Garrett Mehrguth bootstrapped Directive to $10M/yr in revenue

When the biggest consulting firms in the business won’t even let you get your foot in the door, how do you get experience to launch your own firm?

Garrett Mehrguth is the founder of Directive which is a lead generation-based search marketing company for B2B enterprise with a focus on SaaS.

Garrett lived on a food budget of $12 a day, cleaned toilets and bid jobs on Fiverr all the while learning about search and lead generation so he could launch Directive.

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Garrett Mehrguth

Garrett Mehrguth

Directive

Garrett Mehrguth is the founder of Directive which is a lead generation-based search marketing company for B2B enterprise with a focus on SaaS.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy where I interview entrepreneurs about how they built their businesses. And I do it for an audience of really ambitious entrepreneurs. The types of people who instead of, I don’t know, listening to music would rather listen to an entrepreneur talk about how he built his business, would rather find a few little ideas that would both fire them up and also ideas that they could then use in their businesses. Joining me today is an entrepreneur who told our producer, Brian Benson, and our producer, by the way, at the end of every conversation with guests will say, “Is there anything I didn’t ask you? Is there anything I should ask you?”

And here’s today’s guest answer, Garrett said, “The reason I am successful is because I’m willing to lose a crap ton of money. But I’m also willing to trust people and when they screw up, I will take the blame.” I thought it was so fascinating that is why . . . that’s a big reason why he thinks he’s successful. I want to find out about that. All right. He’s an entrepreneur who is really taking a bunch of risks and building up a consulting-based business. I invited him here to talk about it largely because I’m seeing that there are a lot more consulting-based businesses. A lot of entrepreneurs are starting that way. It’s an easy way to get started. You started with what? Like 20 bucks?

Garrett: Oh, yeah, not much more than that.

Andrew: Yeah. That’s a large reason why people get into it. All right. The person whose voice you just heard, he is Garrett Mehrguth. Mehrguth, right? I’m pronouncing it . . .

Garrett: Spot on.

Andrew: That was German, right?

Garrett: Yeah.

Andrew: He is the founder of Directive. They are a lead generation-based search marketing company for B2B and enterprise with a focus on SaaS. Here’s what they do basically. If you’ve got like a software company largely or a big company, and you want to reach other businesses, he’ll do your search marketing for you. Paid ads, right, organic search results, help you with the content. And all of that is not just so you get hits on your site, but so that you actually get leads that will generate sales for you. We’re going to find out how he did this thanks to two phenomenal sponsors. The first will host your website right, it’s called HostGator and the second will help you hire great developers, it’s called Toptal. Garrett, let’s talk dollars and cents. Revenue, where are you now?

Garrett: Oh, I’d rather do headcount now because having employees is better, Andrew. One of the things I struggle with and I think it’s every entrepreneur’s struggle is the compare and despair. My business isn’t successful because it’s not as big as X others’ business. And the truth is, is a lot of people are passionate about a lot of different things.

Andrew: Are you saying that you don’t want to give you a revenue not so that you don’t hurt my audiences’ feelings?

Garrett: Yeah, guess because I . . .

Andrew: Hurt their feelings? Let them suffer a little bit if that’s what’s going to hurt their feelings.

Garrett: Okay, like we’re getting near like doing around $10 million or so in recurring revenue soon. It’s been about five years. Yeah.

Andrew: By the way, when we first found you, it was at roughly $6 million. The number just keeps going up. And I can see here that . . . and it hasn’t even been that long. Last year, 2018, what was the revenue?

Garrett: 2018, I mean, we were going like . . . so every year, we’ve been growing a little bit over double year to date and then it compounds a little bit more. You know, I learned a lot about our business in the sense that it’s really important that you can swim upstream. It’s a concept in professional services. I like to communicate in the sense that when you’re doing like professional services and you want to grow, you have two options: volume and poor quality, higher, larger contracts, better quality. And anytime you try to go anywhere in between, you get your butt kicked.

And so we didn’t even realize that because we were kind of, I don’t know, so almost good at our search marketing, that we could essentially get accounts at such a fast rate, but we couldn’t simultaneously not sacrifice our values. In other words, we couldn’t do the world-class work we wanted if we grew too fast. So we actually had to slow down our growth rate and go more enterprise so that we can maintain the quality of work. I’d rather be broke and do great work than have money and not be proud of what we do. And that to me was kind of that breaking point that we went through.

Andrew: By the way, we sent you a mic and you said, “Hey, this is great because I’m doing a few of these a day now,” meaning interviews like this with podcasters. Before we started, I . . . we’re the only ones, by the way, who you sent you mics, right? Nobody else sent that.

Garrett: Right. You were the only one who sent me a mic. And, I mean, this thing is great. I like it.

Andrew: Thanks. That’s because our audio used to suck so badly. I’m sorry to the audience for making them suffer for so long. And then I had the idea, “You know what, let’s just buy everyone a microphone. It doesn’t cost that much. And we’ll make them sound great.” And I’m glad that you’re enjoying it. Are these interviews that you’re doing with podcasts helpful for you?

Garrett: Yes.

Andrew: Be open. They are how? Come on. Actually, you know what? Let’s be fully open. Before we got started, we were both saying, “We’re not even sure if podcast interviews are effective.”

Garrett: Well, they’re helpful for me because of my bigger vision for what I want for myself.

Andrew: And what’s that?

Garrett: So like I highly believe that once you have your brand to be positioned to be discovered, in other words, where you can capture the existing demand for your marketplace, it’s incredibly important to do differentiate your brand and then grow your awareness. So in other words, if someone searches for SEO agency and they find you and they see your ads, they find your website, they can see people talking about you, that’s great. But then how do you differentiate yourself from all the other people that you see as well? That’s when it’s time to essentially swim up the funnel. And at that moment, differentiate yourself and grow your brand. So for me in this sense, I know it gets me out there. People tell me how many downloads they get. I know that’s viable and important. What I have found, though, is actually podcast advertising for me outperforms podcast interviews, which is great.

Andrew: And, by the way, I sell podcast ads. I’m still to this day surprised at how effective podcast ads are. You had an example before we started, what was your example of with podcast advertising?

Garrett: Yeah, so essentially, we have some very large enterprise accounts that are finding us through brand campaigns. So one of those enterprise accounts, which we’re hopefully going to start working with and we’ve, you know, got a lot of progress with, found us on a podcast ad, literally where we did a story-based ad talking about one of our customers, the success we had about them, from a third party that works exceptionally well for us. We actually have generated probably over a million dollars in revenue from podcast advertising as professional services and podcasting.

Andrew: I know the name of the company. I actually see it here. It’s an impressive company. I’m going to close my tab because you told me who they were in private and I don’t want to give up something that you told me in private. But you mentioned what your ads are like that you do story-based ads. What is your ad like in podcasts? I feel like that’s a good way for people to get to know what Directive does.

Garrett: Yeah, let me do my advertising in person because it is not my voiceover. But essentially it’s the guy who says, “Let me tell you a little bit about a company named Clear Company. They were really struggling to generate leads and they didn’t know what to do. Their in-house team was awesome. They had the right brand positioning and target market but they needed some resources. They reached out to an agency called Directive. I want to talk to you a little bit about Directive.

Directive does B2B and enterprise search marketing. They worked with Clear Company and they established X, Y, and Z. In the first six months, they generated 30% returns. If you’re like this company, then contact Directive today.” And essentially that ad in about 10 different variations, so we gave them like 10 customer success stories, and they spun that up. I wish I could take credit for it. It was literally the guy’s podcast who did that ad for me. And it’s been an amazing ad and it seems to work.

Andrew: That is the format, by the way, for convincing anyone through storytelling. Here’s someone who’s like you, relatable, tried to do something, had a struggle then discovered this sponsor and because of the sponsor, life change, and here’s this new life, this new way of running a company that you want to emulate. And if you want to be like them do this thing that they did, which is hire the company in the sponsorship message. That’s fantastic.

Let’s go back and get to know you a little bit now that we’ve gotten to know your business. Your dad was a craftsman. You told our producer. What type of craftsmen are we talking about?

Garrett: He did woodworking. Custom woodworking kitchens, installs, cabinets, things like that. So then my co-founder’s dad was a plumber. We’re best friends since freshman in high school.

Andrew: Craftsman? That doesn’t seem like he’s rolling in money.

Garrett: No.

Andrew: No?

Garrett: You know, especially automation, he wasn’t his strength. I think he really wanted to create a world-class product and in doing so, especially in a time and materials type industry, the truth is, is there’s not a lot of margin. He then went on to be a full time missionary. So, I mean, you know, it wasn’t blue collar to, you know, other environments, which I think gave me a lot of my character and work ethic, but not a ton of let’s say financial, you know, push.

Andrew: My dad had a situation like that where he wasn’t transitioning with the time because he didn’t want to and for him as a manufacturer of women’s clothing, the transition had to be to China and he said, “No, I’m not leaving my family and going to China.” And because of that, it became a big issue for his business. You then ended up as a kid going out and putting flyers on cars. Why? What were you trying to do?

