How big agency M&A and hiring works, and World's richest man on being a 'working boss’

0:00I remember one time I was interviewing for a job and then this one they were going to pay like 7 figures a year, 7 figures and bonuses. and here's what happened. So they put me through the ringer. It was 10 hours of interviews on a Monday, okay? The next day was another 10 hours, okay? And it was nonstop. And they even dragged in management consultants in there and asked me like, oh, you know, how many tennis balls can you put in a plane? I'm like, what the fuck? And you just want to see how you think about things, right? And I do agree. I think you need to do this for people that are way more senior.

0:35And I think you can have a lighter version for people that are 50, 60 grand or so, because you still want to keep the talent bar high. That's my opinion. But if I were you, I'd just go figure out how we can hire some of these people from Andreessen Horowitz and run that process. Because I think what they did was they probably just hired the best of the best recruiters in the world because they're Andreessen Horowitz. You know what I mean? And they also know they can do that because they're Andreessen Horowitz. I totally agree with you on just poaching their people. The hard part is, like you just said, they're Andreessen Horowitz.

1:05They manage so much money that they're paid for some of their people. It's going to be hard to compete. It's probably in the millions for the best. A16ZAUM. So let's see how much they have under ask. They say$42 billion. I don't know how much of that is active, but if it's$30 billion that's active, they're collecting$600 million in management fees. Yeah, that's assuming it's active. They've employed the money. That's so much annually. Let's say Mark and Ben take$200 each. That's$400. You have a remaining$200 million divided up to, let's call it, 300 employees. You can pay each one roughly$660 ,000.

1:49Well, hold on. So I went a step further. I typed in A16Z recruiter salary. So you have the talent partner at Andreessen Horowitz, which is a more mid-level role. $110 ,000,$192K per year. And then you have there's one where it's like $215 ,000, which is 301 % higher than the national average. 301 %? Yeah, the$215K for a talent partner, right? So you have to assume maybe their best one's getting paid probably like $500 ,000 or$600K a year. But it's still worth it. Totally agree with you. You do it first and let me know how it goes. I think we're a few years away from that. I think eventually we'll end up getting to that place.

2:29the main reason I, it's actually not the money. The main reason I don't do it. If I look at our best hires, it's come from our executives who have performed really well and they've given us most of our amazing talent and leaders. You know, I really like this too. It's because the people that are really serious are going to go through it. The people that are kind of tire kickers, they're going to tap out. Totally agree with you. But what's funny is if you just hire someone from your competition, like our president, our CEO managed, I don't know, 7 ,000 employees. I'm making up a number, but it was something large like that.

3:05Gullickson? Yeah. So he already knows because he worked at a direct competitor, literally a direct competitor. Apples for apples, they do what we do. He knows in our space who's great and who sucks because he worked with so many people over the years that it's like, oh, there's not much risk with just hiring those people. And we have a few of those people who came from, he came from Dentsu. We have some amazing people like that who came from Omnicom, WPP, Publicis. And a lot of them have each managed thousands of employees. So you pull it all together. Like our Spain leader, Luis, was just like from day one, he's like, I want to hire this person for SEO, this person for paid, this person for sales, this person for account management.

3:48I just want the budget for this. I don't care. I want to do this from day one. Right away, started pulling in accounts that We're paying hundreds and thousands of dollars. How did you react to that? Knowing you, how did you react to that? I didn't mind. Oh, you're just like, okay, let's do it. Yeah. Really? We actually are very lenient with leaders who want to expand faster and grow. But he had built trust with you already. No. No? No. Wow. Well, I mean, you should do that. He is an executive that you hired early. He's an executive we hired for that country. And we said, what did you lead up? I think he came from Dentsu.

4:18He's like, I led up all of Dentsu's Spain. Okay, that makes sense. That makes sense. He's just like, I led up. that was doing 100 plus million in revenue and he was just like. Because otherwise, why are you hiring him if you're not going to let him do his thing? He's like, look, I can do it slowly or I can hire the people that I know can just bring revenue. I was like, okay. Oh, that was the key word. Had he said, yeah, the key word was slowly. Once you heard that, you're like, oh, no, no, no. It's actually not slowly, it was revenue. I can hire people that can bring revenue. We're actually big believers in hiring people that can generate revenue.

4:49If it doesn't work out, I'm a big believer. you just fire. I know that sounds bad, but you just fire if it doesn't work out. Neil's really good at that. When you look at entrepreneurs, an entrepreneur's job is to take risk and make more money. Take care of the business. No, the entrepreneur's job is to take risk and try crazy random things to grow. That's the personality of Mike, Camo, and me. A job of a CEO like Mike Gullickson is to provide stability and growth in a gradual, comfortable way without risking the farm and causing too much pain. There should be a push and pull. You still went crazy with the acquisitions.

