SaaS Interviews with CEOs, Startups, Founders 665: Blessed or Gutsy? CEO Turns Down $400k Salary to Launch Own Agency
May 20, 2017
22:50
Joe Koufman. He's responsible for introducing at least 3 married couples in countless contacts to establish business relationships. In early 2014, he parlayed his passion for connecting people and founded a company called AgencySparks, which is essentially a dating service for brands and marketing agencies.
Famous Five:
- Favorite Book? – The Challenger Sale
- What CEO do you follow? – Jeff Hilimire
- Favorite online tool? — Lucky Orange
- How many hours of sleep do you get?— "I try to get 7"
- If you could let your 20-year old self, know one thing, what would it be? – "I would have invested even more in relationships. They will absolutely pay off down the road"
Time Stamped Show Notes:
- 01:36 – Nathan introduces Joe to the show
- 02:29 – AgencySparks focuses on making connections for brands and agencies
- 02:34 – AgencySparks is paid by the agencies to help them with their business development and outreach to potential clients
- 02:50 – In many cases, AgencySparks can help subvert the RFP and the client will hire the agency directly
- 03:15 – One of AgencySparks' clients tells them about Coca-cola's water sustainability efforts and that they need the story to be everywhere
- 03:46 – AgencySparks was able to make a connection with one of their agencies that focuses on public relations and they made a deal
- 04:13 – AgencySparks is shifting their model now
- 04:20 – AgencySparks is traditionally paid by agencies to get them through a thorough, upfront, vetting process
- 04:27 – AgencySparks is getting paid through monthly retainers and a percentage of the deal
- 04:34 – The monthly retainer is $5K per agency, which is 12-month deal
- 04:50 – AgencySparks was launched in early 2014
- 04:58 – Joe spent years with KnowledgeStorm which was acquired by TechTarget
- 05:05 – TechTarget went public and bought KnowledgeStorm for $58M
- 05:26 – Joe spent 6 years building marketing and business development in Engauge
- 05:31 – Engauge was then acquired by Publicis
- 05:56 – When Joe left Engauge, he had job offers from 6 different agencies and that's when he had the idea of AgencySparks
- 06:21 – Joe's highest offer from one of the agencies was $400K and he said "no"
- 06:55 – AgencySparks is Joe's first entrepreneurship stint
- 07:11 – Joe didn't have any equity in KnowledgeStorm
- 07:45 – Joe made a big transition while he was at KnowledgeStorm
- 07:47 – Joe started as an account manager in 2000
- 08:05 – Joe moved to sales and realized that he was just going to have the same exact salary
- 08:23 – Joe did well in sales and had grown big accounts
- 08:50 – Joe's last salary was $210K, in 2007
- 09:20 – By the time Joe left, he was making around $300K in 2013
- 09:43 – When Joe started AgencySparks, he knew that we wouldn't have much revenue, at first
- 09:52 – First year revenue was $270K
- 10:03 – Year 2 was $370K and Year 3: $430K
- 10:13 – 2017's goal is to double
- 10:25 – To achieve their goal, they have to change their model a bit
- 10:45 – The client is asking AgencySparks for different options
- 10:59 – They want to have multiple agencies in one category
- 11:27 – AgencySparks currently has 11 clients
- 11:40 – AgencySparks has other revenue streams
- 11:48 – The commission percentage is 10%
- 12:10 – AgencySparks offers other services like info-product
- 12:40 – March 2017 revenue
- 13:00 – Team size is 4 and all are in Atlanta
- 13:18 – Greg Crabtree's labor efficiency ratio is the idea of hovering between 2 and to 3.5, so for every dollar spent on payroll, you should be bringing in $2.50 - $3.50, in terms of revenue
- 13:47 – As a CEO of a company, if you're not pulling out the salary that you would be making as a hired CEO, then your business isn't profitable
- 14:00 – Nathan's computation within The Top's 600 interviews done with SaaS companies
- 15:04 – AgencySparks' net margin
- 15:27 – Joe is the guy who would re-invest his money into the business
- 15:33 – Joe isn't a family business guy
- 15:44 – Joe is looking into 5 years, then selling his business
- 15:52 – AgencySparks already has interesting offers
- 16:14 – AgencySparks has a method that is a repeatable and sustainable as a business development process—which is part of what they're teaching
- 16:57 – "The challenge is that this is a very relationship-focused business"
- 18:28 – The Famous Five
3 Key Points:
- As a CEO of a company, if you're not pulling out the salary that you would be making as a hired CEO, then your business is NOT profitable.
- Continue to grow your business as much as you can, but be mindful of the interesting offers that come along the way.
- Invest in relationships.
Resources Mentioned:
- The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
- Organifi – The juice was Nathan's life saver during his trip in Southeast Asia
- Klipfolio – Track your business performance across all departments for FREE
- Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
- Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
- Audible– Nathan uses Audible when he's driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
- Freshbooks – Nathan doesn't waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW
