Simon Brown - The Realities of Selling your Recruitment Business

You know, I've been in industry for long enough to say that historically we hated tech. It would always be like, the robots are never going to take our role or whatever, whereas right now the industry is so open to tech.

Welcome back to another episode of the Recruitment Mentors Podcast. I'm your host, Hishem Azzouz, and on this week's episode, I sat down with Simon Brown.

We turned business away. We turned down £72,000 worth of business within the first 12 weeks of opening.

Simon's been on an interesting journey these last 6 to 9 months. He sold his recruitment business. He's then joined the company that bought his business and more recently became the managing director of Digital Gurus.

So sometimes there's a fine line, isn't there, between self-belief and that arrogance in terms of there are other ways you can do things.

We have a really honest and frank conversation around how he got to that point. How did he build a £1 million business without making a single business development call? Don't worry, I really get him to explain how he did that. How did he come to the decision to sell the business. How did he get it over the line? How did he deal with the impact for those that worked for his organization when he never initially planned to sell the company? And these past 6 months now he's joined the business, now he's got the sale through, how has it actually turned out? How does it feel to now have sold your business? We discuss all, he shares all, some really great insights in this conversation for any aspiring recruiting entrepreneur who wants to exit or sell their business one day. Enjoy the episode. Simon, welcome to the podcast.

Thank you, thank you for having me. Happy Friday. I don't know if you're gonna timestamp this, but I've just timestamped it. Happy Recruitment Friday.

No, I appreciate you jumping in. Obviously I had someone let me down, and I know that, you know, when I saw what happened with your business, I messaged and I was like, mate, we have to get you on the pod to talk about this at the appropriate time. So it sort of worked out this way. So I'm really looking forward to breaking this down with you, and I thought let's just get straight into it for people listening.

Yeah.

So obviously it's been an interesting period for you because obviously when you came on the podcast last, you was on the journey of building your startup. Yeah, Digital 51. Yeah. And then in January of this year, it was acquired by the Rethink Group.

Yeah.

And I think today what we're going to do is focus and talk about, you know, what did Digital 51 look like to be even in a conversation of being acquired? Um, you know, how did you get there? What was that experience like? And then we'll then talk about you know, what the journey has been like actually on the other side. I know we're early on on that journey, but still, I think a lot of people are told this is, you know, this is what's going to happen, this is, you know, what's going to happen when we do this, and then you're now in, in the thick of it 6 months in. So we're going to talk about that. So why don't we, why don't we just start then, um, with, you know, Digital 51. Yeah, what did that— obviously I made some notes, but why don't we start with like, when did, when did the sort of conversations start, or when did Simon initially have some of these ideas of, I actually might sell my business, which had been going for, you know, 18 months, which isn't a very long time? When did that start happening for you?

It did, it did happen around the 18-month mark. So the plan was never to sell. The plan was to drive for 10 years to build an employee-owned business and essentially step away at the 10-year mark. So that was the original plan. There's no denying it. First 18 months in some respects went better than I expected. Financially, performance was superb. The impact and the approach and the style and all of that was brilliant on the markets that we were going after. So there was lots of positives in some respects. However, we were struggling to grow I was struggling to grow the business and we needed to grow at a faster rate of heads in the business than I was able to financially drive through cash flow. Bearing in mind, completely self-funded, completely privately owned by myself, and therefore there just wasn't able to grow in that way. So I started to think about investment at that point, you know, bank loan, investor, putting my own, more of my own money in, releasing shares. I started to think about how can I raise money. So at that point we'd gone from 5 to 8, and we'd hired in ones and twos, or ones, and then a couple of people hadn't worked out, we'd rehired from that side. I wanted to grow at 10, so therefore do it in a chunk of 5 and then another chunk of 5, and that required investment. So I, I went to my accountant. First things first, what can I get from the bank? What can I leverage? You know, based on my accounts were in a good perspective, you know, in a good spot. They offered me some money from there, which was interesting, but that's bank money, so it didn't come with any upside. It was just, here's your cash, away you go. What I thought is if I got some investment from someone in our industry, I might also gain from that support. For me, it is lonely. I was I was lonely. Um, maybe an investor would be someone to bounce off, someone to talk to. I had a non-exec, but the— that wasn't necessarily driving the way I wanted the outcomes to for me. So, so I, I then started to just talk to people in my network in the sense of if I was looking to raise funds to release anything between 5 and 10% of Digital 51 would you be interested? And that was— that happened at the end of summer, um, '22. Okay, so really bang on the 18-month mark. And that's where the conversation started around what the business looked like, what the value of the business was, because you had to— you have to know all that information to ask people to invest money. And then you sit opposite people and you start talking about it and it went from there.

Okay, and I appreciate that. So I want to ask you to break down what the business looked like when it got acquired, because I think that'll be really interesting for people, because you've, you've achieved something. I know there's, you know, you're really excited about what's to come, but ultimately you've achieved a business event that a lot of recruitment business owners, you know, really aim for at some point, and a lot of people don't get there, and you managed to you know, get that over the line and achieve that. But I think it's probably worth noting, and we'll come back, back to this, but obviously correct me if I'm wrong, but you wanted to grow in two chunks of 5 because your model wasn't the typical contingent model, it was a talent partnership model.

Yeah.

So what you were seeing is, you know, with you sharing with me, it's like you was getting in, you know, you was getting in the rooms with some great businesses.

Yeah.

They bought into the way that you're doing it, but you knew if you committed to a hiring project of 30, which what the opportunity was, there's no fucking way you're going to deliver that, or you won't be able to deliver the service that you wanted to. So that was obviously a bottleneck, which is why he's like, hang on a minute, I can get in these rooms, we just need more, you know, more power in inside our four walls to be able to deliver on these projects that I know that we can get.

