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Ep. 116 - Make Business Decisions Out of Love with David Henzel

David Henzel is the Founder of LTVplus and a veteran entrepreneur who has been building in the saas and e-com space for over 20 years. He had multiple exits, including MaxCDN. 

His passion is to help individuals and their organizations reach their full potential. 

Aside from LTVplus, (Outsourcing for e-commerce & saas), he has a small portfolio of companies including upcoach (Coaching Delivery System), TaskDrive (Sales Development), Shortlist.io (Digital Marketing Agency), and his passion project Managing Happiness (Peak Performance Group Coaching for entrepreneurs).

In This Conversation We Discuss: 

  • [00:00] Intro
  • [00:38] David’s tech business history
  • [02:43] Earlier Ecom platforms that David used
  • [03:29] Loss leader strategy
  • [04:59] The value in taking care of customers
  • [06:29] Sponsor: Klaviyo klaviyo.com/honest
  • [07:58] Meetups and masterminds
  • [09:20] Chase’s coaching announcement
  • [10:06] Sponsor: Rewind rewind.com/honest
  • [10:44] Continuing David’s business journey
  • [11:33] Value prop for CDN’s
  • [12:39] Shopify makes things easier
  • [13:18] Finding product-market fit
  • [15:44] Sponsor: Avalara avalara.com/honest 
  • [16:33] Out of love vs out of fear
  • [18:18] Sponsor: Gorgias gorgias.grsm.io/honest
  • [19:07] Implementing EOS in your store
  • [20:52] Taking away value from business books
  • [22:23] Principles and books to have impact
  • [24:10] Excellent customer service for success
  • [25:34] How LTVplus help growing businesses
  • [27:17] What software does LTVplus use?
  • [28:02] Expediency over satisfaction

Resources:

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 Transcript:

David Henzel  

You don't have to delight people but you just have to get people what they're looking for fast. People want stuff fast.

Chase Clymer  

Welcome to Honest Ecommerce, where we're dedicated to cutting through the BS and finding actionable advice for online store owners.

I'm your host, Chase Clymer. And I believe running an online business does not have to be complicated or a guessing game. 

If you're struggling with scaling your sales, Electric Eye is here to help. To apply to work with us visit electriceye.io/connect to learn more. Now let's get on with the show.

Chase Clymer

Hey everybody, welcome to another episode of honest ecommerce. I am Chase Clymer. And today, welcoming to the show, an amazing person that I've met through actually the Shopify community. 

He was not supposed to be at Shopify Unite when I met him 3 or 4 years ago, but he snuck in. And he's been a great mentor over the years. 

[He] let me bounce ideas off of them. And I finally got him on the podcast. Today, we're welcoming to the show David Henzel. Welcome to the show. 

David Henzel  

Thank you very much for having me. 

Chase Clymer  

Awesome. And I purposely didn't tell people what your current businesses on purpose. We'll get to that at the end because I want to talk about the history, which I found fascinating when I was a younger entrepreneur. 

And you shared that with me and that's  how we got our relationship started. So I guess walk me through your history in the tech business and how you got to where you are today.

David Henzel  

Sure. [I would be] Happy to. So I'm originally from Germany. And I was a misfit. I went to 14 different schools and I didn't really fit in. I was really lost and didn't know what to do. And thankfully a friend of mine came to me and said "Hey man, you're cool with computers. How about we start a business together?" 

And this was like really my thing(s): finding entrepreneurship, being able to do what I want to do... It was like the "Oh Moment" for me... And so I leaned into this really hard. First, I had a support business. 

We just supported local businesses back then when service was still in buildings. Not somewhere in the cloud. 

Chase Clymer  

Yeah.

David Henzel  

It dates me on how long I've been doing this. And one of my customers, he was the biggest hookah --like shisha, the Arabic water pipe-- manufacturer...

Chase Clymer  

Yeah.

David Henzel  

...in Europe. And he was pushing me like "Hey man, let's partner up. Let's see... You can do an online shop. And I have no idea about this tech stuff." 

And I just did it because he was so persistent that... [I had] no intentions to get into Ecom or with hookah. I didn't even smoke. Also he was very persistent. 

I actually [did it] just to shut them up. But it worked really, really well back then. The stores were very basic, [it] didn't [even] have the pictures. 

