He Built a $150M Company Without Taking a Single Dollar of Outside Capital | Erik Huberman

We were actually burning tons of cash. And I think that that's been a fun realization. I'd say probably came through because of some of the stuff I went through like 4 years ago. And at the same time, I'm trying to say this without getting myself in trouble. I had a few executives that were not honest with me, let's put it that way, and thought we were hyper profitable. We were actually burning tons of cash and figured out quickly, thank God, but took a few months to really uncover it. And in that time, just burned through our cash holdings, had to clean up my entire leadership team, so trust was broken, etc. At the same time, she's okay, but my mom came to me and said she needed me to give her a kidney. She did get a kidney donor from somewhere else, but she thought at the time that I was the only one able to give her one because someone told her only her kid could do it. Our team had misreported our taxes, had misreported our sales numbers. We got a frivolous lawsuit from a former employee claiming wrongful termination. She had So that was an interesting filing. My father had just passed away.

So when it rains, it pours.

Yeah, I'm saying this is in the same week, by the way. That's what I'm trying to say. So yes, I spent about 6 months waking up every morning with dread and going, I just want to shut this thing down. But that realization was it. It was like, well, this is probably the worst it gets. Like, it was fighting, like, the— your limbic system and your reptilian brain saying, like, run, this thing's gonna eat you, to, like, Thinking rationally, like, no, this was really bad. Corrected a lot of it right away. It was the emotional side that was hard. And so I was like, just grit through it and learned a lot about, like, frankly, mental health. Like, I'd never dealt with anxiety till that period. Spent about 6 months literally every morning waking up just waiting for the next shoe to drop. And after 6 months, it never really came. And then you start to feel better about it. And what's nice is, not that I wish that on anyone, because I was, you know, I've broken a lot of bones. I'm an extreme sports junkie. That was the most painful thing I've ever gone through. But going through it and coming out the other side gives you a lot more grit.

I'm Allison Maslan, and welcome to the Scale It Method Podcast. If you're a CEO or founder and you're ready to take your company to the next level while also living a fuller, richer life, you are in the right place. I've built 10 companies over the last 40 years, and I'm here to share the most up-to-the-minute strategies and the biggest needle movers that will truly scale your company. Plus, I'll give you a peek into how we do it over at Pinnacle Global Network, where we help business owners multiply their growth and enjoy the journey along the way. Okay, my Scale It friends, let's dive in. Our guest today is a trailblazing entrepreneur and marketing expert. He is the founder and CEO of Hawk Media, the fastest growing marketing consultancy in the United States. Valued at over $150 million in revenue. Since launching the company in 2014, Eric has helped scale more than 5,000 brands, including Red Bull, Verizon, Casamigos, Funko, and Crocs, generating over $2.9 billion in revenue for his clients. Before founding Hawk Media, he built, scaled, and successfully sold 2 e-commerce companies before the age of 26. And today he continues to push the industry forward through Hawk AI, a proprietary marketing intelligence platform that equips businesses with data-driven insights to make smarter marketing decisions and accelerate growth. Eric's leadership has earned him recognition as a Forbes 30 Under 30 and a CSQ 40 Under 40 honoree. Under his guidance, Hawk Media has grown to more than 900 team members, earned over 90 industry awards, and expanded through strategic investments and acquisitions, all without taking on debt or raising outside capital. Known for his practical insights and innovative approach to scaling businesses. Eric is a sought-after speaker who's passionate about helping entrepreneurs build stronger brands, create sustainable growth, and lead with confidence in ever-changing marketplace. Help me welcome to the stage Mr. Eric Huberman. That's quite the bio you got there.

I was gonna say, I don't know where that came from, but we definitely— wherever it did, it needs to be corrected and shortened.

Oh my goodness. Well, we're excited to have you here.

Yeah, thank you for having me.

So we have some amazing CEOs out here that are scaling their businesses. And so Hawk Media was born from my own research about you and all that you've done, all the amazing things that you have done, out of your own frustration of hiring agencies as a founder. What were some of those frustrations? Take us back to that moment where you're like, I can't take this, I'm gonna fill this gap.

Yeah, I mean, it's a pretty easy one. Show of hands, so everyone here is CEOs? Show of hands, who here has had a bad experience with a marketer or an agency? It's pretty— I didn't see a hand down, but if I did, I'm like, you are a miracle, because I have not heard one person tell me they don't have a bad experience. And that's where it came from. I built and sold 2 e-com companies. I then was advising for a few different brands around LA, and big and small. I was working with Red Bull, as mentioned, and a few others, as well as a bunch of startups. And it was like, you know, there's 90,000 marketing agencies in the US, and the problem is 99% of them are full of shit. And the few that are good only want to work with the Fortune 2000, and they move upmarket the moment they get credibility. It's— and this is being on the other side, being on the agency side. Every private equity firm, every banker, every acquirer is telling you, oh, you need to go upmarket because it's It's stickier, it's more profitable, et cetera. Basically, the moment you get a little bit of skill, you stop working with the companies that need you most. I just thought that was ridiculous. Not planning to build what we built, just honestly to solve the problem right in front of me, I hired a little SWAT team and was like, we're going to be the best at what we do, and we're going to stay easy to work with. That became our mission statement. Then over time, wanted to be well known for it and become this go-to marketing team for everyone else, everyone other than the Fortune 2000. We do work with the Fortune 2000, but we literally tell them to their face, We're not built for you, we're not going for you. And go figure, that's when they want to work with you the most.

Yeah, that's kind of how it works, right? Um, and we have a few marketing companies in here, so nothing personal here. This is just—

You might be in the 1%.

