He Spent $2 on a Million Dollar Business

20:37But they tried to take that credit. So two things, you had to dive for that answer. That's going to be how it's working with them. You had to dig in for it. Two, it doesn't seem like they're that truthful, right? So those are like two ways to kind of suss it out. Got it. Okay. So you make a few key hires. It changes the structure of the business. And when you get in and you realize I'm building an agency, the agency is still SEO focused. You are then getting those leads and you're turning them into customers. What has been the growth like? What has been the growth journey? Yeah. So I would say it started with SEO, but the key with agency type businesses is, and there's a really good book called The Seven Powers.

21:14It's called Seven Powers, actually. It's the strategic book. And it talks about with agency specifically, the key thing that we have are the power of switching costs, meaning that the more services we can layer on, the more of a pain in the ass it is for them to cancel. So if we do a pretty good job on all of them - See, the icky turns into sticky. That's right. Okay. Yeah. Okay. So you want to have multiple services and you want to do a pretty good job, obviously. And then that grows the lifetime value of the customer. The retention goes up a lot more because we used to have Amazon before and we just helped them with paid media.

21:43And we helped Amazon ads run ads. We helped with their Amazon Alexa, not their, not the Echo, but they're, they had an SEO software and we helped with another division, three divisions that could have expanded into something really big. But at the end they left and they're like, dude, we love you guys. And we love all the strategic thinking you have, but you just don't have enough services. Same thing happened with Lyft. We had Lyft and we're helping them with enterprise B2B. And then it came time to, they wanted to grow even more. but when we lost the deal ultimately so we had them for like two years or so but then they're like dude we didn't even know you guys had all these things and so that to me was a big takeaway how can you have multiple things and how do you have people that have been there done that in all of those and then these people will tell you what to do but you just got to be there on top being really involved okay so i've known you i actually met neil at a dinner in la i had no idea who neil was i happened to be sitting across from him and i could not figure him out like i sat there and I'm like, is he like intentionally being mean to me?

22:39And it was not that. Neil is the most honest, kind, straightforward, but he says exactly what's in his mind. He doesn't give a rip what anybody says. So when I reached out and I attended one of your masterminds in Beverly Hills, I got a chance to see Neil again. Neil was 100 % Neil and I just freaking, I like him. I like his vibe. I like that you know exactly where you stand with him and I like that you know, and it's not for everybody, I get it, But I like that you know 100 % what he's thinking and pulls no punches. You both sat on a panel as part of your mastermind. You guys did a Q &A. And you guys went on this riff that I found really fascinating around why owning an agency is the best type of business to own when a lot of people are running away from it because it's like, whoa, more money, more problems.

23:23It's like, this is a people business. So explain to me your big push for why you built an agency and why you still think it's, or do you still think it's one of the best businesses to have? I think so when I took it over, I was actually ashamed of it because I cared too much about what others thought. Right. I like I came from tech like I come from like, you know, Asians are very into status. Right. So status games. Right. So it's like, you know, I'm up here. But all of a sudden, I'm like, I'm doing this service business. Right. OK. And so first I was like the first couple of years, I think I was really annoyed that I was associated with it.

23:53And that's more of me problem more than anything. But what I've learned over the years and this is what Neil and I talk about, it's every business sucks. over time. Like as you learn more about it, it just sucks. And it's just, you decide how much pain you want to deal with. But the great thing about an agency is if you grow it really big, maybe you can cashflow five, 10, 15,$20 million a year. That's an exit every year. Not only that, if you do get it to like 10, 20, 30 in profit, you're multiple. Even today's day and age, you can maybe sell for 15X or so, right? So 15, like people think agencies, maybe you can only sell it for 3X.

24:24So let's say you do a million dollars, you can only sell it for like three, $4 million, which is decent, right? But if you get it to$10 million, maybe you can sell it for$100 million,$150, or maybe even$200 or so, even in this bad economy right now. So you can have a very nice exit if you want, or you can just cash flow the thing. And Neil and I had a private conversation a couple of years ago. I'm not going to give too many details, but he got a really good offer, right? And I'm like, you're already rich. What are you going to do after? He's like, oh yeah, you're right. I'd probably just do the same thing.

24:53Zuck had that story too. Oh, you can sell it and get 250 million of the billion. And he's like, well, then what would I do next? And so if you really like what you do, but everybody else is on Twitter is talking about selling all the time. But if you really like what you do, why don't you just do it for a long time? We sat at lunch and he said that story and how it had an impact on him and how he moved to Vegas for a minute and then moved back to LA. And part of the reason why he's willing to that same undercurrent of how much pain are you willing to endure? It's like taxes in California, specifically taxes in Beverly Hills.

