– Every time I start a company, I find people to put in place That have already done
it multiple times before. Because your risk of failure are lower, And they already know everything to do. So I don't have to deal With client relationships, I don't have to deal with customer service Or anything like that. I get to do what I enjoy doing. (gentle upbeat music) – Why did you do an agency? So me and Sam always talk about Like we have many motto's on this podcast. For example, we don't do public math. For example, you don't say you're rich, You say you're post-economic. These are things we've picked up From guests along the way. And one of the model motto's That we say is, you know, agencies suck. And it's like, and the reason we say Is not because they, like they do well, It's not that they suck. It's like they suck as a business choice. Like if I could, I've always thought if I could choose Between software or an agency. I choose software. Because it's like, Oh it's not a services business. It's going to work while I sleep And they could scale up, And I don't have to open up offices
In Poland and Brazil and
all these other places. But you chose that. You did software and you chose agency. Now, why did you make that choice? And what's great about agencies That I am kind of like Not giving enough credit for. – You're looking at business As in software's more scalable, It's more desirable by public markets. EX HubSpot versus Accenture. Accenture has way worse
multiples than HubSpot. Accenture's a bigger company From a revenue EBITDA standpoint. But now take a different approach. Okay, HubSpot's publicly traded company. You guys are both HubSpot employees, I'm assuming still. Is that correct? – [Sam] Kind of. – Sure, whatever your
guys' deal is, right. But you guys are pretty much at HubSpot. So now imagine creating a business And you don't plan on going public. You don't care for the limelight. You don't care for any of that. In business, what's a successful business? Good revenue growth and good revenue, And profitability right. All that really matters
at the end of the day, Whether you grow or not grow Is how profitable are you? Would you guys agree with that statement? Assuming you're doing
something that's ethical
And you're not selling products? – No, I wouldn't agree with that. I would say there's a third thing, Which is like is this enjoyable? And like, do I like my day to day? And with the more people you have, Most people would say That's just a little bit more headache. – That's not software or consulting. Anytime you build a big company You tend to have a large amount of people. Whether it's HubSpot or
whether it's Accenture. Everyone has a life – Yeah, but you can have. You can probably have a much higher Revenue per employee with software. Versus let's say you own a massive Landscaping business, you're going to Have to have tens of thousands of people. – But, what's the difference from dealing With how many people does HubSpot have? Like 6000, I don't know, 5000, 6000. That's probably a lot, I'm guessing on the number. But what's the difference of dealing with 5000 or 6000 people and 20000 people? There's a point where it doesn't matter. And it's a lot of people either way. Like it's not like you're at 50 people. You still have thousands of employees To deal with, and you need managers And layers and all that kind of stuff. – Yeah, but you're
hiring, some good or bad. You're hiring a different type of person.
So for example, if you're VaynerMedia, They're based in New York, They can probably only afford to pay Some of their lower level employees 70 or $80,000 a year. And so you just have
to get a ton of people Like that and have to have higher churn, Versus say a bigger company Where you're able to pay A significantly higher salary Because the revenue per
employee is much higher. So, perhaps there's a slightly different Day to day with because of that. – Not necessarily. Let's say you're VaynerMedia, He could be doing it
to optimize for profit. What if I told you his LTV Was 6, 7, 8 years, right? (indistinct) Then at that point, You can still hire high quality people And pay them an arm and a leg. – [Sam] Okay. – You get what I mean right? Like you look at Accenture, They're charging accounts so much money And their contracts are long. And I don't know what
VaynerMedia's LTV is. But there's a lot of consulting companies That have LTVs of six,
seven years for clients. And their clients are spending. You know, at HubSpot, Yes, there's more revenue per, You can say potentially in software
You can get to more revenue per employee. But I know consulting companies That only take on contracts That are like five, $6
million and upwards. So you have high margins, And you can have a high
revenue per employee. But either way, no matter what, As you build a big business You're going to need more people. And it's a headache to manage, Whether you pay them 70,000 or Whether you pay them 150,000. It's still more of a headache. And the notion that if you hire someone For 150,000 , I'm not
saying you're saying this. It doesn't necessarily mean They're a better employee right? – No, it just means
different types of headaches. – Correct, exactly. Engineers for an example, Are very expensive in this economy, right. So the point I'm getting at is, A consulting company,
I had the demand for. A lot of people wanted
to pay me for marketing. And there was just so much demand, It would've been silly not to do. And if I'm not trying to go public Or I'm not trying to sell. Money's money, green is green. As long as you're happy
doing what you're doing. Take the cash. – Will you ever sell the company? – I wouldn't say I would
never sell the company, But I don't care to ever sell the company.
