Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview amazingly successful entrepreneurs about how they built their businesses for an audience of entrepreneurs. And I’ve said since the beginning that my goal is to do these interviews for people who are listening, building their own companies based on what they hear, and then I want them to come back and do interviews.
Joining me today is someone who said that he’s not only a fan, he’s a lurker, who’s been in the background, paying attention to my work over the years, and I’m so proud that he’s on here. His name is Johnathan Dane, and he’s a guy who created an agency. Now, many people I find just hate agencies, can’t scale them up, and can’t wait to find software to create so that they can stop being an agency. He’s smiling because I think he recognizes this. But he’s also found a way to make the agency work for him, and I want to find out how he did it.
So Johnathan Dane is the founder of KlientBoost. They’re a creative paid ads and conversion optimization agency. We’re going to find out how they did this thanks to a phenomenal sponsor you’ve heard me talk about a lot before. It’s called Toptal. And I can’t wait to tell you guys how Toptal helped save the day with Calm. You guys might have heard this Calm story in the news. I’m going to give you a little bit of background on it. But, first, Johnathan, good to have you here.
Johnathan: Thank you. I’m pumped and thrilled and excited to share a lot of dirty secrets I feel like too.
Andrew: Especially about your childhood.
Johnathan: Yeah.
Andrew: Let’s get right to the question that you know I’m going to ask you which is revenue. When are you guys today?
Johnathan: So we just eclipsed the 10-million annual recurring revenue and all transparency based off accrual GAAP accounting. The cash basis can fluctuate up and down like month over months. Our max . . . so we’ve hit so far and come a little bit further back from was $875,000 in monthly recurring revenue. So a little bit over the 10-million ARR mark.
Andrew: When you say accrual, you mean that somebody signs up to pay for advertising and you guys include their revenue only when you do the actual work for them?
Johnathan: So we actually don’t charge them for the advertising piece. It’s only the money that we get ourselves. But some clients have net 45, net 60 days, net 30 days, so we don’t realize the money right away. And some clients pre-pay us six months or three months in advance sometimes. And so the consistency of the cash can differ quite drastically from the accrual basis sometimes.
Andrew: And do you include in that the price of the ads that you guys buy on behalf of your clients?
Johnathan: No, we do not.
Andrew: You don’t.
Johnathan: No.
Andrew: So that’s net of that. Wow-wee. Profitable?
Johnathan: Yes. We made a lot of investments this year, to your intro point as well. We invested in our own software, which . . .
Andrew: I saw that.
Johnathan: Yeah. We’re profitable, not as profitable as liked and that’s something that we’re changing for the coming year to with our goals.
Andrew: How long have you been profitable?
Johnathan: Since day one to be honest.
Andrew: So have you bought anything or done something special for yourself with all this? We’re about to hear about a lot of challenges and a lot of hard work to get here. Is it worth it?
Johnathan: Oh, my gosh. It’s worth it. Yes.
Andrew: Why?
Johnathan: Well, on a side note, I actually want to come out with a book one day where I interview not just other agency founders but other people, and I want to call the book “The Art of Eating Shit” because I believe that if you get used to it and you train your brain and feeling like hey, you know, every problem that you have, every issue you run into, it’s just another chance of an opportunity for another solution, or an improvement to a system, or a strengthening of some . . .
Andrew: Give me an example of how you ate it and because of it you’re better off.
Johnathan: I think that early on . . . so I had just left another agency that I co-founded in Utah. And there are currently like 130 people. We are just around 60 people right now. I was done with agency life. I’m like, “This sucks.” And then I came to Orange County where my family is from, my dad’s side of the family and my now wife’s family is, and I wanted to actually build software from day one and use revenue from some agency clients, so just use to fill that. But the speed at which we grew was so quick that a lot of times I use the analogy like we’re building the bridge as we cross it or we’re building the plane as we fly it, which isn’t always easy, always a little bit of chaos. And so we just decided, like, keep doing what we’re doing. But in that first year I was like, “Oh, this is exactly what I feared. I might just quit,” you know. But I’m like, “Well, what else can I do? I can have . . . ”
Andrew: Well, be specific. What was so bad? What was so bad? I want to hear what you did that was so terrible that many people would have given up.
Johnathan: Here’s the first one, setting expectations, being so eager to close the deal that you forget like what happens after the deal, and then a lot of issues come, legal threats, client wanting their money back . . .
Andrew: Let’s be specific. So what did you promise a client and what happened?
Johnathan: Like, for example, not setting goals and saying when you would roll out new things. And so I would take my time that I normally would do without thinking that I had to explain that to a client just hoping that they would trust me blindly.
Andrew: Setting a goal for what?
Johnathan: Like to achieve like a certain metric, let’s say a cost per conversion or conversion volume, for example.
Andrew: So, to close a sale, you said, “I can get you this cost per conversion.” You know you could because you’ve done it before. You’ve been doing this stuff for years. Meanwhile, the client comes back to you and says, “Where’s this thing that you promised me?” And you were so eager to get the business that you didn’t say, “It’s going to take me time,” instead you said, “I could do it,” which is true, but . . . all right, I get all that.
Johnathan: Exactly.
Andrew: But here’s the thing that I found with Mixergy interviews, I’m so deep in the weeds with people about the difficulty of doing it and the triumph of finally doing it than I never get to, “And here’s the reward.” There’s never like . . . we cross the finish line and then the story is over. We never say, “Here’s the good thing that happened.” Did you get to do anything that you couldn’t have done before that you could have done with this? What’s one of the example of that?
Johnathan: So almost paid off a $1.6 million house, need like $300,000 left, which is amazing.
Andrew: Okay. I’m with you. Yes.
Johnathan: I’m 32 years old. I’ve done that in the span of two years. So a lot of profit at the end of the year. We’ve been using that for my own family. I call that a success. I don’t think I can do that in a traditional job, to be honest. Helped my own family in Denmark, which is one of my big drivers and motivators is . . . it’s not that they’re in poverty, but they’re heavily reliant on the government there, and to be able to send them money is huge for me.
I remember my first time my mom asked me for that. It was a very weird feeling because as a child you’re like, “My mom takes care of me, not the other way around.” Now, it’s part of me. Now it’s part of my mission to keep pushing and doing that and to, like, give them even more once, you know, an exit event . . . and, like, that’s our goal too. And so, in the last year, we’ve had a lot of acquisition talks. We have a lot of investors knocking on our door that are really curious. So there’s a whole nother thing that I haven’t realized yet, but I’m like, “I can’t believe that in just less than five years this is the reality of what I’m talking about and people that I’m talking to as well.” So that big reward hopefully is happening, but it hasn’t happened yet.
Andrew: I don’t know. That actually must be really nice to be able to go to sleep knowing I’m pretty much paid off here. I’m going to have a home to live in. I always worry, “Am I going to be homeless?” And my kids are like nuts with like, “Why do you keep worrying about being homeless?” You never know. And I’m still, like, beyond that point. But it’s nice. That is one of the big benefits.
So you were saying that you grew up in Denmark. I always think growing up in Denmark must be so nice, and happy, and safe. And you told me before we got started that at one point a friend of yours pulled out plastic wrap on the train. What was in this plastic wrap?
Johnathan: It was actually Reynolds Wrap. It was, like, aluminum foil.
Andrew: Aluminum foil. Okay.
Johnathan: Yeah. It was cocaine that was in there. And so . . .
Andrew: How old?
Johnathan: I was in seventh grade I think I believe right there.
Andrew: Wow-wee. Okay.
