Service-Based Businesses Are About to Change FOREVER

Service-based businesses such as agencies are going to change forever. And if you don't do something about it, you are going to lose your shirt.

But the good news is this provides a massive opportunity for people willing to put in the work.

If you go back in time, people in tech, if you've worked in software, for example, people have always looked down on service-based businesses because the common knowledge here is that service-based businesses aren't as scalable, right? And which is why they're kind of looked down upon and being able to sell these businesses back in the day, they wouldn't sell for as much versus like a software company, right? Software companies would sell for much higher multiples, which just means you end up making more money on lower profits and lower revenue because service-based businesses are very people-intensive and that brings the margins down. Now, a business like a Google, for example, the margins are a lot higher and they have a lot more to reinvest into the business. So they're a lot more profitable. They're money printing machines. And ultimately this is why Google is one of the best businesses in the world, even today. Now, what I want to talk about is what's happening now is that service-based businesses over the next 5 to 10 years will become way more valuable. And so when you think about the more the businesses that are valued at a higher multiple, it's because they're tech enabled, right? So a lot of, even a lot of software companies today, they do tech-enabled services where they help their customers implement, right? So even they, they have added services on. Now, if we think about the largest service-based businesses and even agencies in the world, like Omnicom or Publicis, for example, or WPP, these are multi-billion dollar companies and they do really well. And what's really worked well for them in the past is that they just go about continuing to acquire other companies, right? And these companies have thousands and thousands of employees. Other service businesses would be like Accenture, for example, or McKinsey or Bain, for example, these are consulting companies. They have a lot of people and they have really great processes as well. Now what's going to happen is that these agencies, these, these people-based businesses, their model is no longer going to be the gold standard. Now what they're doing is going to continue to work over time. I don't think they're going to go away in the next 5 to 10 years. And in fact, I see, I think some of them will adapt, but just keep in mind that when you do mergers and acquisitions, when you're buying other companies, You're throwing people at the problem, right? The problem is the more people you add, the more it dilutes the quality of the company because the more people you have, the more room there is for error, and the more room you're going to have errors in terms of people that follow or align with your core values, right? Your culture. It's just not going to happen in terms of having A-players across the board for thousands and thousands of employees, right? I don't really know of any organization that has A-players. with tens of thousands of employees, right? Everyone's an A player. That's just not the case. In fact, I've talked to people in the past that have, you know, been a part of these big agencies and they think maybe, you know, if they're lucky, maybe 10 to 15% of people are A players and the rest are maybe B and C players. So that's 85% of people that are B players and C players. And the problem with that is that the work gets diluted and then the customers end up being unhappy. And what ends up happening is you don't get to retain the customers for as long. So it actually adds to a lot of inefficiencies in the business, right? So I believe that what's going to happen long-term, instead of letting, you know, your— as your company gets bigger, instead of letting your work dilute, what's going to happen is that these companies or more forward-thinking companies are only going to hire the top 5 to 10% of talent. And the top 5 to 10% of talent, the reason why things are going to work out for them is because they are going to be 1,000 times more efficient. And you think I might be exaggerating a little bit right now, but the reality is when you have AI agents, so AI agents are, these are basically robots that will, that could duplicate you 5 times or 10 times or 1,000 times or 10,000 times. These robots are one, they're infinitely patient. 2, they're working 24/7. 3, they understand all your pros and your cons in terms of what your strengths and what your weaknesses are. And if that's the case, if you have, for example, if you're a smart person, you're a strategic person, well, you no longer are constrained on resources. You're actually, the real constraint now is actually creativity.

All right, so I wanted to take a second to tell you about my ad agency, Single Grain. We're a performance digital marketing agency and we focus primarily on working with B2B companies and e-commerce. So performance marketing, that's SEO, that's paid media, that's CRO, that's ad creative. And there are a whole host of other things that we're doing with AI that's Really cool. You can go to singlegrain.com to learn more. Again, that's singlegrain.com to learn more, and we'll see you on the other side.

