The Best Marketing Is Free. Almost Nobody Does It.

So anyway, by the way, I was listening to this podcast with, you know who DHH is?

37signals? David Hansel or something?

David Hanemeyer or Hansel or something? Yeah, something like that. Or maybe David Hansel, because I know David Hansel, so I'm just putting that in there. David Hanemeyer or something.

I just know he likes sports cars and I think he lives in Malibu.

Yes, he does. So he was actually talking about when they raised money from Jeff Bezos, the first thing he did was to buy a sports car because he's like, you know, I deserve it. And we're gonna make the money for it, right? That was his take on it. So it was an interesting podcast, but there's one thing that sticks out to me, and I think you have a point of view here, right? He's like, it's always better to out-teach versus outspend when it comes to marketing. Out-teaching is the best way, and that's how we grew in Basecamp. You know, we did all these blog posts, blah, blah, blah. But the interesting thing is later he's like, well, you know, the blog posts aren't working that well today anymore because da, da, da. So I'm like, don't get me wrong, I love teaching, but I don't necessarily agree that out-teaching is the best way to outspend. If you have a lot of money and just spend on ads and you have a good offer, you have good messaging behind it, I still think that's better than out-teaching.

Yeah. On a side note, do you want to hear something interesting about Basecamp?

What?

So Bezos Expedition did the investment. I don't know why they did it. This was years ago. I talked to Melinda who runs Bezos Expedition. I don't know her well, but I've had a few phone calls with her over the years. They ended up investing in Basecamp. Did you know they've— Basecamp does distributions, but they've gotten paid all their money back plus a lot more over the years. It's been a great return for them.

Do you know why Jeff Bezos invested?

I think it was something to do with design or principles or some of the stuff that they're doing that he liked.

No, he was just curious. He was curious and he liked working with founders and he liked what they were doing. And they had reached out to Basecamp a few times. So Amazon, his team had reached Jeff. It's like, Jeff wants to meet you. They're like, no, you know, we don't need VCs, right? Da da da. He's like, well, no, Jeff really wants to meet you. He's like, well, fine, it's Jeff Bezos, they'll meet, right? So that's when they took on money. But DHH, by the way, when he came to the US, he only had 50 grand and he spent all that money on an Audi, clearly couldn't afford it and he said it himself. So sometimes, by the way, if you want to, I've seen entrepreneurs where it's like they clearly can't afford something, but they will buy the thing and that will inspire them to work harder. So to each their own.

I have a bad habit of Pushing people in sales to spend more money so then that way they close more. It actually works really well. Give an example.

You don't have to name names, but you can give an example.

I'll give a real-life example and I'll be pretty public about this. This actually worked out for my co-founder. My co-founder—

Oh yeah.

Bought a home in Las Vegas years ago. It was a big home. It was 3 levels. It was expensive. It was expensive even for Los Angeles.

You pushed him so hard that you helped.

It helped, but then he sold it for profit. And then he bought a home at that time in the community I lived in, or a piece of land, and then he was building. And that's turned out really well for him as well. But what I find is when people do transactions that make them uncomfortable, a lot of times, specifically with good people, I don't do this with people who suck, but with good people, it brings out the best in them. And you see that fire being lit all over them.

It's pressure.

And they just perform really well. And I never push people on things that are bad decisions. So like example would be a car. I wouldn't tell someone to go spend money on a car, even if they were doing well or not doing well. But a home, like things like that. I had a friend this morning who called me about a home. It's a little bit out of his reach, but I know he can afford it. And I said, you should do it. And he's just like, you sure? And I'm like, Dude, you have a view of a golf course. You have a view of the water. This is amazing. You got a good price. The seller needs to sell because they're in a jam, so they're willing to give him a steep discount. And I'm like, rates are high right now. You're taking on a mortgage, but within 5 years, rates should drop. I don't know what they will. I doubt they'll go back to where they were, but they'll drop. And as rates drop, in theory, and the market starts turning around, in theory, his property should balloon up and he's getting a steal of a price right now in which the seller's so desperate, they'll do things like give them furniture, reduce costs. They even said, oh, if the appraisal comes back different, let us know. We're flexible. Like there's, they just have to get the transaction done and they're willing to lose money just because they're in a jam.

