Dan: I’ve got a good example for you on that exact thing. Whenever you’re looking at your business, whenever you’re looking at what you do, or even as a person on a daily basis. Even if you’re not using software or hardware or you’re not even automating anything, you still have to look at the steps that you take to accomplish whatever it is you’re doing on a daily basis. This is the example that I’d like to use. I was doing something out on my computer because I had always done it that way. This guy or something else sent me an invoice, I printed out the invoice, I scanned it over here and I put it in an archive. Okay, so e-mail to me, I’ll print it out, I’ll scan it and put it in archive.

Now three years ago there was a really good reason for me to do it the way that I did it but that really good reason went away in over the last 3 years. I never noticed that that really good reason went away. So I was showing somebody else this process because it’s like, “This really sucks. I’ve got to do this, I’ve got to print this out, put this over here and that sort of thing.” And then she says to me, “Why don’t you just take right out of the e-mail and put it in the archive because it’s coming as an Excel Spreadsheet. Why are you printing it and then scanning it?” And then I was like, “I didn’t even think of that.”

So my point with that story is that whenever you’re doing something that you’re kind of thinking like, “Okay. I just got to do this. I just got to do that.” Look at it again because maybe you don’t, maybe there is a way to chop steps out. Now that step there that she pointed out wasn’t fancy, wasn’t technology, wasn’t custom software or anything like that. It was just kind of looking at my own process that I was doing and just finding a quicker and better way to do it and even if you think that the challenge of we doing your processes is going to be difficult and time consuming. A) It will take as long as you think. And B) once you get it done, you’re going to be like, “Why didn’t I do those 3 years ago?” That’s really what it comes down to. You’ll see things on the periphery. I could probably do that different but I don’t know, I’m just going to keep doing what I’m doing. That’s the key. It is to look at what you’re doing and then just decide to change it and once those changes are done, you’ve done it like it made your life so much easier.

Owen: So one of the things I’m trying to get every guest to do is look at their business like a conveyor belt. Let’s say on the back end is the customer getting the service that they’re promised and happy happy. On the front end here of the conveyor belt is like, okay, they’re making a request to purchase the service and we’d like to go behind the scenes and look at how you get from that very starting point to the end and what are the systems you currently have in place to make that happen? I guess we can talk about the video production business and look behind the scenes of how that works and maybe one of your other businesses too which anyone they can choose and we can do that. So that way, my listeners can kind of see behind the scenes what’s happening as you move to the conveyor belt.

Dan: Let’s look at the video production business I guess since we’ve been talking about that. Here are the literal steps that happen. The customer usually by e-mail or fax sends us a job and that job comes in a variety of format so unfortunately inputting that job is difficult to automate. So that usually requires somebody to look at it and decipher the information and then put it into kind of our standard system. So that’s the one guy’s job. So job comes in. At that point once he’s logged in to the system, the computer automatically sends out all of the confirmations to both, usually it’s the customer who hired us and then the opposing side because remember this is more of your stuffs so there’s always two slots. It sends up the confirmation to both of those people saying, “Yes. The job is scheduled. This is what we’re doing.” And now that might be tomorrow or that job might be 2 months from now, we do know. But the jobs are all different.

So once it’s in the computer now that’s it. Now as far as it actually being booked like somebody actually goes out and does it, the server is in charge at that point. So time is running by, the server knows what date it is, the server knows what time it is and then at a certain point it says, “Okay. I think this job is going to happen.” Usually it’s the day before. So the server sends out an automated e-mail with a clickable link as well as a text if we have a cellphone number for the customer and it sends out these tidbits of information to the customer and says, “Is this really happening or we’re actually having this happen tomorrow? You know, we scheduled a while ago. What’s happening? And then they just click a link that says, “Yes, it’s happening or no, it’s not happening and we’re going to reschedule.” In which case the server asks, “Now, okay, when do you want to schedule for and that sort of thing.” But most of the time they go.