Garrett: Well, yeah, I mean, initially, I’ve always looked at myself and said, “How do people perceive me?” So I have a, you know, a value belief. And one of the principles I can operate on is that perception is reality. And so if you’re selling something, especially your time, in the sense of professional services, or your knowledge, or expertise, it’s incredibly important that the people you’re selling into perceive you as an expert in it. Hence, why I do podcasts, as well as they perceive your age demographic and who you are as a person to be a fit for their needs. So when I was a kid, I was better at soccer than the majority of the population. And so I essentially figured, heck, I could just go figure out where the kids practice, they’ll practice at this field, the parents go and watch the practice.

You put flyers on the cars. I knew every hundred flyers, I got about two calls. Then I started to learn that if you put the kids together in the same session, you could tell the parents that allowed them to, you know, compete against each other or work together, but simultaneously, you had to do less sessions and make a lot more money. So you start doing group sessions instead of private sessions. Then you start charging way more for your private sessions. Now at one point, I think I was 12, 13, 14, 15, I was kind of doing it all through junior high in high school and had about 16 to 20 kids that I was always training. So you can do . . .

Andrew: Training them in soccer?

Garrett: Yeah, it was at soccer. Correct.

Andrew: Wow. All right. And for your business, I heard, when you decided you were going to run an agency the first clients came from flyers also, right?

Garrett: Yeah, I mean, when you had no money and the printing is kind of cheap, so, yeah, I was essentially just handing out flyers. I wanted to start a consulting firm. I went online, I started typing out a bunch of stuff like everyone does. I found Directive was open and Directive Consultant was open. So I bought the domain. I got really excited. I didn’t know what the heck I was going to consult on. No hard technical skills. I had graduated with my degree in three years. I was doing my masters in one year.

And for me, I just thought, “You know what? I want to go into management consulting. I understand people. I think I’ve been given the gift of wisdom and communication and insight. I think I could really do this and be passionate about it.” So I applied to Boston, Bain, McKinsey, Deloitte, these places. And what I wasn’t told is that if you attend the small, private Christian university, that doesn’t necessarily position you for McKinsey. And so I just got like an auto-response because they have these application portals and I had to apply as other. And essentially, there’s like conditional logic if student applies at other, send note thing. And so . . .

Andrew: If you’re not from one of the big schools, they’re just not interested.

Garrett: Correct. It’s completely like it’s legitimately like I had to apply. I could not find the university I just spent $40,000 a year on through my scholarship on their list. I was like, “Well, they don’t tell you that when you do the campus tour.” And so, you know, that was just a harsh reality of life and what it’s like. So I said, “You know what? Forget it. I’ll start my own consulting firm and one day they’ll have to acquire me.” I don’t know why though. That was my thoughts. It’s like, “Whatever. You guys aren’t going to stop me, I’m still going to be great at this.” And then I realized people don’t want to hire a management consultant who has never managed anybody. I figured a lot of older men and women who have money frankly don’t know the internet that well.

And so I figured, “Okay, they perceive I know the internet, what’s the most valuable thing I can sell related to the internet?” So I looked at social, I looked at other places, and I didn’t like necessarily that there’s no purchase intent on paid social. While I found how to leverage it now for a lot of success for people at the top of the funnel, you couldn’t theoretically position yourself on an ad and intrinsically know that when someone’s found it, the timing was right. So I started understand the power of timing. I invested in search, got better at search, and decided I’m going to start, you know, search agency. But in that process, there’s kind of a lot that I went through. First, I learned that I like search engines because I was on fiber. So I . . .

Andrew: Let me go slowly with this, by the way. By the way, are you a religious person? You use the word “heck” earlier. Do you still believe in God?

Garrett: Yes, I do believe in God.

Andrew: Do you think that part of your business success is because of God?

Garrett: Yes, I would argue in a world that I don’t have infinite control of, I would argue someone who does have some control could have influence. But I would argue it’s more due to a belief or value system that I follow as well as things that are out of my control. So in a sense . . .

Andrew: How does it strengthen you as an entrepreneur, as a business person, as a consultant? How does it make you stronger to feel that you’ve got this divine power behind you? What does it allow you to do? Does it allow you to worry less or something like that?

Garrett: I don’t necessarily like feel like I have this divine power that makes me, you know, uniquely better off than someone else. So much as that I’m in infinitesimally small and I have so much less control than I could ever dream of. And I think it allows me to be more centered. You know, so a lot of people do yoga, they do a lot of spirituality in the sense of trying to center themselves. I do every morning. You know, I essentially pray. I visualize my day what I want to accomplish, ask, you know, to make the right decisions and think through scenarios I know I have that day and how I can prepare for those.

And in those moments, I think the value of preparation and having a value system where there’s truly black or white and then recognizing areas that are gray, but really having a no that’s a no and yes that’s yes, I think it allows you to attract other men and women to want to work with you because of your character. And I think that’s really important in professional services firm, especially for trying to scale.

Andrew: I do too. I just feel it’s a type of topic we don’t talk much about. So I’m glad that you’re comfortable talking about it. So you’re handing out flyers. It doesn’t seem like you’re going to get the best of the best people, the best of the best clients by handing out flyers. And you ended up getting a customer who was really excited, worked with you and then at some point you said, “Come back tomorrow to . . . ” I don’t know what, “To pick up your check,” or, “To check in on them.” Talk about that. Do you remember the one I’m talking about?

Garrett: Yeah. That was the first client. I was living on 12 bucks a day. I figured how to go fresh and easy. You had to buy from the stuff that’s going to expire that day. And so you kind of just I was living pretty cheap. I had a Peugeot moped 103 SP from 1978. Still in my office today. And . . .

Andrew: That sounds pretty cool, actually.

Garrett: Yeah, it’s pretty cool. Now, it’s cool. It’s not as cool when you’re like going and trying to get girls and you’re like the pizza box and you’re holding on to and got the helmet and you got the old moped. Then I didn’t think was quite nearly as cool. But, you know, I went over to this guy’s shop. I didn’t have any tangible skills yet, but he didn’t either, necessarily. So he had no Facebook page, no Yelp presence, no real local presence.

So I handed out flyers for him, built his Facebook pages, Yelp page. Did that for 30 days, came back on the 30th day to get my check. He said, “Come back tomorrow came back the next day,” and the entire place was boarded up. That’s the first ever client in the history of Directive. This is the contract with the greasepaint and all right here and this kind of . . .

Andrew: A frame contract detected.

Garrett: . . . a little motivation for me to remember, you know, people don’t have control over your success. Just because some guy doesn’t pay you doesn’t mean you can’t be successful.

Andrew: That’s to remind you that because you made it even though he didn’t pay you, no one else can take you down by making something by doing that.

Garrett: Nobody can touch . . . no. I’m my own enemy. If I don’t want something or if something happens to me, I can have control of my success. I mean, I don’t believe other people can control it.

Andrew: And so you needed to make money so that you can pay your $12 a day groceries for nearly expiring food. And what did you do to make money?

Garrett: Just Fiverr. I mean, I was working. So in the summer I would like I’d work with the like the custodial. Yeah, so like clean bathrooms, cleaning dorm room.

Andrew: Hang on a second. I didn’t know this. So, Garrett, you’re a guy who’s a proud man, who even as a kid wanted people perceive him as being knowledgeable, which is why you did this thing with the flyers, why you spoke and taught other people to then go and have to clean up people’s garbage. How did that make you feel?

Garrett: Fine. I mean, you got to understand where you’re at in life. And if you’re at a point . . .

Andrew: How did that make you feel fine? I’d feel like garbage if I did that. If I went from like this high sense of self-worth to then cleaning, I’d feel like, “What happened to you?” And my mind would spiral on that. Why didn’t your mind spiral on that? No, I can see that’s not resonating. Why?

Garrett: Because what I do doesn’t define me. Who I am defines me. And so like the garbage isn’t who I am, I am who I am. And so like if I have to pick up garbage because of where I’m at in life to get to where I need to be, then that’s like the part of the process of making yourself great, you know, because people don’t get to define who you are as a man or as a woman. And so for me, it was just like, I needed to go out there and do what I had to do in that moment. And I had a great time doing it. And I wanted to excel and be the best at cleaning up than anybody out there. So whenever I do I just want to be better at it. And I’m perfectly okay of being bad. Like I truly enjoy the process of getting better.

Andrew: What did you do as a janitor that made you better than other people, or made you better than you were when you got started? What’s one example of something that you do?

Garrett: Well, it really taught me a lot about corporate America, and it was corporate but it gave me a perfect understanding of it at the time. So I showed up the first day and busted my butt, just busting my ass. I was out there grinding. And I cleaned . . . I didn’t know this, but I was told we needed to clean these four floors so I cleaned all four floors before lunch. Supervisor comes around, and he’s pissed. “What the heck is this guy pissed about?” That was what we were supposed to do for the entire week. And now I just ruined his schedule and he had to now try to figure out what he was going to do that we looked busy. So what I’ve learned is not all jobs respect certain work ethic or equality. And I knew that I wanted to make sure I could do something that, you know, really valued my skills.

