Sun, 20 June 2021
Stephan Spencer made himself too essential in his agency, resulting in working to exhaustion. After a much-needed break, he was able to gain clarity on the best way to scale his agency. In the 1990s he founded the SEO agency Netconcepts and in 2010 it was acquired by Covario. Stephan invented an automated pay-for-performance SEO technology called GravityStream. He is co-author of "The Art of SEO", co-author of "Social eCommerce", and author of "Google Power Search." Today, he joins us to talk about how he scaled his agency to the point he could take a sabbatical. Learn how he intentionally worked himself out of a job by building a leadership team that could take over the thought leadership role.
3 Golden Nuggets
Sponsors and Resources
SweetProcess: Today's episode is sponsored by SweetProcess. If you're looking for a way to speed up processes in your agency, SweetProcess will provide the systemization you need to scale and grow your business. Check out sweetprocess.com/smartagency and get your productivity up.
Avoid Becoming Indispensable and Working Yourself to Death
Jason: [00:00:00] What's up everybody? I have an amazing show coming your way. If you want to know how one agency owner built an SEO agency over $6 million and sold it. And even before that got to a point where they could actually go on a sabbatical and the agency keep running without them. Which is total freedom. And, and to come back. This is the episode for you.
So let's go ahead and get into it.
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All right, welcome to the show, Stefan. How's it going?
Stephan: [00:01:52] It’s going great. Thanks for having me.
Jason: [00:01:54] Yeah, man. So, uh, tell us a little bit about who you are and what you do.
Stephan: [00:01:58] Yeah, well, I've been doing SEO since, uh, the nineties. If you can believe it. Even before Google existed, I dropped out of a PhD.
Jason: [00:02:07] Yeah. That was probably back when we could, uh, put all the keywords in the background and put it the same color.
Stephan: [00:02:15] Yeah. You know, I never did that. I always thought that was a little sketchy, but yeah. That did work kind of for a little while, uh, back in those days. But the idea of having eight or 10 different search engines that you had to optimize for was a little nerve-wracking back then, if you recall, there is Infoseek and…
Jason: [00:02:35] Lycos.
Stephan: [00:02:36] Lycos, AltaVista Dogpile, MetaCrawler, Web Crawler, Excite. Yeah. It was just…
Jason: [00:02:43] I remember all of them. Yeah, it was crazy.
Stephan: [00:02:46] Yeah. That was an interesting time, but then Google changed everything and became the 800 pound gorilla. And I knew that I needed to reverse engineer that algorithm and figure it out. So I did, and our agency went from being more of a web agency, interactive agency to being a specialist SEO agency.
And we really made a name for ourselves. Even I developed a technology platform for, uh, doing an end run around all the technical, uh, roadblocks that most SEOs face with regards to things like, uh, implementing URL rewrites and, and, uh, fixing architectural issues and so forth. I used a reverse proxy technology and created this software as a service.
We had clients like Zappos and Nordstrom using it, and we charged on a cost-per-click basis, which was brilliant. Because we could go head to head with pay-per-click, you know, like, oh, well you're paying 50 cents a click on average or a dollar per click? We only charge 15 cents a click. So you should buy as much traffic as you can from us and if we don't deliver, you don't get the traffic, you don't have to pay. So it was a no brainer.
Jason: [00:04:01] I love it. Now, was that part of the agency when you actually sold it or was this a spinoff?
Stephan: [00:04:06] It was.
Jason: [00:04:07] Very cool.
Stephan: [00:04:08] It was. Yeah. So that technology was really the main reason why our company was valued at what it was valued at and, and we, we got, uh, the nice exit. In fact, I don't even know if we were just a traditional agency, like everybody else. If we would even have been approached, I have a feeling we wouldn't have been.
Jason: [00:04:28] Now, do you feel that having that, and I've been talking to a lot of agency owners, you know, in the mastermind and over the years about, you know, if you can build that little black box that only you have.
Because I saw part of that as well as our agency, we were one of the first to build our own CMS system because we started in 99, so a little behind you. And we built the e-commerce system, email marketing system. Now we probably weren't as smart as you and a lot of other people that are like WordPress and all these, because we didn't turn it into a SAS product.
We installed it every time and we were always working on our clients. But do you feel that more agencies, especially the specialized agencies. If they could try to figure out how to build a technology that makes them unique. Does that really separate them?
Stephan: [00:05:18] It does. It does. And I think figuring out what can be automated or scaled with some artificial intelligence technology and to not have to kind of, you know, brute force it.
Because there's some really incredible AI tech out there already. Like for example, GPT-3 is a game-changer and you could sign up for their, their beta and start using it and incorporate it into your product and have a real competitive edge.