Yes, exactly, exactly. So you've said a business never dies unless the founder decides that it should. When did you come close to that decision for yourself, and what pulled you through?

It's funny, I went through that yesterday, recapped that story, but real quick, 2 reasons. They either give up as the founder or get underwater financially. Hence why part of that was like, we haven't taken on any debt. We haven't taken outside capital. If you're not under a pref stack on the investment side that you've got to pay back people you're never going to be able to pay back, or you aren't dealing with debt service, your business can ebb and flow as much as it needs to, as long as you don't give up. So that's where that came from. So what's nice about that as CEOs is it's pretty easy, like, manage your finances and make sure you wanna come to work every day. That's the job. Other than that, how successful you are is part of the game, but it's not gonna go away. And I think that that's been a fun realization. I'd say probably came through because of some of the stuff I went through. It was like 4 years ago, and at the same time, I'm trying to say this without getting myself in trouble, I had a few executives that were not honest with me. Let's put it that way. And we were, where I thought we were hyper profitable, we were actually burning tons of cash and figured out quickly, thank God, but took a few months to really uncover it. And in that time, just burned through our cash holdings, had to clean up my entire leadership team. So trust was broken, et cetera. At the same time, she's okay, but my mom came to me and said she needed me to give her a kidney.

Oh, wow.

She did get a kidney donor from somewhere else, but she thought at the time that I was the only one able to give her one, because someone told her only her kid could do it. I— our team had misreported our taxes, had misreported our sales numbers, had— we got a frivolous lawsuit from a former employee claiming wrongful termination. She had quit, so that was an interesting filing. We got— my father had just passed away, and my daughter, who's—

So when it rains, it pours.

Yeah, I'm saying, this is in the same week. By the way, that's what I'm trying to say. So, yes, I spent about 6 months waking up every morning with dread and going, I just want to shut this thing down. But that realization was it. It was like, well, this is probably the worst it gets, or maybe slightly. But it was like being— like, it was fighting, like, your limbic system and your reptilian brain saying, like, run, this thing's going to eat you, to, like, thinking rationally, like, no, this was really bad, but we've corrected a lot. I corrected a lot of it right away. It was the emotional side that was hard. And so I was like, just grit through it, and learned a lot about, frankly, mental health. I'd never dealt with anxiety until that period. And yeah, spent about 6 months, literally every morning waking up, just waiting for the next shoe to drop, the next thing that was gonna hit me. And after 6 months, it never really came, and then you start to feel better about it. And what's nice is, not that I wish that on anyone, 'cause I've broken a lot of bones. I'm an extreme sports junkie. That was the most painful thing I've ever gone through. But going through it and coming out the other side gives you a lot more grit, because now when things bad, bad things happen, like when you've gone through something that catastrophic, it's like you kind of roll your eyes at everything else, right? Whatever, keep going. Yeah.

Yeah. You build this level of resilience. I know for myself, and I, you know, over 40 years in business, believe me, I faced a lot of things. But over time, you're able to— I mean, you still have the moments like, oh my gosh, But then you're able to move through. You're just like, okay, so what are we going to do about it?

Yep, exactly. And getting back to that, like, not letting it get to you emotionally and just playing the game.

Yeah, exactly. Now, you've looked under the hood of over 6,000 companies. And so when you see— because we have a lot of 7-figure companies in here, 8-figure companies, When they hit a plateau, what do you feel is almost always broken in their marketing?

Yep.

And what does fixing it look like?

I'd say probably the most common problem people deal with on growth and marketing, we, it's funny, I preach this, as mentioned, we've worked with over 6,000 brands. We've probably been under the hood over 100,000. Like we do audits, we're really big on like just helping the community. So we will go and run a full free audit for a company and we do that all the time. without working with them. We just came up with, like, we're guilty of the same thing, which is, if you're not hyper-funded, VC-backed, spend all the money you want, burn money, it doesn't matter. You're managing things to a level of profitability, but marketing has a working capital cycle. First off, from the day you serve an ad to someone to the day they make their first purchase, there's a sales cycle there. We all know that intuitively, but when we look at our marketing, we don't actually take that into account in the measurement. It's hard for me to get my team to do it. We talk about in our book and everything that this is a thing, and still, and again, our own marketing, it's hard to remember. The truth is, for us, we have about a 24-day sales cycle, which is great, because from a customer acquisition standpoint, a month later after we spend, we can see where we're at, which is really nice. Knowing that number is something some of the biggest companies in the world completely miss. Is knowing what, from the time they get introduced to your company to the time they actually buy, what is that period? That's number one. We're not talking about first purchase in most companies. If you have a one-purchase product, one-time purchase company, you're probably struggling in a lot of ways anyways. You have to have a lifetime value. Now it's about measuring that lifetime value and knowing your customer acquisition cost to lifetime value, and what is that payback period? Because if you're measuring marketing all on what did I spend this month and what did I make, Well, that's a complete fallacy. And so what we see a lot of times is people get to a point where they can't scale their marketing because they're measuring it wrong, because they're measuring it on the outcome now. Quick numbers and example would be, if I'm spending $100,000 a month and I'm making 6 times my marketing, so I'm spending $100 grand and I'm making $600 grand, but my lifetime value, like for us, let's use our example. We take about 9 months to— our average lifetime value is more than that. It's probably 15 months. But let's say it takes about 9 months to get to the level of profitability we're targeting on marketing. We're targeting about 10 times profitability. If I take that $100,000 I'm spending and making $600,000, and I decide we're going to now spend $150,000, well, it's going to take me 9 months for that $150,000 to turn into $900,000. I'm going to feel like I'm losing money based on the profitability metrics I've subscribed to myself, or prescribed, excuse me. for that whole period. Knowing that and measuring it that way, and now my CFO and I, frankly, again, this is something I've preached for almost 13 years to our clients, and we've been sitting in, because we have some big ambitions right now to grow a lot more, and so we've been assessing where all the levers are, how our advertising's going, all these things. Turns out, thankfully, we're really good at advertising and marketing, so that's where we're seeing the best opportunity to invest more. Again, we deal with these payback periods, and we're bootstrapped. We're not just like, let's just go spend someone else's money. That is where we see even ourselves being the experts in this getting hung up, is you still have to run a sustainable business and not just burn a bunch of cash. Building a model, literally an Excel model, where you can look at those payback periods, look at those sales cycles, and go, okay, what is my comfort level of maybe spending a little more and dropping profit a little bit, knowing that we come out the other side with with a much bigger top line, and then we can stop ratcheting it up. You don't have to, in perpetuity, scale your advertising. We're toying with 10% to 20% per month scaling. What that does to— literally, we just ran these numbers this week. What that does to our business is profit goes from about 20% to zero, if we do it 20%, for the next year, but then we're 3 times the size. This is where we do know our business. The idea that, hey, you're not gonna profit this year, but I'm gonna triple the top line, and then you can stop growing all that advertising and start benefiting and get back to your profitability margins. Any business owner faced with that goes, absolutely, but you have to actually run those numbers and then feel good about them and run a really tight model and then monitor it. That's something I think most businesses struggle with unless you have a ton of cash to take these risks.

