Wed, 30 June 2021
Anna Shcherbyna is the CEO of Remotivate. And, leveraging her decade of experience in Business Operations and International Recruitment, Anna's recruitment agency helps online businesses hire remote staff worldwide. They handle all the due diligence relating to candidate communication, arranging interviews, discussing salary expectations, and conducting reference checks. Today, she joins us to talk about how to find and attract your agency's dream team. She shares why some job search platforms are better than people may think, why it’s better to invite candidates to apply for your agency, and why you should never hire for the fire.
3 Golden Nuggets
Jason: [00:00:00] What's up everybody? Jason Swenk here and I have another amazing episode for you where we talk about re, remote recruitment. If I can actually get that out, I don't know why that's so hard. But we're going to talk about how to find the right senior-level managers and hiring them remotely, as well as how can we evaluate and make sure that the right one.
So, it's a really good episode. Let's go ahead and get into it.
Hey Anna, welcome to the show.
Anna: [00:00:32] Thanks so much for having me, Jason. It's a pleasure to be here.
Jason: [00:00:36] Yeah, I’m excited. I almost wasn't able to say remote recruitment. I don't know why it's such a tongue twister this morning for me. But for the people that don't know who you are, tell us who you are and what do you do?
Anna: [00:00:48] Yeah, absolutely. So my name's Anna Shcherbyna. I'm actually originally from Ukraine and I help online businesses all over the world, help them hire remote staff internationally. Uh, it's been an incredible journey and the experience to work with companies that have all kinds of needs. And I believe, as you mentioned, we do focus on managerial and leadership positions, but we've always get some fun roles and fund requirements.
So it's kind of the, uh, the new age of headhunting, so to speak, uh, at times that's what it really comes down to.
Jason: [00:01:17] Awesome. Well, let's go ahead and dive into it. Let's talk about where can we find these people, right? So, you know, we're, I'm an agency owner. I'm looking to get some more help, so I don't have to make all the decisions. I need, like I already, I'm maxed out at managing these people. I want to build my team up. I think a lot of times people just default to going to LinkedIn or Craigslist or wherever. So what is your recommendation for people listening of how can they find some of these amazing talents?
Anna: [00:01:46] Yeah, absolutely. I do think that a lot of people, when they're transitioning, especially into hiring remote staff, that's where the challenge comes in because they still go back to the old websites.
As you mentioned, LinkedIn is very popular Craigslist, things like that. And it just doesn't work for remote stuff. You want people who know what they're doing and really have the right skills and abilities and understanding of the remote space. They're not going to be there. I mean, you can find amazing people on LinkedIn, don't get me wrong, but in terms of what we love to do, Upwork is actually one that surprises everyone.
I'll say this because a lot of the times people assume that Upwork is for projects, just for projects for short term. But actually if someone's new to the platform, they haven't really realized how it works properly, and so you can find some incredible people who are just looking for that opportunity.
And a lot of them are looking for more consistency. So Upwork is an amazing one. Um, AngelList has been incredible for us. We've loved that. And also with AngelList, you kind of upgrade, there is an upgrade on there where you're able to get access to their database, which is awesome. And then be able to go out and invite candidates.
We use Indeed, it's actually been a lot better for remote hiring as well. Most recently, they've really done a lot of growth in that sense. So Indeed has been quite good. I'd say those are our top three, though we’re, we're constantly experimenting.
So right now we're trying out Dynamite Jobs, we're trying out We Work Remotely. And I just say like, it's really good to experiment. I've heard great. Like We Work Remotely is one that I've heard, works wonders, but not for all positions.
Those three that I mentioned is just, those have worked the best for us for the type of positions, like the managerial leadership type positions that we're normally hiring for.
Jason: [00:03:25] So I thought AngelLists was really more for, and maybe they've, they've changed it. Or was it Angie's list? Or am I thinking of the right? The same one.
Anna: [00:03:36] You definitely are. The same angel.co like I think before it was very much for startups like tech world, all of that. You have the right idea in mind. They definitely have evolved to now where you can find professionals of all kinds. They're very remote-focused because, again, a lot of companies are going remote. And so it's definitely an amazing, amazing website for finding great candidates.
Jason: [00:04:00] So let's say we go on Upwork because, you know, I've, I've found really good designers on Upwork and, and stuff like that or people actually doing the work.
But if we're looking like I know a lot of people listening in, they're thinking, well, I need a manager. I don't need someone to actually do the work. So like, how do I post something on Upwork going I need a Director of Ops or a Manager of Operations to come in.
So do I post something like that on Upwork? Because usually, it's like, hey, I need this for what I understand. Like, I need someone to do, you know, this landing page or this logo or whatever it is.
Anna: [00:04:33] Yeah. I mean, here's the thing, again, Upwork has incredible potential because it's all about the mindset. When you go to LinkedIn, you're trying to get people away from potentially those that already have jobs, whereas upward people are going on there already with the mindset of, hey, I need a job.
And as I mentioned, a lot of them, they are getting in there and they don't really know how to break through, they don't want to deal with the hassle of all these different clients.
And so something we do and something I always recommend is, it's all about how you filter. So filter for the ones that don't have a lot of success on Upwork, which is counterintuitive because most people are looking for the ones that have earned the most, have the best reputation… But those people are already successful, why would they go from client work back to full time? It's, you know, they're making a ton of money, they've made it on the platform. It doesn't make sense for them.
So we'll go ahead and post those types of high-level positions, head of ops and all of that. But the ones that are going to be inviting are usually the candidates who have limited experience on the platform. They are hungry for an opportunity and they are much more likely to take on that opportunity.
Jason: [00:05:36] Oh, that's clever. That's clever. And so let's say we're hiring a director of ops. What would you post on Upwork to in order to attract them to click on?
Anna: [00:05:47] So, okay. Two things here I want to say. So first of all, in the job description. I'd say definitely make it very personable. We get a lot of feedback that the more personable a job description is the better candidates react to it.
But I want to say that the trick that we have found really works isn't about just posting and waiting for candidates to apply. We actually go out and invite candidates because then we take control of the narrative. Who's applying the type of candidates, the quality, and also a lot of candidates are not checking every single day what's, you know, what's live.
And so you're actually missing out on a ton of opportunity. So if you go out and that's why I love, we love AngelList network, you can actually invite those candidates to apply and get so much better results rather than waiting around and getting candidates who maybe have the wrong motivations or just not good quality candidates, because they're just, they're applying because they need a job and they're just clicking on everything.
Whereas when you're inviting, there's, you know, there's a quality control there. So sometimes we even put a job post as private and so people won't be able to actually apply unless we invite them.
Jason: [00:06:50] Oh, I like that. And so when you go into the search on Upwork or AngelList, is there other than, are you new? And like, you know, it's actually a really good point of like, I don't have much experience on the platform. They're new. What else are you looking for?
Anna: [00:07:07] Uh, requirements. It always comes down to the requirements. And I'll be very honest, I think a lot of business owners don't take the time to truly understand who they need and what will make those people successful.
When you have a clear understanding of what success looks like, like, okay, I'm going to need someone who has at least three years of experience in operations. They have, um, a background in recruitment, they have experience with running a SAS business or being an operation specialist in SAS, and you, if you're looking through applicants and applications, you'll be able to see those things.
So figuring out your requirements of what success looks like, and then really searching for those among the applications is going to make a huge difference.
Jason: [00:07:46] Yeah. I mean, I think a lot of us, and I've done this in the past, or I might be doing this right now. Who knows? I probably am. Thank you for beating me up because there, there's a lot of us that we probably go, we just need a marketing associate.
But we really haven't thought about what… we just want them just a marketing associate. We'll just put them in, but really hasn't identified what success looks like for that marketing associate and like, what do they have to have? I think that's really very crucial that a lot of people actually skip over.
All right. So, so now that we've come up with the requirements, like, as we've done our homework, so you don't yell at us, we don't want you to yell at us.
And then we've gotten creative by using Upwork and AngelList and Indeed, and we're starting to invite people to apply, which I, I've never thought about. Like, that's brilliant. So, when people start applying, is there any special thing that I always try to bury something in the middle. Like, hey, you got to do this weird thing or put this to the subject titles, see if they actually read it.
Is there anything that you do like that? Or how do you evaluate to make sure that they're not just padding their resume?
Anna: [00:08:58] Absolutely. Absolutely. So I always say create a process. And again, start at the beginning, right? Because let's say you identify your top five kind of things for success, right? Your top five requirements for success. You can then translate that to, like, for example, for us, we do a questionnaire, a skill test, a video, you know, you can put steps in place that test for those initial requirements.
And that's going to be so important to really identifying, not only do they have what it takes to be a great team member or a part of your team and really solve your problem, but it's going to be able to also identify their motivations.
So being able to see that they're going to jump through quite a few hoops before even having an interview. And a lot of people don't want to do that. They're like, yeah, thanks, I'm interested in this role, yeah, when can we chat? And we're like, well, right after you go through our process. Apply here. And that actually filters through a lot of people who don't really care too much.
I would say I'm not the biggest fan of adding like those little trick questions in job descriptions. Because people who are looking for jobs, they're not as consistent in reading the job description, I would say. So definitely having the, the steps is a lot more of a thorough process to see, not only do they qualify, but they are really interested in the position and they're going through and following through on the different steps.
Jason: [00:10:16] So walk us through the steps that you would take someone.
Anna: [00:10:18] Yeah, absolutely. So the, what we do is we have a questionnaire. So for example, let's say you need five years of experience in Facebook, running Facebook ads. So we'll ask: How many years of experience do you have in Facebook ads? What's the budget that you have handled per month?
Uh, we’ll ask about what types of businesses have you done Facebook ads for? And there'll be like a dropdown or check the boxes of which industries you've done.
So we we’ll add the requirements in the questionnaire, because that way, even if they didn't read it, which sometimes happens, we'll be able to filter through that. Because candidates say, hey, I actually don't have this. Or I only have three years of experience.
So the questionnaire and yeah, like the questionnaire really helps assess that. Now we have a small skill test that we've created that tests for the hard and soft skills. We have done this internally and we've created what works for us.
But I talk about this all the time. Like I do a webinar now and again, and I talk about how there's so many tests out there, like personality tests, hard skill tasks, like let's say you even need to test somebody's abilities with Facebook ads. There's so many different tests out there. Do a bit of research, find what works for you and incorporate that in the process.
So having some sort of questionnaire looking into there, the requirements, if they meet them, having some sort of soft and hard skill test. It doesn't have to be crazy long. Just a few questions here and there to understand and better filter those candidates. Then we have a video, which again, we're asking a few questions.
We're asking for a two minute video, super easy and straightforward. But again, we're looking at, can they follow directions? Right? Can they actually respond at like, what are they saying? How are they saying it? What what's the attitude that we're getting? Is this something that they just put together, walking your dog on the street.
Which actually happens like we've either had like a girl in a farm. She's walking around in her, like near her farm. She's showing the farm. She's like, hey, this is where I am. Absolutely not. But walking the dogs, driving in the car to work, I mean, we've got some crazy videos. Oh, a guy eating sushi. I think that was one of my favorites. He's like, I'm going to wing this. So I just ordered some sushi, but it helps stand the mindset of candidates, how they work, like who they are as human beings, and really understand if that's going to be a culture fit.
And it just says so much, their video say so much. And so, that really helps us understand. And it not only does it kind of test for their personalities and interests and things like that. We're also looking at their English abilities. So we're seeing, I mean, we're hiring internationally and so we don't want to waste time having an interview. If we don't like it, they might be great at writing but then when it comes to speaking, they might not be able to, don't have the abilities.
So that video really ticks a lot of boxes and a candidate usually doesn't always, like they don't really anticipate it, I would say, in terms of what's really being expected.
But that's what we're looking out for, great communication skills and interest for the position, honest responses, a great environment. And then we'll do the interviews and move into that phase. First interviews, client interviews, and then towards the end, we'll do reference checks. So it's quite a thorough process and it helps really collect all the information you need for a successful hire.
Jason: [00:13:27] Yeah, that's crazy about the videos. You know, we, we ask for that as well. And I remember there was this one guy that we got a video I was getting so dizzy because he's walking around his pool, like holding this and I'm like, h my God, and the shaking like, oh, stop.
Anna: [00:13:46] Yeah. Make it stop. Stop. Absolutely.
Jason: [00:13:50] That's funny. Well, this has all been great, Anna, is there anything that I didn't ask you that you think would help out the audience with their remote recruitment?
Anna: [00:14:00] Yeah, absolutely. Twister tongue twister of the day. I would just say that start from the very beginning and put the time to truly understand research the position you're looking to hire for. Don't hire for just a fire like that.
And we do all have fires. I have fires. We all have fires in the business that we need to take care of, but don't hire for the fire. Okay. That's not, I got a rhyme in there. Don't hire for the fire, hire for the long term.
Jason: [00:14:25] It was like a Billy Joel. A Billy Joel song.
Anna: [00:14:28] Yeah. So definitely take the time to understand who you're hiring for, what are the requirements, and what will they do once they have, you know, taken care of that fire. What's that long-term plan? And when you have that, everything becomes so clear. So start from the beginning and best of your time from the very start to have a successful hire at the end.
Jason: [00:14:49] I love it. What's a website people can go and check you out?
Anna: [00:14:52] Absolutely. So it's, letsremotivate.com.
Jason: [00:14:56] Awesome. Well, thanks so much for coming on the show. And if you guys enjoyed this episode, I want you guys to do something. Take a screenshot, go on Instagram and tag us and say, hey, I liked the show. And then we'll give you a shout back.
Also, if you guys want to be around other agency owners, we have an amazing Facebook community. It's free. It's totally free. Just go to jasonswenk.com/insiders and request access into it. We asked a couple of questions just to make sure you’re an agency owner, and you have a team.
That's the requirement in order to get into there so you can ask the relevant questions and protect the community. So go to jasonswenk.com/insiders and you'll go to that page. And until next time I have a Swenk day.
Direct download: How_to_Attract_and_Hire_Your_Agency_Dream_Team.mp3
Category:general -- posted at: 7:00am EST
Sun, 27 June 2021
As co-founder and creative visionary at Harmon Brothers, Daniel Harmon uses storytelling and humor to create ads that convert. Since 2014, he has helped create videos that changed the way we do advertising today, and that at the time were confused with funny sketch videos that had to assure audiences "Yes, this is real. This is a real ad." Now, he joins us to talk about how the Harmon Brothers found their comedy niche, how they find the right creative thinkers to write their unique ads, and how the company teaches their entire system through the Harmon Brothers University.
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.
How to Create Amazing Ads that Convert More Clients
Jason: [00:00:00] What's up everybody? Jason Swenk here and I have an amazing guest on the show. One of the Harmon brothers who is going to talk about how you can turn your poop into gold. Literally. Their videos are so funny and their ads reach so many people. And I'm happy to have them on. So let's go ahead and get into the show.
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All right, what's going on? Welcome to the show.
Daniel: [00:01:49] Thanks for having me, Jason. Glad to be on.
Jason: [00:01:51] Yeah, man. So for the people that have been kind of hiding under a rock a little bit, tell us who you are and what you do.
Daniel: [00:01:57] I'm Daniel Harmon. I'm Chief Creative Officer at Harmon Brothers, and we're known for ad campaigns like Squatty Potty, Purple, Chatbooks, Poo-Pourri, FiberFix Lumē, Kodiak Cakes, Camp Chef, all these different campaigns that have, um, helped companies generate over 1.5 billion views and over $400 million in sales. And anyway, that's, that's kind of what we're known for is mixing some elements of sort of direct response advertising stuff that gets people to act and buy immediately with really traditional branding elements of storytelling. And that's kind of our sweet spot.
Jason: [00:02:36] Yeah. And I love that. How did you guys kind of fall into that sweet spot? Because a lot of agencies, they start off and it takes them forever. So how did you guys progress through that?
Daniel: [00:02:49] Sure, for us it started a little bit with a company called Orabrush. My brothers were co-founders of Orabrush, Orabrush is a tongue cleaner that, um, helps remove the gunk off of your tongue. And that's where 90% of bad breath comes from is the, uh, is the gunk out of your tongue. So in trying to market the Orabrush, they weren't having any kind of retail success at all. And the co-founder, the inventor of the Orabrush. Dr. Bob approached my brother about, um, being able to sell, um, online.
Then with the Orabrush, they made a video that not only educated about how the Orabrush was cool and how it worked, but it also entertained at the same time. And a lot of the elements that we use in our videos are drawn from just classical sales principles, right? Things that you would use in a door-to-door scenario, things that you would use in telesales, email marketing, it's all very kind of problem/solution-based advertising.
And, um, that was the case with Orabrush, where it was all based on the fact that people have a problem of bad breath. They don't want to breathe that onto other people. It's embarrassing. And then the Orabrush provided a solution where it would clean the gunk off of your tongue.
And most people didn't know that good oral hygiene would include your tongue and not just your teeth, right? Most people know to brush their tongues, but the toothbrush wasn't really designed for brushing your tongue and this product was. And so it was educating about that, but then, um, adding the twist of the entertainment value and kind of a personality and character with it and some, and some branding really.
I think that is a lot of what was missing traditionally through the years on things like food commercials, right. That they all kind of felt a little bit cookie-cutterish, but they all were in sort of a, such a similar pattern that they, they were mostly distinguished by how different the products themselves were rather than by the personality that was pitching it or the story that was being told around it.
So with the success of Orabrush they ended up getting distribution in places like Walmart, CVS, Walgreens, Boots, I mean, international stuff all over the place. The company ended up actually being sold to a company called DenTek and, um, that's kind of where that started. I actually was an employee of Orabrush as an art director there, where we created, uh, over a hundred videos over the course of a little over two years.
And so kind of learned the craft of that. Then later on, when we resigned from Orabrush, we, um, the first campaign we did was, um, with Poo-Pourri. And that one people know for the girl, that's the British girl sitting on the toilet saying all those terrible candid things about her bowel movements and how much they stink and that kind of thing.
But that's kind of where that formula for us started to solidify. And then later on it was Squatty Potty. It became much more so, and then Purple and so on. But yeah, hopefully, that answers the question.
Jason: [00:05:55] Yeah, definitely. I want to know more about the blooper reel. Like you guys have to have the best blooper reel out there for Squatty Potty and the Poo-Pourri
Daniel: [00:06:04] When we were filming Poo-Pourri and we were listening to the lines that she was saying, of course, this is 2013. And so most of us, our perception of what can kind of be done in the advertising space in this way has changed a lot. I mean, obviously, Harmon Brothers has done a lot to change that perception, right? In how you can kind of joke your ways through certain taboo subjects. If you're writing the right line, you don't want to get super offensive it anything.
But as I was listening to the lines that she was saying, as we were filming them, I was, as I was saying to myself, no, one's going to believe this is a real ad. They're, they're going to think this is a College Humor sketch. They're going to think this as an SNL thing. No one's going to think this as an actual ad.
And so my brother Jeffrey was like, well, okay, think of a solution. What do we do? And I was like, well, I think we have to tell them.
Jason: [00:06:57] “This is an ad”
Daniel: [00:06:59] Well, we didn't do it exactly in that way. While we were on set, um, I came up with the line that, yes, this is a real product. And yes, it really works. And it became kind of a catchphrase in our advertising to some degree where people, we see them use it all over the place. We don't use it as much ourselves anymore because we think it kind of sets the viewer off a little bit or can even be distracting.
But to some degree, we feel like that's a good space to be living in is if you kind of have to remind people “no, we're not just joking around.” This is, this is real what's going on right now. And it was very effective.
Um, I can't remember how many people told me that when they were watching the ad right up until that moment when we said, yes, this is a real product. And yes, this really works. They had actually believed that they were watching some sort of like a spoof or sketch or some sort of just comedy gig of some kind.
Jason: [00:07:48] Yeah. Walk us, um, because a lot of people want to understand kind of the framework of how. Because we all want to create including myself, so all of my audiences, agency owners, and I always like to say we exist to provide a resource. We wish we had, so we can scale faster, right?
And 90% of our content is educational, but 10% is supposed to be funny, you know, like humor, like we talk about what is an RFP means, Real Fucking Problem, Request for Punishment. Like all these different things we try to put in there. And a lot of people struggle with, you know, finding a way to stand out and you guys have really have a formula or a framework.
Walk us through a little bit of that. So the people listening can have an idea and be like, okay, this is how I can start. This is how I can kind of morph it and see if it actually works.
Daniel: [00:08:40] Yeah, for us standing out has a lot to do with just asking ourselves, have we seen this before in the way that we're doing this? I am not one to, admittedly, I'm not one to really follow a whole lot of what's going on in the advertising industry. Meaning there's a lot of advertisers that are really into things like the award shows and…
Jason: [00:09:05] oh, don't get me started on that.
Daniel: [00:09:07] I just think you end up advertising to advertisers. You ended up trying to please your peers. Rather than actually speak and relate to customers. And so, um, I don't really go down that road and I, I ask myself more as we're doing the content, have I seen, have I seen something like this or are we doing something fresh enough as we approach this, that it's going to make them stand out?
And it's not necessarily that it's always, that the character is always something that's just never been done before. I'm sure there's been a prince used in advertising before in some way, right? Um, in the way that like we have the Squatty Potty, we have the unicorn, there's never a pooping unicorn, I don't think, prior to that point in advertising. But using a prince I think had been done before, but in the way that we used it maybe it was a little bit different, right?
Or the girl on the stall talking directly from a toilet perched on a toilet. That was something that was very, very different. Or Goldilocks releasing some eggs that fall down on a bed. Those were all kind of things that we felt like, um, hadn't really necessarily been seen before. A French woman singing, um, kind of in a Broadway style, uh, play-type environment for Lumē.