Andrew: Wow, I’m so glad that you had a story for that. Let’s go into Fiverr then. What kind of work did you take on Fiverr?

Garrett: Fiverr, my goal was to count. It was to hit like if you can do things fast enough, you can still make an hourly targeted wage that’s exponentially better than like cleaning restrooms and dorm rooms and stuff. So like the goal there was to figure out like things I could sell that I could deliver in an incredibly short amount of time that still felt customized. So I like built up the social media template. And so I could like put in the person’s name, which they had to give me. I can sell in that five minutes, but I can deliver in 30 seconds. So all I had to do is figure out how to rank number one in Fiverr for it. So then I went on YouTube, and I searched every video related to social media, and then I just put a link that said, “Don’t really want to figure this out yourself, pay me five bucks.”

It’s really simple. Like people have five bucks laying around. And so then all of a sudden, you know, I was number one in social media for a while in Fiverr and I just gave them really good service and delivered the $5 calendar really fast. I figured out if you have a library card, you can go to a library and you can go to a thing called A to Z Database. And so you can literally build any list you want for free with a library card. And so I would essentially like somebody to come to you want to know every mortgage company in Orange County. And I could give them every mortgage company in Orange County for five bucks. And so I would sell all these little things so I could bet my buddy I can make 1,000 bucks a month working only 30 minutes a day on Fiverr. And so I just pulled it off.

Andrew: And you sat at the library yourself putting these lists together?

Garrett: Well, no, you only need the card. You’ll get the card. You can log in remotely with your library ID and you use it from the laptop at a coffee shop, wherever you are.

Andrew: Wow, you know what? Library cards now are so much more valuable than people realize.

Garrett: I guess. I don’t ever use it for anything else.

Andrew: I’ll tell you what I use it for. I use it to listen to audiobooks. You get unlimited audiobooks from them. And because it’s unlimited, I get to explore books that I never would consider and I dump out of them in a few minutes if I don’t care.

Garrett: Yeah, it’s a lot easier. It’s more transactional than if it’s free, right?

Andrew: It’s [fun 00:20:52], stuff like that. It just goes directly to my phone. I dig it. All right. Let me talk about my first sponsor and then I’m going to come back and say, all right, how did you transition them from being a Fiverr guy to suddenly running this agency that just keeps growing and growing?

My first sponsor is a company called HostGator. You’re not with HostGator. Who are you with?

Garrett: WP Engine but I only sell hosting. Yeah.

Andrew: Yep. I’m totally fine with that. So WP Engine is who hosts your site, right?

Garrett: Yeah, they’re the host, I think. Yeah, they’d be a host.

Andrew: Yeah. So here’s the thing about WP Engine. I want to actually bring up the fact that you’re not using this because I want to be open and say this isn’t what everyone uses and HostGator isn’t necessarily for everyone else. The thing about WP Engine is I think they’re fantastic. But what they do is manage WordPress hosting. They take care of upgrading your WordPress. They take care of upgrading your plugins. And the challenge with companies like them is they also restrict which plugins you get to put in and which ones you don’t, which for you, you might be okay with it. I don’t need to install clever plugins to do this and that because that’s not my business.

That might be the way that you’re thinking. Totally get it. What Host Gator will do is and the reason that they’re cheaper is they let you install anything. Here’s one click Install WordPress. Now that you got WordPress, we’ll recommend the plugins that you should have, we’ll help you out, we’ll let you add any plugin you want and then it’s on you to decide what you want the plugins to do and which plugins you install and I like that. Now there are people who say, “You know what? I actually do want a little bit of restrictions. I want some guard rails. I want somebody to upgrade everything for me.” Guess what? HostGator will do managed WordPress hosting too so if that’s you, you can do that with them also.

So you can get started by going to hostgator.com/mixergy and get the lowest price available. And when you’re ready to scale up if you decide, “I want managed WordPress hosting. I like Garrett. I like the way he’s doing things. I want that too.” Great call him up and say, “Switch me to the thing that Garrett has,” which is managed WordPress hosting and HostGator will give it to you. Or you say, “I’m like Andrew. I want to know guard rails but I want to be able to scale up.” Let them know and they’ll give you dedicated server the way that I have it. All you have to do is get started by going to hostgator.com/mixergy. They’ll give you the lowest price lowest price possible which is frankly what it is, $2.64 a month is where it starts.

It’s really insignificant price-wise and the service is phenomenal. And the fact that we’ve been with them for years now just says how much we think about how highly we think about HostGator. Hostgator.com/mixergy.

At what point . . . you told my producer . . . I keep relying on my producer notes in my research. One of the things you said to my producer was, “You want to know where this idea came from, I have no aha moments. I was just passionate about starting an agency. I had 20 bucks in my pocket or so and I decided I was going to get started.” So let’s talk about that. When you were at that place going from Fiverr to running an agency again, what was the transition?

Garrett: Yeah, I mean, I guess I ran it differently than kind of I guess most anybody I’ve ever met to a certain extent. I never planned on being small. I never planned on doing the work. So like the first thing I did was I got one account and then all I did is I just read everything that Moz and Search Engine Land had essentially written like word stream, just every blog posts. Like, I mean, like every blog. Like thousands. I just kept reading just everyday just read, read, read and I came up with a little motto called learn, engage, create so I could learn something new every day, engage with it in a meaningful way like try it on one of my clients, leave a comment, like actually engage with the material that I could create more value for myself and for my customer.

And so I just came up with this little motto and I just kept learning, engaging, and creating. And from that, once I got one I realized, I don’t know if I really like, want to just be the guy who does search. I’d rather be knowledgeable at it and sharp at it and sell it and create systems around it and build a team around it. But I’d rather have a team and manage them and build something special. And so I brought my best friend on from freshman year in high school. And I’m talking I was doing client for 200 a month. And like just more than I had before. So now it’s just like you just do a plumbing website. You do a personal fitness guy. You do a . . . I had a color whisperer. I don’t still to this day know that means. There’s something about like colors and psychology with emotion and people. And I helped her . . .

Andrew: How did you even find these people? What was it? Meetups or something?

Garrett: Yeah, I was hosting like, I mean, two three meetups a week or attending meetups, family and friends, just anybody in anyone’s network who had a small business.

Andrew: You were just taking anything. You weren’t too good for any type of work.

Garrett: Anything. Yeah. You’re just getting started. I wasn’t even good. I told him like, “Hey, I’m going to do my best. I can’t guarantee anything like I’m learning still, but I’m not going to charge you remotely enough.” And so essentially, for people, is just a free way of getting a lot of exposure on breaking number one, like every client was still a case study back then. The goal was just, you know, honor that person and their time and their money.

Andrew: You know, I’m still surprised that you’re be willing to do that considering I’m looking up your university. Is it Azusa Pacific University is where you went?

Garrett: Yeah, yeah.

Andrew: Google says the average cost after financial aid there is $27,000. We’re talking about you spending thousands of dollars to go to school and $200 clients you were saying yes to.

Garrett: No, of course. I mean, you got to start somewhere.

Andrew: Okay. All right, fine. So you’re getting these clients, you’re then bring on your friend to help you out. And at what point does that transition happen from you doing the work to someone else doing the work, from you taking on small clients to you getting bigger, higher end clients?

Garrett: Yeah. So first, we just kind of decided we wanted to be really good at local. We had so many local clients. So I think I was . . . how old was I? Probably 23, 24. And I got to the SEO for Allstate. So . . .

Andrew: How? How did you get Allstate? I see them on your site. How did you get Allstate as a client?

Garrett: So I wanted to do content and thought leadership and help the industry since I started and so I was calling all the people who did thought leadership to ask them how they did it. I would just find their numbers. You’d be amazed, a lot of people don’t call anybody these days. And so especially like other like thought leaders, so I’ll just call them up like, “Hey, how’d you doing? My name is Garrett. Like I’m doing this stuff. I’m trying hard. I’m creating content on my own and I’m trying to learn.” So I finally found this one woman named Miriam Ellis. And I didn’t know this about her at the time. But she ran or runs still the newsletter from Moz. I had written a cool article. I pitched her and she said, “Yeah, sent it to me.” So I sent it to her. She put it in Moz’s newsletter. I took a screenshot of that and then I emailed every other smaller blog saying, “Featured by Moz. I would love to write for you.” Next thing you know, I wrote for the whole industry.

Andrew: I saw that whenever I was Googling you, I saw that your author pages kept showing up. And that was big. Here’s another thing that seems to have been big for you. You got in car with an Uber driver who said that he does SEO, search engine optimization. And what happened in that conversation that helped change the direction of your business?

