Okay. Can you hear me? I'm live. Thanks so much for your patience. This is crazy. Let me know if you can hear me. I have gone through a comedy of errors. That's all I can really tell you, is that everything that could have gone wrong has gone wrong today. And I appreciate you, just an awesome beta tester who is patient and accepting of the fact that, not everything works every time. That's how we have to treat these things, if we didn't, then it will be easy to freak out.
Jason can hear me, great. Thanks Jason. Fred can hear me. Awesome. I'm going to describe to you what happened. Because this is the type of stuff that small businesses go through all the time. So over the weekend I switched my email. I had Jeffalytics.com email and I have Digital Mantis which is the company that I actually incorporated. My S-Corp is called Digital Mantis and Jeffalytics is the name I use for my blog. And they just got merged together.
The reason why I'm going in this much depth for you is because you probably can understand from our survey here that we are talking about the same thing. A lot of us start doing business, we start working and suddenly we have a business that we have to attend to. We have different things we need to think about, different considerations and it's not always smooth how these things happen.
Yes, ideally I would have been on the Google suite of apps this entire time and had my email perfectly configured and everything would have been great, but I didn't. I had Jeffalytics which I started as a blog and then now I call it my consulting business. And then I have Digital Mantis which I've had since 2005 or so, whenever I went on my own. And for the last 10 years I've been like, do I switch my email or not. And in 2017, I'm going to switch the email, I'm going to clean it up, I'm going to get everything in one place and so I did that. I made it jeff@jeffalytics.com and jeff.sauer@digitalmantis.com as the same email.
So if you email one or the other it goes to the same spot. And when I did that, apparently it deleted jeff@jeffalytics.com from the entire Google database. Google had no idea that jeff@jeffalytics.com was a thing. No idea. And this is what I used to log into all my clients’ Google analytics accounts, I use it for training, I use it for everything. And ten minutes before we were supposed to hop on the call, that email account was no longer existed.
And so as you can imagine my panic was through the roof. And so what I've been doing while you all have been waiting patiently, is one I tried to change the webinar, so I can log in as my Gmail account or my Digital Mantis email account. And it turns out that those things are not allowed to do Hangouts on air, which is really the back end of this thing. And so that didn't work. So what I had to do, I had to go and delete the alias jeff@jeffalytics.com from my email and then go back to the old way of doing things. And so if you were to send me an email at that address, I'm not sure what would happen right now.
So that is the longest explanation I can give you for why this is a crazy world, right. These nagging things, we know we should get them done and it just takes a while, because it's not important. There is nobody holding a gun to my head and saying Jeff you need to just make this switch. So I tend to not do things until I have time to focus and I finally felt like I had time to focus and then I probably didn't have enough time.
The reason why I'm telling you this, normally I wouldn't go into this much depth. This is exactly what we are talking about in today's call. This is exactly the point of today's call. And that is, there is so many things that we do from a business planning perspective or that we don't do because it is not easy to do at the time or that we don't have time to focus or we're just not sure where this is going to lead to. And if we don't do these planning pieces, if we don't get that stuff in place, then it can have repercussions down the line. You might find that ten years later you are finally fixing something you should have fixed ten years ago. That's really is the reality of what ends up happening in all of our businesses. And so you saw it happen to me right now. I like to feel like I have my stuff together but even then there's little things that are nagging there.
This is not uncommon at all. So one of the company that I admire is that Minneapolis company called LeadPages. I know a lot of you have used their software to create landing pages for clients or for your own campaigns. They are still called Avenue 81, because that was the name of the company they started before they became LeadPages. So if you send them an email it's all up their old way of doing email. That's just how companies operate. There is a lot more behind the curtain than you think, right. There is the legal business name and there is the brand name they use that gets the traction.
The reason why I'm bringing this up and spending this much time again, is because as we go to our survey results, what are we seeing here? What are we seeing when we look at our results? We actually see stuff about, whether you're going to grow or not, we see stuff about what type of legal entity are you? These are the types of questions we are asking now. So I think it does dovetail nicely into what we are talking about. So let me just make sure this shows up well on your screen. Let me know if you can see what I have up here. It should just be a typed form under Jeff Sauer. I think everybody should be able to see that now. Great, it looks like it's working for everybody.
So long story longer, what phase are you in right now in your agency? So one of you is saying that you're a dreamer. Five of you are in a freelancer phase and two are in the employer phase. So as we talk about in our lesson we define the dreamer phase as, I am looking to make the leap, but I haven't done it yet. Freelancer is, you're working but it's mostly just you or maybe a partner. So you're very small and you are looking to possibly expand. Which we get to in the next question. And then the employer phase is really where you have people on your team to get these things done. This is just giving you an idea as to where we all stand right now.
Do you plan to grow your agency in the future? Yes, all of you do. I think that's a pre-requisite for investing in this course. If you aren't planning to grow that'll be weird answer.
What type of legal entity have you established? This is one of the interesting--the majority of you are LLCs, two are S-corporations and then one is a sole proprietorship. I'll be curious for you LLCs out there. I think Ryan mentioned it in the forums how his lawyer said LLC. Lawyers tend to go with LLCs, accountants go with corporations. I wonder if that's true for all of you as well. So if you are a corporation because your accountant said, let us know. If you're a LLC because your lawyer set it up, let me know in the chat. I'll be curious to see.
Ryan says, I'm in the dreamer phase and the freelancer phase still works full time but this freelance is not enough to leave the job. I think as I mentioned in the lesson videos, it's okay to be in that phase for a long time, because once you get out of that phase, once you leave the job and you get into this, it's hard to do anything but just work, work, work. So the more plotting you do, the more planning ahead of the time you do and mapping out what your vision is going to be while you still can think clearly and you're not in the thick of things and you can have a rational decision process, there is nothing wrong with that at all. So I think it's good Ryan to be in that phase and to be in this course at the same time.
Because again, I said on the side line, it seems like forever but it was really more like six months that I was just plotting out what I was going to do. And I wasn't even sure that the lesson how I mapped out exactly what I thought I would make, I thought would happen from that and then I didn't look at it for ten years. But everything came true and actually revenues were much higher than I ever thought they would be. That was really how it went. When you are busy building a brand and building something up, it's really hard to have an objective point of view outside of what's in front of you.
