– It's like Accenture, they
do a ton of advertising. Do you really think
they're generating majority Of their revenue from
having their logo placid On the FedEx Cup golf tournament? No. – No, definitely not. (upbeat music) So we, we got to go
through the parts here. So 2001 to now, obviously
a lot has happened As far as you being an
entrepreneur in business. So what are some of the cliff notes here, Some of the parts of that
journey that are most important? (bell chimes) – I learned a few big valuable lessons. One, don't try to take shortcuts. I used to try to use
like black hat techniques And try to get rankings really fast And just climb my way to the top. Not the best approach. Not smart. Eventually you get whacked And you should take
the long-term approach. 'Cause if I took the long-term
approach from day one, I would've had a much bigger business. The second thing I learned is, And this one, It took me a long time to learn. Brands are super important. If you look at the most
popular search queries On Google, majority of them are brands. Great product, great service, does amazing To your marketing And you can't take it for granted. The third thing that I really learned
And this one was the
toughest one that took me Time to really focus
and practice was focus. You do too many things too soon, Nothing's really going
to end up happening. – Okay. what was the, oh, go ahead. Go ahead. – And once I started focusing
on my business career, My marketing career,
focusing on what matters, Not chasing the newest
thing, things started to grow And become much better for me. – Right. So What was the first brand
that really took off for you? – Crazyegg and, Well probably not first real brand. Our first company that really took Off was an ad agency called ACS Back in the day, we no longer own it. That started taking off and that did well And we got that business To a few million in
revenue really quickly. Didn't know how to scale To 10, 20 million or anything like that. The next business that did decently well For us was a brand called Crazyegg. We still have it today. And over time, just being in a market For 10, 12, 13, 14, 15 years,
your brand really builds up. People keep using your product
and service, it adds up. The next one that did all
right was Kissmetrics. That one failed due to FTC investigations, Class action lawsuit over data privacy. We didn't really do
anything, not even really, We did not do anything On data a privacy or
Sell data or anything like that. But we used this cookie
approach that helped Reduce our server expenses about 30%. And people frowned upon it. And once we found out That you're not supposed
to end up into doing it, We stopped. But what we had the class action mainly For wasn't just a cookie But they said if we
had Macy's as a client, Hypothetically we're selling
the data to Nordstrom's. And with the FTC investigation, The government found that we
weren't doing anything wrong. So we passed with flying colours. And then I learned if you're in a lawsuit, Whether you're doing
something right or wrong, You still got to pay "legal fees". The government's actually
easier to deal with. And believe it or not,
it was actually cheaper To settle than it was
to spend the legal fees. And they knew that, 'cuz we had insurance. – Interesting. – I remember the lawyers
calling us like, "Look You spend some money
or your insurance will Spend the rest, settle. It'll be cheaper and easier." And I was like, "Why would I settle? I'm actually right." And then I quickly realized You want to spend a half a million dollars To a million dollars battling it out Or 50 grand of your own money And 500 grand of the
insurance company's money.
Like, huh, basic math, right? You spend the 50 grand and settle. At least 50 grand for
that came from our pocket. And then the latest brand is, And this is my full focus It's an Ad Agency called NPDigital. We're 700 to 800 employees. Were global And the business is going well, As good as it could be In this market when people
like cutting marketing budgets. – Yeah. Yeah, we can
definitely get into that. Yeah. So the first ad agency
you had, how similar is it To what you're doing at
Neil Patel Digital today? – Very similar. We're just doing it better and at scale. – Okay. – It was small, right. Few million in revenue versus
a nine figure revenue company. There is a big difference. – Okay. Yeah. So this goes down to focus. So I'm assuming your focus right now is Is on NP Digital and You probably don't have
a lot of other selling, You're not selling courses,
you're not doing masterminds, You're just purely focused
in on this right now. – It's like focused on selling courses Or just sell one contract
for 5 million bucks a year Or six or $10 million a year. Right? I'll take the bigger contract. – Yeah. Well let's talk logistically About how you would execute
that big of a contract. What size team is required?