So the customer clicks yes, it’s happening at which point the server looks at every… Let we back up. At the beginning of every week, the server also sends out a similar request for information from all of our video guys and it says, “This week, what is your schedule looks like?” The video guys do the same thing. They fill out a form that says, “These are the times and days that I’m available. So any jobs that fit into that, I can go to.” So the server then out on a rotating basis based on people’s availability and based on the customer saying, “Yes, this is happening.” starts assigning jobs to these different guys and telling them where to go. So then they go out on their job based on the information what the server and then at the end of the job, the guy out in the field like I said tablet can close out his job. He can say, “Okay. We’re finished, click, click, click.” And then the server says, “Okay. You filled out all the information I need. Everything is done.” And like I said at that moment, the server generates an invoice that’s ready to go.

And then at that point, the guy who did the order entry way at the beginning gets a big list of invoices that all he has to do is click print and then the computer prints them all out of the printer and it gets sent out and that’s tracked on our receivable at that point all on real time as soon as their invoices are generated and it was all official, it’s on our receivable. And then the same thing happens in reverse. When the customer pays us, the check comes in, check deemed against that receivable and that it’s deducted out of the receivable and then there’s a revenue item added to our revenue at which point we can run real time profit and law statements against that revenue.

The same thing goes for when it’s time to pay employees, the computer knows that, “Okay. Today is payday. So I’m going to generate all of these checks.” And it just takes a one guy and look through and just kind of verify, “Yeah. Everything looks good.” and then click, prints out all those checks at which points all those expenses are accounted for and again we can run those on our profit and loss for the month or whatever. So everything happens at real-time and everything happens automatically. If the person again gets a list of things that they have to look at or check but they don’t really have to remember to do stuff for the most part.

Owen: And what I like you just going through the example now is that you just literally gave minimal and concrete to the listener on how all you’ve been saying so far, how it’s working in the background with all the system, the software that custom software that you have developed and you created how it’s working in tandem with the different aspects of the conveyor belt as it’s going down. And at the end of the day, it’s a customers in the case of this one now is I guess the attorneys or whatever, getting the video services the way they want it you’re getting paid and everybody is happy. But there were different moving parts to the engine which you just gone through and explained. Let’s use another business if you’re okay with that. I was curious about the business where you create hot dogs. I like the pictures of you draw hotdogs. Can you talk about what’s happening in the background of the conveyor belt? That way the listeners can going to get more insight.

Dan: Sure. The Big Hot Dog was a silly online product that we decided to sell. 2010 I think is when that started. Just a silly thing, we decided to sell online and see what we could do with it and it sells well because people think Big Hot Dogs are funny.

Owen: How do they eat hotdogs?

Dan: They slice it. It’s this big then you slice it and then you realize it’s like two patties or whatever.

Owen: Okay.

Dan: That one actually is very streamlined and super automated because it’s really easy because the orders obviously were all taken online. So people are very used to purchasing things online and so they just go to our website, they place an order. Okay, a customer purchase and place their order, the computer already has real-time tracking of the inventory that we had. So we’re taking inventories of these Big Hot Dogs that are custom made for us by a factory. They are sitting in our inventory as well as the big buns and the ketchups and mustards and all that stuff that we have in an inventory. So the computer has account on all that stuff. When an order comes in, it verifies the address with FedEx as our shipper and the computer then interfaces with FedEx directly, generates the FedEx label on everything that needs to be printed for the order.

At this point, this is a good example of a part of it that isn’t automated. Somebody has to pat the hotdog into the box. Again, we don’t have the big arms or the robot thing. I guess if we did a lot of volume then probably we could do that. We don’t have the volume to do that. So we do have a person who sees the order come up on a screen and it’s kind of like at McDonald’s. When you go to McDonald’s you always see the guys looking at the screen that fill the orders, it’s the exact same thing. They see an order and they package everything into the boxes. They click, okay and the package is ready to go and then at that point the computer sends off the tracking number to the customer so that they can see where it’s at and then the FedEx guy comes and picks it up down at the dock, picks all the orders for that day and they’re on their way at that point.

And then obviously, credit card processing, all the revenue side of that’s generated is all happens in real time as the sales are happening. And then the other thing that’s interesting about this particular one which I think you’re going to like is that we’re actually interfaced directly with our supplier in a similar fashion. So these things now, this isn’t something that he stocks. So he has to make this custom for us. So we have the server set up, the computer set up, robots to contact him when inventory starts to get low.