All these things we felt like were just different than anything we'd seen before. And so for us, the basis of coming up with a lot of those ideas is really coming, um, is involving really creative thinkers into the writing process. And, and, um, a lot of that is for us centralized on comedians. So we're looking not as much for people that are extremely experienced in advertising and marketing.
We're looking for people that have a lot of reps and a lot of skill developed in the areas of stand-up, improve, and sketch comedy. And then we feel like we can better guide the marketing and advertising language around that. That it's going to we're, we're going to be much better off teaching a comedian to be a marketer than a marketer to be a comedian.
And that gets us some very different thinking because their jobs are like on a day-to-day basis are like, okay, what kind of cool thing can we come up within in the sketch? Or what kind of thing can we make fun of? Or what's some observational thing that I've seen that I can use in my standup that I have never heard anyone say before.
That's kind of just second nature to them. And then that's kind of our, our starting point for being able to stand out. I'd say.
Jason: [00:11:32] I love that. And so for the people listening, I guess, do they need to go and find their funny friends that are doing standup?
Daniel: [00:11:43] Short answer? Yes, that's what I mean in Harmon brothers university in our courses, that's one of the things we teach is the idea that a community it's easier to turn a comedian into a marketer than a marketer to a comedian.
And so we do recommend following funny people on Instagram, TikTok, YouTube, that kind of stuff. Wherever you get your stuff. Facebook, I don't, I don't care. And then kind of looking at the patterns of what they use in their humor and things, but even maybe reaching out to some of these people and seeing if they'd be available to get involved, or maybe going to your local standup club or improv group or whatever it is.
There's usually somewhere nearby in your state or your, or your area that, um, some sort of a culture or a community that you can tap into of people that are already in that world. And, um, I think using them as a resource is, is really good. And it's not always easy. There are, there are comedians that approach it very much from the standpoint of like, well, this is art and I'm doing art. So don't tell me what to do with your advertising stuff.
Well, at the end of the day, it still has to sell, right? It has to move the product, it has to brand. It has to do all those things. Then it can't just be funny and it can't be tangental all the time for the messaging. Um, there's, there's ways that you can kind of channel that creative energy to be more productive for what you're doing. But yeah, I think it's a really good idea to go. Go involve people that are already funny rather than trying to teach yourself to be funny in order to get it done.
Jason: [00:13:14] Oh, yeah, that would be horrendous. That would be, that would be really bad for a lot of people.
Daniel: [00:13:20] Yeah. Like for myself, I'm, I'm not even like the funniest person around. I do have a good sense of humor, I have good comedic timing and mine more applies in the way that I go about filming and editing and enhancing what's there in, in writing. I mean, I can write jokes and that kind of thing, but like, I might be able to write one joke in the time that it takes some of these other guys and gals that we get involved. Um, like they can write 10 in the time that I write one.
It's just not as efficient. And I'm pretty darn good at making that stuff that they write be funny in the end product. But as far as like originating that on paper, that's not going to be. There's going to be other people that, that have more superpower in that area.
Whereas it would be a lot of toiling for me to do that. I can help out a ton in the advertising language and the sales persuasion and all that kind of stuff. And I'll all writing zingers here and there. But as far as like that really creative stuff that's needed. Yeah. We're always looking to outsiders to help with that.
Jason: [00:14:18] I’m going to guess, you know, I'm in Atlanta today and there's obviously tons of improv and all kinds of places all over. And I bet if you went to some of those and you went up to someone and be like, hey, do you want to be involved in this? I bet they'd be like, heck yeah, I want to be involved in this.
Daniel: [00:14:35] Yeah, they'd probably in most cases be over the moon excited because what you'll find is that most comedians aren't actually making a living being a comedian.
They are developing it as a skill set on the side and they're passionate about it and they'd love to make a living with it. But as far as it's their full-time living. Ooh, it's, it's a small subset of that community that is actually making, making money and not waiting tables somewhere or, or not working in some sort of a warehouse job or in a kitchen or whatever it is.
Like, most comedians are very happy for the opportunity to write something funny and be paid for it. Like that's probably going to be really exciting to them.
Jason: [00:15:19] Oh yeah. After we find the talent or the creatives to help you with the idea. What's really kind of the next thing that we'll, will shape what we do to get these ads to convert or get people's attention.
Daniel: [00:15:32] Yeah. I mean, I'm kind of going backward here, but the starting point for us is finding a product or service that we're passionate about. That if you can speak from the perspective of the customer, meaning that you've been sold on the product yourself, you've kind of had that aha moment of you as you've used it.
Then you will be much more effective at communicating that to other people because you’re sold, right. You're not just selling people because it's your job. I really feel like, and I repeat this around here all the time that nothing sells better than the truth. And so if you get to that authenticity, that's a much better starting point.
So for us, we're very choosy about what kind of clients we partner with, especially on our big campaigns. Because we want to really ensure that we have passion for it, that we have someone that has actually has belief in it. That's heading up the project that are whatever creative directors on it is really, you know, wants to, to sell this thing rather than just I'll has to, because it's part of their job.
And so that's for us as a good starting point is finding a product or service that's offering real value, solving a real problem for people and is genuinely making the world a better place in some way.
Jason: [00:16:45] Yeah. I remember, um, we were talking in the pre-show about Daryl Eaves, your producer for Squatty Potty. And I remember him telling me he was he how he was trying it out before. He would actually do it and he's like, it actually works. And it was pretty funny.
Daniel: [00:17:01] That's essential to it. We have people that are mailing us their products, um. You know, fairly regularly we see new stuff come through the door and just so we can get our hands on it and start experimenting with it and start falling in love with it, or just being like, you know what, this isn’t for us.
I remember a food product that came through the door the other day. And I, I, it was several different flavors of this particular kind of, uh, it was a, it was a snack cookie or something like that. And I, I tried one and another, another one and I was just like, nah, I just can't get behind this. I just am not, I'm not liking this. I'm not seeing how, how we can sell this because this doesn't taste great to me. And anyway, that's kind of the process we go through.
Jason: [00:17:41] Very cool. So now that we have passion behind the product, we've hired the creative team, what are the things that you've seen that will make, make something sell, make an ad actually work.
Daniel: [00:17:54] Yeah. So some of them are to relate with the customer in their pain. If you can dive into the problem that they're experiencing and you can effectively capture in video what that pain looks and feels like, then, um, you're relating with them and then they're perfectly set up to the solution, which is what your product or service that you're, um, that you're selling is going to be providing.
So I think in the case of, for example, let's just take FiberFix, for example, when we did our ad for FiberFix FiberFix is a fiberglass a wrap or tape that essentially can fix almost anything. And it's in its a hundred times stronger than duct tape. And it's, um, it's stronger than steel by the time it all sets and hardens.
We go through this scenario of a guy on a Saturday that has a broken sink underneath, like something leaking underneath the sink. So he goes to get the part to the hardware store and he comes back and realize it doesn't, it doesn't work. So he goes back to the hardware store and he misses all this time with, uh, where he could be watching football.
As opposed to, if he would've just had the fix there with FiberFix where he could have just immediately taken care of that on the spot, then he would have been in really good shape. And so that made the pain very relatable to the situation that people that people face. So I think that's one of the best ways to speak to people is the specificity of what the customer goes through in the way of the problem that they face on how the solution of the product relates to them.
Jason: [00:19:27] Yeah. You know, that's one of the things that we always ask when people engage with us. Or whenever we chat with them or in any of our Facebook groups is like, what's the things that are keeping you up at night? Or one of the things we did in one of our communities is like, what's the dumbest request you've ever gotten from a client?
And then they'll just, oh, I mean, it's literally, you're reading some of these and you're like, yep, checkmark, checkmark, checkmark. So I guess my next question from you, and don't obviously don't name the client, but what's the dumbest thing someone's ever asked you for as a client.
Daniel: [00:20:00] Oh, gosh, I try to erase those moments from my brain. Oh, the dumbest request. I think sometimes some of the dumber requests come when they try to force. It's and it's never actually, I don't think happened in our case, but when they try to say, oh, you should really cast this person as the lead in a role.
And specifically, they're thinking of like a celebrity and we're like A, that is nowhere near your budget so you can't go there. B, whether or not they'd even want to be involved that's a whole other question. And C, they're probably not even right for the part, even though they, you think they are kind of a thing. So I'd say that's one of the funnier things that sometimes happens is that when the client's like, oh, we should, you know, if you really got, um, Tina Fey.
Jason: [00:20:52] Or Tom Cruise.
Daniel: [00:20:55] Well, yeah. That’d be awesome if you can do that. You know, maybe we should ask American Express how they pulled that off. Oh wait. They had billions of dollars. That's how they pulled it off. So that's kind of one of the funnier requests that comes through. And sometimes I'd say. I'd say the bigger mistake that we sometimes see clients make is just focusing on the wrong things.
And by that, I mean a feature or an aspect of their product or service that's really important to them and they think is really cool. But when you actually listen to the customer base of what's the most important to them, what's the problem is solving, might be almost a little bit distracting. It's might maybe not even something that needs to be brought up and they're just like, oh, we really want this to be a part of it because you know, doing this long form ad and we're, we're, we're going on record two or three minutes so surely you can find a way to fit this in.
It's like, it doesn't matter about the length. You still got to keep things focused, right? And so that's, that's another thing that happens sometimes is people just want me to stuck everything possible into it.
Jason: [00:21:56] So, and that happens to all of us creatives, right? The client thinks they actually know better than us.
Daniel: [00:22:04] Yeah. Sometimes they do.
Jason: [00:22:06] Sometimes, but I remember we were doing a campaign for Pro-Line Boats and this was in 2003 when Flash was really popular, but we still had dial-up and they wanted to put a four-minute video of us chasing their boats on a helicopter on the homepage. And I was like, you gotta be kidding me. Like, how long is this like going to spin? If you remember the spinner, right? So how do you get around when clients do ask for something that you know is way off? How do you reel them back in?
Daniel: [00:22:43] Primarily, I usually try to explain it in terms of data. So if we have any data from prior campaigns, that can point to the fact that they're going down a direction that's not going to be good for them.
Then we can illustrate that with stuff we've done in the past. And then that kind of takes some of the subjectivity out of it. It makes it a little bit more objective. So if you have data to rely on to show the client, okay, that's not quite right. And the other one is sometimes it is on a gut level and you just kind of know, like, no, that's, that's not going to work out.
And I think it's worth having those discussions and falling on the sword on behalf of your client to some degree, because they're hiring you to do something that they can't do themselves. That's the reason they're hiring you in the first place is because they know that they, they only have a certain level that they can get to and they need you to take them to the next level.
And you essentially bend over or just kind of tower to every request that they have because they're the client, I think you're actually doing them a disservice. So what I ask myself, when we have those moments is. Am I falling on the sword just because on the creative and this is my art and that's, that's what I want? Or am I doing this because I think the client is genuinely going to hurt themselves? And if it's that I really feel, or especially if I have the data to show that the client is going to hurt themselves, then I'm going to fight that battle.
If it's more of a preference kind of thing, then there might be areas where you can compromise. And like I said, sometimes the clients are even right. Sometimes they'll have an insight of something legally that you can't do, and they know about that and they can kind of steer you right in that way. Or some other aspect of things that will be more factual or whatever it is.
And you need to be able to listen to those moments. But I'd say more so the real question to ask yourself is, am I doing this because I'm on my high horse a little bit, because I'm the creative and they're not? Or am I doing it because I genuinely want to protect this campaign? I want to protect their brand for them. If that's the case, then it's, it's a battle worth fighting.
Jason: [00:24:50] Yeah. I love it. Well, this has all been great. Daniel, is there anything I didn't ask you that you think would benefit, you know, the agency owners listening?
Daniel: [00:24:58] Um, yeah. So one thing is for us where we do so much of the direct sales and direct response style of advertising, and then the branding. I would say when it comes to branding and comedy and being funny and storytelling that you want to go further and further and further down that road and have maybe less and less direct response elements, the bigger you get as a company and the more competitors you have. When you're early stage, and you're very differentiated in your market, then you need to be a lot more clear and a lot more direct.
In a way, um, I mean, you can be funny at the same time and stuff, but you need to be really focused on that sale when you're kind of in that startup phase, because you're just educating people on something that's brand new. You're maybe telling them about a product or service that they've never heard of before.
And you need to kind of gain that trust initially with communicating clearly about how you solve a problem for them. But as you get further up into the market and you, and you have more competitors, if you think of someone like Nike, or, um, Ford or Apple doing a redirect response out of some kind, they would feel really out of place, right? Or red bull.
Like it doesn't make a lot of sense at that place. You need to be just telling really great stories and you need to be relating with people emotionally and just highlighting a benefit in a clever way. But, um, you can't be going through and be like, I know it can't be the exact same format then because you're in a different place at a different time.
And so I would say depending on the stage of the company, there's different ways to focus your advertising on that spectrum of, from direct response, clear, over here to branding. You want to be careful of not getting ahead of yourself in trying to be too clever and too funny and too, too many bells and whistles too soon, as opposed to kind of focusing in on the message that really matters.
Jason: [00:26:55] Yeah, I totally get that because you know, a lot, what happens in the agency world is we look at the biggest agencies in the world. And then the little guy, or even the medium-sized guy, we go, well, we got to do what they do. You know, perfect example is looking at their websites.
If you look at a big agency's website it is the ugliest. It is the worst thing. There is no conversion point. You can't figure out how to have a conversation with anybody. Like. We need a big H on our homepage. I'm not talking about Harmon Brothers.
Daniel: [00:27:29] No, I got the dig it's okay. Right. Yeah.
Jason: [00:27:32] Right. Got it. You got it. You got the punchline, but we need to model, like you were saying model how someone actually got there rather than looking at where they're at now and try to duplicate that because, yeah, you're going to look kind of silly.
Daniel: [00:27:47] There's a time and a place. And you've got to kind of move along that path as the brand grows.
Jason: [00:27:53] Yep. Tell us a little bit about your, you guys' amazing course where people can go.
Daniel: [00:27:59] Yeah, so essentially we've developed an entire internal train that we use for our writers, for our editors, for our creative directors, for everybody to be able to create the kind of advertising that we do, brand the way that we do, sell the way that we do.
And it's all on harmonbrothersuniversity.com. And it's our entire playbook. We don't hold anything back. We, we've put it all on there. The exact same internal training that we give here is what we put out on there. And so for anyone that wants to learn how to do this themselves, as opposed to hire it done, they can go to harmonbrothersuniversity.com, and they can sign up for the courses that are there.
There's things like the 14-day script challenge, which is basically two weeks to get you from a blank page, all the way to a script that's ready to film. Um, which is a really cool course. And there's other things like the easy ads that sell course, which kind of gets you into a bunch of different little forms of ad formats that you can put out there on, on Facebook, Instagram, and so forth.
Anyway, it's just been a tremendous resource for people where, um, literally the, our students have driven millions and millions of dollars by following the principles and learning from these courses. And, yeah, I, I would for sure say, uh, for people to check it out and they might even dive in and learn enough to be like, you know what? I just want to hire you guys instead.
And that's fine too. It works both ways, but anyway, that's, that's our entire playbook there for people to learn from, if anyone wants to do this and hopefully it can help some companies out.
Jason: [00:29:28] Awesome. And, uh, and yeah, they're not sponsoring me, but I just think what they do is really pretty amazing. So go check it out. I do have one last question, because I think that this, especially of what you guys have done with Harmon Brothers University. So a lot of people are like, well, why would you put your whole thing out? A lot of agencies think about the same thing. I look at it of going, I think it's a smart decision because everyone wants to know how, but a lot of people don't want to know how to do or to actually do it.
And then the second part, I think. And hopefully, I'm not answering your, taking your thunder from this. The other part is, I bet you probably could pick like the people go through it and you're like, man, this guy is really good or this gal's really good. Let me just hire this person. Has any of that happened?
Daniel: [00:30:14] Yeah, both those things we knew, we knew when we were seeing the success that we were, that people were going to copy us either way. And so we just said, why not just put it out there? And educate people on how to do it, right. That eventually some of them will come back to us and we've seen that for their own campaigns.
And then I just have a little bit of the altruistic attitude and I think we, we do here internally of, you know, kind of you reap what you sell, right? If we put things out there that it'll come back to us in some positive way, even if it's not always measurable. And so I would say we haven't regretted that in the least in going that direction.
Jason: [00:30:47] Awesome. Well, thanks so much for coming on the show. Lots of great takeaways and a lot of fun, making fun of each other back and forth. And if you guys enjoy this episode and you want to be surrounded by amazing agency owners on a consistent basis where we're making fun of each other, we're seeing the shit that you're doing wrong, and we can actually point you in the right direction.
And you want to have a therapy group. I think a lot of it it's that so that we could feel sane and we can actually scale a little bit faster rather than have the shit between our ears, and you know, block our growth. I want you guys to go to digitalagencyelite.com. Check it out if it's right for you, do the application and maybe we'll chat and then maybe we'll see you on the inside.
And until next time have a Swenk day.
Direct download: How_to_Create_Amazing_Ads_that_Convert_More_Clients.mp3
Category:general -- posted at: 1:00pm EST
Wed, 23 June 2021
Duncan Alney made the decision to focus his agency on social media back in the late 2000s when MySpace was still a thing. Now he's running a 7-figure agency and is has niched it down even further. As founder and CEO of Firebelly, Duncan juggles the roles of catalyst, program overseer, problem solver, and strategist within the organization. Today he joins us to talk about how he accelerated his social media agency, the benefits of letting go of your fears, and why you have to let go of your ego to reach the next level.
3 Golden Nuggets
Sponsors and Resources
Agency Dad: Today's episode is sponsored by Agency Dad. Agency Dad is an accounting solution focused on helping marketing agencies make better decisions based on their financials. Check out agencydad.money/freeaudit/ to get a phone call with Nate to assess your agency's financial needs and how he can help you.
Getting Past Your Ego and Put Clients in the Middle
Jason: [00:00:00] Hey, what's up everybody? Jason Swenk here, and I am excited to bring to you an amazing agency owner who's going to talk about how he accelerated his social media marketing agency. He's in the mastermind. He's always a bundle of joy and always makes me laugh when I chat with him. So welcome, Duncan. So, for the people that have not experienced the Duncan effect, tell us a little bit about who you are and what do you do.
Duncan: [00:00:28] I am Duncan. Much like Prince or Madonna or, you know, with this Duncan nothing else is needed. I'm the founder of Firebelly, and, um, we were a social media marketing agency. I'm also a dad and a husband/partner and a son. And yeah, I have a lot of joy in my life, so I try to bring it to everyone else around me.
Jason: [00:00:51] Awesome. And so talk about how did you get started with your, uh, social media agency?
Duncan: [00:00:57] So we started doing social media marketing in the late 2000s, really like 2007, because we were a branding agency and there wasn't any real differentiation. And I already had noticed at that point that SEO was moving very quickly. You know, websites were becoming more and more technical and I really wanted Firebelly to own a space.
And so we decided, hey, this social media thing is new, let's, let's jump into it. So that's how we got into it initially and then over the years, you know, my business has, has really gone from being a lifestyle with some employees to being a real business in the last really two to three years has been, you know, with profit incentives and a social impact and thinking about ourselves seriously as a business, as opposed to, hey, get some people in here to do some work.
Jason: [00:01:50] So let's kind of dive into that a little bit. So what were you going through at the time when you said, hey, I want to make a switch? And then what did you do?
Duncan: [00:01:59] At the time, the company was sort of an extension of myself. You know, I had been like a lot of people a solo player with a bunch of freelancers and contractors. And what I was really good at at the time was actually doing the work.
And so I did some exceptional work for brands. You know, whether it was tactics or strategy, well, probably mostly tactics, but you know, if someone wanted PR done for a launch or a trade show, or they needed a video made or email marketing campaign or a website like I was the guy I brought the right people to the table.
But what I realized is, with all of that there's a reliability issue when you're working with freelancers and contractors. I mean, I don't care who they are. They're not your employees. So I was looking at employees mainly because I also wanted to start sleeping. Cause I was working with the development team in India and I didn't know how to say no.
And so there were no boundaries and really, like, getting started in social media was sort of like saying, okay, we just kind of picked something, actually. It was in the MySpace days and we did a launch for a restaurant and I did the PR launch with the local media. And my colleague who we've been working together for 14 years, Chad, said let's use My Space and we'll geotarget the people that are within a 10-mile radius. So those people, you know, 10 miles is not far to drive to a pub for a good shepherd's pie and some, and some Guinness and the PR got on all the TV stations, but the social media created, and I'm not kidding a line of 300 people when they opened.
And so we thought, hmm, I remember sitting in our tiny conference room and I, and I said to Chad, I said, we should just do this all the time. He looked at me like I was nuts. Like, he looks at me like that a lot. And that was it. That's the story. We… at the time there was no category, right. Nobody was really doing social.
So we couldn't get anybody to talk to us. So the first few years, you know, if we wanted work, we bought the work. I mean, meaning, like we said, we'll do it. You know, cover some expenses and we'll just do it. Cause we were trying to build case studies and build, I guess, experience and expertise in the space.
And so we did that and, uh, we were humble about it. You know, we, we acted like we knew what we were doing, but that we were figuring a lot of things out, which was kind of the situation in social at the time.
Jason: [00:04:24] That's how we all are in everything.
Duncan: [00:04:28] And then, uh, you know, then we found that, I mean, that we got a, you know it was a slow news day in Indianapolis and I got on the cover of the business section and Tony Dungy, who was the coach of the Colts at the time, had a photo on there that was one fifth, the size of mine. And it talked about, you know, us doing social and a couple of alums from my college called me and one thing led to another. We were doing crazy good work for a little restaurant chain and they hired us to do work for Qdoba.