Johnathan: So this is crazy. So, you know, in Denmark you’re allowed to drink when you’re 16. You’re not allowed to smoke marijuana or anything until I think you’re 18. But we would do it when we were 13. We would smoke cigarettes when we were 13. And it sounds super bougie, and this is like, to your point too earlier, like you’re still being worried about being homeless or being stressed. Even as you’re successful as a person, this is just I believe human nature. I don’t have the science reason why. But even though you’re much more cozy, you have more of a financial security, you still get stressed regardless of what you decide to do in life. Let’s say that I want to stop everything I’m doing and have five clients and just like have my own day to day more lifestyle, business and balance, I would still get stressed. I guarantee you, it’s just how we are and how we operate as people.
So in Denmark, I was part of a private school. And interestingly enough, this friend, who basically . . . his dad was one of the people who brought consumer internet to Denmark. Very, very wealthy person. Very, very wealthy family.
Andrew: How did you go to school with them? Or do you come from a wealthy family?
Johnathan: No. No. Not at all. I was actually embarrassed. I was . . . my mom and I lived in this tiny apartment above a storefront in a city that actually has a queen’s castle in it. It’s called Fredensborg. And I never really took any friends home because I was so embarrassed comparing, you know, our “wealth” to the wealth of all of my classmates. Like, they lived in all these like close to the beach and other neighborhoods and all that kind of stuff. And so I remember even having a girlfriend, and I would always go to her place. I would never take her home to my place, because I was embarrassed about it.
But this aluminum foil, so he was a friend that I kind of felt, like, I had to, like, always show up and impress in some way. And the trigger that it was like, “I need to go to be with my dad in the U.S. and . . . ” No knock on my mom. Like, she had no idea about this obviously. I never told her even . . . if she listens to this episode, this will be the first time that she’ll actually know about this. And she got this aluminum foil ball of cocaine, and we walk outside of the train on the train station. And he started opening it just to make sure that it was there, and he would dip his finger and, like, rub it on his gums to make sure that it actually works. And I’m like, I’ve never, you know, been part of this or seen this anymore, but he would open that aluminum foil ball and I, just by instinct, held my hands underneath it in case anything would fall out. And, like, all of it fell out in my hands, and I was like . . . In that moment something triggered and I’m like, “I need to get out of this.” Like, this is just a bad path for me to go down. Not that I was peer pressured, but I was feeling I had to show off repeatedly, again and again. And so that was a very, very important turning point in my life.
Andrew: And so you go to your dad in the U.S. Your dad at some point sent you back to your mom in Denmark because?
Johnathan: So a lot of investments were made into me being a good basketball player, and we had a lot of . . . you know, I would say that my dad definitely lived vicariously through me, and I had a girlfriend at the time. And my focus was just, like, on her, not so much on basketball, not so much on grades, and he saw that and got very, very upset. And then one day, he had printed out a British Airways itinerary. And I was basically calling out his bluff. I’m like, “Well, dad, if you’re so upset with me, like, why don’t you just send me home?” And he’s like, “All right, pack your bags.” Like, literally that day, we drove to the airport, and he paid, like, $3,000 on the spot to get me on the next flight to go back to Denmark, which I then took, and it was just, like, the most emotional wreckage going through and it’s something that inside of me, you know, still is preventing me from having a super close relationship with my dad if I’m being completely honest.
Andrew: I get it. I get it. Could you still have resentment? I would even feel resentment for the fact that . . . Your dad had a mortgage company. Am I right?
Johnathan: Yeah. He had his own company, was making quite decent money. And, you know, I can’t blame him. I can’t . . . I’m going to move [inaudible 00:12:15].
Andrew: Why are you moving the mic? Why?
Johnathan: Yeah. Sorry. I’m moving away from the machine over here because it’s super loud. Sorry, one sec.
Andrew: Thankfully, the mic, I don’t think it’s picking up on it, but I’m glad that you’re aware of that.
Johnathan: I’m being proactive. Let’s see if this is better. Can you hear me now?
Andrew: Yeah.
Johnathan: Okay. It’s cool.
Andrew: It’s getting close to you. So you work for your dad, I guess you’re licensed?
Johnathan: Yeah. That’s later. So I go to Denmark. My mom, during that time of living . . . so I went from like 8th grade to junior year of high school, which is, like, 11th grade for people who aren’t in the U.S., and I go back and I have to wait until school starts again to finish high school in Denmark. And so during that time, my mom had moved to a different location in Denmark so that meant, you know, new area, new friends, new school. Again, you know, that happened quite often before that too. And it just didn’t work out for me to live with her and her boyfriend. And so we made the mutual decision that I should move out and I should get a job.
And so, you know, this is from me coming from a pretty cozy high school experience in the U.S., everything paid for, focus on basketball, and I just focused relentlessly on getting better at dribbling. I remember a lot I used this like medicine ball because I had this like aerobics studio where I had no basketball hoop. And I would practice a lot because I had nothing but time. But I got like stress-induced asthma and I tried to meet all these doctors and they couldn’t figure it out and eventually it just went away, but it’s because I had to go fend for myself now. I had to go do my own thing.
And so, during that summer, before starting high school in Denmark, I signed up for a basketball camp for the basketball team that had just won the Danish championship that got invited to Euro League, which is like a bigger, you know, expansive European League obviously. And I won the MVP of the camp, and I got asked to join the professional team. So I actually played professional basketball for two years while in high school, which kind of was like there’s, like, ongoing pattern of me taking something crappy that happened to me and turn it into something that’s, like, you know, very, very strong for me instead.
Andrew: The thing I was getting at was you eventually end up getting a job with your dad’s mortgage company. He decided, “You know what, I’m taking time off.” You’ve worked hard to get to work with him, and now you’re stuck. You don’t know what you’re going to do. And that’s when you say, “You know what, maybe I can get some work. Maybe I could start something of my own.” What did you decide to start because this is where the business side of Johnathan starts to kick off? What was it?
Johnathan: So I started the moment that my dad told me that he’s going to be gone for a couple months, and I had just gotten my real estate license to help him on the mortgage side. I’m not even talking about, like, what happened for me to come back to the U.S. But I was detailing his car. I was washing and waxing his car. And so I decided to figure out, you know, what’s a low-cost thing that I can do or to get my word out there that I can just wash and detail a car. It’s like, “We’re in Orange County, California. You know, Newport Beach, there’s a lot of wealthy people that have nice cars that pay to make sure their cars are kept clean. You know, I can do this.” And so I started posting my car detailing services on Craigslist is how I basically started.
Andrew: But before you even got to Craigslist, you thought, “Well, people have cars, they’re everywhere, I think I could get some of them to sign up.” What did you do?
Johnathan: So I went into my dad’s neighborhood and I printed out this little flyer that basically had my detail services on there with a picture of me. You know, you can barely see because the printer wasn’t even that great. And I folded it, and I put a little heart sticker on it. And I went and dropped it off on every single doorstep and every single mailbox thinking that people would like, “Oh my god, this is like a love letter. I’m going to open this up.” And then of course they were majorly disappointed because it wasn’t even that at all. So that was my start before even Craigslist began.
Andrew: And you got zero sales from that.
Johnathan: Zero calls, zero sales, yeah.
Andrew: Zero calls even. Wow.
Johnathan: Yeah. Nobody called.
Andrew: But Craigslist did work for you.
Johnathan: Yeah.
Andrew: What did you do on Craigslist? Where you, like, bombing Craigslist essentially? Constantly flooding them?
Johnathan: No. I didn’t even know how to be, like, smart about the auto-posting service because, like, you know, your chronological listing, your posting on Craigslist goes down over time because new ones appear above it. And so I just manually re-update them or post them again. But the thing that I did that other people didn’t at that time was Craigslist didn’t have a native image upload feature. So you had to go to take your before and after picture that I would have of the car detailing that I was doing, I would then go to Photobucket, get the image source code, and then paste that into Craigslist. And then, you know, my steam started happening. People started seeing me because they saw who I was, like, physically. And they were like, “This guy doesn’t look that bad,” and the people I was competing against were these older guys that would smoke cigarettes all the time.
And I remember specifically, they would change their listing to say, “Hey, don’t have some, you know, uninsured college dude come and wash and wax your cars,” which was completely true. Like, don’t do that. But, like, they felt threatened, and I was making probably, like, $300 to $400 a day on good days, you know, washing and waxing cars. And I was like, “I made it.” Like, that was my, like, entrepreneur-like I’m onto something here.
Andrew: That’s pretty impressive actually.
Johnathan: Thank you.
Andrew: Four hundred bucks a day is great, and it’s you doing the actual work. But more importantly, you’re learning about Craigslist, and you were starting to learn about Google AdWords. Am I right about that?
Johnathan: So I got an in-house job because I was kind of burned out from the whole Craigslist side, and it was a customer service rep job. And the boss, at that point, asked me, “Hey, look at this Google AdWords,” which was called Google AdWords then, now Google ads. I got him to send me to a two-day seminar. And I started learning how to do this kind of stuff. And then, once I was no longer working at that company, I turned back to the Craigslist and actually posted my pay-per-click advertising services, my Google AdWords services on Craigslist. And I’m like, looking back at it all I’m like, “Well, nobody ever called me back to come back to wash and detail their cars.” So I’m like, “I’m not doing that again.” Plus, it’s like manual labor. I pretty much sucked at it to be honest.
And then in addition to that, you know, Craigslist was this, like, free medium that people would look at that didn’t cost me any money. So it only took me time. Everything I did, from my business perspective, was all if it takes me time, I’m going to do it. If it cost me money, I’m not going to do it. And that’s how it kind of started.
Andrew: Okay. And so you go back, you place ads on Craigslist saying “I can do your Google AdWords for you,” people start to hire you, it’s nice that it’s easier work than going out and cleaning people’s cars, and there’s repeat business from it. And then this one guy comes in and says, “I saw you on Craigslist,” and he made you a big offer. What was he, who was he, and then what was the offer?
Johnathan: So a guy who runs a car buying service where he buys cars from the public and then sells them to auctions to make, you know, the difference, basically called me and said, “Hey,” and it sounded like a car salesman, and I was like, “You know, nobody wants to deal with a car salesman,” so I kind of didn’t believe him. He said, “I spent about $50,000 a month on Google AdWords, would love to . . . ” He asked a couple of questions that I apparently answered correctly, and then we met at front of a Barnes and Noble and he was asking me, “You know, I like you, you know, can we work together?” And I was like, “Yeah.” And he’s like, “What do you charge per hour now?” and I didn’t even know, I hadn’t figured it out. And I was like, “Thirty dollars.” And so he pre-writes me a check for 100 hours, which is $3,000. And I go, you know, not cashed it, I go deposit it, and it clears and I’m like, “I’m onto something here even more so.” And I got, like, you know, like, the thrill and the excitement was insane. Fast forward, he basically wanted me to perfect his account to then sell to a nationwide competitor.
Andrew: Sell that business to a nationwide competitor.
Johnathan: Yeah. Sell his Google AdWords account, like the way that it was set up because it was performing so much better than theirs. So he sells it, he gets exclusivity in his area, which is like the Anaheim area in California, and he basically gets them to close for a year, and I think it was like $25,000 a month or something like that, I get $5,000 of that. And this is me being like a junior in college. And so I was making about $15,000 with other clients as a senior in college, you know, almost decided to quit because I’m like, “I’m not learning anything that’s valuable. I’m learning about geology, which I’m not going to use for anything but general education.” But the very important piece of that is my point of contact for that year contract was a guy that I co-founded an agency out of Utah with.
Andrew: Let me see if I understand this, what was the business that he was in, that he was able to do all this?
Johnathan: So the original guy that wrote me the $3,000 was basically car auctions. So he would buy cars from the general public, wouldn’t say that he would lowball them, but, you know, people are looking to sell their car, he would buy it, and then he would flip it and sell it on an auction for [inaudible 00:21:40] . . .
Andrew: And so you were buying ads for him so that he could get people to sell them their cars. And then once he had his ad account working so well because of you, he sold the ad account . . .
Johnathan: Exactly.
Andrew: . . . to a major company that did this?
Johnathan: Exactly.
Andrew: And then they would place ads under this account that you created and send him the business locally from it, but they’d run nationally and send that business to other people. Got it.
Johnathan: The reason why is because the cost per lead was so much lower than what they were achieving. And so it was a mix of the ad account structure itself, but also a mix of the landing page performance, which was a huge part of that [inaudible 00:22:16].
Andrew: And that you did too.
Johnathan: Exactly. Yes. So I was not a designer by any means, but I was, like, [smartly 00:22:21], you know, slowly split-testing the different things that can actually happen. And so that was, like, part of the DNA of client who’s making sure, like, you know, it’s easy to get traffic, it’s much harder to get that traffic to convert, so what else can we do to influence, you know, the metrics to make it look favorable and actually . . .
Andrew: So we’re not just buying ads, we’re taking over the next step, and if we can’t reduce the cost per lead from the ads, we can increase the landing page convert. What software did you use to increase the landing page conversion?
Johnathan: Unbounce.
Andrew: So you were one of the earlier users of Unbounce which was a beautiful software.
Johnathan: Exactly.
Andrew: I remember when I first discovered it. All right, let me take a moment talking about my first sponsor, and then we’re going to get back into this. So my first sponsor is a company called Toptal. Did you know calm.com? You know, the meditation and sleep app?
Johnathan: No.
Andrew: Do you know them? No.
Johnathan: Oh, I do. Yeah. Sorry. I do.
Andrew: Yeah. They’ve been, like . . . I think ever since they switched to saying we’re meditation and we’ll help you go to sleep, people started signing up. I don’t think sleep . . . I mean, I don’t think meditation solves a big enough problem that is immediate enough for people to get that worked up about. But if you say, “We can help you fall asleep,” there are enough people walking around saying, “Well, I’m not getting enough sleep. I could use something. Great, I’ll sign up and pay for subscription for it.” I remember I interviewed the founder, Michael Acton Smith, about how they were falling behind this other company and meditation. They’ve way caught up. They now have over $150 million in sales. They are over a billion-dollar valuation. The guy is just killing it with this thing.
And so because they’re doing so much business, they can’t afford to have [outage 00:23:51] and then they did. It was in the news for a bit, they had an outage, the site wasn’t working, they couldn’t sign people up, and it was a big deal for them. I’ve got statistics here that say that their outage cost them about $40,000 per hour because they sign up that many new subscriptions. Think about it . . .
Johnathan: Wow.
Andrew: . . . every hour, $40,000 new subscription business come and killing it. Anyway, the good thing that they did was they went to Toptal and they hired this guy, Christopher Stobie. He’s a senior engineer in the AWS DevOps practice. They hired them before they had this issue because they couldn’t hire enough solid people.
Well, this guy was so good. He wasn’t just able to get them back online, he was also able to transfer . . . this is where we start to get too deep into the weeds of what the technology is so I’m going to leave it out, but it was transferring their . . . he was rebuilding . . . how do I say this, build a new fully automated cluster managed by AWS instead of having Calm manage it. So he rebuilt it, and he had Amazon Web Services, AWS, manage it. And he was able to do this because he had the experience, he had the knowledge, and he was somebody who had done this type of work before.
That’s the benefit of having someone from Toptal. You get the best of the best people that you ordinarily wouldn’t have access to, but Toptal does and they can save you money, they could restructure your business in a way that even a billion dollar company hadn’t thought of and wasn’t able to do before. Anyone out there, including you, Johnathan, when you’re really ready to hire the best of the best developers, we’re not talking cheapo, best of the best . . . what were you going to say?
Johnathan: No. I was just saying this is actually an amazing social proof ad that you’re explaining right now that actually has me . . . I’ve seen Toptal’s ads everywhere. But now, I’m even more hooked on the value that they bring when we have that [need 00:25:34]. That’s all I’m saying.