Jason: [00:05:49] Fantastic. I have not heard of that, but I'm not in that realm. Uh, so everybody go check that out or tell us a little bit more about that. So people know.
Stephan: [00:05:58] Yeah. Yeah. So there's a company called Open AI, openai.com and their flagship product is GPT-3. And GPT-3 stands for Generative Pre-trained Transformer… three. In case you're curious.
But the idea of it is that it can take your input. Let's say you, you ask for a GPT three to write you a poem. Write me a poem about Elon Musk and make it like a Dr. Seuss poem and lo and behold, it actually does it. It's, it's amazing. You could ask it to catalog and sort images based on the kind of animal it is. You can just ask it questions and it will answer those questions. It's phenomenal.
So somebody who asked GPT-3 to write a poem about Elon Musk, like Dr. Seuss would write it. This is really hilarious. Uh, you can, you can Google it or you can drop this link into the show notes. I'll just share one stanza from that poem with you, “but I'll tell you what I'll do. I'll send my Mars Rovers to red planet you.”
Jason: [00:07:15] Oh, that's… man, that would've been awesome for college, for me in college. To be like, do this paper for me and do it this way.
Stephan: [00:07:25] And it seems to have a sense of humor. Yeah, it’s like, really outstanding.
Jason: [00:07:30] This is a free tool right now?
Stephan: [00:07:33] It's not free, but it's not prohibitively expensive.
Jason: [00:07:38] Wow. Okay, everyone go check that tool out and they're not sponsors or anything. So that's just a really pretty cool tool. I'm going to go check that out. Let's talk a little bit about, now we talked about you built a particular technology that was your own, you know, four year SEO agency that enabled you to, to sell it.
But what were some of the other things that you did in order to get to a point where you could go on sabbatical and the agency keep growing?
Stephan: [00:08:07] Yeah, well, it's important to work yourself out of a job. If you are relying on your own steam, your own initiative and skill sets in order to do all the selling and to manage the client relationships. To help with a higher level projects, activities, and so forth, then by being indispensable, you become the biggest roadblock to the growth of the agencies.
So I didn't want that for myself. I wanted to be the visionary and not the integrator or implementer. So I brought on COO and, uh, different VPs. And even to the point, I brought in a CFO to help with the growth and even a CEO so that I could just step back.
And if I had my company acquired and I had to go with the company that defeats the whole purpose, because I want an asset that I can sell, I don't want. To go from being self-employed to employed by somebody else. That's the wrong direction. So I wanted to build a company that I could be able to run, but without having to do the day-to-day work and I wanted, uh, so to own it, but not operate it.
And I wanted it to be an asset that I could sell at any point. I didn't have golden handcuffs that would keep me at the acquirers’ premises for very long. So I negotiated down the earn-out. They did want me to stay for a period of time, but I, the maximum I would do was six months. As soon as that six months came and went and then the check cleared, they were surprised that I, I gave notice.
I'm like, really? How, how could you be surprised by that? I would just, I don't get that. Anyway, so that was, uh, uh, you know, kind of a quick story about how I went on and did other things. I, I started another agency. It started more as a lifestyle kind of business where I could just take months off at a time, even with a very small team.
And I did do that. I signed up for Tony Robbins platinum partnership, which was amazing. I followed Tony all around the world. All these amazing life-changing experiences. Platinum partners pay a lot of money to Tony Robbins every year, but they get incredible experiences in very exotic places all around the world.
So I did that for three years and it was incredible. It was life-changing and I was able to do that because I had a successful exit.
Jason: [00:10:53] Yeah. That's great. A lot of times people want to hire for things that they don't know, right? And to bring into the agency. You know, I was chatting with a buddy of mine, Dan, and he was talking about, you want to hire people based on what you don't want to do anymore first and start, right?
Like if you're at the center, so you start looking at the under-hundred-dollar tasks, email bookkeeping, account management, project management. All these things and going, how can I hire so all of that is done? Because that's working in the business and then you got to look at what's the other side, on the business.
Well, that's content creation because you know, like what we're doing now only us can really create this, but we shouldn't be doing post-editing, or editing it, right? That's kind of why I'm trying to do this all in one take.
Stephan: [00:11:44] Well, you're doing a great job of it.
Jason: [00:11:47] Well, I hope. You just jinxed it now. And just do like strategic planning, leadership development and work on those things in order to, you know, surround yourself.
So, when you go back at looking at the first agency and even the agency now that you have now, what was the order of people that you started bringing in? And would you, you know, obviously don't name the names, but tell us that the titles or their, their responsibilities and like, who did you hire first, second, third that started making this to a point where you could have that freedom in the agency.