'Cos I love what I'm doing. We also have good growth too, right. Like I don't know what
we'll grow this year. 60 something percent, which isn't bad. You know, with the market Going up and down and fluctuating. 60 something percent is my guess. At our size is decent. – Yeah, the part I was
actually talking about Was a little bit more like, I think you're you're totally right That like if you're going to win big, You're going to end up
with a bunch of employees. And like, you know, it
might look like 150. It might look like a thousand. It might look like 10,000. But like, you know, in either case You're going to have
managerial work and headaches. And it's just different types. The part I was really talking about Was like, you know I've now built Let's say a media company content. And then it's like Done educational stuff. So courses which are like, you know, A different thing. And then there's like a
built software company, And you know, we ended up selling that one And then it's like, and
then there's services. Which is like client services. Like consulting or agency model. And what I hate. What I love about content media Is it's actually pretty fun to create.
And it's cool because a lot of people Consume it so they kind of, you know. You get that like hit, But you got to like. You got to bake the cake every day, right. So like, you know, the hustle Or like the milk road or this podcast. It's like we have to come on And create the content again. You know, for the most part We're not doing like super
long evergreen stuff. So you know, like with the hustles, The daily newsletter, milk roads, The daily newsletter. We got to bake that cake every day. Whereas software, it was like we built One product and yes we might. We will improve it over
the course of a year. You know, every year
we're going to improve it. But like fundamentally, We didn't have to like
recreate the product. Come up with a new viral story, Or a new great content segment That would like require like a new genius. With software, it's like you come up With one genius moment. And then you sort of refine it. Make it work better over time. And get rid of bugs and things like that. So I preferred that part of software, Which was like making a product. Rather than making kind
of like a disposable, You know, consumable piece of content. Or like I have a e-commerce company
And like, it's a pain in the ass To have physical products That are supply chain, Constrained and like we have a warehouse. We got warehouse problems With our e-commerce business. And so I'm like man, Digital is sweet compared to e-commerce. But e-commerce is quite profitable. That kicks off a bunch of profits. That's nice. So every business has these pros and cons. And I always thought agency was like. The part I always thought
was a pain in the ass Was like the client services. You are reinventing the next campaign. And the next winning marketing, You know, formula for them. And you have to keep
clients happy all the time. And clients are sort
of like never satisfied In a way that like. If software is like, you can have Nameless faceless customers. That like yeah, some percentage Of them will write into your help desk, That's in the Philippines or whatever. But like you're not having to like, You know, send account reports to your Big clients to keep them happy. – Yeah, but you everyone
has their own problems. In software, a lot of people Have tons of those issues And they can't figure it out. Or they have competitors
Who come into the marketplace And just undercut them on pricing For the same features. 'Cos it's cheaper and cheaper To build software these days, right. So they all have their own problem. To me I look at it as, If you can find the right people. So every time I start a company I find in people to put in place That have already done
it multiple times before. 'Cos your risk of failure are lower. And they already know everything to do. So, I don't have to deal With client relationships. I don't have to deal with customer service Or anything like that. I get to do what I enjoy doing. Which is go and create content, Be the face, et cetera. And my wife enjoys what
she gets to do, right. She gets to donate the money. Although, we don't really Consider it as donations. We look at it as investing. We're investing in people. Although we really don't ever collect Any money back. It's more so you're investing Into making the world a better place Or people's lives a better place Or whatever it may be. – Who were your first three clients? At this agent.
