What Erik Huberman Knows About Marketing That You Don't! 💵 E92

0:00Diversification is a money preservation strategy. If you look at most people, even Warren Buffett, he made his money on Geico and going deep in insurance and then took that, spread it around. What are most brands doing wrong on social media? It's forgetting that people take time to buy things. The average sales cycle online is generally between three weeks and three months. If you're not doing things to nurture and actually follow up with those people and stay in front of them and keep them coming back, you're probably missing out on 75, 80 % of your potential revenue.

0:34ladies and gentlemen welcome to the money mondays i am very excited for our guest today this is one of the few people that i admire in the marketing space because he's been in the game just as long as i have if not longer and he's just been buying up all of our competitors buying up all of our friends and doing a full-fledged roll-up in the category and right now we're sitting in a parking lot that's why we're in the rv motorhome for busy gentlemen like this i have to go drive to them and he was speaking an event that i'm actually throwing today here in the mortgage industry. I recently launched Elevator Funding, a mortgage company where we do everything in the mortgage space with eMortgage Capital as our partner.

1:09And they are throwing this mortgage event with us today here in Irvine, California. And so I decided to bring the RV motor home. Trevor brought us out here so that I could catch Mr. Eric Huberman from Hawk Media. So as you guys know, we cover three core topics, how to make money, how to invest money, how to give it away to charity. This gentleman knows how to do all of those things at scale. And so I'm really excited to interview him. So what we're going to do is have him do the quick two minute bio so we can get straight to the money. Sure. Bio. So, I mean, it's fun because of the path of money.

1:37I graduated 08, went into real estate one week before the whole industry collapsed and made $350 my first year out of college and went, this isn't going to work. So I started working on an online music company, built basically like masterclass for the music industry, built that for two years, got it profitable, hired a CEO, and then built two e-commerce companies consecutively. the last one out of an incubator called Science that had just launched our Shave Club, worked with their portfolio, built an activewear brand, sold it to Bally Total Fitness. And then this brings us to about 11 years ago, started consulting and advising for a bunch of brands, saw how broken the marketing ecosystem was and started scaling it.

2:13And so fast forward, it's been 11 years. We've got about 250 full-time people. We've worked with over 5 ,000 brands. We've acquired 21 different agencies. Yeah, it's crazy. We have a venture fund and we're invested in over 100 different marketing tech and e-commerce tech companies. We're an owner in the women's soccer team in LA. Got a family office on the commercial real estate side. And yeah. All right. So it's not like we're going to need to do seven episodes. Let's start with the beginning. Hawk Media. Yeah. When you decide, and by the way, Hawk is spelled with an E at the end, in case you guys are looking it up.

2:42It's H-A-W-K-E. Tell us about Hawk Media. How did it start? Why did it start? And let's go into that. Yeah. It was really, I had built the credibility and actual knowledge on how to build these digital brands when it was new. I mean, this was 2013. I got a call from Red Bull and they're like, how do we do this digital stuff? Like that was a common phrase. What is this digital stuff? I want to do a tweet. Yeah, exactly. And so I just started consulting and advising and calling myself this outsourced CMO and that resonated. And so then I started getting more business than I could handle. And I tried to use other agencies to actually execute.

3:12And I just found that 99 % of them are full of shit. And so I just, after a few burned some of my clients, I went, I can't afford to keep this up. I got to just build my own team. And so I hired a small team using my consulting fees. And literally we went back and said, now we can just execute it. Let's keep it super flexible. We're going to be the best at what we do, but easy to work with was always what we had in mind and how we built it. And that was it off to the races. So let's say someone out there is a brand owner. Why should they consider using an agency like Hawk or one of its competitors?

3:43Sure. I think, I mean, there's a lot of reasons. One is I'm going to be able to attract and hire better talent than most companies. There's the really sexy, you know, brands and the high flyers and the really great companies that, you know, they might be able to compete, but most marketers don't want to go work at, you know, just some other company. And so you're a victim of the talent you can attract in that situation. So that's number one. Number two, the forest from the trees thing is really important. So, you know, we watch a lot of companies try to bring things in house and that usually lasts six months to a year because it takes about that long to see the degrade of all your marketing starts going south because you don't have that outside perspective.