And next thing you know, we went from one brand to another and we were working for the blue chip nonprofits. And I think at the end of the day, those days of social media have come and gone. There was a lot more hype in those days and we probably got caught up with some of the hype as well, but these days it's, you know, it's definitely very different.
It's all moving the needle, you know, and actually creating some outcomes. But there were years where we had, you know, what a lot of agencies do that say they’re social media marketing agencies. They can't really make a goal for that social media marketing, because either they don't have the focus or the expertise or they, they can't make the commitment, right?
And so they fund all that work with some behind-the-scenes email, or they're doing websites or they're doing other stuff, but they're hanging their hat on social. We decided it was probably like five or six years, six years ago, like, you know, screw it. We don't care if we go broke, which we nearly did go broke. We're only going to do social. We're going to turn any other work away.
That was a major, a major transformation. So that was like, what eight years in? And we decided, you know, we basically, I should have put a referral agency in place or talk to Chris Dryer about an incubator agency or something like that, and, you know, send all. We just gave up most of the work and, uh, we started off and, um, I think the experience and the expertise was definitely tested because now you got to do it all the time. And that's all we did. We focused in and we started doing ads and extended into influencers.
We were ahead with a lot of that stuff. Actually, we were doing influencer work in 2012, and we've done it the hard way. You know, we've built frameworks and we build winning relationships for brands and their audiences and the influencer. And so I think that that kind of like commitment and focus isn't easy, but that's what it takes to win.
Jason: [00:06:51] Yeah. What are some things that you attribute to the growth? That looking back you're like, that was a pivotal point for really kind of catapulting us to where we are now and where we're going.
Duncan: [00:07:05] That's a great question, Jason and I, and I think that there are a few things that come to mind. I think the pivotal moment, if there, if there was a pivotal moment was losing the fear and saying, okay, we're… I think there's a quote about burn the boat, so you can't leave. It's like basically, we said, okay, we're either going to succeed or we're going to go down trying.
And so I think losing the fear in terms of doing other work and also losing the fear of taking all business. You know, understanding that all businesses not good business, those things were critical. And I also think like we switched from doing, we've never, I've never been good… our company has never been good at following, you know, blind best practices.
So we've always just followed our own compass and like saying we're not going to be afraid of doing what we want to do, and we're going to follow our compass on what we think the right way to do it has been. And it's a learning experience. The learning has not stopped.
Even today we're constantly learning new things, but I think that embracing fear… as we're going to be afraid but we're not going to be afraid to do it.
Jason: [00:08:15] I love it. There's so many agencies that they're so crippled by what they don't know that they can't push through and make that next step that's so needed.
And I love that quote, I think that was from Tony Robbins about, you know, if you want to take the island then burn the boats, because then there's only one path forward. Because if you have a backup plan, well, you're not going to go at a hundred percent and then you're actually going at it as kind of half ass of going well, I succeed, I succeed if I don't that's okay. Like it's like, no, you live or die by succeeding.
Duncan: [00:08:49] And I think part of it has been, at least we have a small team. Even now with massive growth we still have a small team. And I think part of that has been to lead from the front and not only lead from the front, but you know, this is where our stories start converging.
Where when I first met you, you know, we read you a playbook, we read your book and we thought core values? Hmm. You know, we have a vision to be very good at what we do, and what are our core values? And so having core values really changed the way we saw the world and the way the world saw us. Suddenly, like. we had a framework for employees, well for colleagues, for partners, you know, for clients.
And I've been several occasions where we have said no to clients based on our values. So… I lost the original question, so you’ll have to remind me.
Jason: [00:09:40] Oh, I lost it too. I love hearing your answers. No, we were, we were talking about what was the thing that really kind of catapulted you to the next, the next level.
Duncan: [00:09:51] So I think that looking at the values and looking at where we wanted to be was really great. I think also like finding a community of agency owners has changed the game for me. So, you know, I wasn't going to the best HR person. I was going to the best HR person for agencies, I was going to the best finance person for agencies.
I was talking to agencies that had gone from 300,000 to 600,000, you know, or from 600,000 to a million. And I was surrounded by people that had walked my path before. And, you know, I think that community of, from a leadership standpoint, for me, that was a huge change.
I think for the company seeing me confident about the future and seeing me say that there is no question about whether we're going to succeed. We're going to succeed or we're going to go down trying. I think that made a big difference.
But then I think also a place where people started to find out about our successes. I think we won an award. In late 2018, uh, we won Sprout, which is sort of the defacto social media management system, in my opinion. And, uh, we want to Sprout award and suddenly like people were looking at us differently and we were applying for awards and winning them, and we won so many awards and then getting ranked by so many different organizations as being a serious contender.
I think those were all moments when suddenly we went from toiling and basically in an invisible place to being very visible and, and, you know, that has given us a voice. And I think using the voice has been really important, like, you know, to help other agencies to help people that are looking I'm very active in Sprout channels and I think, you know, teaming up with other agencies, talking to them about the role of social and helping them and them helping us.
Those are the things. So I think maybe it's like claiming knowing our point of view, knowing where we want to be and where we are then claiming our space in the world have been sort of like, I think critical components of like all of that, but I think the key piece was saying, okay, I don't care what we're doing. I can't give people as a leader. I can't give people a dependable, safe place to work if I don't operate from a value standpoint and protect them and enable them to do a great job with definition and clarity, but also running a profitable enterprise.
Because at the end of the day, and maybe crass to say that, but we have to balance people's lives and people giving people the environment they need to succeed with making money.
Jason: [00:12:29] Yeah. I mean, I love that you said that when you had more confidence your team, and especially, I noticed that over the years of building the first agency is whenever I would come in negative or whenever I would come in worried that would portray through the whole company.
But when I would come in excited, vibrant, like this is what we're going to do, like just, you know, anxious, it would inspire everybody and then it would take the emotions or add the right emotions to the company. And when I look at running an agency or building an agency, I look at it in kind of four phases.
I look at it as the first phase is really kind of building. So let's say we're building a race team, right? We got to build the car, but the only way to build that car and get to being able to drive it is you have to know what kind of car do I want? I have to have that direction. And you talked about that a little bit of like once I had that direction and like the direction of these are the values that I want to surround people with, this is what I actually want.
Then you started catapulting you to the next level, which is kind of driving the car. And then I look at kind of driving the car is the only way to get to the next level is through systems. And putting the right systems in place for your team. So now you can take that car and go to the racetrack.
A lot of people try to skip levels and I've raced against them and they wound up very on fire or hurt. And they've just tried to jump to the racing level too quick and they don't have the right systems in place or they don't have the right crew members in place. Then, the only way to get to the next one is through delegation.
And over the past couple of years I’ve seen how you've progressed through the levels of building, setting that direction, setting up those systems, learning how to delegate. That's hard for a lot of agency owners or any, any entrepreneur, honestly, to delegate something that you're like, ah, let me just do it. And then once you have all that, you have alignment, your team's winning races and you're onto the next level.
Duncan: [00:14:38] I subscribe to that thinking. Or did you call them phases?
Jason: [00:14:41] Phases.
Duncan: [00:14:42] Yeah, I mean, I think that how I interpret that for our world is you live dominantly in one phase, but it's very good for you to be in all the other three phases at the same time. So, you know, in our case where I'm looking for new service areas. And in that situation, you know, going back to one, and then when you have a new service area going into two, and then the agency as a whole, you know, we're going through a ton of systems work and I'm beginning the delegation work, you know?
So there's lots of things I don't know, which is a win. And for example, like going from 12 one-on-one meetings to three one-on-one meetings, you know, things like that. And also, like, I think people want to be challenged. They want clarity and metrics, but they also want a challenge and say, hey, can you do this? I, I believe you can, but can you?
And I think that that has been, you know, I mean, it's interesting. I know it's a tough economy and you know, everyone's getting a lot of applications, but we've had jobs that are requiring five and six and eight years of work experience and literally, we're getting 500 applicants and just going through the freaking applicants, is heavy lift.
But I candidly like losing a lot of the rules, like, oh, you know, we have to have an office. Well, do we? We have to have employees in one place. No, with the pandemic we just threw that rule book out that playbook out. And now we have employees in Miami and Tampa and New York and Michigan and LA, you know, with more to come.
And I think that people see that and they see like, hey, I can be a part of this. Not that people are everything, but they are a major component. Right? I mean, people need processes and protocols, and infrastructure. So, but I think that that's what has attracted people.
And going back to the phases, I definitely think we're in phase three. I hope we're going to get through phase three soon.
Jason: [00:16:46] As an agency owner, it's hard to know when you have to make those big decisions. I remember needing advice for thinking like hiring or firing or reinvesting. And when can I take distributions without hurting the agency? You know, we're excellent marketers, but when it comes to agency finances like bookkeeping, forecasting, or really organizing our financial data, most of us are really kind of a little lost.
And that's why my friend Nate created Agency Dad, specifically to solve these exact problems. You know, at Agency Dad, they help agency owners handle the financial part of their agency so they can focus on what they're really good at. Nate has spent years learning the ins and outs of agency business. He understands everything from how to structure your books, to improving the billing process and really managing your financial efficiencies.
Agency Dad will show you how to use your financial data to make the key decisions from making your agency more successful and most importantly, more profitable. If you want to know how your agency finances stack up to the rest of the industry, Agency Dad can tell you how to do that. A lot of my listeners have already gotten their free audit from Agency Dad.
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Jason: [00:18:31] Oh yeah, you definitely will. And then the only thing that I feel that keeps the successful companies and the winning stage is alignment. Everything has to be aligned. But like you were saying, you're constantly, always resetting on different things. Like I tried it this weekend. So, this weekend I played a game, one of the strategy games, Clash of Clans or whatever, some strategy game.
And I was telling my son that I used to play this game, Age of Empires. Clash of Clans it's just too many damn options. Like I was like, I can't, I'm frustrated. I'm not playing anymore. Let's go play football or basketball, but they did empires. It was pretty basic. And it was just like, get more wood gold and food.
And as you get more, you progress from the Stone Age to the next stage, the next phase, the next phase, right? I was like, that's just simple. And that's kind of how I look at as you progress up. That's why I always tell everybody, look, when you get the agency playbook, you gotta keep going through it every year, because you're going to have to, self-assess where you're at.
And there's going to be different areas that you might be like, oh, I'm good there now. But next year you have to kind of go back and go pull that lever in order to really kind of scale.
Duncan: [00:19:43] Agreed. Agreed. I mean, it's interesting. I'm about to start reading it again and I'm looking forward to that. Um, it's also interesting to see one of the things that I think a lot of people think is that bullshit get rich quick gospel that's out there.
You can read that gospel and it will take you wherever you are qualified to go. It is not a silver bullet. It is not any system that those get rich quick people. You know, those epistles are not sincere and authentic. And I think that there's a lot of people that think, yeah, you know, anybody can start a social media agency. Sure, anybody can do anything.
I mean, I think, I mean, we live in America and it's the land of second opportunities and you can have a second opportunity for the 60th time and you can post a picture with your beachfront property with a boat, and then you can like ask everyone in the community for help and you can't spell words properly, and you're basically, you have no model.
And so I think that that thinking is out there. But I think that the thinking that wins is when you have a community around you, of people that are going to tell you when you're wrong and tell you when you're right. And you know, you need to have processes and protocols and alignment and mean you need to have a plan, you know?
So I think that, starting a social media agency. Anybody can start a social media agency, but I think being a player in any space comes with time and experience and expertise. And in fact, even we are now saying, even if someone's a great lead for us, you know, I got a meeting set up with the defense contractor and that's not good business for us.
You know, we are now wanting to work with food and beverage brands and beauty brands. Do we have a drawer of miscellaneous clients we're passionate about? Certainly. But for the most part… so that's another step forward, you know, which, you know, part of my journey.
That's a very difficult step to make, you know, saying, okay, I'm only going to do this, but it also comes with. No, it does liberate you because suddenly you're on a, I'm on a call. You know, I still handle all the business development and I'll be on a call and I'm like… learning the space is going to be so challenging. We're not going to make any money for one year. You know, whereas if we work with the CPG food brand or a wine brand, it's like, we're going to kill it in month two.
And so that I think is another piece about like accelerating your agency. It's like our common friend, Jonathan Jacobs. He is the undisputed king of thoughtful social for authors and for books, you know, and for kind of like literary things. That's a very specific niche. And he does some other things, but that's what he's known for.
So I think that that is almost like the next step, right? It's you can't dominate unless you know what it is you're going to dominate on.
Jason: [00:22:39] Yeah, I must, I must break it up into kind of three things or actually three major things. And then each major thing has three things.
So if you want to get to a point where you can exit the business from the day-to-day operations or exit from selling it, right? That's usually what I see a lot of agencies that they chat with me about, or they joined the mastermind for. And if you look at it as kind of three things, how am I attracting people to my agency? And then out of those three things, it's kind of like, do we have a specialization?
Are we building authority? And do we have a lead generation system coming to us from outside of, you know, word of mouth? And then I look at, you know, on the other side, you have to have kind of convert. Do you have a sales team? That's the next thing we're going to work for you, Duncan, right? So you're not doing all the sales.
Are we having a high converting quick offer, right? That we talk about with the foot in the door and then are we selling on value? Right? Like you do an amazing job at selling on value. That's why you're so profitable. And then on the other side, the scale part. Because there's so many agencies that can actually attract, like, do amazing job at marketing and sell, but then they really drop the ball at the delivery one.
Like, can they set up, you know, is the agency running without them? You know, are they profitable? Are they growing accounts? And so when you get those nine things all working together, that's really where you get to the point where you have that freedom, that predictability you're making the money that you actually want.
And a lot of times people just have to do a self-assessment and go, okay, well, let's just work on this one part. Then it kind of stems to the next part, the next part. And then you just move up stages.
Duncan: [00:24:29] I really do think, I mean, I think you can live in different parts, but if you're trying to get to a place where you have, I was having this conversation with someone a couple of days ago and they were talking about that business and I said, hey, isn't it just, you?
And she said, yeah, I said, I didn't say this to her, but I talked to myself, well, it's not really a business. It's like a job you do at home, right? And so if you want to get to a place where you grow your business and your vision is basically capable of working without you, I think that's, that's one of the first signs that you really got something that works.
You know, whether it's you leave for two weeks and no one needs you or whether it runs all year without you with limited input. I think that that is a difficult place to get to, and it is really, you have to get past your ego. And a lot of us agency owners have an ego where we want to be needed. You know, we want to think that we're the only one that can solve this problem.
Well, they're not going to talk to you, they want me. And it's like, it's not true. They just want the problem solved and they want the outcomes. And at the end of the day, they may like you, but if they don't like you they're going to work with someone else anyway. So I think so I think there is letting go and, and saying like, what is, and it doesn't matter if you're at the agency world or any world, right.
It's like a sustainable business has to be able to run without you. Like, look at Apple. So many people thought, even with Apple’s scale, that Apple could never continue without Steve jobs. Tim cook didn't have the vision. Tim cook didn't have the operations handle. And obviously, that's not true. Again, how, it's been almost 10 years since Steve jobs died a little bit less, I guess.
But I think that that's the piece that you advise people really well on. And that's what people need to do to accelerate is you have to actually decelerate as an agency owner for the agency to accelerate.
Jason: [00:26:30] Yeah, you have to decentralize like you cannot be this, you're not the center of everybody's universe.
You kind of have to kind of step outside and put your clients in the middle. And if you could put your clients in the middle and then build everything around them that's when you can truly create something amazing. And even if you're listening and you're a one-man person, and that's what you want and you're happy with it. Perfect.
Don't let us lead you down a path of hiring a team and all that kind of stuff. But, but if you're at a place where you have team members and you feel like you're at a place where you're kind of just stuck and you're like, oh, I can never add double the employees because there'd be double the headaches.
That's the incorrect interpretation of what's going to go. Because if you hire the right people, it can actually give you that freedom that you've always wanted. And I love what you pointed out, Duncan, about the ego, right? Like I'm actually going through this right now. I'm about to hire a salesperson and a lot of times when I get on a call, people are kind of sometimes surprised that I'm on the call and they're like, well, I don't want to be like those other people, but like, you just literally made me think going, man, I got a big ego.
Literally, it's like, no, like you said it, they want their problem solved. They want to be able to scale their agency faster, regardless if I'm on the call or not. And I think if that resonates with everybody, like, that's a huge takeaway. If you guys are listening.
Duncan: [00:28:00] I mean, and I, and I think it's fine for the ones that don't want to do that.
They either don't have the vision to see the path ahead of them, or they don't want to be on that path. And I think that's fine. I think that you have to be realistic about where you are and whether or not that's what you want to be or not. And so if you want to be the practitioner that works on it every day, and you know, you're the copywriter who runs the business and it's like you’re also the main copywriter, that's totally fine.
But I think it's also a risky place to be, because if something happened to you, you know, what happens to all your employees? What happens to those people? Those are all lives that are reliant on you as a leader, and also what happens to your clients? And I don't want to seem like old thinking, but I mean, it's like you have like a responsibility and you have a, like a responsibility to those people and those groups, and also to your own legacy, like, you don't want to leave people in the lurch.
So those are not easy things to think about. Just like writing a will isn't an easy thing to do, but it's like, almost like you have to say, what's my obituary for myself going to be? And what's my obituary for my business going to be? Like, if Firebelly died today, what will people write about?
Thinking about that though, I will say, does raise some uncomfortable questions. It's like what you set out to do? And if not, what are you going to do about it? Right?
Jason: [00:29:19] I mean, it goes back to like what, also too, what regrets would you have for not taking action quick enough? Well, great insight, man. Duncan, is there anything I didn't ask you that you think would benefit the audience listening in to really help them scale faster?
Duncan: [00:29:35] You know, I recently launched my Firebelly podcast.
Jason: [00:29:43] Yes, finally! I should find the applause button on this software.
Duncan: [00:29:47] Yeah. And I think it's interesting because, you know, we had what I thought was a very clever name and I told you the name and you said to me, I don't know what that means. It was so nice and I was like, what do you mean?
He goes, you said, I think it's a shit name. You know, you need to communicate who you are. And so we said, well, we are Firebelly and we're social media. So maybe we'll just call it the Firebelly Social Show. And it's focused on mission-driven brands in the food and beverage space. But I think that if anyone has an idea on a great… my son is here to say hello.
Jason: [00:30:24] I know, hello! I saw him peeking in.
Duncan: [00:30:29] That’s the famous Jason Swenk that I always talk about. If I say Jason, he'll actually say Jason Swenk? So, who are you?
I think that, you know, as we're trying to make our way in this world of like being a leader, one thing that you have to do as a leader, whether you're a, uh, one-person show or whether you're an 80-person show. I think that people want to hear from you when it comes to stories. You know, the leader. Um, honey, it’s a podcast.
Jason: [00:30:58] Gotta love the pandemic.
Duncan: [00:31:05] On stories, and I think the reason you got to keep going on the stories is when you stop telling the stories, it's like, you don't exist anymore. And so regardless of your scale, you know, you gotta be somewhere present in those stories. So I think that's, that's a piece that I've been talking about a lot. Where do we stand?
Whether you're Francisco Serrano running a nine-figure agency or you’re someone else running, you know, a six-figure agency. It doesn't matter. It's like as a leader, you have to really tell the stories.
Jason: [00:31:37] Yeah. I love it. Well, what's the website people can go and check that agency out? And then also tell us where we can check out the podcast as well.
Duncan: [00:31:44] So the Firebelly Social Show is everywhere. It's on YouTube, it's on Spotify and Stickler and Google Play and everything like the Apple music. So the Firebelly Social Show, if you have some ideas of who should be on the show, I'd love to hear them. And then we are firebellymarketing.com and DuncanAlney.com is soon to be launched.
Jason: [00:32:06] Awesome. Well, so exciting for you on that, and thanks so much for coming on. And if you guys enjoyed this episode, which I know I did, and you want to be surrounded by other amazing people like Duncan. And Duncan is always usually the first one to greet every mastermind member that comes in. So I appreciate you so much for doing that.
And you want to be in a mastermind where people really have a lot of fun. They care about your success. They want to share the wins, you know, share the lessons that we have because it's not always sunshine and rainbows. We'd love to have you fill out an application because we want to make sure it's right for you and you're right for the group.
So go to digitalagencyelite.com and until next time have a Swenk day.
Direct download: Should_You_Burn_the_Boat_To_Achieve_Agency_Success_.mp3
Category:general -- posted at: 5:00am EST
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.
Wed, 16 June 2021
Roger Bryan has worked with some of the world’s largest companies as an SEO consultant. He sold his first website in 1998 before he knew what SEO was, and spent years working with nonprofits. His agency Enfusen was recently acquired by Growth Foundry and now he joins us to talk about how he has led agencies to great success and failure, and analyzing both. Roger also explains why generating revenue is the real focus of SEO. He also shares tips from his book and even a few crappy jokes.
3 Golden Nuggets
Sponsors and Resources
Agency Dad: Today's episode is sponsored by Agency Dad. Agency Dad is an accounting solution focused on helping marketing agencies make better decisions based on their financials. Check out agencydad.money/freeaudit/ to get a phone call with Nate to assess your agency's financial needs and how he can help you.
Why Did One Agency Owner Fire His Entire Team?
Jason: [00:00:00] All right. I have an amazing interview with one of my old clients who has sold a couple of agencies in the past. And we talk about a lot of the mistakes he made in running his SEO agency. Then we go into a lot of different tactics about how he fired his whole team in one meeting and then a year later he was at $3 Million.
And what are the three major roles that he brought in to help? What did he pay them? What was the framework that he used for success and how he really positioned his agency from just being an SEO agency, to being a revenue agency for his clients? And that was a huge, huge thing. You're not going to want to miss out this episode.
It's really great. Roger did an amazing job. So let's jump into it.
Hey, Roger. Welcome to the show.
Roger: [00:00:54] Hey, thanks for having me.