That's good. It's again, I think that the pressure, the good people can take the pressure. It's a booster. The bad people, you don't want to pressure them because they already couldn't take the pressure anyway.

Totally agree. And even with him, when he was going through the process, he's like, this is a little expensive. I'm like, You have 2 cars, right? He's like, yeah. He's like, the other one is a collector's car. I'm like, are you losing money on the collector's car? He's like, no, it's up. I'm like, does it go up a lot? He's like, no. I'm like, sell it. He's like, yeah, people hit me up all the time about it. I'm like, sell it. Use that money towards a house. And I started going through all the things he has in his life that he doesn't need. And I bet you he'll pick up another like $80,000, $90,000, which will then make the property more feasible. And then his current home that he lives in, he wants to sell it. I said, why do you want to sell it? He's like, Then it'll be really easy on me. I'm like, dude, you got a property with, I believe, a 2.25% interest rate. I'm like, rent it out. He's like, I won't cash flow much, maybe $1,000, because he's on a 15-year mortgage. I was like, take the $1,000 cash flow, use that money to pay down the current home you're in, have both, because then when you retire, you'll have a rental property that's paid off that's also producing you income. That's good.

So By the way, Neil, you called me yesterday and you had talked about somebody's agency, right? So I want to talk about that, the hairy part about agency M&A today, because last week you had a— we had talked about, you know, another thing that I brought to you, and then you brought something to me and it was a good price, right? You know, for the revenue, it was a good price, right? And I gave you my thoughts around it. And so I want to give my— I want to share my thoughts here without revealing anybody's identity here. So Let's say, you know, this deal was, let's call it like, you know, they're doing $10 million a year in revenue, okay? Neil's like, okay, you might be able to get this for like $1 million or something like that. Good deal, right? But my immediate reaction was, I spent so much time getting my team AI native this year, right? We talked about the 10 to 55, 60% or whatever it is, and I know how much pain it is, and I am not willing to have to go through that culling. right now with this, with this business, right? So there's just a lot of work to do and it's a very people-intensive business. And like hearing from my team today is like, dude, this is what I stayed for. Like this moment, like the traction we have now, like, like everyone's like collaborating, all that. Like, I don't want to bring in a completely different culture and then have to cull and then like ruin their, their time and all that. And so I'd rather just not deal with it. And similar to the thing that I brought to Neil, I'm like, hey, you can get this thing over here, you know, maybe you can work something out. And Neil immediately within the first 5 minutes of talking to that person, he was like, No, you know, I think you should go do a deal over here just because it's a lot of work, right? And so at least for right now, you know, there's, I think what isn't being talked about is the, it's really hard to discern. It's not really hard with these M&A deals. You need to figure out who you actually want to keep and who you don't. And I would say a vast majority of people who are AI-pilled in a company, it's very low.

I'm going to word it in a different way. With a lot of deals and transactions, whether you're buying a company or not, everything comes down to if the juice is worth the squeeze. When you start derailing from your main vision or you have to deal with a new problem that you weren't planned for, if it's worth it and the outcome can be amazing and it can be life-changing for you, it may be worth taking the derailment. But a lot of times, in the example here with the M&A deal that Eric mentioned, when I was looking at it, And I was looking at it on the way when I was driving to Laguna. I randomly called them up, just catching up, 'cause I did a text intro for them, for someone else that could just, that may need their services. And they were telling me how a deal didn't go through that they were trying to do. And I was just like, oh cool, what's the business? And then, or not what's the business, I knew what the business, but I'm like, what are the numbers?

Mm-hmm.

They sent me the access to the data room within 3 hours. Team reviewed it really quickly. We quickly learned it wasn't for us. It's not that it's, It's a bad business. I would actually say it's a good business. The problem is the amount of time that my team would need to spend to fix that business would cost us way more revenue and profit than if we just focus on our core business because of the size and scale of that company. That is why I referred it to Eric. I don't mean that in a bad way. I know the revenue is meaningful for most companies, almost every company, but— Eric quickly figured out that revenue, even though it's meaningful, the headache that it creates and the distraction that it creates goes away from where he's trying to take his company in 3 to 5 years. And he doesn't want to be a quote unquote traditional agency. So he decided to back away from it.