5:29Actually, no. We don't do more than one a quarter. No, no. Before. In the very beginning, you said you went hard. We still have gone hard. You said you learned your lesson earlier in this podcast. No, in going on adding regions, not acquisitions. Okay, got it. When adding regions, we're just adding tons and tons of people. The problem with the acquisitions is if you look at any company, it is hard to do more than one acquisition a quarter. What you do is instead of doing 20 acquisitions or 30 acquisitions, you just do bigger acquisitions. I looked at a company in Italy. I'm not going to name their name.

6:05We negotiated the right amount for what we're going to buy the company for. They agreed to it. I met up the founders in Spain. When I was in Europe, I had them fly in with a leader from Italy. I told my co-founder right away, dude, they were speaking English. And then my Italian managing director, the person who leads up Italy, was translating their English for me. All right. There was a disconnect. That doesn't mean it's a bad company or not. I just wasn't getting good vibes. Like something was off. And what I mean by that is like when I was looking at this company, and again, I won't mention it.

6:44There was some funny stuff they did in taxes. So we're like, all right, we want you to take on liability. So then they come back and they're like, oh, we bought a building. And then they're like, yeah, we'll sign your LOI, but we want you to pay 70 ,000 euros, I believe it was. It was 70, 75 ,000 dollars, somewhere around. There was either euros or dollars, but it was somewhere between 70, 75 ,000 to change the name of the landlord or the person leasing from our company to your company. Once you buy it, I'm like, wait, but you guys bought the building, you own it. why would i pay seventy thousand dollars to do a name change it doesn't cost seventy thousand dollars they're like oh we bought five hundred thousand dollars worth of camera equipment we need you to pay for that i'm like i'm buying your business for profit you've bought this equipment a long time ago to run your business yeah this is your guys's problem you started changing the deal oh we did funny stuff on our taxes you know you're going to give us x million up front and then you're also going to give us payments if there's bad stuff just take it from the payments that you're going to give us well if i do that then there's no incentive for you to just keep staying with the company and working.

7:46But culturally, there was just an issue. I'm not talking about the Italian culture versus the culture we have here, or, you know, I grew up pretty much in America. I'm talking about culturally, forget regions or religion or language. I'm talking about the way they operate and run a business is very different than we do and our values. And I was like, this is not just going to align. I don't care how much, how low their churn is, how much their growth is. I just don't get along with the team and the founders. It's not a cultural fit. That kind of stuff, you don't get to know over one meeting or trying to do a deal in three months.

8:21It takes so long to get to those phases and have tons of calls and meetings in person that you just can't buy these companies so fast due to the time it takes to do proper diligence. I got to take a minute to tell you about the Agency Owners Association. This is a peer group for agency owners, think YPO or EO, but for agency owners. And I just wanted to read you a couple of testimonials. So this first one comes from Carrie and we asked her, what do you like most about the group? She said, having a group of people to discuss and bounce ideas. The leads are great too. Yes, we share leads in this group as well.

8:52This one from Alian, he says, the ability to really post whatever I want and need and the group responds. Great experienced members, getting a lot of insights from conversations with other members, getting a lot of value from sessions from Eric, getting advice from others as well. And so if you want to grow your agency faster and you want a peer group to do so, just go to marketingschool.io slash agency. This is a group that both Neil and I created. And our hope here is to create a vibrant community of agency owners and do a lot more with it in the future. So again, marketingschool.io slash agency, and we'll see you inside.

9:22You know what Warren Buffett said? He said, you can't make a good deal with a bad person. Not saying these people are bad. It's just more so saying that some of the things maybe they did from a business standpoint might just not align with how you think about things. Right. So it's just better off to walk away. And Neil, Neil brings up something interesting too, where it's like you had to meet them to really understand the vibe a lot faster. That also applies to working in person too, right? Yes. You tend to get things done faster in person. And so sometimes, I remember reading this Jason Lemkin thing where it's like, if you want to retain a customer sometimes, get a good deal done.

9:56You just got to get on the jet and fly over. This was back in the day when Groupon was really big. and Jason Lemkin, the EchoSign founder, he flew over to Groupon. This was in the winter of Chicago, so it's cold. As he was walking into the office, he saw another CEO sitting in there, it was Mark Benioff from Salesforce. You sometimes just got to get on a jet and meet people. Dude, you're spot on. I also agree with you. You got to meet them and not just meet them, you got to get to know them. It's hard to do that over an hour or two hours. You do that by multiple meetings because people's true colors come out.

10:33The other big lesson, funny enough, talking about M &A, and this was a more recent lesson. If you do deals often enough, you'll notice that people's projections on their financials aren't always what they're going to be. That I knew, but my corp dev guy, Carlos, he's like, we drag on deals. I was like, why do we drag on deals? He's like, we drag on deals to make sure that people's projections are actually accurate. you'll actually see if they're going to hit their numbers or if it's full of crap because if they're going to hit their numbers you got a good business if you're buying a business based on past financials and future projections but their future projections could be totally off and made up and you close the deal too fast you could be left holding you know the bag which sucks so when we drag out deals we also see all right are they hitting numbers are they not hitting numbers oh your profits half of what you're supposed to be.