25:22They are not for the faint of heart. And so he had said, how much pain are you willing to endure? And I think that Neil endures a lot of pain because he drives so much pleasure from the build and specifically where like building his home here in Beverly Hills and all the other pain that is associated with that. When you guys look at that growth structure, somebody looks at this business that you built, tens of millions of dollars, and perhaps the way that you're running it, 10 to 15 X multiple. Someone was like, man, that's the business I want to get into. He started with nothing and was able to layer and grow.

25:51So if somebody likes that idea and is like, maybe that's a skill set I have. Maybe I'm strong operator, service based. Maybe I can build a team. Where do you suggest somebody who's listening right now? They don't have a lot of money and they don't have agency experience. I want to talk here. Yeah. So one thing, okay, a couple of threads here. So the agency, the great thing about agency again is you don't need to outlay a lot of cash upfront. Okay. So that's great. Not a lot of startup costs. And then you can kind of learn at your own pace. Neil and I, we started this agency owners association group, kind of like EO or YPO, but for agency owners.

26:22Oh, I heard about this. Okay, okay. So right now, do you have to pay to be a part of it? Yeah, you do. Okay. Now we've realized, oh, we probably only need, we not only need, we want agency owners that are above six figures because that means they've already done something. Oh, yes. You can't have below, right? Got it. Anyway, so we started that and we're learning from a lot of people. Like a lot of people. Okay, but why did you start it? Just pure revenue, networking? The real reason? I mean, yes, there's networking revenue and like I like to build community. Yeah. But long term, is there an angle for us to partner with some of these agencies or even by some of these agencies yeah yes there is yeah oh my god yeah it's funny because i brought this idea up to neil a couple years ago and like you know you work with someone for eight years you get to see all the skeletons because they they want to share the skeletons to beat the skeletons but if you know that you have a skill set and you know that their growth and ambition is not trending towards squashing that skeleton you're like we could squash it yeah and we could grow it dang that's and there's a beauty that too, because there's someone we're talking to right now, like they do a couple million a year.

27:20And I basically coached him up for a couple of years and Neil and I, we don't do coaching, but in this case, we're kind of doing group coaching in a sense. And so we kind of get the benefit of it. And the ones that are doing seven to eight figures, we'll just do a mastermind once a year and then we'll meet with them in person, build more of a relationship. And maybe they can partner up with each other or whatever, but we're just trying to build community and eventually see what we can do there. But one thing I want to mention about Neil, going back to your question, he was really good at understanding that he's terrible with people.

27:44And you know, Everybody knows that, Neil, right? So he's not good with people and people management specifically. The good news is even though I didn't do to deal with him, he had Mike Camo, which is his good friend. So Mike, he gave Mike some shares in the company. Do what deal with him? To start MP Digital, his agency. His agency. Okay, so you did not do the agency with Neil, but Neil brought in somebody else. He had somebody that's been working with him for a while. So actually him, Mike, and I were sitting at a hotel in SLS not too far from here. And this was probably 2017 or 2018. And then they're like, okay, well, Eric, you take 50 % and then we'll take the rest, right?

28:19And then Neil understood that he needed someone operating Boots on Ground because he's really good. The good thing about him is he's either really good at something or he's really bad at something. And so he's really good at driving traffic. He's really good with numbers. His memory is exceptional. But he's really bad with the nitty-gritty around people management. So he wanted Mike and myself to take that over. I think it would have been a great partnership. I don't think I was ready for that at the time because I wanted to do all these different things because it was so fun. Right. So yeah, that all connects.

28:47Okay. So you don't do the agency with him. You are building your own agency. Now you guys have a group and then a mastermind for agency owners. There is possibility, long play here, to get possibly acquiring a company that does something similar to what you do, expand your customer base, and optimize. When somebody's hearing this, there's not a lot of startup costs. You now know it's best to serve your customer at an LTV, make it more sticky for them. But somebody who's just starting out, I don't have a lot of money. What is one thing that you're saying, okay, you could start an agency and be very highly specialized around one thing.

29:21Can we ideate and like brainstorm around a night idea? Someone's like, yeah, I'm pretty good with Canva or, you know, I'm kind of good with copy. Yeah. Let's start with building an agency. Let's make a way for people to make money with the idea of building an agency. Ideally, it's something that's trending in the right direction and there's a lot of demand right now. So I'll tell you what's in super demand right now is ad creatives. So someone that's really good with ad creatives because the ad creatives bring the CPAs down when you're spending a lot on ads. Community management is actually growing up.