Alvaro does an LLC because it seems to be common choice. Looking back on it, should have done more research as he rather be a S-Corp. It is common to do LLC and LLCs are a safe choice, Alvaro. There is nothing wrong with doing it. As you can see here, the majority of people have chosen an LLC. So there is nothing wrong with that by any means.
There is a tax advantage. I just sent out massive amount of money to taxes myself for our company and it was nice to look at that number and see that it was reduced compare to what it would have been if I was an LLC. So that was nice. But that's the main reason why you do this tax benefit. And actually this time of year where we are right now, some of you would see that if you look at how much you paid in as your tax on your own revenue, or as you start to file that, it becomes tangible. It's about 6.875% that you're paying extra by being a LLC versus an S-corp.
Ryan is saying that he wants to leave but he is trading work for work. Another plan is to just doing work now phase of figuring how you will do work. So you're not doing work 80 hours.
My wife is a lawyer and she is an LLC person. There is nothing wrong with LLCs but it is a thing that lawyers push as I mentioned in the lesson. Ryan I like your thought on trading work for work. Because you're right and I think we should all think about this, and if you are freelancers or in this phase where you're getting early on the process.
If you have a job and you're making $50,000 a year. You could quit and you could get contracts and you could work the same amount at a contractor rate and you could make a $100,000. It is within the realm of possible. But you'll basically just be working all the time in order to get to that point. And you'll get more money but you'll also have so many things that you'll have to take care of that. It's alright to sacrifice the short term earning potential to make sure that what you're doing is what you want to do, so you can plan it out. That is really a smart attitude with going through things.
So we've talked about this pretty extensively the legal type of business. How many business partners you have? Six of you are saying, it's just you. One has three partners and one has two partners. I think the three partner agency is probably Fred's agency.
Do you have strategic partnerships? Many of you are saying no. Some of you are saying yes. I like this thought of strategic partnerships with other agencies. I like it a lot. But I’ve actually found it's empty at the same time. So, it's alright to have it as a no. Those of you who say yes, I'd like if you can put it in the chat if you are on the call right now. How it's benefiting you and what the value is. That'd be nice to hear.
But here is the thing that happens. Actually one of my business partners at Three Deep, here's what he would always say about partnerships. He would always come in to our office and say, hey we should work together. This sounds great. And every single time it was empty. Yeah we should work together right? So what he would end up saying to people is, hey it's alright for you to come in here, it's cool we have some energy. The only way this is going to work out, I've had fifty of these conversations, the only time it ever works out is if you bring business for us or you bring business for you. Then we can have a project where we can work on, that's the only time it is going to matter. The only time a strategic partnership works if there is money involved. Otherwise we're just wasting our time. We're just basically putting time into something that may never produce revenue.
At first I thought it was rude to tell people that, then eventually I was like, I respect this a lot because it is such a waste of time to try to create a relationship without any idea whether it's going to work out or not. Not only as any idea as if your relationship is going to work out but there is no real reason to have a relationship with another agency or somebody who throws you business, unless it can lead to throwing you business.
What I found is that a lot of people especially individuals, they want to maintain their independence by being just a freelancer or consultant, whatever you want to call it. So they try to line up other consultants and be the business development person for them. I've been in many meetings there as well, like hey we should all freelancers get together and act like a big agency. And again that sounds great in theory and like I said, I've been listed on people's website as one of the services they provide was SEO, analytics or web design even though they didn't do it themselves. They listed me as the partner.
I've been involved in all these things. And again it all comes down to business. And the reality is that, maybe one of every fifty people that you talk to about partnering up will actually bring stuff to the table. And usually they are the ones that are really good at business development but not very good at the work. So if you're the expert in doing the work then you can get the work done for them. Or it works the other way around is if you're really good at business development then yeah you should be finding partnerships out there, where you can give business to people. And I would try to find some kind of structure on it. Some kind of revenue structure where you can make money off of it from doing that. Anywhere from 10% to 50% of the contract.
That's really my thought on strategic partnerships is that, they sound great, who wouldn't want to have a partnership where another agency sends you business. But they are pretty empty. It's just like lip service and the nature of working at an agency and having clients and everything, it's hard to do that well. I would just say, it's alright if you're not doing strategic partnerships and if you do them I would focus on doing one or two really well, with people who you really trust versus going out and having coffee with people and talking about how do you team up. I've never seen that work really well at all.
Who makes the important decisions in your company? Many of you are saying that it's one, you. I think with more data, this would start to even out a little bit. But obviously this is pretty much biased towards the types of agencies you have. Second one is, everyone has an equal voice. There is one sole decision maker, who is not the person and then the other. It's really hard to come to conclusion with this because so many of you are just one person shops.
Nobody has a board of directors. I think that's okay. I think the board of directors probably doesn't become really necessary until you have so many layers that it necessitates itself. I know it sounds like a weird way of praising it. But basically if you have a C-suite, then you have an executive team and you need somebody to govern those areas then that's when you need board of directors. You don't have a C-suite or you don't even have an executive team and you're just a few of you probably don't need it yet. And the other thing is, and somebody has asked this in the forums, you are basically the board of directors even if you don't formalize it, as you start your company.
Buy/sell agreement - Looks like one agency has that. Again I'm going to assume these noes are based on there is just one person. These things are really important to take a look at. So hopefully as you grow you can see how important that is.
What are your thoughts on exiting your agency? I like this one because doesn't matter how big your agency is when you answer this one. So for some of you it is on the back of your mind that you're going to exit your agency but not influential. And then the other half are saying basically I have a ton of work to do, if I'm ever going to sell this thing. So you look at it as a light at the end of the tunnel perhaps. Actually I think both of these answers are saying similar things about you. So that's good.
Honestly, I can't believe that so many of you are actually saying that you are not planning for exit. When I first started my agency and when I joined the other agency two years later, all I thought about was making millions of dollars. So, I don't know either you are not as crazy motivated as I was to get the money out there, or I influenced you from this class in that area.