So the most creative people, the most strategic people, the people that are constantly learning, the people are always trying to get better, they're going to be the most creative people, and they're going to be the ones that are exploring the frontiers. And then they're going to have, you know, again, tens of thousands or maybe millions of agents working for them. And again, it used to be, for example, when you look at these service-based businesses like a McKinsey, for example, Again, you just have a lot of people, right? But when you're— the people are in fact the resource in that scenario for a lot of the— just any company in the world, right? The people are the resource. But when you make the robots the resources, you're going to be able to move a lot faster. You're going to ship a lot faster. And, you know, different tools out there that are available, like Replit, for example, allow someone like me to create a front end, you know, like an MVP, like a minimum viable product to move things faster. And that's really exciting, right? So again, talent is no longer the constraint. It's really creativity. And, you know, this is why when you go back in time, why does Google push so hard? Why does Meta push so hard? Why does Apple push so hard when it comes to recruiting? It's because talent is the X factor, right? But when you are now roboticizing talent, you're going to be able to take things a lot further. And that's why I believe the future $1 billion plus agencies are going to have a lot less people and they're going to be armed with tons of agents. And if you are able to condense your talent density, then I think you're going to do better. Because the problem with if you're a large company, you have tens of thousands of employees, you're probably going to have to cut a lot of people. And that can be very nerve-wracking. And maybe that's not a competitive advantage long-term, but in the short-term, it's going to be an issue, right? Because if you start cutting a bunch of people at once, that's going to lead to a lot of instability versus if you start a company and it's just, you started earlier and you're like, hey guys, we can only afford to hire the top 5 to 10% of talent over the next 5 to 10 years or so, and you keep beating that message into the organization, people are going to be aligned with that and they understand because you've been saying it constantly over and over and over, right? So I do believe, again, this vision is going to take about 5 to 10 years to play out, but that doesn't mean you can't get ahead of the curve right now. The key for you is to keep tinkering. The key for you is to keep testing things. The key for you is to be open-minded, and that's how you're going to get ahead, right? Earlier I said that the biggest challenge is finding that top 5 to 10% of talent, right? If you can't attract them, ultimately your business is not going to it's not going to succeed. And before that, or maybe a little after that, I said that talent or resources are no longer the constraint. It's really creativity, right? And I also want to reinforce the fact that I did mention that when you're a large company, you're going to have B and C players. And good examples of this would be, and by the way, these are good companies still, right? Omnicom and Publicis. I've talked to people that are the A players there. I've talked to people that are the B and C players there. They end up working there for 8 to 10 years or so. They never get promoted. and they're just kind of coasting. I believe that those people, it's going to be harder for them to hold on to a job because they're not the ones that are constantly trying to innovate, which is fine. I don't think this AI push is going to cause everyone to lose their jobs. I think what's going to happen is people are going to have to reskill just like every age, right? You go from the Stone Age all the way up to the Industrial Age, right? There's a lot of different— every time something like this happens, like the Industrial Age, people have to reskill, right? Back in the day, a lot of people were farmers. And so I think You know, these things, you know, these shifts happened. And, but as long as you're constantly learning, you're being strategic, you're talking to people, you're going to be ahead of the curve. And so that's what I think is interesting.