Andrew: It’s phenomenal, the level of people that you can get from there. And to be honest, it scared me from hiring them at first because I said, “Well, I just have a WordPress managed site. What do I need to deal with Toptal?” And then I had an issue, I went to them, they had this guy who was so freaking phenomenal. All these issues that I had over the years, he was able to resolve within hours.
Johnathan: Wow.
Andrew: And then, basically, he resolved himself out of a job because we didn’t have any more. He was like cleared up. All right, so anyone who wants to hire developers from Toptal, go to toptal.com/mixergy. When you do, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours. I’m intentionally saying that quickly because I don’t want you to sign up just for the free time. I want you to sign up because they have the best of the best people. So go top as in top of your head, tal as in talent, T-O-P-T-A-L.com/mixergy, toptal.com/mixergy to get that offer and to get phenomenal developers. All right, you were starting to say co-founder. You have a co-founder at KlientBoost?
Johnathan: No. So my previous agency, their name is Disruptive Advertising. The CEO there, who I was co-founding the agency with, was my client at that national car buying company.
Andrew: Got it.
Johnathan: He saw what I was doing on a small scale. He came from the enterprise background, and so, you know, my scrappiness, and hustle, and, you know, rolling up sleeves mentality and he’s more like button up, like “Hey, I can bring in the money,” was a perfect mix. And so I was there for about a year and a half living in in Utah. And then, you know, we knew it was temporary. We’re not Mormon, not LDS, either. And so, you know, we got married during that time that we were living there and then we were wanting to start a family. We want to be close to our own family. So that was the backstory of the Utah days.
Andrew: So you start working with him building this agency together, why did you leave?
Johnathan: Well, part of it was, one, I knew it was temporary. Like, from day one, we did not . . . you’re replacing Southern California and me coming from Denmark originally which has, you know, not the best weather, you don’t want to then go back to something similar living in Utah and also just being away from family. At the end of it, I was basically realizing that I could do everything, I can do sales, I can do operations, I can do marketing, and that kind of gave me, you know, the confidence to do my own thing.
And, in addition to that, I was a minority owner, and so at the end of the day didn’t have a lot of say. I wasn’t equal which is all fair because we already decided on that prior to engaging together. And there was just some disagreements in regards to, you know, the brand, like this is what I care a lot about. I care a lot about brand, and that’s the content. I care a lot about investing in those things that become evergreen and snowball. The snowball keeps growing and growing. That’s what we’ve proven because our customer acquisition cost is so low compared to theirs.
Andrew: Were you basically taking his approach, the idea that you guys had come up with together and going and doing it on your own so own 100%?
Johnathan: Basically, my goal when I left was to start the software. And so the amount of people who reached out to us through the content that we were writing was not expected. And so now I was like, “Well, I keep raising the prices.” Like, we were closing, you know, $10,000 a month deals, $15,000 a month deals. Some of those people are still with us today, like, almost five years later, and I was like I’m kind of stupid for, like, starting to say no to these people because I’m like money is there. Like why don’t we just build a smaller agency and like do this later?
Andrew: So you leave Disruptive . . .
Johnathan: Yeah.
Andrew: I’m sorry to interrupt. You leave Disruptive Advertising and you go and start your own software company?
Johnathan: Yes.
Andrew: And instead of that, and the software company was going to do what?
Johnathan: Basically automate a lot of the things that we do manually as humans.
Andrew: And were you able to sell that? Were people paying you for it?
Johnathan: No. So we didn’t start it at all. We postponed it until last year. That’s what Kite is now.
Andrew: That’s what Kite is. I was starting to mention that earlier. So you create the software, and then you see the people willing to pay you to do the service and you say, “Why am I going to give up the service money when they’re willing to pay?” How did they even know that you’re out on your own and had how’d they find you to pay you?
Johnathan: The content. They found us through content. So I was guest posting a lot. I was writing on our own blog as well too. I was part of podcasts. I was doing webinars, in-person events. I was basically trying to partner with any company in the marketing space that was bigger than us, like, back [inaudible 00:29:55] . . .
Andrew: To create software first? You were still writing content and . . .
Johnathan: No, no, no. At that point and probably three months in we’re like, “Okay, we’re just doing the agency route. We’re going to postpone the software because it’s just a gold rush right now from an agency perspective.”
Andrew: Okay. And so you started going into it and then you wrote a bunch of blog posts. Was it you sitting and writing blog posts?
Johnathan: Yeah. I was sitting and writing those blog posts.
Andrew: Yourself?
Johnathan: Yes.
Andrew: How can you be so freaking prolific? It’s really hard to sit and write something thoughtful, creative, and in a competitive space. Like, you’re writing on Unbounce blog. How did you do it?
Johnathan: So part of it is like having an amazing amount of confidence to begin with. Like, all of the things that happened that were bad in my life, I turn around the whole basketball thing, playing pro. I turned around. So I just knew it can be possible. If anybody could do it, I could definitely do it and I’m going to do it as well. But the reason, the simplicity behind it was so simple, which sounds obviously like, yeah, it would be, but all I did was I took the domain authority of a website that I knew had the chance to rank when I actually wrote an article and when I got that first yes, I would use that as a proof to get the next yes. And then I would use both of them as a proof to get the third yes.
And so I’d use this thing called the yes ladder technique and if anybody said no, I’ll figure out why and I would actually care. And I would be like, “Oh, well, let me write the article for you first,” and so that meant that I could actually start writing these articles actually on the same topic, the same focus keyword, and all my guest posts would dominate page one of Google, like, in different . . . like, yeah, number one, number two, number three without my own client whose article even being close to being there, but then all the backlinks started happening.
Andrew: Got it.
Johnathan: And so I decided myself, hey, this is a long-term play, this is thought leadership, this is scratching people’s back, this is giving value, and that led to this 25 days of Christmas, which is a whole another thing that we did, was actually really not performing well at all. But we did these gifographics, not infographics, but gifographics, like another step up of 25 brands that were way bigger than us to say you’re going to put your logo next to ours and in addition to that, we’re going to write an article for your website and we’re going to write an article for our website on the same topic but they’re going to be different. And so we just had, like, an insanity in regards to content creation early on.
Andrew: The thing that I’m trying to understand is how are you able to write that much? How do you sit down and produce so much? It feels like part of your strategy was you said, “What are people saying out there, and how do I argue it?” and that was an idea generation?
Johnathan: Yeah.
Andrew: What else did you do to get yourself to write that much?
Johnathan: I literally just looked at tools like SpyFu or Ahrefs in regards to what our competitor is ranking for. And I still to this day has zero technical SEO knowledge. I could write two articles per day. I could write an article in four hours and it can be longer, more well-thought through, more data. I was just very fast at doing it. So that was one part in regards to your volume question, like how I was able to do it. But this also became very, very unmanageable, as I was being the own account manager, meaning like I was a marketer, I was a salesman, and I was a person fulfilling the client work. I was almost about to quit in that first year multiple times because the stress was just like . . . again, the expectation setting was crap. Like, it just all felt like it was a house of cards at any given moment.
Andrew: Johnathan, were you on Speed at the time?
Johnathan: No, I wasn’t. And I was also not on cocaine from my earlier childhood days. No.
Andrew: Nothing. There’s a well-known writer in the space who was . . . and I asked him, “How do you write your book so fast?” He goes, “I took these pills.” I don’t know enough about pills. Essentially, it seems like it’s Speed that sped him up, and that’s what he was able to do.
Johnathan: Adderall.
Andrew: No. You know what, I don’t even know well enough to remember it, but it was something that got him to just pump it out overnight, just sit and write, write, write. I’m looking at an early version of your website. You were offering 14-day free trial to buy ads for people, pay-per-click ads.
Johnathan: Yeah.