Or you're just not as young as I was. Because I was in my early 20s. But I was like this is my ticket to millions, that's why I did it. That was even one thing I actually thought about with my agency was, I can sell those things for big bucks and then it wasn't until 5 or 6 years later that somebody, my accountant again, was like you're not worth anything. And so that was a fun reminder for me. So hopefully whether you are thinking this is going to be a huge way to sell your agency or not, at least now you've heard my cautionary tale about it.
So a couple of you are interested in your answers, I'm not sure if we'll get to that or not. But these are the general survey questions, anybody has any questions on that? Otherwise I'm going to get into that free form questions. So I'm going to let some questions come in and then I'm actually going to download these results. Because of my technical difficulties, I didn't get a chance to download them. So I'm going to download them now.
I see Ryan popped in a link into the chat window, might take a look at that while I'm waiting for this to download. Oh yes. I have definitely seen this before. I can't remember if I sent it out if this was in the lesson notes or if something I sent to my business partners, but I do remember seeing this. Yes, I think this is something that I included in the notes. If anybody is wondering what I'm looking at, it's the merger piece that Ryan put out there.
Alvaro want to know would you recommend switching to S-Corp after you've reached a certain revenue goal? I am not qualified to recommend a business legal entity to you. I can give you the information that I know, but I can't tell you the involvement between switching between LLC and S-Corp. It's above my pay grade and my knowledge level and my ability. I don't actually know what is involved in switching from one to another. I would love to answer that but you need to talk to a business professional. And when I say a professional, I would probably talk to an accountant and to a lawyer about it. Because it affects a few things.
Now it's interesting, when you set up an S-Corp from scratch, what probably ends up happening Alvaro is that, you divest the LLC or shut it down and then you invest in a new S-Corp. So you close down one business and then invest in a new business essentially. And I had my accountant do the articles of incorporation for my company. Your lawyer can do that as well. But articles of incorporation which is what a corporation means was done by the accountant and it’s pretty straight forward. But it is basically the same, who owns the shares. And since it was just me, it was very easy.
Then obviously the agency that I have with multiple owners, that still is pretty straight forward as long as the percentages are well defined of who owns what. But it's pretty straight forward. Yeah, you need to talk to somebody who does this every day, otherwise you could get burned. I'm just doing my best to try to give you some understanding of the process, but you need to talk to somebody to do that.
Fred says, very loosely, how is running your podcast helped you with your agency. How beneficial you feel is in growing your agency/industry/network? Fred I love that question. My objective of the podcast is not to grow clients based on my agency expertise. It does many things but it's not for me to get clients doing consulting. The objective is to build the brand of Jeffalytics. It's to talk to peers in the industry and get an excuse to talk to people, the reason to outreach to them and everything. It does a lot for me. But it's not the objective to get clients. I know a lot of agencies are thinking about this now have actually been on agency podcast, and I've seen them from all over the world from UK, US, Australia.
I think one the biggest problems agencies are going to have, just business to business in general, is how do you get enough critical mass of people downloading your podcast and listening that it's worthwhile for you to do this, to keep on producing it. Now who is going to want to listen to an agency talk. What can you talk about that people will listen to it? Because the reality is the overlap between clients and the people who listen to podcasts, I'm not sure how big it is.
But a lot of time people give up on stuff like podcasting or other dreams. And they give up on it before they reach critical mass, because it's hard to get a lot of people to get interested in B2B things. B2B marketing is difficult because there is just so many things for people to consider when it comes into it. I know I didn't articulate that very well. There is just so many considerations when it comes to the authenticity of listening to an agency. Do the people really want to get their marketing advice from an agency who is trying to sell them on services? Personally I wouldn't do that, I wouldn't listen to an agency podcast. Maybe I try to get my clients to listen to one something like that.
So I don't know if a podcast is the best method that I would think of to market an agency. But I have seen some people who are doing it, who do well in it. So I think the best way in my opinion a podcast will really help position you as an expert in front of the people you want to be an expert in. So what do you want to be an expert on and how are you going to get in front of the right people. So that's how I look at podcast as a vehicle.
So in my case, it let me reach out to people who are punching several weight classes above me, in my opinion like the Larry Kim's, the Rand Fishkin’s of the world, Marty Weintraub, people who I look up to and I actually have an excuse to interview them. Like hey, do you want to be on my podcast? And a lot of people now consider me to be their peer, which is wild to me. It's just crazy because I never really thought that would ever happen with these people. So it's been a cool effect. It has done a lot of good things for me but it has not been primarily a business generator. It's more like a deal sweetener. Like it makes the deal sweater for those who want to be involved with what I'm doing.
So It's a long way of putting it out there. But I think a podcast will be a good idea but I wouldn't choose it as one of ten marketing things that I'm doing and then not do it not very well. I would say I'm all in on podcasting, that's what I'm doing. And I'm going to be different from everybody else. Notice the trend how you are different, that's what it comes down to. So how are you going to be different than other podcasts and who are you going to listen to, who are you speaking to and why should they care. I took an approach with my podcast because I didn't think anybody was doing what I wanted to hear. And I think that's been beneficial and so I'm really happy I did it. But I also don't know if my objective was to grow business, I think it would have been considered a failure by this point.
And sorry if I was a little bit rambling there but I was trying to open up the spread sheet answers while I was talking. I am not the greatest multi-tasker.
Ryan says he considered starting a podcast focused on business in the home building industry. People he could interview and he thinks people would be interested in hearing. Yes, actually Ryan this is a great example. So let's talk about podcast focused on home building industry. Who would download that in their right mind? I don't want to sound super negative. But who would just download a podcast on home building and like yeah this is a home building podcast. Now my impression of somebody who is in that industry they are listening to a radio, classic rock tunes on a radio.
I used to work on construction sites, this is what it was. One radio playing the classic rock station, maybe a country station. And they couldn't put headphones in, because they had to be able to hear things. So I don't know if that would really work out well. But maybe if you're talking construction foreman or something like that, then that what it is, they are driving site to site. So that's one consideration.