We know it takes him about 2 weeks to produce our order comfortably. So based on the amounts of orders that are coming in and based on history which the computer has been calculating based on the time of the year and that sort of stuff. It decides, “Hey. I’m thinking we’re going to start running low pretty soon on hotdogs. So we’re going to need to order more.” So it starts to contact the supplier to place the order basically to say, “Hey. We need another 100 hotdogs or whatever.” And then it’s the same process. They will either click a link to verify that he got an order or they don’t really do cellphones over there but we could, we could a text if you wanted.

Owen: And I’m glad you even respond to that because I was going to my next question. What happens in the system is it turns out, because you said initially it’s always looking at the inventory to make sure that there something in there. The next question is going to be, what happens if someone places an order but you guys will have an off in the inventory and you just answer that. And I’m thinking that you guys actually built a solution for that based on an actual issue that happened.

Dan: Yeah, that happened all the time at first before we built the system because we didn’t know if the product is actually going to sell. So we just started doing everything manually. We’re just like, “Well, let’s see what happens. We’ll just get it via e-mail and we’ll just throw out the orders as we go.” And then as the volume went up, that exact thing happened. We actually had multiple times where we get a big rush of orders at a particular time of the year and we’d run out of inventory. It will take the supplier 2 weeks to get us another batch. So obviously that’s no good because people placed orders and they want their product and you want to give them the product because it takes too long to cancel orders and all that sort of stuff. So yeah, that was a legitimate problem.

And then the other thing was, at first we were just selling the hot dogs and we started adding component to the hotdog. So we have the Big Hot Dog itself and then the big bun and then the ketchups which are the Heinz Picnic Pack. And now the thing that’s funny about the Heinz Picnic Pack thing is that we get those from Amazon, we’re buying from Amazon. So the server places automated orders to Amazon to have them delivered to us similar to the way that they contact the other suppliers. So it’s kind of cool when we’re able to interface with a small manufacturer using one system and then also a big company like Amazon has other solutions that we can place these automated orders through. So the server is able to contact them in two different ways but accomplishes the same thing, keeps us supplied so we don’t run out and we don’t have too much inventory. Because of course, anyone who has a product knows that you don’t want to have way more inventory than you need because that’s just a waste of money. So it’s really good that you can balance all that stuff.

Owen: Well, I like that. And one thing I also got from what you said and I don’t know if the listeners noticed that was how you said you started out with manual first and then when you got to the stage where you’re doing it all manually and now you literally have built up the entire system manually is at this stage you now say, “We know how the roadmap is on the manual level of how to get the job done. Let’s not go and use the custom software and figure out how we can customize it with software because we are literally known to road map on a manual level.”

Dan: Yes.

Owen: Is that right for me to assume that?

Dan: That’s exactly right. I’m glad that you picked up on that too because that was a start up for us. There was no history with that. We didn’t know what was going to happen. We didn’t have any processes at all. So absolutely, we just started doing it manually like everybody else because it would be a waste of time and money to try to create these big giant custom solutions where we didn’t even know what we are doing at. And that’s why we are to go back to your question on the acquisition of the video company. They already were through and they were already doing that manual process. So when we looked at it, we looked at their process, their manual process the same as we ultimately lifted our Big Hot Dog manual process. Once there’s a manual process in place, it’s very easy to figure out how to automate it. It’s very difficult if there is no process to automate no process. You know what I mean? So you kind of do have the kind of start out. I guess co-manufacturers are doing it all the time. You know, you ever see billboards big clay models of the cars that they’re going to build before they actually build anything? It’s the same idea. You just build everything manually first so you can see it and then you figure out how to see the whole process up and increase the efficiency.

Owen: I’m glad you mentioned that because if we want to let people know how it really takes to automate your business, you start with a manual first, clay out the roadmap and make sure you know the road map is repetitive and then you can now say, “We can go see how we can use custom software to automate it.” And so we’ve been talking about the good but I’m sure there have been challenges that you experienced when you buy a business like this. What are the challenges that you usually run into when it comes to trying to systematize and eventually automate the business?