Yeah, like on the money. I was, you know, really lucky, myself and Adrienne, who were leading the business from the front, natural, um, better with clients, love the market, love business development, love getting out seeing people. I went to see one of the largest, um, privately owned creative comms agencies in London, which was like totally my wheelhouse. I love that industry space. And they were wanted to do an intake for 25 account managers. Um, it was like, this was, this was early '22, and the market in that Creative Commons space was booming. There was a huge demand for account managers because of, um, suppressed hiring in the past 2 years. And I can remember getting the train home thinking, fuck, this is so exciting, I would love to work with this brand. But if they give me this project 'How the fuck am I going to deliver it?' Pardon my French. You know, what am I going to do? Um, because we didn't have the resource in place. And then we— just to be honest, that didn't come off. And you know, when I was, I was worried that early in the year, that didn't come off, and there was a bit of me that was relieved it didn't come off, which is insane, right? And then Aidy and I pitched for another piece of business, which was European business. And being honest, we sort of tanked on it a little bit. We, we didn't nail it at the end. Um, but again, what they were talking about, I was like, we are really— because we were 100% fill rate, right? On everything we got, we filled every single opportunity that didn't get pulled by a client because we were that partnership model. So you have to know if you're in the room with these people, we're going to deliver. And we were getting close on the— from the resource side, and I wanted a bit more slack in there, which is why I wanted to grow a bit quicker. Also, the market was insane for salaries at that moment in time. Time. So I knew I was going to have to get people without, um, you know, full-blown recruitment experience and take them on that journey. And we were fine with that. But again, that means you unfortunately probably have got a higher churn rate. If you're going to churn, you know, 30% of, of that, then you're going to hire 10 and lose 3, possibly 4. So it was sort of accounting for those types of things. That was the demand. Well, that was my thinking.

Yeah. So why don't you just very quickly, just like high level, explain what a talent partnership product looked like and felt like, just because I feel like this might be, you know, quite important when we're talking about the acquisition, because that might have made you actually stand out above, you know, the other recruitment owners that say, I want some investment on growing my business. I feel like you can tell us in a sec, but just describe to us what is a talent partnership model? What— how did that work and operate? What did that look like?

Well, it is ultimately as well why it became more attractive from an acquisition perspective, because ultimately we could plug in our offer into someone else's solution, which is what ended up happening with Rethink. So if you think about contingent recruitment, um, you know, I need to hire this, can you get it for me, fill that seat, um, that's like tried and tested, and that's where recruitment came from, right? And then you've got the full outsource model where, you know, you sign an RPO contract for 1, 2, 3, 4, 5 years, and you go down that route. We sat right in the middle of that. So not necessarily embedded, so we weren't embedded on client sites or what have you, but we would take, um, projects of like 5 hires and above where a client— you know, you've got to think about our target audience was two areas. It was either the creative space or it was scaling startups in the tech space. And you want to grow from— you want to add 5 to 15 hires, say, in the next 6 to 12, uh, 6 to 9 months in product, creative, tech. You don't want to build your own in-house talent team. You don't want a contingent recruiter because they don't understand you enough. They're not you know, immersed in your culture, then we had a financial offering around that where the, the partner would, would pay us a monthly fee and we would deliver outcomes against it, um, from that perspective. So we were— we weren't physically embedded, as in we didn't sit on their sites, but we were embedded in what they were trying to achieve, and we delivered our solutions as opposed to we will fill these roles for you. We were delivering outcomes for them from that side. So The thinking behind it was one, fast growth coming out of COVID huge demand for perm. And from a business ownership perspective, it was recurring perm model, perm revenue, recurring perm rev. Whereas the historic problems in the perm market are it's spiky. You have a brilliant month, then you've got to rebuild and you have a dreadful month. And what this allowed us to do was essentially we didn't do contracts, so it allowed us to have recurring perm, um, and, and grow in a slightly different way. And also, I just believe that there was a hole in the market between full outsource and contingent, and a lot of contingent recruiters weren't really looking for this because their desks were hot because of the Spanish, trying to deal with the job flow.

Yeah. So just quickly, if you don't mind, again, we're going to try and make this as tangible as possible for people. Let's just break down what a, like, minimum deal look like? So what was like the minimum? So let's say, you know, I was your target client and I fit the 5 over the next 6 months. I knew that I wanted to get 2 developers in that time, Simon. I wanted to— I needed a product person because of that, and I needed 2 creative, uh, talent. What, like, firstly, what, what in and around would be the minimum, you know, monthly recurring revenue that you'd end up agreeing with me? And then 2, what did those deliverables look like that were expected and you agreed to? Because I think that'd be helpful for people.

Well, I will answer that, but also we had a partnership approach to everything. So we would do a partnership for one hire, but that partnership was called the Key Hire Program, um, or the guaranteed, um, the 8-week guarantee. So we would— we had partners who came to us to say, we need to hire this one person, head of product, head of development, um, head of client services in the creative space, and we would partner with them on that. So we would guarantee to get that job to offer within 8 weeks. Loads of people would call that historically a retainer, but in a retainer you lose your— you pay your retainer, and if the agency doesn't fill it, you lose it or it gets spun onto something else. We had a partnership offering there for one role, which was you pay us half upfront. If we don't get it to offer by the end of the 8th week, then we give you that half back. Now we never had to do that, which meant that we could offer— for us, partnership wasn't based on a minimum number of roles or hires or what have you. The cheapest ever one we did, I don't mind sharing, was £4,500 a month.

Okay.

Um, and that was in the creative space, and that was with a client who had done 10 hires with us on a, um, on a 6-project and then a 4-project, and then they wanted to do something over a longer period of time, and we did a commercial deal that was £4,500 a month for them. That was our cheapest one that we ever did.

Um, What's the biggest one you ever did?

I was gonna say I won't share our biggest one, but it was good. It was a good deal.

Oh, it's over 10?