For some of the businesses here, their profitability with The client is on their retention.

Right. Almost everyone. Yeah. It's very rare. Again, if you're targeting profitable on the first purchase, you're probably being very gun-shy on marketing and sales. There's a way to do that. You're just not going to grow very fast. If you think about, especially when it comes to advertising, you're competing with everyone else trying to reach the same audience. Not the same product. You know, if you're selling shoes and someone else is selling shoes, they actually might not be competitive with you because it could be women's versus men's shoes, whatever. These days, the way marketing platforms work, you're targeting the same audience, the same type of person. So, you know, it's— and what I mean by that is like, you know, On probably competes with me because I'm trying to reach business owners for marketing services and they're trying to reach— there's probably a bunch of business owners that are good target customers for On. So we're both spending the same money bidding on the same sort of access. And so if you're gonna— it's basically whoever was willing to spend the most will win. And so it's whoever builds the best funnel, the best lifetime value, the best ability to monetize that impression is who's gonna win.

Right. So much to consider. So you have said that the era of growth at all costs is over and today's consumers are Curators, not bystanders. What's the single biggest shift in how businesses are finding their right-fit customer these days, and what should every, every company in this room change in the way they're marketing and finding these customers in the next 12 months?

Yeah, so I think there are a few different things there. The grow at all costs, I think, isn't as much consumer-related as it is just business and optimism related. Every time I think everyone gets a little optimistic about the year, we get another curveball. It's a war or a tariff or something that just changes the outlook. I do believe that at some point, we either— I've already seen this. 2022, or I guess 2020, 2021, people went into wartime, and those that could survive did really well. We also dumped money in the economy. '22, when rates went up, Everyone just got burnt out. I saw it with almost every business owner. I spent a lot— I'm in a lot of rooms with a lot of business owners all the time. Everyone seemed burned out. You ended up watching a bunch of people, frankly, fail '22, '23. Back to why do businesses fail? At some point, the founder goes, screw it. I can't do this anymore. I think a lot of that happened. What I think that's led to is now you're in '24, '25, '26. People are cautiously optimistic, but it's a lot of people that have already dealt with the next shoe drop, they're just like, whatever. Like, there's another war, there's another this, you know, our president said something else stupid. Like, I'm just going to focus on my business. But what that's changed is— that's not a political statement, just to be clear. It's just a fact. Like, I'm a very moderate politics-wise, just personally. I just— you've got to call a spade a spade. And so what ends up happening is now we have a bunch of people that I think thankfully are going to kind of ignore the macro and just be like, whatever's happening, happening. I got to focus on my business. I saw it with tariffs. Tariffs did not— so again, managing 600 companies' marketing, a lot of consumer brands are in there too. We do just about any industry, but consumer's a big part. I expected a disaster. I expected our clients calling us like they did in COVID. 25% of our clients fired us in March of 2020, 25%. I thought the same thing was about to happen. I think 2 out of 600 companies said, hey, let's slow down for a second. And it was like, that's interesting. This is frankly catastrophic in a sense, but they're just, at this point, the founders are just like, it's what it is, let's figure it out. So I think we've trained founders the past few years that are in the current market to figure that out. But in, again, 2020, 2021, in all the 20-teens, money was free. You were valued at revenue. Nobody cared about profitability. And so everyone's just like, let's go, let's rip. I do believe that'll come back. So I don't wanna say it's over, not the free money. I don't know that interest rates will get where they were, but I do believe that people will get— it's greed or fear that drives the economy. And I think greed will come back and people just wanna be the biggest and best. Right now you're seeing it in AI, you're just not seeing it in other industries. Now to the other question, in terms of reaching your consumer, this is what's kind of funny about marketing. There's a perception that's changing all the time and it's hard to keep up with. And honestly, one of the I'd say, most important things about marketing is not to chase the shiny object. You know what the 2 most important, best advertising channels are currently for marketing? Most lucrative? Guess.

Facebook.

No.

YouTube.