– I don't know, they were small companies. – And right now who's an example client? – Like a Fortune 100 software company. Like that is a typical company. Think of any big large corporation in b2b. That's a great example
of one of our customers. Or even B2C. Actually, think of any
Fortune 500 company. That's a prime example of a customer. – And who's the CEO of your agency? Are you? – No, I'm never the CEO. I'm a terrible manager. I'm one of the worst managers ever. His name is Mike Gullickson. He was the CEO. No he was the president of I prospect, Which is a ad agency owned by Densu. I believe in, I prospect Maybe they had four or
5,000 people, is my guess. – How early into the business Did you have a hired CEO or hired leader? – Day one. I won't start a business Without a CEO from day one. – And what did you pay
them in the first year? – First year was my co-founder. So like a hundred grand. – And that's because you basically went And drummed up a hundred
grand worth of business. And you're like, hey Mike, I got this client Says he'll give a hundred grand. You want to run this thing for me
And help it get deployed? – No, our business didn't
start off that way. I probably put in total of 5 million bucks Into the business, of my own money. So, I was bootstrapped, But not really bootstrapped If that makes sense. It's kind of cheating. And it gets easier and easier As you're an entrepreneur, right. The more successes you have. And I'm not saying I'm
successful by any means. The more capital you have To deploy into the next thing. So it reduces chances of failure. And when it's your own money. This is just my thesis, And I could be wrong on this. I have no data points. When it's your own money, You're much more careful Than when you raise
like 15, 20, 30 million Of venture capital, right, You really look at every single dollar. But Mike was the CEO from day one. He's a great operator,
has no agency experience. Eventually we got in a president. And then, eventually from
there we got in a CEO. – And have you guys crossed A hundred million in revenue yet? – Yeah, we do nine figures. – That's crazy man. So, I mean that's just pretty wild, That you're able to like parlay this blog.
That was always kind of a juggernaut. But this blog, Into a nine figure a year business. I mean that's amazing. – Yeah, it's been a good run. I hope it, I'm knocking on wood. Although you probably can't hear it Because of Chris. I hope it keeps going And more so we're just having fun. Like for me what I enjoy doing Is building a business. I know I have an expensive lifestyle. I generally don't do stuff for the money. Like I overpay like house staff. Like nannies and stuff like that. When I say overpay, I drastically overpay. Not by like 10, 20, 30, 40%. Like I really mean drastically overpay. 'Cos I look at people, And I'm like if you're cleaning a house, How are you going to live on this? Like I'll give someone
six figures to do that. I know that sounds kind
of crazy or stupid. But, like I'm not giving my kids money, So might as well take care of other people In this world who need it more than we do. – Did you just say you're
not giving kids money? – Yeah, I'm not going
to give my kids money. – Nothing, leave nothing. – We have a trust set up. What they'll get maximum Is like if they're on the street And they can't provide
And they're going to be suffering. Like I will help pay their bills. Or put them in a normal home. Or like if my kid's like,
I want to be a doctor. And I want to go spend
all my time in Africa, Helping other people out. And I won't get paid for this and I need, You know, x $5,000 a
month to live or 10,000 So I can just go volunteer all my time. I'll be like, sounds
good, I'll pay for that. But like I won't give them money For the sake of it. Like if they're like, I want to go travel to see Italy. Or I want to a Honda Accord. And I'm like, go buy
your own Honda Accord. Go travel on your own with your own dime. Like, you know, I don't believe in just
giving people money. 'Cos I think there's other people Who need it more than we do. – Shaan, are you going
to give your kids money? – I haven't really thought about it. Like my oldest is two. So I think I got some
time to figure that out. But I lean more toward. So I've kind of heard both arguments. Like I know somebody who they. If some people are like you know. There's some people that I, I'm definitely not in the camp of, I do this for my kids. I want to leave my kids With a whole bunch or something.
That may be the worst
thing you do for them. Not because it means of the ruins but. – Yeah, you have drug addicts. – Yeah, you take away, You know, agency in a way, right. Like you want people to. It's not that it's good or bad. It's actually just. It's just way lower On the totem pole of priorities. It's like I just don't even focus on that. It's like if I'm going
to leave them something, It's going to be a
certain set of character. Character traits and
skills and like mentality. That's what I'm trying to leave. Money is like, I don't know, 15th on the list of like, I don't know. We haven't even gotten
to think about that yet. But I've thought a lot about What are the character
traits and mentality. And like mindset and skills That I think I can help build. And like that's the focus. That's the one that matters. That's the gift. If whatever else comes from beyond that, I don't know, we can figure out. It's like the footnotes. – So like we're very similar. I have a two year old, And a less than one year old, right. And I look at it as you want them To be productive units of society, right. You want them to be ambitious, hungry,
Caring, thoughtful happy. Like whatever it is. There's a lot of characteristics That you may want children to be. But I look at it as like
they don't need money. Even like with my wife and I, We go over our expenses, And we look at what we spend on travel. And we do some of this cause it's easier. But like my wife and I
are actually considering Cutting out all private And just going commercial now. The main reason our expenses are high Is due to Covid. So if it wasn't for Covid, I would just be going in a normal airport. I didn't know how Covid Was going to impact with young kids. Could afford it. I was just like, Yeah, just start flying private. And we haven't gone
back to commercial yet. But we're thinking about going back. Because like my wife
and I look at the money. And it's like yeah we spent all this money On travel and airfare and hotels. If we donated the money, People would have a better life. Do we really need it that much? – What do you do when you donate that? Like, what's a good way To donate in your opinion? So there's like, you know, Ranging from not donating,
To donating to one thing, To donating to a bunch of things, To like getting involved. Or seeing the impact or like, You know, I know people who. If they donate to
Africa, they'll actually. Their family will go
take a trip every year. So that they're more
connected to the people. And they actually see the impact, And they take their kids with them So that they see the impact. Like what have you found That's a good way to give. – So we have a balance. It's my wife and I team up. This is going to sound bad, But I don't like volunteering my time. My wife loves volunteering our time. I think it's very inefficient For me to volunteer my time. I should make the money Versus volunteering my time. Because the money or the hours spent, If we donated the money, It would have a much bigger impact To the cause than if I
actually spent my time. – I don't think that's sounds bad. – And my wife loves spending the time. And like from going to soup kitchens Or whatever it may be. So she picks the causes. We have a few theses. So like one thesis is, Or not really thesis but rules.