Garrett: Well, my average contract at that time was probably 450 bucks a month. I’m like big shot, man. I was like, “This is cool. What used to be 200, doubled revenue, right? Look at me, I’m a genius.” And so, you know, you’re in the Uber and the guy is like, “Oh, I mean, you know . . . ” Ubers like to talk more than anyone I’ve ever met. I don’t know if it’s part of the job description or how it works, but he, you know, just start talking and we start discussing, he starts saying how he likes to do SEO and I say, “Oh, that’s cool. I like too SEO.” He’s like . . . and I just asked him candidly because I was still new.

And I said, “You don’t mind me asking, you know, how much do you charge for your services?” And he said $2,000 a month. And, by the way, we’ve been talking for like 15 minutes. At this point, I know this guy knows nothing about SEO. And so now I’m flabbergasted because I’m over here like Mr. Thought Leader, helping this guy out doing all this stuff and he’s charging so much more money than I am. So I call my partner I’m like, “Bro, what are we doing, dude? Like, you know, people are charging two grand a month for this?” And we just start laughing and so we raised our rates and we kept raising our rates and, you know, to this day, we still raise our rates. Yeah.

Andrew: And now what do you charge?

Garrett: I’ve quotes around 50,000 a month.

Andrew: Wow. Let’s talk about people. When you got Allstate you had seven people working for you. Who are the early hires?

Garrett: I mean, they were all men and women who either were so fresh and new that I could pay them minimum wage because that’s really all we had money for and they wanted to get a start. And then I kind of slowly started to bring family and friends. Like with the first like employee was one of my best friends Chip. And then like other guys are still with me that day for the most part. Like everyone. So I’ve never lost anybody who they were like the core team of . . .

Andrew: And so what do you have them do? If they weren’t experienced enough to know how to do this, what did you have them do?

Garrett: Just really intense coaching.

Andrew: You would coach them and tell them what to do. And when you teach when you coach, what’s your process? Are you a systems-oriented person? Are you a big picture person and let them figure out the small stuff?

Garrett: Yeah, I’m not really much of a micromanager. I’ve learned a couple things about systems. Systems are really good if you plan on doing volume-based consulting and are very worried about your floor. So what I mean by that is systems and processes raise your floor. It means that you do less bad work more often. The other thing that systems and processes do flawlessly and few people realize is they drastically lower your ceiling. So when you create a system and process-oriented culture, you teach people to be rule followers, not innovators or strategic thinkers.

That does really well for volume-based low price consulting. It doesn’t do really well for like enterprise consulting where you have to go into complex environments and solve complex problems.

Andrew: That makes sense. Yeah.

Garrett: And so, yeah, I’m much more aspirational, I’d say, as a person. It’s like I’ll tell them, “Look, what about this idea? What about that idea? What if we do this? What if we do that?” And then I follow up a lot. “Hey, you know, are you there yet? How can I help you?”

Andrew: So you’re just coming up with ideas for how they could do it. It becomes like this creative brainstorming session. And now that you’ve pumped them up with ideas and they’ve come up with their own ideas, you let them go and pick the ones that work and you keep checking in to see what’s working? Are you using this?

Garrett: Yeah. And I set the due date two days before it’s actually due so if they screw it all up I can fix it and it’s a learning moment. But you got to just be smart enough to . . . like I always expect people to fail. Not that I want to, but just so that if they do, I can support them and love on them and encourage them so that the failure doesn’t affect them or a client.

Andrew: Okay, and so when you do that and somebody gets really good, the challenge there is the thing that they did really well is now stuck in their heads. And you can’t easily share it with someone else on the team and have them do something equally well because it’s not documented. It’s not clearly written. And, by the way, I’m totally with you on the issues that you brought up with systems. I’m glad that you raised it. I hadn’t heard anyone express it that clearly.

Garrett: Well, I think for me what I did and like I just got out of sales for the first time after about five years where I’m not like the primary account executive like I was back in the day. And, you know, for me, the way I got out of it is I just gave up my privacy. I think for a lot of times, you have to sacrifice a lot if you really want to develop men and women. And so for me, that meant like I would just have the person who I wanted to [sexually 00:31:55] succeed me in a role, they work with me. Like I’m talking every day. Like they worked in my office.

Andrew: They sit with you at the office. Okay, that’s how they pick up from you. It’s kind of I get the value of it and I could also understand the lack of privacy. There’s somebody there. I don’t realize even like how much scratching I do when I’m by myself, right? Now you’ve got somebody there watching this whole thing. Or how much I get up to go to the bathroom because I drink endless water and tea and coffee, right? It’s like my thing. I can’t sit still. So I get that. But then when that person needs to pass on the knowledge to someone else, how do they do it? Is it always constantly watch us and do it?

Garrett: Yeah. Right now that account executive has another account executive in his office, and nobody can complain about it because the CEO did it. What are they going to say?

Andrew: It’s just the way that you transfer knowledge in your company is have people sit next to the people who are doing it now so that you know how to do it too.

Garrett: Yeah, I have full training modules and systems, don’t get me wrong, but that doesn’t teach people how to think. You need to actually have love on someone, sit with them, and do life with them or do consulting with them. And in that moment, when they hear you talk, they hear you think, they hear you prepare, they start to notice how you live your life. At that moment, you can make someone essentially yearn for the sea instead of fear how to build a ship, right?

That’s the problem with so much stuff is people just . . . like if you really want to cross the ocean, you don’t want to teach to build a ship, you want to be passionate about the ocean. And so the only way you get passionate consultants who can do real work that’s worth $50,000 a month is if you can import that into your culture so that if you’re not passionate, you just don’t fit here. Like if you’re not passionate, you don’t belong. And that’s that next step.

Andrew: Yeah. You know what? And that’s one of the challenges with working remotely. That’s the one thing that’s missing. I would like for people to just sit and listen to me as I work, watch as I do things and pick up the things that you wouldn’t think to share, right? The schedule, the way that I put things together, the way that I prepare for you. That’s something that when people are in my office and they even get to see the conversation before we start, they pick up on so much. You were saying that you do also have the systems and modules. What is that more formal training that you get people? In fact, you know what, if you don’t mind, I’m sorry to interrupt, I want to talk about my second sponsor and then come back into that. Cool?

Garrett: Perfect.

Andrew: All right. My second sponsor is a company called Toptal. Garrett, I talk a lot about Toptal being the place that you go to hire developers. You can get a team of developers or one developer to come in. But what I don’t talk enough about is I hired a finance person from that and they acquired this MBA consulting company. I now hire a finance person from them. I don’t know if you have someone who does this. Here’s what this finance person Jack does with me. Among other things, once a month, we go through my whole income statement. And we just think through, “What is Andrew not paying attention to? What’s an opportunity that other companies are jumping on that Andrew is not?” Like for example, we weren’t increasing ad rates.

He said, “Look, even every company expects to pay an extra 5%. Can you do 5% more? Let me talk to your salesperson.” He gets on with my salesperson. He goes, “Here’s how you guys should be charging at least a little bit more, if not much more to increase.” Well, I didn’t think of that. I was actually thinking that was just set it and forget it. Let’s focus on the rest of the business. Who’s thinking, “Andrew, here’s somewhere where you should be cutting this person.” And I thought, “Well, the person is critical. Let’s talk about maybe they aren’t critical.” And I realized having that second pair of eyes with a lot of experiences incredibly helpful. Do you have someone like that?

Garrett: Yeah, I mean, I’ve actually used Toptal. It’s a world-class service. I love how they match you to experts that are actually experts. It’s a very different experience than up work or somewhere else. So, no, Toptal is great. It’s a great problem.

Andrew: You’ve used developers or for what?

Garrett: I was looking at actually someone to build a financial model for me. I’m pretty decent with models but not great. Like I didn’t end up pulling the trigger on because actually figured out something on my own while I was kind of going through that process that I liked better. But it was the way they interacted was a different way that you traditionally interact with an outsource platform to connect to a talent and I thought that their qualification process and the professionalism was exceptional.

Andrew: Can you say what that model was, the financial model? It seems like use the same the department that I did, which is they’re finance people. What kind of financial models do you work on?

Garrett: I don’t know what that one was. I mean, this last model I built essentially was trying to see essentially my cost of goods on my like advertising marketing and my growth team is I was able to monetize at 10% of that total cost to make sure that growth was efficient. So I don’t know. I do a lot of models like that. I do capacity modeling. I do a lot of stuff like that.

Andrew: That’s the type of stuff that drives me nuts and I need somebody to at least put together the framework and work with me on because I do better when there’s a framework there when there’s something started and go back in to edit it, than start from scratch and try to figure out all the details on it.

Garrett: And that’s the norm. For like my directors now, they got so ingrained. It’s very easy to work on a system or structure because it’s cathartic, in the sense that like, it gets you away from all the noise and the craziness and something you can do personally. But now, I actually have an approval process for new systems and structures because I want my team focused on the people and the work, especially the leaders, not, you know, building this next thing that had a 2% adoption rate and you’re really excited about but nobody used it. And then the all the clients upset. It’s like, “Well, you shouldn’t. You know, that’s probably more of a priority since the client pays you not the software.” And so . . . you know.

Andrew: You’re saying when you’ve got an idea for a project that you don’t know if it’s going to go anywhere you want outsiders to take it on and not distract your team. Is that it?

Garrett: And approve it. Like I want to have approval on systems and structures. So like “Here’s the new update we want to do. Here’s what we want to do with the new Asana checklist.” It’s like, “Okay, run it through me. And then if it’s important, I’ll take it over for you. I’ll still run it all through you. I can build it in about an eighth of the time because that’s what I’m gifted at.”

Andrew: Okay, let me get into that. I’ll close out the ad for Toptal by saying, if you, Garrett, ever want to go back to Toptal or anyone who’s listening to me wants to go and use my URL, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours. That’s unreal to get 80 hours of developer credit, in addition to a no-risk trial period. If you’re not happy, you don’t pay. But don’t worry, they’re still going to pay the developer. They’re still going to pay the finance person, whoever it is that you work with.

And that’s why they wanted to get on calls with people make sure it’s a good fit so that if it’s not a good fit, they don’t even have you pay, they don’t have you start off because they don’t want the risk for you and they don’t want the risk for them to get you to service and then have you say, “Actually, Andrew, told me I don’t have to pay.” So here it is. It’s top toptal.com/mixergy. Top as top of your mountain. Tal as an talent.com/mixergy.

So let’s talk about systems. You are like an Asana creating your checklist. Talk about like how you manage through processes and documentation. And, as you said earlier modules.

Garrett: Yeah, I mean, for me, the biggest thing is technologies, if you’re in professional services right now, in any type of service, no matter how boutique or enterprise you are, you’re going to be disrupted over the next 5 to 10 years. Ask BMW and Mercedes Benz how it’s going right now at Tesla. And the truth is we don’t have nearly the same market share or brand resonance that those once did and they still got their butts kicked, okay? And so what I found is the importance of data and making the differentiation. I think a lot of us differentiate by even the stuff I’m still having to differentiate by and I’m trying to get away from which is we’ll do better work, we spend more time on it, we have better reviews, customers like us more.

And these are all things that I call like commoditized differentiators. These are things that when you say it, sure, but can you prove it number one? And number two, if you could prove it, does anyone still care enough to pay 25% more for you? And traditionally the answer is no. In other words, that’s why AmazonBasics is so successful. Because at the end of the day, yeah, you like that, but I’ll pay half the price and it’s still here two days because I don’t care that much. And that’s the problem with better. Better people want to pay an extra . . . their very like small elasticity of pricing. Different very much so, okay?

And so what I believe in what we do here a lot is I want transparency and then software and systems. So we have a SQL development team that essentially takes all the client data, anonymizes it, puts it into data visualization tool then can integrate Asana and everything else. And I can in one second see every account manager or every specialist in the company and their performance on any account in real time so if that someone comes to my office and they want and they’re struggling and this and that. I don’t have to have a qualitative conversation. I can have a quantitative conversation. So you want to raise? Okay, let’s go look. “Oh, look, all your clients from the red. Let’s focus on that first since those are the people that pay you. I don’t really pay you, they pay us and then I pay you after.”

Andrew: What do you mean? What’s in the red? How can you measure . . . ?

Garrett: Because you can [measure 00:40:20] the logic. So if a client experience negative numbers, it’s in the red. If it’s positive number, it’s in the green.

Andrew: Oh, because you know what their cost per lead is.

Garrett: I know everything about the client and their business to a certain extent where I get data for, and then I can directly see data plus team members in the same row. And so you can see every person who is in every team and the different makeups. So maybe one person struggling but that’s because they’re with this other person. And this person everyone is struggling with. So they’re actually bringing the whole team down. I have a way to prove it quantitatively with data, not qualitatively based on like, “I don’t like Jesse,” or, “I don’t like . . . ”

Andrew: Yeah. So you have this database that shows you how successful people are for each client.

Garrett: And it’s public. So the cool part is that then builds a culture of love, honesty, and appreciation so that if you see someone struggling, the point isn’t to punish people or do anything like that, it’s just so you know where you can help and support people, especially if you have extra time or resources. So every client has 100%. We have visibility 100% of time to every client and every person every client. And I don’t think any other agency can say that. And so I can talk to my directors and my leads who have no accounts and say, “Janice from this company struggling this month. Can you figure out this seasonality? If it’s something in our strategy? It’s something in their business? Let’s then figure out the root causes and we can go focus on that in real time and allocate resources really wisely.”

Andrew: And that’s because everything is measurable. All the results that you getting your clients is measurable. That’s why in every description of a company that I saw, I saw ROI mentioned.

Garrett: Yeah. Best we can. You know, a lot of times the truth is client CRMs and mine included, frankly, a lot of times they don’t maintain very well. They haven’t set up very well. But for like enterprise companies, they have like billion dollar market caps, they have full sales and marketing ops teams. If we have access to that data, we will take that API. And then essentially, you can base campaigns on what I call a cost per opportunity or cost per deal basis, not a cost per acquisition basis. What I found is that the death of marketing, especially great enterprise marketing is cost per acquisition.

So what happens is a pay-per-click agency comes in somewhere, okay? And they usually have deep direct to consumer B2C experience. A lot of shopping experience on the e-commerce experience. Those are low margin, high volume businesses. So when you go and work with those types of players, you might set a bid setting like maximize cost per acquisition. And immediately what you do is you lower kind of the cost of certain terms to increase volume. Now the problem is in B2B, those terms are traditionally expensive because they’re worth the most. But you see if you’re basing your numbers on marketing data, everything looks rosy. But then the income statement starts to change.

And so what we do is we allocate time, resources, and budget for these software companies and the B2B companies as enterprise companies based on their cost per deal. And what I found is there’s a massive discrepancy between the marketing data and what a cost per conversion from a channel is, and their close rate in their average order value, AKA, the cost per deal. And so what you find is that certain channels might be more expensive with the marketing data. But because the close rate so high on the sales side, or the average order value is so great that the ROI is totally worth it. In fact, you should be spending less on your cheap channels and more on your more expensive, which is illogical based on most marketing kind of thought process, you see, especially in the B2C or direct to consumer world.

Andrew: Yeah, you’re saying an agency could come in and say, “We’ll get you leads at $1 per. Don’t worry, people are going to fill in the full contact information that they need.” They’re really interested in this life insurance. But in reality, hardly any of them convert into sales versus someone else who comes in and says, “It’s going to cost you $50. It is going to cost you $500 per lead.” Whatever the number is.

Garrett: But I can measure [crosstalk 00:43:58] prove it.

Andrew: But I can see that you’re closing a lot of these deals. It’s definitely worth more. And the only way you know it is because you get tied into their CRM. And when you do you get to know when a lead you sent over converts into a customer.

Garrett: And the key here, Andrew, is you have to be good because guess what happens if you can see if it’s turning into revenue? You can see. [Done 00:44:16].

Andrew: Yeah.

Garrett: You know what I am saying? So it’s a lot easier. And what I’ve decided is I’d rather have a client fire me because I wasn’t successful and I didn’t make them money then keep them and they just didn’t know about it. Because that to me is pretty messed up. So I’d rather . . .

Andrew: Why? Why is that messed up? Why? Like who cares? The client is keeping you. They’re paying you every month. They’re happy.

Garrett: The client doesn’t keep me, the point of contact does and they’re people. And I have a motto of “People first.” So what I mean by that is when someone hires Directive, the person who hired us they put their ass on the line. They went to their boss and said, “I’ve interviewed three to five agencies. I want to work with Directive. I believe in Directive. Let’s take our finite capital invest it into them.” And that looks incredibly bad on that point of contact’s discernment, and knowledge, expertise, and ability if we fail them.

And so to me, I take a really personal in the sense that I need to honor the person who put their neck out there for our brand and make sure we deliver results that make that person look great. And that’s why people hire us, because they know that we’re the safer choice who genuinely cares. And that’s a really different approach to treat your accounts as people and your point of contacts as people, not just some other business that pays us.

Andrew: Let’s look at it from a selfish point of view. If you were selfish, I feel like you still come to the same decision, which is I’d rather have customers get results than not get results and still pay me, right? And my sense is that the reason you want that is because the more good data you get about how to get results for one client, the better you are at working with other clients, which then allows you to bring in more people. Which then allows you to . . .

Garrett: Assuming you [get them 00:45:49] . . . but the problem is, right . . . The truth is, is guys know that they’re struggling, women know that they’re struggling with certain accounts, but to keep them because they need the money.

Andrew: Right, right. You have to. Okay. So let’s talk about how you do it. How do you get clients now? What’s your process? I know that you’ve done podcast ads, we’ve talked about that. What else you doing?

Garrett: I’m a little bit everything. Sales development. Really, really passionate about sales development.

Andrew: What’s sales development? You know, actually, let me talk . . . let me go back further than that, actually. I went to Ahrefs, they’re a sponsor that I’ve now started using in interviews. I want to get a sense of like where are you getting your links? And I see Moz, and you’ve written for Moz and I get it. But I’m also seeing a lot of other places like Unbounce like neilpatel.com who are not writing about you, but including your site in articles like, “Here are four reasons to do live chat.” And what they have is just a screenshot of your live chat and a link back to your site.