The pro for it is that, if you can get one contractor to listen to this podcast in their car, they are going to buy everything you sell for the rest of your life. If they like you and they are interested in it and they are getting insights, they are going to be a lifelong customer of yours. So sometimes it just takes one to validate your entire production cost. Say your podcast costs a $1000 a month to produce or something like that. You can easily make that money back if you're just one person. You could easily get there. It depends on who you are geared to. But that's just an example of my thought process. When I go through things, I like to picture the end user of this thing sitting there in their car or whatever they are doing and then picture a real human being and that's usually how I figure it out.
So Ryan when you will it down like the owners of the company, how many of those are there in the US? How many of those are there in your market? How many are in the demo, where they listen to the podcasts? I think if somebody who is older than, might not even listen to podcasts. How do you get in front of them? How do you get them to listen? Or is there another way of to get in front of these people? I'm not sure of the answer to that. The good thing about the podcast and other distribution networks like blogging and everything, the cost is so minimal to get going. Getting a podcast going is very cheap, relatively speaking. It costs more to do a good production and there is hosting costs and stuff like that, but it's not too bad to get a podcast going. So you could experiment with it.
But again, most people give up on things before they get any traction and the reason why they give up on it before they get traction, because it's hard to get traction. So I think if a podcast is one of the 10 things you are doing, like I said earlier, then generally speaking I don't think it's going to give you the results you want. But if you say I'm all in on podcasts then yes you will get there. You can say this for anything right? It's not just podcast. Podcast are just one thing that happen to be popular right now.
I think Ryan you might even have better success on Instagram. Using Instagram ads or something, I don't know. There are so many different ways you can get out there and get in front of people. That you just need to experiment and see what gets a little bit of traction or your sure that is going to work and then just go for it. If you're sure something is going to work. Just pull all in on it. Heck yeah or no. I think that's in one of our upcoming lessons, we talk about that, if we haven't already.
This extra week because I was gone two weeks ago and I couldn't attend, it's throwing me off as to whether you've listened to the lessons or not.
Fred does mention a good podcast for you to take a look at and see how they are doing. That's one thing I like to do. Is see who is successful and just try to reverse engineer what makes them successful. And also if their success--and this is something you should be cautious of everyone listening and everybody who is in this course, just because somebody sounds successful or looks popular, does not mean that they are profitable. I know there are a lot of people who are internet famous and they are broke. And just because somebody looks like they are doing well does not mean that they have any money at all. And that the more flashy people are with how well they are doing, they talk about their numbers, usually the worse off they are. They are putting up a façade. Just because somebody seems like they are doing well doesn’t mean they are making any money at all.
I think there is a quote that I really like, it says, you can't write a check with famous. And I think that's a good way to put it. I don't anything about these individual podcast you are talking about. I am just saying in general that just because people are popular doesn't mean that they are successful.
Uros is saying some kind of time is offered to partner up small businesses just starting up. They basically need all kinds of digital marketing can't afford to pay what you are willing to. What approach would you advise? So would you work for equity in a company instead of taking money? So on one of the lessons I definitely say I personally don't work with startups because I just don't think they are going to succeed for the most part. And it's just way more work than I'm willing to put in and the return is so far down the line that it's really hard to run a profitable business when--it's really difficult to be profitable with your business if you are doing a bunch of spec work. But with that said, if you believe in the entrepreneur and if you have extra margins in what you do if you have cash cows and you have extra time. You might consider doing that, like working for equity.
As far as how much equity you should get? One of the calculators we put in our lesson about partnerships. We have a calculator about equity percentages. I believe it's lesson no. 28. There is a bunch of different ways to look at it. Venture capitalist say, who had the idea, who is committed to it. They basically break it down to how much risk you take and how much you put into it. And also there is the pillars of what makes the business successful? There is leadership, there is sales and marketing, there is product, there is back office like finance, HR type stuff. And you got to give some percentage assignment to sales and marketing and the value that it brings in.
I happen to think that marketing and sales is extremely valuable to a business. Maybe even worth 50% or more. But if you are just doing it as a freelancer on the side, part time it's probably like just a few percentage points that you could ask for. And it probably invests over a long period of time. Because if you are just doing work let's say for two months. I don't think somebody in their right mind would give you a large chunk of their company in the future because you spent two months on something where they couldn't pay you a $1000.
Now there is stories and these stories get perpetuated as if it's how is it going to happen. Usually it never does. But people who instead of getting paid a $1000 by Google to do a logo, they get paid in stock and now they are billionaires or something like that. That might happen once in a life time, but it's probably not going to be any of our life time unless we are setting up shop in Silicon Valley and specifically calling that out. But even then your chances of hitting it are very small. So I would say, a couple of percentage points in the business and that's if you do it over the long haul.
Brian is talking about the millionaire fast lane. That sounds like a get rich quick scam. Yeah Ryan is saying equity investing with mentors stay away. I agree with that. Stay away from people giving you equity in their company unless you want to be married to that person and you think they are going to make it for the long haul. Or if you are just looking for something fun to do or are looking for a change of pace, I guess it's alright to do that.
Okay, so I'm going to get into the written answers now. The first one answer is they have had challenge with business partners one agency, which is a good partner, white labeled their services. The white labeling has required to present himself as an employee of that agency. He realizes that it's a big mistake since it's overly complex. While the set up is done now. You have to let this partner know that they have an exclusive set up. Another challenge is that they provide competing services that is they want to sell high margin services they trying to sell, expand your services. It's not scalable. Not sure they can expand the relationship.
From what I'm reading here, it sounds as if they want all the benefit of the partnership and they are just using you for the labor. Which doesn't necessarily mean as bad but, what do they bring to the table that makes them so valuable that they can compete and work against you. At the same time, they are working with you. What are they doing versus what are you doing? And can you live without them? And can they live without you? That's really what it comes down to.
Actually you can probably divide it into quadrants in that way. If they rely on you and you're the unique one, then get out of this relationship and find an actual business partner and work with them instead. If you rely on these people and you're not doing anything differentiated, then you might have to put up with their BS, because of it. So where do you position yourself with that quadrant of uniqueness and how bad do you need what they have?
