This week, I catch up with Dom Wells to hear his story of building Human Proof Designs over the last 5 years and then selling it this year, as well as his new project, OnFolio where he’s working with investors to buy and improve profitable web sites.
Sites and Resources Mentioned:
Kevin Graham: Hey guys, Kevin Graham here. Today on the podcast, I have a good friend of mine, Dom Wells. Dom, you might have known from his days as the CEO and founder of Human Proof Designs. He's actually recently started a new company called OnFolio. He's here today to tell us a bit about his story and his entrepreneurial journey that he's taken over the last four or five years. But to give you a bit more of an intro than I've just given you there, please welcome Dom.
Dom Wells: Hey, thanks for having me. Happy to be here. So, Human Proof Designs did actually start about four or five years ago. So you're right on the money that I've been doing affiliate marketing and online business in general since middle of 2012. I guess like a lot of people I was just looking for a way of making more money. I was teaching English in Taiwan, so I didn't have a lot of career prospects. Teaching English in Taiwan is fine, but there wasn't a lot of other things for me to move into as I got older, and I wanted to grow.
Dom Wells: I discovered online business and discovered affiliate marketing. I just started building these websites that just made money by recommending products and getting commissions from the places that sold those products, for example, Amazon. Then in 2014, I started Human Proof Designs, which was or still is a business that does a lot of services for other affiliate marketers.
Dom Wells: We started out just doing done for you starter websites, which is basically let's say somebody wants to get started in affiliate marketing, and they want to have maybe a website about let's say fishing and they want to review different fishing rods and fishing equipment and write articles about how to use the right bait and whatever other stuff fishing people need to know. Maybe they have all that information and have the ability to write, but they don't know anything about starting a website and creating the framework and researching the topics and stuff. That's what we offered people.
Dom Wells: We would basically give them the site, and then we would give them the training that they needed to understand what to do. Because I always felt like, yeah, you can pay someone to build your website, and people tend to focus on how good is that website? Is it the cheapest website? Or is it the best website? Whereas really, I used to think of it as like a car and you could buy a cheaper car or a fast car or a kind of average car. But unless someone gave you driving lessons, it wasn't going to do much good. So, that was the training component to what we did.
Dom Wells: Over the years, we just grew the business and scaled it and brought on a lot of team members, added a lot more training and a lot more services, and I guess became an industry leader and authority in the space.
Kevin Graham: On that training component, that's kind of a really big thing. Because when you looked at so many of the other people that were selling starter sites either on Flipper or on other websites, they would build the site for you, and obviously do the keyword research and put the WordPress site together and have some articles on the site and everything else. But there was never really the information and training on how do I take this from here's a brand new shiny website I've been delivered, to here's a website that's ranking really well in Google and starting to get a lot of traffic and earning money.
Dom Wells: Yeah, that's right. That's something I fortunately realized quite early on. The training aspect really started from a slightly different reason. It was because when I first started out selling starter sites, I was one of those Flipper sellers. A lot of the flipper sellers were basically just selling garbage websites, and people were buying them because they were being promised to become millionaires overnight.
Dom Wells: I put legit sites up there, and I was like, "Hey, you're going to have to do some work, and maybe in a year you'll make a bit of money." Naturally, people weren't really excited about that. So they weren't really interested in buying the sites. So, I realized I was going to have to do a little bit of product education and explain to people why these sites were valuable, and then what they should do with them afterwards. That's when I stopped selling on Flipper. I had already registered Human Proof Designs and put a few articles on there. But it's when I really just started focusing on the HPD blog and products education.
Dom Wells: Then, I think why we were able to rapidly get success is because we were sharing case studies and explaining how to make money with these sites. The vast majority of the people who read our content weren't really interested in buying a starter site, because they already had one. But they came to us because we were teaching them how to make money with their site.