29:48I'm going to leave that alone for a moment. We'll just say ad creative and then organic social. Like those two areas. I would start there. The community thing, it's like it's coming up, but I don't think it's achieved escape velocity yet. So I'll leave that alone. Okay. So let's just say somebody's really good with organic. What I see specifically in my niche of the world is people are good with organic. They take on three to four clients. they get extraordinarily burnt out and then they get into the stuck in minutia and they're not making enough money to start abdicating some of the responsibilities within it.

30:19How do you overcome that if you're like, oh, I want to grow? Yeah. So chances are they're probably not charging enough because when you start out, like when I first started, I was charging like, I don't know, $20 an hour or something,$25 an hour. You underprice yourself because you're desperate for clients. But then as the demand goes up, you just need to charge more. So raising your prices is huge. It's one of the highest levers you can pull. That's one thing. And then I think your prices go up so you now have more margin to hire some people, then you need to figure out, I like make an Excel sheet.

30:44And then for each column, you have$10,$100, 1 ,000 an hour, $10 ,000 an hour. Just define all the tasks that you're doing right now. And your goal is to offload all the$10 an hour tasks as quickly as possible. Every quarter or so, you're offloading maybe 15 % or so. And then maybe you're getting to$100 an hour tasks. And so then all you're working on is a$10 ,000 an hour task, $100 ,000 an hour task, million dollar an hour task, like negotiating a deal or like some type of M &A thing. So you probably get a lot of people pitching you. So I get a lot of people who will say, I will edit a short for you.

31:13I get a lot of pitches for, I design thumbnails. I get a lot of pitches because I create so much organic content. People come in and like, I want to shoot your organic content. Like I'll come to you. And then they charge a really low amount of money. To me, I don't want to get into it because I can already tell you're not seasoned enough. What advice that you have for somebody who, number one, is looking for somebody to help them. But then also for somebody who's trying to get pitched. Like, what am I looking for? How do I start scaling that? Yeah. Go get Alex's workbook for$100 million offer.

31:41So again, not the book, the workbook. It'll just tell you what a good offer looks like. And then you work through the workbook and then you have a good offer, right? And most people, like what you're telling me, like you would never click on that stuff. I have people hitting me up. Yeah, I'll do it. Why don't you just do it in the first place? Like, okay, slow down, slow down. So we don't talk fast, people listen slow. So when you say they send me something, but they didn't do it, let's go back. So I get hit up all the time. Like, can I repurpose some of the content from your podcast? Here are samples of other work that I've done.

32:07And I'm just like, zero. I'm not watching that long form to see what kind of short form you produced. What they should have done was created an 11 second breakout from a YouTube video that they saw. Because then I can immediately see how it works for me. And plus my blood boils too when I see that. Because it's like, that's the best you can do. You're trying to make it work for yourself and that's the best you can do. Because it takes us back to the early days, right? I'm like, you could have done so much better. And now I'm even more turned off because that's the best you can do. Absolutely. So people pitch me for thumbnails.

32:37And I literally, this is how, like, I don't know how much I should be paying for thumbnails. And I don't know how much I should be paying for a good thumbnail designer. Like, get into the nitty gritty. If somebody's pitching me, like, how do I know what's good or obsolete? So the best offers I've seen, and a couple people I've gotten through in the last couple years. Like, for example, our AV guy that helps with the podcast, he cold DMed me on Instagram. And it was a good offer. Like, okay, here's a good offer. there's actually a thumbnail guy that he's like I'm just going to work for you for free for a month here's an example of one and if you like it they get it so he worked for you for free he did A-B testing of how it improved after he changed the thumbnails and they weren't necessarily even better performing they just looked a lot better and that totally changed our art direction for our thumbnails moving forward if you are listening right now and you want to work for other people, send them work.

33:35But here's the thing. When I Google like average cost for a designer to create a YouTube thumbnail, they say anywhere from like 25 to 35. And if this guy pitched me and he said it was 100, what kind of test can I set up? I'm like, okay, great. I'll test one thumbnail. Am I testing eight? Like from your agency perspective, how do we start going and judging the veracity of, or talent? It's, I mean, it's worth it. If it's$100 versus 25, if it just performs way better. but we had another thumbnail guy actually reach out and he did, I think he's like, one's not enough. I'm going to do 10 for you for free and then after that, it's going to be$75 per thumbnail.

