Episode 74 — Dustin Hemesath of GolfRz

Gravitate

Transcript:

Geoff Wood: Welcome to the Welch Avenue Show, episode number 74. Today we're talking with Dustin Hemesath, founder of GolfRz, a company that builds mobile apps for golf courses. They're based out of our space here Gravitate. Hey, if you're enjoying the Welch Avenue Show, you can support us by sharing a post for this week's show on Twitter, Facebook or LinkedIn. We're always working to grow the audience for the show and sharing is super helpful in doing that. Thanks, guys. On to episode 74 with Dustin Hemesath.

Hi, Dustin. How are you?

Dustin Hemesath: Good. How are you?

Geoff Wood: Not too bad. Thanks for being a spot, pinch hitter, I guess, today on the podcast. That's been good. Tell us a little bit about your company, GolfRz. You guys have 2 companies, I don't know how much you want to talk about. GolfRz, is that what we're talking about?

Dustin Hemesath: Yeah. We're talking about GolfRz.

Geoff Wood: Okay. Tell us what GolfRz is and what you guys are building?

Dustin Hemesath: Yeah. GolfRz builds mobile apps for golf courses that helps the golf course enhance the golf experience for the golfer. Golf courses are in the business of providing an overall experience. We all play golf for different reasons. The course is in charge of making that the best experience possible. Our job is to help build engagement and inspire people to get out and play more golf, to get involved at the club and to ultimately spend more money when they're out there, so to help them increase their overall engagement and profit.

Geoff Wood: The courses themselves are your clients or the golfers are?

Dustin Hemesath: Yeah. We consider both to be our client. The golfers are the ones who use it so if the product is not built for them, then obviously it's not good. The paying customer is the golf course, and there are in app upgrades so that the golfer can do more things and get more involved, paid in app. Essentially the golf course pays a monthly subscription fee to have an app store for themselves.

Geoff Wood: It's an individual app per course?

Dustin Hemesath: Yeah. Each golf course would have a branded app for their course. It would do tee times, food and beverage, sales, pro shop features, leagues and tournaments. There's a whole slew of different things that we build to build that engagement for them. Then we teach them how to use it, how to get downloads from their golf community, and then how to provide instant notifications through push notifications to get people more involved.

Geoff Wood: It sounds like you guys have pivoted a little bit away from the last time I talked to you about this. Maybe talk about how the company started and how you got to this point that you're at right now.

Dustin Hemesath: Yeah. Back in July of 2012, we started down a road where we're focusing on challenges and getting people to play more golf, play more courses and quickly learned that that was a one-sided affair to the people who play a lot of golf already. Switching from that, we moved into a point space gamification of golf where you used an app to ...

Geoff Wood: Gamification of golf.

Dustin Hemesath: Yeah, kind of funny, huh. It's a game, and we're going to gamify it even more. You earn points for playing more golf and using the app while you're out there. Then you can earn rewards with those points. What we found is we needed a lot of money to market that product. We were able to get downloads instantly when we launched, but we weren't able to carry that over and continue to build on that. Frankly, we hadn't figured out a revenue stream out the gate. We started talking to people, talking to courses, found out that there was a need in the market for a better mobile solution for the courses, and then we went out and talked to over 250 golf courses to figure out what that was, how much they would pay, what features they wanted, and then talked to thousands of golfers to see what they would use as well and came up with the solution we have now.

That solution also includes our reward system. It's one of the functionality built in that gamifies the app for the local course, offers local rewards within the app, stuff that can be housed right there in the pro shop that you can get instantaneously from the clubhouse.

Geoff Wood: Nice. Size of your team and the folks that you're working with, tell us a little bit about that.

Dustin Hemesath: Yeah. I have a business partner, Ryan Knutsen. He is the life and blood of me. It was all myself until September, and then we found each other, and he's just been great. He came from the golf industry, has been able to connect the dots both in terms of product features and connections in the golf industry. I had no problem going out and cold calling people, but he's got hundreds and hundreds of connections that we didn't have before that have allowed us to get in the doors quicker. Then we have development partners that are doing the original development. We plan to hire a couple of developers in house as soon as we're able to. We're looking for some golf course experience managers who will be our training staff to really go out and train the golf courses on the product and how to use it. Then obviously we're looking for sales staff, so commission salespeople who know the golf industry, techy at the same time, to go and sell all over the country.

Geoff Wood: It sounds like you guys are hiring quite a bit right now.

Dustin Hemesath: In the next 3 to 6 months, we will be hiring. Any commission sales position we'd hire right away. The customer experience manager and of course, experience manager will come as we launch the next phase.

Geoff Wood: How did you and Ryan meet in September?