No. Google, Meta. By far the best returning. Scalable, repeatable, best returning. You know what they were 10 years ago? Google, Meta. Reddit's— so let's speak to Reddit. Reddit's important right now because for showing up on AI, if you ask ChatGPT or Claude, hey, who should I go to for— we can use any business example, hot marketing. You know, if you have a bunch of content on Reddit, it's quoting a lot of Reddit, but they've explicitly stated they're trying to wean off of Reddit because they know how gamed it is. And so that's gonna be short-lived. And that's where like the, what I focus on with marketing for our clients, it's a scalable, repeatable, predictable piece. Because while you can drive a sugar rush and get a quick bump in a business, running my own business, I've experienced it. If you don't have something behind that that's going to make it scalable and repeatable, you're going to have to build all the infrastructure for that sugar high, and then it's going to fall apart. So we're not really big about chasing the shiny object. Now, if it's a true paradigm shift, like we are absolutely built— we built a whole practice around optimizing for AI. We invested in softwares. We have a venture fund, so we invest in a lot of tech too. So like, we really do believe in that entire practice being a long-term thing. But the idea of like pivoting all to Reddit, like 6 months from now, that might be worthless. So.

Yeah, I think that is absolutely great advice. So I want to, uh, I wanna talk about acquisition a little bit because that's been a big strategy for you. You've done it successfully. Um, you've acquired more than 20 companies while most of your industry is running for the exits.

Yeah.

When does acquisition become a smarter path to scale than another year of organic growth?

Yeah, I, well, there's so many different ways to strategize M&A. We, I thankfully, and a couple things happened. The first acquisition I did, I was an LP in a venture fund that decided to fund an agency, which was a whole conversation of, wait, I just gave you money to start a competitor to me? Like, what happened? But the, and to be clear, like, I don't really believe agencies should need to raise money, especially in the beginning. You should be able to bootstrap that and get it going. So the whole idea of it was a little flawed to me. And of course, 6 months later, they called me and said, it's not working out. Do you wanna acquire it? And I was 2 years into business. I had no idea what that meant, but I have a wife in private equity, and we were 2 years into dating as well. And I was like, I've kind of seen how this stuff works. Let's figure it out. And I ended up figuring out a model that worked for me that I felt comfortable with offering it. They accepted, and the deal went well. And so it kind of opened my eyes to, like most things you find in business, once you pull back the curtain, it's not that complicated. No one's that smart. It's not this mystery behind the curtain thing. It's like you kind of go into the room, I don't care what room it is, you go to Amazon and talk to their M&A team, and you go, oh, you work like everybody else does. You think like everybody else does. Once in a while, you get someone brilliant, or you get a brilliant concept they stumble upon, but— Buying a company is not that complicated. Once I did it, it took away that inhibition of, oh, I don't know, is that a big deal? Then we started looking at it more seriously. We also announced it. About 6 months later, a friend reached out and said, we're divesting of our agency arm of our business. Do you want to buy it? We had a structure that we had already developed. I showed it to them. They went, yeah, that seems fine. Did it. That went well. Then I was like, okay. Again, that was early in the business, but it was about right before COVID hit. So about 6 years ago, I was like, maybe we should hire someone and actually focus on this. Our model is really unique, just to be clear. We pay no upfront cash. We pay no equity for these businesses. So I just said the worst part of the selling point, but when I say that to a head of M&A who's got experience, they go, I'm sorry, how the hell am I going to do my job? We didn't have enough success in it. We had a few done, That it wasn't like, oh no, we've done it a bunch of times. This is how it works. We couldn't speak with complete confidence. Frankly, went through a few people in that role that went nowhere, while also probably once a year doing a deal that just fell on my plate. A good example, a friend of a friend had a great little agency, but he got offered a job to be the CMO of Crocs. Crocs was mentioned in this. We ended up working with them. He had his first kid. He's like, I need more stability. And Crocs is offering me, like, 3 times what I make in profit for a salary. So, like, I need to do that. And, but I don't wanna just shut this down. So why don't you hire all my people, take over the accounts, figure out an economic relationship with me, and let's go. And we did that. And so there were deals like that we did over time, but then we finally figured it out 2 years ago. We bought 10 companies in 2024. And the idea there, I told this to my leadership team, we're gonna break a bunch of stuff. and figure it out, and it's gonna hurt, and it's gonna cause challenges. And I said that, like, not understanding what that meant, frankly. And man, 2025 was a rough, not a rough year, but a, how would I put it? It was a lot of work. It was like we had to basically fix 10 other companies while fixing our own, but we did it, we figured it out, and then we kept going. So we did 2 last year, we were done 2 so far this year, but we're aiming to do around, 5 to 10 by the end of the year. We have a huge pipeline, and then the goal is to get to doing 1 acquisition per month. Now, when you say, when is it time to switch from organic? We're still scaling organic too. I think one of the big challenges here is you're adopting the problems of all these companies, and if your company cannot absorb those, you can take your own company out with the company you acquire. So you got to be super careful getting into this. When I see 2 companies of equal size, one acquiring the other, That I'm wincing a little bit, because I know— some quick, easy stories. I acquired a company that came in, part of our contract is all AP is taken care of. You're coming in with no accounts payable left, no debt. We're not paying off anything for you. And they come in, and then we get a bill for $350,000, and they go— and I'm like, hey, you guys got to pay this. We don't have the money to pay that. Well, we're not paying it. They're like, great, then we're going to lose our biggest client. It's like, so we end up lending them $350 grand without any interest, 'cause they wouldn't take it, and basically just fronting $350 grand for one of the— that's just one small example of, thankfully, we could afford to do that. We can, okay, fine, we're gonna do it. It took 2 years for them to pay that back, but they did. And that's just, we look at this, you need about— in our business, what we've seen is we need about 2 months of working capital, 2 months of revenue per acquisition. in working capital for each one, and that's just an average. That's just an example of one piece that you have to be able to stand. So, if you're going to buy a company and you don't have 2 months of revenue of theirs to just— and that's just an average. That's not a worst-case scenario. That's one piece there, as well as it's a huge distraction. I mean, we did an acquisition. We closed one on June 1st and one on July 1st. And my team, we just had our leadership meeting, was like, yeah, these 2 things got punted because we were doing with these 2 acquisitions. So, it absolutely takes away from other things too, so it has to be worth it. But those 2 acquisitions added 12% to our revenue. And again, no cash upfront, no equity, great teams. We're buying profitable businesses. We're not buying disasters or anything. So, it's worth it if you set it up right, but it can really hurt in a lot of ways too, and distract and take away.