Oh yeah, yeah, yeah, yeah. So over 10, yeah. I think the benefit of, um, the biggest deal we ever did, the benefit with it was it was a 6-month deal. Yeah. Paying X amount a month, say 25 grand if you wanted to use that number, a month over a 6-month period. And the partner needed to hire a number of people during that time, and then halfway through that pro— that project, they didn't need to hire those people anymore because of a pivot in their business. But they still paid the rest of the partnership. So in the partnership model, if there's economies of scale for the hiring partner, they get all of— they get more than just— they get a help. We used to have a huge stack of data, insight, market intel. We would help them with their recruitment process. We would do lots of things for them. But if you needed to hire 10 people and then you got to 5 and you didn't need to hire the other 5, you still paid. So you still paid that monthly. So the reason that the big one was good was that, truth be told, their business pivoted halfway through and they didn't need to hire. So for 3 months they paid us that partnership model, which is like commercially superb. But the flip side of it is if they had gone the full duration, then we would have made less revenue per hire than a contingent recruiter.

And then just really quickly, typical deliverables, but besides having someone offer in 8 weeks, what were the typical deliverables that you would say? And for that, every week we're going to have a check-in call, you're going to get an insight into, you know, the amount of people that we've reached out to what are some of the, the typical, you know, deliverables that you would say we would also give you this?

Yeah, it's funny even being honest because you, you've got to think as well, this was the height of the market, so it was about outcomes in terms of— it was about that. So we had lots of metrics in there in terms of we will provide you with data, we will provide you with salary benchmarking, we will provide you with, um, you know, but really it was about deliverables. And also certainly in the scale-ups, because they were like, we, you know, it was about speed, they wanted people quickly.

Okay, cool, fair. Right, so really useful context then. So I guess from what it says online, you can obviously fill in the gaps here, from what it says online, obviously, uh, with the acquisition of, um, your business by Rethink, at that time the net fee income was £1.1 million. What was the EBIT?

We were half, so at that point we were running 50% drop-through rate. So the, the plan was to build, um, a million-pound NFI business in the second year, so we would generate a million pounds worth of NFI, bearing in mind we're perm, so I wasn't like turnover was irrelevant. Um, however, we, we fell short in that second year, which was a big sort of frustration. But the goal for the second year was to do a million quids worth of NFI, and for costs, or like nothing to ever get above 50%, was always the goal.

And then there's 7 people at the point of sale, you said? Yeah, yeah. Okay, cool. So that's the business they bought, I think. Why don't we— let's just break this down a bit. So in terms of, I think, what you obviously shared with me, um, on the prep to this, which I think would be an interesting place to start, was you said the conversations started around October.

Yeah.

The deal ended up actually happening, going through on January.

Yeah.

So, so these things can often take longer than people anticipate. Totally. But I think what you said, where I want to start, and obviously I'm not bothered about actual numbers, but I think what you said to me was you said an initial number. Yeah. They did their due diligence. They're like, yeah, nah, Simon, that's not happening. Um, and then you obviously got to play. So what— why didn't you— I think what would be good is what didn't stack up, or after due diligence, a good Simon, look, I don't think it's, you know, I don't think it's there because of this reason. What, what did you you know, put more value in.

Yeah.

But then when someone, you know, an actual acquirer looks at and go, yeah, Simon, that's not as valuable as you think— what were some of those things that maybe you misestimated? Let's start there.

Yeah, it was funny because we were talking about 20% investment and we, we sort of, you know, they were like, for 20% investment, and they were really happy to invest at that level, and that was going well. And then these were happening over lunches, and then in between one of the lunches we had a conversation was about, well, maybe we'd want to acquire all of it and we'd want you to come with it. And, you know, our business could, you know, one, we've got an outsourced business in Rethink, we've got agency businesses in Digital Gurus and Infinite Talent, but we've got this gap in the middle. And then also there's you yourself type thing. So would you be interested in all of it? And then I was also like, I'd started to think about it. So I was like, would you be interested in buying all of it? So they said, yeah. So we went back for a lunch and I'm sort of a no-bullshit, I'm going to tell you my numbers first and then I'll follow it all up in black and white. And the person I met with was like, yeah, great, love it, whatever. So we went through the numbers and it just all went too well. He was like, yeah, yeah, yeah, yeah, that sounds great. Yeah, yeah, love it. Yeah, yeah, yeah. And I was like, okay. Um, and I came out and I was like, shit, that went really well. Um, so I then followed that up in email. These are like, this is real now. This is real. This is what we went through. These are the numbers. Um, I'm not gonna lie, he replied to that email and was like, yeah, all looks good. What we're going to do is we're going to get the finance, uh, people to check it out, and we're going to do this, that, and the other. And one, at that point I hadn't even decided that I wanted to do a wholesale sell. However, I— the price that I'd put out there, the number he was happy with, yeah. Then I spoke to the finance guy, then we met for lunch, and he was like, dude, this is not happening. And I was like, what are you talking about? Um, and he was like, I get this partnership model and it's recurring rev and what have you, but it's a startup and it's perm. Um, and yeah, let's like have a reality check. And it just shows, I guess, the value of a really good numbers person in any business that, you know, I guess what was against me holding out to get what I wanted numbers-wise once I'd started to really commit to a deal was if I'd have probably been a year or two further down the line, I would have had a lot more traction to demonstrate, whereas the reality is at this point 18 months with a forward pipeline of about 3 months, we always had, you know, there's a lot of risk in there for a business. Don't get me wrong, I still think the brand is and was banging, so, you know, that was great. But there's only so much price you can put on what's, you know, goodwill and brand. So yeah, they started to pick at bits of the concepts behind my valuation, if you like.