Jason: [00:00:55] Yeah. I'm excited to have you on, you know, we were reminiscing about how many years ago was when you came out to Atlanta for a workshop with me. Can't believe how long ago that was. But, uh, for the people that don't know who you are, tell us who you are. And, uh, tell us a little bit about the agency.
Roger: [00:01:11] Perfect. Uh, my name is Roger Bryan. I'm an SEO consultant. My former agency, Enfusen, was just acquired by a company called Growth Foundry. We do enterprise-level marketing, a lot of multi-location, franchise marketing, a lot of lead gen, SEO pay-per-click, specialized in healthcare, nonprofits, all across the gambit on the different industries that we work with.
Jason: [00:01:35] Awesome. Well, let's kind of jump into it and we're kind of trying something new and you're the, you're the first guinea pig. So welcome to being the first guinea pig. And it's really kind of a thing of like a how-to series to figure out, you know, if you're an SEO agency because your agency that you sold was that, talk about how did you specialize in that?
Because a lot of times people will start an agency and they start trying to do everything. You know, design pay-per-click, everything under the sun. How did you pick SEO? Let's start there.
Roger: [00:02:10] I sold my first website in 1998 and it sold pagers in long-distance service. And what I found was is then I didn't know, I had never heard of SEO.
I don't know that I even had met someone that had ever said the term before, but you're putting on content onto those pages to try to get people to find them. Uh, to me, it was no different than making your company AAA in the phone book a hundred years ago, so that people knew, would find you first. It was just as kind of simple.
I got into the auto auction industry after that, and we had a website and we were working with nonprofit organizations and it was like, well, how do I get us to come up first so more people find us? I didn't get into paid traffic until 2005. So I spent seven or eight years just living off of organic traffic, not even knowing that that's what it was called.
I've always just been… I've stayed focused on it, and always hired people to do everything else. Because I was good at it. To me, my left brain works. It's a science to me. And if you follow certain rules and you do the right competitive analysis, it's easy.
Jason: [00:03:14] Walk us through some of the team structure, because obviously, you got amazing results for your clients because you were able to sell the agency. So walk us through, how was the team structured?
Roger: [00:03:26] Yeah. I've gone through a couple of different iterations of this. So my first agency, when I sold it, we had 12 people on the team, but we also had a call center and we're taking in calls for the leads that we were generating. So it was a little bit more robust than just SEO services.
Typically, when I think of an SEO agency, let's say sub-seven figure versus seven to eight-figure the, the differences between the two. The sub-seven figure, really you are the thought leader. You're the one that's looking at the data. You might have somebody else doing the research. You're making strategic decisions and you're allocating resources to certain people on your team.
For me, that would be a content team, whether you have full-time, or part-time, outsource a link-building source that compliments your content team. Uh, one good web developer. We tend to, I used to tend to stick to WordPress until I started working with Growth Foundry. Now it's a whole different game with the clients they deal with and then one person that's going out and doing some type of syndication.
So syndication means taking that content and putting it out into places. I've tried all of the different tools out there for social syndication or engagement syndication, or even manipulated social signals, a little decent outreach to the right outlets never, it never worked better. So especially in today's world where everybody uses automation on those things.
And I think Google has found most of those. Getting one blog post picked up by one real news article is going to give you a hundred times the results of all of the automation tools that are out there. So I think I hit like 4 different people there.
When you get into a larger agency and you're working with larger clients, say your retainers are six figures or more per year, you're going to have a strategist in there. You're going to have an account manager in there and they're going to be different. The account managers dealing with the relationship, the strategist is dealing with the success. You're going to have the same underlying.
Four core sections that you're going to deal with, but those teams might be larger and have different points of interaction. I don't like having larger teams for the sake of larger teams, but you have to provide a level of service that demands the type of revenue that comes from working with those larger clients.
Jason: [00:05:34] And then how was it structured? Like where you guys broken up into pods? Did these a strategists and the account managers, did they report up to an operations director? How was all that, you know, once you get above the seven-figure mark.
Roger: [00:05:48] Yeah. What's nice is I've done this successfully once I've and done it completely wrong once. So I can compare and contrast.
Jason: [00:05:55] So let's talk about the wrong first, like, and then get into the right way.
Roger: [00:05:58] Absolutely. The wrong way is for you as an owner to be in the mix. And I there's a period at the end of that statement. There's no if ands or buts about it. So when I went and I sold my first agency, my team dealt with the customers. I signed checks and I looked at monthly reports. And if my team had a problem, we would talk about it. I had very little interaction with clients other than conferences, or once in a while, maybe I would chat with some of our larger clients.
Now fast forward to my last agency Enfusen, I did everything wrong. I kept hiring kids straight out of college or interns, which there's nothing wrong with that, but I would want to be the point of contact. I didn't trust them enough. I didn't go out and hire the best people. Now with that being said, some of, one of them now runs Halle Barry's e-commerce business. So they've gone out and done amazing things.
And if I would have trusted them more, Infusion would have probably flourished more. But I had, every week I was talking about each and every client to some extent, and it was exhausting and we never scaled that agency, no matter how hard I tried, we would scale and we would implode, we would scale and we would implode.
So the worst part was I knew what I was doing. I look back now and I'm like, why the F, I don't know if you swear on your podcast, was I doing that? And the nice thing about Growth Foundry is I'm the Chief Revenue Officer, so I'm responsible for growth and strategic alignment within the SEO team between our software and services.
So they've taken me away from the thing that I was doing bad in the last agency and giving me a chance to excel at what I'm good at.
Jason: [00:07:33] No, you can always cuss. Uh, no kids are listening. You know, I look at it as. Thinking back at all the agencies I've chatted with and all the agencies we've done. I look at it like the first stage is like the doer, right? Like you're doing everything.
And then you get to another stage. You're like the barker, like you're barking orders to everybody, but you're still the only one making decisions. Then you get to the delegation stage, and this is where you're delegating and you're trusting people. And then there's one above that where I see only a select few actually make it there.
You know, one of our clients, Zach has actually made it there where he's starting to transition out of being the CEO and more to, you know, the chairman. And it's exciting to get to that leadership stage where now all you're doing is coming up with the vision and direction, passing it to your leadership team and that's it and you're hands-off.
And that's total freedom where you can scale. You have the freedom, you have profitability, like let everybody else worry about all that shit. Cause there's always shit. It’s just a matter of who's doing the shit, right? There's always like, I guess we use another analogy of like cleaning out the barn.
There's always someone that has to take the shit out. Like it just doesn't evaporate. So let's talk about kind of the right way that you, you've seen it. Now you've kind of talked about like why you guys were going through that roller coaster, right? The ups and downs, because that's where you're focused. What do you think the better model for SEO agency is?
Roger: [00:09:13] Yeah, it focuses almost too simplistic of a word. But when you focus in on a specific type of client in a specific service with a specific deliverable, that problem kind of works itself out over time. If you allow it, of course, if you're arrogant and your ego is this big, you're going to make that problem exist forever.
But when I look at those ebbs and flows, I could see them dictated on the partnerships that we were in and the service that we were providing. And it was different enough each time that it created that need for like a recalibration of the underlying offer and then the implementation and the systems and procedures, if that is not a way to scale and grow an agency.
When you get to that point where you've got a dependable, predictable revenue stream from the service that you provide, and you know that every client you sell it to has a 100% chance of success, then you have this model that people can go implement. And there's bumps, there's hurdles, there's hiccups.
It's not perfectly easy every time, but you can overcome them better if you're working towards the same strategic goal each time. So starting with that focus element is going to make things so much easier.
Jason: [00:10:16] Then how is the team structured? The right way. So, you know, a lot of agencies listening and be like, all right, man, that sounds like me, Roger. Like, man, I'm doing everything. I'm the doer. I'm the Barker. Like we're in this red zone here. So how do we get to the yellow and the green?
Roger: [00:10:32] Yeah, the campaign managers a big part of it. You can call them client success, managers, campaign managers, cat herders, whatever you want to call them. But they're the, they're the face.
They're the ones talking to the client. Whether some large clients, you have weekly calls with most clients you have monthly calls with and their responsibility is to gather up all of the information. And make sure that as they're going into that call, that they're presenting success, not problems.
And if they're focusing in on that, then they spend the whole month building up their data, looking at the reports, making sure everything's going well. And then most importantly, we've got 10 data points that define success for every campaign. They go in and they look well, this one wrong, is this one-off?
Why is this one going down? And they're talking to the team, they're talking to the people running paid traffic. They're talking to the people that are building links or writing content and saying, why is this data point off of what are we going to do to improve it? And their questions are what drives success from the underlying team doing the work.
Jason: [00:11:27] And these people, are they acting as an Account Manager and a PM or are these two different people? Because there's a lot of, a lot of people struggle with, and I have my own kind of 2 cents on that too. So like, are they the same person? They’re different, they’re the unicorns, what are they?
Roger: [00:11:43] The unicorns are nice. I have one that I wish I could get back. But they are managing both. Now, I've scaled up to right around $5 million. I don't know, at $10 million, if that dynamic would change, I'm going to assume that it will. And with the work that we're doing at Growth Foundry and the trajectory that we have, um, you do have an SEO department that's responsible for SEO, that reports up to the campaign manager now.
But the campaign manager still needs to reach down at certain points and find when things need to be done. Now, there's a head of SEO, there's a head of Facebook and there's a head of, um, Google marketing, and then there's a head of IT and software development here.
So I knew into that with them and I see that different structure. And it's interesting for me, I'm not an exact, I mean, I'm Chief Revenue Officer. I'm not involved in any of that now. So as I bring my clients over and I bring over relationships, I'll probably see how I fall into that mix.
Jason: [00:12:39] Yeah, no, I love that. And I always saw like, I guess it would work really well for where you guys were with if they had really good SOPs to follow. But I guess you would have to probably find that Account Manager that really understood this and understood the strategy and could actually probably challenge the client.
I mean, that's kind of why a lot of us as agency owners, we've kind of fallen into that role because we know exactly how to help them. Like we're not order-takers. If you hire like an order taker, you're just going to get a Big Mac, like, you know what to expect with a Big Mac, but you're not getting that most amazing burger that like, you start smelling it and your mouth starts watering and foaming, right? Like we can like taste that burger.
And that's really what we want those Account Managers. So I presume that and you learn your lesson from the first one where you probably hired experienced people. So. Where did you find these people? And then, you know, what was the kind of levers that you would pull in order to make sure that they were right? And how did we move them out?
Roger: [00:13:45] Yeah, it's interesting because this was, it was not a smooth process. So I started my last agency in Summer of 2005. And I remember coming in, it was April of 2007 and we were growing exponentially. We had, we were in one niche. We had one product offering. It was a home run. We were trying to scale. And I, it was just, the wheels were coming off. Like everything was wrong.
So I walked in one day and it just, the tension was there. One girl in the office started an argument with me and I'm like, you know what, that's it, everyone just leave. And the entire company was fired. And then I spent the next six months going out and finding the right people. At that time I was based in Washington DC, and I don't recommend that anyone walk in and fire their entire staff in one day, but it was, it was a year in the making.
And we went from that year doing $1.2M, and remember that was the beginning of the year. The next year we did $3.2M. So it was the right decision to make. Now there was a lot of fresh out of college. In fact, the girl that I brought in her, name's Amy to run marketing for us at the macro level. I sold that company in 2012, nine years later, she's still there running marketing for that company. And they've grown exponentially since then.
The Office Manager that I hired in that timeframe, still there, the General Manager that's running the company since I sold, was my GM. So those right people helped me get to the point scale, sell, and then they continued to run the business for the investors that bought it.
Where did I find them? I plugged into the universities. I would go and do the job fairs, but I wasn't looking for like interns. I was looking for the people that had gone out and done something. In 2005, 2007, when you're trying to hire digital marketers, there wasn't a lot that they could have done. So if they had a LinkedIn profile and they were doing any type of content creation online, they were, they were first in line.
Jason: [00:15:34] Yeah. I mean, I remember when we hired designers. You didn't have to like, and this is where I kind of failed at school. I didn't really kind of create any side hustle while I was in school. But the people that we would bring in, if we brought them in right after they got their degree, which wasn't really a requirement with us. They had to, or had that side hustle and they were already having a portfolio that they could show us.
They weren't just like this is their first pony, you know, the first rodeo. Was what I was trying to say, right? I was like first pony? Like where did we get a pony?
Roger: [00:16:11] Like, I don't know. You got cows behind you. So maybe the pony’s not too far.
Jason: [00:16:14] That might be it. Maybe it was because I was watching Seinfeld. And, uh, when Seinfeld was at the table, he was like, I don't like anybody that has a pony. And then the, this, the old lady was like, I had a pony. Why don't you like me? So maybe I think of that. I don't know, listening on the show, make sure you guys come and go to the website and tell me if you have a pony or not.
Roger: [00:16:36] We won't judge you.
Jason: [00:16:38] We won’t judge you. But getting back to, I don't even know where we were actually going since the pony. I guess that's where I show you my ADD, like pony, what? Go over here.
Roger: [00:16:47] You took me for a ride on your pony and now we're lost in the woods.
Jason: [00:16:50] We are so screwed. We were talking about hiring out of college. So I like what you were talking about. Like they already had the expertise there. They were already doing it. How did you make, after you evaluated that, what was kind of the first task that you had them do to make sure that they're right? Because I'm sure you probably hired some people that, you know, like, oh man, that was a wrong hire.
Following this method when you reset the whole company. Cause that's fascinating. Like that's so fascinating. You come in, everybody get out and then a year later you bring on new people. So let’s talk about that.
Roger: [00:17:24] So there's been a couple of different iterations here too with the last agency and this was good or bad.
The first 30 days that someone was hired, they would go through a whole set of tests, whether that be the digital marketer tests, some of the HubSpot certifications. And only about 70% of them would be able to complete the first set of tests.
So a lot of them, it was just a natural, you know what? You can't pass these tests. You can't work for us. Including my brother, he tried to come work for us. He couldn't pass the test. He didn't get to work for us.
Jason: [00:17:51] That's probably a good thing. You never had friends or family.
Roger: [00:17:53] Yeah. I hired him in other businesses before. I don't even know why I tried. But that was a decent way. So you had something to show me now, can you do what we do?
I had tried in the past, letting them launch a campaign. That was always a disaster because I wanted, I didn't want to spend money on my stuff. I wanted to spend money on customer stuff. I had one guy, he had a $250 a week budget to generate leads. You spent like four grand in the first week and didn't generate any and it was on my credit card.
That was when I learned that that probably that wasn't going to work anymore. So every person is going to be a little different. Now we're trying to hire people that are coming from other agencies. That have been in the game for a little while. We don't have the luxury of time to train up from the beginning.
If you can come in, maybe there's a little bit of retraining, but we need to put you in a role and we need you to go and then we'll figure out how to make it better and how we can scale. I learned that by watching one agency grow from like nothing to like a hundred million dollars over the last seven years.
And I've worked with them on a couple of projects. I'm not going to name them because I don't want to say it's a good or a bad thing, but most of the projects I worked with them on failed. But the same people that were working on those projects five years ago are still there. And I bet you they're better now, now that they're a nine-figure agency.
But that says it's, it's a choice, they chose to just take on every client, take on every project and then they found their niche once they hit scale. Again, not recommending that, but that's just another dynamic that I've seen people do.
Jason: [00:19:20] Yeah. I probably know who they are. They will be nameless, but, um, let's talk about when you reset the whole darn team, who was the first three people and why they brought on. Like, the role, the roles.
Roger: [00:19:35] Yeah. The first role was the office manager, because I needed someone to handle like the HR side. Obviously, if you go in and you fire everybody, you probably aren't thinking about HR too much. So they came in and their job was to help me systematize everything that I was doing in the business. From the way the clients are coming in. We had to have like insurance policies in every state that we were working in because of the space we were in. Getting that done, then the general manager to hire both divisions of the business, because there was a service and there was an e-commerce business.
By the way, I didn't fire anybody in the e-commerce business side, they were fine. This was just the office and service staff. And then I needed someone that knew marketing and sales a little bit. Uh, I didn't expect them to go out and sell. I was the one going to the conferences. I was the one in the booths, I was the one building the relationships.
And I enjoyed doing that, taking people out to dinner, buying them drinks and like, it's not that hard. And when she came in and got to work, and then she started managing our outsource vendors and our content teams, and at that time we were using a third party to do our paid traffic.
It was just, it was like a light bulb went off in my head. Like, why did I ever try to do all this myself? But finding that person's hard because it, especially today, because in 2007, entrepreneurship wasn't as hot as it is now. And people weren't as willing to take as much risk as they are now. So there's that balancing act of if you're going to find that person now, you're going to need to pay them very, very well.
You can't ask them to bootstrap with you as you're growing this thing, you're going to have to give them all the money, even if it means you're taking less. Uh, to grow the business because what's stopping them from going out and doing it themselves? It’s not that hard anymore.
Jason: [00:21:13] As an agency owner, it's hard to know when you have to make those big decisions. And I remember needing advice for thinking like hiring or firing or reinvesting. And when can I take distributions without hurting the agency? You know, we're excellent marketers, but when it comes to agency finances like bookkeeping, forecasting, or really organizing our financial data, most of us are really kind of a little lost.
And that's why my friend Nate created Agency Dad specifically to solve these exact problems. You know, at Agency Aad, they help agency owners handle the financial part of their agency so they can focus on what they're really good at. Nate has spent years learning the ins and outs of agency business. He understands everything from how to structure your books, to improving the billing process and really managing your financial efficiencies.
Agency Dad will show you how to use your financial data to make the key decisions from making your agency more successful and, most importantly, more profitable. If you want to know how your agency finances stack up to the rest of the industry Agency Dad can tell you how to do that. A lot of my listeners have already gotten their free audit from agency dad.
And if you haven't yet go to agencydad.money/freeaudit before August 30th and get your free financial metrics audit. Also, just for smart agency listeners, find out how to get your first month of bookkeeping or dashboarding and consulting for free. It's time to clean up your agency finances and listen to dad. Go to agencydad.money/freeaudit.
I love that you said pay them what they're worth. Because there's a lot of people that I see. That are like, well, just we'll give you equity. I'm like, no, like you believe in this, right? Do it all yourself. But like you were saying, it's very easy for other people to do it. So walk me through, like, we don't know who they were.
So can you walk us through, what were you paying the office manager? What did you pay the GM or like, what would you pay right now? I guess let's do that since we're in 21.
Roger: [00:23:26] So right now, I'm in Ohio and our agency's based in Pennsylvania, not in a big city, so we do have a little bit of luxury there. You're not going to get quality under 52 a year.
And this isn't even people working remote.
Jason: [00:23:40] For an Office Manager.
Roger: [00:23:41] Oh, well, when we talk about people now?
Jason: [00:23:44] Well, let's talk about the office manager, the GM and the marketer, the three roles, and then you can go into the other roles too.
Roger: [00:23:51] So right now we pay our office manager probably makes around probably in the 46 to 48 range.
We do and, it's interesting, I'm trying to not get sidetracked. We've got three service businesses here. We have two 20,000 square foot buildings here and play 65 people. So it's a little different, that's not agency work. On the agency side, I don't even know what they pay anyone yet, which is interesting if I think about it.
Jason: [00:24:18] Well, go back to like when you hired those three people.
Roger: [00:24:21] Those three people all started at 52.
Jason: [00:24:24] 52, wow. Even the GM.
Roger: [00:24:25] That was in 2007. Yep.
Jason: [00:24:28] Wow. Of you had to do that now.
Roger: [00:24:30] I’d probably be 80ish.
Jason: [00:24:32] Good. I'm just trying to give someone a context.
Roger: [00:24:34] Yeah. There's a part to that too, that no one stayed at 52. Within a year you were dramatically different. In fact, at 90 days, things started changing, uh, especially for the marketer who was handling all the client business. You figure if she was managing millions of dollars a year in revenue, I think she was getting dropped like 10 K every quarter, as long as our numbers were going up. And I'm sure she's a six-figure earner now having been there so long.
Jason: [00:24:59] Yeah. And that's the crucial thing is, is like pay them a fair salary. That's what we always did. Fair salary and then do bonuses on performance quarterly. And you know, you'll get them above, you know, rather than pay someone, you know, some people come in for a GM and be like, I want 200K I'm like, sure. You know, crap in one hand and wish on the other. See which one fills that first.
Roger: [00:25:24] You know what’s interesting about this? My first mentor was a gentleman named Patrick Morsillo, he was a really old-school Italian guy. He's about 80 now. He owned the Greater Cleveland Auto Auction, which was the first real job that I had after the military.
And he kind of trained me on business. If it wasn't for him, I'd probably always have the employee mindset coming from where I came from, but he told me he's like the salary that you pay someone is what keeps them at their desk. And he's like the money that you pay them after that is what you pay them to help you earn more.
And he's like, not everybody wants more. Some people will take their salary and they'll sit at a desk and they'll plug, plug, plug, but there's a few of them in there that will bust their ass to make you money and you'll compensate them in return. I mean, and I've had that mentality. I mean, that was 2001 when I first started working for him, I was 23 years old and that never… they have something about cows going down and having sex in the field. Those two sayings have always stuck with me.
Jason: [00:26:16] You just keep looking at the cows behind me.
Roger: [00:26:20] I know, I can’t. But it really was. You'd have this thing about patience and cows having sex, but it was a whole ordeal.
Jason: [00:26:25] I kind of want to go there. I kind of want to go there, but I won't because it was such a good, like, I loved the saying that, that he said about like, people stay there because of what you pay them, but they'll make you money for what you pay them above that. That's brilliant. I love that.
Let's talk about. Was there a framework that you guys used at the agency in order to get people success? Because a lot of times I talked to some agencies that they're just kind of winging it and they really don't have a framework for specifically for rankings. Can you talk a little bit about that?
