Effective Leadership in Agency Management

All right, so we have a little treat for you. So this is a coaching call from the Agency Owners Association. This is a group that Neil and I have for agency owners to help you grow faster. So if you're in the agency space, you are a services business, this is applicable to you. It's a little preview of a call. It's probably 10, 15 minutes or so, and you get a sense for what it looks like to be in the group. If you wanna learn more about the group, you can go to marketingschool.io/agency. Again, it's marketingschool.io/agency. Hope you enjoy the episode. What I'll do on this one, I told Austin this, I was just kind of hopping in. I have to run to like a— I'm going to be traveling for about 33 hours soon. So it's a doozy. It's 3 flights. But I have a couple things and then Austin, I'll flip it over to you because I know you have an agenda for this one. I met with— something's top of mind for me. Last Friday I was in DC meeting a couple of my team members there and So I go on these walks with, with, you know, if you get to see your, your people in person, I like to go on these like 1-hour walks with them. And so by the end of it, you're at the end of it, you're really sweaty and, and, and everything. You got a good workout in. But, you know, I, I just talked, I was talking to one of my lead strategists. I was like, okay, so one of the questions I always like to ask is what can the company do better? Right? Like, what are we doing right now that's really stupid? Like, what can the company be doing better? Right? And everyone has an opinion at the end of the day. And what I'm looking for is I'm looking to discern signal versus noise. And, you know, you get a lot of from those conversations. I think we don't spend enough time talking to our people. I don't think we spend enough time talking to our customers. That's another one. We're not close enough to it. And then what happens is you get further and further away from the business. And I was just doing a podcast live with Neil, and you do a comparison of the Starbucks CEO and the Nike CEO, what the differences were between them, the new ones versus their predecessors. And the big thing was that the Starbucks, the previous one, he worked at McKinsey for 19 years. Okay. And the previous Nike CEO, he worked at Bain for 20 years, right? So these large management consulting companies and—

Okay.

Well then now the new CEOs, one guy for Starbucks, he was at Chipotle, he was at Taco Bell, and he's been in food and beverage for 19 years. Nike, the guy worked for Nike for like 20 years or something like that, right? So there, there's a lot to be said about industry experience, but a lot of these people, they also talk a lot to their customers. There's always, they're always in the trenches, right? Um, there's this Brian Halligan post that he just put on LinkedIn about all his leadership lessons from, from HubSpot, right? And I really recommend reading that one. And, um, you know, he has, I think there's one piece in there where he just talks about you, you have to be there in the trenches, whether it's like, I think it's like his, his whole piece is like getting coal on your face, right? Like if you're, if you're a miner, you gotta be getting the coal on your face, right? To really understand what, what's, what's going on there. So, okay.

Number one.

What can the company be doing better? And then the number 2 thing I like asking is, what can I be doing better, right? What can I be doing better as a leader? You know, one of the responses I got was like, okay, you know, staying closer to people ops. I'm like, okay, great. I should pay attention to that, right? Which leads me to the 3rd question. 3rd question is, what should I be putting more of my attention on? What am I not doing enough of right now? Because the job of everyone here is we're spinning a lot of plates right now and some plates are starting to wobble and we kind of have to like look at it from a free safety angle And then, you know, hone in on it and, and, and solve that problem, right? Um, but sometimes we forget about, hey, like maybe some people are seeing some things that we, we, we, we aren't seeing and we ultimately, we don't know what we don't know. Um, so that's the third question. I'll drop these in the chat. And then the fourth question is, where do you need more support? Like, where can I be more helpful? Because oftentimes our people are overwhelmed, um, and, and we just don't know. And what, what happens is they get so overwhelmed and I'm sure some of you have experienced this or you're for sure going to experience this. You're so busy doing your thing, they're stacking on more and more client work. They're trying to please you. They're trying to do all the things they're trying to do extra. They're trying to go the extra mile. They get burnt out and they quit. They don't even tell you. There's no like 2-week notice sometimes when this happens, right? Um, and that's a very jarring thing. So it's, it's better to kind of get ahead of it. Um, so that's always a question I like to ask. And ideally you're doing this with your direct reports probably at least once a month or so. Um, and so again, I'll drop these into chat, but I, those are the thoughts that I had kind of going into this call. And I wanted to share this before I, before I, I jump in a couple minutes. Um, but Austin, I'm gonna turn it back over to you for your regularly scheduled programming.