I think it's okay if you don't have some other people have to get paid for the white labeled services but then learn from them. Learn about why they are successful and how they do it. That's a valuable thing. Somebody is like really good at business development but you are not good at business development. Learn everything you can about business development from these people then. Learn everything you can on the job while getting paid by them. So basically you're getting paid to learn. Why not, right? I would highly recommend getting paid to learn. Hopefully that helps you.
No experience. Thinking might be it's best to stay away.
Affiliation only. Get referrals, key agencies, nothing written in stone.
In a prior business the partner was a disaster. This business has been great. Word of caution - make sure you have similar appetites for risk, whatever that appetite is.
I think having a test period is a good idea. I think Fred has mentioned this in the forum as well. But basically a partnership is like a marriage. It's equally messy to get out of a partnership as it is to get out of marriage. So make sure that you are committed to that person. And that you know about them. So I think the holding period all kinds to different things you can do with the partnership.
I highly recommend partnerships but you have to be cautious. It's great to have partners. because you can't be good at everything. You can't be good at business development and creating products and marketing products and HR and finances, you can't be good at all those things. You can have enough to be dangerous and then surround yourself with good people. You can't be great at everything, so partners make a lot of sense. People work harder when they have an incentive to work harder. You are going to get a 40 hours employee if you don't give them an incentive to work more. Or you might find somebody who has crazy work ethic. But people work hard because they have incentive to.
First time it took a couple of years. Started the business with business friends. One finally joined after the business was semi-established and had two years of growth. Current company was brought in when one of the partner retired. That's interesting. I think that's Fred again. I'll be interested when you say brought in, did post a job posting, did you know them from something, how did they find you? How did they know about you?
Found a potential business partner from a year ago. Our process of testing out was very passive. This sounds a lot like the partnership I was talking about. Like hey we should work together sometime and then nothing happens. That's like among one out of fifty relationships that actually lead anywhere. That sounds a lot like that. Fred knew the person, that used to be competitors, interesting.
Describe your decision making process.
Day to day decisions left to one account manager. They review challenges weekly. She provides daily recap of accomplishments and challenges. When work is repeatable we create workflows in Asana. I like that.
A lot of you are not quite there yet.
I like this one. This is basically saying you have full autonomy within your area because otherwise the project just wouldn't get done on time. So you need to let them make decisions. But then anything that effects the company then you basically need to bring in your business partners. This is a good summary and a good way. This is pretty much how I think about how business should be managed in that sense.
Instinct and future planning depending on how big the decision is. May list pros vs cons, consult with colleagues.
Most minor decisions have autonomy. Bigger decisions are much touch base process. If you have a small and no formal experience that make sense.
Do you have any story about agencies selling, merging or other exits? So, I did sell a former e-commerce company through a business broker. It was a good experience to just relieve me of a company that I had zero passion for. But I do see how an agency can be more complex to sell, having many operations, documented. I would agree with that.
I have a good exit story that I'll share with you that I heard on Friday of the last week.
I worked my ass off for 5 years to build my previous business ended up trying to sell but market was commoditized. Walked away with nothing but my accomplishments. Not a bad thing but a solid lesson in planning. If you are on the call, that'll be great to hear some more color behind that. But it's refreshing to see this year, if you look at line 7. Working your butt off for five years and then you try to sell it but if you become a commodity you end up walking with nothing. People aren't going to buy a business for 50 grand or a 100 grand. That's just not even worth their time. When people want to buy a business, it's in the millions they want to spend on something, because that's what end up being worthwhile for them.
Sold company for a lot of money, in stock of a Fortune 500 company. Stock went from $44 to $2.50 in 18 months. I would advise against that approach as 5% of a lot of money is not that much. This person says they'll do either cash deal or they’ll divest the stock immediately.
Yeah so here is the story that I heard. Actually two stories and these aren't in the videos. When I was in India two weeks ago, I was hanging out with somebody and he thinks that the agency is trying to sell and so that's going to be interesting. He has given me some numbers around them, but I actually got exact numbers around an agency that just sold in 2016 and their analytics data science and performance marketing, that's how they described themselves. That was three things. They had about $10 to $15 million in revenue coming in. When they had revenue, they were also selling Google products. Some of that was just pass through revenue where they paid it to Google. So they are a little bit bigger than my agency.
They sold for $25 million, which is pretty remarkable if you look at revenue. It's about 2X revenue and I would assume that there has to be more like a 10X of EBITDA because there was no way they were making--10X EBITDA would mean they were making $2.5 million in profit a year. I don't know many agencies that are making $2.5 million in profit a year. For whatever reason, there is not that many of them. That will be 10X if they were doing $2.5 million.
So that's pretty remarkable. And so this company is sold to a bigger agency and then the other thing that was interesting about this one is that they have an earn out, and I had mentioned this in the last one that earn out is up to $80 million. So they can keep on growing. All the partners still remain in the company after getting acquired and they have an incentive to make 3 times more money if they stick around and hit earn out targets.
So that's pretty remarkable if you think about it. I can't mention their name because I feel like they told me this in confidence. This is one of those “buy me a beer and I will tell you” conversations. But I don't know if I mentioned this company in the lesson. I think that I did so you can do the math if you want to and figure it out. But they were a merger of three other agencies back in 2008-09. And then they ended up going from there. Yeah they merged in 2009 and sold the company again in 2016. And they probably had eight principals at the time because they were a merger of three other agencies. So they had a lot of people getting paid out. So $25 million among eight, that's still a bunch of money right? $3 million a person potentially and then the earn out can be even bigger.
So yeah that's pretty awesome. They didn't do anything that special if you ask me. Let's talk about that for a second. They were three agencies that merged and they each had two may be three maybe four partners. So we have eight principals. When you have eight entrepreneurs working in an organization, you should be able to structure your company to have awesome processes, like Ryan's saying. And to go into the future and do R&D and it becomes somebody's strategic purchase. Why wouldn't you be able to?
You basically have eight people. You don't need eight partners to run $50 million business, you really don't. Might sound like you do, but you don't. So there has to be three or four people, may be just even one or two people, who all they have to think about is how do we make this thing more worthwhile, how do we package it up. And also because there are a lot of people in there, they need to get the value up so they can get their cash out. That's an important thing here. If you have a lot of partners, you need to sell for a lot more money in order for people to hit their goals.