Roger: [00:26:59] Yeah, it comes down to a deliverable. So what we had then, the compelling offer with a guaranteed deliverable. So we did non-profit fundraising. So I could walk into a Goodwill and I could say, hey, I want to help you raise money by doing car donations online.
Here's the deal, you're never going to pay me a penny. I'm going to invest all of my own money in advertising. If it works, we're going to split the profit 50, 50 after expenses. If it doesn't work, you just wash your hands of us and I walk away and never problem. The offer dictated the implementation strategy. Over time, we had a campaign for Goodwill, we had a campaign for Red Cross, we had a campaign for Salvation Army.
They were different enough to be representative of the brand, the markets and the style of marketing that they were willing to do. But every Goodwill I walked into and there was 140 Goodwills at the time and we were working with 52 of them. So we were almost at 50% of Goodwills in the US were working with us.
We made that offer and then it was a dependable, predictable model. We knew you set up a landing page, you launch a separate website. You set up a landing page on our site, you set up a separate website, you set up a landing page on their website. You rank all three of them, the top of Google, so that no matter where they donate, it's coming through us.
And then you later on paid traffic for broad keyword terms. And it's the same keywords every time, just in a different market. And then you adjust your bids relative to the competition in that market. And that was it. I mean, there's intricacies of how you got them to rank, but we're going back to 2008. If you sneezed your websites ranked, it's a little bit more complicated today.
Jason: [00:28:30] Yeah, it was so frustrating back then.
Roger: [00:28:33] I know. Well, I had eight websites on the first page of Google ranking for Goodwill car donation. You could not donate a car in the United States without it coming through us. And three of them are still on the first page today. I mean, that's, that's all you had to do to win. I mean, that was, that was, uh, that was a seven figure ranking campaign right there.
Jason: [00:28:52] I like that you had the success. What are some of the gotchas that you've learned with that? Because. I love that strategy. That's very easy for them to commit and especially of how you phrased it too, which I elegantly picked up on.
I was like, well, we'll split the profits after our expenses. So probably it was maybe they were getting 30%, but they're 30% is better than zero, which was really good. So walk us through some of the gotchas there.
Roger: [00:29:21] So some of the, the, some of the gotchas there is at a macro level, the only way that an SOP or a campaign strategy works is if you have a defined outcome, like you can't go into SEO with the idea that your job is to rank websites, you've already failed.
If you even started that. In fact, internally in our organization, we kind of, we don't use the term SEO. We use organic revenue optimization. Our job is to deliver revenue to our customers. So any task has to be correlated to a data point that leads to revenue. And if somebody starts talking off tangent about this thing, okay, how does this get me to revenue? Nine times out of 10, that will bring them back.
And honestly, they'll realize you went, I don't even need to be worrying about this because it's not revenue-related. It's just busy work. In so much of what I see SEO professionals doing is busy work.
They read something in a Facebook group. They want to go try it to see if it works, but they don't sit down and write down, okay. How is this going to get me from where I am today to more revenue because the client's being need for revenue. Very rarely does a client pay for rank. And I say rarely because there are some doctors and lawyers that will actually pay for it because their ego says they just need to outrank the guy down the street.
They don't care about money. They're few and far between, but they do exist.
Jason: [00:30:31] And there are bad clients.
Roger: [00:30:32] They are bad clients. They stick with you until they get there. Then they fire you and then they yell and scream at you six months later when they're not there anymore. So you know that there are short ride, six-month to 12-month client, which isn't what you should be going after.
Anyways, if you have a dependable, predictable model that leads to revenue, your scaling capabilities completely open up. If you're chasing a different result for each client on a different traffic strategy on a different type of offer, you will continue to be stressed out. You will never scale, no matter how much you try to put SOPs and people in place.
It's that, that single, dependable, predictable deliverable that makes business scalable and repeatable.
Jason: [00:31:09] I love that you focused on the revenue. Because a lot of times an SEO agency will be like, we'll get you on the first page. We'll get your ranked. But you're doing things after that to control that.
Because a lot of times, even with a pay-per-click agency, right, will be like, let's use dentists. They're a great example of a very hard client to work with. Right. We send a ton of leads to them, but their, their dumb staff never answers the phone. They never get back and they’re like the leads are shit.
Right. But you're kind of taking that out of going, like, we'll take it to here by picking the right market too. Right? Like it's very important. That's important. You pick a really bad market you have to be resourceful and figure it out. Like, I'm sure someone's going to figure it out. And I have some clients that really rock the dentist world, but they are a little bit more challenging, but I like how you did the solution.
Roger: [00:32:06] The big thing that we needed to do in the nonprofit space that we're repeating now in the space that we're attacking right now is that we started answering the phones warm. So we set up a call center and answered the phones, got all of the information and went right into their scheduling system and put people in.
It's not that hard to do. It's not that expensive to do. It can actually just be a couple hundred dollars a month. And if you've got multiple clients in the same space, that's nothing relative to the overall value that it creates. And it completely eliminated, like I remember one of my first clients when I moved back to the Ohio area after selling my agency, because I wasn't allowed to work in the nonprofit space for a certain number of years was a dentist.
And to me, it was, it was a breeze. He went from said he was getting five phone calls, of course, no tracking in place. So like one week I generated like 76 phone calls, you know how many he answered? Three. So I drove to his office an hour away and I went in and I talked to his secretary or assistant, and I realized she wasn't there to answer the phones.
And I was like, you know what? We should probably just stop spending your money cause we both wasting our time. But now we see like we're, we're scaling really large in the septic industry right now because we have the largest residential septic company in the state of Ohio.
Jason: [00:33:14] Is it a shitty client?
Roger: [00:33:16] It is. I get crappy jokes like that all the time.
Jason: [00:33:19] Oh, I had to like, literally everybody listening was like, when is Jason going to say shit?
Roger: [00:33:25] And the first key was setting up a call center. We quadrupled the number of conversions by adding in the phone calls. That means we didn't change anything with the marketing. But four times more end result just by setting up a call center and we use answerconnect.com.
They're great. They're inexpensive sort of, we're kind of at that point now where we're asking ourselves that we want to have our own people doing this, but 24 hours a day, seven days a week you can get a live voice. If you call for services through any of our websites or partners, and in most cases we can direct schedule, not all of them, we're working on that.
Jason: [00:34:00] I can only, I can imagine the call center would be like, you got shit? We'll help you with your shit.
Roger: [00:34:06] I should throw that up on our tagline. We just, we just bought septictank.com. So we're going really heavy into growing this business.
Jason: [00:34:15] The tagline should be like “we help you with your shit.” Sorry.
Roger: [00:34:22] I don't know if that'll fly with like the Facebook mods or anything like that.
Jason: [00:34:26] I know, I kknow. I just, hey, I got.
Roger: [00:34:27] And when the team did their brainstorming under taglines for septictank.com. Don't worry, a lot of those came out.
Jason: [00:34:33] Oh, I'm sure like how it would be such a fun project to be on.
Roger: [00:34:36] Our engineers call themselves poop inspectors, so.
Jason: [00:34:38] Oh, that's brilliant. Oh, that's awesome. That should be the title of the podcast. Let's talk about your book that's coming out or it's already out now, so, yup. “Local SEO secrets” Tell us a little bit about it.
Roger: [00:34:53] So we've been putting out content for a long time and I'm pretty vocal in a lot of the Facebook groups that I'm in.
We decided to take our top blog posts and put them together into a book and then reformat on them around a specific goal. And then I reached out to a couple people that I knew in the space that might be better at things like we got one guy to come in and talk about GMBs. Another one to call in and talk about the Google My Business, or Google Guarantee Program. One on e-commerce landing, page optimization, and one on PR for SEO.
And we put them all together and just kind of packaged it so that we could give our customers a premier on SEO. So if you read this book, you're probably not going to be ready to do enterprise SEO, but you're going to be able to have a conversation with us about the different tactics that we're doing.
Uh, it's the same thing. I published a book called “Data-Driven Marketing” in 2017 and it was written for the Microsoft partners that we were working with. It was like, hey, last year we generated $56 million in sales leads for Microsoft partners. Here's how we did it. Do you want to do it? Here's the book.
It sold 10,000 copies on its own, but it was never really designed to be like a revenue stream from sales. It's, hey, I want to educate my clients cause educated customers actually stay around longer. I always hear agency people say I don't want to make them too smart because they might fire me. And you know what that happens from time to time, we had a customer paying us a quarter-million dollars a year for four years.
And they're finally like, you know what? Roger, we got this. We'll come to you for one-off consulting. And I was like, okay, that's awesome. I just trained a multi-billion dollar company and how to do their own SEO. It took four years. They made me a million dollars, but. They moved on and that'll happen.
Jason: [00:36:28] Yeah. Everything transitions. It's, it's kind of like when I work with people, like even yourself, like you bake it in, you, you help them out. And then they transitioned, they graduate and they get to the next level, they sell. You know, it's just, it all happens. And, and everybody should celebrate that. Not like I always hate when I hear, well, I don't want to teach them everything I know.
I'm like, then what are they paying you for? Like, what are you even helping them for? Like, why are you throttling it? Like literally, it as much pressure as they can take, give it to them. And then they'll be your biggest advocates when they have a success, because that's why we're doing it. Right?
Roger: [00:37:07] The head of marketing at that healthcare organization, it actually worked with me at a different company before that and brought me in because he's like, I like the way that you teach what you're doing, you don't just do it. And you know what. He left there and went to another company and guess what they hired me to.
And another person from that health care company texted me over the weekend. He's was like, hey, I'm at a new organization. These are the problems I have. Can you come in and help consult? You actually get more business by training your customers to fire you. Then you do less.
Jason: [00:37:34] Exactly. Give us one really killer thing in the book. And then we'll tell everybody where they can get the book.
Roger: [00:37:40] Perfect. If there's one killer thing from the overall strategy in here, it's like flip it upside down. Don't try to read it upside down, you'll get a headache. But SEO, isn't about ranking websites. It's about generating revenue. So the one strategy that I tell everyone before you even start SEO is implement call tracking.
Now, again, this is local SEO. So we're usually talking about a conversion path that is calls. I probably wouldn’t work with the pizza shop. I can't track the revenue that comes in from that. Implement call tracking and figure out where you are before you do anything else. It only takes 30 days.
If your customer is telling you, they're getting 50 phone calls a week, you implement call tracking. They're probably getting five and you're going to have a real benchmark set now you're also going to listen to do they answer their calls. If they get a hundred calls and answer five, you've got to fix that.
There's so many things you have to fix in order to make SEO successful. And we charge, we charge maybe 1500 or $2,500 a month for our additional audit roadmap and data capture.
But after that, you will know for certain, if you can help that person and what agencies chase money. Most of them do and it's why their lives are so stressful and so miserable. Because they'll take money from anyone. Be willing to say no. If the data doesn't tell you, you can make them successful.
Uh, Travis Saga has a great thing. He's like you only take on someone if he's willing, and this goes back to poop, to give them a bucket of poop that they can dump on his head if he, if he doesn't make them successful. And knowing that he only works with a certain number of people and the ones that work with him and brag about working with them.
But pretend there's a bucket of poop sitting next to you. Don't take that customer on if they're going to dump that bucket on your head.
Jason: [00:39:15] I love it. I love that there's so many different things to break down, but I love how you were like, just do one thing to see if they're going to beat an amazing client and do that in early on, rather than invest all your time and you getting paid a great deal from them.
And then you're like, this is miserable. You're gonna lose your team. Right that you're going to get bad clients and it's just a constant rollercoaster ride. But if you do it and you reset it and you think, how can I make sure? And even going to the prospect, I want to make sure you're good for us. You know, it goes back to an interview I did with Seth Godin, where he was like, look, there's this one agency that only want, doesn't want to hire over 50 people.
And if they only have 50 people, there's only so many clients they can take on and they tell the clients, if you ever do anything, if you dump a pile of poop on us, we're firing you. Talking about shit the whole episode.
Roger: [00:40:11] Going back to poop.
Jason: [00:40:13] You like how I came back to the poop. That's what I did. That's what I do. Where can the audience go check out the book?
Roger: [00:40:17] I mean, I'll give you a link. They can go to rcbryan.com/localseobook. And I'll just leave it up for a limited amount of time, but they can actually get the digital copy for free. So we took the whole book. We turned it into like a course format on teachable.
And what's nice is we're actually there's conversations going on in there. There's been tweaks. There's been additions. Some chapters have been dropped to the bottom because people didn't find them useful. Some chapters have been moved up, we've redone some of the intro stuff, things that you can't do once you have a hard copy, but there's a great community building around it of SEO professionals and amateurs, just learning and trading, uh, skill sets and, uh, swapping ideas in order to create the best strategies for people.
Jason: [00:40:56] Awesome. Well, this has been amazing. Everybody go to that URL, go to it now and go check it out. And, uh, is there anything Roger, I didn't ask you that you think would benefit the audience?
Roger: [00:41:09] No, but I think we did 3 million, no, 300 billion cubic feet of poop last year. You forgot to ask me about that.
Jason: [00:41:19] All right. Well, if, if all you listening, if you enjoyed this episode and you want to stay away from getting the bag of poop thrown on you, you need to be surrounded by amazing agency owners. And we're only looking for five agency owners that are over 500,000 and under 20 million. If, if that is you and you guys want to add multiple millions on, we want to invite you to go check out the Agency Mastermind.
This is where we share the strategies that people are crushing it on and you'll be able to see the bags of poop that you can throw away. So make sure you go to, you guys can tell it's not a script cause I'm putting poop in there. But make sure you guys go to digitalagencyelite.com and request the invite, put in your application.
And if I feel that we can help you out and you'll be amazing for the mastermind, we'll invite you to come on and uh, so you can stay away from the shit. All right, until next time have a Swenk day.
Direct download: How_One_Agency_Hit_3_Million_By_Firing_the_Entire_Team.mp3
Category:general -- posted at: 5:00am EST
Sun, 13 June 2021
Michael Begg began as an Amazon seller and quickly saw an opportunity in e-commerce marketing. He figured how to successfully sell products online. That led to the idea of creating their own agency, AMZ Advisers, full-service, e-commerce, and digital marketing consultancy partnering with brands to evaluate and develop their e-commerce strategy. Today he joins us to talk about how he started scaling his agency, how he used third-party platforms to get his first clients, and how he stays on top of his niche. He also shares tips on how has had great success near shoring his team.
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.
How Near Shoring Your Agency Team Helps Scale
Jason: [00:00:00] I have a great guest today and we talk about how he's grown his Amazon agency. And really he moved down to Mexico, created a team down there, and is really scaling it very fast. Really interesting episode. I hope you enjoy it.
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All right, welcome to the show. How are you doing?
Michael: [00:01:42] I'm good, Jason. Thank you for having me here.
Jason: [00:01:44] Yeah, I'm excited to have you on, so tell us who you are and what do you do?
Michael: [00:01:48] Sure. My name is Mike Begg. I'm one of the co-founders of AMZ Advisers and we're an agency that specializes in the Amazon marketplaces. We help brands increase their sales, manage their advertising, and just maximize their visibility on the Amazon platform.
Jason: [00:02:04] That's awesome. So how did you get started? And then tell me kind of the origin story about how did you transition to Amazon.
Michael: [00:02:11] Yeah, so we actually started as, uh, myself and my two partners, we actually all started as Amazon sellers ourselves. Before that, I was actually working in retail. I was working at Sears in retail real estate development.
And this was in like 2014, 2015. So it was a very interesting time for the business because a lot of things were, you know, the stores were really struggling, trying to figure out ways to make money. And at the same time, we kind of saw what was happening in e-commerce and saw an opportunity there. So originally we just started selling products for ourselves to make some money on the side.
And we found out we were really good at doing that. And we realized that a lot of other companies, a lot of big brands, were really bad at it. So that kind of led to the idea of creating the agency, AMZ Advisers, and yeah, from there, we just went out and got our first clients. And it's been six years now and we just keep going forward.
Jason: [00:03:03] So that's great. And so walk us through kind of, how did you start getting your first clients? Did you just go, hey, I see your position in Amazon. It sucks. Like, do you want our help or what?
Michael: [00:03:15] Yeah. So the original way we started getting clients was, well, two different things. The first, I guess, sales meeting that we went on, uh, was with a distributor in Long Island. I'm originally from Connecticut.
And I think we saw his, uh, job post on like Indeed for like an Amazon expert. And we just like reached out to him and we were like, look, you're not going to be able to hire anyone for this position. Uh, and then we kinda got the first meeting that way. But beyond that, platforms like Upwork, FreeUp, ODesk used to be, I think was part of, it was a part of Upwork, now freelancer.com.
All of those, uh, we just started putting our profiles and our company on there and started taking jobs, even if they were low costs. Just to, to start moving up the ranks. And yeah, that's really how we started building and getting those initial clients.
Jason: [00:04:04] You know, we had a mastermind member talk about how he generated like over a hundred thousand in monthly recurring revenue from Upwork. And I was like, there's no way, because I just always looked at it as like a platform like Fiverr, like find cheap labor. He's like, no, no, no. And he walked us through a strategy. I'm like, wow, that is really pretty clever. I was like, if that existed, I was like, I would have done that. Like, that was great.
Michael: [00:04:29] Yeah, no, it was awesome. I mean, for growing a business, it was perfect to get started because we didn't really understand exactly what companies we were going after or what companies really needed this service. So it was kind of a way for us to learn and figure things out. And yeah, I mean that, it just kind of developed into building out a real sales and marketing strategy from there.
Jason: [00:04:49] Yeah. Let's talk about a little bit about how have you been able to start scaling, you know, the agency, you know, I look at, you know, the first part. It's just really getting started, you know, going after the clients, knowing where you're going, getting that, you know, that direction. So as you're in that building phase, and then you get to that systems phase. So talk about a little bit about how have you guys been able to scale.
Michael: [00:05:13] Yeah, I think you bring up a really good point there. And in that initial phase where you're kind of just getting those clients, it's really important to play to your strengths and what you're good at, what you're not good at. So the great thing about having partners in the agency business is that, you know, we each compliment each other.
So like, I'm very good at marketing and advertising. I have a partner who was very good at sales. I have another partner that's very good at project management. So between all of that, that really helped us execute initially to get to the point where we could start figuring out the processes to go forward.
So that's always important, I think when you're in that initial phase, and then when we're looking at that next level of building the processes, it's okay. Which way do we approach it. What are our high-value tasks? What are our low-value tasks? And can we start by getting rid of some of these low-value tasks to other people?
So the way we started with that, at least from my perspective on the marketing side was, you know, blog writing. I started outsourcing blog writing instead of doing it myself, content marketing, coordination. So doing the outreach to other people, you know, I started outsourcing that to a VA. SEO link-building like started outsourcing that to a VA.
So it started with those low-value tasks that really allowed me to focus on the higher value items. And then from there it's more of right now, how do I train someone to take over some of this higher value stuff? Because I mean, I think a VA is great for that low-value stuff, but getting them to execute on the high value is definitely harder.
Jason: [00:06:43] Yeah. It's really challenging. So, you know, I like kind of the process that you went through of going like, hey, how do I get rid of a lot of the stuff? So what were some of, outside of just VA is like, let's talk about kind of the management level. What was kind of that first person like you guys are around 30 people now, so you got some structure in place.
And a lot of times people look at it going, man, I would never want 30 people. Because there are kind of that process of like five employees and they're already maxed out and then they think all 30 are going to report to you. Which is, obviously that's a mistake. Like that's a bad, that's a bad structure to have with 30 people. So talk a little bit about the structure that you guys put in place and then how has it evolved?
Michael: [00:07:26] Yeah, so I think originally the first people that we brought in that, you know, weren’t ourselves to help where, I guess I call them Amazon experts, the people that understood the platform and how to sell on it. And you know, that allowed us to start taking on more clients because now we can leverage their bandwidth to help with.
Then we got to a certain point where we realized, well, we need someone to kind of oversee a lot of what they're doing to make sure it's consistent between what each of them are doing because everyone has different levels of knowledge within Amazon. And I mean, just with anything, you know, some people that are more experienced are going to have more knowledge than others.
So we called them the Director of Account Management, uh, was the one that really helped oversee everything. That was our initial kind of manager position. And that handled the, the client-facing side of the business and it worked for a while. And then we figured out it didn't work. We had to kind of evolve a little bit more.
And then on the back end of the business, you know, we obviously have a lot going on with, you know, coordinating marketing. I have a marketing manager that handles all of that for me. Content creation, that's a big part of our business is, you know, graphic design, SEO, copywriting. And we brought in a project manager to really help oversee that process. We promoted a designer to really lead the design and make sure designs were consistent across everything.
And those are kind of the management positions we started, we started filling start helping us manage things better. Now that Director of Account Management role has kind of faded out to the point where now we have, you know, a real client success team and we have an advertising team.
So now the account managers are responsible for managing the relationship. The client success manager is making sure that that's responsible for working. And then we have the advertising team making sure that they're actually getting the results. So, there's definitely an evolution there and I'm sure there's a lot more, that's going to come, but from failing a lot, that's kind of where we got to where we are now.
Jason: [00:09:19] Awesome. And then, is there a framework that you've developed over the years for making sure that you deliver, you know, the value to your clients that are on Amazon? Because I always find with successful agencies, there's always kind of a methodology or a framework that they actually follow.
Michael: [00:09:39] Yeah, I agree with that. I think there kind of needs to be, we call it a playbook or, you know, just something that you can implement. That's going to get consistent results across clients. I mean, you need to be organized in a way, especially if you're going have people working for you. So yeah, we have implemented like, something like that.