What were some of the key bits? I think that because, yeah, I know what's useful for people is Like, there's one thing going, yeah, I'm gonna sell my recruitment business, and you thinking like what it's worth, why it's worth this. Like, like you just said, like you put it all down, you had that really positive meeting, and then you had a bit of a reality, reality check with someone that, you know, gets in the nitty-gritty. What were some of the— one of the two things that maybe in hindsight, like, you know what, maybe I did put too much value on that, or maybe I did over-egg that, or maybe, yeah, that shouldn't— fair, that shouldn't equate to X multiple. Like, what were some of those things that maybe you thought would— yeah, what, what did it— what were the— some of the one main one or two reality checks that you gave you?

Yeah, well, to be clear, I still think my price was right. Yeah, the biggest, um, probably one of the biggest mistakes I made and one of the biggest things— so I didn't take a salary for 2 years, so I hadn't factored— so when I looked at my profitability, which was— I didn't take a salary for 2 years because I didn't want to take a salary for 2 years. I didn't take a salary for 2 years because it was part of my plan to build the business. I was actually always going to take a salary on you know, month 1 of going into the third year. It was always planned that way. What I wanted to do was reinvest as much as humanly possible. And I'd made some— I'd made plans going into the startup that financially, financially would take care of me. So I didn't do that. I was just taking a dividend if and what— like, as in at the end of each year, being completely candid, my approach was like the day before Christmas Eve, I'm going to take out a dividend at that point. And that's me done for the first 2 years. I'd done all my planning around that. What that did is that inflates your EBITDA. Because fundamentally you haven't got your own cost in that. So the very first thing the CFO did was, right, your salary is this, applied it straight to that number, and that reduced the profitability of the business straight away. So I hadn't just plucked— sorry, yeah, what I'd done is I'd taken the EBITDA of the business and applied a multiple to it, which is the way that you should do a deal, and I looked at the last 12 months and I forecast the next 12 months, and I was taking a bit of a gamble because I took the average of that, whereas in reality you should probably take the backward-looking number. Um, and yes, from there—

that's a great learning.

But what I hadn't done was factored in my salary. Now, where I got— I would say where I got frustrated and where we disagreed is I still saw it as the true EBITDA of the business without my salary in because I'd made the decision not to take a salary. So it wasn't, well, we need to put this amount in for you because that— I hadn't needed or wanted to take that money for this.

That was intentional. It wasn't like you weren't taking it because like you wasn't able to.

No, the cash in the bank was never a problem. You know, we were, we were profitable in month 1. We started trading on the 1st of March. We made profit in month 1. In the first 9 months of the business, we only didn't make profit month by month once. So cash in the bank was never an issue. Cash in the bank to the scale of go and hire 10 people was an issue, which is why we were looking for investment. So I always felt that that was a bit of a bone of contention. However, I could understand the logic behind it. You are coming with the business. 'Cause I think again, when you go to do a deal, some people look to do a deal and exit. Some people look to do a deal and earn out. I was looking to do a deal and go with it because I was looking for the opportunity inside that business. Organization, which is why I got interested in it, because I was interested in rethinking the group and the brands within it. So because of that, they'd started to factor my cost in a little bit more. But to be honest, there was probably a learning that I— whether I took a salary or not, I should have factored a salary into my P&L going into year 2, because every time I sat with someone over finance, they were like, these numbers are brilliant. And then they were like, what are you getting from it? And then I couldn't show a salary, and they were like, that's not right, you know. So it caused me a problem.

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Yeah.

If I'm a recruitment owner and I mainly have a predominantly perm recruitment business, what do you think is a realistic multiple of my EBITDA to achieve?

Yeah, yeah, it's interesting. I was on— I was actually on a call yesterday, exactly, you know, 60%, um, contract v perm split business, um, been going for half a dozen years, looking at looking at an event and, you know, um, sat on the call with the finance guy and they're looking at a 3 multiplier, okay, um, off that side. I think it would— it's like a bit of a politician's answer that it will always depend on, you know, what's, you know, the business itself, the makeup. Are the other owners, are the founders, are they going with it? Are they doing an in and out? Who control, you know, in a contract-heavy business, how much contract have you got, um, with certain members of the team? So if you've got 10 people who build contract in your business but 40 or 50% of your revenue is sat with 3 members of that team, that's gonna— that's gonna bring the EBITDA— that's gonna bring the multiple down, um, you know, from that perspective. So it will always— it will always depend. I also think as well, any multiplier is important, but the business is also worth what someone's willing to pay for it. So it's like when you go to buy a house, the house might be valued at a certain amount. If you want to pay more or less, that's that, you know, beauty is in the eye of the holder, right? So Ultimately, you need to apply a multiple. If you're doing an MBO, so, you know, management team are buying it out, then you should really look at, you know, EBITDA performance for the last 12 months because that's the reality. If you're doing a trade sale, then you might look at forecasted EBITDA for the next, you know, 6 to 12 months because you're looking at the future value of the business from that side. You know, so there's loads of different things and there's much more qualified people than me out there. I, I find it interesting, I find it interesting that we don't— there's not more merger acquisition, MBO deal talk in our industry in general. And I also find it interesting that there aren't that many deals done every year because most agencies are owner-managed. And although some of them have the ambition to do an event, they're normally profitable businesses, so they end up holding them. And some hold them for too long.

Too long, yeah.

And from that side, so yeah, you know, depends on your business. I think with a straight perm business, your multiple will always be lower unless you're a Goliath and you've got some, um, you know, recurring perm rev in there.

Yeah. How did you structure the deal then?