If you are selling your agency and each partner they want to make at least $1 million, that's just how it goes. I'm not sure about the cooks in the kitchen piece. That does sound like a lot. I'm speculating, I don't know the exact workings. People could have merged or they could have divested or something in between.
Fred says, has to be strategic purchase. Yeah it must have been, right? I'm actually not sure how strategic the purchase was, because I think data science is something that's strategic. But that's essentially how this had to have been. There is no way the earn out is $80 million, that's a ridiculous amount of money. So as I keep on finding these numbers and everything, I'm going to share with you all just because they are fun when we go through that. So that's my acquisition story that I heard recently.
Finally, what makes your agency unique? You're data driven, but creatively focused. Provide small business owners training, insights required to succeed at digital advertising. I like that. I like the mission around this. It's hard for me to know what services you provide or--I don't want to pick this apart. It could be more specific is what I'm trying to say. Like what type of training, what type of insights? Anyway, so I know that people who fill this out aren't asking me to critique what they are saying. That's just my first thought. I was like this all sounds good but what do you do?
I'm still figuring out positioning. Not much at this point. Still trying to figure it out.
We've been tossing around this question for as long as we've been around, 12 years embarrassing. I just don't have an answer for this. We may just be too jaded within our industry. That happens.
One thing I would say, if you've been in business for 12 years is think about where things intersect. Look at where you can get in the corner of something. This is a quote from Larry Kim who was on our podcast. And he says position yourself at the corner of two different skills and that's how you can really be unique. That's how you can be super unique. And so what we did at my agency was, we were Google AdWords partner, Google Analytics certified partner, which is really tough to get and a Salesforce partner. So we were the only agency in the entire United States that had those three certifications.
And so we try to build a narrative around that. That was, yes some people will get Google certified because everybody does that. But how many of them will position themselves to understand how your sales process works and be accountable for that as well. We can take you through your full stack all the way from advertising on a search engine all the way through getting customers and analyzing who your best customers were. And people bought into that crap. Not crap, I mean it's true but it’s more positioning than anything. Because the reality was that we had our Salesforce person who was in their silo and then we had our AdWords people in their silo and Analytics in another silo.
I am just basically saying that, that might be all you need to sound unique and to believe it. And it's not just for customers you need to sound unique. Generally, customers are going to buy with you because they know you and like you and you have a relationship with them. Or they were introduced to you, something other than how you position yourself, how you get most of your customers. But what about the employees? Do your employees believe that and do they get excited about it? So it can be positioning for both internally and for your employees too. Because employees feel a lot more for your company when they are part of something. When they can relate to it. When they can say it. So I think that's a good way to think about it.
Fred says, Google partners really difficult to achieve, something to go after. The Google Analytics certified partner network has been around for 10 plus years. They are basically nerfing the value of it. It has never been really valuable from a business development perspective, to be honest. Google has sent us ten leads and they are all terrible. But now with Google premium being a partner is good, but they are basically only going to send leads to premium partners, not to just general ones. So if you are not selling premium for Google, they are not going to give you any value at all. So you'll actually be better off selling Google Analytics 360, It is still called Premium but it's Google Analytics 360. You'll be better off doing that and re-selling for them and taking a cut, then you would just being an expert practitioner.
And the reason why, Fred and everybody else, is because if you're just an expert in a free product nobody likes to pay for the consulting services on top of a free product. They don't see value in it because they didn't pay for the product in the first place. And so we got trapped there a lot as an agency. We would get these people thinking we were just tech support for Google. When Premium comes out or GA360 it's now called, they charge a 150 grand for it, it assigns a value to it and your services are automatically regarded as more valuable. It is interesting how that works. You're just magically more valuable, even though nothing is really different. Nothing has changed.
And that just aligns as my comment as always, just go to where the revenue is. I'm not sure there is revenue in being outsourced tech support for Google on a free product. And also the ship probably sailed 10 years ago on that. Not 10 years ago, but 5 years ago. So that's my thoughts on Fred is, I think Google analytics in general is going to have a lot of challenges in the next few years, because of mobile. I think maybe looking at some of their mobile stuff and getting into the ground floor of Firebase Analytics.
If I were to start an agency or try to grow my agency, I would actually grow at the beginning of something not something that's matured. And we've talked about this in the course, right? If you are trying to start something in the industry that is at its maturity, the growth is pretty much squeezed out. If the growth is squeezed out of the industry and you're trying to grow something, all growth will come at the expense of somebody else, another agency. So when that happens you become competitive. And when you become very competitive in these areas it's easy to get commoditized or treated like commodity. And people would try to negotiate or try to lower their prices for you or anything because there is not as much to go around. So people discount their services, they charge less as they get there. They take concessions just in order to get their business. It's funny right?
Because that happens at the end of a commoditized business and it sometimes happens at the beginning when there is no real market for it at all. So you don't want to be at the beginning, beginning of the market, but you don't want to be on the down curve of it either, in my opinion. Depending on where you're at with your agency. If you're still choosing what you want to be and who you want to be, then choose something that's going to be around and growing five to ten years from now. Don't choose something that has already started to level off when it comes to growth.
I would say going after Google Analytics services, five to ten years ago was the time to do it. Firebase Analytics is where it's at, everybody. I really think you should look into Firebase. It's pretty amazing. It's pretty bare bones right now but it's pretty awesome.
The other thing I learned about in India two weeks ago was Yandex Metrica. Now Yandex is the Russian search engine. I think it's actually very viable search engine, really good. But it doesn't do much English language stuff. They have Yandex Metrica which is their analytics suite. Which is Google Analytics on steroids. They are pushing into the English speaking market. The product itself has no data caps, no data limits. It's like Google analytics without any of the sampling or any of the negative throttling. They just basically copied Google Analytics and then put on to much more strong infrastructure. I have actually having beers with the guy who is the lead developer of the Yandex Metrica. And he told me that he rebuilt it from the ground up, three times in the last four years. Because he just wants to make it better. So I thought that was pretty interesting.
He said that they are on 8% of all websites. Which is crazy because Google Analytics is on 85% of the websites. So the Yandex Metrica is like a pretty close number--they are not close to Google but they are in a number 2 or 3 position for biggest analytics tools. And you wouldn't have known it and it's completely free. And they have everything built into it, everything built into it, and this guy, his business card is sitting right here. His name is Victor Tarnavski. He is the head of Yandex Metrica and that dude is awesome.
He talked at the same compass I was speaking at and he was just going crazy about how he is adding features left and right. He is like, yeah I built that feature over the weekend. I don't understand why Google is so slow. And we were talking about person identifiable data, we were talking about how easy it is to spam Google through the measurement protocol. I was like, can you solve this problem? He was like, yeah it's super easy to solve. He was like I don't understand why Google doesn't have authentication on the ability to push data into people's accounts. It's that easy. And he said if they just made their account IDs more obscure, the problem would go away. And I said, are you going to do that? He is like, actually yes we can just do that. We are going to make an obscure account ID that's not like 1,2,3,4,5,6 and it's going to go away almost immediately. He is like I think I'm going to implement this weekend.
I know you guys are more interested in agency stuff, but I think this is helpful in general just to see where people are innovating. I go to conferences and I get inspired by innovation. I get inspired by these conversations that I have with people who are passionate about what they do and talking about these things, and answering questions that never get answered ever. I could do so many things to try to get in touch with this guy at Yandex and ask him all these questions and I'll get no answer at all, I bet. But then I just happen to be there talking to him and I got that. It was sort of cool to see these things.
And also that I'm personally not crazy for saying that Google is the only one who can solve their spam problem with Google Analytics. I think the big spam problem with Google Analytics is potentially where people are going to look for an alternative. I think that Yandex could be an alternative. I am not sure how much I trust my data with them. But these people seem like they didn't care about your data, they just cared about making cool stuff. A lot of adult websites use Yandex Metrica, they said in the United States. They are really the only customers they have in the US. The adult websites that don't want to be tracked by Google. Take with that what you will. Y.A.N.D.E.X here Ryan put it in there for you.
I'll see what I can do about Victor's presentation, Fred. Victor Tarnavski, Yandex Metrica. I just tried to Google search form. They didn't video tape the ones that super week that I was at two weeks ago.
Okay these are the end of free form answers. So start any other questions in here if you want to have them. No Ryan there is no reason at all to be scared about Russians stealing your data. That was sarcasm.
Uniquely qualified to serve to every industry and every company, just kidding. We have a really good approach to creating product catalogs for manufacturers, particularly when they have a large distributor channel and have to repurpose content across multiple channels. I think that's cool and a good way to differentiate.
In addition to the services I offer, I focus a lot on helping business properly build out their sales funnel and tell a great story. A lot of agencies from what I see just plug away without questioning if the client has the right funnel or not. I also think storytelling is important because humans love a good story and they can often be the deciding factor for sale as opposed to cost or features. So I like this. I don't know how well it scales to offer that a customized service and building up that funnel.
And also you just need to make sure you charge for it. And that's a problem I see people run into, is that they don't charge for these additional services. So they think the money is great but then they look at how much time they have to write off getting somebody onboard. That's the hard part right?
It's logical and it's good for the client to offer them a lot of extra services but it's not great for profitability or for your own personal stress. Now if you figured out way to do both, then either you are amazing or you're stressed out or you have just great margins. If you can get $500 an hour and then this makes sense. If you can charge $500 an hour and only have to work half the time and the rest of the time doing strategy that can really work out for you.
Okay, does everybody have that they want to ask while they are on this call? I know we are about an hour and a half into it but we started about an hour late nearly an hour late. So let's just hear your questions. I'm going to take a look into chat window, I don't see anything that's recent. I don't think I missed anything. If I did miss your question, bump it up to the top. Otherwise I'll just look for what you have to say.
Okay I don't see any questions coming in. I'm just going to stick around for a little bit but it sounds like you all are focused elsewhere.
Alvaro, good question. Why do I hate the name Jeffalytics and Three Deep. So let’s start with Three Deep, because that was the first one that came around. I am from Minnesota and when I was in high school, there were three wide receivers for the Minnesota Vikings, Jake Reed, Chris Carter and Randy Moss. And if you went to Burger King and you bought a happy meal or whatever they call them the value meal, you get a poster called Three Deep. And it was a picture of those three wide receivers, deep wide receivers whatever you want to call it.
And so I heard the name of the company, I decided it was hilarious that it was named after a poster from Burger King. That every kid had. Every single person had this poster. Honestly that was just funny to me that it was that name and then if you Google Three Deep, before I helped with SEO on Urban dictionary the description is not very flattering. And the other one is people would make fun of it and put a sexual connotation on it, much like urban dictionary.
So I get a lot of weird sexual comments about the company name. Which nobody really needs that in a business setting, no matter how funny it is to all of you or whatever, nobody needs that. You just don't. It was just all of these things adding up and I was like this is a dumb name. Now the intention of Three Deep was most companies only look at surface when it comes to digging your marketing data and the results. We go three level deep to give you the answer you're looking for. So it actually makes a lot of sense, we go three levels deep. I actually liked that. It's differentiating. It's a methodology. It's something that makes you unique, because everybody else sucks.
But you don't always have time to explain that. And when you're at networking events and you say it and people have few drinks in them. I just got embarrassed. Now I'm over it. I hit them back, not literally but I snark them back if they snark me first. That's what I ended up doing there.
Jeffalytics. Funny thing is I didn't have blog or anything. I was the only one blogging under the Three Deep name. People didn't even know who I was when I was there. Because I did everything as Three Deep because I was building that brand up. So, I decided that I wanted people to know who I was because I wanted to get speaking gigs. That dovetail nicely into what Fred's asking. I'll get to that in a second. Because I wanted speaking gigs and nobody knew who Jeff Sauer was. They only knew who Three Deep was, because I never put my name out there. And I was, I better write as Jeff in order to get it going. So I just chose any name at all with my name in it, so people would know that I was the person who was considered for speaking gigs.
Because for every five that I applied to I get accepted into one. And I only get accepted into local ones with local audiences of five people. And even that didn't always happen. So every time I tried to do something at a national level or even a mid level I would get rejected. So I thought the only way I was going to get speaking gigs, was if I had my name out there. And that's partially true.