4:18And that's why every Fortune 2000 uses agencies. And the idea that it's binary or one or the other, I think, is crazy. And then for us, we've now built an AI system that's digesting over 8000 companies, marketing media and revenue data in real time, training AI against it so it can look at an individual company and see exactly what's going wrong and right. You don't have that yourself. And so all the softwares we have, all the tools we have, all the knowledge we have, you're not going to build that in-house unless you're a Fortune 500 and then go figure all the Fortune 500s use agencies. So that's a big aspect.

4:45So what I often say is when someone wants to hire in-house, they're like, I want to hire someone with five years experience and does this, this, and this on Meta. Someone with five years experience running paid ads is going to sell$2 ,000 a day of waffles and irons and pillows. They don't need to come work for you for$8 ,000 a month when they can make literally thousands of dollars a day selling knives or selling cutlery or selling freaking bubbles. Unless they're not actually good at it and then they'll come take that job. And they'll come work for you. And so I always recommend on the agency side, when you're first starting out, this is what I understand, but there are agencies actually like Hawk, which they'll start sometimes with 5K, 10K, 20K budgets.

5:23We still do. Rather than most agencies, which are like my agency, the 25K minimum, mostly because in the influencer space, you can't spend five grand and really figure it out. I need to actually spend enough money to matter. But for your agency, you're able to like really track and really dial in because you own 21 different agencies of all different topics. So walk us through, why did you go the roll-up route? why do you decide I'm going to go buy up a lot of the competitors, interesting characters in the media tech space? It's really, it's the same talent conversation. It's like, I can go and try to find a salesperson that can sell into something and like a great, let's take Amazon as an interesting channel.

5:57Cause it's one of the better growing ones we have. So I can go hire an Amazon expert and a salesperson that can support them or try to train my sales team to do that. And that process is slow. We just talked about this before the podcast. Like I want to be the best, like marketing world domination is our mission statement. We want to go for it. And so instead of that slow build where maybe in the next year or two, I'll get to the point of what an agency is already doing, I can go find a great agency with really talented people that are already executing, give them my platform and everything we're able to do, and one plus one can equal three.

6:27So it's just at this stage of our company, it's a lot faster and more efficient and just a better process to just go buy. So on the making money side, someone out there is like, I've got a brand or product or service and I want to make money. but I only have 10 grand to get started. What should they be looking for? They should be thinking about ROI. Should they be thinking about branding? Should they be thinking about hiring experts or consultants? Like what are the first things someone can do when they're like, okay, I'm ready to go for it. My product is ready. Yeah. I would say if you don't have a consistent 10 grand a month to spend, don't take it.

7:00Put it back in your pocket. If you're a founder of a company, you need to go figure out how to drive revenue, whether it's funding or actual revenue. You got to go build a war chest. Yeah, exactly. I mean, I spoke about this the other day at a conference, like the whole selling things out of your trunk. It's not a metaphor. It's a real thing. Yeah, me too. I did it in traffic before. Yeah. So I can get to that story in a second. Yeah. When I was selling lemonade as a kid, I used to run in front of cars because I knew they wouldn't run me over and they wouldn't say no. I knew they wouldn't run me.

7:27But by the way. New York don't do that, but yeah. Yeah, touche. Oh, hi, California. It was a small town. They were, yeah, they'd stop. I positioned myself at a stop sign and then they'd stop at the stop sign and I'd walk in front of their car and hold up a lemonade. Yeah. So they had to say, I made them say no. But yeah, I mean, it really is. You got to go figure out how to start building your business organically in the beginning or get someone that's going to fund it, which I think people chase fundraising a little too quickly. It is easier in the beginning, but my dad used to tell me money's expensive.