All right, so I wanted to take a moment to tell you about my podcast co-host Neil's agency called NP Digital, and they work with a whole host of global brands. global companies or a global organization. Also, Neil has SEO tools such as Ubersuggest and AnswerThePublic. All you have to do is go to npdigital.com to learn more and we'll see you on the other side.

And Eric's already done 2 deals, right? You did 2 agencies that you already bought?

3 if you include Single Grain.

3. Let's not count Single Grain, but let's count the other 2.

Single Grain doesn't really count.

Single Grain was pennies on the dollar.

Single Grain was $2.

Yeah, that's why I don't count that.

Yeah.

You still bought it and you had to take on the losses and all the issues.

So that's an example of a hairy situation, right? Yes. And like, I wouldn't even blame your— so Neil's cousin was the founder. It's not on Sujin. It was not a good situation, but I made it go worse. But that's for a story that I've told before. So listen to an old podcast. Yeah. Yeah.

And to summarize, Eric learned that you just don't let— a lot of people have this style in management where, oh, people made a mistake, they'll learn on their own and they'll get better over time. And Eric quickly learned that That doesn't work for him.

I want to say it's quick. It took me a while to learn that. Neil learned that lesson quickly.

I took a while. I learned it very quickly, yeah. But I think it's also personalities and I don't think there's a right or a wrong way. IBM had that philosophy for many years and they're a much bigger company than I am in which people learn from their mistakes. So why would you fire them? Let them keep learning and getting better.

I don't know about that. There's a whole nother thing I'll talk about in a second, but finish your point.

Yeah, I've just always been a big believer, either good or you suck. If you suck, bye-bye. I know that's cutthroat, but it really is the reality for most entrepreneurs. If you're good, great. And if you're not good, but you have potential and it's very obvious, most organizations are willing to put in the time and energy to make you great. But crappy people who just suck, it is very hard to turn them around because they just don't have potential. And there's a lot of them out there.

I'll just say this, the more cutthroat I've become, and I'm not saying you should be cutthroat, but I'm saying that the tougher I've become, the easier time it's been with business, right?

Yeah.

And like, it seems counterintuitive to people listening. You might be younger listening to this right now, But I'm telling you, we have both been young, younger at some point, right? What you're doing is when you're tougher, like if you don't apply pressure, pressure is going to be applied to you. What ends up happening is that if you are able to move someone out quickly, they're able to do their best work somewhere else, right? It's not— and then you're also able to help your team too, because your A players want to work with A players. The problem is if you have a bunch of B and C players, the A players have to take on that work and it becomes unfair and all this resentment starts to build up and there's a lot of pressure that you feel. from the company and you don't know what to do, right? You still want to be this, like this nice guy. You want to be this, the boss that's cool and all that. It doesn't pay the bills at the end of the day.

Yes. And one thing to note about A players, Eric sent me a CMO the other day and he's like, you should hire this person. Someone's A player could be your B player and your A player could be someone's B player. It doesn't mean your A players are better than someone else's. A lot of it also has to do with cultural fit. your industry, and some people are just a better fit for your company than someone else's company.

Yep. So by the way, because we're talking about agencies right now, I want to talk about a tale of 2 agencies, Neil. So we just, you know, we like to test out these contractors for the brand team, right? One is doing well on LinkedIn right now. The first post he put out, like 500 comments on it, right? He put out another one today, like 300 comments already, right? And so I'm like, oh, that's pretty cool. Like, you know, I'm like, hey, I'll refer you to like my friends and all that. And like, he The way this guy operates, so this is a LinkedIn, you know, we'll call him a LinkedIn agency, okay? Then another one is like a short-form content agency, okay? So this guy, let's talk about this guy over here. He shows up, he's always trying to talk to us inside of Slack. He's always trying to learn about the business, right? He's very AI-forward. He's trying all these things. He's only 18 years old, by the way, but he's got a bunch of staff with him already, right? Like he knows his stuff, right? So he's proactive, he's very AI-forward, and he's always trying the newest things, okay? And he's very communicative with us. The other side, the short-form agency, which I fired in like a week, and I had Let them go before, but let them go a week ago. They're like—

Wait, you let them go? So this is the second time you fired them for short form?