What systems are required
to be able to do that? I mean, that's a pretty big undertaking. – It's just skill. Typically bigger contracts
just usually mean Either more divisions of a corporation Or more regions of a corporation. So, Think of what you would
do on a smaller contract For a hundred grand, 200
grand, 500 grand a year. And You don't have to add tons
of more account managers But you're going to have
to add more SEO people, More paper click people,
more marketing people, More conversion optimization, Whatever you're selling them on. Typically, it's, when you're
getting the bigger contracts, You're selling them a little bit Of everything or quite
a bit of everything. And your goal is to just deliver on it. (bell chimes) But the bigger part is not actually How to scale up to that From a operational standpoint. It's just more people. The harder part is how do you get them? And typically a lot of those kind Of contracts are built from
reputation and relationships. So if you look at a lot
of our executive team, They were C levels or presidents Or executives at larger
corporations in our space. So we hire a lot of people Who are executives from Dentsu, WPP, Omnicom, right?
We're taking people from
the holding companies Because not only do they
have the experience managing, Dealing with those clients, Scaling out the businesses
on a global scale, They also have the relationships Which helps you get more RFPs in business. – Mm-hmm, interesting. Yeah. So, you're not
going to be able to get These types of big fish By just getting some
little lead generation side Or some some traditional inbound technique That we would use would not work. – All right. So check this out. I haven't checked my analytics in months. All right. Seriously, for neilpatel.com. I get millions of visitors, Whether it's three,
four, five, six, seven. For enterprise contracts, Can you guess how many of
them come from the website? Take a guess
– I would guess Virtually none. – Close. A little bit more Than 77% come from referrals, RFPs or employees. – Yeah. – And it's going down
– It's what I would expect. – every year, right? So that 77 will probably
eventually become 90 Something percent. – Yeah. Yeah. 'Cause I'm assuming
the journey for them to Eventually become that
type of lead is very long Because they probably maybe
watch something from you
Then they talk to someone who knows you And it's this big long
business development Process that takes, it's
a very long journey. – Yeah. But even if
it's not a long journey, People don't sign the
large contracts usually Without going through RFP
processes or procurements. There's systems and procedures in places For a company to sign big contracts. A hundred grand contract, no problem. You can generate a ton
of them from inbound. You want five, 10, 20 million contracts, It's much, much harder to generate them From inbound marketing
or even paid advertising. It's like Accenture, they
do a ton of advertising. Do you really think
they're generating majority Of their revenue from
having their logo placid On the FedEx Cup golf tournament? No. – No. Definitely not. So let's just take an
example client of that size, What is the sales cycle? How long does that sales cycle
look from beginning to end? – Quick end, if you're lucky. Three months. (person sneezes) Bless you. (person sneezes) Bless you. A long end, six months to a year. – Yeah, that's what I figured. Yeah. – Three Months would be really short. Realistically, most of them
are six months to a year. – Yeah. And so Let's go on the low end of three months. How many touchpoints are we talking to get
To a closed deal? – I don't know. And here's why I say don't know. It's not that I'm not
involved in the process, It's because there's so many
people involved in the process. You're pulling people from
different departments to help you With pitches and phone
calls and follow ups. And then you're dealing With not just one or two
people on the other end. And you may be dealing with, Six, seven, 10 people in marketing And then they bring in people From different countries or regions Or different divisions. Then they bring in procurement. So there's a lot of different people That you're talking to And a lot of different touchpoints. And sometimes actually
not sometimes, a lot Of times not everyone is on
the call at the same time. – Mm-Hmm. Interesting. So I would assume, therefore – You're not talking about like five Or 10 touchpoints, right? It's substantially more. – Yeah. Yeah. It's a of moving process. – You're putting in a lot
of money to try to close A deal too. It's not like, oh you put
in $5,000 worth of hours To close a deal. Some of these deals you're putting In a hundred plus, two,
$300,000 worth of hours To try to close a deal.