One rule is we don't like money Going to organizations That have tons of high overhead. We actually want our
money going to the causes. So if it doesn't go to the cause, Then we tend to not
pick that organization. The second thing that we look for Is organizations who are Like self-sufficient, right. It's just like how can
this continue going, Even if someone wasn't managing. So like a great program for example Is my wife likes donating
to women's education. We used to donate Also to men's education as well. So you find these people
in these villages. You say, hey you can't afford To go to school, get a degree. We'll pay for you to go to college. Go get a degree, come back, Teach kids in your
village for a few years. Whether it's under a tree or anything. People can learn anywhere, right. And then, you know, Go move on with your life And do whatever you want. But at least you're giving back To your own community. And what we found is,
when we started giving. 'Cos we've been doing
this for so long now. Well actually not that long. But when I mean long, I'm talking about like 10, 11 years Where we've been donating.
And it's picked up quite a bit Over the last like five, six years. When we started giving the money to men, A lot of the men we saw
very low conversion rate From them actually coming back And teaching people in the village. Well when we gave the money to women For their education, A lot of them came back And fulfilled on the promise. Because it's not like you get A signed contract, right. It's just like, hey, We're going to pay for everything. Come back, help people
out within your village. – Which country – We've done this in
both India and Africa. So different parts to Africa and in India. And then another program that we've done Is like growing gardens. Where a lot of people who have Aids Don't take the right. Don't take their medication And aren't doing well. They're given the medication for free. But if your body Doesn't have the right
nutrients, it rejects it. So what we'll do is, we'll do programs Like growing gardens. We'll give them money, they grow food. And then not only do they Eat nutritiously or well. They'll more likely to
take their medication, And you're also growing enough food.
So that way other people In the village can also eat. I was like, but my wife
picks all the causes. She vets them, she loves it. Like she'll go, this is Wednesday, In two days she'll end
up going to a function. Scouting out more nonprofits
and organizations. I won't go. Like, I think it's a waste of time. I'm like, if I will make more money, She can donate it. It's a better ROI, Than if I go spend three four hours Mingling when she could just do that. And I can go make more. So that way we can donate more. – Other than your own private businesses, What have been your best
financial investments That's allowed you to to donate And and make a lot to give away? – Stock market has done really well. Companies like Apple,
Amazon, Google, Facebook. I know Facebook's down, But they still have been a tear If you just bought the
stocks early enough. 'Cos some of these companies Have grown 30, 40% a year. And the public market's compounding right. And it really adds up. Angel investments have
done really well for me. And I would say Probably those are the two biggest. The stock market still has done well. Although in the last six months
I've taken a beating. 'Cos I'm in a hundred
percent tech companies. Like I don't diversify. Like, everyone's like, Oh, you need some oil, and you need this. And I'm like, yeah, I'm
just going to go all tech. And people are like, oh, you're silly. Look how much you lost. But if you look at the whole time When I first got in, I've done well and I invest In what I understand and I'm 37, So who cares? You know, another 10 years,
everything should rebound. Assuming you pick the right companies. What's your portfolio look like, In terms of percentages? – Not including private businesses. – My public portfolio, if I had to guess, I probably don't even
have more than 20 stocks. Amazon, I won't be able to name them all. But Amazon, Google,
Facebook, apple, Microsoft, HubSpot, Salesforce,
Adobe, Atlassian, Shopify. I'm missing some as well.