And why have you decided that this is— because that, that is a pretty aggressive goal the way you're going about it. So obviously you're having growth, you're growing your valuation, so you're really seeing this as, you know, one of your main scale strategies. Yeah, we—

I mean, we talk about we grow the business 4 ways: outbound sales, inbound marketing, strategic partnerships, and M&A. It literally lives under our chief revenue officer. Again, it's different than most people look at it as M&A. We're looking at it as a sales channel. We're looking at it as a way to add clients, bring in the team to support it, and potentially bring on agency founders that are great sales leaders, frankly, because most agency founders are excellent at sales. The doubling down on it came from, Looking at this 90,000 landscape that I talked about, 90,000 agencies in the US that frustrated me and made me want to start and go, what if, you know, there was a line and I repeat it all the time and I really wish I could give the person credit because someone said this to me a few years ago and it was so poignant. What does this make possible? It's something I really try to think about whenever faced with a challenge or an annoyance or whatever. Well, what does that make possible? Well, if there's 90,000 marketing agencies in the US, that's my competitive landscape. But what does that make possible? Well, I know most of them are struggling. Most of them don't have enough infrastructure to grow. Most of them are founders that are sales-led. They got into this, and then all of a sudden they're running a business, and they're managing HR, accounting, legal, and everything else you have to do in a 7-figure business. Again, most of you are probably the head of everything I just said. That can be really frustrating when all you want to do is grow. If I can come to you again, I gave you the bad sales pitch. The real pitch is we guarantee their profit. So we say, we're gonna take over all your infrastructure, we're gonna take over all your delivery. You focus on growth. We're gonna guarantee your current profit margin. So you just get to grow this and focus on top line. We'll manage it for you and go off. And by the way, a $2 million revenue agency doesn't have any enterprise value anyways. So like, you're not selling this and riding off into the sunset. So if you wanna make more cash than you're making now, or work half as much and make the same amount of money, here's an opportunity. And so when we go to these now, and now our TAM versus our competitive landscape is 90,000 agencies around the US. And so that was where that thought process and strategizing around how do I take this into something? And again, our north star is to be the go-to marketing agency for everyone under the Fortune 2000, end stop in the US. Like, we're very focused on the US, but that's what we want to be. Well, what's one great way to achieve that? Acquire great agency founders that are well networked in different geographies, different industry verticals, different capabilities. Versus organically hiring people, spending the money on that ramp-up period. Remember, these are all profitable. So, like, the 2 agencies we've acquired the past 2 months, we made money on those immediately. Cash flow. We've made positive cash flow on those 2 agencies already in month 1, month 2.

Amazing. Yeah, so much there. We could talk about this for hours.

I should say one note. They've also made more money immediately, because they can expand into more services. They can— that's what's interesting.

Well, you're making it a win-win situation.

Exactly.

When you go to buy a company, you want to see what's a win for them, and what's a win for you.

Yeah. Stumbling upon this, that was the crazy part, is it's a very low risk. Our risk is that they decline in revenue, and we're guaranteeing their profits, so we start losing some money, and we have to catch up on, frankly, firing people and optimizing their business. That's the downside, and it happens. But that's why the scale comes in, because at scale, I'd say a third of these go really well, a third of these go fine, and a third of these don't go well. So as long as the two-thirds outweigh the one-third, you're fine, and you're doing well. And that's been the case.

So now, this is the opposite of the private equity playbook, because in your model, the founder stays, the team stay, the clients stay, which is really the The plus side, right? Because you're not having to build a whole team. They've already built up the clients, their offers. Why did you design it that way, and what does this unlock for you that a traditional buyout does not?

Yeah, I mean, I just think it goes with a lot of things, like even starting our company. We started as month-to-month, and everyone told me there was no way that would ever work. We're literally the fastest growing company in Los Angeles last year. So apparently it's done just fine. It's looking at existing frameworks and not just taking them for granted and just being like— so the typical agency acquisition model, it's usually a multiple of EBITDA. At the scale we're buying at, that's sort of like $1.5 to $5 million revenue range, the EBITDA multiple is like, let's say, 3, 4 times. So let's just take 3. But what they do is they pay you 3 times as a value. But they pay you 20% of that upfront, which is less than 1 year's profit. And then you have to hit growth targets to actually earn the rest of your business, which is like, okay, so you sold your business for less than a year's profit, actually. And now you're working for them for a bonus that maybe gets you paid what you— for the next 3 years, gets you paid what you would have made anyways. But people take it because of the idea of, oh, but I made— again, let's say at $2 million, you might be doing $400,000. They gave me $1.2 million. They didn't give you shit. They gave you $240 grand and made you earn another $960,000.

Right.

That is the model. And so looking at that— and by the way, we get people all the time that look at our deal and go, no, I want cash. And we're like, okay, good luck. We also want to work with smart people. If they can't comprehend that our deal is better than what their normal deal is, then fine. We're not here for ego. And so it was just looking at that and going like, wait. The way we would do this aligns us more with the founder, because now it's like, if it shrinks a little bit, we both make less money. We are taking risk on, because we're guaranteeing the profit, but if it grows, we succeed together. And like any deal, they're going to have to work for 3 to 5 years. In this, you want to sell— we're talking to a guy right now that's actually an old friend. He wants to sell us his agency. He started a tech company that's booming. His agency is doing about $2 million a year. His tech company's probably worth—

$10 million.

