What We Learned From Acquiring Companies, Why 'Best Practices' Fuel Mediocrity, How Long Does It Take to Generate Revenue After You Speak At A Conference?

0:28What we learned from acquiring companies. is at the time, the two I bought, there were actually two other ones that were very additive and they were acquired by agencies that are well-known. One, I should have bought agencies that are complimentary, okay? Meaning that if I did SEO and paid media, for example, there's actually an analytics firm I was looking at that's doing very, and they actually had software too. So I was looking at them. And then I was looking at a creative firm as well. But instead I bought an e-commerce paid media firm and I bought a small business SEO firm. Okay. The other thing is this.

1:06So if that part makes sense to you, do you have any clarifying questions there? No. Second part is I would have, go ahead. Wait, do you want to explain to the audience on why you would choose something that's complimentary so they can get a better understanding? Because it's easy to cross-sell, up-sell, and then to build. So one, you get higher retention. Two, your LTV goes higher. Your lifetime value goes higher. And then three, the other thing too, is people generally like, Like they, as long as you can do things pretty well across the board, they, they, they rather de-risk you. They see themselves as de-risking if they're going through a firm that can do multiple things.

1:37So Amazon, for example, a long time ago, we did paid media for them. They're like, dude, you guys are really good at paid media, but we need someone that does a lot of these different things. And you guys don't do that. So, yeah. So what Eric is talking about, just to give you guys all more context, if Eric does SEO and another company does just paid media and he acquires them, what ends up happening is, is their customers, in theory, if they're doing paid media, could also use SEO. So you can now pitch all of their customers on SEO services. And for Eric's customers that all pay him for SEO, in theory, he could pitch them all on paid media services.

2:11So when you combine the entities, if they do a million in revenue and Eric does a million in revenue, you don't have two million. You ideally want to see if you can get to 2.5 or three million because you're cross-selling. The second thing he's talking about with churn is if someone pays you for one service, It's not as sticky as if they paid you for two services or three or four because the moment they pay you for a lot of things They're more reliant on you, which makes it harder for them to leave you So then you make more money because they pay you for longer But those are the main two aspects that he's talking about when he says complimentary I'm gonna give you two more and then I'm gonna flip it to you So the second one is for one of them I would have kept the founder because the founder Ideally you're buying a company where the founders stay because a lot of these agencies are it's almost like a little cult there They follow the founder.

2:56The founder drives a lot of the energy. And usually they're the ones bringing a lot of the ideas, the strategy. They're just pushers, right? That's how they started this thing. One guy was an absolute grinder. And I think had we just done that from the beginning, it would have worked out perfectly. And I could tell he just loves working. He doesn't stop, right? Now, the other company, this will lead into the third piece. The third piece here is you want to make sure whatever you're buying, the culture aligns. So for the guy that was a grinder, that actually goes through the entire organization.

3:24People follow the leader, right? And they were much more aligned with us versus the other one. The guy optimized the business to not grow. So he wanted to cap the revenue and not grow. And therefore, I didn't vet the culture. And so when you look at one of the cultures, like, okay, I think we can make this one work. But the other one was just like people want to chill during a client call. Sometimes they might not show up to the client call. They'll go do yoga class instead, right? They didn't care enough because it was a job to chill. and he also didn't pay his people that well. He paid people like really low.

3:57And so then we ran into those issues too, right? So even though he had a lot of people, it was a lot of people that weren't really motivated and a lot of people that weren't incentivized to be motivated. And plus it was, my logic there was to combine that SMB, all those SMB people with the software that we had at the time, the SEO software. I was like, okay, I think we might be able to make that work. But because the tech wasn't good enough, that didn't work. So we had a lot of technical debt. So, but that's a whole nother conversation. But I'll give you those three, and I'm sure you have more.