It turns out that the way to get speaking gigs frankly is to get in good with the organizers of the conference. That's the number one rule. Just like I was talking about, how I like going to conferences because I have these hallway conversations and I have accessibility unlike anything else.
Accessibility at conferences with organizers is great. If you are nice to them and they like you, they just want to get their job done, which is to have people speaking and people showing up to the conference. So if you get in good with them, they'll just have you go to all of their conferences. That's why I was in India. Because the organizer of Superweek, him and I get along well and I have done three of his conferences now. Actually I just wrote the foreword for their Hungary conference just the other day.
And Fred you're going to like this one. Fred I might finally meet you in Estonia. I'm going to go to Estonia and do a conference in June, because I met the person who runs the conference last year. Like I said, Fred this is dovetailing into things for you. What end up happening was I got rejected a lot when I was an anonymous nobody on speaking gigs. I filled these contacts, these forms that say give us your pitch. And I get rejected every single time. Eventually I started to say, that's stupid to do that, right? It's not working for me. So I started talking to who were successful and got a lot of speaking gigs. And they basically said, are you a woman? Are you talking about something unique? How are you different? Just like even on this screen right now. What makes you unique? I never defined that. I only got speaking gigs in the past just because I was there, I guess.
So eventually I started to define more around what makes me unique and trying to get out there. But even that, I just needed some experience. So eventually I applied to things and I met people and that led to more and more things. That's the only way to put it is that get in good with the organizers and find the next one and keep on finding them. That's how it has happened for me. Basically you do good in one area and you get a reputation and you get more of them.
Now speaking itself, it's just reps. It's all 100% repetition, doing things over and over again. Just getting good at it, just getting comfortable with speaking. Best article I found on that one is by Oli Gardner, 'It's alright to puke, when you speak in public', I believe. Now Ryan's the fastest person in the world that is searching. So I bet he'll find this. It's a Medium post. But Oli Gardner just basically watched a bunch of TED talks and then became one of the best speakers I've ever seen. He's great. Maybe take a look at that one and see his approach to speaking. There is two parts to that. One, you have to be a good speaker. But no matter how good of a speaker you are, you have to get gigs. And the only way to get gigs is if you are unique or if you differentiate whatever ends up being.
Ryan on the spot. That's awesome. Okay so I think that answers your question, Fred. But if not, it's a slow build, it's all about repetition and getting good with the organizers. And put yourself out there. I'm telling you that having jeffalytics.com was much better for speaking gigs, then having just ThreeDeepMarketing.com
Now that's another funny story, if you want to stick around. I try to buy ThreeDeep.com and the number of ThreeDeep.com and I was low balling the people because I thought there was no competition with the domain name. And in my low balling, I ended up costing us the domain name and now it will be like a 100 grand to buy it.
Yeah, Ryan says he has spoken at a couple of meet ups. Yeah that's a good way to go. I like meetup.com to get people into a setting. You can get people in a room. I talked to non-profits, I talked to MnSearch, which is an organization I helped found. Just every little thing. I spoke at independent wedding association. I've spoken at so many things in the twin cities area. Just whatever people would ask me to talk about. It was almost always Google Analytics or advertising. I just said yes to everything and eventually kept on going.
You need some discovery method. The discovery method is probably search. Like speaker, your topic, your local area. Then putting your slides on Slideshare every time you do something. If you search for Google Analytics on Slideshare, I think three of my presentations are on first page. It's your back catalog. You just keep on doing things. And you just keep on plugging away. But again like we talked about podcasting earlier, we are talking about speaking now.
Just choose to commit to one or two of these and just choose you're going to be awesome at it and you're good at it and you're going to have much better results than doing speaking once and then not touching it again until a year from now. There is a difference between people who speak a lot and those who don't. And you can tell. It's all repetition and just getting comfortable out there.
Ryan said on meetup people stepped down so they asked him to take over. Should you take over somebody else’s meetup group? I don't know, depends on the reputation, depends on the attendants, depends on strategic value for you. Worst case scenario you just picked up a new job that sucks and you don't want to do it and wastes your time. Best case scenario you got a bunch of leads and fish in a barrel. So I don't know, you have to asses that group, which bucket they fall into.
I think you can over do it with community and speaking and stuff like that. You really have to tie it up back to revenue. That's never really a short term revenue tie, it's a long term. So what I mean by that is, if I do a speaking gig today like the one I did in India, that may never lead to business. I might never get a return on my flight there. Now sometimes people pay for you flights. Lots of times people will pay for the flights. This time I did it as a favor. So I paid for my own flight. They paid for the hotel and for all the food and everything.
Anyway, I may never see return on that or it could turn into $100,000 in business. And actually I could get a $100,000 in business from it three years from now. One, when India decides they want to start taking online courses. I might be one in position there now because there is a 100 or 200 people in the room watching me. And so I don't know, I don't have any answer to that. I don't know the answer to the ROI on that speech. Because it's zero until it's not. And all I know is the more I do this, the more things come to me and so I'm in a position where I don't have to assign a ROI to everything. I just know that I'm better off having chosen this then not doing it. And it's like a small factor being better off, significantly better off.
I think about speaking in meetups and local associations is that you have a reason to reach out to people. Like I was able to reach out to several people above my weight class and I get responsive because I can say hey I met you at a meet up or I met you at when you came and spoke at our thing in Minneapolis. I ordered you tater tots. All kinds of different things you can do to reach out to people when you have these relationships. So putting yourself in a position where you can rub elbows and bump into them, I think it's really good. You can do that with Twitter where people have their guard up a lot more to a random person on Twitter. Once you've met somebody physically, the relationship is much, much better.
Okay, I don't see any more questions coming and it's very late here where I'm located. And so if there is no more questions I think we're going to end this call. And yes, Fred it's the ConversionXL conference in Estonia that I'm going to.
Alright, thanks everybody. Hopefully you found this useful and you are okay, or at least understanding of my little technical snafu. Sorry about that.
You know that's the last thing I want to do. But hopefully we're through it again. Thanks everybody.
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