I mean, we focus on, uh, an initial 90-day plan to get, make sure every client, we hit these things in the first 90 days from during that period, we're collecting a lot of data and that's going to help us formulate our strategy beyond there. But yeah, I think having an initial, uh, methodology to make sure that they're getting the right results in the beginning with all the setup and you know, all the fundamentals. And then from there seeing where the data is taking us and then implementing the strategy then.
Jason: [00:10:21] So let's dive a little bit more into kind of the 90-day plan. So let's say someone goes, hey, um, I want to, you know, be a big dog on Amazon. This is what I want. Right. And, uh, like walk me through that process. Like, are you selling them a 90-day plan or are you selling them something different?
Michael: [00:10:39] Yeah, we're selling them. I mean, we obviously want this to be a long-term partnership. We want it to last longer than 90 days, but in our opinion is that, and our view on it is that if you don't see the value within the first 90 days, then like what's the point of working with us.
So, you know, initially, we just got to make sure that everything is set up in the account correctly. A lot of times within Amazon, people are doing things incorrectly there, you know, it's just costing them money or making them look not as good as it could. Uh, from there, you know, doing content, making sure everything is optimized. From there, starting advertising and like, yeah, moving down the line, but starting like really with the basics and the fundamentals.
And then we think after, you know after we do those things within the first 90 days, you're already going to start seeing a pretty good return on the investment. And that's like what we call the window to show the value and beyond there it's just continuing to show value primarily through advertising and you know, other marketing strategies.
But yeah, that's kind of the way that we approach it. We don't sell them on the idea of a 90-day plan. It's, you know, we just have that internally.
Jason: [00:11:39] Yeah, I love that you do that the 90 days, you know, I had a guest on, uh, Joey Coleman who will link up in the, in the show notes. If you guys go there, as well as we had him speak at our Digital Agency Experience, and he talked about why the first one hundred days is so important when you're onboarding a client.
Like we all think of, hey, we got a new client. Yeah. Celebrate, ring the gong, ring the bell. That's it, but it's all about like retention, you know, like when I'm chatting with agency owners and we talk about, you know, alright great you're good at attracting. You're good at converting, but are you really good at streamlining the operations where, which, you know, part of that is retention and upsells to other things.
So it's yeah, you could be like, there's a lot of companies I know that will be nameless. I won't call out anybody that we're really good at sales and marketing, but they sucked at operations. And you have to kind of get all three of those together. This has all been great. Is there anything I didn't ask you that you think would benefit the audience?
Michael: [00:12:37] Yeah, I mean, I think there's something interesting when we're talking about, you know, running a business and an agency in general, and I think this last year has made it more relevant than ever. It's just the ability for remote work and that's something that we really leveraged within our business. I mean, you know, virtual assistants are pretty common, but, uh, I actually moved, left the country.
I live in Mexico now and, you know, what's helped us build our agency is by building a team down here. So, you know, now I'm leveraging not only the cost savings but the ability to scale faster by hiring more people. And, you know, I'm hiring. Like I talked, like I talked about the range of low value, high value, again, you know, the great opportunity is now that I'm here with them and I can train them on the high-value tasks.
So, having the ability to hire a team like that, international, that's not virtual assistants that are on the other side of the world is definitely been very important for us. It's really allowed us to improve the product quality as well, because I think a lot of agencies generally go that independent contractor route where you definitely don't have as much control versus actually having an employee.
Jason: [00:13:39] And let's talk about this a little bit, because we actually bought a company on our agency in Costa Rica that did the very easy development work. You know, it was only one time zone away. We were on the east coast at the time and in Atlanta and they were, you know, on central time. So it was really easy, but we always had a struggle with giving them more qualified or thinking tasks.
And you just mentioned like you live in Mexico, which is great. I'm sure the weather's a lot better from Connecticut. I grew up in Long Island, so I know how bad the weather gets up there. So Mexico is like, yes. So if someone was hearing this and going, man, I'd love to get a lower-cost labor, but really good. Does it require them having to move there or what have you found is the musts?
Michael: [00:14:31] I don't think it requires them having to move there. But I think a lot of times, and this is a big challenge where I think a lot of agencies struggle and I know we struggled with it, is transitioning from I'm hiring someone where I think I know what they're doing to transitioning to I'm hiring someone that I need to train to do what I want.
And, you know, that can, all it can be done virtually. I mean, a lot of companies succeed like that one example, you know, we, I have another company down here that's a US-based company. And what they do is they have literally a live camera in the office. So it's like in a TV screen. So it's just like, two-way communication live.
If someone has a question, they answer it there. It's almost like being in the physical office. So I think there's a lot of ways to tackle that problem. But if you don't, aren't in that position to really train them, if you don't have, I always say documentation, good SLPs build on how to do things, it's going to be that much harder for them.
And I think that's really where a lot of people will probably fail with that. You know, for us being here in the office was great initially, because, you know, we were able to hire people. I mean, when it comes to thinking of people that can think critically. Yeah, we've hired some engineers. We've hired MBAs, uh, people that have really helped us scale in that sense because they have more business experience.
But yeah, if we weren't there supporting them, we weren't training them. Like we were, we probably would've just set them up for failure. And then, you know, we wouldn't have seen the return on it. So, and now, again, being remote with COVID, I'm the only one in my office, out of all my employees. So it's definitely still possible to do it.
You know, we, we've trained over the past year. We've trained another five people completely remotely up to the point where they're able to, you know, take clients. Uh, handle everything, you know, understand all the strategies. So it's doable, but obviously, that training piece is the key to it.
Jason: [00:16:17] like what you said about the TV and the two-way. I just keep picturing the Wizard of Oz. Right? Like the guy, you know, the guy always watches me. Like, I'm watching you, like, you got a question? You're not working? That's pretty funny. That's when you mentioned that, I was like, oh my gosh.
Michael: [00:16:35] It's definitely like strange in a sense that it's kind of like big brother watching you, but at the same time, it actually, I think it's really an interesting idea if you're collaborating between your team and a different country.
So like for example, a good example of this is let's say you're the marketing head. You're the CMO. And you hire everyone down here. So you have your entire marketing team here, but you're based in the US so you hire a CMO to have a team down here. That's a great way to collaborate. I mean, yeah, I kind of, it still has that big brother vibe to it, but now you can literally direct them in the office and be like, all right, just have this call. This is what I figured out. This is what we need to do.
Whatever it is in real-time, instead of dealing with time zone differences, you know, outsourcing stuff to Asia. I mean, you already know from Costa Rica, but yeah. Central time zone for us is huge too.
Jason: [00:17:24] And let's talk about the people and then we'll wrap it up. Are you bringing on people that already have the experience or are you training them from the ground up?
Michael: [00:17:36] It's very tough to find people that have Amazon experience. Luckily we have a mix of some that do some that don't, we've found some employees that are Amazon sellers themselves down here that sell primarily on Amazon Mexico, that we've been training to, uh, you know, do better.
I mean, they understand how the platform works, but they're not massively successful on it. And that's kind of what we've been able to. That's a, that's a much shorter training timeline than it is for other people. We've also hired engineers. Uh, engineers have been very good mainly because their, their problem solving, you know, if there's an issue, they can kind of figure it out when it comes to learning how the platform works. That's something that's very interesting to them.
And we've also hired, uh, people with digital marketing experience, even though if it's not, even though it might not be related to Amazon specifically. So, uh, we've hired a couple of employees that had backgrounds in, uh, SEM, uh, other paid ad types, social media, uh, and they've been able to understand the advertising concepts very well and pick that up very quickly.
So yeah, I mean, it's very hard to find exactly what we're looking for in our niche, because Amazon is fairly new and there's not a lot of talent out there. And the people that do know what they're doing usually are creating their own agencies or. Or doing consulting themselves. So yeah, that training piece is just massive.
Jason: [00:18:51] And then I guess I lied. I have one more question, especially with, you know, something rather new or, or just staying on top of your game. Like, I feel a lot of agencies, you know, they knew how to do something cool. They got into this by accident, but they're not able to stay on the top of their game and, and, and get it to a point where they can actually train others.
So, what are some things that you guys have done to stay on top of your game that enables you to train someone that has no knowledge in it? Because I feel that if all the agencies could really understand that and then do that, their work would be so much better.
Michael: [00:19:29] Yeah. It's definitely a tough one because once you take a step back from the actual implementation and doing things yourselves, you know, things are constantly changing, whatever, whether you're using Google, whether you're using Amazon or Facebook, whatever platform you are on, if you're not constantly doing it, I think that's going to definitely have a negative effect on your ability to train other people, or you need someone that is doing it to have that knowledge to train other people.
So. The way that we've kind of, I guess, avoided that problem is that, you know, and we're still selling products ourselves. So we have an entire separate business that, uh, is selling our own brands online on the Amazon platform and on other platforms. So we're constantly testing and trying new things within that account first to see how it works.
And then, you know, we're, we're the Guinea pig and then we're implementing it to all of our clients. So. I think that's one really good way that we're kind of staying on top of what's happening on the platform. I mean, it's definitely getting more and more competitive, but by continuing to do it ourselves we're making sure that we're not falling behind.
Jason: [00:20:29] I love it. I see that all the time. And I love using the agency as kind of an incubator or having other, or other companies as an incubator to test out and to really kind of, because a lot of times clients don't want you to test out stuff, but some do like if you go after the right ones, they do. But I like that.
So awesome. This has all been great. What's a, what's an agency website that people can go and check you guys out.
Michael: [00:20:53] Yeah, sure. So, uh, the best place to check us out is our website, amzadvisors.com. If you or any of your clients are looking for help where we're always going to help, or if you just want to email me directly, you can get me at my email firstname.lastname@example.org.
Jason: [00:21:08] Awesome. Well, thanks so much for coming on. And if you guys enjoyed this episode and you want to be surrounded by other amazing agency owners that can see the things that you might not be able to see and really work on attracting the ideal clients, work on converting them at a high rate and also work on streamlining your operations, where.
You're constantly building that talent where not everything has to flow through you, which is pretty frustrating. I would like to invite all of you to go check out the digital agency elite. This is only for experienced agency owners that want to grow and scale fast. I mean like double in the next year, go there, go to digitalagencyelite.com.
And until next time have a Swenk day.
Direct download: How_to_Scale_Your_Digital_Agency_By_Near_Shoring_Your_Team.mp3
Category:general -- posted at: 7:00am EST
Wed, 9 June 2021
With around three decades of experience running professional services firms, Don Scales understands first-hand how to make them successful. He is currently the Global CEO of Investis Digital, a global digital communications company that helps world-class businesses manage their corporate brands. Today this industry veteran joins us to talk about his experience in the business, the reasons behind failed mergers and acquisitions, and share some funny stories.
3 Golden Nuggets
Sponsors and Resources
Agency Dad: Today's episode is sponsored by Agency Dad. Agency Dad is an accounting solution focused on helping marketing agencies make better decisions based on their financials. Check out agencydad.money/freeaudit/ to get a phone call with Nate to assess your agency's financial needs and how he can help you.
Avoid a Failed Merger by Staying True to Your Agency's Values
Jason: [00:00:00] What's up, agency owners, Jason Swenk here, and I'm excited to have an amazing guest. Now, this guest has been in the agency world for a very long time. He started when he was one and he's grown several agencies and the current agency that he's, a global CEO has over 500 employees. They're approaching $90 million in revenue and they've done over 40 acquisitions over the, his lifetime.
And I'm really excited to get into it. So let's jump into the episode.
Hey, Don. Welcome to the show.
Don: [00:00:39] Hey, good to see you. Glad to be here.
Jason: [00:00:42] Awesome. Well, I'm excited to chat with you and learn from you because you've been in it for a long time and you have a lot of experience. So for the ones that have not heard of you yet, tell us who you are and what do you do?
Don: [00:00:54] My name's Don Scales. I am the global CEO of a company called Investis Digital, which is a UK-based company. It’s private equity-owned by Investcorp. Uh, we just recently exited from, uh, a six-year relationship with the company called ECI out of London. Uh, so we're very excited about our Invest Corp relation.
Then prior to that, I was CEO of a company, I'm sure you heard of, called iCrossing, iCrossing, we managed to take that to, um, some $140 million, exited several years back. So I was there for a good eight years, nine years. And then prior to that, I was CEO of a company called Agency.com, which is a pioneer in the web development space. And it's one of the, if you will, one of the founding companies of web development.
So that takes me back all the way to 1999 in the digital age, that's kind of like dog years. So I've been around a long time.
Jason: [00:02:00] I started our agency in 99 and yeah, I used to love those days. It was kind of like no one knew what websites were, and I could literally go through the yellow pages and go, oh, you don't have a website here, so.
Don: [00:02:10] And in fact you'll, you'll get a kick out of this. Back in the day, people would send us RFPs and we, we'd send them an invoice for 50 grand just to read their RFP.
Jason: [00:02:25] I love it.
Don: [00:24:10] And that was good business.
Jason: [00:02:25] I love it Well, I think we're going to get along well, because I always looked at RFP as, um, you know, stands for a couple of things, Request for Punishment as one of them. Other ones, I probably won't name on this show right now. I don't know if I can talk to you that way. But, uh, let's jump into that because that's interesting.
Why would you send an invoice for 50 grand to respond to their RFP?
Don: [00:02:47] Because, like you said, you could go to the yellow pages. It was just such a demand, and we had very limited resources of people who could do those kinds of work. And so we had to make sure that, uh, every, every minute of every day was, uh, paid for in some way, shape or form. And so if the market would take it, and they did, and they'd pay, it would, we'll invoice.
Jason: [00:03:12] That's the biggest foot in the door I've ever seen. So I always believe in like, charging something as a slice off of your core offer, you know, in order to kind of see if they're serious and also kind of prove like the relationship back and forth, but you guys have the win right now of the highest foot in the door yet.
And, and you guys said you converted too. That's awesome.
Don: [00:03:34] Yeah, we did. And then, you know, then, then everything changed in 2000 and now it was like, it was. Just, the whole market would be evaporated on me.
Jason: [00:03:47] Well, that’s what helped us little guys back then when the market crashed, I was like, all these big guys going down, here's our opportunity. You know, let's get on what I call the strategy line, where everybody else is kind of cringing and kind of like they're on that roller coaster. And that's what allowed us to really grow.
Don: [00:04:05] You know, it was one of those times when there was so many bigger companies. Yeah. The biggest thing that hit people back down was when it got bigger, they all invested in real estate.
And then after that, you had all these fixed commitments and real estate, then the market just evaporates and they're stuck there with all that office space.
Jason: [00:04:23] So, what's the key…? You've seen so many agencies go from a certain size and just blow it up. And a lot of people listening, you know, they're in the million mark, they're trying to get to the eight-figure mark.
Some of the eight-figure guys are trying to get to the nine-figure and tens and so on. And you've gone through many, many levels. So what are some things that if you're right in the middle of like, let's say a $5 million agency, what do you need to do in order to really kind of, to accelerate your growth that you've seen.
Don: [00:05:00] Yeah. So I think there's an evolution. So when there, when you get to the $5 million mark, and then when you're a very small agency and you're a founder, the biggest thing you have to learn in order to get to the next level is you have to learn to delegate. And so if you can find the right people and if you have, if you continue to have to do it all yourself, then you'll never scale.
But if you can find the right people and you, and you're willing to delegate and you may make some mistakes and, uh, if you do, but you, you can still move on from those mistakes and you'll have a chance to delegate. And then beyond that, as you continue on, you have to bring in more discipline in your organization's structure.
They, you know, there's a lot of research that shows that most agencies sort of tap out either, one, right there where the owner has to start delegating, that's, that's one key point. And then there seems to be another flex point, right around 75 to a hundred employees.
For some reason, that’s when the organization becomes, uh, not as flat and it gets a little bit more widespread. And so you have different players involved. And that seems to be a place where organizations have hard times as well. Once you get past a hundred employees, I think you can scale up for, you know, you can do a pretty good job of getting scaled.
Cause you have the, if you manage to get the structure, you have the discipline and you have the management team in there and you've got a lot of the right parts.
Jason: [00:06:31] I always look at, in our agency mastermind, especially with the guys that are close to that, we're always talking about recruiting and really, how can we make our leaders better leaders. Like, that's our major focus rather than how do we make ourselves better. Right. Because we're literally kind of replacing ourselves.
So what have you seen working well, or what's worked for you in the past to make your leaders better? Like you brought them in at a certain level. How did you keep getting them up to the next?
Don: [00:07:04] First of all, you have to be willing to let them grow with you. So, like you have to give them something that maybe, that you know is not necessarily in their sweet spot, but it's, it's a growth opportunity and you have to be willing to let people might make a mistake if they're going to make a mistake.
If you're not the type who can deal with the issues of making a mistake or a client failure of some sort, then it's going to be difficult because then you have to take these people, dust them off, tell them what they did wrong, pat them on the rear end and send them off and go do it again.
Eventually, they start building up a real good experience, basically, they can do this stuff on their own. And that's how, that's how you build a team. And then once you build that team, you stay with it. Now, I’ve found that the best way to build a team and hang onto the team is, I'm a firm believer that as an executive you have to be very consistent in your leadership style.
And so if you go to work every day and one day, you're just, just a normal guy. And the next day you're ranting and raving and you want to shoot anybody that walks in the door, nobody's going to work for you. But if you're, if people can say I know, I know Don, he's always this way, you know, consistent and you're, and you're consistent in your thinking and you make decisions so that it's almost transparent to these people, how you're making your decisions.
Then they're going to learn how to make decisions very much akin to how you make decisions. And that's how you get a team that sort of has staying power.
Jason: [00:08:42] Yeah. I looked at it too of going, uh, someone shared with me many years ago, it's called the one, three, one method, or I think it's called that. But whenever your team would come to you and think about as you're building an agency, your team's always coming to you because, especially in the beginning, you're like the toll booth everything's flowing through you.
Whenever they would say, you know, hey, here's the challenge? What do you think we need to do? Like they would ask me and I'm like, no, no, no. What are three options that you think we need to do? And then what's your recommendation. If they do that enough, then they're just going to stop coming to you for these things and they'll start solving it.
And then they'll do that with their team. Because I looked at our whole goal was. My job is to coach and mentor my leadership team. And then they should, it should trickle down. I love that you said consistency too, because I was talking to an agency the other day. I'm like, man, you're all over the place. Like one day you're up here, another day you're a tyrant here and it's just.
Don: [00:09:46] As an employee, you come to work and you don't know who you don't know which boss is going to show up today. That's not the kind of place you'd probably want to work at for the long run.
Jason: [00:09:55] Yeah, exactly. Well, let's kind of switch focus a little bit and talk about why do you think, you’ve obviously you've gone through, you know, over 40 acquisitions. Why do you think a high percentage of mergers or acquisitions actually fail?
Don: [00:10:13] Uh, it's a great question. And it's probably on page one or two of my new book coming out. I believe if you look at the diligence process that people go through and you start looking at what people really examine when they look at potentially buying a company. What you find is that they don't spend a whole lot of time looking at the value set of these companies that they're looking to buy.
So you don't really have a good keen understanding of whether or not the value set of the people you're buying is in alignment with the value set that your company has.
So I talk about in my, in the book, this whole thing called value compatibility profile. And what kind of alignments you see in these values, and then when these companies fail and if you go read in the press, you're reading the literature, the first thing people say, well, you know the values weren't in alignment, the cultures were off.
Well, It shouldn't be a big surprise to anybody that, uh, these things failed. If you didn't spend enough time on the front end that if, when they do fail, these are the cause on the backend. So my belief is that we spend too much time on the hard stuff, like the financial stuff, and we don't spend enough time on the values, compatibility and the alignment of values, because that is going to dictate much of how these two companies come together.
Jason: [00:11:36] Yeah, I always tell everybody, and I did this when we were acquired. I wanted to sit in their office for a couple of days, like a fly on the wall. And I wanted to see, you know, are these people happy? Do they joke around? Like, I'm obviously not a corporate type. So if we were going to be acquired by someone, very corporate. It would've just been a complete, utter disaster.
Don: [00:11:59] Well, I had this good story I tell that back in the day, uh, when I was at iCrossing, there's this amazing agency, AKQA that, uh, and Tom Bedecarré who used, you know, it was a CEO there for years. And at one point GA, who own them, and then, we had gone with some other people that they had this idea that we were going to possibly merge the two and it would create this really powerhouse in the marketplace, a creative powerhouse, like AKQA, and then a performance media powerhouse like iCrossing, you could bring that together.
And I think it would have reshaped some of the agency business. Well, so they were talking about merging it. And the first thing you have to do is you have to look at it and say, well, you know, can people get along and the CEOs even get along. So, uh, you know, uh, Tom and I get together and the board calls us up and says, look, we want to know if you guys can make this work.
We want you guys to, uh, take a weekend and go to go to Sonoma County or Napa Valley for a weekend, have some wine, just sit around and talk. So that's what we did. We went up there and spent the entire weekend up there just to see if we even liked each other. I found out about his kids. He finds about my life.
At the end of the day, you know, I found out what was important to him. He got to know what was important to me and we, and we figured out a way to stay to the word. Now, but the deal fell apart for other reasons. But that part of I would I think would have worked its way through. And that's just because we put in the time upfront.
Jason: [00:13:32] Yeah. Yeah. I totally agree. Now, outside of values and matching the culture, what are the numbers like when you were acquiring agencies? What are the numbers that really matter to you to make sure or what's a good acquisition for you?
Don: [00:13:50] Well, experience has shown me that if… you're going to get what you paid for, right? And, and so like, if you, if you're looking to get something on the cheap, then chances are, you're going to get something cheap, right. You're going to be spending a lot of time fixing it. And so if you’re into reclamation projects, that's a whole different world.