So we, we did a deal that was based— so the other thing for me was I wanted, I wanted to go with the business first of all. So I wanted to go into Rethink, which meant that I also had to then negotiate on a job in the sense of, you know, what, where are the needs within your business? What, what is the future of Digital 51 within your, you know, group? At that point, the group had 3 businesses within it: Infinite Talent, Digital Gurus, Rethink itself. Where will Digital 51 sit within there? So there was sort of 3 parts to the deal, if I'm being honest. One was like, how, you know, how much you're going to pay for it and what's included in that price. So what was included was like the client relationships, the candidate database, um, the, the brand itself, all of the knowledge and everything that went with our product offering. And, you know, some of what I'd like— our secret sauce, as I like to think, behind the scenes. So that's like the first part. The second part is what's gonna, you know, what's gonna happen to the brand moving forwards. Is it going to get sunsetted? Um, is it going to remain as, as a legal entity? You know, who's going to own that legal entity? And then the last bit was what's happening with you, Simon, yourself in that perspective. The big things bizarrely for me were not the upfront price because it sort of, it is what it is. You know, we'd been round that roundabout, you know, the first roundabout had been really good for me. The second roundabout, I think it was still good, but it just wasn't as good as the first one. The second bit was for me was around the legal ownership of the business. And whilst I was super excited to be going into Rethink and I am excited to be inside it, I also, I didn't want to give up the legal ownership of Digital 51, and I wanted some caveats that if for whatever reason this didn't pan out of the journey that we wanted it to, that I could get that business back. What I wasn't looking to do was sell my business, have nothing to do with it ever again. So really important factor for me was I actually want to caveat milestones for the first 2 years, which is what we did, that if this doesn't work, and by work we, we, you know, define success, then you have the option— I can take it with me and I can leave. And that was really important for me. And then the last bit was, what's my job going to be?

Yeah, so why don't we— let's focus on that now then, what your job was going to be. Obviously you told me— well, obviously you told me when we're preparing for this, like, I was like, right, how— what does Simon actually do within this organization, within this group? And you broke it down like this. But why don't we talk a bit about what the, you know, overall strategy and plan was for Simon to impact the Refunk Group. But you said at the moment, if we were to split up in your weeks, like Monday, Tuesday, you're running a, you know, circa 50-person, um, recruitment business under Digital Gurus and Infinite brand. Wednesday, Thursday, you're involved in the marketing team, um, and, you know, the functions around the RPO model, right? Um, and then, um, and then you're also then, you know, now one of the 5 people that are leading a 200-plus people you know, recruitment, business and group. You're back in the boardroom having those conversations, and you are developing products and services, and, you know, now thinking, right, how can we continue, you know, rethink strategy? Who could we be interested in buying? What companies do we need to be aware of? Some mergers and acquisition strategies as well, right?

You just nailed it. If anyone in the business is listening to this and wants to know what, you know, what do you do every week, Simon? Well, Hishem Azzouz.

So was that the initial plan?

Uh, no, it wasn't. Absolutely not.

So talk to us about, yeah, what was like, you know, the second part of that deal. Yeah, right. Simon, join us. This is what we're thinking, which you obviously got excited about. These things happen. These— obviously you're, you're engaged and you're excited with what you're doing, but what, what was the initial plan?

So the initial plan was really the Infinite Talent brand, um, was, um, sort of— it's— it didn't really, you know, it didn't have a crossover with Digital 51 in that sense. They own their space, very different type of agency. However, Digital Gurus and Digital 51 don't just share a name, you know, lots of market synergies, product, creative, technology. You know, that is what DG was built on. You would definitely be fair to say, well, you've modeled large parts of Digital 51 on that. I have, because I love that business, that brand. The pink in Digital 51 comes from the pink in DG. It was a homage to that. So, but they are heavily a contingent agency. Then you've got Rethink, which is an outsourced provider, large-scale managed service on the contract side, large-scale RPO on the perm side, so like 5,000, 6,000 perm hires a year type scale. There was this really big gap in the middle between where one business ends and another one starts. And what fit nicely in there was, you know, Digital 51, this partnership offering, bridged the two worlds. So that, that was the original plan. Combined with that, you know, increase scale and sale and sales velocity within the Rethink Group themselves, you know, acquire more more logos, more brands, more RPO and managed service clients on the contract side. And that again was my history from 10+ years ago. So that was the original sort of thinking. Combined with that, I had, some would say, some success with marketing Digital 51 over the time. There was a head of marketing, or there's a head of marketing in Rethink, but he reported to the CEO. The CEO, by his own admission, if he's listening, is not a natural marketeer. So there was an opportunity for me to lead a marketing team on a scale that I'd just never done before. So really exciting from there. And what was the original pitch? The original pitch was our holes are here, this bridge between these two brilliant organizations, getting them to work together, and also offering our client base and new client base something in between, which was Digital 51. Combined with that, if you can grow our existing portfolio and, you know, harness the power of marketing, you know, we've got half a million eyes on those brands in terms of LinkedIn followers alone, but maximized ROI from that is minimal. So it's like a— it was a brilliant opportunity. So the sell was, yeah, sit nicely between there, drive, um, those partnership sales through Digital 51. So keep that entity. We do projects within the RPO business, but it didn't have an identity. So it was like, put that project RPO, which is sort of sub-12-month, uh, deals, put them into Digital 51, give it a brand, give it identity, bang, let's go. So that was the— that was the original—

that was the original plan. That made sense. So How did it go in reality then?

What?

Oh, so you said like what you find yourself doing now? Yeah, yeah. So now, how did it go?