Andrew: How’d that work for you as a marketing approach?
Johnathan: It worked great. One thing to keep in mind is that we didn’t pay for the advertising spend, that was still on the client, but it was more so like my whole focus that you still see to this day, and I can give you examples of it too, is how do we do anything that we come out with that’s just different and objectively better than our competitors. Nobody’s giving out free trials for an agency. They’re all doing it for software, which is understandable, because there’s no human capital as equal as like an agency world.
So this was just my chance to say, “Hey, lower the barriers to entry, make them more comfortable, have the conversation with them,” and that started leading to a lot more conversations versus not having a free trial and I could still say no to the client. Like, if they were too crazy, or whatever, the business didn’t make sense, I guess they’ll say no. It just gave me a chance to talk to them. Once I talked to them, it almost felt like as if like my batting average was so high to close them that why not give them that, and forgoing 14 days of revenue when you really don’t have any other costs is pretty [inaudible 00:34:57] . . .
Andrew: Why? Because I wonder if it was drawing the wrong customers to you, because you would also say you’re going to get $100 in free AdWords credit which would come from Google, which is only for new advertisers, which means somebody who doesn’t have a Google ads history, who also is caring about 14-day free trial, it feels like they’d be really bad customers, were they?
Johnathan: Bargain hunters. For sure. And I totally had a lot of those conversations too. There was some people selling wigs on Amazon, and I’m like, “I can send you Google traffic but we can’t even track if you get a sale or not.” Like, those kind of things are a lot of . . . and, you know, for me, again, what was the downside for me? I could throw as many darts as I wanted to and I don’t care if half of them stick or not, meaning the clients relationships afterwards. All I had was time. And so, like that 14-day free trial didn’t last longer because now we started making a name for ourselves. And so that was something that we moved away from because we’d rather have clients, you know, line up around the corner and have a have a reputation instead of that.
Andrew: And it was just you, but it looks like you had a couple of people who were working part time like Mike, Katie, and Matthew.
Johnathan: So Katie was part-time. She was actually an employee. Michael was my Danish friend who got his school in Denmark to be okay with an internship with me, which I have no idea how they said yes to because all we would do was eat in and out and play Mario Kart all day long, and like he’d help with the website, but he was literally not an employee. And then Matt, Matthew, was my roommate. They were not employees. They were just there to make ourselves look bigger than we were.
Andrew: Got it. And Katie’s job was to be a photographer because you didn’t want to have a lot of stock photos and what?
Johnathan: So, in the beginning, when I looked at the competitive landscape of other agencies, like you go to the About Us page, it’s literally stock photos of people shaking hands. Like, there’s no who am I actually working with, like, this is human-to-human marketing, and that’s something I never forgot about, which makes us more approachable. And also, today, if you read our bios, like they’re all written by me. I roast my own team members, like, you know, and people laugh. It’s one of the pages that people spend the most time on on our site. And so she was a photographer, but she was more of the account manager, and I was teaching her how to do things.
Andrew: Got it. She was starting to do some of the things that you were doing that you could pass over to her. This was now you starting to build it up. The clients came largely from you doing guest posts. You also were doing cold email outreach. How did that work?
Johnathan: So I use a tool called SpyFu, which basically allows you to see the advertising spend on Google per domain. And so I can just find local companies. I can literally drive down the street, look at company buildings and find their names and find their domains, put that in there. And if they’re spending money, all I would really do was take a screenshot of the things that I think were bad and then send it to them. So I started with like how do I give them value first, and we landed like a tax consultancy, like get out of IRS debt kind of client. We landed also in the car space, but it was more for junk cars, like salvage and donate your car to, you know Cars for Kids kind of thing too. Those are the ones that early on I remember.
So that would work as well too. But I was horrible at scaling. I was horrible at automation. Technically, still to this day, I suck at all of that. And so it wasn’t something that you can do much quicker today.
Andrew: But it did get you customers, and it’s just you going and saying, “I’m getting some people coming in because they’re reading my blog posts. And I’m also going to go out and anyone who I see who’s buying ads who I can improve, I’ll take screenshots of what I would improve. I’ll offer my services to them, and then they can hire me.” And is it a service where you get . . . how were you getting paid back then?
Johnathan: Just retainer. So retainer flat fee was the start of it. We didn’t even think about percentage of ad spends, like if they grew their ads and we would make more money. Today, we have a flat fee or percentage of ad spend, whichever is greater. But we also have, like, consultancy and things like that in addition to the regular retainer. But it was just like a flat fee every month. And I was so silly early on because I was like, “Hey, instead of having you to pay me month by month, I’m going to have you pay me week by week,” meaning you don’t even have to commit to 30 days with me, you can just commit to me 7 days at a time, and I thought I could manage. But what I found out was it was, like, annoying to, like, follow up with weekly invoices. And, like, the other thing is, like, every week, they would have to justify, “Does it make sense to keep paying Johnathan? Does it make sense to keep paying?” So that was, like, my whole, like, how do I lessen the concern that they might have early on.
Andrew: You know what I wonder, why don’t more agencies automatically take money out of their customer’s bank accounts? Like when I signed up for inDinero to do my books, so a long time ago, they had me on credit cards and they were charging the account every month. And then they said even credit card, “Well, why should we pay credit card fees when Andrew is not getting that much benefit from it?” They took my banking information, they started taking the money out every month, and they were doing the service where they were doing my books. Why don’t more creative and other digital agencies, why don’t they just do that too?
Johnathan: So we do Stripe today, which is still something that we pay probably like $15,000 a month in merchant fees. It’s 2.9% plus 30 cents to transact.
Andrew: I hate that.
Johnathan: It’s crazy, right? But for me, I wanted simplicity. I wanted cash flow. And so I didn’t care about that 2.9% to begin with. Now, we’re moving toward . . .
Andrew: But even that, why send out invoices? Why not automatically hit their credit card?
Johnathan: No, 100%. But that’s what I’m saying. Like, I would refuse to send invoices because I didn’t want any stop and go. I want to have fluidity and continuation. So a lot of agencies do that, and they don’t collect, and they don’t have systems for that, and it doesn’t allow them to focus on what they need to do for the client. And so I agree with you. I think it’s one of the things that I . . . I run another business called GrowthComet which is with another co-founder. His name is Ross Hudgens, out of Siege Media. They’re an SEO Content Agency. We have a community that we basically take people through our growth. And it’s $200 a month, where it’s like $2,000 for the full year. And we talked about that. Like, you need to remove the friction point of invoicing and having the client every time they get an invoice mentally had to think about is it worth continuing, worth continuing. Like remove that, make it fluid and do that. So that’s what we did. Now, we’re paying the price for it, but I still wouldn’t change it to be honest.
Andrew: So then what got you . . . so far, we’re looking at pretty small but consistent revenue starting to come in. What took you to the next revenue level beyond you doing some blog posts and doing the work, beyond you sending out email and telling people what you could do, what they could do better?
Johnathan: It sounds super unsexy, but it was really just continuing to write blog posts, to plant more seeds as I call it, to build that snowball because our organic traffic has grown quarter over quarter since the day that we started. But the way that we did it was we literally follow something called a skyscraper technique. If you heard of Brian Dean from Backlinko, he coined this. I call it the lemonade stand principle is that you just look at the competing blog posts that are ranking for the keyword you want your blog post to rank for, you make sure you have more words, you make sure you have more examples, and you make sure you have more data, more humor, and that’s it. And then, we just publish. And literally, it just took care of itself and then we started getting more and more backlinks, our domain authority started going up.
And, today, we’re basically competing against agencies that have been in business 5, 10 plus years longer than us that actually offer SEO and content to their clients which we don’t. And we have a better domain authority, we have a higher domain authority, then we have a stronger SEO presence in them in much, much shorter time, which is, like, very ironic, but it just shows you we just cared about quality every single step of the way, and we never slouch from that.