If you really want to grow. You don't want to spend all your life fixing what you just bought. So I'm, you know, I'm a firm believer that you pay a fair price and you gotta be willing to walk away. So for me, it's understanding what, what the true… and, I'm not into, since we're talking about services businesses, it really has to be more EBITDA-based then it's going to be revenue-based as opposed to a lot of these technology businesses that we see, but, uh, so on that base, you know, I know what multiples are to be in play.
So, you know, if, if people are willing, then what you, what you really find, and you know this because you've seen it, as many times as I have is that most of these owners think they're the unicorn out there and they have, they want the one-off multiple that nobody's ever seen before, and that's just not going to happen.
So you have to get people to get, take a dose of reality, and come down to earth. And if they get real. Then you have the basis to starting at the discussion about getting something done.
Jason: [00:15:29] As an agency owner, it's hard to know when you have to make those big decisions. And I remember needing advice for thinking like hiring or firing or reinvesting. And when can I take distributions without hurting the agency? You know, we're excellent marketers, but when it comes to agency finances like bookkeeping, forecasting, or really organizing our financial data, most of us are really kind of a little lost.
And that's why my friend Nate created Agency Dad specifically to solve these exact problems. You know, at Agency Dad, they help agency owners handle the financial part of their agency so they can focus on what they're really good at. Nate has spent years learning the ins and outs of agency business. He understands everything from how to structure your books, to improving the billing process and really managing your financial efficiencies.
Agency Dad will show you how to use your financial data to make the key decisions, from making your agency more successful and most importantly, more profitable. If you want to know how your agency finances stack up to the rest of the industry Agency Dad can tell you how to do that. A lot of my listeners have already gotten their free audit from Agency Dad.
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Yeah, I'm glad you mentioned EBITDA because that's how we've always based it on. And I always used to love when people would say. Oh, we're a $10 million agency. We're a $20 million agency. And I'm like, well, what's the profit? And they're like, oh, we're like a 5% margin. I'm like, oh, that's horrible.
And I also agree with you too. A lot of times when we actually we at Republics, we started buying agencies. Like we don't buy anybody under a million and EBITDA. There's the same amount of work. A lot of people are like, especially when the pandemic happened, they're like, oh, we're going to grab up all these people that are struggling.
I'm like, I rather grab the people that are growing.
Don: [00:17:52] Yeah, you know, I'll tell you a really, a really funny story was, uh, when I was at Agency.com and I was sitting in there talking to John Wren, who’s the head of Omnicom, and he's bought more companies than anybody I know. And he's, uh, so he was telling me one day he said, uh.
He said: Scales, let me give you a piece of advice on how to deal with acquisitions. He says until a company gets over a million dollars in EBITDA, he says, you just fly over, fly over the top and you wave to the airplane. Don't ever go visit until get over a million dollars, then you'll stop.
Jason: [00:18:36] That's awesome. Oh, definitely so. Right, because I feel that businesses can hit a couple of million by accident, but to get to a million in EBITDA, it's a little bit more challenging.
Don: [00:18:47] and they can lose a couple million by accident too. They can go both ways by accident, too.
Jason: [00:18:55] Exactly. What are the multiples that you're seeing for, let's say, one to about 3 million in EBITDA.
Don: [00:19:01] Uh, you know, I wouldn't pay it from one to 3 million. I meant, like you said, some of that could be by accident. But I'd say probably it's, it's still single digits from me. Uh, you know, I'm not going to be paying at, I'd probably pay six to eight, maybe somewhere in there, but not much more. I can't see much more than that.
Jason: [00:19:23] Yeah. When does it really start jumping up to the double digits?
Don: [00:19:27] I think one, when you get a little bit of scale to it. So, you know, once you get to a point where there's not 50 other people that look just like you. So, I mean, if you get a, I can recall when we hit, uh, at iCrossing. And we actually merged with Proxycom and that got that, that took us over a hundred million dollars in revenue.
We were at, I forget, like 20 some odd percent on EBITDA. That put us into some rarefied air in the agency business. First of all, you don't see that many agencies go over a hundred million and then you don't see that many agencies making that kind of EBITDA. That got us, you know, we ended up making in the high teens.
And so it's really the scarcity factor that drives it. So if you are a three or $5 million agency, Then you better have a real unique proposition is going to be able to get something in the marketplace is going to be differentiable because there's, there's a lot of those out there.
Jason: [00:20:34] Yeah. Do you look at specialization as something that separates agencies rather than saying know the typical we're a full service “me-too” agency.
Don: [00:20:43] Well, there are two things that... One is, we're a full service and two is, yeah, we deserve it because we have such great people. We have unique people. Everybody says that. So when I hear that, I'm thinking they don’t even.
Jason: [00:20:58] Or what is it? The three Ps: Process, Portfolio, and People.
Don: [00:21:02] Okay. But so when you start hearing that, then you wonder what their strategy and what their story is.
But if they cannot in a minute, if they have that 32nd elevator speech cold, and they can tell you exactly who their market is and what they're trying to accomplish, then you pay attention.
Jason: [00:21:20] Yeah. So when you guys merged and you took. Your guys' revenue, you guys became a hundred million and 20 million in EBITDA, right? How long did you guys have to stay merged together before you exited?
Because I found, and what we're finding too is like, just putting all these companies together, you have to make it work for some time for a buyer to treat you seriously.
Don: [00:21:43] Yeah, I think what you, what you have is typically have, you know, right after something like that you're going to take at least a year to get all the kinks out.
So you're going to have turnover. You're going to have this, you're going to have that. You're going to lose some clients. You've got all these kinds of issues you have to work your way through. And then you've probably got after that, you've probably got another year of sort of demonstrating that you can manage it and run it right. So you're looking at, probably at least two years, uh, before you can really do something with something like that.
Jason: [00:22:16] Yeah. And let's talk about kind of margins. Because a lot of people, especially on, on the lower end, the people that you're flying over and waving to. I love that the flyover.
Don: [00:22:30] I love it. That is a great story, and he said it was such a straight face too.
Jason: [00:22:34] And he was a part of, uh, the CEO of Omnicom. Was that right?
Don: [00:22:38] Omnicom, Omnicom is, he's probably done… He's probably done past some acquisitions. I don't even know.
Jason: [00:22:47] That’s hilarious. I love it. So the people that were flying over a lot of times, you know, their margins are at 10, 15% and they're like, oh, that's good. Or even 20%. And I look at that going that's I feel that's below average. So what do you think average is for profit margins?
Don: [00:23:06] Yeah. Since I, I spent enough time and Omnicom I'll quote John Wren one more time I met John Wren used to say, if you really want to be an exceptional agency, then your overhead’s 20%, your direct cost is at 60% of your margins are 20. He said, then that's what, it's a very simple business, Don.
He said, you make 20% every year, he says, I'll never, you'll never hear from me. I'm happy and I will never bother you. So I mean, that’s kind of the way I looked at it, it was it's. Uh, and you have to, you have to take that, but there's so many CEOs that just don't have that kind of. That makeup to focus on that number and be focused on that 20% or better.
And now, you know, over the years, because we've gone more from services and now it's sort of this mix of technology and services. And now when 20 years ago, we didn't hear about recurring revenue and now there's all this talk about how much your business is recurring versus repeat versus, all of this.
It’s all the same, you know, now you have to be a little bit more focused and you do have the opportunity to get higher margins as a result of all this, but yeah, pure services business, you ought to be shooting for at least 20%.
Jason: [00:24:27] Yeah, I love it. And you kind of alluded a little bit to, you know, the reoccurring model, because when I did the first agency, about 85% was just project-based.
Like we would go into Lotus Cars and we'd go into Tochi and right. And just exactly, but we had a machine for our pipeline. Like it was predictable for us. Now going around it's kind of a little different. I actually kind of love reoccurring cause it's predictable, especially when we're buying someone. So what's your thoughts on that?
Don: [00:24:59] Right, and that's where you're gonna get margin. That's where you're going to get margin. So nobody's going to pay you for project-based businesses. Now, even if you have, like you said, even if you have a machine that can crank out new opportunities. Nobody's going to pay you because they, they can't look forward. They can't see it beyond a certain amount of time.
So what you're going to have, what your business is, no matter how… you could have five years of great project-based business results. But because they can't see more than three or four months in the future, they're not going to pay you the higher multiple, but as you get more recurring, and a word we call repeat, which is meaning that, you know, you're not necessarily going from contract to contract your own more or less 12 months kind of contracts.
They may be on auto-renewals, those kinds of things, where you're not having to go out and renegotiate something every three months. Uh, then you can start, people are, you know, then people respect your business a little bit more than they value visible more highly.
Jason: [00:26:00] Yeah. And you know what I've always seen, especially when we're going in and doing valuation of going well, you might get your valuation, but most of it's going to be tied into an earn-out because there's no predictability.
Don: [00:26:13] Yeah, exactly. No, that's exactly right. And then depends on what the, if you're a fan of or not, but.
Jason: [00:26:23] I was screwed by that one, I wish I read your book.
Don: [00:26:27] I've been screwed on both sides of that one.
Jason: [00:26:29] I know. I've been on both sides and, you know, especially what we're doing it now is like, we've always structured the earn-out now to make it fair. And we're like, we're not going to base it on time. We'll base it on when you hit this.
So like, if an agency comes to us and says, well, I'll hold off, Jason. And you can buy us next year because I feel we're going to be double. And we’ll be like, okay, well, if you feel that, why don't we put an earn-out on that? So when you hit the double, we'll give it to you. There's no set time so we can screw you. Like it has to… like, it can be a win-win I'm tired of people taking advantage.
Don: [00:27:07] And generally takes them twice as long to get to double, right?
Jason: [00:27:13] Exactly. They're just, I think they're trying to buff up. And then they also where they tell us, they go, well, we want to stay on for long haul. I'm like, no, you probably be the worst employee. I know I was the worst employee ever.
Don: [00:27:26] I man, especially it's really hard to you get a successful entrepreneur who started an agency, or started two or three agencies, uh, yeah, they make the, they're not the best employees and the guy, the guy I had the most respect for. Started with that iCrossing and he could work for anybody else.
Jason: [00:27:46] Yeah, that's, that's me. Last question I have for you, Don is as a global CEO of one of the big agencies. What are your roles? Like, what do you look at as your role in the agency? Like if you had to pick like three or four roles.
Don: [00:28:15] Uh, I think really my role is to provide two things. One is depending on what the, you know, you have to articulate what the strategy is, and in some cases that's a little easier than other cases. But I have to articulate what the strategy is and then I have to provide a culture and environment by which people can go accomplish, you know, accomplish those goals.
But you have to get people, you have to show them the direction. You have to give them the tools by which they can go do it. And you got to get out of their way and let them do it. And, those, those are the keys.
Jason: [00:28:41] Yeah. That's, that's kind of what I looked at when, when I started getting up in a little, the gray hair, as I started figuring out that part of like getting out of people's way. And it's more of…
Don: [00:28:52] Uh, and the good ones, you know, I have some people who've been with me here Investis Digital I've had people who've been with me for 20 years. This is their third company we worked at together and they're, and they're some of the best people in the world. And that's the reason is because I'm smart enough to know when to get out of their way.
Jason: [00:29:13] Yeah. I always said I wanted to be the dumbest person in the room, at the company, and that was not hard for me.
Don: [00:29:22] I think Reagan said that too. One time. He said you want to be the dumbest guy in the room one time when it was, he said something like that.
Jason: [00:29:30] Oh, that's funny. Well, Don, this has all been amazing. Is there anything I didn't ask you before we tell people where they can get the book?
Don: [00:29:38] I think, uh, you know, I probably. You know, I thought maybe you might ask me, like, give me one funny story that came out of doing one of these acquisitions I had one before I was going to tell you. Yeah. So the first acquisition that I ever did at iCrossing was a company called NewGate Internet, it was in Sausalito, California.
And we had spent all this time and effort getting this right. We had dotted all the I's and cross T's and we wanted to make sure that the board was really standing behind this and. So we got all excited. We got this deal done. So, uh, we went out there, uh, myself and the CEO of iCrossing at the time we went out there and went to Sausalito.
And so we meet, we meet the CEO of NewGate Internet at the front door. We're talking to him and I said, okay, is everybody ready? Yeah. I got the whole team together and we're going to introduce you guys is going to be great. So we walk in and the. And the CEO stands up in front of his group, which is probably about 50 to 75 people.
And he says, well, uh, he says, uh, I have some news for you guys. He said, you don't know this, but for the last six months I've been, uh, trying to sell the company and he says I've actually been successful at doing so. And so, uh, your new owners here, Jeff and Don they're from a company called iCrossing. They're going to be your new bosses. And today's my last day.
Uh, I'll be leaving as soon as I finished speaking here, it's been great working with you for the last six years, and I hope to see you guys soon. And they literally picked up and walked out the fire escape and never came back. And Jeff and I are looking at each other like, holy cow, what are we going to do now?
So we had to figure this out on the fly in front of 75 people who didn't even know they were being sold and we made it work this way through, but there was a, oh my God moment there where it was like, my gosh, what are we going to do next? Oh, wow. That was our first deals at iCrossing.
Jason: [00:31:51] It's awesome. I mean, literally he got the mic, he dropped it and then just bounced and walked right out the fire escape too. Was he afraid that you guys would go to stop the elevator?
Don: [00:32:05] I think he was, I think he was so embarrassed about just pulling a fast one there. He just didn't even want to wait to go out to the front door. He didn't want to say goodbye to anybody, he just left.
Jason: [00:32:16] Wow. So was it a good acquisition or did you find a lot of skeletons?
Don: [00:32:21] Yeah, it turned out really good. I mean, they, they were really, uh, experts in paid media. Uh, and they really set the tone for iCrossing for years in paid media. And we got some really fantastic people out of that, but it was, it has bumps in the early days, that’s for sure.
Jason: [00:32:37] That's crazy. I mean, literally like.
Don: [00:32:43] It was pretty funny.
Jason: [00:32:43] I can only imagine, like, I'm picturing, I know what you're talking about a fire escape, but I, I see like the New York fire escapes, like him sliding down. With the ladder.
Don: [00:32:53] With the ladder and everything. They don't have those in Sausalito.
Jason: [00:32:58] I know, but that would be. You should embellish that a little bit. Like be like, yeah, he just slid down like was James Bond.
Don: [00:33:08] I need to build this up a little bit more.
Jason: [00:33:10] Yeah, definitely. Well, you got to sell it, like your, sell it a little bit more.
Don: [00:33:14] Exactly. It is in the book though. You can read about it in the book.
Jason: [00:33:19] Cool, what's the name of the book? And obviously, we probably can get it anywhere, right?
Don: [00:33:23] It's from Forbes books. It’s out Amazon for pre-sale right now. It comes out June 6th and it's called the M&A Solution.
Jason: [00:33:30] Awesome, well, everyone go check it out. And then, uh, what's the agency URL so people can go and check out the agency as well.
Don: [00:33:38] The agency that I’m at right now. It’s called Investis Digital, and like I said it's London-based and we just got bought by Investcorp, so yeah, check us out.
Jason: [00:33:50] Awesome. Well, Don, thanks so much for coming on the show. It was a lot of fun hearing some of the old stories. Make sure all of you go check out the book. Check out the agency as well. And if you guys enjoyed this episode and you guys want to be surrounded by amazing agency owners that are sharing what's working now, so you guys can scale faster and really know that you're doing it in the right way.
I'd love to invite all of you to go to digitalagencyelite.com. Check it out, apply if you're right for us, we'll have a conversation. And until next time, have a Swenk day.
Direct download: How_to_Avoid_a_Failed_Agency_Merger_By_Focusing_on_Culture.mp3
Category:general -- posted at: 7:00am EST
Sun, 6 June 2021
Todd Taskey has over twenty years of experience as a founding investor, board member, and management team of several business ventures. Now, as M&A at Potomac Business Capital, he helps CEO's and entrepreneurs develop a successful exit strategy by understanding the mid-market investment banking process. Today he joins us to talk about roll-up strategy, the mergers and acquisitions red flags you should avoid, and what you should be offering as an agency if you're thinking of selling.
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Jason: [00:00:00] Hey, what's up everybody. Jason Swenk here and I have an amazing guest today. A repeat guest, Todd, where we're going to talk about a roll-up strategy because there's a lot of things out there right now that are going on and this market is growing very quickly with, uh, mergers and acquisitions and, Todd is going to provide a lot of value to you.
So let's get into the episode.
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Hey Todd, welcome to the show.
Todd: [00:01:50] Happy to be here, Jason. Thanks for having me.
Jason: [00:01:52] Yeah. So for the ones that have not checked out our other interview, which we'll actually link in the show notes, make sure you guys all check that out, but, uh, tell us who you are and what do you do?
Todd: [00:02:04] Yes. My name is Todd Taskey, T-A-S-K-E-Y. You can find me on LinkedIn. I'm happy to connect Potomac Business Capital is our group and we do, uh, investment banking primarily in the digital marketing and digital transformation space.
Jason: [00:02:18] Awesome. Well, let's kind of jump right into it. You know, there's a lot of crazy things going on at this moment with, you know, different deal structures.
What are you guys seeing since you're in the mix of it with a lot of digital agencies?
Todd: [00:02:32] Yeah. You know, it's interesting. We've got one client. I'll give you just a couple of anecdotal pieces. I've got a client right now that is small, you know, they're actually under a million dollars of EBITDA, which is usually an important cutoff, but these guys are very focused in terms of the work that they do.
They provide email marketing in a very specific vertical. And that becomes a, a really good bite-size piece for an acquirer. And in fact, both of, we expect two LOIs this week for them, and both of those are very sizable companies, but I think they viewed this opportunity as, like I said, a bite-sized piece that they can build out a practice from and then cross sell across to their other brands.
We've also got, you know, we closed the deal right at the end of the year where our client is about 2 million of EBITDA. They're a partner in the HubSpot space, has long time been there. And we were able to put them together with the business, very similar to theirs, probably about twice the size. And that now becomes one of the larger premier players in the HubSpot space.
We've got another client now that’s in the video intelligence space, again, they're a little bit under a million dollars of EBITDA. But because they're so specific in their, in their offering, it becomes easier for us to find, uh, a very specific or curated fit for them really, you know, from the, almost from the network that we already have.
Jason: [00:04:15] And so what should people know about the possible roll-up? Because there's a lot of people listening in that their intent is to have option to sell. And let's say they're to a point where they do want to sell, but they might not be over the certain threshold in order to see the real money that they really want.
Like you and me. We always discuss kind of the million in EBITDA is kind of the, the starter, right? Like you got to get to that level in order to really start to entertain some healthy offers. And so talk a little bit about how can the people listen and get a little bit creative.
Todd: [00:04:53] So, two things I would say. Don't think of it as a roll-up, think of it as an arc of services. And so when people put together, when larger buyers put things together, they don't want an SEO shop and another SEO and another SEO so that they can become a bigger shop. What they want to do is become a destination, a one-stop-shop if you will, for their clients. So what a lot of, for example, there was a lot of news.
People want to check in Tinuiti, which was a, a Mountaingate Capital company that was acquired in January by new mountain capital. And it's very, very, uh, nice data point for the space, but they had spent the last four years building an arc of services. So for an example, they acquired a company four years ago called Elite SEM they added paid media, they added social, they added content, they added analytics, a delivery system and a platform and everything else, and had a wonderful exit from that.
So, one question for your listeners is, am I providing a, a really specific piece? Right, to that arc of services. And am I really, really good at providing that to folks? So that would be one. And then I think, you know that the second thing, when you look to be acquired, private equity is driving a lot of the activity in our space today.
And so for private equity to get the returns that their investors want, they always will have some debt in their structure. To be able to borrow from an institution they need $2 million of EBITDA. For most lenders, that is the minimum that they'll do. So from that standpoint, I'll give you an example, we've got a bunch of private equity relationships.
The transaction that we did with HubSpot, I reached out to three of the groups that we work with and that we know pretty well. And I said, hey, you know, if you don't know about HubSpot, you should, it's a fragmented industry. There's a lot of smaller providers in that space. And it's a great software for inbound lead creation.
So two of the groups said to me, Jesus, you know, if you can find me, uh, you know, an a million and a million or a million and a half. You know, any pieces that you can put two together so that we can become a diamond or an elite partner, and we can, we can lend against it. Then we would be excited to do that. So that's a project that we're working on now where I've got actually two kind of in the early stage companies that are both, uh, around a million that will get us to that amount that private equity can, you know, can sponsor.
So there's lots of opportunity that's out there for, and it's a little bit easier if you're smaller to solve a very specific issue, if you will.
Jason: [00:07:58] So if you're putting two kinds of agencies together, right? Like you're taking one plus one equals two. How long do they have to be together before you can kind of go to someone and be like, yeah, it's a proven model, right?
Like, like what you were talking about is looking at like, all right, it's not just adding services to add services. It's adding services to come up with a full solution for getting the max results. So I just want everyone to be clear on, on that, but how long do you feel like if you do take, like, let's use an example in our mastermind, we have tons of agencies and some specialize in one particular service and that's it. And same thing with another one.
Now, if they come together and they're like, Hey, we're both going after this industry, we put these two together. Wow. We'll make it over the threshold, but how long do they have to be together? Because I know with Republics we're putting, you know, last year we bought eight agencies and I still look at it going, look, we still need to make sure everything fits together before we talk about exit and all that. So what are your thoughts there?
Todd: [00:09:08] So couple of great questions. The first is when you were putting agencies together. Here's what I find, that without cash, the deal oftentimes will break. So for example, Jason, you and I are roughly equals. We're going to put our business together. Let's say we have about a million bucks of EBITDA.
A million bucks is, you know what it means. I have a very good life. You have a very good life. Now I'm going to give that up and I'm not going to be in control of my agency anymore. And, and who's going to be in charge. Who's going to make the decision to, you know, a whole bunch of questions that make it difficult.