How do you get these types of mentions? I feel like these like side mentions, these by the way, here’s a good example of this thing that we just taught you are even more valuable than something that feels like a glowing post just about you? How are you included in these conversations in these posts? You smiled when I said it, which tells me that you know what you’re doing. It’s not happenstance. What is it?

Garrett: Deep relationships.

Andrew: Okay. And so it’s someone on Neil’s team that you know, and then how do you know that they’re writing an article, or what’s the process for doing it? I feel like you’re about to be a little closed mouth about it.

Garrett: I don’t. People like to talk about people they like. I don’t like ask him to talk about me. It’s not. You know, at the end of the day, there is couple things. There’s ways to earn links through guest posting. So in other words, you create content for somebody and in return during that article, you write for their website which they’re going to own the traffic to. You link to yours.

Andrew: I’ve seen you do that, too. And you write on a bunch of different places.

Garrett: That’s just primarily the way. And then I like to let my team do it, because I want them to really build up their like resume and their portfolio. Like I celebrate everyone here. And it’s like my goal is that if Directive ever disappears one day, everyone here could go get the job of their dreams, even if Directive wasn’t that because they’ve gotten a differentiated resume, they worked on select accounts that people dream about. And they have thought leadership, and they’ve been published in areas so that if they actually applied somewhere, they immediately stand out from the crowd. I’m trying to build the best people I can, and if I can keep them this great. If I don’t, it’s just as good to me. We’re a launching pad for all these people’s careers. And one day, they’ll hire us, right? Because they had such . . .

Andrew: Okay, I get that and I get that. I feel like there are a lot of people who just want everything written under their name even if someone else on the team writes it. I feel like it’s a mistake. And it’s kind of frustrating for me that a lot of the writers I’ve worked with would rather use my name than their own name. And I’d rather have it coming from them, right?

Garrett: It’s just relationships . . .

Andrew: You don’t have a process. Just you building relationships. So you know the Unbounce people, or someone on your team knows the Unbounce people and if they’re writing about Panoply, they’ll mention that you guys designed Panoply’s website.

Garrett: Yeah, exactly. Exactly. Like over the years, you know, you just . . . if you really are in this industry, it’s a pretty like give or take industry and people start to know who you are, they start to recognize that if they link to you, they don’t look bad. They also start to, you know, it doesn’t hurt that you pay Unbounce for five years. You know, that doesn’t hurt. So, you know, there’s a lot with like we’re customer of theirs. But, no. I mean . . .

Andrew: But what do you do to maintain relationships with people that you work with? I feel like you’re good at that. You’ve used the word love so many times in this interview that it’s probably more in this one interview than the whole Mixergy interview archive. What do you do to stay in touch with people like Neil, with others that you want?

Garrett: I’ve never actually worked with Neil. I’m not even that great at honestly like relationship building. I have teams that are way better at it than me. I’m really, you know, focused about my team and making sure they’re the best men and women they can be and honoring them and building them up and appreciating them. And just treating everything with a lot of . . . I don’t know, honor or respect or just thoroughness of just making sure that if I say something, we really do it. And I want to build that trust with people and let them know how much I value and appreciate them. I’m not the kind of guy that is going to call you up, Andrew, or like text you every once in a while but I’ll talk. You know like when I see you, it’ll be an opportunity for me to say, “Okay, if I show up on Andrew’s show, I want to make sure I’m prepared, ready for it. I honor his time. I do my parts. And it’s an exceptional thing for Andrew.” And that’s my way of building a relationship is just through, you know, my actions.

Andrew: Okay, so talk to me about the rest of the sales process. We’ve talked about the beginnings of it. What happens afterwards?

Garrett: Well, it isn’t fun stuff. I’m excited about that’s actually working right now. You want to talk to the audience about that?

Andrew: Yeah. Okay.

Garrett: So like we rank I think number one for SEO agency. So we eat our own caviar, I like to say. So my point there is I have a theory I’m writing a book on it right now and I’m building tools on it, it’s called discoverability. And the theory of discoverability is that your brand is more important than your website. In 2019, marketers are still obsessing about the keywords they rank for and where their website shows up. But if your audience does a quick search or on a query like top ERP software, what you’re going to find is that no ERP software can even rank the top 10. I call this the Yelp and the Amazon effect. What this is, is people are so used to comparison shopping $5 hot dogs and $12 whiteboards that no duh, they also comparison shop quarter million dollar software.

Andrew: Okay.

Garrett: And so what Google has realized is that their audience, their searcher wants to compare different options. Now the problem is, is in-house marketing people and search marketers are still reporting on keywords. So what they don’t know is that no matter how hard they try . . . it’s not like Microsoft Dynamics has a bad team, that SAP or Oracle don’t know how to do search or have small brands or no content, that they’re doing something wrong. It’s intrinsically that Google is saying individual websites are no longer the best answer to the questions people have in our search engine at the bottom of the funnel when the timing is the most ready, the most intense. These are the keywords that are most expensive in Google ads, that when you mine your search term report, you can’t even rank for necessarily individually. So you need to market share. You need to show up on third-party sites, Capterra, Software Advice, G2 Crowd.

Andrew: Yeah. So I did this. I didn’t even know what ERP means. ERP is Enterprise Resource Planning. Those different companies that you mentioned like Microsoft or products that you mentioned Microsoft Dynamics and SAP, ERP, and Oracle, etc. Those are all software companies, right? If I type in top ERP software, I end up with the top links that are organic are softwareadvice.com, Capterra, SelectHub, etc. But I wonder if that’s because I typed in top ERP.

Garrett: It is. No, if you type in ERP software, it’s going to be an informational intent query. So you might see something like Wikipedia, and then a bunch of articles, I’m guessing that say, “What is the ERP software?”

Andrew: Yeah. That’s exactly right. Okay. And so you’re saying why are we working so hard to show up for top ERP when the truth is that’s not what people want? They don’t want us to show up and Google knows that they don’t want us to show up. What they want is some kind of comparison site. And so we shouldn’t be focused on Google search. We should be focused on the search. Sorry, what do you think . . . ?

Garrett: Well, the reason they’re so focused on showing up because that’s what they’re getting measured by. They’re getting judged by how much traffic they could send to their own website. Now what I’m trying to teach people is that you don’t need to show up with your own website, you just need your brand to be a part of the conversation.

Andrew: And so how do you measure that? How do you even know if your brand is part of the conversation? Yes, it’s in Capterra, but does that matter?

Garrett: Okay. So that’s the tool I’m building that launches in November. And I’m building my own proprietary software that essentially will manage the discoverability of your brand. And it’ll measure you across yourself and your top two competitors. And I’ve already written the book on it, I’m just trying to get it published right now.

Andrew: Will measure it by doing what?

Garrett: It will measure essentially how often you show up for terms you care about, but not your website, your brand.

Andrew: And if my brand is one of these other . . . let’s pick Microsoft Dynamics, how are you measuring that? What are you looking for? You want to see if it’s showing up on the second click or on the first click?

Garrett: Precisely.

Andrew: That’s it.

Garrett: Anywhere on the top ten.

Andrew: Got it. So if it’s the best . . .

Garrett: Because you see what happens now in the in-house marketer who’s actually positioning their customer there, they don’t have any way of proving that it’s valuable, because they can’t own that data. They can only try to get it, wants that person to get back to their website. The problem is if you . . . in in-house marketing, especially doing enterprise, what you’re finding is diminishing marginal returns from traffic. That’s because Google My Business is taking more real estate for local, ads are pushing down on mobile. All these things are happening. There’s answer box, there’s snippets, there’s featured things.

What’s happening is all the data and the way marketers have tried to show their value is constantly decreasing even though their value is growing. And so what we need to do is have a way of appreciating where we’re discovered because a lot of times we get bucketed in the direct. Like I can’t tell you how many times I’ve seen my wife search for something on Google, find it, not click on it, open up Amazon, go directly there and buy it. How the heck are you supposed to keep investing in Google ads or shopping ads if all your customers see your ad, closed the app, go to Amazon and go there. You can’t even correlate the fact that you were discovered was valuable, you can’t prove it, so you can’t fund it.

Andrew: And you’re going to find a way to do that?

Garrett: Yeah. That’s what I’m building.

Andrew: Okay. I’m wondering why? How can you tell? I do that all the time. I look and then I’ll maybe even see a YouTube video and then I go into Amazon to buy it without remembering to click their link and my habit is . . .

Garrett: Or their website. So right now, that person, that marketer is like, “My YouTube videos don’t work. Nobody really buys from YouTube in my referring channel. I need to stop doing YouTube.” And so great ideas die on the vine.

Andrew: So how do you know it? How can you connect the two? You can’t because Amazon is not going to give you that information.