7:57Like you're giving a piece of your company. If you actually believe your company is going to be worth hundreds of millions, billions of dollars, why the hell would you give up a piece of your company early on? We've bootstrapped Hawk to this point. We've never taken outside capital. And like, if you can avoid it, that's great. But you have to be real with yourself. You might need the funding. And after that, again, when you can spend a consistent 10 grand, then that's when you can get to start running some advertising, doing some email marketing, it depends on the product or service of really what you're going to do.

8:23But even influencer marketing, depending. But it really starts with partnerships and things that don't cost money in the beginning. So like finding someone that aligns with your brand that has an audience that's willing to put it out there, you know, calling in favors, asking for help, hitting up influencers that might give you a shout out. Your commodity at that point is time because you don't have any money. So use your time to go find ways to get it out there. And then once you see the flywheel going, what's good about doing that, it's not just you need to save the money. You don't have it.

8:49It also forces you to really figure out what is the pitch? What is the value? How are people responding to it? Because when you're that in the weeds that you are selling your product personally, you will learn a lot about your product. So we're in San Diego, California, passing through Camp Pendleton. And there's those two huge globe looking things on the right of the freeway. That's like a nuclear power plant. and something happened and the freeway was stopped like stop stopped like we're not going anywhere all day is the way they explained it and so i thought basically i have hours to go but my partner at the time his dad was the main executive for rhino linings which was doing around 200 million dollars a year for truck bedding back then and the him and the owner of the company were in the car with us so as you can imagine they're very busy guys they're frustrated because we don't know when this multi-hour trap is going to end.

9:38But I happen to have 60 t-shirts, 5 dozen t-shirts in my trunk, 12 of each color. All different sizes. That part was a bit awkward. And so I got in the car and literally started selling t-shirts for hours until I sold all of them. But here's the fun part. The billionaire guy, the main owner, and the dad got out of the car and helped us. And so they walked around and later they brought it up for like two years how much fun they had going back to their roots of selling. I was going to say, that's the thing. If you've got that entrepreneur bug, it's the game that's fun. It's not about who, I doubt you made that much money off t-shirts.

10:16It was just like, what am I going to do with my time? I'm going to go fuck this muscle a little bit and have some fun with it. I still think it was such a fun day. Yeah, 100%. We were selling them for 10 to 15 bucks each times 60. So I was like, made like six or 700 bucks. Gross, not net. By the way, that's what people don't realize. Gross sales versus net sales. okay so on the investing side why would someone as they're growing their business decide to start finally investing outside of their business okay they've started to scale their company now it's time like hey maybe i'm gonna put 50 grand into real estate or 50 grand stocks um diversification is a money preservation strategy so i i've heard this a lot recently and i believe it you make your money on being hyper deep and focused you know if you look at Most people, even Warren Buffett, he made his money on Geico and like going deep in insurance and then took that, spread it around.

11:03When I say maintain, I mean outpacing inflation, like maintaining according to how money is degrading, basically. And so to me, it's the forced function of getting some money out of your business so that you actually create a stable foundation to keep building on. Because if you keep everything in your business, businesses are risky. They're always risky. companies go out you know there's companies that go out of business after 100 years so it's it's crazy to keep everything tied into one thing and so as it starts to make money having the ability to take some of it out and put it away so that you're set it's the kind of saving for retirement thing but honestly as an entrepreneur most aren't going to retire but it's still like god forbid the business that i've put all my time in ends up not being necessary or ai takes it over etc i've taken enough money out over time that i'll be okay and i'll figure out the next thing I think it's a safety net.

11:53So let's say someone listening has built up their company. They're doing$4 million in sales. And Eric Kuberman from Hawk Media calls and says, I want to buy your company. How do they make a decision of what the heck to do? Should they sell? Should they wait? Should they keep going? How do they figure out what to sell for and why to sell? And how do they explain? Like, just walk us through that process or thought process. Yeah, we're a unique buyer. Like, we're looking to buy people that want to keep growing generally or if they need an out. but like we're not a big cash buyer meaning like we're not just handing them a check and going goodbye so it's one way or another they're going to be partnered up with us and so the people that partner up with us are the ones that are like i i don't have a three-year window or a two-year window on this and i'll explain why i either am out now and i can't hang out because most other than us most companies require an earn out which means you have to stick around you have to keep running it and if you don't hit your metrics you lose everything and so you get a little bit of cash up front, usually it's like, you know, 15 % of the value of the deal, maybe half of your profit for the year you might get in some of these deals, but then everything else in contingent on you growing the business.