Stephan: [00:12:23] Yeah. Well, when I started, I wanted to bring on contractors first. I wasn't sure to what scale I would get and how quickly and I was bootstrapping. And I didn't have any money to speak of, I, I was up to my eyeballs in student loan debt. I was studying for a PhD and I dropped out in order to start the agency.
So I started with contractors to deliver on the client work and the, the very first event that I, I networked at to get my first big clients, it was, I don't know if I'd call it dumb luck. It was maybe a mix of, of that and, and gumption. I was pretty cheeky to go and I talked my way into this event as conference called How to Market on the Internet.
It was a very premiere event, costed several thousand dollars to attend. And I wasn't a speaker. I didn't even have the money to afford to attend at that point. Because, remember, I was up to my eyeballs in student loan debt. But what I managed to do is I got in for free by being a volunteer and they gave me the job of being a mic runner.
So, imagine this, is 1995 and this is my first conference that I, uh, in my industry that I'm, uh, I'm at. And I'm the mic runner and one of the, the rooms and I, as a cheeky 24-year-old, I think that I know more than the people on stage and so I have the mic and I start chiming in. And I ended up getting a big stack of business cards by the end of that day.
Two big accounts came from that, both of those each worth, uh, over half a million dollars in customer lifetime value to me. I didn't have to get funding. I just had to put myself out there in a very daring way. Now I did get uninvited from volunteering on day two.
Apparently, some of the speakers didn't think this was too cute when I was doing, but I didn't know any better. I was, I was just trying to add value in a way that, um, you know, many people would, would be pretty nervous about doing.
Anyways, so this is how I got my start, with contractors to help deliver on that work. And then I started working on a more kind of permanent situation. In those early days, I hired developers and, um, uh, systems, administrators and stuff like that to handle a lot of the technical stuff.
But where it gets really interesting is when I decided, you know what? I'm going to move to New Zealand, because why not? Now everybody else has gone, I was in Madison, Wisconsin at the time. Everybody else was moving to Silicon Valley to make their fortunes. I'm going to do the exact opposite and go halfway around the world to New Zealand.
I'd never been there and I just knew intuitively that it would be a fantastic place to live. So I applied for residency, permanent residency, and I got in. So then I convinced my wife at the time and my kids to make this huge move. And we did, and I had to start all over again, pretty much, because I wanted to keep the US business running, but I wanted more of a skeleton crew.
I had an office manager at the time. We were like seven staff or something like that, or maybe it was nine and we scaled it down to three. Three staff. And the main person that I left in the Madison-Wisconsin office was the office manager. I promoted her and made her a managing director so she could get in to exclusive meetings with, with C-level executives and stuff like that because she had the title.
And I went to New Zealand and I started with nobody there, no… uh. It was very stressful for a month or so, but the very first hire there was a, a general manager. That general manager I have found through a recruiting firm and then I was able to, using that same recruiting firm and the guidance of that general manager, find I think we had seven other people that we brought in within a two or three month time period.
So we had to build the team fast, because we had a lot of work and we didn't have anybody to deliver on it because I, I scaled down the other, uh, office to just three people. So that was stressful, but really rewarding and fun. And once I had that general manager, it was just so much easier because he was the equivalent to a COO.
And so if you have to find one person, it should be your COO. Maybe the very first person should be your EA, so that, that can free you up from a lot of the tasks that are bogging you down and are not high value tasks. But after that, for sure, the COO I think is the most critical role set that allows you to stand back and be the visionary and, and speak at conferences and write books and write columns for magazines and things like that. And not have to worry about the day to day of operations.
Jason: [00:17:47] You know, the, the one thing that I see is when you're on the side of the fence of working in the business. You're always kind of thinking of what and how, like, what should I do and how should I actually do it? But if you're on the other side of the fence of working on the business, the only thing is, is like, where are you going? Why are you going there? And who.
Like who do I bring in to figure out the what and the how and all of that. It makes things a lot easier. I see, like that operations person as crucial, just like you. But I also see like with certain agencies, it depends on the situation, right?
I look at it as the first hire almost, you know, after like a project manager to manage some of the stuff. So you can keep doing sales because you got to think of like, when you're starting out, you're doing sales. But you also have to figure out how can I get leads before I hire a salesperson in order to help them? So I look at it as hire a marketing person to produce leads. Because you're probably already doing a lot of marketing things that you can get off, right?