4:24Well, you recently did two acquisitions. They did not work out. If you had to take away the biggest thing that you would do differently in those acquisitions, what would it be? Give me your top three. I'm just going to give you top one. Top one, okay. Top one is had I been involved from the very beginning with those acquisitions, all three probably would have worked out. Had I been involved, like we're talking because each acquisition will add like hours to your day. I probably should have been working until like 12 a.m. or so. But I drank the Kool-Aid and we hired a GM and that GM actually ended up stealing from us and then stole clients and stole people.

5:03And I had done the same thing their previous agency and did the same thing in the next agency. So while so you have each acquisition, you're adding a ton of debt, like a lot shoulder. One, you add two. That's already like two big weights on your shoulders. Then you add in someone that's stealing from you. that's three big weights on your shoulders and plus arguably the most valuable person at that time to drive things forward was me and i was sitting on the sidelines yeah so i've learned quite a few things as well i've done a lot of deals between all my organizations some of them have been as simple as buying a domain name like i bought kiss metrics from my previous um 500 grand yeah company that i co-founded for 500 000 that deal was really well worth it for me uber suggest uber says i bought for 120 something thousand bucks i believe see the funny thing is that the week before i bought a senior living site and the next week you're like look what i bought i got this idea from you i was like oh that's nice well it was in the works for quite a bit more than a week but yes but um but continue continue yeah um uh but uber says i don't know what we put into the company my guess is three to five million afterwards the domain didn't come with employees kiss metrics didn't put uber suggested it come with employees uh-uh answer the public did not come with employees okay see so that's actually important so these three did not have employees yeah um and i've done quite a few over the years like it's too many kind of done hello bar back in the day um what i found from acquiring sass because my background as entrepreneur is not in the agency world it genuinely is is sass i have way more sass experience than any other industry it's easy for me to buy marketing sass and know how to fix it and grow it and not really need a ton of the people that were working prior on that corporation i can't do that for all industries but for marketing sass specifically when i'm buying a company i'm buying it because call it i quote have a bag of tricks and i can go in and implement the bag of tricks and i already know before i buy that company, how much more revenue and profit can I squeeze out literally within three, four months?

7:12And I could tell you I could squeeze out the profit in 30 days, but it takes me longer than 30 days to implement everything. Usually I get everything implemented within six months. Usually I get a lot implemented within the first three months. And, uh, that's gone really well because I'm just rinsing, repeating the same playbook over and over again that I've been doing. It's no different than like a Vista equity or something like that. You have a checklist. Exactly. This is just better at it with way more money than me. And Robert, their co-founder and Brian are on the Forbes list and I'm not.

7:45So just to give you an idea of their success versus mine. They're a little older too. So, yeah. When it comes to agencies, we bought some agencies. And the big thing that we've tried optimizing for is, A, complementary services. So what services are they offering that we don't offer a ton of or we're not known for? So, for example, we bought Rebel House in Canada. They've done a lot of TV commercials like Snoop Dogg stuff or J-Lo stuff and not even just the celebrity stuff. They've done really good work for B2B companies as well, like, you know, SaaS companies. And they've done even corporate work as well for like the Marriott's of the world.

8:25And when I say corporate, I'm not talking about a Marriott commercial for TV. I'm talking about like Marriott commercials for internal use or B2B use. And that was an easy plug-in because they offered a service that we didn't really offer much of. So when we plugged it in, we were able to drive them revenue, and we were able to take their clients and sell them our services, and it became a quick win-win. What we also found is by buying complementary services or companies, we were able to get included in bigger pitches where if we didn't own that company, we would have never got included enough.

9:06A great example that you mentioned was Amazon and how you lost Amazon because you don't offer enough of what they're looking for. We weren't getting included in every single pitch that we should have been because we didn't offer enough services. We felt we should have been getting included in them, but reality is the customers didn't care. And there's still pitches today that we don't get included in because we don't meet the requirements. And another example of this is if Microsoft issues that global RFP, they expect you to have boots on the ground in almost every major country. We don't have that.

