Neil Patel and Eric Siu's Biggest Business Mistakes

0:00I wanted to actually discuss your biggest marketing mistakes or business mistakes in the last 12 months and I'll discuss mine as well. where we really failed i would probably say the biggest area we failed with our ad agency np digital we went from pretty much being in a handful of countries and when i say a handful india uh us and brazil to then all of a sudden in roughly like a year period of time we expanded to a total of 19 or 20 countries somewhere around there i think it's 19 it's the exact number and we started burning a lot of money not like a million dollars a year or two million i mean like burning a lot like substantially more and we're not venture back so we're using our own money and when i start looking at the economics of some of these things like i look at in southeast asia wait wait you have you have business mistakes and marketing mistakes this one's business mistakes right just confirming yes business mistake and we were a little bit arrogant because we're looking at our leads and our traffic in these regions we're like okay if we take our closing rate in the u.s we divide it by two we you know adjust the price the revenue per region we started calculating how much money we can make and it just didn't work out like in some regions you know their sales processes were different mike had to get involved fix a lot of the sales uh people a lot of the team is doing great but just educating them on our systems and processes this helped a lot but when we look at some of the burn some of these regions are costing us like a hundred grand a month okay we're 19 of them so when you start losing like a hundred grand a month on a region you have a lot of them it adds up so then two million a month that's what that's two million a month if you do times it by night take yeah but some of the regions are profitable right so it's less than that but it is a big burn like that um so when you start looking at the numbers you know we started then buying in some of these regions we're like huh it would have been cheaper for us to just buy agencies in these regions add our people and grow them than it is to than it is to build from scratch because the profit from the agencies we bought would have paid for the debt payments and it would have cost us very little to nothing it would have just been cheaper and our revenue would have grown way faster.

2:25And that was probably one of the biggest mistakes. And the arrogance was, is looking at Google analytics and Salesforce, be like, look at all this traffic we get in regions like France. Oh, 500 companies are hitting us up a month based on their GDP and how much people can pay and the average spend for marketing and for consulting. Here's how much revenue and profit we'll make within two years, right? Spreadsheet math doesn't always work out the way you think when you're operating a business. They're very two different things. Yep. Well, that's a big one. Would you say that's the biggest one? Do you have anything else?

2:58That's the most costly one I've made in probably the last year. It's probably going on two years now, but I'm still happy with the team and we're still chugging along with the burn. So now we're buying and then we're adding in the EBITDA and still having the losses from the regions that we're expanding on. But eventually we'll figure it out and figure out where there's overlap and stuff and merge and, you know, do whatever's necessary. But that's been going well for us. The other big mistake that I made in the last year and it really hit me is I'm traveling a lot, right? Eric and I are recording this.

3:38I'm in India right now. It's late at night. But you're talking about this month alone. Maybe I'm home three or four days. Five if I'm lucky. But three or four days. And I'm going to all these conferences and it's much better now than what it used to be. It took me a long time to learn this. I'd be like, okay, you want to pay me 50 grand to speak? I'll show up. All right. You got 75 grand. I'll show up. You got 25 grand and probably not, but I was doing the math and I was like, huh, making good money doing speaking. So we're picking and choosing. And on an average month, we get around 11 companies hitting us up for paid speaking gigs, right that's our rough number that we get when you average it out through the whole year and we would pick the ones that would generate the most front-end revenue from speaking but we change it up in the last year or so a little bit less than a year where we're now picking and choosing the ones that have the most ideal customers in the audience but it doesn't matter if they can pay or not if they can cover some of the costs that's great so then we're not paying out of pocket.

4:40And like my team hit me up today when I was at dinner, like, Hey, we got this gig in Brazil. You're already going to be there. It's great for branding. I'm like, well, we've already spoken there. They've paid us in the past. Do we ever pick up customers? Like, no, it's not the right fit. And they're like, we can talk to them. We can ask them for money. I'm like, but if it's not the right fit, I'd rather be home with my family. And we're still facing some of the ramifications because some of my speaking spots are booked up like a year and a half in advance, usually not more than a year and a half.

5:08So I'm still going on some speaking spots that I shouldn't be. Um, and that's probably a, one of the second biggest mistakes, but on the flip side caveat, every once in a while, when I go to these, some of these random events, I'll meet some interesting people. They'll be like, Oh, I'm part of the QIA. I'm like, what's QIA Qatar investment authority. You know, we fund companies. We love you. We've been following you forever. Would you be willing to come to Qatar. If you bring employees here, we'll pay for 40 something percent of all your employees and subsidize expenses. I was like, ah, probably not going to bring employees there.

