Wed, 13 October 2021
Hollis Carter is an entrepreneur and avid skier who, after founding many companies in his career, recently became the co-founder of the Baby Bathwater Institute, a membership-based community of entrepreneurs with a focus on cultivating natural, mutually beneficial relationships. Since his business relied on many in-person events, it was quite affected by the Covid 19 pandemic and subsequent restrictions. During this time of cancellations and being stuck at home, Hollis thought of a way to add value to the members during this new situation and started to offer a series of services with a performance-based model. This model quickly grew and he ended up selling it before actually having to fully build an agency. In this interview, he talked about the process of building and growing an agency to over $4 million and then selling it, all during a pandemic.
3 Golden Nuggets
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Growing an Agency Fast to Over $4 Million and Selling Quick
Jason: [00:00:00] What's up, agency owners? Jason Swenk here. I have another amazing show guest. We're going to talk about how when COVID hit, they formed an agency and ramped it up to over $4 million and sold it, during COVID. So it's a really cool episode and you're going to enjoy my guest. So let's go ahead and get into it.
Hey, Hollis. Welcome to the show.
Hollis: [00:00:29] Hey, man. Thanks for having me.
Jason: [00:00:30] Pleasure to have you on. So for the people that have not heard of you or met you at one of your cool events, tell us who you are and what do you guys do?
Hollis: [00:00:39] Yeah. My name is Hollis Carter. Living in Boulder, Colorado, but originally from Georgia, where I kind of got my first start in internet marketing stuff. I was like early in college and built a couple of online businesses and luckily had one that did pretty well and sold that. And then I moved to Colorado and did this skiing thing for a while and, uh, living in the mountains and it was great, but I could only talk about skiing and snowboarding and mountain biking with people.
So, I’m now a front ranger living in Boulder and enjoy it and got back in the mix of things. Our main business is called the Baby Bathwater Institute. You've come out to one of our events that we had at out mountain. And, uh, I started, my other businesses based on the thing that I use to learn… Like no one was really teaching relevant stuff in the late nineties, early two thousands. So to do it, I thought let’s sit at the bar and a lobby at a conference and got most of my nuggets. And so when we had some free time, me and my now business partner who were lobby con buddies for like a decade… We started hosting these events and the whole idea was curating nice people who are in the grow and scale phase and the actual founders of their business.
And in a lot of different industries that we could draw knowledge from different places, less of a kind of echo chamber mastermind of people doing the same thing. Cause there's a lot of value in those, but it's very linear. This was more of organic group meetings to have fun and, um, draw things from other industries and stuff.
But we have agency people, we've got guys from hotels, we've got guys from e comm businesses… I guess I say people, not guys, cause we have plenty of girls too. We’ve been doing it for about eight years and I love it. Compared to the businesses I've done before, it's probably the dumbest business model. Cause it's overhead-intensive, time-intensive, relationship intensive. But I actually like it.
So we're doing it for years and we'll probably do it for a very long time and really enjoy it.
Jason: [00:02:37] Very cool. And COVID hit you guys really hard because your whole thing is about live experiences and that kind of stuff, uh, which are a lot of fun. And so tell us about like… cause we were talking a couple of weeks ago, you were like, man, I couldn't do these live events and that's really what the membership was for.
So we gave all this money back to the members because we couldn't do live events. But I started an agency kind of by accident and it quickly grew. So talk about how did you grow the agency so quick? What did you do? Because a lot of people are looking at going, and I've seen a lot of growth in agencies over during COVID, but yours was really pretty, pretty good.
So tell us a little bit more about that.
Hollis: [00:03:18] I think it was, it was different because much of it was born out just starting that momentum sort of grew versus sitting with a very particular plan. Where Baby Bathwater came less out of need more out of want, this came out of need. And so there… Also, we are locked in our house and I could stay focused on, cause I wasn’t doing… Going to conferences or traveling or doing things.