And then after that, bring in a salesperson to help you, because as you get busy with, you know, delivering all that work and building the relationships. You start dropping the ball and you actually start, you might've gone through this, I know I did, self-sabotage the deal. You like, you try to grenade the engine because you're like the car can't go any faster because I know we're going to do really bad.
And then I look at it as like, how do we bring in that ops person in order to, to really help out? But everyone's in a little different situation. Like if you're getting a ton of leads and you know, you're in a good spot, then you can bring in that person. So you've got to self-evaluate, there's no one solution every time.
Stephan: [00:19:32] That's a great point. And if the lead flow is what needs to be addressed first, you don't have to necessarily hire a salesperson. You could go with an outsourced firm that can help you with the appointment setting or with the closing or with all of it.
For example, there's a… one company that comes to mind is called Meta Growth and they will recruit the salespeople. They're going to be commission only, and they become your team and you pay Meta Growth, a monthly retainer, and then a percentage on top of that, of the sales that, uh, their team generates or the team that becomes yours. But they continually train and, and if somebody leaves, they'll replace them and so forth, and that's a way to build an outsourced sales team pretty quickly.
Jason: [00:20:26] Exactly. Let's talk about the GM and the operations person. What were their responsibilities to enable you to step away? And what were the other team members that you had to have in place so you could go on the sabbatical?
Stephan: [00:20:43] Yeah, so it was a few years later after I went on sabbatical. We built up the Madison office again to one that was at one point we got to 35 staff over there.
And, uh, we had a CEO and the CFO, or no, we didn't have the CFO yet with the CEO, we had the general manager the same one that was my first hire in New Zealand. And I ended up taking six months in New Zealand and yeah, it was just, uh, worked great.
It was really refreshing and I, I was burned out at the time. This was back in, I don't know, 2004, 2005. I had just worked myself to exhaustion, really, and I was needing a break. So, uh, everyone was very supportive of me to just take that time off, which I needed.
Jason: [00:21:35] Let's talk about that because there's a lot of agencies that work themselves to exhaustion. So how did that happen? Especially since you had, you know, everyone thinks hiring an operations manager. You know, like you don't have to do anything anymore. So how did you work yourself to exhaustion and what would you avoid going through it now that you know what caused it?
Stephan: [00:21:59] Yeah, well, I, I made myself too essential to the marketing of the business, being the thought leader, the thought leader, right? It wasn't like there were five or 10 of us. I was the one who was, uh, writing books and, uh, writing columns and so forth. It wasn't until after I had the sabbatical and I kind of realized I needed to have that function of the business, be distributed out across multiple staff, that we encouraged other team members to start writing columns and, uh, speaking at conferences as well.
But yeah, that was pretty much just my job was to keep going from conference to conference to conference. So I was on the road all the time. I was based in New Zealand, but I was spending probably a quarter to a third of my year in the US, and I had small children at the time, and it was not easy for me to spend all that time away from them.
And that took a toll on me and, and on my happiness. So that was a big part of it, and then I was a workaholic. Maybe I still am to some degree, but I'm way better, way better than I used to be. It's, it's like, it's a socially acceptable addiction. But it's not okay. It doesn't help your health or your family in the long run.
It's just a way of numbing out, I guess. And if this relates to you and you're feeling like you're kind of a workaholic, then you got to take some powerful action to address it. Don't just think, yeah, that probably is something I should get to someday. You know, you got to address it because it doesn't break the camel's back until it does.
And you don't know when that's going to happen. So just preemptively address it.
Jason: [00:23:52] I've learned that the hard way as well. And the only way that I've found through that is creating kind of rules on your time and really goals around your time. That is first, I feel. For many years I taught people in the agency playbook the framework for us that, hey, set your revenue goals first, then your create goal, and then your time goals are last.
Well, when you do that, you're going to sacrifice your time because everything else should be leading up to the time. And thinking about why, you know, like one of the exercises I walk people through is going all right, write out your perfect week and what does that look like?
And then tell me why, like, do you want to take your kids to the swimming practice or track? Or, you know, do you want to be home when they get home from school? That's why we work so hard, but then we sacrifice it. I've been breaking my rules on, on health. I've just working, you know, until I get back to Colorado and literally just, you know, kind of skipping, you know, the health stuff.
So what worked for you? Do we have to go away for six months to do that or…?
Stephan: [00:25:04] No, you don't. Here's the key. If you're chasing after, whether it's your health or your relationship or career, family, whatever it is, it becomes elusive because when you're chasing after one thing, you can't chase after all of the things.
The only way that you can win at all of it, the business/career. And your health and finances and family and significant other, all that, is to chase after just one thing that has it all. And the analogy I give you is, I learned this in Kabbalah class, actually. It's, it's a prism and the white light shines in to one side of the prison and outcome all the colors.