12:56And that's how the buyer mitigates their risk on making sure that you actually stick around. For us, we just do it. If you succeed, we succeed. If you fail, we fail. We make it a lot more aligned. And so that works really well for people that are want to keep going after those couple of years. Because again, after those couple of years, you don't own your business anymore. It's done or want to get out right now. We're kind of, you know, in that middle ground where you're like, I'm going to hit the numbers for two years and get out, that might be better. But there's not that many buyers for that at that scale of one to five million in revenue.

13:24And so the real thing for us is we're going to take, like, if you're running a business sub four million, five million, you're probably the head of HR, accounting, legal, sales, marketing, everything. And so we go, hey, thankfully, we got, you know, we had some tailwinds, we grew this business big, we have a great platform, great executive team, you get all that. So now you all you have to do is focus on growth. We're going to take over the rest of this. And then the thesis has to be, do you think you can grow this a lot more aggressively if we take all the other bullshit off your plate? If you do, it's a good deal.

13:53If you don't, then it's not a good deal for either of us anyways. So that is the conversation we have is if like you want to go make a lot more money. And I'd say the thing a lot of times they're giving up is the idea that they're, you know, if someone thinks is doubling every year and they think they're going to be worth hundreds of millions of dollars on their own, then it also probably doesn't make sense. It's the person that's you know gotten it to this point it's a lot of headwind and they go i you know i'm making the cash but it's not really an agency under 10 million in revenue isn't worth that much right and so it's like why don't we just make a lot better cash flow together and that's really where it comes in all right eric so you've had over 5 000 clients over the years for hawk media and ask you a very straightforward question what are most brands doing wrong on social media on social media uh yeah it all goes into the same thing most brands are doing wrong in general and it has to do with social media too is forgetting that people take time to buy things i say that and everyone goes well yeah but then when they look at their social media numbers their metrics they look at how they're selling they their strategy for how they run ads it's all about buy today buy now buy now and the average sales cycle online is generally between three weeks in three months.

15:02And so like Facebook, as an example, on Meta only tracks a one week sales cycle through any of their clicks. So you actually can't track as long as you need to track to actually see these things. And most people don't understand that. And when I say most, I'm literally 99%. Like almost every agency I know, it's like they're still talking about ROAS and ROAS is such a misleading number. And it's just a terrible stat. And it's okay leading indicator if you understand how that plays into your marketing. But if you're not doing things to nurture and actually follow up with those people and stay in front of them and keep them coming back, you're probably missing out on 75, 80 % of your potential revenue.

15:36And literally not, that's not exaggeration. So it's like, you know, people, when I see all the struggles the past couple years of e-com, it's because people just didn't understand these things. And so didn't do all the other pieces of it, like email marketing and SMS marketing and retargeting to actually keep in front of their potential customers. And yeah, they just, when someone sees an ad and then, let's be real you're sitting bored between meetings or you're on the toilet or you're doing whatever and you're on your phone and you see an ad and you go oh that's cool and then you move on right you might have intended to buy that but you're going to need to see it again and everybody knows this but then when it comes to actually looking at their marketing they forget so what i explain is i call it i'm going to retarget you till you buy or you die yeah 100 once you click on something and then you've showed intent to want to buy this product or ad i'm serving you yep i'm going to retarget you until you buy it or for the rest of your life And it works.

16:25I mean, anecdotally, I see it for myself. I'll see an ad and go, oh, that's cool. And I'll check it out. And I'll be like, I don't have time for this right now. And I might get served for six months before I go, you know what? I need to just buy that thing. Yeah, I do want that thing. Yeah. And that's normal. Everybody's had that experience. And then they forget it when they're on the marketing side versus the buyer side. Yes. Yeah. So similar when I sit with brands, they're always talking about the return on ad spend or the ROI. Yeah. Like you don't realize that oftentimes people are watching social media content from the influencer.