Exactly, yeah. Because like, I believe in the founder, like she's very strong strategically, right? Very good with the short form formatting. Like that's important. Like I saw Neil record a video, by the way, recently. Do you have the SEO, AEO, GEO one? I'm like, Neil has the formats now and that one did really well. I'm like, I'm for sure that one's going to do better than the other ones. So the formats matter, right? So she knows the formats, like the background. I think she's one of the strongest. So she, Gives us account manager, cool, right? And then there's an account manager under the account manager, okay? So the account manager is like, oh, you know, we don't do Slack, you know? And then when we sent them a Riverside link, right? Because we use Riverside to record stuff. It's like, oh, we don't use Riverside. Can you put it all into Google Drive? And we're like, can you just— one of our guys was like, can you just do it yourself? Like, you just set up like a thing. Like, oh no, that's out of scope, blah, blah, blah. And then like this and that. Oh my God. I'm like, at this point, man, like, Like, what are you even doing? Like, as an agency, right? What we do is we help people solve problems. We take things off their plate. Okay? You're putting more and more shit on our plate and then it's coming all the way up to me and I'm already, I have enough stuff going on. I'm like, how is this even getting to me? I'm like, just cut it, right? This other guy is just going, growing, growing. He's like, we should try this. We should try this. My point is the difference between these 2 is one person that cares and one person that is biased to action and loves learning. The other one, they're not adapting quickly enough. And that's what's going to cause a lot more churn because I was willing, I was, I referred her to a few other companies. And then I had a poker game the other night, right, with a handful of entrepreneurs and they're not going to work with them anymore because they heard of this experience. And so word travels fast too.

That's all I'll say. Yeah, word travels fast. And because Eric referred her out to a few agencies or a few of his friends, he's going to notify them on his experience because he doesn't want his friends to get burned as well.

One guy, like he's trying to grow his brand. His company does like $160 million a year. That would have You could have been a great client, right? But I referred and I had a bad experience. I can't keep that referral up anymore.

Oh, of course. Dude, I got an interesting text from Shiv. You know Shiv, the guy who also owns the agency?

Yeah, AI. Shiv wrote a book around AI and marketing. Do you remember?

Yeah, but it was really good. He sent me a text of the same thing. It's just a video of me filming in my living room and they made the mirror in the background, they just put some images over it. And he said, so many Neils, because there's 3 of me. And he said, your videos are so focused on what you guys sell. Still figuring out my strategy. And I learned this one the hard way years and years ago. Don't chase the views, chase the revenue.

Neil actually learned this during his blogging days, like 15 years ago when Neil, when I would read Neil's posts on SEO, but then sometimes he'd have some ones on like his clothes. I spent $600,000 on clothes and I made this. And at my mom's funeral, I think you met, I don't, you met one of my friends. I don't know if he walked up and he's like, hey, I read your post on like Did he walk up to you?

I have no idea. So I've had a few of your friends walk up when we were eating dinner in Vegas. One of the girls mentioned about the clothes.

Yeah. So the funny thing is these are not your ICP. These are like my friends from high school and elementary school, right? And then they're like, oh yeah, you know, I'd read Neil's stuff on that. But those aren't— to that point, it got— it went wide, but it was not directed at the right people. Yeah.

And I think that's really important. I think that's really what most people forget. chase the views and they don't really look at total revenue. Someone just posted something on X, okay? And I didn't respond to it. I've had this post—

About you?