Kevin Graham: Yeah, definitely. The other component of all that as well, as well as showing people here's how you can do it, or here you can buy it from us. The thing that I've really noticed with the sites that you had was that they were keyword researched and the keywords that they were targeting were the sort of keywords you could get some rankings with relatively easily.
Kevin Graham: It's one thing to say here's this site about payday loans or credit card offers or something that has really high value per conversion, but to actually rank in some of those niches is extremely difficult. Whereas the types of niches that you're picking for these sites were sites that people could realistically do some work on, get some backlinks to and start ranking and earning from.
Dom Wells: Yeah, that is a good point as well. Yeah, it's about ... Again, that's just more incentive for me to get off Flipper because everyone on Flipper back then was selling these sites that were in these really attractive niches that they were great if you were the only person trying to go for them. It was like web hosting, payday loans. They were lots of ones that were selling social likes and stuff like that.
Dom Wells: All what we tried to do was find the kind of Goldilocks niches where there's enough popularity in the niche and enough money in the niche that it's going to be worth your time, but there's not so much competition that you're never going to get there. I guess it did mean that some of the sites we sold, they weren't exactly that exciting in terms of their topics. But in my experience, some of those ones are the most lucrative niches. It really depends what your motivation is.
Kevin Graham: Yeah, definitely. Because you could be super interested in writing web hosting reviews. But unless that site ranks, which it's a very competitive niche, you're not going to get traffic, which means you're not going to get visitors and no one's going to convert from your site to earn your commissions.
Dom Wells: Yeah, it's a shame actually, because there could probably be some really good content about that. But most people that rank for that kind of content, generally just write generic stuff and then spend a ton of money marketing.
Kevin Graham: It started four to five years ago, you started with the starter sites on Flipper. You then started moving that across to humanproofdesigns.com, and doing a bit of content marketing push on that site. What's the business look like in more recent times, or how did it grow and what did you do to help it grow?
Dom Wells: It grew pretty well. The past two years passed a million US in revenue. Then it actually grew quite rapidly once it got traction. I think there were a couple of phases of that traction kicking in. The first was, I guess, when the content marketing started to actually have an effect, which is, it took a while. Definitely took longer than any of the sites I'd built previously, but I would say six to 12 months was where I started seeing some trickle of traffic coming in.
Dom Wells: Then I'd been around long enough where some of the other influencers in the space took me a bit more seriously because they were like, oh, this guy's still around. He's still blogging, he's still putting out good content. So, people like the Empire Flippers guys and John-Haver from Authority Website Income, and some of these guys then started letting me guest post for them and started mentioning to their audience like, "Oh, hey, this guy, Dom at Human Proof can build a site for you if you need one."
Dom Wells: That's when I started thinking, hey, I might actually get something out of this business. I think it probably took a year to get the first $1,000 month. That was pretty ... I wish it had been faster. In hindsight, it didn't seem that long, but at the time, it felt pretty depressing. But then once we hit 1000, we hit 3000, I think within two or three months. Then once we hit 3000, we hit 10,000 within probably four to six more months.
Dom Wells: That was just a case of the old, snowball type thing where once people started paying attention, suddenly more people paying attention and word of mouth and content we wrote was getting read and getting shared, email subscribers were opening emails and reading blogs and stuff. I think the real success, the real turning point where we created almost a feeding frenzy with our sites was when I realized people weren't sure which niches to buy. At the same time, as I realized that, I realized that I was limited because I was very much bootstrapping the business.
Dom Wells: A lot of people were coming to us with custom orders. But most people just wanted us to pre-build and pre-select niches. What I was originally doing was I was building five sites every month, and then putting them on the market and saying, hey, these five sites are ready to buy. I couldn't build more because I didn't really have the budget to build more, because I had to pay writers to create these sites, and I had to pay my team to create them.
Dom Wells: I felt like if I listed maybe 30 sites, I would sell maybe 20, because there was more choice, and so on. I had this brainwave, where I was like, what if I just list the niches and I showed the potential of the niches, like the income potential, the traffic potential, the competitiveness, but I don't build the site until someone pays me.