Dustin Hemesath: I had put out a job posting for experienced golf sales, contract salespeople to the golf industry, and he stumbled across, said he was looking to get back into the industry and looked at the website, thought, wow, this is a cool idea. They're probably based out of Florida somewhere, but I'll check them out, and I was right in his backyard. He lives in Ankeny, and it was just fate that brought us in, and he called me. Next thing you know we had coffee and had another coffee and had 5 more and had some Red Bulls. The next thing you know we're business partners.

Geoff Wood: Nice. Do you consider him a co-founder?

Dustin Hemesath: Yeah. Absolutely. I couldn't have got to where we are today without him.

Geoff Wood: You'd been working, like you said, since 2012. What was it like to bring on a co-founder at this point in the business? I think a lot of people would struggle with giving up some of their ownership of it.

Dustin Hemesath: I have taken the mentality since the beginning that 100 percent of 0 is 0 and whatever percentage of a big pie is better. I started out with a business partner in the beginning, it didn't work out, with a tech partner. He was doing it part-time, had to move on to work full-time at his job. I was very lenient in bringing somebody on to begin with, but I knew I needed somebody with his skill set in the golf industry at some point in time. I knew it was going to come, I just didn't know when or how.

Geoff Wood: You said you talked to 250 courses and thousands of golfers. How do you start making those contacts? Is that Ryan's background?

Dustin Hemesath: No. We simply walked into golf courses all over Iowa, all over Nebraska, all over Kansas, Minnesota. We just started walking in and asking for either the general manger or the golf professional, head professional. A lot of times we might get kicked out, or we might end up with zeros on the broad but ultimately, we were there thinking we were selling but more doing discovery.

Geoff Wood: Is it hard to do this product without the participation of the courses? You've transitioned into working directly with the courses on an individual basis but when you had this product that was "nationwide," quote, unquote. When golf courses didn't participate, did that throw up roadblocks?

Dustin Hemesath: No. The first product, which is still out there, and we're still planning to redo it to match with what we're doing now. That's a product that we didn't need to buy in from the golf courses. They simply used our app just like they would ... A competitor would be GolfLogix. I would download GolfLogix, they would keep score, and it would do GPS and all those things, but they didn't have a reward system in place for golfers. We are and still are the only reward system available to any golfer in the marketplace that wants to earn points and get free stuff. That has no tie-in to the golf course whatsoever. The idea was long-term we could tie it back to them once we had the user base but to get started we just needed a database of golf courses, their geolocations and off we were running.

Geoff Wood: The partnerships are more about marketing per se than ...

Dustin Hemesath: On that product, it was all about marketing to them later on and providing them data on the golfers and where they're playing. Now we've completely shifted focus to just helping them engage and grow their business, frankly, because the golf industry is behind the times always. They're always slow to adapt and slow to move, but they see that the golf community is out there with their phones constantly and using other products. GolfLogix has, I think, 10 million users now. If they're going to have 10 million users using their product, why wouldn't the golf course want to brand that for themselves and have them use a similar product in house? It just makes sense.

Geoff Wood: I assume golf was your passion before you got into this. Has that changed since you've had to live it as part of your business?

Dustin Hemesath: Absolutely not. I still love golf, I wish I could play 5 days a week, but that doesn't happen. There's times when I've been to 5 golf courses in a day and didn't take a club out of my trunk, but my clubs are always with me. I'm always ready to play if the timing is right.

Geoff Wood: Do your clients at the courses ever invite you to play since you're there?

Dustin Hemesath: From time to time, yeah. We have been invited out to play. We usually don't play that day. We'll schedule it for a later day, a follow up visit but absolutely, it definitely can happen. Now most of them are really good golfers. One of my duties in the next year and a half is to improve my game. Ryan is a pretty good golfer. I myself am an amateur golfer in the true term.

Geoff Wood: Because of all the free time you have to practice with the whole thing too. You guys have done some pretty serious marketing with this. I know you've been to some of the golf trade shows and things like that. What have you learned through that experience?

Dustin Hemesath: Everything costs a lot more, probably 3 to 5 times more than you expect, both development and marketing. There's no easy way to market. You either are on the phone cold calling, which is the inexpensive way. You're sending emails, you're LinkedIn profiling or you're spending thousands of dollars to get to trade shows. Part of our struggles early on is we still don't have a product to market. We're in development, and it's hard to sell vapor. We've got a lot of courses that are pre-committed but want to see the bug-free product before they commit. That's been the hardest struggle for us. Once we have that, then I think the trade shows will be more beneficial because we'll able to showcase it better, have client testimonials and be able to go down that road.

Geoff Wood: When do you expect to have that?

Dustin Hemesath: Mid to late June, we will beta test with our first 2 courses that signed on. Those 2 courses will help us figure out the bugs, fix things and then launch to the following 25 courses after that. We have soft commitments from those 25 courses. As soon as they're bug free, they'll all sign on and move forward.