Andrew: I’m looking at SimilarWeb, and it looks like one of the things that you guys do is you’re on listing services like clutch.co.
Johnathan: Yeah.
Andrew: Are you guys buying ads there?
Johnathan: Sponsorships. As of recently, we have, but probably we started doing that, like, three to four months ago. And why I highly recommend that if you can afford . . . like Clutch, for example, is $15,000 a month, and when you measure the volume and the CAC, you know, the customer acquisition costs, it makes sense for us because of the lifetime values that we have, but it might not make sense for, like, you know, every agency that might do project-based stuff that isn’t recurring. So we did that as well and it just is another, you know, adding gas to the fire for us of another platform that we’re using and taking advantage of.
Andrew: What about Fiverr? Why is Fiverr sending you traffic?
Johnathan: That’s a good question. I actually don’t know why they’re sending us traffic. I don’t know if they’re sending us traffic.
Andrew: They are. SimilarWeb says 4.41% recently. You did that. What about increasing prices? Because, so far, what we’re looking at is not a business that gets to $10 million a year, which is where you are now. What helped you go beyond what you’re talking about so far?
Johnathan: So, like, this year, for example, we’ve got a lot more bigger clients, enterprise clients, and it slowly has increased over time too. But if you look at our, you know, average client value, not much has changed to be honest since day one. And so it’s more so a volume game for us now where we are now entering a phase where we’re going to start offering more services that are, you know, very, very tied to the performance of pay-per-click advertising and conversion optimization like email, conversational marketing, content, SEO. So it becomes more of us . . .
Andrew: Meaning you want to start adding more of those services.
Johnathan: I do. Yeah. I do.
Andrew: But you haven’t yet. And so you’re saying part of it is just doing more of the same size customers. What’s your typical customer spend?
Johnathan: Typical customer spend can range from, like, I think average is probably like 40,000. So we have ones that are obviously way higher . . .
Andrew: A month?
Johnathan: Yeah. But those are outliers. So our average fee is no more than like $4,000 or so per month per client.
Andrew: Four thousand. So it’s a bunch of SMBs and now a little bit of the Bloomberg, Stanford, you told our producer, Brink’s, Airbnb has worked with you guys, those are paying considerably more, am I right?
Johnathan: Correct.
Andrew: And so what do you do differently to go after the bigger customers?
Johnathan: That’s the beautiful thing too, we don’t go out for anybody really. They’re all inbound. So they come knocking on our door. We average about 500 leads per month inbound.
Andrew: Just coming to your site, hitting that request a free . . .
Johnathan: Proposal.
Andrew: . . . consultation, proposal. That it. And it’s all from content.
Johnathan: Yeah. So, right now, we have like more enterprise companies that are in the pipeline that are working on getting closed and all that kind of stuff too. But it’s not something that we go out and reach out to. Again, we start with content, we show that we are, you know, who we want to be as thought leaders, and we challenge the norms, and we split tests, and we show that with data. And I think that’s what gives people a lot of confidence in wanting to work with us.
Andrew: I see that. So I’m new to Ahrefs. I’m so new to them. I still call them Ahrefs when they were buying ads for me.
Johnathan: Everybody call them different things. Yeah.
Andrew: But it seems like the people in the know call them Ahrefs. Neil Patel call them Ahrefs when he said, “I’ve got to compete with them.” So I go to Ahrefs, and I see where your backlinks are coming from. It looks like Neil Patel is sending you a bunch of links like “Content Marketing Made Simple: Step by Step Guide.” That’s his blog post. He linked to one of your examples. Is this still you working your network? Unbounce is still linking to you. You were working there. What am I taking away from that? What should I be taking away from that because I feel like I’m missing a lot?
Johnathan: It is horrendous of how much we’re leaving on the table in regards to what more we can do to get more backlinks if we did anything proactive, but we don’t, honestly. And I think that shouldn’t scare you, if you’re listening or watching. It should more be, like, well, I can come up with quality content, I can make sure that I have that, then I can also focus on promotion and getting those backlinks, and I can speed up the process to grow my domain authority. But we haven’t done anything. Those are just . . . I’m assuming, you know, entrepreneur respecting entrepreneur and giving a hat tip with a backlink, but they weren’t asked for.
Andrew: So then, what am I missing from why you were able to break through as an agency where for many people, frankly, they’re stuck in making maybe 100,000, 120,000 a year and they can’t break beyond their time for money.
Johnathan: I think I always focus on the long-term game. I basically started client KlientBoost again when I left Utah. I hired two designers as my first hires. And I basically had $60,000 . . . I actually had $130,000 in the bank, and I said, “I’m okay going six months having absolutely zero clients because I want to invest in content, and I want to invest in brand. I want to invest in illustrations to be different.”
Like, it’s so easy to see how different agencies can be and I think a lot of people are catching up and understanding that design is super important. It’s very subjective. That’s the only downside. Like, you can’t measure the impact that it has on you, but you can see who cares about the details, the investing and, like, the actual high quality photos, the headshots from our team, things like that that we still do today. All those things just gave us an advantage and now we just are basically adding more snow to our snowball by all the new blog posts that we’re publishing. Now, we have our own podcast, we’re doing video content, like we’re adding more resources to build our brand even more.
Andrew: It’s the investment in creating content that’s not going to necessarily result in orders and new signups right away. It’ll take a few months. Investing in design, that’s hard to justify, but you knew that if you could invest in design, you could do what, get more customers or charge them more money because it feels more premium?
Johnathan: From a first impression standpoint, when they’re looking at us versus anybody else and they see that their About Us page has no human pictures of anything, has no personality, like, again, it’s human-to-human marketing. And I honestly think too that a lot of marketing agencies just purely suck at marketing themselves. It’s very easy to go in and push buttons and pull levers, but to actually, you know, get to a point of marketing yourselves where you then hit a threshold where like, “Okay, the amount of clients we’re losing and the amount of clients we’re gaining is the same, we’re just treading water, how do we get to the next level?” I think that’s the mark of a true marketer. And, you know, a lot of agencies out there because there’s no barrier to entry, they start and they focus on referrals, they focus on their network and that dries up very quickly. So me looking through the long term and trying to build a brand from day one has been the benefit of what we have today and still reaping those rewards from it.
Andrew: What’s that blog post he wrote for Inbound that was doing so well? Seventeen landing page . . . I’ve got it here on one of my million tabs about you. What was that, and why did that one do so well for you?
Johnathan: You’re saying for Unbounce or Inbound?
Andrew: Inbound, Inbound. Sorry.
Johnathan: Inbound, the community, inbound.org? Which one are you looking at?
Andrew: You know what, it wasn’t Inbound. What’s the one that you were telling me before we got started . . . ?
Johnathan: Unbounce. Yeah, you’re doing AdWord [inaudible 00:50:36]. You got to try to do it right.
Andrew: Unbounce. Got it.
Johnathan: Yeah. So we took a blog that basically had higher domain authority, it was already well established, had a lot of readers, and it was about landing page optimization. Like, that’s what Unbounce does, like, that’s your software. If you’re going to care about landing page optimization, you should care about the traffic that’s going to your landing pages. So it’s a perfect audience to write for, and all I basically wrote was a new structure of running your Google AdWords account, and I went against the grain. And the headline was very challenging. And by luck, I actually didn’t come up with that headline. It was just very challenging and going against the grain by itself, and it says, “You’re doing AdWords wrong, here’s how to do it right.”
And the amount of comments that came through has been, I think, over 600 so far. And a lot of people, you know . . . So the structure that we mentioned is something called single keyword ad groups. We didn’t actually invent this. We invented that format execution for it, and it basically translated into a lot of other agencies, a lot of other companies adopting it and making it very popular, which kind of put us on the map as well too. And that was one of the blog posts in addition to our own plus other guest posts that we wrote that kind of had like the flurry of new client requests coming through early on in the days of KlientBoost.