34:10And I was like, that's a good deal. And the first 10 were amazing. We worked with him for a little bit and then eventually the team was like, hey, we can just do this. So the team just like took the style and like that was it. Interesting. So you also got to make sure that this is again, like if your work is not that defensible, it's pretty easy to copy, then what do you think the business is going to do? They're probably going to just copy it and move on. so so good okay and so like let's play here again so i get pitched for somebody to create content for me but at the rate that they're like for me be on time i think it's like such a low bar it's just just be on time can you just give me the deliverable when you say you're gonna give me the deliverable be reliable be freaking reliable i don't even think it's that much to ask but it's like just hit your freaking deadline and the people that we work with currently our editors and some marketers they pitched me in my dm and we navigated that and i think it's really good.

34:59How do we start setting a standard? Because when we're working with creatives, it's just like, how do you hit your deadlines? And what am I holding you to? And in the agency, you see this a lot. So what do we do for our creative teams? So I have this standards of excellence document. So we have our internal wiki, obviously. And one time I was so tilted. This was during like the cleanup with the acquisitions last couple of years. I was just like, man, we haven't defined what excellence looks like. So I spent one Saturday, I probably wrote like 4 ,000 words that day. Just like, here are standards of excellence.

35:26So every new hire, full-time hire, I'll start with the full-time people first. They are required to initial that document. You have to read the whole thing. You have to initial every page and that proves that you've read it. So you understand what our standards of excellence are. And that's what we're going to hold you accountable to. Whatever I can remember, I'm happy to dive into it. But we realized with our contractors, we weren't holding them to the same standards. And so, you know, they'd get amazing work from our full-time people, but they get subpar work from the contractors. And so now when the contractors join us, it's like, oh, hey, you have to read our standards of excellence.

35:57If it's not good for you, then that's okay. We don't have to work together. But that's raised the bar. And they know that we're holding them to the same standards that we hold our full-time people to. Okay. So they initial it. There's a standard of excellence. What happens when somebody becomes against that, an infraction? What is your barometer of how long you tolerate? quick. And by the way, the way we do things is we, you know, people talk about criticizing in private, right? Praising in public. So I praise in public definitely, but I've kind of changed my stance over the last couple of years.

36:27Now, let's say I make a mistake in your company. Sure. That's on your dime, but I made the mistake. Why would you deprive the other people of the learnings? And so as long as you can be respectful about giving the feedback in front of other people, that's how we do it now. Can you give me an example? Yeah. So we had, this is when I was going too far. So we had a contractor recently, and he was helping with our blog. And his job was to mainly focus on the AI assisted content from our podcast. And so he's repurposing a lot of content. And every week we'd go into the marketing meeting. And then I sometimes I'd step in and be like, hey, man, like this isn't up.

37:02Like, I'm just gonna pause for a second. You know, so and so I'm sorry to use it as an example publicly, but I want to give the learning to everyone. Are you okay with that? He says yes, right? So then I'm like, okay, look, this isn't up to our standards of excellence. The words you're using are from a couple months ago. The phrase itself has changed in this. So I was giving him like direct feedback. I was like, we need to be... Stating facts. Yeah. Here are the facts over here. And then this is how I feel. I feel like we're not going to be able to produce high quality work. And that's going to affect everybody here because other people are going to have to cover for you.

37:31And he's like, that's fair feedback. Thank you for that. We did that for maybe probably another two, three weeks or so. And then after that... With the same person? Same person. And then it was like... In front of people? in front of people. And then we let him go. I was like, guys, we have to move on. And then my developer messages me on the side, the developer in that meeting. He's like, dude, took you long enough. So we have that. It's built in now where we made a job offer to someone this morning. And he's like, dude, I feel it in your culture. Like the improvements in your water. Like I want to drink that water.

38:00So I'm like, great. That's amazing. And then also what it says for the people who are watching, like your level of respect for that person and then how long the tolerance is. And then the team can be like, thanks, chief. Took you long enough. And people hold me accountable too in meetings. They'll call me out straight up in front of everyone. And I love that. That's good. It's like I write the checks, right? And so I get there's a fear. What's an example of something that somebody has called you out on that you really appreciated that maybe generally leaders would not want to hear? Yeah. So one guy was like, hey, Eric, I think we're working on too many things right now.

38:28And I think we should focus on this thing. It seems like it has the best opportunity. And I paused for a second. I was like, yeah, you're right. We should do that. Because I talk really fast. I move really quickly. Sometimes I just need some, like I need to surround myself with people that would just not be afraid to call me out and not be afraid to slow things down. I love that. Those are my favorite people on my team, people who like challenge me. And I think that the culture has become, we challenge each other to make each other better. And I am not above any sort of like feedback or criticism.