9:38we can say we're in 20 plus countries but being in 20 plus countries is not being in 70 80 100 if you're not in all the countries that they require you to be in you're not gonna get those deals so we've been acquiring agencies and other countries where we don't have as big of a team and it infills the talent the logos and the reputation and that's helped us grow quite a bit. But when I look at our main M &A strategy, we keep the founders because the moment you don't have the founders, there's risk. There's always something a founder knows that you don't. And it's just risky to take it on without having the founders, especially when it's a business that requires relationships and maintaining the relationships.

10:25The second thing that I've really learned is out of all the acquisitions I've done, the ones that tend to work out the best are the ones where they offer service that we don't in ideally a region that we're not in so when you combine both of them you're now in a new region that assuming we have high demand for and a new service that we don't offer so it plugs two holes and that causes one equals four yeah so that causes the fastest growth for us um and you know by the time this podcast airs we would have closed the company in the uk even though we're in there they infill a service that we're not known for and they only specialize on this uh uh service and fast forward two more months we'll acquire two more companies in europe it helps us infill on the regions and gives us a much bigger head count but it also provides services that we're not known for let me ask you something side side note so we can move on from this topic but do you think in the next couple years within the next five years you're going to be back in an office you just you No.

11:33No. But I've never done well in an office. That's right. We talked about this last time. But do you think most of your people will be back in office? No, I think it's too hard for us to go back into office. We're too remote. Once COVID happened, we stopped hiring within those cities. That's actually a wrong way to put it. We stopped making a requirement that you live in that city to work for us, like San Diego or Lehigh. and we more so made it where we'll pull from anywhere in the United States even if we don't have an office and we have some amazing people that work for us in a lot of random places throughout the world where it just makes it too hard to be like we're required to go back to office it's just we're not big enough like a Microsoft or Apple where we have offices everywhere and that would be just too expensive for our size yep when I first started my business the overwhelm was real.

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14:02No issues with versions or miscommunication. Whether you're starting from scratch or using one of their templates, Framer lets you focus on design while handling the technical side for you. Animations, responsive layouts, search optimization, and all the things that matter. Ready to build a site that looks hand-coded without hiring a developer? launch your site for free at framer.com and use code ms to get your first month of pro on the house that's framer.com promo code ms framer.com promo code ms rules and restrictions may apply so i actually finished that nvidia book um so there's this thing nvidia is here let's talk about this wait do you want to first mention the title of the video book the nvidia way so the one thing i learned from the nvidia way which is a tremendous book i think it's worth rereading every year if you want to build a great culture that fits what you want to do yeah i think nvidia's unconventional culture proves one thing that best practices fuel mediocrity right and so the whole thing about oh you should have one-on-ones oh you should have like you know this structure over here you should do it like this um you should listen to your board you should do like all these things by the way are advice from people with all different experiences and i think what jensen learned overall is that forget criticize in private.

15:15He's just like, I'm just going to do public feedback. Okay. That's number one, two. He's like, I don't know what everyone's working on. And I don't know what the latest trends are. Okay. We're going to do top five emails. I want that from everyone, right? Three, we're going to have a whiteboard in every single office. Right. And I'm not saying I'm going to copy all these things. I'm just saying he learned that best practices fuel mediocrity. And he learned over time that he has to do things his way. And even his board, when Nvidia stock was down 80%, I think 2013 or whatever, and he bet all in on AI, and then CUDA and all those things.