16:50They're not necessarily like waiting with their credit card out. Yeah, exactly. They do want to see your Fashion Elvis shirt or your Fit Tea drink or your healthy product or your brand, whatever. But then they do. But it doesn't mean that they're in the moment to buy when they're next to their significant other. They're at the movies. They're at a TV show. They're in a car at a stoplight. There's all sorts of times that they're watching. And so it's not always. And that's also why our agency, we do not allow for you to do a one post campaign. So oftentimes, we just want to do a test and have 50 influencers post for 50 grand.

17:23I'm not going to do anything. I'm not going to promise you any of that stuff. It's insane because we don't know when they're going to see it. I want them to do three posts each morning, two days later in the afternoon, maybe a week later at nighttime, so different times for the audiences. I want them to build up a story about, hey, I just got this product. Hey, I just used this product. Hey, guess what? The product was so cool that let me give you guys a discount. I want to build a storyline for the brand. I don't want to just be like, hey, buy this protein today. Well, then back to the point, you have to have retargeting set up so that then when they actually go to the site, now whenever they're surfing the internet, they still see those ads around and maybe you're even repurposing that influencer content on those ads.

17:59And then on top of that, you're doing email and collecting their email and SMS. So if they're not ready to buy, you're able to actually stay in touch with them forever, as you said, until they die or buy. And when they buy, I want them to buy again now. So I'm gonna still keep hitting them up. How often do you turn down clients? Interesting. um so we we've always wanted to be the best at what we do and easy to work with so i actually other than obviously we have this is how much we can like you said it great too like 25 grand is what you need for an influencer campaign for us 10 grand per channel is really where you need to be we can go down to five with the certain brands but other than like we don't want to go lower than that and so um other than that the only real role we have about working with companies because we've been so surprised by products that i didn't think would be good that just crushed it etc is uh we don't work with assholes like if they're gonna be a dick we're out yeah other than that we're gonna do everything we can to help well also people don't realize about the jerk rule about not working with the jerks is nothing's ever enough correct so even if you go crush it yep like hey we're gonna spend 100 grand and you go bring back 260 yeah and they were hoping for 150 and you bring back 260 like i thought you're gonna do like three or four hundred yeah wait and it just gets worse because like that's those are the people that's like threaten legal action and do all this stuff that you're just like, what are you doing?

19:17Like that's that. Yeah. You just, the sort of nurse, if you can, if you can spot a narcissist or some sociopath before you can work with them or even early into working with them, get out. Yeah. And that stat I tell my team. So three to 4 % of people are sociopaths. It's an actual stat. And so on some level, and so we have currently about 700 companies running marketing for. Right. So if let's say it's 3%, that's 21 companies. So 21 companies are being run by sociopaths. And that's if they don't, that's if sociopaths don't over-index into entrepreneurship, which is also a thing. So we always know that there's a portion of our client base that is probably a little unhinged and we try to spot it.

19:59And if they're being irrational and that kind of thing, we do try to very amicably, very carefully just back out. That's how, but it's hard to spot during the sales process. So on the other side, you've worked with over 5 ,000 brands over the years. What are brands doing right? What are they doing good out there? You know, we 90 percent of what we do, and I think it's important, is focused on the scalable, repeatable part of marketing, because to me, it's the pipes that really grow a business. And then the viral part, the really good brand, et cetera. That's what comes over the top that puts an X factor on everything.

20:29And I think where the number one thing companies do really well and the most important part is when you have a great product that people want. And we both run into it a lot, I'm sure, is the person that started a company for the sake of starting a company, not because anyone actually needs what they do. Those are tough. But when someone's actually got a great product and everybody likes it, trying to think how much I can share with this. I can share the company. I can't share the partner. We have a company we're working with right now. It's Vanessa Hudgens and Oliver Trevina's company, Cali Water.