Some of the really big ones. – Yeah. And I'm assuming
just to be able to even Develop the type of proposal That you would need to
even win a deal like that, It's going to be some
sort of custom build, It's going to be pretty intense. – Everything is. – Yeah. – It is, analyzing a lot of numbers And data and data rooms
and all that kind of stuff. And you may not be paying
money to try to close And win those deals, but you're paying For a lot of people's time And they're spending that
time on closing a deal. So if you don't close it, They just spend all these hours On something that produced no revenue. That's how you get to
the expensive number. – So, is your sales division separate From your account managers or
are those blended together? – Separate. _ Okay. We keep it all separate But account managers also
have a book of business And they got to upsell. – Okay. – Sales folks on new business
account managers focus On existing business. Sales sometimes gets involved In existing business, but rarely. And funny enough, A lot of our sales reps were
previous account managers. So they're experts themselves when It comes to
Whatever they're selling. So, let's say we're
selling, I'm making this up, Ford on a whole digital
performance marketing suite, SEO paperclick, social
media organic and paid, Emo marketing, conversion rate, Optimization data analytics. The list goes on and on, right? Our sales guys aren't a salesperson, They're more so industry experts That we have them handle sales. They started their career
doing the actual work, Maybe then eventually going
into account management And then we try to bring
them over into sales. – Interesting. So 'cuz
it's probably better For them to have the nuanced understanding Of these technical skills, Which then makes it easier For them to be able to
actually hold their way If a client has technical questions. – Yep. – Yeah. Okay. Now let me ask you Because you probably have a
lot of experience with this. So, I learned a while ago That there's a big difference Between people that have hard skills And people who have soft skills. And something I learned when working With clients was It's not a great idea to use someone As operating from the soft
skills and the hard skills And having one person try
to do both of those things. So like for example, Having an SEO also be an account manager.
I realized that that kind
of needed to be divided out. So can you explain why that is And why you need to
have that separated out? – Sure. So SEO may be attention to detail, Really good at optimizing code But they may struggle
with client communication, Reporting, building up rapport. While account manager may not be In the weeds as much,
but they may be amazing At maintaining their relationship, Creating reporting,
communicating with them, Figuring out overall strategy beyond Just SEO and where the
business needs to go. And understanding business sense, Versus just "SEO or marketing". And understanding the roadmap That that company needs to take In order to achieve their goals. Right? So you need different
people in different roles Because without that, You're not going to give a
customer what they really want. It's hard to do that
with smaller accounts. Like someone paying you
three grand a month, It's much easier when someone's paying you A million dollars a year Or 5 million or whatever the number is. – Right? Yeah. So do you think that account managers Like the skills, the soft
skills that are required To be a good account manager. Do you think that that can be trained Or you think that's pretty
inherent in certain people? – It can potentially be trained, That I don't know if it can or can't.