Andrew: Now I see it. Yeah. I was confusing Inbound with Unbounce. And I see it. That’s the one . . . Is that you holding the two big jugs of Nutella?
Johnathan: That is me in Costco joking that I’m a big fan, which I still am to this day, big fan of Nutella. And people call me Mr. Nutella from that article still to this day.
Andrew: Oh, yeah. This is a pretty, pretty long thought through piece of content here on their site. All right, you know what, I feel like we’ve talked just about the good stuff. Let’s end it with one of the challenges. Apparently, you had an issue with compensation. Can you tell me about that?
Johnathan: Yeah. So one of the big things that I’ve always been very focused on has been, like, how do I build a company that I would want to work for myself. And we have five values of the company. They spell PFART, and we’re trying to change the F to Y so it can spell party, but we haven’t decided on what that is, but that they stand for pushing ourselves, so like, on and off the court, so to speak, like half of us have done Spartan races and we go together to do Spartan races, which is a really, really cool thing. The F is for fun, A is for accountability, R is for resilience, and T is for transparency.
I’m going to talk about the T part because I wanted to make sure that we can create a compensation plan and structure that was fair to everybody, that was also, like, basically we get commissions, and with this comp plan, we were giving more commissions and we’re also giving other people in the company who didn’t get commissions before commissions now, which were actually the designers that we’re carrying about the conversion optimization piece. And it backfired. And the reason why it backfired was even though we said, “Hey, we’re lifting the curtain on what everybody makes because it’s based on the amount of clients they have and what the clients are paying us,” which is fair, everybody can agree to that, but the people who were holding a lot of clients were basically having to lower the money that they can make for the time being. It was just a few, but it was our best performers. And so, in person, I was like, “Are you okay with it? Are you okay with it? Are you okay with it? Do you see the value of this?” and like, “Yeah, yeah, yeah,” but they were definitely afraid to tell me the truth.
And so we rolled out this compensation plan, which basically, again, everybody knew what everybody’s making if they knew how many clients they had and what the clients were giving, paying us, but it made it obvious that designers and account managers were being treated differently, which is true. And I told them like, “Hey, the job market, the economics behind it, there’s way more applicants of designers than there are account managers, they just make more money.” It was a truth that was hard to swallow.
And so we basically had, on one day, three key people put in their two weeks’ notice. I was like, “Holy shit.” That day, my mind was firing on being so just busy and so on top of it, so damage control that I remember when I closed the door of my car leaving home for that day, I immediately felt sick, literally like flu symptoms, cold, sick, like I was exhausted. And so I saved two out of the three people and got them to realign expectations. I understood too, “This is the accountability aspect. Like, I apologize, I want to do better,” and then that third person who left actually came back probably six months later as well, which was like a huge, awesome statement higher and just definitely an ego boost, not going to lie. But she’s here today too still.
And, you know, what we learned was that if we’re going to be honest and transparent and truthful with each other, it has to go both ways, meaning, yeah, it’s a truth that designers make less than our account managers here. It’s not the truth that you’re not equally valued, or it’s not the truth that you’re not getting more wins than the accountant manager sometimes, but it’s just a truth. And so I’m not going to live or operate a company that doesn’t, you know, basically keep myself accountable.
So, to this day, I basically share revenue numbers, I share profit numbers. I share where the number is like, where we’re spending money, where it’s all going. Anybody could tightly decide at any given point to start another KlientBoost if they wanted to, but I’m not concerned about it because I know that like all the things that are not being spoken about, all the little friction points or annoyances that team members might have are removed because we both operate from the same source of truth. You can see what I see. And if you have an idea to invest in something or do something more that costs money, we can go back to the numbers and we can look at it together, we can define it together. And so while it was a shit show back then, I’m glad it actually went through and we did it because we learned so much and we’re in a much better spot of it today. But we can always make it better as well too. That’s what went down.
Andrew: I like that you were able to go back and try to win them back. I would have thought that they’d have jobs already, but they quit before they had new jobs.
Johnathan: They did.
Andrew: They did.
Johnathan: They had offers. One had already accepted one. One was about to accept the other one. And, you know, honestly, I gave them shit. And I was like, you know, after . . . I was basically guilting them as well. I’m like, “Hey, if you go to a bigger company, I get it, and it feels like the grass is greener, and I understand that too. But the truth is you’re going to go back in the line of all the equity that you put in being with me in the front lines. And once you get that raise right now, when you are then complacent but then want to do the next thing, what are you going to do? Do you really think that you’re going to have a close relationship with the CEO there as you have here?”
And it was that plus other things we just talked about. But, again, it was also me showing vulnerability. It was me showing, “Look, I’m sorry. Like, I made a mistake. I did not think that doing something as obvious as like messing with people’s money in this, like, open forum was probably not the best way to do it. And I’m learning from it, and I’m sorry. And I want to make sure that you’re taken care of.” And so I had to match some salaries for the time being and I’m okay with that. And I had to, like, put some things in place from like a future growth perspective. Like, I’m okay with that as long as they know that, like, what they do has value to the company and we can measure it, then, like . . .
Andrew: What do you mean, in a future growth perspective, like, you were giving them a piece of future profits of the business?
Johnathan: No. Not profits, not equity either, but more so like, “Hey, if you can manage . . . oops, there goes the microphone, if you can manage . . . Can you hear me okay?
Andrew: Yeah.
Johnathan: If you can manage, you know, X amount of revenue, or if you can be in part of other things, if you want to do part sales or whatever, we can add additional incentives that you can hit to grow your salary as well too. It was more of that conversation.
Andrew: Got it. And now you own 100% of the business still, is that right, Johnathan?
Johnathan: Yeah, I do.
Andrew: And everyone in the company knows the profit. What’s the profit now?
Johnathan: So, right now, it hovers around like $100,000 a month. It’s fairly low right now.
Andrew: And isn’t there like the sense of jealousy then? They’re all helping you build this thing. They know enough that they could go create their own company. There’s no sense of jealousy?
Johnathan: If I was in Denmark, I would say yes. But I don’t think anybody can argue. And the reason why I say in Denmark is because a lot of people are envious. There’s a whole, like, the socialism aspect. But this is what I love about this country too is the people who actually lead and can actually accomplish this with the help of everybody else. I can have conversations and if anybody wants to say, “Hey, Johnathan, you know, I can do this myself and I can make good money. But then once I’m there, I don’t know what to do next.” And that’s the truth because they don’t know how to tackle, they don’t know how to have, like, the holistic focus. And like I said, most marketers suck at marketing themselves. That’s a challenge, and a lot of people don’t know that. They also don’t know how to lead, you know, that kind of stuff.
So, if you ever read the “E-Myth” where it’s like the example is like that lady who’s really good at baking bread or baked goods but she sucks at accounting, she sucks at all those other things, you don’t want to wear all those hats. I think people know that.
But the other thing is, like, I’m extremely open. If somebody comes and says, “Hey, Johnathan, I want to make a quarter million dollars a year. How do I do that?” I sit down with them and actually, like, I go through the options today of how we can actually make that happen.
Andrew: I do love the “E-Myth.” I think the founder . . . yeah, the author, Michael Gerber, his thought on Mixergy. I love that he was on here. It was the one book that was recommended to me in school that actually helped me, that came through when I was running a company.
Johnathan: Nice.
Andrew: And the software that you created, it’s Kite, is it meetkite.com?
Johnathan: It’s Meet Kite. Like, say hello to Kite, like meetkite.com. Yeah.
Andrew: And from what I could see from the homepage, it helps you hit your pay-per-click goals faster with return on investment-based optimization.