Dom Wells: What that meant was, I was able to list say, 25 niches one day. I just said, "Hey, there's 25 sites available. I'm only going to send it to one person per site. So, you got to get it fast." I think I listed 20 sites and something like 15 sold the first two days. Then I went out and I built the sites knowing that they'd already been paid for. Then two weeks later, I did another 20 sites, and they sold straight away. Then it created this thing where people were on the email list saying, like, "Wow, these sites are going quickly, I need to be ready next time."
Dom Wells: I think our record was something like 15 sites in two hours or something like that. That was around like $15,000 or something. Yeah, it was crazy. Of course, that died down, and other competitors started doing the same thing because they saw how well it was working. Eventually we started launching too many sites. That created less of a FOMO effect because there was more supply than demand. But anyway, that was the real turning point where I had this brain wave and it worked out well. It was just one of those ones where I had 20 brainwaves, and one of them was going to work out well, eventually. It's not like I was a genius or anything.
Dom Wells: But yeah, that was really the like, oh, wow, this is a big business, I might actually start making some decent money out of this.
Kevin Graham: Yeah. That shift there of building the sites, and then taking payment versus asking for payment up front, and then using that money to go and build the sites is bootstrap 101 where they've spoken about this with SAS products before of going to a customer and saying, if you want to sign up for this product, it's $5,000, and then we'll go and build it. You copied that model except into building these starter sites for people.
Dom Wells: Yeah, that's true. I think the timing helped as well. Because if I started out that way when I had zero audience, it wouldn't have made a difference, people still wouldn't have bought them. Maybe six months later, I'd have said, hey, what happens if we build the site first? I guess I caught lightning in a bottle to some extent because I tried this model when I had sufficient audience to pull it off as well.
Kevin Graham: Yeah. And obviously, the existing sites, you had the five every month were selling out. By pre-selling, it made sense at that time to allow you to rapidly grow the sales.
Dom Wells: Yeah, that's very true.
Kevin Graham: Switching gears now to your new venture, OnFolio, when did you start that, and how did that begin?
Dom Wells: I started it formally just this last November. So, November 2018. I got the idea from the Human Proof Design audience. It's something where people have maybe mentioned it to me, maybe one person asked about it in 2015 or 2016. I was like, "No, we don't do that." Because at the time, we were very much trying to stay in our lane, and we had found when we tried to do stuff outside of what we were good at it, it always went wrong. But the situation had changed in 2018, where I was already running my own portfolio of sites. So, I realized I was able to do it.
Dom Wells: To go back a bit with OnFolio, we work with investors who want to buy established sites. Maybe someone has $50,000 and they want to buy a site that's making large enough money, like $1,500 to $2,000 a month. But they don't know how to run a site, they don't know how to find a site and all of that. So, we will partner up and we'll run it for them.
Dom Wells: I surveyed the Human Proof Design email list probably either end of June or July that year. I noticed three or four people from about 200 respondents. Not a large percentage, but it was enough that I felt like maybe I'll pursue this. They mentioned that they had that kind of desire, they wanted to invest in websites, but there was no one resource that talked about how to do it, and there was no service that helped people, at least not that they had discovered. There definitely are some others out there.
Dom Wells: That made me think, interesting. I am aggressively growing my own portfolio right now, which I had been for the past probably year, year and a half. I've just finished scaling my team and my processes to the point where the only thing that's stopping me scale is money. I have the ability to run, say 10 more sites or 20 more sites, but I don't have the capital to acquire it. So, if someone else wanted to acquire it, they're essentially subsidizing my team running my own sites, and helping me grow more.
Dom Wells: I just created a website and explained the terms of partnerships. I just emailed to the Human Proof Design's list, just I think one time or maybe two times and was like, I'm going to gauge interest. The interest, it was pretty good. Some of the first people we got didn't have the big budgets that we expected, or they had sites already.