So, real-world example, when we did that transaction at the end of the year with two HubSpot agencies, we, one company had the larger company of three owners and my guy was a single owner. We put them together. Now they all have roughly 25% of the business. To make that work, my guy got roughly $3 million.
The acquiring company wrote a check. They had it on their balance sheet and they wrote a check for that amount of cash. So now, that happened December 31st, our expectation is that we'll spend most of the year doing integration, picking up efficiencies. And then we will get credit for that. So the combined businesses, about 6 million, we would expect at the year-end, it would be about seven and a half million of EBITDA.
And then beginning of next year, we'll take that to the marketplace, right? With the other project I mentioned where we're bringing those $2 million businesses together. That's going to work because we're going to bring a private equity group together at that time.
So each of those owners will get cash at close. Probably somewhere in the two to $4 million each in cash. And then they'll also have somewhere between 20 and 35% equity in the new company, the larger company, and all of these things need to be worked out. The private equity group is going to get a little bit better value on that business because it's not as valuable because it's smaller and because they haven't harvested the efficiency yet.
So in, in that deal, it, when we start, it will be agency one agency, two and private equity all coming together at the same time. Whereas the other deal that I mentioned, those guys are going to just do it themselves because they were strong enough and they had enough cash to be able to do that. So that we'll have a little bit of an impact on the answer from that standpoint.
But I would think. You would want to be able to show a full financial year cycle to prove to somebody this is real. And it takes that long, right? For things to be humming along that everybody's familiar with the system and move on from there.
Jason: [00:11:55] What are the things to look out for that you see as big mistakes when. Because there's a lot of people, you know, I see a lot of people go into my mastermind members and clients are like, hey, let's roll-up. Let's roll-up. Like, what are some of the gotchas to be like, or the red flags for people to avoid?
Todd: [00:12:13] Yeah. You know, uh, giving an example, Mountaingate Capital has had tremendous exits so far with Olsen and Sierra and just recently with Tinuiti and, and the, the guys that drive that private equity group say that the number one most important criteria for them is culture fit. Secondly, is culture fit, and I think third is also culture fit. So they also established leadership because there was somebody who writes a check, right?
Whoever writes a check is in charge and what I see oftentimes. Uh, in, in kind of failed combinations is that nobody writes a check nobody's really in charge. Everybody's kind of given up their autonomy and aren't completely comfortable and they do it almost without a lot of forethought. So that would be one.
I think the second thing is the notion of two companies coming together. If they're smaller, they should add certain capabilities. So for example, in, in a transaction that we just closed at the beginning of the month, that hasn't announced yet. These guys both do digital marketing focused on the SMB space.
My guys had really good technology, but not a lot of sales infrastructure. The buyer had great sales capability. They didn't have technology and to add the technology to their sales process should have a tremendous impact. And that will, that will cover both sides. So from that perspective, it shouldn't be just, you know, two companies that are identical and feel like they belong together. There should be something that you add to each other.
Jason: [00:14:05] Love it. Well, this has all been amazing. Todd, is there anything I didn't ask you that you think would benefit the audience.
Todd: [00:14:10] Um, no, not from a question standpoint. I just think it's interesting when I have conversations, which I do pretty regularly. People are surprised at the type of opportunity that's out there because oftentimes they think, well, I got to sell my business, I guess some cash, I get an earn-out and then I become an employee.
And there are so many more exciting opportunities than something like that. That extent, that A gets liquidity, B hopefully a better upside and gives entrepreneurs an opportunity to focus on just the things that they are best at that they enjoy the most.
So, so maybe it's just opening up their aperture a little bit to consider what they would like to do. Because I, I believe that we'll see a really strong next two or three or four years in this space where good companies will get strong valuations and have the opportunity to do, you know, what gets them excited.
Jason: [00:15:12] For the ones that are interested in chatting with you. They're, they're over the million in EBITDA or close to it. They're wanting to really kind of exit or have a bigger opportunity to take some chips off the table. Where can they reach out to you?
Todd: [00:15:26] Yeah. So find me on LinkedIn is the easiest way to do that and just reach out there. But one last thing that I would say, which I think is interesting. You see, I have lots of conversations with clients or prospects, that they do not want to go through this process of putting a deck together, getting their financials right, going out to the market and let's see if somebody will buy us.
But I have a lot of them that say, listen, this is how I'm thinking about the future. Here's where I see our strengths and weaknesses. This would be a really great fit for me. And, and so for example, I've got two deals under LOI now. The video intelligence company was exactly like that. When I sold to my client, Arie, he said here's, this is what would help accelerate us and the people that would benefit most from our capability set.
And he's been on my board here for a while. One day I had a conversation about a completely different opportunity. And turned out that potential buyer is a great fit for him. So I'm always interested to talk with people that are doing interesting work that want to explore what might be out there for them.
Whether that's something that they want to do in the Spring of 2021, or just to be exposed to ideas that are interesting as they come along. So I'm always happy to do that. Uh, our website is potomacbusinesscapital.com and you can find me on LinkedIn. I'm pretty easy to get to.
Jason: [00:16:55] Man this new software, I'm waiting for the little keyboard, but, uh, make sure you, uh, tell him, uh, you heard of, uh, him from the smart agency master class and they'll hook you up.
And, uh, if you guys enjoyed this episode and you guys want to be around amazing agency yeah. Owners to really help you scale faster, create that predictability, that, that growth, and really achieve the money that you really want in your business. I want to invite all of you to go to digitalagencyelite.com and check out our exclusive masters.
Todd: [00:17:26] I will tell you some of the, a few of the guys that I've spoken with have been thrilled, maybe a little bit surprised at how much they have ramped up their agency as being part of the mastermind group. Not just the stuff that they've learned from you, but being around other people is forcing you to think bigger and to do bigger and you know, all those exciting things. So keep up the good work.
Jason: [00:17:46] Oh, yeah, we, we love it. You know, if we can, uh, speed up people's, uh, sales process and get them to where they want to go faster, that's our whole goal. So thanks Todd for coming on, everybody go reach out and, uh, until next time have a Swenk day.
Direct download: How_to_Implement_a_Successful_Roll-Up_Strategy_for_Your_Agency.mp3
Category:general -- posted at: 7:00am EST
Wed, 2 June 2021
As a Certified Management Accountant, a Certified Internal Auditor, and certified in Strategy and Competitive Analysis, Naten Jenson, co-founder of Agency Dad, is certainly the best person to help you establish a strong business and drive your agency's profitability. Today, he joins us to talk about scope creep, a topic that many agency owners struggle with but should definitely learn more about. Remember that if we can get a hold of scope creep, we're going to increase our profit.
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Understanding Scope Creep Will Help Drive Profitability
Jason: [00:00:00] Hey, what's up agency owners, Jason Swenk here. And I'm excited, I have a repeat guest and a repeat guest where we're going to talk about scope creep. Right? You should hear that tun-tun-tun on scope creep, because a lot of us, we struggle with this and if we can get a hold of scope creep we're going to increase our profit. And we'll be able to afford those people to really come in and do the things we don't want to do anymore.
So this is a really important episode and let's get into it.
Hey, Nate. Welcome back.
Nate: [00:00:34] Thanks Jason. Glad to be back with you again.
Jason: [00:00:37] Awesome. Well, uh, for the people that have not checked out the first episode, tell us who you are and what do you do.
Nate: [00:00:43] My name's Nate Jensen. Uh I'm with Agency Dad, our website is agencydad.money. And we are an outsource CFO firm, bookkeeping firm, accounting firm.
And our focus is really helping agencies to drive their profitability. We do that by good accounting where we can actually measure profitability, measure what's going on and those metrics drive action, drive decision-making that leads to greater profitability.
Jason: [00:01:08] Awesome. Well, let's go ahead and talk about scope creep and how to identify this, because I know there's a lot of agency owners. We're busy at bringing in new business and we really kind of take our eye off the ball a little bit. And there's a lot of, uh, what I call profit leaks in scope creep. So tell us how can we identify these?
Nate: [00:01:33] Yeah, no, you're absolutely right. What I, what I see is when, when someone's in growth mode, they're, they're so focused on that next client, that next client. That they're not measuring and they're not managing the profitability of existing clients. Peter Drucker is famous for saying what gets measured, gets managed. So identifying scope creep, the first thing you've got to do is measure it, where's it happening with clients is that happening with? And, and how bad is the problem?
And so I want to talk today a little bit about how do we measure it? What are the numbers that we need to know? And, uh, after we go through that, we'll get to, what can we then do about it?
Jason: [00:02:09] Cool. So, yeah, let's get into how do we measure it?
Nate: [00:02:12] Ok, First, how do you measure it? There's three numbers that you need to know. And most accounting systems you should be able to pull at least one of these numbers out of there. You need to know your bill rates, which is, hey, if we think we're going to spend 10 hours on a client project, we're going to bill them, let's say, $120 an hour. So we're billing $1,200. The $120, that's your bill rate.
Second thing you need is your gross profit on a client. This is the one that you should be able to pull out of QuickBooks or whatever accounting software you're in. And your gross profit is what you build a client minus any direct costs. So if you're, if you're spending money on ads for your clients, it's going to be what you bill the client minus what you spent for those ads. That's your what's left is your gross profit.
And then the last thing, the third number that you need is how many hours. In a given month, did you actually spend on that client? So the way you measure scope creep, I'm going to give you three formulas there. They're simple formulas. If you're driving don't, you know, don't stop and try and do the math.
Jason: [00:02:09] We'll put them in the show notes for you guys.
Nate: [00:02:12] But the first thing all you're going to do is you can take that gross profit by clients in whatever month you're looking at and divide it by your bill rate. So let's say your gross profit on a client in a month is $1,200. If your bill rates $120 an hour, you get an answer of 10, right.
1200 divided by your, your bill rates, 10 hours. And that 10 hours. That's how many hours you have available for that client. You've said based on my bill rate, you've got 10 hours. So one of those other numbers that you need is how many hours you actually used. So if you look at that client and you say, h, okay. Out of 10 hours, we only used, let's say six.
Well, I have four extra hours, so there's no scope creep. I had 10 hours budgeted. I only use six. I have four leftover. Great. Now what if we had 10 hours and we use 17? Well, we've now measured our scope creep. We have in that month, we have seven hours scope creep, which is, you know, if you've only budgeted 10, that'd be pretty significant.
And then the final thing you want to look at here is what did that cost you? Okay. So if we know we're seven hours over and our bill rate is $120. 7 hours x $120. We've actually lost out on $840 of revenue. Does that makes sense? I know it's a lot of math. It's a lot.
Jason: [00:04:34] yeah, it definitely does. You know, what we always did and what I've always told everybody is, is you should be tracking all of your hours for everything that you do.
And so how we had it in our software, we use a really cool project management software back in the day called My Intervals, but it works like ClickUp or Teamwork or any of those and what we would do after we had a baseline of projects or engagements. We'd be like, okay, well we know this normally takes a hundred hours to go do, and then we would break it up into segments or phases.
And then we would actually get a visualization of each of the deliverables and each deliverable had allocated hours to it. So then, then on a weekly basis, our project manager, or on daily basis if they wanted, they could look at it and then it would show green. If they're under, you know, yellow, if we're getting close red, if we're over.
And so then we could go, all right, well, why are we going over? Or why, why are we getting close? And then we can make our adjustments.
Nate: [00:05:35] Yeah. Well, one of the things that I tell people and I, I've totally made this statistic up, but I use it anyways is I say 95% of your data analysis is new data entry. The number of clients that we work with when we start working with them, who don't actually track their time to clients, uh, it continues to surprise me. I'm like, if you're not tracking the data, if you don't have the data, there's nothing to analyze. And, well, it's no wonder you've, you've spent a year growing your business and you're working twice as hard and you're making just a little bit more money.
Jason: [00:06:05] Actually. They're making less. That's what I see a lot of times.
Nate: [00:06:09] They are making less, I was giving the benefit of the doubt. But, yeah, that's why you've got to track the data. You got to track the time. And so if you, if you have the numbers. And again, throw them into these simple formulas. It's really easy to see, Oh, I've got this client, this client, and this client, they're each using, you know, seven hours per month too many.
And it's really easy to see where you, like, what you call the profit leaks, right. Where it’s easy to see where those leaks are.
Jason: [00:06:35] I find scope creep actually starts before you even actually sign up the client. I find it happens in the sales conversation. It's about setting the expectation with the client and not trying to oversell them.
I think a lot of, especially if you're an agency owner and you're doing the sales, which that should stop immediately, right? You should find a salesperson, but a lot of times you try to go like this is what we're going to do. And we're going to do this, this, this, and you're just piling all this stuff that, you think in order to close the deal, or if you have a really bad salesperson, you do that. And it really starts there. And, but I totally agree with you on data entry too.
Nate: [00:07:15] Well, no, you're absolutely correct. Because whether you bid the job wrong, you know, in the beginning or whether the client has just taken a little more time, a little more time, a little more time, the problem ends up being the same. It is you're not, you're not billing for the amount of time you're spending on it.
And so regardless of what caused it, you're still able to measure it and identify where is this happening? So it's amazing. Let's say, let's say you have 20 clients and you find that three of them are using seven hours per month too many. Well, that's only 21 hours per month, but what you bill, times your $120 hour bill rate, and you're losing $2,500 per month in revenue. You should be charging, somebody should be charging, whether it's this client or if they're not using it to pick up a new client, and then you have that bandwidth to take care of them.
Jason: [00:08:04] Yeah. One of the things that we found that pointed it out to me, because yeah, like, like you said, you’re like, oh, it was only three hours here, or it's only an hour here, but if you do this one thing and I can promise you you'll change your idea about, because when the client comes to you and go, Oh, can you do this? And you always say yes.
You should implement a $0 change order. I talk about this and the agency playbook all the time and we actually give you guys a template for it, but it's really when they come to you for something very small, I want you to print them out a change order. That shows the original price that you would actually charge for it.
So if it's a hundred dollars an hour, let's just say easy math, put that down and then cross it out and have them sign it and send it back to you. So you're training them that this is additional. So when they actually come to you for the big items, then you can actually go, oh no, no, no. My digital agency can't do this. Again, we already gave you this free stuff over here.
And then the client is programmed to go, oh yeah, it's it's additional. And when you start acting, like, I literally started adding up all the change orders and I was like, oh my gosh, like I gave away $10,000 last month.
Nate: [00:09:19] Right. Yeah. It's great if you've taken the time to train your clients that way. And anybody that's not, they should get started.
Right. But if you were to do this analysis and say, oh my heck, I'm giving away three grand a month in free services. We need to talk about, okay, what can I do right now? Okay. It's great. I'm going to start changing my process with my clients, but what can we do right now? The first thing I would say is I would not go to a client after one month of analysis and say, hey, we're going to charge more money because that month may be an outlier, right?
That month. Maybe you're doing a lot of prep work that's going to pay you over the next several months. But if you do this analysis over, let's say three months, and clients are consistently using too many hours. Then I would go and I'd look internally first and I would say is the problem with me? Okay.
Do I have an employee who actually doesn't know what they're doing? Do they need more training? Is it the wrong fit? Etcetera. So what's, what's kind of generating it. If my employee who's done this work, if I asked them, what, what are they spending their time on? And they say, every time he put up their Facebook ads within two hours, there's a phone call. They want the copy change. They want the image changed.
Then we know the problem is more with the client than with us. But even then, it's not necessarily that we go to the client and say, hey, look, we're changing the contract. You've got to pay us more money. It might just be a trust issue, right. It might be that they don't really believe that we're the experts. And if they don't put themselves into the process, we're not going to do it, right.
So it might just be a conversation of helping them to actually trust that we can do the work. And so we're in, instead of charging them more money, we're helping them to take less of our time. And then again, that frees up our bandwidth and we can then. With those additional hours, we go pick up a new client and build that client instead of giving those hours away for free.
Jason: [00:11:06] Yeah. I always, I like how you said kind of look back at your internal process first before you kind of blame the client. Because a lot of times the clients, they'll just, they don't know they're ignorant. They've never gone through this process and they don't know what's in scope or out of scope.
When I would talk about scope creep, I would always kind of default back to when I was building my house. Like, I didn't know. The process of building a house. I was like, oh, can I make my room bigger after they do framing?
And they're like, you could, but we have to kind of tear down these walls and like all this other stuff. And they were like, well, that would be additional. Or you want a waterfall? Okay. We can do like, like I was just like, it's not included? I thought you said you'd built my dream.
Nate: [00:11:51] Yeah. And like, I think it's a good point you brought up earlier is. It is it maybe in the, in the bidding process. And if you're, if you're looking at this on a regular basis and you can… It's gonna, it's going to help you identify that problem, right? If, if you're saying, if you're seeing client after client, where simply their expectations were not in line with what the reality was going to be as an agency owner, that that may be on you and that's, that's fine, right?
If you, if you learn that fantastic and let's fix it going forward, but if you're not measuring it and you're just saying, hey, new business, new revenue is going to make me profitable. It's not always going to do it.
Jason: [00:12:28] Yeah, I can promise you all of you listening now, before I actually started tracking all of this and actually measuring our time and looking at scope creep, we were losing money on 60% of our engagements, 60%.
That's probably what you, Nate, lot of times when you guys probably get an under the covers of a lot of agencies, you probably realize, wow, you're losing a ton of money on these clients. Like, why are you still doing this?
Nate: [00:12:54] Right. And I would say sixty maybe high. 60% is, is a high percentage of clients to actually be losing money on. But, but almost guaranteed. There are very few agencies that I do this kind of analysis for that aren't losing money on at least a few clients. And keep in mind, it's not just about, is the client actually profitable or unprofitable, you know. One of the questions you should be asking is, is the client profitable enough?
So we may have a profitable client, but because of the scope creep. We're spending so much time that they're, they're just barely profitable. When really if we're going to run a, a good, solid, profitable agency we need to have those boundaries. We need to be able to say, you know, our, our bill rate is 120 an hour that finds you this many hours.
And if we're consistently spending too much time, we've got to change that. We've got to fix it.
Jason: [00:13:42] That's another good point about like how profitable are they? We had a mastermind member not too long ago. Uh, had a bunch of legacy clients. We showed them a bunch of systems in the mastermind where they really kind of quadrupled their sales, but then they had all of these existing legacy clients and we started looking at it and they were, some of them, all of them were profitable.
But just like you were saying, they were barely profitable. And we went to them and we're like, well, how can we get them up to par? And the only way we can actually get the mastermind member in order to do this was to have them calculate the opportunity cost. Like, what was the difference between the new clients coming in?
Like how much money were they making there and the old ones. And that actually forced them, like, as they started looking at the data, he was like, holy cow. Well, like if I could just double the rates, and we're like double those rates, and even if half those clients go away, the other ones will make up the difference.
But you want to know what happened, Nate? Every one of them said yes. And he made 60,000 extra every month. By not having to sell anything more or deliver anything more just by literally going, hey, we need to be more profitable.
Nate: [00:14:56] I'm glad you brought up opportunity costs because some people would say, hey, let's take an example of we're spending seven extra hours on this client every month.
And what I said earlier is you're losing $840. Cause it's those hours times your bill rate. And some people would argue, well, no, cause I'm really only losing what I'm paying my employees. I'm not losing the whole bill rate. I'm like, yes, you are because you should be invoicing that. Right. You're spending that whatever it is, 40 bucks or 30 bucks an hour on your employee, regardless of where it's spent or not being used on a client at all, you've got to look at the opportunity cost.
It's that's really what, you're what you're losing. It's not just money out of pocket. So yeah. Perfect point.
Jason: [00:15:36] Well, this has been awesome. Nate, is there anything I didn't ask you that you think would benefit the audience listening in? Before we go over to the, the cool thing I want to, I want you to tell everybody about right.
Nate: [00:15:48] Really, it really comes down to just taking the time to measure this stuff is so easy. Like you said, if you are, if you're an agency owner and you're doing your own sales system, if you're an agency owner and you're doing your own bookkeeping, your own financial reporting, which means you're probably not doing any financial reporting.
You should stop, right? You've got to look at this and you've got to look at it consistently. If you're not measuring it, it's going to get out of hand. There's, there's no question. So I don't think so. I think we've pretty much covered it and I'll make sure that you've got the formulas and you can disseminate those out to your listeners, however makes the most sense.
Jason: [00:16:23] Great. Yeah. I mean, if, if you guys are not measuring and if you guys are doing this, then you're not doing the other things that only you could be doing, which, you know, it makes me very worrisome. If that's a word, I don't know. I mean, maybe making up words now. But, uh, Nate, tell us about kind of the special offer where you can, uh, you know, help identify this, you know, for them.
Yeah. So we do, we do a free audit on some, some various metrics for agencies, just to, just to have a phone call, just to get to know you and see if there's maybe a fit for us to work together. And so we, we offer a free audit of, of your, your profitability and different metrics. And so for this summer, we're actually offering a free first month, if you do want to do some business with us.
Nate: [00:17:06] So, there'll be a link. It's that fact, it's the agencydad.money/freeaudit. And there'll be a link there to have a phone call with me and we can, we can talk to see what your needs are.
Jason: [00:17:16] Awesome. Uh, repeat the URL one more time for everybody.
Nate: [00:17:20] That's agencydad.money/freeaudit.
Awesome. All right, well, everyone, uh, go do that now. You know, I really do appreciate Nate coming back on the show. Make sure you guys go get your free audit, because if you can identify that scope creeps are happening, then you actually have an action plan of what you actually need to go do in order to fix it.
So make sure you go there. They're incredible. We've said a lot of mastermind members and a lot of listeners over there. And they've all had amazing things to say about Nate and all their crew. So go do that now and until next time, have a Swenk day.
Direct download: How_to_Calculate_and_Eliminate_Scope_Creep_to_Drive_Agency_Profitability.mp3
Category:general -- posted at: 7:00am EST