But I think the main frame was okay, just postpone slash canceled, who knows a handful of events. We basically lost about two and a half million bucks in that decision. Which happened before people in the states even believed that this COVID thing was gonna affect us because our president was in Italy. And so we saw it a little early.
We knew we didn't want to let people go. There was no PPP stuff yet. And me and my partner, Michael, we always knew we could always fall back on our marketing skills, which is kind of what got us to a place to even know what people wanted from a mastermind. So our personal interests has been in the health and wellness sort of space.
We see lots of stuff that's crap. And we see lots of stuff that's good. And we happened to know a few people who have amazing products that are members. But they’re product guys, they're not marketing people at all. And so we kind of went in with the thesis of how do we enhance the people who are already members value and we can't do anything for 'em, but also don't run any risk of screwing up the relationship if we get in bed with them and do something different than what we already have a good relationship with.
So, I mean, it basically started with four products. I knew we had people in the group who had platforms. That love the products, cause they give them out at events. They love them. And I know they have a lot of traffic and I knew these people have great products.
Didn't even know what I'm talking about. Like you should just set up this campaign and get them on the podcast and set up an email. You can track it with affiliate links… And all like, can you just do that for me? Kind of thing. So, I mean, it was actually super, super simple. Essentially, out of a network license for post affiliate pro so that we could track all of the clicks and conversions and build it very slowly, not a lot of overhead. It costed maybe like five grand or something we spent getting set up and all that automation and tracking. We did have a really hard time finding someone to help us run that once it worked. We ended up finding the guy who made the tutorial videos for the original version of it and tracked him down.
And it was the first hire because it was complicated and how he set up the company structure. But the basics of it was we had people get podcast, email lists and content sites. I mean, people have great products that had a unique hook. It couldn't just be like, like we did have a CBD, which is a crowded market with a bunch of people at all look the same. But this had clinical trials, some studies, so I could go get functional medicine doctors to say something unique about it and they could write a real piece of content.
So really we just took the friction out of the middle, which was, it's hard for the product owners to focus on these things that are ancillary. Then buy an ad that are not doing very diligent tasks that can scale these like one-off promotions and managing people is hectic.
Like if I had a brand, I wouldn't want to do stuff we were doing because I know the costliness of managing all these relationships and getting it on the calendar and getting all the stuff they need. But in our unique situation, we had time. We… the money. We wanted to serve the people who we wanted to have back when things came back online.
And so it made sense to keep calling them chatting and working it out and figuring it out. So our deal is that we took... it’s very minimal, it's just an average, about 10% of the revenue for 12 months of the customer.
And we would do a, you know, a multi-tiered campaign where, you know, perhaps the person to get on a podcast and do an interview about the product that was very educational and content-heavy. So it didn't just come out of the blue of this promotion. It was like ease into with good questions and then we’d do an article. And then eventually kind of like an email with a special offer and a landing page just for that person. And like something I've been back in early on was when one big person promotes the rest.
So we usually just go for, you know, one or two people we have a good relationship that have a big audience and then their affiliates would see it happen. And we'd get a few more of those. But we did, because it was so hands-on, mess around with people who could send, you know, thousands and thousands and thousands of clicks and had an audience that already trusted them.
So very boutique, very niche, but where it worked, very effective. I'd say the biggest bottleneck was calendars. You could lock in a deal and they might not have three months so they could do it. But we hit a point where we were going to have to start hiring more people, we had a tech guy, an administrative helper in an industry that me and Michael were putting together. Then we hired someone to go start recruiting more promoters, and then we need to start hiring writers and creatives.
At that point, we actually ended up selling the business so that we didn't have to build an agency. The hard part of building an agency, managing the creatives, training, we never really hit that point.
Although it looks like I’ll go back to the trough and do it again. But I mean, really it was about that simple. It was like performance-based so we couldn't mess up relationships. And also we didn't want anyone to ever tell us, hey, you have to do this for me. Uh, it usually mostly came from the merchants with the products.
