From Running a Traditional Marketing Agency to a Partnered Service Offering

Today, Sam is going to break down a bunch of cool things. This guy has incredible energy. He's a great builder and a great operator. So right before we hit record, Sam was kind of telling me about how he went from doing a traditional agency. He's now running kind of more of a partnered service where he actually has skin in the game. Sam, let's get the listeners up. What are you doing? What are you working on? Yeah, dude. So it's as I was saying right before, we're in we're in kind of a transition. We went from we went from agency early. You know, I ran an agency since I was 15. I've been in the game like 10 years now. And we got to a point in early 2021 where we realized that there were a lot of talented founders and cool products that were being built that weren't able to, you know, actually pay the retainers that we were charging to do all of this growth work. And so I started just saying, hey, I'll partner with you on these things. Right. We apply the growth infrastructure. Some of our team, CLO, CFO, the whole bit to your business. And in exchange, we get equity instead of charging a retainer price, which in theory executes a lot better than in practice, which has been a hard a hard lesson learned for sure in the last year. I like I said before, like we grew ridiculously quickly. We brought on a lot of companies last year. I'll take responsibility for that. I like got too aggressive too quickly. Like then I had to try to like build the infrastructure. It's like it's like building the bridge as you're crossing it, which is like, you know, in most situations, the definition of entrepreneurship. But when you're building 18 bridges at the same time, trying to leverage one team, it gets it gets challenging. And so now with proven and grow faster, we stop taking agency clients because we're doing so much work. And that was not ideal either. It's like I miss having clients. I know that we can do stuff and create cash flow and perform well for them. And so now they're kind of separating back out. Right. It was like agency turned into private equity firm. And now they're separating into really an agency and a separate private equity firm with a little bit of a different approach to it where we're going to be we're more. We're more operational like owners or or advisors. We either own 75 percent of a business or more or the weight of execution operations, team management. Everything is on our shoulders. Or we own less than 25 percent of a business where we're much more advisory, right? Network like distribution partners versus kind of what ends up happening. And it happened to, you know, a handful of our companies last year was like we would come in and we'd own 33 percent or 50 percent or whatever. And it ended up not making sense from an emotional standpoint of like the founder that we would partner with would be like, yeah, but you own 50 percent. So their expectation was higher and we were unable to deliver on that. Or it went the other way, where we ended up carrying more of the operational weight than we were being financially rewarded for. Right. And so it created, I say, a misalignment of expectations, which, again, I take responsibility for. Right. Like I didn't know any better. I'm still the weird kid that just likes to make money on the Internet. And I'm homies were like, if you were like, yeah, we should partner on something. Me as Sam would go back. Let's do it 50 50. Right. And like that's how I think a lot of younger entrepreneurs kind of handle it. Like they find somebody doing something similar. They see an opportunity. They partner up, which worked, you know, earlier in my career. But now it's like that doesn't work for the ecosystem. Like we either need to own the business, give equity to an operator that we bring in as as more of an employee than a partner, and they earn their way into being a partner. Or we attach ourselves to somebody else's business and allow for them to retain the majority of equity and have them know that it is 100 percent still their business. They are the operator. They have to handle the majority of the execution. And so that's been kind of the transition that we've been going to now. And reintroducing the agency is a huge emotional piece because I was trying to make a deal happen out of every conversation. Right. Where like I went to the other side of the spectrum before I was trying to close everybody on agency work. Right. Whether or not it was good for their business. Then I was trying to close everybody on joining the portfolio, whether or not it was good for their business. And we took on deals that we came in as equity partners when really they should have just paid the retainer. Like it would have made more sense for everybody involved just to jump in and actually just pay a retainer to get executable tasks done or consulting advisory. Right. And so that's kind of the goal for this year is to like create separate identities for those two operating bodies that I run and allow for both to be optimized for growth separately versus trying to kind of bring them all together. I know that was a lot, but yeah, no, this is this is super interesting. I really appreciate you kind of pulling that back. I've got a lot to unpack here. The first one kind of where my mind goes is cash flow. Right. So in a lot of businesses, I'll speak to an agency business. There's essentially three ways that you make money. One is through, you know, project based or recurring revenue. Right. So retainer or project fee to is as the business does. Well, as an owner of