Garrett: Yeah, there’s ways to essentially scrape the internet and gather this information. I can’t necessarily talk about it as freely as I’d like right now. But the point is that I’m trying to come up with a way to show that the value of your brand is far more than just your website. Because the truth is, is great ideas and PR and link building and content. All of its dying because it’s not attributable to your website and so people can’t keep funding it. Because the data that they fell in love with doesn’t show it’s valuable. Like right now, we launched a really cool idea. I hope everyone of your audience can do this. So once your position at the bottom of the funnel, meaning someone searches PPC agency, and they see your ad or they find your website, you’re on third-party site, you’re on a review site, you’re somewhere, people can find you when they look for the product or services you sell.

The second you’ve got that down, that’s called demand capturing in my mind. Okay, you’re discoverable for the products and services your sell. Now you need to go to demand generation, right? Because just when you show up there, so does everyone else. And why the heck would they choose you over them? Or you say you’re better? Cool. I don’t trust you. Oh, these are probably fake, right? There’s all these things in the consumers’ mind. So what you need is a brand. Now what people don’t understand is how cheap it is to build a brand these days. I didn’t know. That’s why I call this the frappuccino a day, okay? Well, if you’re a small business, even a small business, if you took one frappuccino a day, I can guarantee you you’re going to grow your business more than you ever imagined over the next 25 years. Not the next 5 days.

Andrew: By investing the price of a frappuccino in brand building.

Garrett: And brand building. And here’s how you do it.

Andrew: Hit me.

Garrett: You run CPM only campaigns. It’s like right now Directive. I want launch your campaign and hopefully your audience has seen it, targeting every marketer in the U.S. between 25 and 55 years old. Because all of those people could one day be an employee, okay?

Andrew: Which is might be an employee or what? Sorry we lost you.

Garrett: A customer or team member. And the way our growth works at Directive, our kind of growth engine is essentially we get great accounts, we match you to great talent. That great talent can operate at capacity. So we have a great gross profit margin. From that great gross profit margin, we’re able to find new growth, we get new clients, we match them with new great talent, we then have great gross profit margin because the talent can be at capacity, and we get more and it creates a cycle, okay?

So we have two things. For us to grow, we have to have great talent, and have to have great accounts. Both are equally important. So we need to grow our brand so people know about us and we’re part of their job search as well as their RFP process, let’s say. So what you do is you create an ad that’s crystal clear. I can’t tell you how many brands love to have taglines that mean nothing. Like software company, we power business. And it’s like were you electricity? And it’s like no, right? So no like Directive, we do B2B and Enterprise Search Marketing, period.

Andrew: And so it’s that clear, not clever, not whimsical, super clear.

Garrett: And no marketing language. It’s just the URL, no links, no caption, nothing in the header on Facebook, nothing in the body, just a billboard, a giant billboard.

Andrew: And we’re talking about you said CPM, cost per thousand impressions. Where? Where are we buying these ads?

Garrett: We’re buying these ads. You can do a plain video that’s just an image but a video so you can you pre-roll on YouTube, Instagram, Facebook, Twitter, Google Display Network, LinkedIn.

Andrew: And all I’m doing is spending less than 10 bucks because I don’t know what frappuccino cost, let’s say, $6, less than 10 bucks a day, buying ads that just get people to see it and nothing else. They’re not clicking over, they’re not do . . .

Garrett: You can click, go to your homepage but that’s not the point. The point is that they have an emotion. They love you or hate you. The problem is a lot of brands they don’t care. And nothing is worse than nobody caring. Like Gary Vee. You love him or you hate him but we’re talking about him. So he won, right?

Andrew: Right. Okay.

Garrett: The point of this campaign essentially is we’ve gotten over 2 million impressions in the last two weeks for $700.

Andrew: And, by the way, when you say a video, that’s just that language. The video doesn’t move, it’s just that language on the screen?

Garrett: Recreated, right?

Andrew: You’re nodding, that’s it. Yeah and people aren’t bothered by that?

Garrett: I don’t care if they’re bothered. I want them to be bothered.

Andrew: You don’t care. You just want them to see it, right? You want to be bothered because then they at least have some kind of emotional connection to it.

Garrett: Now they know.

Andrew: Got it. And you spend nothing with that. And the idea is if you continue, you know, you’re building a brand, but how do you know you’re really building a brand? How can you measure people even if don’t you remember it?

Garrett: Well, check this out. The funniest part. So a software company has spent $9 million a year on search. They saw my Instagram ad, they thought it was clever, filled out our form. It happened last week. It’s only live for two weeks, $9 million a year on search.

Andrew: Got it. So you are seeing the results.

Garrett: I didn’t expect it.

Andrew: And how are you connecting it back to that?

Garrett: That’s shocked me, Andrew. I thought I’m going to run this campaign. And I’m never going to prove it. So my trick to running this is a trick for everybody here—spend so little that you never stop and that’s the key. The problem with brand campaigns is they don’t get the ROI. We allocated too much funding to them and we stopped before they ever could have got the ROI. So the key to this campaign is spending so little that I never have to stop.

Andrew: So under 1000 a month. I don’t care about it. I’m not paying attention to it. It’s less than even software that people have to get my permission for. Great. It’s going to keep running and why do you go so broad? Why not say, “I’m just going to focus on a smaller group of people so that I know I could hit them multiple times?”

Garrett: Well, I already have those. Those are my account-based marketing campaigns. Those people are getting direct mail. I’m hosting events in that area. Those people are going to wine and dine, world-class enterprise, five-star experience.

Andrew: Got it.

Garrett: But simultaneously, I’d like them to have heard of me before I send them the direct mail.

Andrew: And so this is a way to just know enough people are reaching you, we’re not going to measure it. We don’t know for sure what’s leading to what. It’s just hitting people and they’re going to see it the problem.

Garrett: The problem with marketing today is we got so data dependent, we got stupid. Myself included. We fell in love with being able to attribute everything. If we can’t attribute it, it’s not valuable.

Andrew: Yeah, I do feel that. I feel like the whole idea of online advertising is you could measure it. And so if you don’t measure it, you’re making a mistake. And you’re saying that got us lazy?

Garrett: Well, like think about the history of advertising and all the genius . . . why do people spend more money on Super Bowl ads than anything else? Because they work. People know you. You immediately have namespace in their head. The problem is none of us have namespace, but then we want people to actually care when we sell them. But what do they care? Like they haven’t heard of us. And it’s so worth it, especially if you’re a local business. Think about if you’re a local business, you can spend $5 a day. You only service Orange County in my area. And essentially for that $5 you could have complete market awareness for $5 a day over a six-month period. You could be the biggest brand in your area for $5, yet you won’t do it because you don’t know if it works or not. Isn’t that hilarious?

Andrew: All right, you know what? Now you got me thinking about this stuff. I wouldn’t mind doing that even here for the San Francisco area.

Garrett: You could be the biggest [podcast 01:02:01]. Hey, let’s think about it for podcasts, all you do is get to my podcast users and the average demographic and nothing else. And I can guarantee you if you did that with enough money that you didn’t stop, it would change your podcast over the next five years.

Andrew: Podcast? I can actually target podcast listeners?

Garrett: I don’t know for a fact but I would guess in Facebook, you can. It’s probably the marketing audience in Google Display too.

Andrew: And frankly, they’re almost all on podcasts anyway. So just hit that audience. What do you think of me just starting with San Francisco, with the area where I know I’m going to get the best guests?

Garrett: Yeah, and I would just have an ad that said, “Have you heard of us?” I’d say, “You friend listens to us, do you?” Now do my ad, your friend listens . . .

Andrew: That’s it? “Mixergy, your friend listens to us, do you?”

Garrett: Yeah, you bet.

Andrew: With my face or just the logo?

Garrett: Well, in your business nobody cares about the logo because it’s more about you do a really good job on the type of interview you do. The reason you’re successful is due to your style of interview not even me or the content, right? It’s you. And so I will just lean on you. So I will do whatever it was that you you’re a brand more than the Mixergy is. So I’ll just . . .

Andrew: “Your heroes listen, do you?”

Garrett: Yeah, exactly.

Andrew: Your heroes listen to my podcast, do you?” That’s it. And just do it over and over again. Don’t pay attention to any of the clicks. Don’t even try to measure whether it’s leading to podcast subscribers.

Garrett: Just die on it. Just die on that hill that the fact that everyone knows who you are.

Andrew: Yeah, I like that a lot.

Garrett: I guarantee you, it’ll make you more money than any like clever YouTube ad you try to come up with like 33% of our listeners. Like every everybody is tired of it. You just need something that’s catchy, big and in your face and never stop. And then once you got seven impressions on your total addressable market, change your ad. You might only have to change your ad twice a year, once a year. It’s the easiest campaign. So set it, forget it, and make money.

Andrew: All right, this is kind of an amateur question but can I actually if somebody’s watching me on Facebook, would I count that as one and if they see me on YouTube, I count that as two? I can’t connect the two, right?

Garrett: No, you can’t connect the two that I know, maybe you can. I wouldn’t worry about it. I would you say per channel, cap it out at [seven 01:03:56]. And then . . .