20:57You've probably seen it. and they're crushing it. And the reason is we then showed it to what is probably going to be a massive partner for them. And we handed them a can because we have it in our office now. And they would have always cracked it open, took a sip and went, hmm, this is awesome. Like it is that simple. Now they're gonna be, I mean, very big partner for them. And so those are the things that like, if you have a good product, marketing is easy. If you have a bad product, marketing is near impossible. And so that's number one. Again, number two is getting all the pipes in order and getting your net in order.

21:30When I say net, I mean your email marketing capture, your SMS, your retargeting, all the things so that when something kicks off on the sort of viral side, that 10 % of marketing is about branding and going viral and really building that. When that happens, you're ready to capture all that opportunity and not let anything fall through the cracks. And then having something compelling to go build that brand and that differentiator and get the word out there and building that word of mouth and building that culture around it and everything. That's big. that's actually one of our catchphrases at elevator studio is we can't undo famous yeah like if we make you famous and we have 50 influencers post to you and they got 50 million followers for example there's no take backs yep but we also say we can lead the horses to water we can't make them buy your stuff yep like yeah i can make you famous yep but just because i make you famous doesn't mean that people actually want to buy your stuff if your website doesn't work exactly targeting doesn't work if your checkout button's not working like or as simple as your differentiator for your product and your value proposition isn't really that compelling like it's like yeah cool no one cares it happens or another t-shirt yeah yeah exactly so it has to be something about your t-shirt to make someone want to buy it and then yep so that's the other thing is like a lot of brands get super excited like we got into ralph's or we got into this chain store we got into this press then they don't realize what it takes to sell through yes like talk us through the actual real life process like especially for beverage brands food brands like what you can get on the shelf at a big chain store.

22:50Yep. But you need to sell X percent per week or we've seen that a lot because a lot of companies, they spend all their time developing product and getting on the shelf and then nobody knows it. Good packaging is a really big one because people will walk through the aisles. That's one benefit of retail. But we've seen it's funny. There's a very it's an underutilized part of the market is using digital to drive into store when you know people that are the right, you know, psychographic info, right, geographic info. And they're within two miles of that store and you can actually compel them to go in we've done this a lot you can outpace a lot of their projections because you can juice it without them even knowing meaning this retailer you get into ralph's or whatever and now you're in these retailers and you drive some digital ads to get them in ralph's doesn't even know you're doing that and all of a sudden your stuff's selling off the shelf way faster we did this with a toy company with target and they sold out what they thought would be the three month holiday worth of it was a toy company they thought the the whole holiday season was covered with their inventory and they sold out in a week.

23:49And so they thought they had 12 weeks worth of product and we sold it in a week. And they had no idea why. So they just bought 10 times as much and went, fuck it. Great. And rolled out into all targets. And there's a balance there where you got to sell that too. But you also, you get that visibility, you get out there. It's a little bit of a self-fulfilling prophecy and then support it with the same type of ad strategy. And it works. So, yeah, I mean, being on shelf and store, the strategy is slightly different than internet. where on internet you're driving for a direct conversion. In the store, you're driving to people so that when they walk through the store, they pick your stuff over something else or they see it and go, wait, I recognize that and grab it.

24:24Again, or as far as drive down to the store and pick it up, which you can do all sorts of different promotions to make happen. And then you have on-site, on-premise, which we're not as involved in, but there's a lot of great strategies with testing and having promotion on-site. So there's a founder listening to this right now and they've got two employees, themselves and themselves. but they're finally ready to hire someone. Why is it important to invest into people? Yeah. I always found it's important to remind yourself you're the most expensive employee. So if you can't afford to pay some, once something's taking a lot of your time, if it doesn't make sense for you to pay someone else to do that, you probably shouldn't be doing it either.

25:01And you have to figure out a more efficient way to do it. It's a force factor to me to find ways to scale because if I can't afford to pay someone to do that, well, why the hell am I doing it then? I'm expensive. I'm the founder. And so, you know, my first hire was an assistant because it was just like, what are all the things that are taking my time that I can put onto someone that I can train them to do the like, you know, easy tasks that are taking a ton of time, but start there. And so it's, and then to me, hiring is all about finding what is the bottleneck and how, who can I put in to alleviate that bottleneck?