Right. Thanks, Eric. No, that's really helpful. Um, and we'll be looking forward to those in the chat.

Agency owners, if you wanna grow faster, my partner Neil Patel and I, we are hosting live agency owner workshops in Beverly Hills, and you're gonna learn how to get more clients. You're gonna learn how to take yourself outta the day-to-day. You're gonna learn how to recruit the right people, and you're gonna be hanging out with like-minded people such yourself. So if you want to learn more, just go to marketingschool.io/agency. Again, it's marketingschool.io/agency, and we'll see you on the other side.

So first thing, for the people who are just coming in, welcome in. We were just having some celebrations. We acknowledge Kevin, we acknowledge Marcos for having a great month and referring people in. So what I would like to do, I actually put together a poll/quiz. Just to see what the needs are for the group today. So let me pull that up, and you guys should see this here. Do you guys see the poll coming up? Okay, cool. So what's most important for you on today's hangout? And then based on that, we can either stay collective as a group and have like an open topic discussion, or We could break out into breakout rooms and have smaller, like more in-person one-on-one or one-on-two discussions. So we'll see what's going on. And then the second question, can you share your feedback on today's call after it ends? Just like Eric was just saying, your feedback is super important for us to continue to develop the group. So there's just a quick 3-question survey. 2 of them, I, I think, are multiple choice. So that's really helpful. you give your feedback there. So I'll wait for everybody to answer here. Got about 57%.

Someone put no.

No, absolutely not. That's fine. Hey, you know what? It's an optional poll. I didn't see the third question.

I apologize.

Oh, there's just 2. Okay, there's just 2. Jinja has to leave early. That's okay. Thanks for letting us know. Let's see, 11 out of 14. We're still missing 3 people. I don't think I'm participating in this.

There we go.

I don't see it on mobile. I'm not sure if it's not popping up.

Okay, I wonder if you swipe.

Mayhaps.

Mayhaps, mayhaps.

No, sorry.

Okay, no worries, no worries. Okay, so we got most of the results in. So networking, about half of you said we wanted to network. About half of you said we wanted to solve a specific challenge. Okay, so this is good. And then about 30% said learning about a new tool. So let's start there. Let's start about solving a specific challenge. So I can't see who responded to those, but let's start there, and we'll have about 10-ish minutes per person. to see like what, what challenge you want solved, and if we can solve it in faster than that, then we'll move on to the next person. So raise your hand. Allian wanted a specific challenge. Okay, who else had a specific challenge that they wanted help with? Rebecca. Okay, who else?

Who else?

Anybody else have a specific challenge that they like solved?

Adam.

Okay, let's see. Matt. Okay, got it. Cool. Awesome. So let's go in order. If you guys remember what we did last time, there was like a— I put a timer up where there was 2 minutes, and then we had 10 minutes to address the challenge. That was like a hot seat format. This will be a little more, a little quicker, I think. So I will, I will put like a 5-minute timer up, and if we can get the, the challenge solved, or if we want to address it moving forward and extend the time, we can do that as well. So let me do that.

Let me see here.

Thanks for participating in that little quiz/survey thing. Let me pull up the apps and we'll get a timer going on. I was super excited for this call today. I was like, let's go, it's Friday. Okay, so Aryan, let's have you go first. I'm going to start the timer of 5 minutes. And the goal here is to solve the challenge.

Challenge means that the problem that I'm facing, right?

Yeah.

Okay. Right. Thanks.