Dom Wells: Another thing we do is we partner up with people who already have sites and they need help growing them. Some of these people had sites that were making $200 a month, which was not really worth our time, but we entertained it in the beginning because we just wanted to get validation. It acted as enough validation, and we continued. Then, I just kept getting more validation, more people telling me that it was a good idea, and more people coming to me to partner that I decided that this was something I actually wanted to focus on a lot more aggressively and turn into my main thing, and I just went with it.
Kevin Graham: Nice. Can you explain a little bit more the business model of OnFolio, of how it works in terms of working with you as a partner and by an operator [inaudible 00:15:18]
Dom Wells: Yeah. We have two main services. One is basically partner with us. It's like, hey, someone has a website, maybe it's making $1,000 a month, maybe it's making 10,000. They either don't want to run it anymore, because they're busy with other stuff, or they don't know how to grow it, or something in between. They can come to us and partner with us. If we like what we see, we'll basically just take over the running of the site in exchange for a management fee and a share of anything we can grow on top of what it was doing already.
Dom Wells: Then the other one is the same thing, but the difference is, it's the people that don't yet have a site but they do have money. Our minimum right now is $50,000. It's not a small amount of money. But it's big enough that someone can buy a website, pay our management fee. We get enough fee for it to be worth our time and they still have enough money left over from the site's cash flow that they're going to see a nice ROI even if we don't grow the site. Of course we do grow them and we try to grow them as safely as we can. But even if we fail to, we can still deliver that person around a 20% to 25% ROI. It's pretty attractive for a lot of investors and people who want to get into the space.
Kevin Graham: Yeah. When you start talking 20% to 25% ROI, it's like that's huge compared to a lot of different other types of investments.
Dom Wells: Yeah, for sure. I think the real risk with investing in websites is, it's the thing that offsets the fact that the ROI is so good, is that a website can in theory, go to zero. If you don't know what you're doing, it probably will eventually go to zero. For us, we're like, we can still give you enough of an ROI that it's very attractive, but we have the expertise and the experience, but that risk is severely mitigated.
Dom Wells: I'm not going to say a site is never going to go to zero under our management. It never has so far. But I would be lying if I said we could guarantee that that wouldn't happen. But the real value add is that the risk becomes very manageable and very low in exchange for only losing a little bit of potential ROI.
Kevin Graham: Either between Human Proof or OnFolio, can you tell me about an unexpected crisis that happened in the business and how you handled it?
Dom Wells: With Human Proof, the biggest crisis we had, and I think you may have purchased from us roughly around this time. You probably would have been on the other side of it, but we grew too fast. The danger of being able to sell an unlimited number of sites because you're taking the money up front is that you can create severe backlogs fulfilling those orders.
Dom Wells: I got married and had a honeymoon and that was great. But what wasn't great was the fact that my project manager at the time wasn't really that good at his job, which was more on me than on him. He just wasn't the right fit. It was my fault for trying to put him in that position. We had customers who basically had been waiting six weeks for a website, when it should only be taking two weeks. Writers would go MIA when we were like, "Hey, the content should have been delivered 10 days ago, what's going on?" We had bottlenecks every single stage of a website's creation. Keywords weren't being researched on time, content wasn't being written on time, and it wasn't being edited on time. Then it wasn't being built on time.
Dom Wells: It was a serious issue, because I had to stop selling new sites, partly because I was like, how are we ever going to clear this bottleneck if we're adding more on to the end of it? But also, customers weren't exactly infused about waiting six weeks for a site, and then I'm selling another site. I'm taking on more customers and they're like, "Why are you taking care of your existing customers?
Dom Wells: That was a legit point. Although, if their site was in one stage of the production, there was no reason why I couldn't start another site being produced earlier. But anyway, I was at the point where I was like, I'm not going to sell more sites. So, I didn't have more revenue coming in, and I was also refunding customers who were overdue, maybe they were canceling orders or I was just giving them a partial refund as a way of saying sorry for the order being late.