Andrew: So if I make seven different websites or seven different . . . I keep calling them websites for simplicity. But like YouTube would be one, Facebook would be another, Instagram, even though it’s owned by Facebook would be another. If they saw me on Facebook, be done and switch to a different page and that’s it.

Garrett: No, I would do it all at the same time and here’s how I do the creating. I just come up with one ad and I just do all the different color schemes of my brand guy. So I just did one ad seven different colors and I’ll show that user all seven ads, let’s say, seven times. So I can run this ad for like next two years before having to change it, literally.

Andrew: Got it. I like this a lot.

Garrett: It’s the easiest thing. It took me an hour to set up and it already got me a $9 million proposal and like in front of me for $9 million.

Andrew: And I like that I can just set that up myself. Let’s come back to this thing that I opened this up with because maybe now’s a good time to bring it up, which is you say, “Look you’re successful because you’re willing to lose a crap ton of money.” How do you lose a crap ton of money and where does it lead to success?

Garrett: Well, like first, that’s, you know, off-the-cuff comment. I don’t mind it. But I’d say one of reason . . . I run my whole business on the cash model. So I’m aware I’m losing the money and I know how much I’m losing. And it’s not like a black box of money. And I have no debt. So I started working with no debt. I still have no debt. And so that’s, you know, gives me a lot of freedom to do this. I don’t have to have investors, I don’t have anything. It’s all the business’ money and the business makes money with what it does. And so that’s . . .

Andrew: Yeah, but still, you lost. There’s one month you lost a million dollars. How did you lose a million dollars and how does that play into your strength?

Garrett: I mean, if you lose key accounts, it’s pretty easy to lose a million bucks once you’re big enough.

Andrew: Because you still have. Right, right, that makes sense. Okay. So then when you say you’re willing to lose a lot of money, what do you mean? What’s an example of how you’re willing to do it where other people would be too scared?

Garrett: Just the brand campaign is perfect example. If you can’t attribute it, you stop spending and it seems like a waste of money. But more so in sales. Sales is tough. I still lose money. Like it’s freaking hard. I built a whole . . .

Andrew: Like where? Where would you lose money on sales?

Garrett: Okay, so you go to sales development rep. Search is such a small industry. Most guys in search rely on referrals and reviews. They don’t even have a sales development team. So you can’t just like go get talent. Most people come into your industry from a software or from something else or from like a gym membership place. They have no experience. So you got to ramp them up. You got to teach them how to do it all because you got to sell expertise, not just the cheap product. It’s not transactional thing. It’s relational thing. And it’s we’re replacement, we’re not a value add.

See, a lot of times, if you’re selling like a software, you could be a plugin for this. You could be something to help you do this. So we’re replacement. We usually can’t work with somebody who doesn’t already have an agency and most agencies are on contract so you can’t fire them to get us. So you have to essentially like it might take four months to ramp up an SDR. Then they close the deal. But they still aren’t profitable because you have the four months of sunk cost. You need to be okay with losing, I don’t know, quarter million, half a million, a million dollars on even a team of that’s small as five people to try to even get to the point of ROI.

Andrew: Because they’re all working to get the sale and in the process it’s costing you money. Yeah.

Garrett: And then when you get to sale, you call them on it. Plus, you only make X percent of your net profit. So really, they need five sales. They might take an 8 months, 12 months, 2 years to get 8 sales. So are you willing to lose money for eight years or eight months or two years, whatever that is to get it? Because if you can, that’s the cool thing about business, is if you are willing to lose the money longer than anyone else, you can create a growth engine that no one else can build. Because they were too cost sensitive and too risk sensitive to invest in something with enough gusto, vision, and belief that one day it was your largest strength.

Andrew: And are you profitable now? You must be.

Garrett: Oh yeah, I’ve never not been profitable. So you have to bake into your business model that lose money so that one day you won’t.

Andrew: I like to that you talk a lot. Now I’m understanding why people have you on their podcast so much. You don’t have your own podcast yet, do you? I feel like maybe one of your strengths is . . .

Garrett: I do.

Andrew: You do?

Garrett: It’s called “Yours in Marketing.” I don’t ran it. Blake does it. He’s way better than me. He’s an awesome guy. He’s interviewed like Cyrus Shepherd, AJ Wilcox, Tim Soulo. All those guys.

Andrew: I don’t know. I get the sense that . . . I’m not saying anything bad about him. I didn’t realize that there was a podcast even. But I get the sense that with you that you play well off of other people that if you could have other people even on your team asking questions and just go fire off your point of view on it, I feel like that would be an interesting podcast. It’s not the standard stuff that everyone does, but I think that’s the that’s the magic with you. I’ll listen to that.

Garrett: Well, maybe one day I’ll do it. Questions with Garrett could be your podcast, I guess, if people cared enough. I will struggle with content because I’ve never got the traction myself. Like I think he added 52 videos last year and I got three subscribers.

Andrew: On YouTube.

Garrett: Yeah, that’s pretty bad, man.

Andrew: Yeah, that’s the challenge with doing things on your own. If you have guests, you kind of feed off of their fame, their attention.

Garrett: That’s what I’m finding. Yeah, then like the partnership approach works really well because you can kind of like barnacle on their audience and then grow yours naturally through theirs. It’s kind of cool. Makes sense.

Andrew: Yeah. What I would like to do is find a way to buy ads to your audience to show them this podcast and I haven’t figured out how to do that because I can’t just target your audience.

Garrett: I mean, you could.

Andrew: Can I? How? How would I be able to do that?

Garrett: Well, you just target like . . . it’s like my audience listens to MarketingProfs, like reads MarketingProfs. So you just go in the market audience on GDN or Facebook and then just say psychographic like interested in or follows. Then you just essentially take my audience is watering hole and then make it your watering hole and then you can just grab them.

Andrew: Got it, so Moz and MarketingProfs and all these sites that I’ve just seen are already referring traffic. Oh, could I do this? Okay, now I’m just like riffing with you. I freaking love talking to you. I love that you use the word heck multiple times and I love that you say love on people a lot. So I could just go like, say, go to . . . I keep going back to Ahrefs because they’re sponsor, but this is not a sponsored ad. They stopped advertising with me. I don’t think they love me. They love me as a person. I don’t think that my ads are doing well enough. So I could go in there. So say I have a guest like you, I would type in your site. It’s Directive . . . what’s the URL? Directiveconsulting.com?

Garrett: Yep.

Andrew: So now what I might do is see where are you getting your traffic by going into backlinks. And so then I could see Neil Patel, Moz, AdEspresso, Unbounce, clutch.co. Maybe I put in all of these and anyone who’s reading these sites is a good target audience for me buying ads saying, “I’ve got you on my podcast.”

Garrett: Yeah, that would work great. Like you just essentially what you do is I would call that like affinity audiences. So you would just look at your guest schedule because you lined them up pretty well. So you will just forecast out your guest schedule and then you do rotating ads or you build a template so you don’t . . . all you have to do is put my face right on the same ad and then you just change affinity targeting. So you just might build out. If you on average get guests from like five different industries, for the most part, you just build up five stages audiences. You tag those. You throw my face on that saved audience. You push that to them and you go from there. And then you could raise your rates to your sponsors, sorry HostGator, and then you’re able to essentially drive more value to them while still slightly increasing your own margins.

Andrew: I like that a lot. I like that a lot because I feel like everything we do with ads works with an agency but I’d much rather just try this and play this on my own and see what happens. All right, cool. I’ve gotten so much out of this conversation. I freaking love it. Thanks so much for doing this interview with me. I don’t even know that I need to be sending people over to your website unlike other guests. Like people know they could go to directiveconsulting.com but I don’t know that that’s the play here. The play is they got to meet Garrett. They got him in his in their heads for about an hour, right?

Garrett: Yeah. If you guys want to check us out, that’s great. If not, shoot me something on Twitter. I’d love to help you with anything you got going on in life or just in marketing your business and maybe I have an insight and maybe I don’t. Yes. Or like talk to my sales team, sales at Directive Consulting. Check out our website. Check out our podcast. Yeah, I’d love to see if we could help you and, you know, partner with you.

Andrew: Thanks a lot. And I want to thank my two sponsors who made this interview happen. The first as, we mentioned, is HostGator. Check them out athostgator.com/mixergy. And the second is Toptal if you’re hiring. I always say developers but frankly Garrett and I have been talking to them about finance people. If you need to finance people for a financial model and for a presentation, for spreadsheets, whatever it is, go to toptal.com/mixergy. They’ll get on a call with you and help you out.

And finally, I want to close this out by saying I’ve been really digging my friend Noah Kagan’s podcast. If you’re looking for a podcast as a follow up to this, go to the Noah Kagan “Presents Podcast” and look for Neville. Forget about his clever titles. I feel like the Neville podcast is especially interesting or anything where he’s talking about his own finances I’ve been riveted by. A great podcast as a follow up to this. But thank you for listening to me. Garrett, thanks for being here.

Garrett: Thanks, Andrew.

Andrew: You bet. Thanks. Bye. Bye, everyone.

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