Johnathan: Correct. So, basically, you tell Kite what your goals are. Right now, it’s only Google ads. They will be Facebook ads in the Q1 of 2020. And, basically, you can tell what your goal is and it’s going to then scan the entire account and come back with a prioritized list of the changes it recommends that you make, which is what we do manually today.
Andrew: Why are you doing this interview with me? What’s the [goal 01:01:20] for you?
Johnathan: Well, I like sharing stories of crap, to be honest. I want people to know that, like, yeah, we share our milestones and we celebrate and we have a lot of fun, but there’s a lot of stuff that goes behind the scenes that are really shitty. And even to this day, like, we have had four months of sales records being broken this year alone, and I get like this dopamine hit and then immediately disappears like two minutes later. We lose a big client and I’m like pissed for two hours. And I’m like, “What is wrong with me?” I don’t equally balance the good and the bad. I gave way more credit to the bad when it happens. And I still struggle with this today.
And even if you’ve done this a million times, like, I left my old agency thinking I had the playbook on how to build an agency, I still suck at it. I still suck at it today. And so anything I want people to know that like . . . not to sound super sweet and like, you know, you can do anything you set your mind to, there’s a lot of things that you need to be really, really good at, and I think for most people, especially in marketing or advertising agency, you’re going to have a hard time doing it. But just welcome the crap but use it to actually understand what can be better. That’s like the main message that I wanted to share today.
Andrew: What’s the name of the book that you’re going to come out with at some point?
Johnathan: “The Art of Eating Shit.”
Andrew: I feel like that’s a good title right now. That anything with a curse word in it is really selling. Even in airports I see it.
Johnathan: Well, I think so many books talk about the good things, the great things that they’ve done and maybe some few challenges. When I go through hard times, I look up . . . not motivational quotes, I look at like the deepest darkest things that I can find on people, and most people don’t want to share that. So my goal with that book is to go out and interview really well known CEOs, and I’m like, “Don’t give me any of the good shit, give me all the bad stuff that you had to drag yourself through,” because that’s what I need when times get tough, to go through and, like, read and be like, “Okay, I have some . . . you know, see, I have some other lurkers out there, myself included on your podcast, that can actually, you know, relate to that.”
Andrew: And your biggest worst part is what? What would you respond to that if somebody came and interviewed you about it? Feels like things just worked out easily for you. I’m not seeing a lot of hard times here.
Johnathan: It’s not. I mean, even to this day, we set new budgets because I was just frivolously spending money, having no financial hardship. So, again, in relation to like, “Yeah, my house could be foreclosed on the bank, the business went bankrupt,” there are numerous and countless more stories that are way worse than mine. But, again, it’s all relative. It doesn’t matter if you were a Harvard graduate and you went through, you’re going to feel the exact same way . . .
Andrew: So no matter what, you end up with a house that you fully own yourself, business is doing well, maybe well enough that you sell it and you get to take time to spend with your kids, with your family on your passion project, whatever, no matter what, we’re going to find things that suck and that’s going to be painful and frustrating.
Johnathan: Exactly.
Andrew: You’re saying, “Just accept that that’s the way it is.”
Johnathan: Yeah. And don’t imagine that you’re ever going to be stress free. I don’t think you are unless you, you know, fully retire and you’re just investing in index funds and you’re just getting things like that.
Andrew: I feel like even then there’s stress. I do think that it’s just a mindset and we can’t let go of it.
Johnathan: Exactly.
Andrew: One of the things that I realized by doing these interviews and running marathons in 2019 was nothing feels like it’s enough ever for people like us. It’s just the way we are. I would interview people who are doing phenomenally, and I could see in their eyes that it wasn’t enough, that they were almost embarrassed to be interviewed, that it was like, “Yeah, but I want to do so much more.” And same thing with me, I go run a marathon, the one that stands out the most was I was in South Africa running on my own, a course I picked by myself. And as I did it, I said, “Yeah, but there’s not much to see here. It’s not beautiful enough. Why did I come to South Africa just to see a bunch of [rocks and sun 01:05:17]? There’s no shade here. And I just had to accept that’s what it is. And you just finish your marathon.
Johnathan: You know what I like though, and this is again coming from a lot of my friends in Denmark that I grew up with are still in school because it feels safe to them. They’re not willing to put themselves out even on the job market because they had this like mental safety net to fall back on. I’m not saying all Danish people, I’m just saying my friends.
So I could take that approach, and I can be very cozy, or I can go to the U.S. where I don’t have health insurance. I actually am in charge of health insurance for 60 people, which is bananas to me. Like, I should not have that power or control, but I’m in charge of that. And the thing that I love about not being satisfied, which I think is more that is that a lot of people, especially entrepreneurs, is, like, literally, you can do anything you want and as long as you’re giving value, you can make tons of money and you can, you know, be joyous in the capitalistic society. Of course, it has its bad side not good, don’t get me wrong, but I couldn’t do this in Denmark.
And so to build this reality, to help my family, to help my wife’s family, to impact so many people’s lives and say, “Wherever you go next, do not be okay with the CEO not being transparent,” like do not be okay with lack of honesty, like demand, those kind of things. If somebody put a cap on me and say, “Johnathan, this is how far you can go,” it will completely destroy me. It would destroy my drive, like why am I even doing these things, because I know that I have unlimited potential, that is why I keep pushing, that is why I’m not satisfied. And that [inaudible 01:06:46] to do.
Andrew: You’re driven by the unlimited potential and by the fear of the unlimited downside, the fact that you’ve got to take care of people’s health insurance or else they don’t have health insurance and they’re in trouble.
Johnathan: In my upbringing, in addition to my dad sending me home, my mom getting my own apartment, I actually came over here for college and my grandma offered to house me, give me a car, she kicked me out. So, like this is my family . . .
Andrew: Why are all these people . . . your dad kicked you out, your mom. We didn’t get until you move back to your mom . . .
Johnathan: We should do a follow-up episode. We should have them on the episode like why they did that. But the bigger point is that I had this rug underneath me that was very easy for people to pull out because they had control, they had financial control. I’ve been so focused now because of that, me going through that, that I’m trying to make the rug as heavy as possible so that nobody has control over me. That is my drive, and that only came through the adversity that I went through as a kid where I don’t know how I can translate that to anybody else. And so I’m now using it as my advantage.
Andrew: I should say for everyone who wants to go check out the website, it’s KlientBoost with a K, klientboost.com. Is that the best place for people who want to follow up with you and get more of your energy to connect?
Johnathan: Follow up with me. I have a Twitter account, but I’m never on it, which is probably bad. I think I’ll do that in the future. But, yeah, go to KlientBoost, Johnathan. I have a weird way of spelling that. I have two H’s. You’ll probably see it in the notes, obviously. But, yeah.
Andrew: That’s why I kept like hitting all these different issues searching for you. But, thankfully, Google corrects. All right, thank you so much for doing this interview. And I want to thank the sponsor who made this interview happen. It is Toptal. If you’re hiring developers, you should understand that the companies you admire didn’t get where they are without having phenomenal people to help them get there. And that is where Toptal comes in. They will get you that level of Silicon Valley developer, the person who can make things happen that you wouldn’t be able to think of because you’re not in their space, they will get you access to those people. Just go to toptal.com/mixergy, T-O-P-T-A-L.com/mixergy.
And if you heard me say that there are few people who are on here teaching on Mixergy, you should know that we also offer . . . I go back to entrepreneurs and I say you’re really phenomenal at this one thing that my audience needs to know. Can you come back and teach it? And when they teach it, it is part of Mixergy Premium. If you’re curious about what that is, go to mixergy.com/more and you will see samples of what we’re doing with these entrepreneurs. I think we’ve got some phenomenal stuff on there. So it’s mixergy.com/more. Johnathan, thank you so much for doing this.
Johnathan: Thank you, man. It’s been super fun. And, again, honor is from my side, so I’m thankful.
Andrew: Yeah. Right on. Congrats.