it. Right. You pay yourself, let's say, like a distribution monthly, quarterly, semi-annually, and then three. The other way that you make money is if you have some kind of liquidation that you sell for you. Right. That was it went from the agency model where you had cash flow to now a model in which you're basically solely taking equity. How did you like keep the lights on? How did you employ 18 people where those people are paying you out cash in terms of distributions on an ongoing basis? How did you fund it? Yeah. So essentially, the nice piece is that the core team for, you know, what we were doing was relatively lean. Right. Like, I don't need a big paycheck every month. And so, like, we were able to minimize what Proven's actual expense structure was in and of itself. And part of what we ended up doing was decentralizing some of the agency services that we had into. I call them micro agencies. Right. We're like Jetpack, which was like the the kind of overarching brand, which was like a growth agency. Did lead gen Facebook ads, website design. Right. Like all of these different things in one house. And by decentralizing all of that out, it made it more affordable for our portfolio to be able to come in and use those. And essentially, we cash flowed micro agencies instead of this mother agency to create sustainability, where if we had a Facebook ads guy that we wanted to help all of our companies, we would wrap him in our own agency, allow for external clients to come in and pay him to essentially create a breakeven situation where we don't have to come out of pocket for those services for our own portfolio. Right. It's creating a little bit of a web where we could create leverage points because we could get at cost services by supplementing that revenue with external clients on a micro basis. Love it. Super interesting. Yeah. So, OK, that's like some of the cash piece in terms of the fit. Right. So you were very transparent. You said, hey, on the agency side, we took clients that weren't the right fit. On the other side, the PE side, we took clients that aren't the right fit. Now that you know what the right fit isn't, what is the right fit for you in terms of both side or either side? Like, how do you figure out brand coming in? So let's say I'm Chase Diamond brand coming in. What sector do I need to be in? Can I be an e-commerce brand? Do I have to be a SAS brand? So we're kind of all over. It comes back to like who I am as as a person. Right. I'm the weird kid that likes to make money on the Internet. Right. Whether that's e-com, SAS, agency, productized service, digital product. Right. Like, I'm comfortable with that suite. And part of this identity evolution we've been going through with Proven is a lot of people when they look at a I think people would look at us kind of more as a venture studio. Right. Where we primarily now build and partner on more advisory basis. I think a lot of people when they see a product studio, they want it to be formalized in such a way that it's like, oh, we only do e-com. Right. Oh, we only do B2B SAS. Oh, we only do. Right. And they try to and for most of them, it makes sense because they want to centralize their monthly burn into a specific team skill set spend to achieve one level. And what I'm trying to do is say, F that. Right. I like the flexibility model. I like finding people that are one. I'll use the word culturally, but like are a good fit as human beings. Right. Like, I'm not I'm not a good fit on a partnership level for someone that's gunning for a billion dollar exit. Right. It's not how my brain works. It's not it's not my thing. I'm not a venture backed guy. It's not how I operate. Those people that are venture backed are the clients that we have. Right. Because we have the growth leverage to help them scale. But it's not a partnership opportunity where that makes sense for us to come in for, you know, if they've raised one and a half million at a 15 million dollar bow. Like, I'm not going to come in for point two percent. Right. Like, it makes more sense for that business to be able to contract us and our team to be able to execute services for that piece of it. A lot of it is is it's case by case. I I've struggled even on like the proven website to say this is what what is a good fit for us. Right. It's like very situational and we're kind of leaning away from on the proven side. The partnership piece of it as much unless there's like just glaring synergies that like makes sense. A lot of it is is building our own stuff. We just see more leverage there and have full control over operations, which helps me sleep at night knowing that I'm not having to answer 18 partners that are in these other companies that I own not enough in to be worth that call. Yeah, it makes sense. And OK, so kind of like to round this part out. And I want to talk about something soon, and I don't mean overindexed in a bad way, but so you kind of overindexed initially on the agency and then you kind of shifted gears all the way and overindexed on the P side. And now you're kind of like having this really nice split viewer. You now have the ability to take someone that could be a great fit for the agency, but not for the other and move them to the agency and something that can be great for the P side, but not the agency and move them here. So it kind of is like now, like you have two different places that you can send someone and then just kind of get to know them and seeing maybe that maybe the third option is they're not a fit at all. And that's an option that comes down the pipe. I know that that's cool. I like that. I think that's going