Dan: There’s always going to be surprises along the way, the things that you don’t expect. In the case of the video production company, something that we didn’t know until the very end was that the video company has a lot of relationships with third party court reporters, they are not customers, they’re more like referral people, people that are referring to us. And we didn’t know that really until kind of the very end of our development process. So we kind of developed everything ahead of time and then we’re like, “Hey, by the way, there is this other 30 companies that also need to interface with this system that you just built.”

Otherwise, you have to have one more employee to just deal with them. So we ended up having to kind of create a whole side portion of the implementation software to get these 30 other companies. They are all way up interfacing with them and then have the server be able to talk with them and to be able to go what it needs to know from them. So really that’s kind of a biggest thing is that you have to be careful when you’re creating these processes that you don’t create a process yourself into like a box that you can’t be flexible at all. You want the system to be rigid enough that it actually works but things aren’t going to come up but you have to be able to tact things on or take things off or maybe your business changes, maybe your business changes direction. So the easier that you can create flexibility when you need it is kind of an important thing I think.

Owen: I’m curious for that example you just mentioned. At hindsight, was there a way that you could have avoided that?

Dan: Yeah, looking back probably kind of as we’re going through the process of talking with the owner and the other people that we’re working there. That was just a mistake on our part probably that we didn’t see that sooner. We knew that those people were out there but we didn’t realize to the extent that they were really involved until we really got into it and then again we had to do it at the last minute. So yeah, you try to be as thorough as you can but you’re always going to miss something which goes back to that being flexible thing to try something that has enough flexibility that when you do get surprise, you can adopt to it.

Owen: And also I think what I get from that is the whole idea of systemizing the business is that you have to accompany at the table with the mindset that it’s an ongoing process, an ongoing improvement and so when you come to a point where there is a snag is actually not something to be mad about but an opportunity to figure out, “Okay. There’s a snag here but it doesn’t mean the entire system is back. Let’s use the opportunity that we have because of the snag to figure out how to improve the system so it answers the snag in case of next time.”

Dan: Yeah. That’s your job at that point. I mean, if the computer is doing everything or not even the computer. Even if it’s a process with employees like if you’ve got a process in place and all your employees are lined up and everybody is doing exactly what they’re supposed to do, that’s just as good as an automated system at that point. You’ve got everything running like a real machine. So yeah, that’s your job at that point. Your job is to keep looking at it and figure out how to tweak this, how to tweak that, how to improve. There’s always room to improve. So the first job is to implement the process and then the second job is to just make the adjustments as they come.

Owen: You actually said “real world processes” I think how to do with hardware and situations where there was a hardware or maybe a equipments in the business that you bought. Explain how that was a challenge and how you were able to…

Dan: Yeah. In the case of the video business, it was really easy because it was pretty much was a 100% software. It was on a cloud-based system that we were able to customize and get everything going. With the theatre venue is the other example. That business makes its money on having a building like building a facility which has to be open at certain times, has multiple rooms that are opened or locked based on the time of the day, based on what the schedule is. So once you start having to have the server which is still the same cloud-based server located who knows where, now you need that thing to be able to run your facility. So you don’t want to just have a list of things, “Hey. You know, Dan, go down and open the door.” and then, “Dan, go lock the door.” and that sort of thing. You want the server to be able to do that. So you want the server to be able to click the lock. Now that’s a hardware thing. If you’ve got for example, you’ve got to be able to lock and unlock that and the server has to be able to do that.

So at that point, it’s a little bit trickier because now you have to figure out how that interface is happening. You’re also running some issues like if the server goes down for some reason or let’s say you lose power, that’s what the most likely example. Let’s say you lose power at the building or at the site, what happens to all of those hardware things that are controlled by the server? All the doors just opened up and now security is completely breached because the power is off or is it the opposite of this, everything locked down and in case which everything locks down, what kind of manual, literal, mechanical process are in place so that people can still get out at the building? You know, when the power is out.