Yeah, in reality, what, what happened is the, um, I guess, you know, a 250-person organization— being completely honest, I, I'd forgotten the inner workings of those bigger— well, I'd sort of just got out of the rhythm of those bigger organizations and been 7 years since I'd worked in a business that size. Lots of moving parts within there. And, you know, sort of end of March, start of April time, there was essentially the opportunity that we actually need— we've got a need for leadership across Digital Gurus and across Infinite. Um, very different needs. Um, one needs hands-on, hands-on leadership, and one just needs, you know, direction maybe. Well, just work. Did you got brilliant— a couple of brilliant directors at the top of it just to help them? Yeah, just to sort of, you know, keep them true and what have you from that side. But essentially, can you take a more hands-on role with the with the leadership of our agency business, which was like— I'm not gonna lie, it was a really exciting conversation, bearing in mind my history with DG in particular, um, my passion for that business and all that goes with it. But I was always nervous that it would come at a cost because they're consuming businesses, you know, 50-person agencies operating, operating right in the heart of, you know, the spaces that they operate in at the moment, where the market is in general. I guess the opportunity to lead them comes about because of a bit of a change. So I was super excited, but I was worried about the impact it would have on the original plan, if I'm being honest, in terms of this is going to make Digital 51 take a back seat. Redundant is a harsh word, my friend. Sorry, sorry. It's going to take a back seat. Sorry. I hope that stays in. How on earth do you market the brand as brilliant as Digital 51 is against the, the beast that is DG? You know, DG's a power brand in my opinion, you know, huge followers, really loyal client and candidate base. Um, yeah, so I was worried that it would get lost in that. And then combined with that, um, it would drive me more towards contingent recruitment, which is fine. And that is— if you cut me open, that's where my background was. But my belief system has moved more towards towards partnership and, um, you know, productization, different ways, productization, 100%. Yeah. And DG is, is brilliant, and I will always say it is. However, it hasn't productized, which is a mistake in my opinion. And therefore, again, opportunity. Well, what better business to productize than Digital Gurus? Like, what an amazing opportunity. However, that takes time because, are the team within that business used to selling in that way? Absolutely not. Are they up for it? Absolutely. But then you've got the skills gap to go on that journey and all that goes with it, which selfishly I thought that's going to take away my time from other things, integrating Digital 51 with— yeah, yeah. And that's been the cost, I would say.

How do you feel about the deal now?

Bang, you've just hit me there.

How do you feel about it?

Uh, good. I, I feel good. Um, I'd be lying if I didn't say that Digital 51 has got lost in the wash.

There's, you know, I appreciate being honest with that.

Yeah, every week someone will reach out to me and say we miss some of your content, we miss, you know, my feet. I— the best—

you did a great job of that.

Yeah, well, thank you. The, um, I'm gonna be snipping that, by the way. The best outreach I've had in the last couple of weeks is, why is my feed not full of purple, pink, and white anymore? And I'm like, that was on a Saturday morning. Yeah, that killed me big time. But I mean, what a moment, like, how good is that? So I would be lying if I said that Digital 51 hadn't kept its brand, um, our brand presence. It's not you know, from that perspective, I still believe it can. I still think that the basis of the original deal makes absolute sense.

I think this might not happen as soon as you may be anticipated.

Well, I think what we need to have a think about now, you know, possibly oversharing a little bit, is I think the plan was never to sunset Digital 51 because it was, it was good, it was a standalone offering or what have you. I think we need to have a think about the longer-term objectives because if Digital 50— uh, Digital Guru, sorry— if DG is going to seriously productize, could you incorporate—

yeah, yeah.

Should we incorporate in that way.

I appreciate you sharing that. I think, look, I think really like kudos to you because, look, I speak to so many different recruitment businesses. We're always talking to them about training, getting the most out of their people, and oftentimes recruitment owners are really good at getting in there in their own way and want to be the person that's still the top performer, bringing in the best clients, all that. And I think kudos to you in the sense of like you've definitely had to have a lot of humility here to be like, I'm, you know, I'm I put a number on my baby that I've been— that I've built. I've had to let people go that are part of the journey. You're now obviously being asked to go, Simon, like, we need you to be a bit selfless here. Like, we think you could have a great impact here. You're now maybe thinking about actually everything that I've worked towards with Digital 51 productization, do we actually now just bring that under there and roll that into DG? And I think, yeah, a lot of people, uh, wouldn't do that. Yeah, well, so I respect that.

Well, thank you. I should also—

but we're looking— I think what obviously what you're able to do is you are— take— you're being willing to zoom out. And you know, we're playing the long game here. And if you're zooming out, you know what, if I do this now and in 5 years' time this is what things look like, that fucking excites me and I'm happy to do that.

So yeah, definitely. And you know, being honest, I, I love Digital 51 and there's days I wake up and I miss it. I should be clear, I wasn't the top performer either, you know. You know, that was Adriano in that hat long, long before me. Um, so I, I do miss it in some respects. However, I am better in a bigger business than a smaller business. There's no denying. I've realized that myself. I feel more comfortable back in a bigger space, um, back in a bigger organization. Um, and you've got to— it depends where you are on your little journey, what you're trying to achieve, where you are, you know, where you are in your, like, life. I'm, you know, I started later. I, I arguably should have done it 10 years ago. If I'd have done it 10 years ago would I have gone down this route? No, maybe I wouldn't. Or maybe I would have stayed true to it for a little bit longer. But you look at the opportunity in front of you, and the opportunity in front of me with Rethink was they were at a really interesting point. You know, they did an MBO themselves 12 months before, really interesting journey for the next 2 or 3 years. Where do you want to put your chips?

Yeah, exactly. And I respect that.

It's not right or wrong.

I respect that. Yeah, I massively respect that. It's all right. Last, um, 10 minutes here then.

Yes.

Why don't we talk about— let's just get into the, the, the granular of maybe the lot. I don't know how recent it's been, the what you were just talking about, but I think obviously a lot of people listen to this, we're working, we'll work in an agency recruitment business or own one, probably do a lot of contingent, maybe they do some partnership retained or whatever. Curious, I was just getting your article up on around like why 2023 is a great year to be in, uh, recruitment. But I was just thinking, you're now going into this business, they said Simon, we need your help.

Yeah.

Yeah, we think you could be really well positioned here to help these brands. Let's just focus on DG because it sounds like that's one that's more hands-on.

Yeah.

What were the things, uh, that you wanted to get, you know, uh, abreast of as quickly as possible of that business so you could know where you need to be impacting, thinking about, you know, what was the dashboard that you put together? Like, right, I need to see what is our job-to-fill ratio, how many clients are we with, like, what was that initial dashboard where you know, you had to get a grasp to go, right, this is what we need to be focusing on, or this is where we're going to focus first. What did that initially look like? Because I think that'd be interesting.