And just by doing this, by providing really good support and sending out stuff fast and taking good care of customers, we grew very rapidly and...

Chase Clymer  

What technology was that based on?

David Henzel  

How do we start out with osCommerce, way back. And then xt-Commerce, the German shoot off of this scenario which is like... They use osCommerce, I think, as a base and build a bunch of stuff on top of it...

Chase Clymer  

Like [they] forked it?

David Henzel  

Yeah. Forked it. But they completely changed it. That's something really cool back then. I [also] saw a lot on eBay back then. 

And the headless way of... When the eBay sale occurs, the checkout goes through your Ecommerce store, so I had the progress bar. 

[In] eBay once [it] in the cart you couldn't remove it. And I pitched him like, "Hey you can get... If you buy more then you don't pay shipping. This is like a perfect funnel to siphon off customers from you. 

Chase Clymer  

I don't think you're allowed to do that anymore.

David Henzel  

No, it doesn't work anymore. 

Chase Clymer  

(laughs)

David Henzel  

Back in the good old days. And then this thing... I think it's called self-liquidating offer offer. Now, I've heard it somewhere. So I sold the charcoal that you sell, that you need for the hookah.

I sold it at cost or below my costs on eBay. So I was making a serious loss on this with the eBay fees, etc. But [it's] also cheapest and a lot of people bought this. And this is how I got people who smoke hookah in the door. 

This is how they got to know about me. And I provided a really good service to them.  [I] sent them some swag with the first offering and had this eBay checkout thing going on and this really propelled the business forward really fast. And I think these days. 

I don't know where I heard this. I think Digital Marketer. Like for example if you sell candle equipment to make your own candles, if you sell 100 wicks at Amazon or eBay... Because the only people who want to make candles buy 100 wicks. 

We know then [that] you can acquire them. [When] you get a customer [at the] door, you get their information, you can market to them, they get to know you. 

You have this trust relationship because they already gave you money. You exchanged money. So you can totally lose money on the spot when you get a customer [through] the door.

Chase Clymer  

Yeah. Loss leaders are a crazy tactic. One that comes to mind now is Micro Center in America does that really, really well. They give away flash drives, just for walking through the door. You don't have to buy anything. 

You just come in the door with a coupon and they'll give you a flash drive. But then they get your information and they're gonna try to upsell you... 

When you're in Micro Center, it's a giant computer warehouse full of every knick knack and... You're not going to walk out of there with just [a] flash drive.

David Henzel  

And another thing that made me really... Actually we had a meetup with all the hookah online stores. [The] people ran those [stores] in Germany. 

We compared notes and a few of them were really good on SEO. They were outranking everything. And when we shared revenue numbers, it turned out that I actually had way more revenue than them because I took really good care of my customers. So everything was super fast. 

And back then, the people who were in this space were a lot of potheads and people were not so super organized. So the customer service was not that great and we saw crazy repeat purchases from our customers because we just took really good care of them. 

Oh, also another tip because your audience is Ecom heavy. I'm a big fan of swag because people like to share good stuff. They like to recommend stuff. 

For example, if I tell you "Hey, eat these berries. Don't eat those berries..." back in the Stone Age times, I provided value to you and then I rose in social status with you. 

So we like doing this. And so we like to recommend stuff. We don't talk about stuff out of the blue so we have to provide people with a trigger and the trigger is swag. It's a really good trigger to give them. 

For example, we send out with every order --even if it's a small order-- [a] really high quality lighter with a logo. 

And when you sit around and smoke hookah, you have a lighter. And then people ask like "Hey, what's this lighter? What's 12moons?" 

This was the perfect [hook] And then the conversation starts and they can recommend us like "Hey, they're good. Good price. They delivered super fast." 

Or like when something's broken, we just didn't make a big deal. We just shipped them a new one. And this led to having really good growth because we just like to care for people.

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Chase Clymer  

How did you guys stumble into the idea of having a local meetup? You essentially had an impromptu mastermind.

David Henzel  

Yeah. Yeah. Basically, it was like... There were a few big suppliers of the stuff, really. I wasn't doing wholesale. I was just like... 

With this ex-customer of mine and the business partner, we bought it from him. And there were a few others that... It's a small community and so everyone knows each other. And so we got together and tried that.