So there’s a lot more steps when you’re incorporating real world hardware into the whole reach of the system. I mean, I’d like to think about the software that runs with theatre business. It’s like a big giant monster robot basically but has two buildings attached to it. And minding also, the software that we’re using and the system we’re using wasn’t a reason you can have a hundred buildings attached to it. It’s just that’s the way it is. Instead of having arms and legs like people think of silly robots, this one happens to have two giant buildings attached to it which controls lights and locks and in it turns the security system on and off, that it’s appendages, basically. So it’s pretty interesting.

Owen: So I guess what I’m getting from that is that you know, especially when you’re doing it the hard way, you need to be, with the system, you have to really find a way to adopt, adopt based on what you’re seeing with the situation with hardware.

Dan: Yeah. You’re never going to be able to buy hardware that does what you needed to do right out of the box. The best you can hope for is that it has some amount of easy ways of interfacing with what you’re trying to do but you’re never going to get exactly what you want. So you do have to do a little work on that.

Owen: Well, this the point where I actually ask every guest how exactly do you set up systems to make sure that your employees would they know exactly what to do and I guess I know probably what your answer would be but let’s just go ahead and try. At this point how do you know exactly that your employees would know exactly what to do depending on the phase of the conveyor belt?

Dan: Yup. It goes back to that but the server is the one who is actually managing the employees and not the other way around. The server is making all of it. And you know, mind you, the server, the computer, the robot, whatever you want to call it. Actually it’s me as the owner. It’s like I will basically. I’ve decided that these are the things that are supposed to happen and so instead of me having to tell the employee and asked them, “Hey, did you this? Hey, did you that?” The server is just doing that all the time. And so, that’s how I keep track of them. Like I said I can see what the server has asked for and I can see if the person has delivered or not.

Owen: This got me thinking too is that you built in the ability to track and measure but then at some point it have to be manual and when you figured out how to manually track and measure is where you announce that, “Okay. These are the steps that I go through to always track and measure this very activity. Now let me go back into my custom software and build automation on how I track and measure.” Is it right for me to assume that that’s how it went to?

Dan: Yeah, that is. The idea, the way that we communicated with our employees manually is pretty much the same. It’s just that we’re typing out a manual e-mail or calling them on the phone, the server is just doing that automatically. So yeah, it absolutely is. And then the thing that’s interesting in terms of tracking which you imagined is that once you do get into this automated system, you’re also able to collect very specific data so that you can really see even better than a manual system because you can see the exact day and time that people are doing certain things and you can start to see and you can chart all that stuff and it’s really helpful. So you build up the manual system but there’s so much hidden information in your manual system that when you start to record it because it is all online and because it’s all automated, you can actually start to draw even more information than really you knew you had.

Owen: Like?

Dan: Like for example, like we have 2 different employees working at 2 different venues and they’re checking people in with tickets, right? And we can see so and so who is checking in tickets at this rate and this guy is checking in tickets at this way.

Owen: I love that.

Dan: Why is there a difference there? What’s the problem? Why is this guy so much slower than this one? Because if they’re not getting them in shows, they’ll start on time, you can’t run as many shows if things are getting behind. So that’s a good example of that. Like in a manual process, I can both tell those two people, “Hey. You got to check everybody in. Start checking it.” And that’s it, that’s all I know. But once I’m registering the speed at which they’re checking people in, I could see that over here is slower and now that gives me an opportunity to look at that again and just why is it slower.

Owen: You might even discover that the guy who is faster has a different way to make it even faster which can lead to an improvement of the system for everybody.

Dan: Exactly right. That’s exactly right. And then to allow the improvement because it’s all in one place, you make the change and that’s it. Now it’s changed for everybody.

Owen: I love that. I mean, you could see the smile on my face. I guess it was the question that I think I asked you in the pre-interview and I love the answer. So as you’re saying, how do you track and verify the results that are delivered by your employees? Do you remember the answer that you gave?

Dan: I probably said something to the lines of it. I just kind of look and see how many requests the robot is asking for that doesn’t get filled by the employees. That’s kind of what I view. So if I’m seeing a big pile of request from the server to somebody who is not doing it and I also want to note that if too many requests for the same thing happen and they’re not addressed, the server automatically contacts me and says, “Hey, Dan. Just you might want to check this out because I don’t know why this is happening.” So it’s all pretty helpful.