They'd be like, hey, where are the traffic? And we’re like, hey, we don't, we don't work for you. We’re not on a retainer, but it's coming, it's coming. Then we'll get paid. Well, we only get paid when we make sales. So that helped us not get stress out.
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Yeah, I see a lot of people going the performance route. You know, one of our mastermind members, David, he was always constantly under the million mark and just trying to figure out how to get over it. And he switched to this model and got a million dollars last year during COVID, just from one client for the performance deal. Kind of like what you guys are doing, or you guys did or about to do again. I guess we can talk about that.
But I liked how, when you're the performance model, they can't tell you what you can and can't do, or a timeline. You're just like, I'm putting a campaign together on our own dime, our own resources. This is what you're agreed to pay. I really like that. But I also like too, that, you know, this is a home run. Like it's a good product.
I want people to not kind of overlook that and just don't go up to anybody and go give me 10% of all your sales. And plus too, you guys had relationships with them so you knew you could trust them. Because it gets really tricky sometimes when you're like, yeah, give me 10% of sales and they could the books however they want.
Hollis: [00:11:54] Yes. So that was an interesting piece of... The one thing that I guess is there is we did have these relationships we've built over almost 20 years now. Which, if you just do it on the street, we couldn't start from scratch with that. So that was like our one… competitively used to do something here, but the book side of things, we actually knew how bad that can get.
So we control that this was a bottleneck and business model, as far as administration and just workload. I kept everything clean, but we were starting to get super risky. So we invoiced the merchant for the payments and wrote to the affiliates. We did everything. So we essentially became a bank taking the money, moving the money versus paying out of their own affiliate program.
It started to get pretty hectic. You get one monthly payment. We're trying to keep the relationships paying on time. We never ran into any issues, but you could see it coming as things got more complex.
Jason: [00:12:52] Well, I'm sure the IRS probably set up red flags of all the money moving around.
Hollis: [00:12:57] Oh, it was crazy that was passing through and yeah… And so like in hindsight, if we do this again, won't do the complicated equation where we have 12 months tail customer. We also calculated a refund risk thing. You know, now it's going to be one time upfront with a small fee for us that continues, but like the calculating the refund piece to try to mitigate risks. Like I think we went into it wanting to be like a no-brainer where it's like, hey, we've taken all the risks where X, Y, and Z, that you won’t have to do anything for.
Our contract is like the nicest thing in the world. If this was the only thing we were doing, and we were focused on it that thing would have sort of bit us in the ass, as it started to grow. But it worked well. It was boutique small. And we only did this from March to October. So it was like a significant period of time, but you can see all the forethought we didn't put into it with, oh man, the amount of time to calculate these things if I would’ve...
There's a bunch of things we do if we really want to scale it simpler. If we do this again, you know.
Jason: [00:14:05] What are some of the other things that you do simpler. Because most people listening here, this is their full-time gig. They weren't just looking at like, well, let's just try this project out, which that's really pretty cool that you guys are able to do that.
Hollis: [00:14:19] Yeah. I think, you know… fed the horse because we had all the relationships and we knew this I'd stayed up drinking wine with every person in the thing all night. I knew we could do well with good products, which you highlighted, is like products that kind of sell themselves.
And then the owner of those products, I think this is the simplest thing is don't just take a good deal. We only took people who were so product-focused that we were going to get the content and the angles we needed. All they cared about is being the best. But they didn't care about was telling us how to market it, that they actually wanted us to tell them. They would use the campaigns to inform all of the rest of their staff.
One thing we did do well and make it easy was, hey, use the work we're creating. We don't need any cut of it. You can take our landing pages, reuse them. If you get your own affiliates, you can run them through your program. You know, just do that. Cause we only focused on that 10% that drove our revenue.
The things we probably would have done different or not such a complicated calculation of the things. I remember when I first started in some of the affiliate stuff, people would hold back a percentage for refunds. There was like a whole equation. But we made everything else so simple for them. We didn't need to go, that… We could have just said here's a flat fee. Here’s a number.