11:25And it was this way for three months consecutively. You typically do it for your diligence for five to six months, right? Yes. It takes us six plus months to buy a business. Yep. And lesson for me, for all you to learn, don't do your due diligence too quickly. Otherwise you're not even doing due diligence. All right. Quick note. This is about my company. It's called Single Grain and Single Grain is an ad agency where we're focused on driving innovation. We'll talk about a couple of new strategies. And if you need help with marketing, great. If not, here are a couple of new strategies that you should try out.

11:53One is programmatic CRO. So we are doing programmatic conversion rate optimization on our site. So it's building products that will automatically optimize your site to increase conversion rates. We're also auto-optimizing, auto-updating from an SEO standpoint. And we're constantly thinking about what else we can do in terms of enriching the visitors that are hitting your website and also tailoring custom messages for them using AI. And so there's a handful of things that we're doing from a marketing standpoint. And our mission is just to drive more innovation. so if you want to learn more just go to singlegrain.com grain like rice so singlegrain.com to learn more and we'll see you inside you know J.

12:28Paul Getty right? J. Paul Getty? you don't know who that is huh? he used to be one of the richest guys in the world so you know Rockefeller obviously so J. Paul Getty his dad was like an oil tycoon and then he eventually took over I know the Getty family they also have the thing in Bel Air they have the villa and then they have the center so he has two buildings The Getty Observatory, right? Yeah. The Getty Center or whatever it's called. Yeah. And then the villa is actually where he used to live in Malibu or Pacific Coast Highway. So anyway, my point of saying this is - Wait, he's a guy who wouldn't pay for the ransom for his kidnapped son or nephew or something like that?

13:06I don't know about that. I think he was also a guy that didn't want to give his money. He wanted his kids to earn the money just because his dad was also very tough on him too. Because his dad was wealthy, right? So his dad was an oil tycoon. He's like, hey, I'm not going to help fund your business completely. I'm going to take 70 % of the profits. Yeah, when J. Paul Getty refused to pay his grandson's ransom. Oh, because he knew that if that happened, they would do it across the board to everybody else, and it would become like a kidnapping business. What happened to the kid before I go on here?

13:43I saw the movie. I just forgot what happened, but I'm pretty sure the kid was okay at the very end. Okay. So basically J. Paul Getty, so former world's richest man, he talks about being a working boss, quote unquote, right? And this is something we've been talking about recently. And the whole concept of this is you have to be involved in the business. And he's involved with the details, right? Even at the very end, when he was about to die, he had the Getty Museum on Pacific Coast. He did a deal with Saudi Arabia. So he lived in London at the time. So the oil in Saudi Arabia and all that. But he saw the bill, at this time, air conditioner that was invented, right?

14:20And they're spending like an arm and a leg on air conditioning at this Getty Museum. And basically, it was like 170 hours a week with the AC on. And even then, he's looking at the light at him. And then he's reaching out. He's like, guys, we're spending way too much on air conditioner. We need to cut it down. So he's involved with the details, maybe more than he should be. But that's also how he got to build the company that he built and got to be as successful as he was. Because I think back in the day, when he first took over his dad's company, I think it was like worth 15 million or so. I think by the end, it was worth 30 billion or something.

14:50I could be wrong on that, but that's a pretty big number. Because 1 billion is 1 ,000 million, so that's 30 ,000 million. Yeah. What are you looking for? The Black Friday Cyber Monday weekend is where systems get stress tested. Traffic surges, inventory moves fast, and every second counts. You need a platform built for the moment. That's Shopify, the commerce platform behind millions of businesses and 10 % of all US e-commerce. With Shopify, you can launch fast with thousands of templates and tools that make your site not just beautiful, but conversion ready. Shopify is packed with helpful tools that write product descriptions, page headlines, and even enhance your product photography to increase your reach during the busiest time of the year.

15:28You can also stress less knowing that Shopify's award-winning customer support team is on standby 24-7 to help with any issues that arise, allowing you to get back to business as fast as possible. This Black Friday, join the thousands of new entrepreneurs hearing for the first time with Shopify. Sign up for your free trial today at shopify.com slash marketing school. That's shopify.com slash marketing school. Go to shopify.com slash marketing school and make this Black Friday one to remember. uh getty agreed to pay two million for the ransom which his lawyers advised him was the maximum amount he was allowed to write off on his taxes i like it what movie did you watch i forgot what the movie was this is an old movie he's got two good books one's called as i see it um there's another one on mark walberg he has another book that i think you would like reaching reading it's called how to be rich it's called all the money in the world and i think it was Mark Wahlberg who was in it.

16:27I could be wrong. Interesting. But Neil, would you read that book, How to Be Rich, written by the richest man in the world? Why not? And yeah, it was a Mark Wahlberg movie. Oh, you're friends with Mark Wahlberg. I'm not friends with Mark Wahlberg. I don't know him at all. He just bought something. Yeah, Mark bought something from Neil. It's a good deal. So that is it for today. Please don't forget to rate, rate, and subscribe. And we'll catch you later. Thank you.