38:53So, okay. So we go back starting very simply an agency. Somebody has a skill set. If I was a copywriter, I should essentially be creating free copy to people as part of my pitch. Yeah. an overabundance that has been very specialized or personalized to that person or business. Yeah. Once you do that, every quarter, you're going to be offloading 15 % of the$10 an hour tasks. And then you start spending more time on the$10 ,000 tasks. Do you then say, if you're saying, I'm building an agency, do you go deeper with the copywriting services to make it sticky? Or do you say, I did copywriting, but now I can take that copy and put it into a graphic.

39:33Yeah. How soon do you start expanding? You know what the number one cause of startup deaths are? What? Premature scaling. So, and I've made this mistake many times. I still think I might continue to make these mistakes, but it's thinking that you're better than you are already and not going deep enough in that core service to make it super excellent and make it super remarkable where you're getting a ton of word of mouth. So the best agencies, maybe 50 % of their customers are coming through referrals, word of mouth. That's when you know you have something really good. and then your retention rates may be like, you know, 80%, 85 % annually, right?

40:05Because there's going to be churn every now and then. So if you're doing those two things and your net promoter score is very high with customers, okay, then you can maybe consider expanding. And their clients will start to ask for something, hey, what do you think about this? We actually need really, we need a lot of help with this over here. You start to hear that more and more, that becomes a signal. And then maybe you start to test that with other contractors to start. And if it does really well, then you can think about hiring full-time people. Oh, that's so good. Okay. Okay, so when you talk about, I could possibly keep on making this mistake.

40:33Cool. Can we talk about a mistake that almost bankrupt your business? Oh, yeah. And I just want to pause. I want to pause. I want to pause. I really want to say thank you for your ability to talk about these things because you're not just talking about this big, amazing business that you've built and all the wins and successes. You're really saying like, there was a ton of mistakes and it got very ugly. And I think it's so inspiring and powerful for people who are listening. So thank you. But yeah, let's talk about that. I don't think enough people talk about these things. Like there are always, I don't care what business you're in, there's always a time where you're going to come close to bankrupting.

41:03So in the very beginning, it was me not being involved enough. And I didn't learn my lesson the first time. So again, let my people go surfing, not showing up to the office. Right. And then hearing from people, dude, like I had a guy that he actually taught me digital marketing. He's like a little bit younger than me, but he's like, dude, you have your people coming into work now wearing pajamas and slippers and watching Family Guy and not doing anything. Right. That's where it got to. Okay. And even when that happened, I still didn't show up. Right. Um, so it's on me. Cause I like, no, you should.

41:31And my mom even called me out on this. She's, she's not a business where she's like, you think they're just going to run the business for you? Like, who do you think you are? Right. And I just had this rosy outlook anyway. So that happened the first time. Okay. That was within the first year. And then I would say probably three, four years ago when we were doing too many things at once. Okay. Well, let's go back to starting the business was how many years ago? Taking over the business was 10 years ago. So then like halfway into the journey of where you are now, a pattern revealed itself. Okay.

41:58Yep. And then doing too many things again and then decided to step away and watch people do it. I have this thing where I just want to watch people do it. Right. Like I can figure it out. You can do it too. Right. Yeah. And then it doesn't work. I would say probably three, four years ago, came close to bankrupting again. And so now. What was the reason for that? Because I just wasn't involved. So you wanted to watch your operators operate. Instead of saying abdication, like everybody goes surfing. It was like, I'm just going to step back and watch how good you are. It wasn't delegation. It was abdication.

42:24And, and in. Can we explain the difference real quick? And from your perspective as an agency owner, you're clearly winning. You're doing a lot of things great. That comes on the back of a lot of like punches in the face. Describe the difference between abdication and delegation. So delegation is when you hand something off to someone, but you're still holding them accountable and you're still kind of helping them where they need it. You still have your eyes on it. Abdication is you're handing it off and you're going off to do something else. Right. So for me doing something else, it wasn't like I was going to go like party or anything.

42:52I don't like partying. It was more so like I was just going to work on software and other things. Right. Again, too many things. I was like, oh, you got it. You've been there, done that. You got it. Oh, and you read on Twitter. Yeah, hire people, been there, done that, and get out of their way. No, it doesn't work like that. They like to think it works like that. But now the people that have been tweeting that from like four years ago, the chickens have come to roost and their companies are not doing well. And a lot of those CEOs have quit because, by the way, you need hired gun CEOs. I'm going to go into a little deeper here.

43:18You need hired gun CEOs, but you have to hold them accountable because they're just not going to care as much as the founder. Like there's a certain energy you have. There's a certain way you want things done and you have this magic that you imbue into the company and nobody can ever take that away. And I'll go to Neil for a second, too. He is calling his CFO like 15 times a day, right? Maybe a little too much, right? But he's calling his people all the time. He's like not necessarily cracking the whip, but he's on top of it. Got it. Hey, how are numbers today? How are numbers today? How are numbers today?