Chase Clymer    

That's something I recommend to Ecommerce business owners a lot. And I don't see it as much as it should. It started getting a little bit more popular. 

But you need to... Every Ecommerce business... If you're selling stuff online, you need to be in a mastermind group with 2 or 3 other businesses that are doing better than you and doing worse than you. And... 

David Henzel  

(laughs)

Chase Clymer  

...talk about what's working and what's not working an hour every month. And you'd be surprised at how quickly you're going to start solving problems for each other.

David Henzel  

Oh yeah. Absolutely. I've been... I'm a huge fan of masterminds. We used to meet twice a year, rent out some villa or like a hotel, any nice place in the world. 

The 10 of us are always getting together and sharing what has been really working for the last 6 months and what doesn't work and exchange [ideas]... 

And it's crazy how much you learn when you do this. I'm actually thinking about putting together a mastermind for Ecom stores. For more [stores] making a minimum $10 [million] or $12 million a year.

Chase Clymer  

 Yeah. 

David Henzel  

Because, there's a void for this thing with this idea right now.

Chase Clymer  

Yeah, it's something I'm playing around with the idea of right now, too. I'm thinking about doing coaching. 

So getting 3 or 4 businesses together and I'll also be in there to help solve problems and doing just one cohort and seeing how it works under the Honest Ecommerce umbrella. 

So everyone that's listening to this, I am thinking about it. And if you think that you'd be a good fit, and you want to be in that group, feel free to reach out and email me, I guess. I can make it public now. (laughs)

David Henzel  

(laughs) Cool. Out of the box. I actually have a portfolio of businesses. One of my businesses is AppCoach.com which is a platform for group coaching and full coaching. I think you... Because... 

Yeah, that's purposefully built for mastermind and group coaching. One-on-one coaching works as well. So happy to hook you up with a free account if you want to play around... 

Chase Clymer  

Oh yeah. I'll check it out. 

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Chase Clymer  

So you guys built this cool hookah business, your customer support is top tier and you're just crushing it, and you're seeing sales better than the people that are out ranking you through SEO. Where does it go from there?

David Henzel  

So then I was... I got bored. It's like a problem for me. If I do something for 5 years, I get really bored. That's also why I now have like a handful of different businesses right now. So I got bored and I want to do something else. 

And I was always drawn to move to the US because I saw the startup ecosystem there was beyond anything that it was in Germany. 

Especially where I live, there was nothing much going on. So I saw my Ecom business, which gave me the money to get my investor visa to move to the US in 2009. 

I moved to LA and I co-founded MaxCDN, the content delivery network, which we ran for 8 years and had a really good exit 2 years ago.

Chase Clymer  

Yeah. So for those that are unfamiliar with... Especially those that are on Shopify, you just have a CDN built-in. You don't know why this is a cool technology or why it was so important back then. So give them a... What's the value prop of a CDN and why was it such a great idea?

David Henzel  

So a CDN is a content delivery network, which is basically like web hosting, but with multiple locations around the world. And we serve the heavy objects of your website, from the close location to your user. 

For example, somebody in Frankfurt accesses your store that's in Los Angeles, hosted in Los Angeles. And the bits and bytes have to travel around the world, which takes a long time and makes your load time higher.

Or it's using CDN to get the heavy stuff like images, CSS files, etc.--static stuff from the Frankfurt location. 

So always, the data center is close [to] you. And the main benefit is A, your site doesn't crash when you get a new channel on a TV or whatever and you have high conversion rates. Because  it's the big thing in Ecom.

If you have a faster website, you just convert higher. It's the "now" customer. People want everything now. And so if it loads long, people lose interest and will not buy. So it's like the big thing on why CDN's are being used.

Chase Clymer  

Yeah. And that's a cool thing about Shopify. Like I said, they have a built in CDN for you and just... Shopify, in general, being a hosted SaaS solution... How much easier do you think it would have been for your hookah business if Shopify existed back then?

David Henzel  

It would have been massively easier. Not needing developers all the time.. And I had my head around to maintain my own server, do updates... I have a technical background so for me, it was okay.

But It was still a headache to learn. I wasn't a front end dev so I hired a front end developer to get this stuff done. So it's definitely... It's incredible. It's so much easier. It's really a breeze to start it yourself.

