How I bought a podcast, The valuation of podcasts, The risk of being overtaken & more

Ralph, I got a question for you. So this is unique because you bought a podcast, right? Can you speak to that a little bit? I mean, how did you think about valuation there? Like, what numbers can you share around this?

Yeah. So my CFO, who is very smart, very well-versed in M&A, worked for KPMG for years and years. He's going to love to hear that because it'll just pat his ego. But we tried to put together an actual model because if you go Google, like, how do you How do you actually figure out the worth of a podcast? It's nearly impossible. There's like one blog post. So what we tried to figure out is we tried to figure out— It's probably Neil's podcast is worth the best and Eric isn't anywhere on that. Yeah. And then sell it to Neil's agency, which is a podcast agency. No mention of Eric on that one too, I'm sure. But the point is, the thing is, it's like nobody actually knew How to do this. It was really, it was a value. So, I mean, I was negotiating with Ryan Deiss, who's a pretty good negotiator. So he's like, it's worth X amount, which is an enormous amount. And we said, well, when we really think about what the revenue is times what it's relatively worth for us, at that point in time they were selling, we said, okay, we'll sell it. We'll buy it for, I believe it was 2 to 3x what their ad revenue was. Which is gross. And we're like, that's a really fair price. But we also knew, we went back through all of our leads and we figured out what is this podcast actually really worth? That was a different number. So the number that Ryan came up with was higher than what it was actually worth for me, but we got it at right around maybe a little bit more than what it's worth to us on an annual basis for what we bring in. For an individual customer. So it's a great way, obviously, here we are talking here today, you know, for co-promotes, this kind of stuff, you know, teaching and obviously doing presentations and speaking. Great for that. You guys all know. And obviously it's great for business. They listen to 100 podcasts, Eric. You can't tell me they're like, I listen to 100 podcasts. So you're like, I'm ready to hire Single Grain right now. Definitely not Neil. But the point is, is that, you know, you guys— Like you understand the value of it. So we valued it based upon what we thought our value was to the podcast, and we paid a little bit more than we wanted, but I think in the end, it was a worthy investment.

So you didn't pay 2 to 3x on the ad revenue, but maybe you came down like in the middle, maybe like 1.5x.

I think we paid, we started at 2 to 3x ad revenue. I think we paid like 5x ad revenue. At that point, and Dice wanted like 20x. You know, he's just greedy.

Wow! 20x ad revenue?

That's crazy.

He's like, "Yeah, dude, I could." Good for him. I could get on there and sell 100 M3s like that if I was the host. I'm like, "Well, I don't know if you could." But the point was is how did Ryan Dice turn into like an old crotchety World War II veteran? You can't even sell 100 M3s.

That's right.

Sneak cap it out at 100. Yeah. But anyway, the point was, is like, he got what he wanted. I got what I wanted. We met somewhere in the middle and it all worked out and we're still friends, or at least friendly. He hasn't changed his phone number on me like other people have.

You know what's worth talking about then, Ralph? I mean, it's like we should all talk about here because we've been podcasting for a while. What have we actually gotten from it? We talked about customers, speaking opportunities, like friendships, right? But a lot of people still come up to me. It's like, what do you actually get from it? It seems like you're just having fun with it.

Yeah. I mean, there is that. I mean, I do have to talk to Cosim twice a week, which is kind of a burden. You guys are what, like every single day, which I'm sure you batch them all together like we're doing right now. But the point is that we actually went back like 3 years to all our leads and we have HubSpot. We just figured out, roughly speaking, how much business did we get from the podcast? And We sorted that back out and then lifetime value, and that's really how we figured it out. But, you know, I tell people all the time, I'm sure you guys get the question like, hey, should I start a podcast? I'm like, well, you know, I started mine like 8, 10 years ago, like when I thought I was late to the party. You guys started right around the same time. I know for a marketing school, you know, would I start one today to do what I'm doing? It's a hell of a lot harder. But I do know that there's a lot of folks that use them. We have a mutual friend, Kasim and myself, who's also in the private equity sort of M&A space, and he probably gets a couple thousand downloads a month, but he gets a couple thousand downloads a month, the exact right customer that makes him millions. So it depends on what the lifetime value of your customer is. For us, it's definitely worth it and it was worth our time to negotiate with the Digital Marketer guys and get the podcast and own it ourselves.