to be better for you and better for clients and therefore better for everyone. The next piece I want to kind of talk about is like when you think about like your personal brand, how important is that to, you know, clients that want to work within the agency versus clients that want to work with you as like a partner? And how often are you using your own channels to actually distribute kind of marketing? So, for example, if you're selling something like the SAS business, like are you, Sam, an influencer then for that business? Like you talking to like a personal brand and how that plays in? Yeah, the personal branding side of it is is interesting for me. I I started on Instagram back in the day, which a lot of people on Twitter like don't realize. Right. I have one hundred thirty thousand followers on Instagram. Right. And that was like I started in that world. Right. Digital products, coaching agency, kind of like supporting those types of businesses. And I think back then the mistake that I made was leaning so aggressively into my personal brand. And what I started to notice was that from a from a marketing distribution standpoint, it would create a lot of false positives. Right. Because like you could launch something to your audience and I can almost guarantee that because it's you, you can get customers not because the business. Right. Like not because the offer is good, not because the value, the service, like what you're actually providing is good. They sign up because it's the thing. It's their way of supporting you. Right. For the content that you create. And so I deleted Instagram from my phone, like just haven't touched it in a year and a half and started focusing on businesses that I could validate external of any owned distribution channel. And what ended up happening is I started creating healthier revenue for the companies. Right. I was faster to true product market fit. Right. I was forced to run Facebook ads and validate our offers. I was right. Like it made me run a business that was sustainable without me faster. Right. And so from a distribution standpoint, I like you kind of said it when you got on the phone, you were like, so what are you doing? Right. Exactly. Like, that's the point. Like none of the businesses that I am hyperactive in growing are at all reliant on my personal brand or personal distribution. Right. Does it help? Yes. Right. But a lot of people will use that to create a spike in growth, but it just ends up coming back down the other side. It feels really good. Right. For like the month after launch, you're like, dude, the product hunt is going well. Like we got some early traction, some early users, but it doesn't necessarily create any sort of, you know, hockey sticks, sustainable growth that allows for us to lever in. And so I think that's a big, I don't want to say mistake, but I think that's a big mistake that some people create is I love building public. I think that that's a great movement. I get nervous that people rely too much on a movement like that to create sustainability in their company. Unless the product is hyper specific to really like the indie hacker market or like wherever you are, like it's gotta be so good. And at some point you have to switch, like you can't rely on building public for acquisition, right. Or Twitter personal brand for acquisition for ever. And so for me, I just say, if we're going to have to make that switch at some point, might as well start there. Like we might as well just do it because like you're going to have to run ads. You're going to have to send a cold email anyways. Like you're only, you're going to hit a wall. And so we would, when I was doing it on Instagram, it was like, Oh, it's a no brainer to get something to 10 K right. I just posted on Instagram, but 10 K and then like the next day comes and there's no sales. Right. And then we go, Oh wait, the business can only grow as quickly as Sam's personal brand. I don't like that. I don't like that model. And so from distribution, we've kind of, you see it sometimes, right? Like there are companies that I promote again, like not like, Hey, sign up for this because it's my thing. Right. But like cart fuel, right. Cart fuel is a great example. Like I throw it into some tweets and I try to invest in companies that I think are genuinely valuable for people. And so I use that throughout my content, right? Quick lines, another one, right? Like I don't make it my brand to promote that product, but I kind of use it naturally in my content style. Anyways, from a deal flow perspective, I mean, Twitter has been a godsend. Um, that's kind of been the primary purpose of it is like getting people in the DMs, getting on the phone with people like yourself and, and trusting that if I meet somebody good and we share one, like emotional life views, right? Like world views, as well as have some level of synergies above work. But like, there's a parallel between our audiences, what our teams are capable of, whatever, being able to build and create opportunity that way. But I think what ended up happening in the next couple of months is as the, the agency and the micro PE firm separate, you'll start to more clearly see the distinction in my personal content to direct towards both of those. Right now, it's just been like get Sam on the phone and let him do his thing. Like, I don't know, just happens. Yeah, dude, you, you just dropped so much nuggets and gold that I kind of want to recap that. So I'm going to start from the most recent thing you said. And I think that was a really good point. I'm glad you touched on that, that your personal brand is