43:45Every freaking day, right? Got it. That's what you got to do. And so when you go back to four or five years ago, what happened at that point in time? It was just, I stepped back. And then how long did you wait? I stepped back. And even when I stepped back in, I was still hoping someone would step up. That took longer than it should have. But the moment I was fully in, everything was flying again. And I'm not saying like I'm amazing or anything. I'm just saying like, if you have founder blood in there, if you have multiple co-founders, that magic cannot be duplicated. And I used to think it was BS.

44:15Like you can't have someone that's like a 10X or a 100X person. No, the founders are those 10X, 100X people. And rightfully so, because they're incentivized to do well. Okay, so let's go back to where you are now. What is the future version of you? If you look at 10 years, first kind of like gut punch, second gut punch, full and focused, dialed in, holding people accountable, delegation, not abdication. What do you want in the next five years? I just want to keep playing the game. So I think a lot's going to change in the next five, 10 years and we can talk about that. Yeah. But I want to play this until I die.

44:48I just want to keep playing because to me, it's just like my joy everything I get. I had Neil take this personality test, right? Okay. So for him, it's really funny. So I'm - What personality test? It's called Principles U. Have you taken it? No, no. Oh my God. Best personality test ever. Okay. So you take, watch, we can compare results after. It's like 90, 95 % accurate. I even use it in dating too. Principle U as in university or Y-O-U? Oh, sorry. Principles Y-O-U. Okay. It's from Adam Grant and Ray Dalio. I love Adam Grant. Best thing ever. So go take it. Works for any type of relationship, whether it's work, your spouse, whatever.

45:17Okay. So I look at Neil's thing and it shows that he's like 1 % intrinsically motivated. I'm 99 % intrinsically motivated. And we talked about this on the phone. So he's like, yeah, I never thought, Eric, you cared about money, like ever. Like meeting you the first time, I don't care, right? But at the same time, like it's a nice way to keep score. And so like, you know, he's very money motivated and that's fine, that's his personality. For me, I just want to keep playing this game and I have no doubt in my mind, like I'm not tied to the outcome at all, but I'm like, yeah, I think we're going to build, it's going to be a great outcome, right?

45:46It could be nine, maybe 10 figures, who knows, right? A lot of these holding companies become that. But it took me, once I got punched in the face four or five years ago, that was when I really realized I'm just going to focus on one thing. So if I understand it correctly, you and Neil are competitors? Yeah. How much of a competitor? Apples to apples? Service to service? Not, I mean, we have a couple of related services. They have other things and we have other things they don't do. So, but I would say that the main difference with us is that he's got this global operation right now and he's focusing on just acquiring globally.

46:23He got a little too, I knew he would get aggressive. And we talked about this on Monday. He's like, yeah, I got a little too aggressive, but it's global expansion for him. And for me, I'm more focused on the tech of what's going to happen in the next five, 10 years or so. What do you mean the tech? Like, let's talk there. Let's do the tech of what's happening. So what I tell my team almost every single week right now, I was like, guys, we need to have a, not just a high talent bar, but an unreasonably high talent bar, unreasonably high. And the reason for that is because I believe that in the next five, 10 years, we can only afford to hire the top 5 % of people.

46:51And that doesn't mean that everyone else is trash. It just means for us specifically, you know, someone like you, you're going to have a thousand, 10 ,000, 100 ,000 AI agents working for you or drop-in remote workers, right? They will understand all your thought patterns. They'll understand all the things you've done. They'll understand all your weaknesses. They'll understand all your preferences as well. And what you're lacking right now is just manpower. You're going to have infinitely patient robots that understand everything about you and they'll work way better than you. And so that's going to be a lot of leverage.

47:19And imagine if we have only the top 5 % of people. They understand how to do all this stuff. That means that the business model changes. So for a typical agency, maybe you're charging a retainer$1 ,000 a month,$10 ,000,$100 ,000 a month, whatever. Maybe you're charging percentage of ad spend. I think that model is broken. I think the way of the agencies of the future in a lot of businesses is you charge on performance or you charge on a usage basis. So what are you moving to? Those two. Because I have a friend, two friends actually. I'll call it two friends with agencies. One agency does over a billion a year in revenue and it's all pay for performance.