Owen: I love that. And so now since you literally, have built a business where at this point is very automated, what has been the longest time you spent away from your business?

Dan: Like I mentioned, I’m actually down here in Florida right now and I’ve been here since April and I haven’t gone back and I don’t have any plans to go back and I’m getting tired right now. So I mean that’s a good example. And again, I can check in and look and see what’s going on but the checking in is very non-committal basically. If I’m not seeing an issue here, then I don’t have anything to do at the business at that point because everybody is doing what they’re needing to do and the computers do what it needs to do. So I just mind my own business.

Owen: One is you’re working in the business but how many hours you’re working at this point?

Dan: On the established businesses, I don’t even know how many hours a week. I work probably not a lot. I mean, I check in once in a while. I mean I guess if I respond to various things, maybe 2 to 3 hours a week maybe on the stuff that’s established because everybody is just kind of going along. And now in terms of normal operations, now if I decide I need to make an improvement or change something then I’ll put more time in of course but as far as just normal operations, it’s just kind of checking in really. That’s about it.

Owen: And somehow with all these free time you have, I mean where do you find yourself spending the most time working on your business and why?

Dan: Now with all this free time, I’m really working on Robotaton really because I really do see the value in what we’re doing and I really do think that the automation thing hasn’t really happened yet. Automation is kind of a last part of outsourcing. People have been outsourcing and chasing cheap labor for years and I think automation is going to be really kind of the next thing that you hear about. So yeah, I’m spending my time building that other business because again that’s the creative side, that’s the sales side, that’s the philosophical side. You can’t get a computer to do that. So it’s good to have that time to build a pie of yourself, you can grow a business, a new business or existing business or whatever. That’s really where you should be spending your time on growth and also enjoying yourself, just having a nice quality of life. I’ve learned that one over the last 12 years. I’ve worked a lot of hours and now I work really hard to not work is what I do.

Owen: You work really hard to replace yourself.

Dan: Yes.

Owen: It’s kind of a different kind of mindset. You’re working really hard to make yourself irrelevant and not needed.

Dan: Right.

Owen: And so the few next question I’m going to ask you now is, what is the very next step that someone who is listening to this right now needs to take in order to get moving forward with the goal of eventually getting their business automated like you have?

Dan: Well, first thing is first is they have to make sure that they have strong manual process. Just kind of like you saw and they point it out. You have to have good processes in the first place because it’s very difficult to automate something that is all over the place. Like if you’re doing things 20 different ways, then you’re going to need to consolidate all of those things to some sort of the conveyor belt. I love that terminology. Make sure you have a strong manual process and once you have a strong manual process and maybe you’ve revise that a few times, you’re ready to talk to somebody about figuring out how to automate your business and the savings that you’re going to create are going to outweigh any costs that are involved.

Owen: And doing that pre-interview, you made a note to say custom software because there was a reason why you said that. It’s not just software auto-show and there was a reason why you said it. Okay using this example you just mentioned now that the person has ironed out all the keys and manual part of the business and they know exactly on the recurring how it is going to occur, now when they want to go ahead and automate it, you’re making a distinction and that is you are looking for custom software. I’m wondering why.

Dan: Yeah. The reason is because every business is different and it doesn’t do anyone any good to try to then take all of the experience that you have with your business and what you’ve been successful with and turn that into some off the shells package. It’s like, “Oh, I’m going to take everything I get and jam it into some box.” The automated process should be a literal, digital representation of the manual process that you’ve already put together. If you’re doing anything short of that then it’s not going to work, it’s not good for you because you just made your business less efficient.

If you’ve been working to make it efficient all this time, automation should just be a speed up of that efficiency and it shouldn’t be like a complete reorganization to the point that your original processes are gone. So you want to make sure that your own business culture and your business personality still exists just in this new digital form.

Owen: Is the reason why the idea of making a custom is that maybe off the shell software at the point where you’re now at the very end of this whole process that you want to automate stuff. But most of this off the shell software might not be able to do all the things you wanted to do. You need to have it accustomed exactly for your need.