Chase Clymer  

Yeah, it is. It is a breeze to start a business. So that's a good little transition. You've now started... Like you said, you have 9 businesses now. 

You started and acquired some of them. And I think the number 1 issue that faces young entrepreneurs is finding product-market fit

So do you have any suggestions on how to position that thought experiment for a startup for... Especially in Ecommerce, they're usually selling physical products online, where should they invest time and energy to try to see if they're onto something?

David Henzel  

If I sell something, even taking one step back in terms of what product you're selling.. If having a product market for the thing... It's really important that you sell something that you're really passionate about. Because otherwise, if you just like to do it for the money... There [are] so many ways of doing [or] making money. 

But you should really think about what's your...what impact you want to have or what are you really excited about [or] geek out about because it's gonna just make everything much easier. Because if there's gonna be... It will be easier to go through the rough patches of entrepreneurship, if you're really excited about this. 

And it's also going to make it much easier to generate good content, good videos, good blog posts, for SEO, etc. if you just really know your shit. If you know what you're talking about in a specific niche or if you just like really passionate about this... It's much easier to sell something if you're passionate about this. 

For example, if I... I'm a recovering introvert. I used to be very introverted. And being on a podcast would have never happened or speaking on stage. I was even uncomfortable on conference calls. So I felt how much this was holding you back in my entrepreneurial journey. 

So the Toastmasters, which is where you learn how to [speak publicly] I went to 2 networking events per week in LA until I got over it. The switch in my head will slip. When my yoga teacher said "Every decision in life, you had to make it out of love or out of fear." 

And this was something I really knew deep down inside, but I couldn't articulate this, but now it was out. 

For example, selling something: If I want to sell you this because I know it's a really good product and it's gonna make your life easier, then I can even be a pushy sales guy like "Hey man... Chase, buy this." or like "Implement us and your business..." I was like annoying you with this, even though I have the monitor benefit was like "Dude, it's gonna help you so much. Just do it." 

Versus selling something out of fear because you have to pay a mortgage, you have to hit your quota or whatever. It really changes the game. 

And being in this mindset, knowing what you're selling, being really knowledgeable and passionate about this will help you to just be better at this. Creating... Yeah.

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Chase Clymer  

You hit the nail on the head there. And I've heard the story before, but it finally clicked for me now. So I'm glad that we're talking. So it's selling out of love instead of out of fear. It is so much easier now to have tough conversations with prospects as an agency owner and pitch [to] them and talk about what we can do to help them because it's... 

All we're trying to do is help nowadays, and like the business has gone through that growth phase to where we're very comfortable. 

We've got a great business. We've got a good runway, we've got awesome clients, and we've got an amazing team. And so we don't have to take on every project, we can be pretty picky. 

And we're only taking on good fits these days. And we're only trying to sell stuff when we know it's going to really help them improve their business and that's what we're here for. 

But I remember as a younger business, as an entrepreneur, you're just trying to hustle. You're trying to make ends meet. You're trying to make a little bit more money. 

And the way that you're selling is definitely a little bit out of fear. "I gotta pay rent. I got a cell phone bill due. You can definitely feel those conversations way a lot heavier on you and you close them a lot less.

David Henzel  

Yeah. Yeah. Absolutely. I once talked to an insurance agent on the flight. And this... I'm always talking about love and fear because it's such a deep impact on my life. 

So I want to share with everybody on the call, I talked to insurance agents on the flight. And what they're saying is like, "Yeah, it's so true. In the beginning, when I started, I was  mediocre in terms of how much sales I made because I just always sold the stuff that had the highest margin for me. I'm not really thinking about the customer. And then I completely switched to just doing whatever is best for my customer.” 

And he became the top sales guy in this organization." And it was really about... Yeah. Providing value and acting out of love and like doing it for the other person not for yourself. 

Chase Clymer  

Absolutely. And then...

David Henzel  

You'll always be most successful.

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Chase Clymer  

You've glossed over something there that I do want to highlight because this has come up more than a dozen times on this podcast, it's implementing EOS

You want to quickly dive into that and explain why that is going to be game changing?

David Henzel  

So for us, with MaxCDN, we didn't have EOS back then. I wish we would have had... Basically, EOS stands for entrepreneurial operating system. 