Geoff Wood: Golf is seasonal in the Midwest, maybe not everywhere. How has that affected your sales cycle?

Dustin Hemesath: It's intriguing because Arizona, their golf season ends in 3 weeks because it's too hot. Our sales cycle starts up with them now, whereas, we can't talk to many of our Iowa courses starting this month because they're in their busy season. They're getting hammered with stuff and prepping for the season and then being full on the course. There's markets all over the world for us to hit at any point in time to be able to sell our product, which is cool. It's just depending on where you're at and location.

Geoff Wood: You said all over the world. Are you doing international marketing right now?

Dustin Hemesath: No. We're marketing locally but if an international course came to us, we would take it on in a heartbeat.

Geoff Wood: You said you still don't have ... You have pre-committed customers, but you don't have revenue for those customers yet. How have you funded things to this point?

Dustin Hemesath: A lot of boot strapping. We also did a friends and family round where we were able to raise enough money to start development, keep the lights on for now. Also doing side projects just to make sure that there's some money on the table for family. Obviously, like most startups looking for funding, going down that road, seeing what's available, applying to accelerators and things like that.

Geoff Wood: What's that process been like, the funding process, searching out that money. Are you finding the money is there or do you feel like it's not quite enough capital available at this point? What's your experience been?

Dustin Hemesath: I think locally most funding is looking for the further along startups at least with revenue generated or a product developed and quite understandably. A product developed, at least, I think, is a pretty important step. I also thing that the idea stage is where some good money can be made from investors, if they're willing to take the risk. I think our struggles would be knowing who to reach out to, finding the right resources. There's a lot of paid stuff online that may or may not get you anything. Platforms that say you can reach investors and where do you spend your money to connect? Then also researching what firms are a good fit has been a struggle.

Geoff Wood: Yeah. What do you think the best use of funds that you've had so far? What is the one piece so far in the life cycle of this business that you're like, this is really worth what we've done.

Dustin Hemesath: That's a tough question because I think you second guess every dollar you spend. I would say obviously development has been good and bad. It's hard to outsource development, I've found, because it's hard to control your cost, but I don't think an individual person on my team could've completed the project in the timeline that these guys are completing it. It's just too big for one person to take on. We would've needed a full team in house of 6 people to do what they're doing. I think that money is probably best spent right there.

Geoff Wood: What's your background before you started on GolfRz?

Dustin Hemesath: Yeah. I went to Iowa State. I'm still a Hawkeye at heart, so nobody blame. I cheer for both except for one football Saturday a year. I got my degree in hotel restaurant management so started out in landscape architecture thinking I was going to be the next golf course designer out there and slowly realized that that was a very niche market, and you had to know somebody to get into it so hotel restaurant management, and I never spent a day in the industry. I started with Best Buy when I was in college, doing really well as a manager and moved into outside sales and moved into commercial audio/video sales. I'd sell video conferencing, high end board rooms, conference rooms, big projects for corporate America and had a good time doing that, spent about 8 years doing that and just really had an itch to get this going and tried to boot strap it working nights and weekends.

Finally I noticed my inbox was more full from the golf business side than it was from my full-time job and realized something had to change.

Geoff Wood: What did it take to actually make that commitment?

Dustin Hemesath: My wife saying yes.

Geoff Wood: Yeah. That's a key relationship there.

Dustin Hemesath: Any day here, don't get me wrong, I might have to go get a full-time job any day here. You just never know.

Geoff Wood: You, me and pretty much everybody else. I totally understand that. You guys are members of Gravitate, and I want to say there are very few people that beat me in here in the morning. I usually get here around 8:45 but typically, you guys are here. What's with that? Why do you guys start your day so early?

Dustin Hemesath: Well, my kids get me up at 5:15 every morning, and my wife leaves the house at 7:00. I'm an early bird. I also like to get home to spend time with family. I'm typically in the office by 8:00, trying to leave by 4:30, 4:15, to miss the traffic, spend a few hours with my wife and then back at the computer by the time the kids are in bed and up until midnight and then do it over again the next day. I really enjoy that family time. I try everything I can to make sure I have that every day.

Geoff Wood: Nice. I think that's a key relationship as well.

Dustin Hemesath: I think it keeps you sane too from a business standpoint. You can't spend your entire life doing it.

Geoff Wood: Yeah. Is there anything that our audience can do to help you guys in whatever is next for GolfRz?

Dustin Hemesath: Sure. I mean, we're looking for connections in the golf industry, connection to funding sources, connections to people that might want to work with us, be it as a course experience manager, developer, you name it. We're looking to hire when the timing is right.

Geoff Wood: Best way to get hold of you?

Dustin Hemesath: Email, [e-mail], is usually the best.

Geoff Wood: Sounds good. Well, thanks for stopping in today.

Dustin Hemesath: Yeah. Thanks, Geoff.