$150 million. It just went crazy. And he's like, I'm going to probably exit this and have to go along with it. I can't focus on this, so I'm leaving. And so we work out a deal. We're like, okay, well, we're going to need to backfill you to make sure that the deal flow doesn't just go away. And this is a literally yesterday example. He's doing 50% EBITDA. I was like, I'm not guaranteeing you 50% EBITDA because you're leaving. So I think we could probably do 25%, but I'm going to put people in place to make sure it keeps going. Someone else that'll give you some value on that 50%, it's going to be gone in 2 years, and you're going to make nothing. You're going to make a little bit of money, but what we're creating is an annuity for you that can go on for a long time. He's like, yeah, it's way better. And he knows me. And that's the nice thing too. We've done 25 of these. The first thing, he knows me well, but he's like, can I talk to one of the guys that has sold you? I'm like, you want to talk to 15 of them? Yeah, no problem. So put them on the phone. But at this point, there's no hypothetical. Well, what if you collapse my business? We don't. So it's, it's a nice place to be.

Yeah, well, your reputation precedes you, so that's, that's a good thing. And so, um, uh, if someone— now, you've had, uh, you have said the cultural integration part is the hardest part, and I have seen that with 2 founders acquiring companies. They were not paying attention to the Culture of the other company, and it ended up being a whole toxic situation. So tell us about that. I think you had this situation like that that got kind of messy.

Not really culturally. Like, yeah, the— well, let's put it this way.

Just blending the cultures of the two companies.

We've only had one get slightly— like, we've only had to call lawyers Once in a deal, and it didn't go to trial or anything. It was just like the other person was, frankly, completely irrational, wanted their business back, but wanted us to pay them to take it back. And I was just like, no, I'll just keep it. You can have it back, but I'm not paying you to take it back. We're very, honestly, if someone doesn't want— we do a deal and then it's not working, it's not meshing, we generally just let them back out. Don't worry about it. We want people that want to work with us. The way this is set up, it's only successful if they like it. So that's when I say a third go wrong, a lot of them end that way.

But how do you ensure that?

Right.

Because that's important.

So it's all— it's the best you can do in the diligence. My goal is— I say this explicitly to every founder we're acquiring. This is probably the biggest learning I've had doing all these, is the day we close, I want everything that happens to be exactly what you were told and thought it was going to be. So what that means, by the way, is nobody hears you the first time. So it's being so redundant that they're like, we get it. But doing that and explaining to them why I'm doing it. I want you to know that the first 3 months, you're going to have 2 jobs. You're going to be focusing, ramping up, growing your business that you haven't been able to be freed up to do for a while, while we're asking you all sorts of annoying questions because the nuances of your business versus ours, and our accounting team's hitting you up going, why are these billed this way, and why is this? You're going to have to deal with all that shit, and it's going to be annoying for 3 months. Then in 3 months, it's going to get a little better, but you're still going to be now dealing with, oh, we need to make some changes on person. Or something's going to happen because someone's not going to— someone on your team's not going to be a good fit, or something's going to happen. But after about 6 months, it's going to really free you up. And we reiterate that over and over and over again. And then we— the one that we've had to be really explicit on, because it's amazing. We set up a deal where we tell you we're guaranteeing your profit. So you're basically paid on a rev share. So your job is to grow revenue. We say it over and over and over again. It's literally what the contract says. Everything in there, the whole deal is set up that if revenue grows, you make more money. And then they come in and go, wait, why is it my job to grow revenue? And it literally— and we tell them over and over and over again. So again, these are the ones that go bad, are the ones that have— and when I say bad, it's just the ones that don't grow, that may shrink, because they're like, wait, why do I have to? I don't want to sell. It's like, that's the whole deal. That's what we set this up for. That's where you're compensated. If you don't sell, you don't make any more money. But this is— OK, let's talk about it. So now we've just been— Again, to the point that it's like, and still, I will say, even the 2 we just did, it's still like the best you can do of that, they're still gonna hear what they wanna hear and be a little surprised day 1, day 2, day 3. That's where the culture piece comes in of what type of person are they to be like, of course, we're gonna have to work through stuff.

Right.

Like, normal, reasonable people, when we acquire them, it all works out because there's always gonna be stuff to work through. Everyone's different. Every company's different. But thankfully, I'm confident, and ask anyone that's done business with me, my reputation is I'm always going to be fair. Doesn't mean I'm always going to do exactly what you want me to do, but I'm never unfair. I'm straightforward. I'm honest. I'm direct. I really pride myself on that. That allows us to stand on that and be like, we're going to be fair. You're going to have to meet us there too.

Again, every— How is it that you've got a founder who's used to running the show, And now, in a sense, they're working for you. How is that transition? How are they—

It's not a transition. So that's actually on us. I've— and we've made mistakes there. But in terms of, like, when I've brought in my management to help them, they've tried to manage them as if they— and that's not what you do. These are entrepreneurs. They got to go be free and do whatever they want. Our best acquisition, by far, guy has 4x'd his business in 2 years, and he's crushing it. In the meantime, wants to be our biggest advocate, wants to talk to every founder. He's like, this is the best deal I've ever did. But he literally said, I had to get my head around selling to you and basically being in sales, but I love it. 'Cause I still am the managing director of my— CEO of my business, managing director of Hawk. And he bought a $600,000 RV, put Starlink in it, and he and his husband spend 2 months a year working from this RV at national parks around the country, also being one of our best revenue drivers at the company. while living an incredible lifestyle, picturesque person, but you don't manage that person. I'm not like, wait, why aren't you in the office? It's like, do whatever you want to do. What's your number? What's your goal? Because, again, as long as their business isn't shrinking, we're fine. If their business is declining, now we're going to have to have a real conversation, but if you just want to maintain and live a life, go for it. We got some scale. It's not a win, but it's not a loss for us. Then what we do is we find the ones that really want to grow and build, double down on them, invest in them.