It's a book called Traction by Gino Wickman. And it teaches you the ultimate operating system: Figuring out what's your mission, what's your vision, how do you set goals, how do you do a 90-day plan, how do you run proper meetings, how do you figure out if you have the right people in the right seats? 

And it was like it's a really powerful framework that you can implement in basically any business. And at MaxCDN, we grew very fast and we hired a lot of people. 

And we messed up by not telling everybody what the mission and vision of the organization was. So we started running in 10 different directions. 

Our new head of engineering came from Splunk. It's like a big data analytics platform. He wants to build this... I actually didn't want to [but] he did... He built this crazy analytics engine on top of MaxCDN which was amazing, but only 5% of our customers. 

The rest was like, "Okay, what will I do with this now?" And then our new head of sales ran after enterprise businesses, even though this was not our core focus. And basically, nothing moved anymore and we just couldn't get anything done anymore. 

And then we realized, [it's] because we didn't have our mission and vision defined and we didn't communicate with everybody. 

And then once we figured this out, and we did, we took off again. And this is because all these things and the interactions we went through [to] feed ourselves with a lot of blood, sweat and tears. And this is why. 

I'm such a nerd with this. I push everybody I meet who's a business [owner] to read this. Please do yourself a favor and implement this.

Chase Clymer  

Yeah. And we implemented it shortly after I met David at Unite and it did change... And you take... With any book you read, you don't have to take it verbatim. You can make it work for your business. 

EOS is definitely written for a bigger business, almost maybe enterprise-y level, definitely more than 6 people that we have at our agency. But we still took what worked and it drastically changed our business. 

And if you look at the numbers, it made a lot of it made a lot of sense. And we definitely grew from it. So I highly recommend EOS. And there's another one out there. 

I believe it's Clockwork by Mike Michalowicz, which is like a more junior version of EOS. He's also the guy that wrote Profit First, which we love as well. That's how we run our finances at the agency, Profit First. But yeah, you need an operating system. 

And you don't realize you need one until you realize [that] it needs to exist. I don't know. A light turns on. You're like, "Oh yeah, this makes sense. Why have we never done this?" Instead of just having... 

David Henzel  

(laughs)

Chase Clymer  

...a never ending to-do list? There's organization to what needs to happen.

David Henzel  

Yeah, it's very simple. But simplicity is the highest form of sophistication. It's not [just] something but it just works really well. So get the book, do yourself a favor.

Chase Clymer  

Absolutely. 

David Henzel  

And implement. Read and implement.

Chase Clymer  

Yeah. It's definitely worth doing. It takes a while to get it implemented so don't beat yourself up. It took us probably 3 months, probably around 90 days to really get it working and going and get buy-in from everybody on the team. But yeah. We will never look back. It was amazing.

David Henzel  

Yeah. Continuing my story. So we sold MaxCDN. And then my wife wanted to move back to Germany. So our daughter grows up close with family. And I couldn't go back to German weather conditions. 

Because living in Los Angeles for a while, I got spoiled. And So we moved to the south of Turkey, to Bodrum. It's really awesome here. And my wife also has Turkish parents so she speaks the language. And they are happier. 

Amazing weather, great food, everything super cheap. People are really nice. So the only thing I miss is [being around] more entrepreneur nerds, web entrepreneur nerds... But I hope we can travel again soon so I got to get my fix. 

And then I was here just chilling and working on Managing Happiness, which is an online course on how to apply... It's basically EOS for your personal life and your family life. I told you, I'm a total nerd when it comes to organizational development. 

And then I read this book and I always want to do something that has an impact because my wife went through breast cancer 7 years ago, knock on wood, which is doing great today. 

But I imagined myself laying on my deathbed, looking back at my life, thinking "Did I already do what I was supposed to do? Did I have the impact [that] I want to have?" 

And this was, yeah, a big wake up moment for me. So I was looking to do something that has an impact hence also the course to have a positive impact in people's lives. 

But then I read this book called Conscious Capitalism, which talks about the old way of doing businesses: We have to increase shareholder value, we have to make the owners of the business rich. It's like the main reason why a business exists. 

But the new way is: We have to take care of all stakeholders of the business meaning suppliers, customers, employees, the planets, community... Basically everything [about] being a net positive in the world. 

And so basically, if you run a business properly, then you can have a positive impact in people's lives as well. And I was also very passionate about providing great customer service, because it's shielding my ecommerce business. 