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So the future of agencies, this is what we should talk about, right? I talked about how these, these robots are going to be infinitely patient working 24/7. So I want to give you examples of some things that they can help you do. And so for my ad agency, Single Grain, we do SEO, we do paid media, we do a lot of different services. And you just got to think to yourself, what are all the jobs to be done at your company? So for us, for example, building internal links, that's an SEO project, right? Or building a new campaign out, that's a paid media project. There's a lot of these jobs to be done. A lot of them can be automated. Just think about the things that you're doing 2, 3, 4 times plus a day that can probably be automated. And a lot of it is thankless work, right? A lot of inputs we're putting into a computer. Like, I don't think we're going to be using keyboards and mice in the next, I don't know, 10 to 20 years or so. I think a lot of stuff is going to change. But again, you just got to think about the jobs to be done within your organization. What are the most, the highest priority ones that are constantly being repeated? And maybe you go after those first and you kind of just work down the list. You can build agentic workflows. So this is something we've done for my company where, you know, in SEO, it's well known that if you update content, you delete your content, you consolidate your content, which is combining your content, that's, you can get more SEO traffic that way, right? And so one of the things you can do is you can create, we've created a consolidation agent that will basically scan through all of our analytics and then recommend pages that we should be combining based on context, and then a human in the loop can approve that, right? So it's different agents that we're building, different tools, different workflows that we're building, and we'd like to provide that value to our clients or potentially even give them away to drive more leads. There's a lot of things that you can do with this, right? And earlier I mentioned that you think about creativity, like what's a real-life example of this? And love him or hate him, you think about Elon Musk, He thought back to first principles. What are the jobs to be done with rockets, right? And nobody really thought about, what if I can build a rocket that can return to Earth? And that way we waste a lot less resources, right? And so that is an example of creativity. If we didn't have that level of creativity, then we wouldn't have been able to build that. Now imagine that now you have a bunch of robots that are physical robots that can help you build. There's AI robots that can help you program things as well. You're going to be able to move a lot faster. And so I believe that we're going to create far more things in a shorter amount of time, and that's going to allow us to propel humanity even further, right? And I think that's exciting. So we're not even talking about service businesses. I think we're just talking about overall. And so the gold standard then is you need to focus on hiring the top 5 to 10% of people. And to me, well, how do you go about, like, what characteristics should you be looking at with these people? One, They should be improvement obsessed. So for example, they should be reading a lot, they should be talking to people a lot, they should be in masterminds, they should be very proactive, right? These are people that are improvement obsessed. And not only that, they're improvement obsessed about their knowledge, but hopefully they're improvement obsessed about their health too, because they want to live for a long time so they can continue to add value to their loved ones and the world, right? The second one is they need to be very resourceful, meaning that if they run into a wall, they run through it, right? So they're able to figure things out. A lot of people just kind of keep banging their head against the wall, or people can figure out a way over it, around it, or they can run through it. And someone that's resourceful can figure out different ways to solve problems. And those people are very creative. They're very strategic, right? And so that's the second thing I would say. The third thing I would say is you want to make sure that the people that you're working with are very humble. So do they think of themselves less? Not that they think less of themselves, but they think of themselves less. They think of other people first. And they are more— their ego is controlled and they're just focused on doing a good job. And it's not all about them at the end of the day, right? Because if you have improvement obsessed and you have resourceful, but they're not humble, they can actually end up causing damage to your company, right? And that's something that you don't want in your organization. That's not a top 5% talent. Now, last thing I would say is, sure, you can be improvement obsessed, humble, and resourceful, but if you're not hungry, if you don't want it, if you're not about making progress or hitting goals, then you're not going to get there, right? You can argue that hungry is maybe with improvement obsessed a little bit, but I think improvement obsessed to me partly is about just learning, right? Constantly trying to get better. So let's add hungry in there. Those would be the 4 things. So as long as you're constantly exploring while building and you have an extremely high talent bar, which is what we're doing at Single Grain right now, I believe over a long period of time, you're going to win no matter what. So that's how you get there, right? This is my thesis and this is something that I've shared with my team. This is how you build a $1 billion plus service-based business going into the new future. And by the way, if you want to learn more, I mean, I currently run an 8-figure agency called Single Grain and I'm using all the strategies I shared in this video and I've developed an in-depth framework to scale to $100 million plus, right? So I talked about this is billion dollar plus long-term, right? But this is a framework on how to build the agency. to $100 million plus. And if you want to see the exact plan I'm using to get there, you can just click on this video somewhere over here, check it out, and we'll see you on the other side.