47:55Wow. Okay, so Jasmine, I buy ads for you. Okay, you're not going to take on any risk. I'm going to spend, I'm going to take on the risk. If I perform, you pay me on each customer I acquire for you. That's it, right? It's an affiliate model, but not many agencies do that. So that's one. I think the way we're going to be able to track. Wait, pause. Yeah. Is that what you're doing now? No, we're moving at the, like, there's a lot of things that we're building right now that are moving in that direction. I've always want to do that. Do you think, because you probably be one of the first agencies to move one of them for sure.

48:22Do you think you're at a competitive disadvantage for a point or are you attracting somebody who is a lot more risk averse? Are you somebody who expects more? Do they become resentful down the line when they're just like, they're making so much money off product and we absorb costs that they don't? Yeah. So I think a couple of things. So one, I would say if we want to take a risk with like a newer service, maybe that's 10 to 20 % of our portfolio. And then the other 80 % is like stabilizers. So I could go out and take my shots. And in terms of the resentment, so the friend that does a billion a year, they work with the same companies.

48:53It's been the same companies over the last 10, 15 years or so. And then the other friend, they do 40 million in profit a year and they only have like 40 employees. So that's 1 million in profit per employee. That's huge. Yeah. And so, and they've worked with the same clients too. And so if you do, by the way, let's say, you know, your client decides to cut you out. Oh my God, you're making too much money. Great. I'm going to go to your competitor. I'm going to tell him all the numbers and I'm just going to roll this over there. And that's exactly what the second friend does. And wait, so do you as an agency not have a non-compete or like do your clients request that of you?

49:27Because could you not just use the same theory and apply it across the board? Typically, there's no non-competes. Okay. So even if you said, okay, that's fine. We're not going to work to either one, including your competitor. Could you already not be working with their competitor? Well, you want to focus all your efforts on one. You shouldn't do too many. You should have one pay for performance client per niche, ideally. So he's focused on the finance niche. He doesn't try to take on too many different clients. Yeah. Wow. I'm fascinated. Yeah. So if you had to guess, time horizon to that, what do you think?

49:56I think probably the next five years or so. So like we're building a product right now. We're building multiple products, but one is a product that will align your landing pages with your ad creative and your Google ad groups. And so that should lift conversion rates up. We might just give that away for free. And but the cool thing is - Give that away for free to who? To anybody that wants to use it for themselves, right? Any customers, because it's going to generate leads for us, right? Do you understand? I do. Yeah. I feel like my mind is being blown right now. And so if we do that well, here's the other thing.

50:26Let's say that's just a feature, but all the enterprise companies or mid-market companies that connect their ad accounts to that, we're going to have a lot of data. And we're going to be able to storytell with a lot of data. There's a lot of case studies we can make. Plus, we can probably build other stuff that's tied to that data. We can see all the inefficiencies across different industries. There aren't a lot of products out there that have a lot of ad data. Are you an agency that's really leaning more towards tech? In your relation to investment and time spent with tech, how is it industry-wide?

50:54or do you head more in that direction? I tend to look a lot into the future. That's probably my strength. So Neil doesn't, like Neil has said this, like I'm really good at looking into the future. He's more about, he's like, he will look at whatever works and just go really deep on it. I like reading a lot. I like talking to a lot of people about the future and seeing what's happening. We can reprogram our bodies. We can CRISPR ourselves, right? There's a lot of things we can do. Yeah, I try to stay at the cutting edge with that stuff. Yeah. Okay, so as we tie things up, we went very high. There's different levels of entrepreneurs who are listening.

51:23Let's go back to the person. Let's put yourself in the shoes of the great entrepreneur who has a skill or a talent, who think they have the ability, the desire to build out an agency. They're here and you say you want to build. What advice would you give them based on what you're seeing right now is performing, what they should be doing? How do they spend their very limited time to get the maximum return? Yeah. So your question is more around how should they invest their time right now? Yeah, specifically in growth. Yeah. So I would maybe spend, I try to read at least an hour to two every day.

51:52Let's just say an hour. So you're reading an hour a day, whether it's you're reading newsletters or you're reading books or whatever. You're just trying to get better, right? Because you're gaining outside perspective that way. Or maybe you're in networking groups or masterminds or whatever. So that's one piece of it. The other piece, this is somebody that's starting out? Yeah. Okay. So somebody that's starting out, you should be focusing on getting, you're the janitor, you're doing everything. So you're out there getting business, a lot of business development. That's going to be a large chunk of your time.

52:16Let's call that, I don't know, let's say that takes two, three hours of your time. I remember in the very beginning, this was before we had Loom or anything. I was taking people's, I was making these 20 minute videos that took forever to upload. And I was just like analyzing your website. Hey, here are all the things that are wrong with your website. And I would send like 20 of those a day. It was a lot. So let's see. I think I was probably spending like four or five hours on that per day. And I was also writing on Quora as well. I was writing on all these communities. So you got to be scrappy.