And also at MaxCDN, we had a great team in Serbia. It's our secret weapon in terms of providing outstanding customer service and customer success. And so I got the idea of having lots of employees, treating them well, providing them a good job and putting food on the table. It's also a way of having a [net] positive in the world. 

So [we] started LTVplus, which is  an outsourcing company for Ecommerce companies. We help with live chat, agent support agent failed payment, recovery agents, abandoned cart recovery, etc. 

So we basically have people who help you to provide outstanding customer service because I think it's... Treating your customers right, it's not only morally the right thing to do, but it also makes a lot of financial sense how [it affects] conversion rates. 

For example when I sell stuff on eBay or in my store, when somebody comes like "Hey, do you have the soup and green as well?" If we responded within 5 minutes, given that the answer was "Yes. Yes we have it.", the conversion rate was nearly 100%. 

But if you... There's just so much offering out there. If you give time, if you let like a few hours pass, the [conversion rate] crashes down. If you ever answer after 24 hours, the sales are almost guaranteed gone. 

It's really important to provide very fast support for people. I'm super passionate about this business.

Chase Clymer  

Absolutely. We had GQ on, whew man, a lot of episodes ago. So for those of you that have been around for a while, David works with GQ over at LTVplus. 

So quickly for people that are at that scale and at that size, where they're... Where getting some augmented support for customer service makes sense? 

What does that process look like to get up and running? And what's... I got the service level agreement, really, but is it 24 hours? Is it certain times? What does it look like to me, as a growing business,

David Henzel  

We believe that to be able to provide really good customer support and also be able to sell a customer on something, you have to be passionate about it or you have to really understand the brand that you're working with. 

So we shy away from supporting that one agent [that] works with like 10 different brands or 20 different brands, we only want to work [for] our agents [to be] dedicated to one customer. 

So it's like... Usually we only give people dedicated live chat agents or customer support or recovery agents. So yeah, we figure out how many people you need, which time zones, if you want weekends or just to augment your existing support, or help you with Black Friday sales or end of year spikes. 

So if you have too many spikes on your support team, we figure out what you need, who you need, what your niche is, and ideally hire somebody that has previous experience or is passionate about [in] this area that you're working. 

And then we train them up, we help you --if you don't have it--we help you with setting up proper FAQs... And I'm a total SOP nerd, standard operating procedures. So we're happy to spell all this out. We have a process for this. And then yeah, we're happy to take good care of the customers. 

Chase Clymer  

Awesome. And then a more technical question is do you integrate with my existing chat software? Or do you replace it? How does that work?

David Henzel  

No, we're completely agnostic. We're basically a people business. We work with Gorgias, Re:amaze, etc. Everybody out there in the Shopify ecosystem. 

And yeah, we're completely agnostic with what software you use.We can give some suggestions because we've been working with a lot based on use cases, and we also help you to set this up. But... Yeah. We're agnostic.

Chase Clymer  

Absolutely. Awesome. David, thanks for coming on today. And I'm sure there's a million other things we can talk about. 

You've got 8 other businesses under your umbrella that you could speak on. Is there anything I forgot to ask today that you think would be a value to our listeners?

David Henzel  

I think we covered a lot of marketing hacks and some mindset hacks. And they're just [there] to get you as [far as possible]. Take good care of the customers. Also do it in any other way, shape or form. It really makes a big difference to answer. 

You don't have to delight people, but you just have to get people what they're looking for fast. People want stuff fast. 

And if you can deliver this, this is gonna be very positive in your conversion rates, the repurchase rates, the recommendation rates, the ratings that it gets. Also, it just makes sense. 

Oh, another book is about NPS, about Net Promoter Score by Fred Reichheld called The Ultimate Question 2.0. [It's] a really good book to read if you want to step up your support game.

Chase Clymer  

Awesome. I'm gonna add that to my to-read list. David, thank you so much for coming on today.

David Henzel  

Thanks for having me.

Chase Clymer  

I cannot thank our guests enough for coming on the show and sharing their journey and knowledge with us today. We've got a lot to think about and potentially add to our businesses. Links and more information will be available in the show notes as well. 

If anything in this podcast resonated with you and your business, feel free to reach out and learn more at electriceye.io/connect. Also, make sure you subscribe and leave an amazing review. Thank you!