We found that when we hire Most of them are naturally that way And it's their personality type. – Yeah. Yeah. That's, definitely seen the same thing. Okay. let's kind of shift gears. So I want to talk more about your, Let's call your marketing strategy That you use personally. And I know most of your business does come From more traditional means, Like we discussed But you do produce a lot of content, So we need to talk about that right? So, let's talk about, I want to know What systems do you have in place To produce that level of content On a quantity and even a quality basis? Obviously you must have
really good infrastructure To be able to do that. – Not as much as you think. So, there's Pascal. Pascali who films my content For my long form. There's AJ who films my short form. They're Saulo and some of the team help Come up with ideas And that's really it. We have Saulo manages
a contractor who comes Out with my YouTube outlines. My YouTube outlines are: title of idea. He'll type out an intro And he'll create like six points
With some stats and that's it. I got to literally Freestyle it and pretty
much create a video. Same with my social media content. They just tell me a topic and I just riff. – Hmm. – And then the team
worries about posting it, Optimizing it, all that kind of stuff. As for SEO, I mean blog content, text based content. I write a post roughly once a week, Post it on a Tuesday. I have a team that goes And updates all my old content. We spend way more time
updating old content Than writing new content. – Right. Okay. Yeah, that's interesting. So you're pretty much Hyper focused on just the
actual creation then you're Handing it off to your team To tackle all that? – Exactly. – Yeah. Okay. Good to know. All right, now let's talk about
a couple quick things here. Which obviously in the SEO industry People are going to know about
this a lot more than others, But So you acquired themsuggest And then you recently
acquired AnswerThePublic. Okay, so let's start with themsuggest How much has that benefited the brand? How has that side
Of the business doing
on the software side? – So it's hard to put it one to one, But roughly 40% of our agency customers Use themsuggest. So did they find us and
then use themsuggest Or did they use themsuggest
and then they find us? It's probably a mixture of both, But it's actually drove quite A bit of revenue from that aspect. – Was that the intentional? Go ahead. – It wasn't intentional at the beginning But that's why we bought Answer the Public To replicate the same thing. – Okay. – Has it happened yet
with Answer the Public? No. Will we hope it happens
within the next year or two. Yes. Is it guaranteed? No. So it's a $8.6 million bet. – It's a pretty big bet. (laughs) – Time will tell. – Yeah, yeah. That's interesting. 'Cause it's probably hard to
quantify in the short term. You're going to need a lot of time To be able to see how that unfolds. – Yeah, we also overpaid for it, right? So it wasn't doing more than 1.2 million a year when we bought it. – Hmm. – So it's not like we got a
great deal when we bought it.
But more so we believed That we can generate way more revenue From consulting than we can from software. – Interesting. Okay. – And we think we can get
it more into more EBITA. Yeah, we think it was mismanaged, No one was focused on it. It should be at least
three, four times bigger In EBITDA than it is. And that we'll work on
fixing in the next year And we'll see if we get it there. But the bigger thing is
we weren't really worried About the EBITDA or the revenue, We were more so focusing
on the consulting end. 'Cause when we were looking
at the users that use it, It's a lot of big companies yet
they don't close any revenue From those big companies. – Hmm. So untapped potential then That you're trying to get into. – Bingo. That's why we bought it. – Yeah, very interesting. – We didn't buy it for a
SaaS to be super specific. – Yeah, You weren't just trying to
get another revenue stream. – Yeah, we weren't trying to get Another SaaS revenue stream. We were more so looking for something To help feed the agency
more on a global basis. And When we look at Answer the public, We'll run a similar
playbook to Ubersuggest. Like we start improving the design, We'll start playing with
pricing in the next week or two. We'll start giving people search volume
And CPC data for all the terms. We'll make it where they can
click a button eventually And automatically generate content using Like GPT, Any one of those software solutions. So that way people can have
a blog post started for them. So we'll start doing all those kind Of things to make the product better. We're also starting to store search data Not that it's Nathan searching,
but just search data. Here's what the term marketing
looked like six months ago And here's what terms were popular. So you can compare over time And see what terms are becoming
more popular or less popular Et cetera, and trending
and all that kind of stuff. – Very nice, very nice. So when you do this acquisition, Are you inheriting the
existing team from that tool? Or are you starting from scratch? – No team. That was the biggest problem with it. They didn't focus on it, they're were like Oh it does like a hundred
plus grand a month in profit. I'm like, it doesn't really do A hundred grand a month in profit. You have no one on that company. So if you actually had to
add people, which you usually Do 'cuz there's support
requests, et cetera, The profit goes way down. That's why I said we
really overpaid for it. We paid at least eight times multiple On a company that churns quite a bit Of EBITDA – Right. Yeah.
Well that's, so what would
be the reason to pay? Yeah, so you must Really see potential then to pay a premium Like that, you must really
see some long term potential. – As I mentioned,
Ubersuggests generates 40% Of our clients that pay
us, 40% use Ubersuggest. We're a nine figure revenue company. You can do the math On how much consulting revenue that it Can potentially drive. Answer the public had 70% of
the traffic as Ubersuggest. It was just a math equation. – Yeah, very interesting.