Yeah, for me, it's like, I'm a big ratios fan in the sense of how do we make our money? Yeah, how do we deliver our NFI? How do we generate the revenue that we generate? What does that look like? How long, how, how long does it take us to get on new roles and new projects? And then when we get them on, how, how do we convert them and fill them? So for me, what I wanted to understand is you can see a number on a spreadsheet, right? You can see the P&L, last 12 months, this is what that looks like. It's gone up, it's gone down, it's whatever it might be. Like, for me, I'm straight on the floor. I'm like, I walk in a million miles an hour. I just took a picture on the, on the way around before, um, I met you, which is like bullet— go with the bulls in the china shop. And I'm like, I'm straight in bull in a china shop. So like, straight in, what is beneath this revenue? How many jobs and how long does it take to fill them? And what's the fill rate? And what's affecting the fill rate and how can we influence that. I sort of love and hate ABC jobs, uh, gold, silver, bronze, whatever you call it. I'm not fucking interested in B and C. I'm all in on A, and I sort of always have been. I don't understand why you'd want a C job. I don't understand what client is sat there thinking, I hope I'm a C job, you know. They're just not doing it. Tell them they're a C job and then try and convince them to become an A job, and if they don't, then don't work with type thing. So for me, I was looking at the mix between— when you've got a brand like DG, you know, they have people knocking on their door day in, day out. You know, we had 125 things come through the door last year of substantial value, um, that, that didn't even get fully delivered on because of the outbound work that was going with it. So that's like 125 opportunities of anything from 1 roll through to 10 rolls. That because of the mix in the history and what have you from there. So for me, it was stripping back what is underneath this NFI, you know, how, how do we make that money in the sense of, you know, how do we convert those deals and, and at what rate do we do them. And I think that's where our opportunity sits because, because of the way the market's been, being honest, we have got a mix of ABC jobs, and I don't think an agency like DG to be biased should have C jobs. So what's the best—

or like putting any effort into C jobs, you mean?

The thing is, you've just hit the nail on the head there, right? You're not going to put any effort into it, then, then don't have it on your board. Yeah, don't, don't devalue that organization by letting them think— do you know what I hate is this term is, if someone comes along, I'll send them over. Who's coming along?

What bus stop is that happening at?

If I'll tell you what, if this JavaScript developer walks past, I'm going to whiz him or her your way.

So you're saying when a client says that?

No, a consultant would say it to a client. Why I don't understand is why a client— Oh right, so— Why does a client—

Yeah, okay, someone sounds good. Like, if I find someone, yeah, I'll ping them over.

What I'm going to do is I'm not going to— Why does any organization hear the words, Hishem, I'm not going to actively work on that, but if someone comes across my desk, I'm going to whiz them your way? Fuck off. No, do not do that. And And to be— to the hiring organizations, no, don't accept that, because there will be other recruiters out there who will be like, yeah, I would love the challenge of going to fill that for you. It's why— it's why we created the 8-week guarantee, um, at Digital 51, is I really like that. We're gonna go and find it for you. Um, you know, we didn't have a massive database to sell against in terms of, you know, I hate that sell, we've got 200,000 people on our database. So how many are looking for work right now? How many are you speaking to every week? Everything we did was sort of headhunt, you know, tell us what you want and we'll go and find people who fit that bill for you. So under that lens, that's why I don't like ABC jobs from that side. So to, to get under the crux of the business, you need to take that NFI number and you need to split it down. How many placements does that represent, at what average placement fee, and what's the conversion rate? That's where I start.

So what, so what's, what's top of mind right now in, in order for you to positively influence Uh, two things we need to do.

We need to productize, definitely, um, because our offering is too broad and it is too contingent in my opinion. And then secondly, we need to use more modern tactics. You know, I famously said to you we built over a million pounds in Digital 51 without ever making a BD call. That's because we were using modern tactics in the background, really sophisticated outreach, content-led outreach, automation in that outreach. Tech and people combined, absolutely. Doesn't need to be one or the other. In fact, it shouldn't be one or the other, but if you put the two together, that is strong. And, you know, I've been in industry for long enough to say that historically we hated tech. We would always be like, the robots are never going to take our role or whatever, whereas right now the industry is so open to tech. But we don't want to go the other way. I think there's this balance. So within Digital Gurus, again the team are doing too much of the heavy lifting where tech could help them. That doesn't mean we need less people. What that means is we can generate more opportunity, more out of each person by using the tech. Yeah.

So productization and thinking about your overall business development strategy and what that needs to look like.

Yeah. And I think, I just think that just productizing in general, I was this morning before I came to meet you, I was on the RPO side of the business and we've got a really cool idea of product there. That we're going to test in the next 7 days about a different way of how you can buy that type of service, which historically has been known for a really long sales cycle and what have you. And we're going to flip it right on its head and make it like really easy to buy, really quick to buy, really easy to access.

Makes sense.

Um, just like free trials, free recruitment. I did not say that.

Um, have you read, um, you, do you read books?

Yes, I do read books. Thank you for that.

No, everyone's a reader.

Yeah, I'm, I'm a reader.

Have you come across Alex Hormozi yet?

I have not, no.

So you should read the book called $100 Million Offers, right? Okay, people listen to this, they should read that. The reason why I bring that up, it's really impacted my business, and I think the way that you're talking about there, it's actually a really missed opportunity. Like, don't fall into the trap of like, we've always done things this way. No, like how I love that 8-week guarantee, and that, that's something that you may have been, uh, like, if you were to read this book, that might have inspired something like that. Because like, there's so much power in a fucking great offer. Yeah, you just feel stupid to say no to.

Yeah.

And like, there's so much that you can experiment with, do. Like, what I love about that 8-week guarantee is like, you're saying, look, you're paying up front, but if we don't fill it, you get that money back.

100%.