Dom Wells: It was a pretty stressful time. We got through it, obviously, and we got through it by well, just step by step, improving our processes, hiring more people, hiring ahead of the curve, so that in the future we could meet a sudden spike in demand. I got a much better project manager and much better processes, much better training and basically just didn't get greedy and selling more than I could deliver.
Dom Wells: The end result in the end was that our capacity did end up doubling and we made more money in the long run anyway. So, that was a pretty stressful, but very insightful period.
Kevin Graham: Definitely. By going through that and fixing those processes, then your business is so much more robust as a result of all that. It's better going forward because you've really seen where things break down and worked so hard to fix them.
Dom Wells: Yeah. I think as a result, I build businesses now that are much better at operations, which is interesting, because people would say to me, "Would you consider yourself good in operations?" I would say, "No, I'm terrible at operations, but I know how to hire people who are good in operations, because I'm still a little bit traumatized from when I last tried to do all the operations myself.
Dom Wells: I think, looking back, I would rather have been in that situation than in a situation where I was trying to sell stuff and no one was buying. Because you often don't know what you need to do to change that. Whereas when your problem is, we've got a bunch of customers and we just need to hire more people and we need to improve our processes. Generally, it's a much easier problem to solve.
Kevin Graham: Yeah, if you've got sales, then you can always hire people to fix it. If you don't have sales, then it's a very different problem that you need to try and fix.
Dom Wells: Yeah. It's often very intangible, it's a lot harder to troubleshoot why people aren't buying than figuring out other systems.
Kevin Graham: Interesting other little point that I heard in there is that you mentioned that you now hire people that are really good at operations. Going through that thing and recognizing your weaknesses of I'm not good at operations myself, let's go find these people and bring them in to take care of that in the business is a really good mindset thing of identifying the weaknesses and taking the action to make them no longer weaknesses, at least for the business.
Dom Wells: Yeah. It's funny because when I hired the project manager/COO for OnFolio, during her onboarding period, she was saying to me, "Do you want to do things this way, or do you want to do it that way? How do you guys do this?" Just asking me questions about how we do stuff or how we want to do stuff. I was very upfront about saying, you're telling me how we should do stuff. Because how we do stuff right now is probably not the best way to do it. I've hired you because you know the best way, or at least, you know a better way. So, you tell me how we should do?
Dom Wells: She was like, "Okay, great." She went ahead and built all of our processes and everything. Even then I was very much aware that I'm operationally challenged. So, don't ask me how we should do stuff. I'll tell you how I currently do it, and you tell me why it's wrong.
Kevin Graham: That's a great way to have the team. Hey, I don't know what I'm doing here. Please do it whichever way you think will work best for us.
Dom Wells: Yeah, I think ultimately, she prefers that anyway. So, it's a win win for everybody.
Kevin Graham: Great. You just delegate the way in which they choose to go about the thing as well as responsibility for it rather than driving down to people that should be relatively autonomous. Like, hey, this is how we do everything here.
Dom Wells: Yeah. Well, true delegation is delegating the decisions as well. It's not just, "Hey, you do this, this is how I want you to do it." It's more like, "Hey, we need to do this thing. You tell me or you just figure out how we should do it." If anyone's read the book Clockwork by Mike Michalowicz, he's very big on delegating the decision making as well.
Kevin Graham: Yeah. That's what having the right people in your team, they should be able to do that.
Dom Wells: Yeah, for sure. There's going to be some roles where it was very systematized and you can just say, "Hey, here's the S&P. Get on with it." But at a higher level, you don't want to be doing that.
Kevin Graham: Definitely. Moving forward. What's one thing about your business that makes you excited today?
Dom Wells: A couple of things. One is the current traction we're getting is very exciting. It's that early stage honeymoon feeling where people start telling you how great your business is, and really validating your ideas and stuff. That's great, not just from an ego point of view, but also just because it's like, okay, I've made the right decision, I'm on to the right thing here.