Yeah. How many of you are interested in looking into and learning more about acquisition? Raise your hands. So, yeah. So that's why I think this conversation is really important, because I think for most business owners, it just seems like something that's so complicated, or, you know, like you said, you have to have this Pile of cash and so forth. I think we can all learn from this.

You just want enough cash that if something goes wrong, you can withstand it. That's it. Then again, it depends on your business. There's a lot of businesses I'm sure in here that have hard assets that you have to account for. Agencies don't. You're buying a logo and a team, so you're taking over payroll.

Right. It's different for different industries. There are some people in here that want to be acquirable as well. How many of you are looking to exit in the next 5 years, 10 years? Raise your hand. Yeah.

I'm impressed a lot of you aren't.

And so what would make their company irresistible, and what would be a deal killer?

It depends on what your expectation of outcome is. The problem right now, again, wife in PE, I also, we have a family office. I'm an LP in 12 different funds and probably 120 different companies. We have a venture fund. I spend a lot of time on that side too, strategizing exits, et cetera. The sexiest, fastest-growing companies are the ones getting the value right now. Everyone else isn't. It's the same as the public market where the top 10 companies are 35% of the market right now. That's where we're at. Timing is a big part, but you can't predict timing. It might seem like it's bad now and then it gets worse. You just have to figure out what I— I think the advice I like that I would take with a grain of salt is, when you're done, there's always a buyer, and you're just going to be ready to take what it is. There's 2 ways to look at M&A or a sale. There's de-risking, which is taking some money off the table, bringing on a partner, and figuring out a way if there's a path to a bigger exit and larger growth, the private equity model. in the growth equity model, or there's literally selling your company. If you're done, then run a process, hire a banker. And by the way, you should all find out who the best banker for your size business in your industry is in the country and build a relationship. They want to build a relationship with you because they want to know that you're going to call them when you sell, but they will give you so much guidance in what your business needs to look like to sell. And I've turned down half that guidance, but I have those relationships because they do point out a lot of great things that have helped me strategize the business. But my advice that they give me all the time is, go upmarket. You need to be enterprise. Again, after hearing that over and over again, it doesn't mean always follow it to the T, but if you want to be an easy sale, then follow it to the T, because you can make it really easy for them, and they'll know all the players and the buyers, and they'll get you sold. That's the easiest way to do that, because if you start now, again, you said 5 years. If it's 5 years from now, you'll spend the next 5 years building that thing that's easy to sell. That is probably the easiest way to that path. On the fundraising side, let's say you want to take some money off the table and put some money into the business. Another good piece of advice I got from my dad early days when people were looking at investing in us, money's expensive. They want to give you money and get massive returns on that money, which inherently means if you don't take that money, you would get massive returns on that. So the only time I think it really is prudent is, number one, another good piece of advice, You guys know TaskUs? It's like a $10 billion company now. Founder's a close friend, known him since he started. It was like 6 people pitching me on customer service, and now they got backed by Blackstone and taken public. He sold, I think it was like 30% of the company for $15 million at one point. And I remember asking him why, and he's like, I separated myself as an operator and an owner. And as an investor in my own company, my net worth was way too tied up in one company, and I wanted to diversify, so I took some money off the table. I'm still here as CEO. I'm still going to run the company. And she sure enough did. Again, at that point, what had that been worth? He was worth $50 million, and now he's, I think it's like $8 billion. It's public, but it's like an $8 billion. So, yeah, he kept going. But that was a really interesting thing to think about too, is at some point you might look at your holding in your company and go, I'm too concentrated here. I should diversify for the sense of longevity here.

Yeah.

Or, but to be clear, the richest people in the world doubled down and went deep. So it's really, this is all individualized. This is where what works for you is going to be really important. And then really, if someone's going to give you money, would you feel very confident you're going to make them plenty of money and yourself way more money than if you just kept it? Are they going to actually accelerate your growth so much that it becomes a no-brainer? Because it comes with a lot of costs. You're now working for someone else.

Yeah, such good stuff. Well, just a couple more questions here. You spent years building your own AI platform, yet you're one of the loudest voices saying AI-generated content kills trust with customers. So draw the line for us. Where should every CEO in this room be aggressively deploying AI right now, and where is it quietly Possibly destroying their brand.

Yeah, it, it's funny 'cause we've been, I, I, I met Ray Kurzweil, who became the head of Google tech, or the tech head lead on Gemini, and was like one of the biggest thought leaders in AI 12 years ago. And he and a guy named Peter Diamandis were like, well, AI's gonna disrupt your business. What are you doing about it? I'm like, fair enough. Thankfully, their predictions were like completely right. He literally predicted that the beginning of 2023, this is 2013, 2023 will be when AI will feel like it replicates people and you'll feel like you're talking to artificial intelligence. It won't actually be artificially intelligent until 2029, he said. But ChatGPT came out in November of '22. He was off by 2 months, 10 years before. So, like, pretty remarkable. But what was nice about that was I just took it as gospel and just said, okay, I have nothing to predict. And so the idea was I thought there'd be this node like in ChatGPT. So what would that mean for my business? Well, that node is just gonna be pulling from public data, which means it's not gonna actually know how the market's moving, how marketing works, unless it's just pulling blog posts. And so I said, well, why don't we build the system that teaches AI what it should be looking at to know if marketing's working? And not as a, like, masterclass where it's like, let's do a lecture for it, but like, what would AI make possible if it could analyze in real time instantly was like, well, let's digest as much marketing data as possible, teach it what to look at.