15:42And they're like, Hey, we don't know if this is the right bet. He's like, no, this is the right bet. You he's stuck to his guns the whole time. And I think, um, early entrepreneurs, early marketers, it's really easy to just read everything and just follow everything blindly. Right. But I think as you get older, you don't do that. And here's the final thing. I'll pass it over to you. Um, remember Anand from CB insights. Yeah. Anand Sonwal. Okay. So he has this company called CB insights. They do really well. but he tweeted this he says one of the reasons i failed to scale as a ceo is i listened too much to smart sounding best practices process etc this was a trap and i was too naive and not self-confident enough to push back don't make this mistake too i certainly won't ever again and the one good thing about you neil is you've never fallen victim to these um you're willing to try these things but the thing is you don't you'll talk to a lot of people you don't read a lot so you won't get stuck into these traps too then i think that's a benefit yes and i you hit it right on the nail i found the people that have this issue the most are the entrepreneurs who tend to read a lot of quote-unquote business and entrepreneur books because they're like oh i read this this is how so-and-so did it i'm gonna copy it and it doesn't really work out that way most of the time yeah i think by the way i think a 20 year old version of me reading the nvidia way would say copy all these things a 38 year old version of me now would be just do it my way like it like you you you'll get different lessons from books at a different time which i this is why i think it's worth revisiting books um so so that's that you want to pick one well also going back to the nvidia way nvidia is a different type of corporation than yours so what works for them doesn't necessarily work for you because it's a different type of business and two even if it was the exact same business you have to keep in mind there's other factors that we can't control like time what worked 10 years ago may not work today because there's different environmental conditions and by the way that that's the whole gestalt thing i mentioned like that's why direct advice is sometimes harmful because there's so many different variables and that's why when you just experience share instead people can decide what they want to do with that yeah and it absolves you from any harm that your advice might cause um but but that's that so you actually have one over here on how long it takes to generate revenue after you speak at a conference and i put in one right above it right after uh what was the one that you put right above it so how to throw a slam dunk event that generates customers for you oh okay um you and i have both spoken at many conferences for many years how many times have you spoke where it's generated you a return right then and there where you pick up a customer very rare um i can count on one hand maybe same here i know i can count on one hand but i'm thinking do i even have one or two examples and i'm running blanks on i have one so i remember um uh no this one doesn't count because i was at this one i was just an attendee but two people caught me as i was just walking around and said podcast guy and then they signed pretty quickly yeah but i wasn't speaking so that's cheating yeah i haven't had any that i can think of it there's probably been at least one because i've spoken at so many events but i can't think of any i'm literally drawing blanks where someone said, you know, this is great.

18:52I'm going to sign up with you. It's usually been, this is great. We'd love to learn more. And in many cases, they don't sign up right away. If they do sign up at six months to year plus later. And a lot of the cases, when I spoke at a conference, the people that were interested in working with me or like what I had to say, I've had a lot of people say, love your speech, wanted to work with you, but it wasn't in my budget at x y and z company i'm now at this new company i have the budget i would love to discuss how we can work together yep and the name of the game here is just any type i look at speaking as content creation any type of content creation is just bringing you top of mind again and with a lot of this stuff 95 to 99 percent of people are not in market to buy um and you have to think about how you can constantly stay top of mind because usually when a lot of people when they're thinking about choosing a new vendor or something like that.

19:49Um, they usually think about who's top of mind first. And then also they might put on an RFP or something. Um, but in general, I've seen the same thing. It might take six, 12, maybe even a few years to get something done. Um, but people, when people do come back, I I've heard this before. People do really appreciate the consistency that you've, you've, you're still, you're still out there creating content. You're still out there speaking. Cause that means you're still relevant. And to stay relevant, that means you still have to be practicing your craft, which this podcast kind of forces us to stay on top of it.

20:17I bet you if we didn't do this podcast as much, we'd be a little bit rustier, a little bit, a little bit. I don't think so. Cause we still would be working in marketing on our business. I think we'd still be doing it in our business. I knew you were going to say that part, but I think sometimes I'll get ideas from you. Sometimes you get ideas from me too. I think those help because in general, like even when you call me or I call you, well, that's still what happened anyway. like it does help quite a bit and it's hard to find you'll find that as you continue to grow in your career having a relationship like this where we call each other all the time we're like with sayed or yaniv or other people those are few and far between so that is it for today guys please don't forget to rate view subscribe and we'll see you tomorrow