Yeah, about me. And this person posted a comment on one of my posts and they're like, why should I take advice from you? Look at your traffic and your reputation over the years. And more so, they were just using a chart with my traffic and it was just going, Down and to the right. So instead of up into the— Up and to the right. Up and to the right, it was going down and to the right. So he's pretty much saying like, I've lost most of my traffic. And that is spot on. I responded to this years ago when we were in this transition. I used to rank on Google for terms like how to get more Instagram followers, got tons of traffic from it. I used to rank on page 1 for the term Discord, literally Discord, the network, right? And tons of these terms. And what I found was I was getting all this traffic and zero revenue from it all. I was also getting leads and a lot of these leads were wasting my salespeople's time of people calling and be like, hey, my, I want to help my daughter become more popular on Instagram. Can you help us out? And what they would fill in on their budgets and all this kind of stuff in websites wasn't related to what they were asking for. They were just putting the company they worked for and then they would ask us for advice for their daughter or their son who wanted to be Insta-famous. We cut all of that out. I focused on my ideal customer, which is a mid to an enterprise company. When I say mid, I think everyone's definition is a little bit different. So for us, like a mid-market company could be doing like $5 to $10 billion a year in revenue to enterprise. And ideally they're global and we try to help them with their marketing in a lot of different countries. with their systems, their processes, and just help them scale. It drives a lot less traffic. It drives us a lot more revenue. And you know what? Our churn on those customers are 4 to 5x lower. So the business is also more stable from it.

So here's what I'll say related to that. So I was looking, I was talking to, so at the poker game, so Mark Manson creator, right? He creates like a lot of relationship stuff. So he's looking at my Instagram, right? And initially he did an audit like as we were playing, right? He's like, dude, like I feel like you're at least 3 to 6 months ahead on the AI side. Like every time I see something, right? And then he's like, you know, my suggestion for you is like you need to do more, right? More quantity, right? And I'm like, oh, okay, yeah, more quantity. And then he starts really analyzing my page. He's like, wait, wait, wait, wait, wait. He's like, no, you have too much quantity. You need to do less quantity, higher quality, right? Because he's like, you do know your stuff. And so my whole thing, and by the way, this is an ad for For, for, for me right now, we are looking for a short-form strategist. So if you got something, send it over to me, DM it over to me, uh, and we can talk, right? Um, but anyway, so he was saying that, I was like, okay, that's interesting. And then the, I'm looking at my, I'm like, okay, that's what I need to do. And I look at Neil's page because Neil's page in relation to how many followers he has, followers, not the most, the biggest thing, but the average is like, it should be higher, right? And to me, finally, when I saw that, that GEO one where it's GEO, AEO, and there's like 3 Neils in it, it's like mirror video, right? I'm like, okay, That format, everything's about the format, right? Like formats come in and out and that format, I kid you not, I think it was like 31,000 views when I saw it. But most of your other videos were like, I don't know, 5,000, 7,000, 8,000 views or so. So it's like a lot of it does come down to short-form strategy. But to Neil's point, like as long as he, his short-form strategist like keeps capitalizing on formats and he keeps covering the right topics, he does generate leads from that too.

Yeah.

I've generated good leads from, from Instagram too, but it was just, You don't have the time to think about it. I don't have the time to think about it either. I was talking to Mark. I was like, how do you do it? He said, oh, I just have a short-form strategist that like just gives me the stuff and I just record. I'm like, oh, that's so nice.

Right? So. The only thing I don't like about recording is people start seeing more of your life. That's the only part I hate about recording.

I can tell you don't really enjoy recording it.

Yeah. And I also don't like people in my home. I know that sounds a little funky. You is different or Noah is different, but like, I don't like people in my home trying to record me.

Usually, like, I get what you mean. You like your friends at your place. You don't like, you know—

Strangers. But also I don't want to go to a studio to record. So it's just easier for people to come to my house.

See, there's no solutions, only trade-offs.

Yes. Yeah.

Yeah.

Because I'm like, man, then I got to drive. I know these are first world problems and laziness, but it's easier for people to just come to my house.

Yeah. Well, good thing, good thing Neil's here. Uh, this makes it easier for me, apparently. So we hope you enjoyed that one. If you want more case studies like this, let us know and we'll see you tomorrow.