Dan: Yeah, it will. If you buy something off the shell, there’s no way that will work. It’s kind of like saying “I’m going to buy a household. I’m going to buy the house with the car, with the food, with the pets. I’m going to buy just that one and then that’s where I’m going to live.” Is it going to have everything the way that you want it in that scenario? No. You’ll be lucky if it has 30% of what you want, if you bought your house and your household like that. It’s the same thing. No one is going to be able to provide an off-the-shelf solution that’s going to work for everybody because when you end up with these things that you don’t need, things that don’t work exactly right, things that now that you’ve got this thing but you have no way of adding into it because it’s just a closed loop basically. So yeah, that’s why it’s really important. You’ve got to really look at each business as its own unique thing and then create a solution that’s also unique.

Owen: Okay. I’m fighting not to answer that question that a software cannot do that even though we have a software. Hey, I want to just let the odds go by and just move forward to the next question. Okay. So let me find what I’m going to ask you. So next question now is, there must have been books that have influenced your mindset to think the way you think. So what are those books and why?

Dan: I’m not going to give you any specific answer because I’m not that booky but I can explain.

Owen: It could be interviews or something.

Dan: I know exactly what the answer is for me. I’m a Philosophy Major originally. So the idea of looking at the world and try to analyze really what’s happening and all sorts of different things, you know politics, science, in this case business and economics, that’s what I like to do. And so all of the different philosophy books that have really taught me how to be a real critical thinker and to view things logically and view things as a process, everything is a process. Don’t let anyone fool you, we get all emotional and I’m not a robot by any means. I’m a lot of emotional person too. But you have to remember that even within people being emotional as a group, there’s still a process that play, a broader area. So that’s really what influenced me a lot is that the idea of everything can be broken down to some sort of logical order and that comes from my philosophy background. Any philosophy that you can read on any subject, I would highly recommend. And then as far as current reading material, I got a subscriptions to the economist and I get a Economist Magazine every week and I read a cover to cover just to see what is happening in the world. There’s a lot of interesting things happening that I use every day to just know what’s happening.

Owen: And what’s the best way for listener who has been listening so far to connect with you and thank you for doing the interview?

Dan: Yeah. They should just e-mail me and I think on the website probably has our phone number. It’s up to you. You can contact me.

Owen: Go ahead and just say.

Dan: The website is Robotaton.com and then my e-mail is dan@robotaton.com.

Owen: I mean we’ve gone through the entire interview. I’m curious. Is there a question that you wished that I had asked you for some reason I maybe skipped my mind and this is your opportunity to ask the question and then answer?

Dan: Here’s the thing I want to leave everybody thinking about. It’s not really a question but it’s to answer your question in this which you asked for. We’re talking about all these processes and about these bigger systems that are in place all around this. I’m talking about what I’d like to call Robotaton Generation 1 which is creating a seamless system to run an entire business. Generation 2 is what happens when those businesses that are automated start interfacing with each other so that then, there’s not even people in between the businesses anymore and then you’ve got factories that are… kind of like ordering with the Big Hot Dog. You’ve got factories that are ordering everything that they need when they need it from other factories that are also automated and then it just goes right on down the line to the point where you have this entire lights out economic processes, businesses that are just running daily without very little intervention and I think that’s where it’s going sometime in the future, not tomorrow, by any means. We have to get through this generation one stop. But Robotaton Generation 2, that’s what it is. It’s giant economic machine that just have just works.

Owen: It’s just ubiquitous. I don’t know if I’m pronouncing the term well. But anyways, forget about term. But I want to just let the listener know that you’ve been listening to this interview so far, so obviously I know for a fact that you all are making sure that your business can be more efficient. You want to systematize your business. So if you’re at the point in your business where you feel like you no longer can be the bottleneck and you want to document how things get done so you can systematize your business and have your employees know literally how to get things done, sign up for a free 14 day trial of Sweet Process. And if right now you’re currently documenting procedures for your business but the tools you are using are rather complex and your employees don’t really like the experience, then check out Sweet Process and still get a free 14-day trial of Sweet Process. And if you know any entrepreneur who will find value in this interview, please share the interview. And Dan, I want to thank you for doing the interview.

Dan: Thank you. It’s just fun. I love talking about what we do. I appreciate it.

Owen: And we’re done.

Dan: Awesome.