52:42Like, yes, you got to find an amazing offer. The move now is probably to DM people that you really like. and eventually you get that flywheel going, you know, maybe three, six months into it, you're gonna start to convert people. I remember I wrote like a answer on Quora and then someone randomly reached out, hey, I saw this answer. Like this was like six months later. It's like, hey, we'll work with you. $30 ,000 a month contract, right? And I was still working like at a job. Anyway, so a lot of time spent on business development and then probably the rest of your time you're spent on fulfilling, meaning that you're actually doing the work because you're broke right now.

53:12You have nothing. So you're trying to get better mentally, right? You are fulfilling, you're actively doing business development, you're doing outreach. And then the other thing too, is you got to take care of your body, right? You take care of your body, I take care of my body. It's like, you don't take care of your body, you got nothing. And so some people just let themselves go. And that just blows my mind. I don't know how, right? But I think it's those four things. Thank you so much for that. And so knowing what you know now, there's a person who says, okay, I'm going to go in, I'm going to start with my biz dev, I'm going to be sending DMs, but they're going to be personalized.

53:42I'm going to show them what I can do. I'm going to be spending my time on the fulfillment of that. Where are they going for business growth? Let's go copywriter, thumbnail designer, and organic marketer. What platforms are they going to? So wait, this is a thumbnail person? This is like a designer. No, no, let's go to three different examples. Does the platform change based on the services that are rendered for a bordering agency owner? Yeah. So, okay, I guess we'll start with thumbnail person first. So thumbnail person, the first hire I would recommend is probably one person to take on the fulfillment.

54:13That worked out really well for me. And then the second one would be the executive assistant to take on a lot of the admin. I hate admin work. I just can't do it. I'm like 6 % detail oriented. I just can't. So there's that. So one person to take on fulfillment, the other person, like an EA to take on the admin tasks. And then what worked for us is we brought on the operations person because we had so many contractors. Once we brought on that person, his name's Daniel, everything took off because he was really good at recruiting people too. And we would just vibe on everything and he just understood.

54:40People talk about the visionary integrator. He was the integrator. How did you meet him? Job posting. Got lucky. No. Got lucky. And did you use the word integrator? Because I'm creating a podcast episode on what kind of words you should be using. And so obviously if you use integrator you're very familiar with Gina Whitman. But is that like a subculture? No. He didn't even know what it was. But yeah. He took a shot and you know, thanks to him. It worked out. Wow. And how long are you guys working here? Well, he's not here anymore. But he'll text me every now and then with other ex-grainers and like, oh my god.

55:05And I apologize. I was like, I'm sorry I wasn't involved. He's like, dude, you're the only CEO we needed. I was like, oh. That's nice to hear, right? So yeah. You know what? I couldn't think of a better way to round out this podcast. Do the ups and the downs and starting and being extraordinarily gritty. And what you're proposing to people is nothing that you have not done yourself. And so to have a former Grainer come to you and say, you were the CEO that we needed at that time is a really beautiful testament to who you are. And five years from now, when you have really transformed the agency industry, but specifically your own agency, I think there's people who say the same thing.

55:38You were the CEO that we needed then. You're the CEO that we need now. For people who want to know more about you, learn more about you, perhaps join that agency mastermind that you and Neil are hosting. Like where do people go and get the goods? Well, thank you for that. One final thing I'll say, both my elementary school friend and I, like we grew up together. We're just like, we were really anxious, right? And now as we're, you know, in our late 30s, we're just like, all you got to do to make it all work is just surf the wave. You try to control it, you sink, right? As long as you're surfing the wave, taking the ups and downs, like you will build a big business.

56:06I think people just get too anxious and they give up too quickly, they tap out too quickly. So that's the final thing I would say. But if you want to learn more about the agency owners association, just go to marketingschool.io slash agency. We'll link it in the show notes. You can find me on all socials at Eric OSIU. So Instagram, Twitter, and all the things. But yeah, thanks for having me. I appreciate you. Thank you so much. Ladies and gentlemen, thank you for watching and listening to The Jasmine Starr Show. My goal is to talk about the business of the business, to give you an inside look about things that we often don't talk about and to see if there's resonance with you or perhaps investing in some of the guests that you see here today.

56:37For more information, you can definitely check out Eric and be sure to tag us both on Instagram if you found this episode helpful or compelling. Again, thank you for watching and listening to The Jasmine Starr Show.