Like, you're, you're committed, but at the same time, there's no risk. Yeah. And like, there's like, with that productization, it doesn't mean straight away you put it in the buckets of contingent, retained, or whatever. Like, you can you know, you can offer up your services however you want to.

Yeah, definitely.

And like, you can have a lot of fun with that. And it's— and if you center it around when we speak to clients, what are the main challenges and problems that, you know, they want us to help them with? What do we always find ourselves helping with? Is it, you know, growing their brand? Is it, you know, interview processes? Is it data analytics? Can we package that all up to say this is Digital Guru's X products, it's called this, this is what you get for it? That's that. Yeah, like, that's just such a missed opportunity for people.

I love it. I think it's such an exciting— that's why I put that post out. What I didn't say is the recruitment— the recruitment market is fucking brilliant right now. And I've had a few people reach out to me and say that I didn't say the recruitment market was brilliant right now. I mean, in my opinion, it is, depending on what you recruit for. What I said is a brilliant time to be in our industry, which it is, because innovation is something that the industry has historically struggled with. There are still consultants out there now building their desk off spec, right? Spec has been around before email. You know, people will tell you the stories about speccing via mail as in physically putting stuff in the post and sending it out to people. I, I don't know, that's good, right? That's okay. But do I believe that speccing is the right way to completely build out a desk? No, I don't. So I think you productize it in the things that you believe in. And we at Digital 51, for example, it was like a cult in some respects. We believed in what we were doing, and therefore if a client didn't want to work with us or a business didn't want to partner with us, we're like, great, you're not right for us anyway. And at the same time, we turn business away, we turn thousands £72,000 worth of business within the first 12 weeks of opening because it was— we had everyone on 14-day payment terms, privately owned, privately funded business, as in me. And I had a business saying we're on 60-day payment terms. I'm like, yeah, thanks for that. No, I'm all right, we'll just move on. And they were like, what? And they said to me, you're really going to walk away from £72,000 worth of potential?

Yes, he's not going to pay me because 60 days actually means fucking 120.

Yeah. And it's like, no, we're not going do that in a sense. It's not who we were. I mean, it did help that they weren't in core market for us, but all of— so it was about staying true to this is who we are, right? We do these things. And we had a couple of wobbles along the way where we would get, um, you know, we'd get things that come in. But once you're a partner— I had a client ring me, we didn't do finance at all. My first desk 17 years ago was Parkwell Finance, so I know it from 17 years ago. I had an agency, PR agency, London's hottest in my opinion, the FD rang me and she was like, I need a finance assistant. You just know us inside out. Is there any chance you know anyone? And I said to her, I know that job, so let me pop around, let's have coffee tomorrow, tell me what you want, I'll go and find it for you. Obviously didn't plas— I just knew how to find that person. I didn't plaster it all over LinkedIn. That's what we were doing. So yeah, we came out of lane a little bit, but only with partners. So we productized, we believed in what we were doing, and then we just banged that drum relentlessly. And if people didn't believe in it, we didn't work with them. And, you know, from that side— so now I think it's a really exciting time because you can productize in that way, and it's never been easier to market because of the tools that are available out there to do it. So if you're not in an environment where you can do that type of innovation, or the organization you work for isn't innovating in that way, then, you know, people will say to me, is perm gonna die? Is this the end of perm? Are we on the long run. Permanent recruitment's never gonna die as a concept because permanent work's never going to die, but it's definitely evolving. So therefore, if it is evolving, we need to think about how people buy that service and why are they buying that service, and then tailor your solution to that. Yeah, yeah.

And I think just to add my two pence on that, what I really like about that, when you actually have that approach, you saying that we really believed in it, when you actually take the time to equip your team with what your actual product and service is and why it is what it is, because our clients ask this and we help them with that, it actually gives everyone a lot more confidence. Yeah, I mean, into the product.

Yeah, I present it to the business. So we, like Adrian and I, we would hone and change our pitch all the time, and we would either pitch it to each other or pitch it to the business. You know, on day one I did a welcome meeting, I pitched the products, and I, and I built the presentation around, right, I'm going to pitch you what this is and why we do it now. Um, and the guy's like, love And then we did that continuously. One thing I wish we did more of— recruiting in product, they do a thing called a product teardown. So they, they take a product, they'll get the product owners, product managers, um, developers, designers, they'll get them around the table and they'll tear down the product in terms of, right, what are all the holes in it and what, you know, what, what could we do differently? I, we should have, we should have done that because there was a couple of points in the first year where we were cutting through, but we definitely could have cut through it better if we'd have looked at our own sort of blind spots. Yeah, there's a diff— there's sometimes there's a fine line, isn't there, between self-belief and that arrogance in terms of there are other ways you can do things. I think we'd have— if we'd have had a bit more of a teardown mentality, um, or we'd have brought some other people in and said, right, we're going to pitch you, you know, give you feedback. Yeah, give us your feedback for it. I'll never forget the first time I pitched sorry, the first time I pitched to a client, Aidy was sat in the back of the room. The client clearly was not having it. They were like, no, it's not ours, and they weren't buying it. And I started to chase the sell, you know, just because you believe in it doesn't mean you don't want it. And also, you know, I wanted the revenue, there's no denying it. And I put the phone down and she was like, they're not fucking buying that. And I was like, no. And she was like, why did you chase it in that way? Um, you know, and what happened is the client raised something that I hadn't thought of.

There we go.

So we never pitched it in that way ever again. I went home that night, rebuilt the pack, redid it, and we never, we never pitched it in that way again. But that was like the one that got away. I think if we'd have done a bit more A/B— we A/B tested definitely in the second, uh, second year. We didn't A/B test at the start. At the start, it was all— we did everything live. Yeah.

Simon, been a pleasure.

Thank you. Thank you, mate. Take care.

Thank you so much for listening to the episode. I hope you enjoyed it and got value from the conversation. If you did enjoy it, please don't forget to like, share, and subscribe, and we'll see you in the next episode.