Dom Wells: Also, I'm excited by the potential. Because I think website investing is very underappreciated. I'm in a position where I can start to really ramp it up in terms of the size of acquisitions that I'm making, and the successes I'm getting, and the kind of traction I'm getting. A year ago when I was running Human Proof Designs, and I was trying to scale my portfolio on the side, some sites went okay, some sites almost tanked. It just felt like we were spinning our wheels a little bit.
Dom Wells: Whereas now that I'm focused 100% on OnFolio sites have started responding to that focus, and my team's focus, and we're starting to get very good results. We acquired a couple of sites in the last couple of months that are already ... I think combined, the two sites were purchased for 160K, and right now they're valued at 260K after only like two months. It's a very exciting time because we're getting the results that I've always wanted to get.
Kevin Graham: Yeah, that whole shift from trying to go zero to one with every site, which is what Human Proof was to taking existing site from one to 10, which is what you're doing now with OnFolio, is a different skill set, but it's a lot more interesting, I find, depending on personality types. Because some people love that zero to one, other people love the one to 10 and scaling things up. For me, personally, I've now shifted into that scale things that are existing rather than trying to build new things.
Dom Wells: It was kind of ironic to me because I guess I'm doing zero to one with OnFolio. So, that's an interesting irony there.
Kevin Graham: True. But I guess you've also been doing this for your own stuff on the side for a while. So, it's not a completely new thing.
Dom Wells: Yeah, that's true. I think overall, the kind of strategy that I'm doing, or the play that I'm making, it's probably in it's one to 10 stage. I don't know where we are right now. Maybe we're at 1.3. But it's good to finally start getting beyond one.
Kevin Graham: For sure. Where do you see the future of OnFolio?
Dom Wells: It's a tough one because I don't want to name any one thing, because I think there's a lot of different things we could do. But if I could encapsulate all of those things, it would be that we'll be managing bigger websites rather than more websites. What I've discovered is that scaling horizontally in terms of quantity of sites that we manage is very much doable, and to some extent easier. But you also have a lot more of an operational headache increasing expenses for scaling vertically.
Dom Wells: Maybe selling a bunch of your like 50K sites and grouping them together to buy one 500K site. That doesn't increase your costs or your bandwidth requirements. I very much want to move up the food chain in terms of running sites that are valued in the six figure to seven figure range. Then if that happens, there's all sorts of possibilities we can have. We could buy portfolio sites where there are multiple sites within the same niche or very similar verticals. Or we could be more of a general publishing company like box.com, the kind of media empire they have going on. Or we could just be more of an investment play. There's a lot of different things. But all of them are equally exciting and interesting to me, at least at the current time I'm speaking.
Kevin Graham: Yeah. With so many options, it does make it easier to just slow the maker play, and as those options unfold, test them out, see what works best for you and move the business in that direction.
Dom Wells: Yeah, absolutely. I guess we are in a quiet, privileged situation right now. Because we do have demand, and we're getting to the point where we've got more demand than we want right now. So, we can take our time and just get on with things and building the kind of company that I want to build rather than that my customers want me to build. In an ideal world, the company I build would be one that my customers want. But what I mean is rather than trying to pander to every little thing that someone tells me would be a good idea, I can just figure out exactly why I want to do and align with the clients who also want to do that.
Kevin Graham: Yeah, definitely. Where can our listeners connect with you and find out more about OnFolio?
Dom Wells: If they wanted to actually message me specifically, then just go to onfolio.co, and fill out the contact form that'll come to me. If you want to just follow us in general, there's a blog, and you can subscribe to get some of our case studies and be notified of our future case studies.
Kevin Graham: Awesome. Thanks a lot for your time this afternoon, Dom. I've really enjoyed having you on the show and hearing more about both your history and where you're going now with this new business venture.
Dom Wells: Yeah, thanks for having me. It's been great.