5:44Cause I don't think a lot of my U S employees would want to move, but you know, you meet some interesting people from some of these events. And that is the benefit of speaking at a lot of events. But when I weigh the pros and cons, you're just, I would have been just better off speaking at the events that drive real revenue. Like today, I spoke at Sequoia Capital, India, which is now called Peak 15. The amount of unicorn companies that they have, and I'm talking about unicorns in today's valuation, the amount of companies that they have that generate hundreds of millions in revenue that weren't heavily funded.

6:19It's amazing that the number is astonishing. It's just like, you know, people are not only did I give a presentation, then I had one-on-one meetings with the portfolio companies talking about how we can help them with their marketing and what are the next steps, right? Like didn't get paid. Don't need to get paid. That's ideal event because you're picking up business and that business makes you way more in profit than what you would get paid 50 or 75 grand from a speaking spot. Dude, you must be so tired right now then. I am, but it is what it is. I got to take a minute to tell you about the agency owners Association.

6:55This 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. This one from Alian, he says, the ability to really post whatever I want and need. And the group responds, great experience 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.

7:25And 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. Side note, this is interesting for me. I was looking at Neil's personality test yesterday. I was looking at mine. Your energy is 99 % out of a hundred, right? So that's your work energy. Mine's still pretty high, but not as high as 85%. So if I were you right now, I'd probably be going to bed.

7:57So that's the difference, right? But so for me here, we can continue, we can pull on the M &A thread a little more. So we're still, I mean, I would just say the mistake that finally we've cleaned up, right? The M &A mistakes that have been made in the past where we didn't do enough due diligence, where we didn't vet the people. We didn't vet the clients, right? We moved too fast on them and we did them too close to each other. Just having to pay for that for the last two years or so. And really, I would say in the last 12 months, I've been focused on the business for maybe I would say the last couple of years or so, but I've gotten more involved than I've ever gotten involved ever in this business, right?

8:38In the last 12 months. And like people will say, oh, you know, let your people learn and they'll figure it out and get out of their way. I'm like, at this point now, I've read so much of that stuff. I'm just like, fuck all of that, right? So I'm just like, things will move if the founder's there. And you think about it, guys. Like, if you're the founder, you're the most incentivized to make things happen, right? So Neil's not necessarily, he's not managing people per se, but he's super involved. He's calling people all the time. That's one thing he's really good at. I'm just, I'm gonna say it again.

9:08If you want to have outsized incomes, you have to be maximum involved. And there are people out there that's like, oh yeah, you know, by the way, you probably can't see them right now, but Warren Buffett and Charlie Munger have done a great job. They're also freaking geniuses too. Right. And I, a lot of these people right now, last couple of years, they've been talking about building a holding company and all that. A lot of the chickens have come to roost now and the holding companies aren't as beautiful as you think they are. Right. Not everyone could be Warren Buffett and Charlie Munger and just, you know, hire amazing operators and get out of the way.

9:35Now, I think that works. You definitely should hire exec team. You definitely should hire operators. But if you are truly the one that's actively learning, you're going to all these events, you're the one that's constantly getting a lot of information from outside, it would be a shame for you not to put that knowledge to use to help your team get even stronger so you guys can move faster. Yeah. So going back to your first mistake that you made, you talked about buying too many companies too quickly and not doing enough diligence. How, how quickly did you buy the second one from the first one? Like what was the spread in time?

10:12Was it months, years, two months? Oh, wow. So you had to deal with two integrations at the same time. Yep. And not only that, not only that, because I subscribed to the, Oh, you know, yeah, you know, get out. So we hired a GM at the same time. I'm like, okay, I'm going to get out of their way. Right. Um, and yeah, that, that probably that part was the worst getting out of the way was probably worse. Cause I think had I stayed maximum involved, um, it would have, it would have, I would have figured out a way to make it all work. So you would have made at least one out of the two work guaranteed.

10:43Yeah. Guaranteed. Yeah. It's funny. So I've known Eric for a long time. He, he used to have this old philosophy and I'm not saying it's wrong or right. Uh, and it was very different than mine. His philosophy was, you know, the IBM philosophy, Oh, I'm not going to fire the person. They just made a hundred million dollar mistake. You know, that was a training and learning. So he would get out of people's way and let them learn and give them feedback and just watch them improve over time. I've always been the believer of, I don't have time for this. You either do it right or you're gone and I'm going to end up finding someone else who knows how to do it.

11:15I know that's really cutthroat, but what I found in business, if you really want to grow, you just hire people who have done the exact same thing you're looking to do. So then that way you're not wasting time and energy, um, spinning your wheels. by the way that's something neil's always been really good at i remember one time he hired someone to be uh let's just say a leader of something and within like a week and a half he fired him the guy with the stash right yes yes yes eric introduced me the guy is really good he's really smart amazingly book smart he knows all the right answers one he was one of the worst executors and i'm like well i don't give a shit if you went to harvard or stanford or anywhere where if you can't execute, who the crap cares?