So get—

so to have some, a bit of context here, I was listening to Alex Hormozi the other day and he said something interesting which caught my mind. And he said that you should aim to sell the goose if you want to sell, if you want to sell your business and have a big— and you want a big cash, sell the the goose and not the eggs. So the goose keeps producing the value while eggs are just a one-time result. So it made me think maybe a kind of marketing agency is like an egg, maybe, and you get revenue from services. But to really— so, Mark, if you see that marketing agency is kind of egg, my question is, have anyone here, or maybe Eric, have you ever thought about Have you ever got any shares or equity for your services before? And if yes, how did that work out? And if not, why not? Why not have it? And why is that? Because marketing agency is good, but sometimes we want equity, we want big cash. So how to get that?

Yeah, so 2 things. I disagree with the point that the agency is just an egg. I think it's the goose and the egg. So the reason for that is because one, if you can get your cash flows up, I think anybody here can get their cash flows to $1 million a year in profit. That's already great. Maybe you get it to $2, $5 million a year. So, okay, that's an exit every single year. And then if you want to exit your company, let's say you're doing $3 million in profit, you might be able to sell it at like a 10x multiple or 15x multiple, right? So that's $30 to $45 million. So you get an exit every year and then you get an exit on exit. So that to me is a goose and an egg. Um, you have a great cash flow business, plus you can exit on a great multiple. Um, maybe on— sorry, maybe on $3 million, it's, it's more like a, you know, 8x multiple or something, but still $24 million is a lot of, a lot of money.

Yeah.

Um, so that, that's the one thing, right? The second thing is, um, you know, I've tried taking equity in the past. Neil has tried taking equity in the past. Um, it becomes messy and usually all of these are lottery tickets and they don't really amount to much at all, right? And I'm pretty sure David here has taken maybe some equity and stuff, but it doesn't work out well. You're better off. just charging a retainer. Maybe there's some profit share, maybe there's some bonus component to it, but you start to make it too complex. Um, again, I would just look at all these things as lottery tickets. Um, you know, all the angel investing I've done in the past, you know, all these investing in all these funds or whatever, um, none of them have panned out yet. You know, some of them are doing really well right now, but still, like, if I have to wait 10, 7 to 10 years or whatever, um, it's, it's, you're better off just focusing on your, on your core business. I think you start to get too cute with all these different things. It doesn't work out well, right? Because here's the thing, Ali, let's say you take equity in this company. Okay. What are they going to give you? Like half a percent or something? And then, okay, you know, maybe they sell for like $100 million or something like that, right? Great. In that case, let's— one, you're probably gonna get diluted.

Okay.

So maybe you get diluted down to like $3 million or something in the United States. Okay. You have to pay capital gains tax and all that, right? And like, what are the odds that they're going to sell for like, you know, $100 million? What are the odds that they're even going to give you 5%? Let's say they give you half a percent or whatever. Okay, now it's half a percent, $500K, right? Oh, and then now it's like, what do you get after all the taxes and like all the dilution and everything? Like $150 grand or $200 grand? You're better off just charging them. So.

Yeah.

Okay.

Right. I want to take a second to tell you about my podcast co-host's agency. So NP Digital. So Neil Patel Digital. What they do is they do a whole host of marketing services. And they are global. They're worldwide. They have SMB services as well. They have mid-market to enterprise services as well. They cover the entire gamut. So, you can just go to mpdigital.com to learn more about it. And now, back to the episode.

Can I just add to that real quick?

Yeah.

I've done this about 5 times. They're all really good investments, but every time you perform— and I performed on every one because hell or high water I was going to. But in the end, they resent it. They just want to pay when they can afford it. They just want to pay you what you're worth. And they don't really appreciate all that work you did because now they expect it. And, um, so in the end, it ended up— we end up breaking up. And I like washed my hands of it because I could sue them, but they were— it was just not a fun relationship. And, right, um, they don't— they, you know, because it's a commodity in the end. It's just really, you got to be a hero and a zero every month. And so, um, yeah, anyways, that's my opinion.

Dang. Okay, good insights. And it sounds like this is like a conversation that can be continued into the, into the group.

Yes.

Cool, cool beans. Yeah, thanks for the— thanks for the question.

A lot of comments here.

Yeah.

Thank you.

Yeah, yeah.

I'll read all of them.

Yeah.

I gotta run to the airport, so good seeing you all. Austin, good job here. Keep it going, keep it going. See you guys later.

Thanks, Eric.