kind of the pipeline and the funnel to where people work with you on the agency side and where they work with you on the PE side. But there it kind of stops. Although, you know, there's, there are some crossover, like the main part of your personal brand is to bring people into the, the environment, bring people into the infrastructure, whether that be companies to work with, whether that be companies potentially to acquire in the future, whether that'd be talent, right? To work with you. Right. Got to imagine there's probably a lot of DMS you get from some young guys and young girls that are hustlers that are hard, hardworking that are more entrepreneurial than they are entrepreneurial. So I think that's, I think that's one. I think you did a really good job of explaining that too. Cause I think, um, I guess I'm gonna break this into two different buckets when I think about me and I'm building an email design software tool because I'm only building one SAS business and I'm not going to go work with five, 10, 15, 20. I think I can piggyback on my own audience in the beginning. Right. And obviously putting things in viral loops where I'm going to have the ability for teams to collaborate. Right. So now it's like one person on one agency might not bring three or five people, right. And now as a work with agency that work with clients, right. I'm going to expand that way. I think I have enough reach to kind of get that critical mass to expand that way. But I think I would do it very differently. And to your point, I was about to work with five, 10 or 15 different companies. There's no way that I could ever put out enough content or give enough love to all 15 of those companies that they would all grow at the rate that they need to grow up. Right. I would almost become in essence of bottleneck, right? If we can only grow when Chase posts and Chase doesn't post because he has to post to all these other things, we're not growing and therefore we're, we're dead. Right. So I think the way that you illustrated that is super, super important. It's like, we are going to need something that carries us from zero to one and we're going to need something different that carries us from one to two. Right. And that's ads, that's SEO, that's influencers, that's affiliates, that's all these different types of things. It's going on podcasts, speaking at events. Right. So I think you just did a really great job. And I wanted to make sure I recap that we've got maybe a handful of minutes left. Is there anything that like is interesting or top of mind for you that you've been doing a lot of research on anything that's related to business, to health, to wealth, to personal, just one thing that you've kind of been going down a rabbit hole on. Yeah. I mean the, the one, the one conversation that I've been having so frequently with people that are, I'll say new to entrepreneurship, right. Is the, the value of, of runway, right. I would absolutely have zero chance of doing anything that I'm doing right now. If I didn't have 12 months where like if I didn't make another dollar for the next 12 months, I'd be okay. Yeah. Right. And I think a lot of people, I think a lot of people gun for the big thing right away. Like I think they go for the big idea. I think that they, they see, you know, the VC billion dollar exit, right. They like, they see the smoke and mirrors of what entrepreneurship is, right. Like watching movies, like the social network. Right. Like, and I just, I think that people underestimate the value of making $8,000 a month, $8,000 a month in cashflow. Right. Which can be done very simply. Right. You don't have to build a SAS product. You don't have to run an e-comm brand. Right. Like that's four landing pages a month for two grand. Right. Like there's this, this space that I think people should pay attention to of like the micro agency. Right. And, and almost, it's almost freelancing. Right. Like I think people should be freelancing before they go launch an agency because you can just create enough sustainable cashflow for yourself. Right. And if you can stay at, I mean, in some cities, six grand a month, four grand a month, right. Like, and all that does is it buys you time. And as long as that four, six, eight, 10 grand a month isn't eating 18 hours of your day, you have leverage, right. You have space time energy that allows you to go after something a little bit bigger. And I think people just try to go after that bigger piece too fast. I think too many people quit their jobs too early. Right. Like instead of quitting your job, figure out how to optimize your time in your job. Right. I bet you you could save two hours a day. Right. Like we're all working remote anyways, get all your work done in four hours. Right. Like there's ways to optimize those pieces that I think is kind of brushed over because of the excitement of quitting your job and the freedom and the flexibility. And I think people run away from stability and I just, I wish, I wish people would like hold on to a little bit of stability first and understand the value of it because the freedom and flexibility is a lot harder than people think. And so runways is absolutely crucial. Like get to eight K a month and you dropped so many dimes on the podcast and I was trying to think about like what was going to stick and what was going to be it. That is the perfect way to wrap. That was such a great ending. You were the man. Thank you so much for the time, the wisdom. Where can people find you online? Is it Twitter? What's the best? Twitter is perfect. I'm Sam Thompson. I really appreciate you. Yeah. I'll link it. Cheers.