11:57I'm not going to make any money from this. I'm just going to end up paying you. It's a waste of time. And to Neil's point too, it's not right or wrong necessarily. I've just realized that that doesn't work for me. I think it might work for somebody else. It just doesn't work for me. And going back to the personality test again, I looked at your thing, Neil. We're both, so I'm like maximum, I'm creative. I think you're kind of in the middle. The way you do things is you typically will follow rules and go by the book. And I'm on the total other side. I like to do things in like original ways. And so it's really important to understand yourself.

12:26And going back to personality test for everyone, this is completely free. You can go take it. It's PrinciplesU, Y-O-U. So Principles, plural, Y-O-U.com. It's Ray Dalio's personality test. And Adam Grant does it as they did a partnership. And it's always good. Sometimes I'll look back at it because, you know, Neil and I will agree on things, will disagree on things. And it's important to understand how people work. And you can compare each other. So it's great. I use it for dating too. Yeah. yeah okay you used to do the personality test with girls your date right i mean used to you still do wait by the way how does that work what do you mean i show them i you know i typically show them your personality test compared to mine i'm like look i do my podcast with my friend over here look we're so different and then all of a sudden they become really interested in it and then they want to take it back up back up okay so let's start from the beginning have you gone on a date with a girl or not at this point what are you talking about when you have them doing a personality test like have you already been on one date with a girl or no many i've done this like this is years no no i know but i'm saying let's say you meet a girl do you have her take the personality test before you go on the first no no you can't do that no no no you have to build some rapport first it's like you can't go for something that that's especially it's going to take 15 to 20 minutes no you can't do that you have to meet and then you show them and then they incept themselves into wanting to take it, right?

13:46And then I'm like, oh, okay, share the results with me afterwards. And then everything like, and then I get to basically like, you know, I get a sense for how they are in person, right? That's more qualitative. And then this is a little more quantitative. And so, yeah, it's good in that respect. And you would get them to take the personality test on their first date? Yep. And what happens if you connect with them? It's amazing, but you know, the personalities are very different. Well, you know, there's one example. We're not going to name names here, Neil. There's one very entertaining one, very entertaining gal.

14:17Okay, let's just call it that. And everything that was said in the personality test was validated. Not humble, very not composed, very not calm, very not poised, and low energy and doesn't want to take responsibility for it. So it was all validated. And yeah, that's why I say that personality test is like 90, 95 % accurate. Was this the one that works at the hedge fund? Yes. Okay. So, and then you still want on dates with them after this many times. I mean, you know, we have another mutual friend. We have another mutual friend that enjoys chaos. And I tend to like to run towards chaos as well.

14:56You know what I mean? No. So this other mutual friend of Eric's and I's will both text Eric being like, Hey, how's your dating life going with this girl? Because Eric's stories, you know, it sounds bad. Don't tell the stories. We don't tell the stories. But it's amusing for us to hear. So we like the chaos that she throws Eric into. We just find it funny. I mean, I laugh when it happens to me too. But yeah, I want to take a second to tell you about my podcast co-host agency. So NP Digital, so Neil Patel Digital. What they do is they do a whole host of marketing services and they are global. They're worldwide.

15:36They have SMB services as well. They have mid-market to enterprise services as well. they cover the entire gamut so you can just go to mpdigital.com to learn more about it and now back to the episode so i would just say in the last year specifically again i i think look as if you're going to be chairman okay or in neil's case he's cmo of the company but he's still very much like an active founder um you know i believe the founders need to be involved in what's big what's broken and what's new right um you need to have someone that's on that and then that's you're in the best position to solve those things.

16:12Right. So I would say that I would say also, um, not, and Neil, I don't know if this was an issue for you, but like, oftentimes we figured out a decade ago, the things that work in B2B marketing, right. It's a wonder to me how we've already figured it out, but we're not doubling and tripling down on it. For example, like basic things like webinars and partner webinars, we bring it back. Oh my God, it's working amazingly. Right. It's like, why weren't we just doing this like 10 years ago or so? So sometimes you just gotta look at, hey, what actually worked and how do we double and triple down on that?

16:41Very basic, but people forget to do that. So I'll just leave it at that. All right, everyone. So that is it for today. Please don't forget to rate. Go ahead. Yes. Make sure they go to marketingschool.io slash agency. I was going to do that. So please don't forget to rate, review, subscribe first. And then if you're an agency owner and you want to grow faster, go to marketingschool.io slash agency. That's where we help agency owners grow faster. A lot of people have been saying the community has been great. that they've actually got a lot of resources, templates, and a lot of coaching that's helped them sidestep mistakes.

17:12So that's the group Neil and I have. Please join it if it seems like it's fit and there's no long-term commitment. That's the cool thing about it. So that being said, we will see you tomorrow.