Cool. All right. Well, I can go down this list or you guys can keep— if you guys have something, go ahead and ask.

So I've got a question for Eric and Neil, just out of curiosity. Y'all are among the most prolific content creators, I think, online, right? And that's not unfair to say. Like, I can think of you and then maybe Dennis Yu, and then I don't know who else.

Hormozi.

How The date?

Hormozy.

Say again?

Hormozy.

Oh yeah, and Hormozy. You know what's funny, dude, is Hormozy doesn't rank. Hormozy's social, but if you think organic, who else would you pit against these guys?

Gary Vaynerchuk does well.

Not organic.

Yeah, he's social too.

Dude, I think you guys are the reigning kings. So here's why I'm asking. Here's where I'm coming, because it's a backhanded compliment. There's nowhere for you to go but down at this point, right? You're like, you're on the top. If you get usurped, and that's my question because you're at the tippity top, if you get usurped, who usurps you and why? Where do you think your risk is in getting overtaken and—

Let's make this spicy, Kassim. Neil's already getting usurped. He's gotten called out on Twitter for like, everyone's like, thank God Neil Patel's losing his traffic, right? So you go first, Neil.

I read that post. It's a good one. Yeah, so when we tend to get out-served, it tends to be by larger brands. It's not, you know, Google admitted to the DOJ years ago that they don't actually understand documents. They fake it, right?

You said that recently.

Yeah, but the— I put that out in a tweet recently, but Google said that years ago. And the big misconception is if you have better content, you rank higher. That's not necessarily the case. If you look at it over the last few years, a lot of what's been shifting up in the rankings are bigger larger brands, which is a hard thing to fake. You know, you can build links, you can do a lot of things, but you have to build a good product and service, and you have to give it a long, long time to build a massive brand. Big brands just typically don't happen overnight. And then the other thing that you end up facing, you know, I'll go back to the private equity example that Ralph gave. We used to be really heavy prolific content creators for the purpose of SEO. SEO has done amazing for my business and my agency. It's caused us to be one of the fastest growing agencies. But there's a big misconception. Ranking on Google for terms like SEO or digital marketing produced little to no revenue for us.

Right.

Right? And that's what we used to optimize for. And then when we saw that, we stopped. And then people are like, Oh my God, Neil's traffic is down. Well, my revenue's up. My team and I just shifted our focus from ranking on page 1 of Google for the term Discord, which does jack crap for us in driving revenue, and ranking high up on page 2 for terms like Instagram, literally the term Instagram. Like, that kind of stuff is cool, but it's not driving revenue.

Yeah, instead you have premier marketing agency now that Doesn't have our agencies in there.

See, Eric's on that trail right now. You know, he's pissed now.

Yeah.

But, but what we found is ranking for stuff like, should I have my blog on mydomain.com/blog or a subdomain? I'm paraphrasing here, but like people typing in those long-tail keywords, it's driving us quite a bit of revenue. Not that one particular keyword, but going after a lot of them. that are very technical, that's what's driving us revenue. So we've shifted our strategy from SEO to, hey, let's produce content for the masses, for anyone interested in learning about marketing, to let's produce content that's a little bit more technical that enterprise companies would question. How do I structure my blog when I'm in multiple languages and countries? That's not a typical question that someone would ask unless you're a large corporation. Right? And what we found is creating content around that has increased our revenue. We've seen it in our numbers. Like, we're having a growth year this year over last year, right? Like, overall, our business has done well, even with the economy. If the economy wasn't this bad, we would've been probably still growing at 40 to 60% a year. But we found that the growth is coming from really unique content that's solving, you know, complex problems versus what is digital marketing.