And the colors represent all the different aspects of your life. Friends and, and the business and family and health and all that. So stop chasing the colors and chase after the white light. So that's the light of the creator. Like whatever your spiritual beliefs are, just that encompasses everything. That's where I had the biggest breakthroughs is by stopping chasing after those individual things and just worked on me as a spiritual being and everything just seemed to fall in line. It's just like life was happening for me not to me, once I started focusing on the bigger picture.
Jason: [00:26:44] I love it. I mean, that's, uh, it's so true. And, I think we always have to remind ourselves that. Because we'll say it now and we'll do it for a week, two weeks, maybe a month. And then there's something that breaks our cycle. You've got to constantly be disciplined and I think also kind of self-aware of when that triggers in order to go back.
Because it's a, it's like that one, that one story I heard one time, it was a guy that was working himself to death, running a business so he could sell it and go buy a fishing boat. And then he wanted just to be a charter boat captain. Well, he didn't have to waste 30 years of working around the clock. He could have just been a charter boat captain from the start. And I think a lot of times we have to kind of learn those lessons the hard way, but that's why you guys listened to the show to hopefully speed up that success or avoid those, those failures from others.
That's why we, uh, we have those conversations. Well, this has all been amazing. Is there anything I didn't ask you that you think would benefit the audience?
Stephan: [00:27:56] I do think if, if you can establish your authority in a very powerful way, that is going to make a huge impact. So for example, a thing that really put me on the map, not only did, uh, the gravity stream technology really help with this, but I co-authored a book called “The Art of SEO”.
I ended up coming up with other books as well after that but the big one is The Art of SEO. And if you can find a niche where you can write a book, maybe even get a publisher for it. O’Reilly was my book publisher. We have three editions of The Art of SEO and I'm working on a fourth edition right now.
And that is a huge game-changer. If you don't have the time for that, maybe hire a ghostwriter to help you write it. You don't have to be the one to write it. You just have to be the author of it or co-author of it. So that, that can be a game-changer.
Another thing that is along those lines that really made a big impact in the early days was when we went from building search engine optimized e-commerce websites to doing consulting for even bigger companies that didn't want us developing the sites. They just wanted us providing the guidance like SEO audits and all that sort of stuff and they had their internal teams implement it.
Our first big account. We didn't actually make any money off of, and that was strategically on purpose. We wanted to get a really big name right out of the gate as a, a, a client for SEO auditing. So we approached Target, target.com and ask them if they would like a free SEO audit in exchange for use of their logo and a testimonial, assuming that they were happy with what we produced. And they said yes, and they loved what we produced made. Made them a lot of money and they were happy to give us a testimonial and use of their logo.
So once we had that on our, uh, clients page and, and our testimonials page, it was a lot easier to sell, uh, other, other accounts that was, that was just super ninja.
Jason: [00:30:14] Yeah. I, I remember landing the first big account and then it just, they kept rolling after that. They want to hang out with others, even though it doesn't matter. It, it really. It's just a name, but people think, oh, if the biggest companies work with you, they're the smartest. Which that's not true either, they're just, uh, they're just big. So, that’s awesome.
Stephan: [00:30:37] Yeah. And so, but you come preapproved, it's like social proof and if you can shortcut that process, if you haven't worked with a really big name company. Imagine somebody so huge that everyone will have heard of it. And that could be one of your clients. Yeah. There's just a, it seems like a no brainer to me. Just offer them something irresistible for free in exchange for a testimonial. Somebody's going to bite somebody going to say yes to that and hello.
Jason: [00:31:06] I love it. I love that. It's just grassroots stuff too, right? Like this is easy stuff we all can go do. So make sure you go do it. Where can people find out more about you and check out the books? Where can they go?
Stephan: [00:31:20] stephanspencer.com. I also have two podcasts. So you were on one of them. You were on Marketing Speak. That's at marketingspeak.com. And then my other podcast is a biohacking and spirituality podcast. And that's Get Yourself Optimized, which is at getyourselfoptimized.com.
Jason: [00:31:38] Awesome. Well, thanks so much for coming on the show. And if you guys enjoyed this episode and you want to be surrounded by amazing agency owners on a consistent basis where we can see the things you might not be able to see and also help you get over those hurdles, because we've been there before I want you guys to go to digitalagencyelite.com.
This is our exclusive so community where we provide you the tools, coaching community. Everything you need to scale your agency faster so you can get to a point to exit one day if you want, whether it be exiting your current role or exiting the business.
So make sure you go there now. And until next time have a Swenk day.