Honestly, it would have saved one employee 40 hours a month in weird stuff. And in places where ambiguity… where also the customer on both sides has to read a spreadsheet that's complicated versus like here's the number that came in and here is the cut… over. I think simplicity would have helped a lot in that sense.
And then other simplicity things, I think just figuring out how to set expectations of timeline. Even though we didn't work for those people, said it on the phone, in the conversations of like, hey, we might get a campaign locked in that’s going to be out this far. But then they get in their own world. Like, where's the stuff?
And I'm like, no, we already told you this. And so, one outline. Here's how this works, one the phone. Before you email me any questions, reread this. This is the rules of engagement and how it works. But that I would say once it worked and had momentum, changing the relationships from I work for you to we work together changed the whole dynamic of it versus, you know, just collecting a flat fee.
Jason: [00:16:49] Yeah. I love that of like we work together rather than you're the dog barking orders to me. And even if you don't do a performance model.
Hollis: [00:16:58] Yeah. It feels like you kind of got to do that sometimes. Cause I feel like that's how we like learned. If you worked in a restaurant going up or we… Whatever, like that’s how it was. When you’re getting paid, you just got to say yes, please, and as you wish.
Which honestly doesn't even serve the client that well. Sometimes you’re doing shit that they don’t even need to get done. They just wanted to show that they tell you to do something. But we're only going to focus on brings in dollars. It doesn't bog down either of our teams.
And that's why we switched the contract that you can leave whenever you want. You know, the psychology there was great because it was like, we're paying equally versus that, you know, walked into some long retainer and some big set up fees and things like that. Obviously you have to have some results for that to be worth it, um, for the relationship to stay.
But if you know you can deliver on it, then it's probably better to be in a, a mutual relationship where either party can leave in 30 days notice versus trying to lock in really long-term deals.
Jason: [00:17:58] Yeah, exactly. Well, awesome. Well, this is amazing, Hollis. Is there anything I didn't ask you that you think would benefit the audience listening in?
Hollis: [00:18:05] Listen, I mean, it's funny just because it's a friend of mine that just got off a call with one of our members who, who set them up on like a little dinner in the same town. And I forget the book references basically it's about taking knowledge from other industries and bringing them into your own. So what I saw was great was a lot of the product companies who were here like some of them were in retail and other things. They just didn't know how to pull stuff from other areas.
There's always like these levers that you can pull from other industry practices that might not exist in a niche that you're opening that you're trying to mark it as that in. And so I was really, all we did was just start reaching into other tools that there's no way they're ever going to get to this.
So obviously we can take over this part for them and we’re not also dealing with the dynamics. So there's someone in the house already being paid to do this or anything like that. It's pretty clean that way.
But I think we just learned that from sitting in these events from people like, you know, we have some hiring stuff we've learned from guys in the hotel space, which I never would have thought to learn that until I sat into that at one of these events or whatever.
So I've never seen through blinders. Like it's good to be focused and linear, but I think there's just so many cool nuggets in different industries you can pull and bring in that we all just kind of forget to take a glance at.
Jason: [00:19:30] Awesome. Well, cool. Well, what's a website people go and check you guys out?
Hollis: [00:19:35] Just babybathwater.com.
Jason: [00:19:37] Awesome. Well, thanks so much for coming on the show. If you guys enjoyed this episode, make sure you go to their website. They have really cool events. I went to the one in, in Utah. And it was really pretty amazing.
And if you guys want to really grow and scale your agency faster, what got you here is not going to get you to the next level and you need to do a number of different things. Because probably what got you to this level is from referrals and word of mouth, or maybe you selling, or maybe one salesperson.
The biggest thing that you need is systems in place in order to grow and scale faster and get to the point where you can pick and choose. If you want to do that, I want you guys to check out our agency playbook. Go to jasonswenk.com/playbook and check it out. And it might just be the thing that will get you to the next level.
So go do that now. And until next time, have a Swenk day.
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Category:general -- posted at: 7:00am EST