Yeah.

And so that's Hawk AI. We're digesting 7,000 companies' marketing media and revenue data in real time, and then pumping it through AI to go, this is what this means, so that it can look at an individual business and go, oh, you're missing on these benchmarks. This is what that means. This is how you fix it, and be basically automated marketing strategy. So that's how we started Hawk AI. Now it's turned into, the vibe coding's great. Now we have a full team of people that every day, or taking feedback from our marketing team and changing it and adding it. They started this whole new thing called God Mode that pulls in financial data, project management data, CRM data, et cetera, and literally can just, anything you wanna know about your business from a marketing standpoint, it just has now. And so—

Amazing.

Yeah, and that, I mean, that was like a 2-month project. That's what's crazy is this would've taken 10 years, and that was 2 months. And so, yeah, I believe there's, on the data and analytics, And anything tedious out of it, really interesting. On the creative side, long way to go. And you see an AI video, you know it's an AI video. And when I, when you mention trust, what I mean by that is if I'm looking at your company, so a lot longer talk and we don't have the time, but I'm happy to send my book around for free, by the way. But it's, uh, we talk about awareness, nurturing, and trust are the 3 pillars of marketing awareness. How do you let people know you exist? Nurturing, what do you do? That sales cycle I talked about, what do you do during that period to get someone to actually convert and become a customer? Trust, also known as your brand, but before you have a brand, it's borrowed from third parties. How do you reach— get third-party validation? But people not— trust is a critical part of basically 75% of people's purchase decision. 25% are called early adopters. They'll just try something out. 75% of people want to really grow to trust you. If you're showing me a bunch of fake videos as your proof point to buy your product, you're not getting my trust very well, depending. If you use it for humor and you own that it's AI and it kind of replicates a cartoon, sure, fine. But if you're a vitamin and supplement company and you couldn't find someone real to tell me to take this, I don't think I'm gonna be taking your vitamins. So you gotta be really careful. And there's so much hype. This is like every other hype cycle. But to me, I think AI is similar to the internet. It's a great industrial revolution. It's an amazing tool. There's not gonna be any AI companies like there's not gonna be any more internet companies. It's just going to be everyone uses AI in some aspect, but it's just, it's a tool and figuring out where it can optimize. One last note on that. The best thing we did recently, our onboarding. We bring on about 50 new companies every month as clients, and manually that's a lot. What we did is we plugged AI into all our sales calls or onboarding calls, do full analysis on the company. So the moment the team comes in to onboard, we have a full brief of Everything that was said that no way a salesperson or a business development team would remember. So we know every pain point, every specific thing. We built a whole prompt around that that has completely skyrocketed our NPS score for our clients that are coming in, in that first few meetings being like, what did I get myself into? Now they're like, what? You guys know everything. And we're honest. We're like, yeah, AI makes sure we catch everything. And it, those are the places where it's really useful.

Yeah. Amazing. Are you all enjoying this? Is this valuable? All right, I have one last question for you. Everyone in this room, they've already built something successful, or many things. The question is, what is next? What's the vision that still gets you excited, gets you out? Clearly, you've got a lot of energy.

Thank you.

What gets you excited about what's next, and what would you say to the founder here who's wondering if they've got Yeah, I think everybody has it in them if you figure out what's going to get you out of bed.

I think it's the inverse. It's the same thing as when we talk about Rob Dyrdek and Mark Wahlberg getting up at 3:00 AM to work out every day on this crazy schedule, and everyone goes, how do they have the energy? It's like, it's the inverse. It's working for them, so it gives them the energy. It's not that they're just different.

Right.

And I've been there. When things are going really well, it's really easy to get out of bed, and when things are tough, it's hard. It's not as easy. If you caught that wave, and so for us, thankfully, things are going well. That North Star of, like, we've worked with about a little over 6,000 companies. Some of those have cycled through, et cetera. There's 25 million SMBs in the US. I've got a long way to go before I've even scratched the surface on really attaining our goal. That really does motivate me. The idea of helping entrepreneurs is what gets me up in the morning. I actually love it. That's not just a talking point.

Oh, then we share that mission.

That's mine, too. That's why we get along. It really do. Anything I can do, sincerely, you guys want to talk about the M&A side? We don't provide that as a service. I can tell you right now, I'm not selling you. I am happy to help entrepreneurs, and I love it. I was lucky enough that at 26, 27 years old, I fell into something that I love, that I'm good at, that works. Figuring out what that North Star is, and then all the— I love the problem solving of figuring out how do we get there? Because we still have a real business. It's not just like I point at $25 million and go, we're gonna just go. Like, now we have to figure out the incremental steps to get there, and I enjoy the process, the game of it, so to speak.

Well, it's very inspiring. Absolutely. Let's give it up for Eric Huberman. Thank you so much.

Thank you.

Thanks for tuning in to the Scale It Method podcast. Remember, scaling your business is about more than just growth. It's about creating the life you wanna live. So if your business has hit that 7 or 8-figure mark, we know how hard you've worked to get there. And you're ready to accelerate your success, but with a team-managed company that can actually flourish without you there, a team that is all in behind your vision. So check us out at Pinnacle Global Network, where we help leaders like you scale fast and enjoy the ride. So head to Pinnacle Global Network to learn more. Until next time, keep scaling and living your best life.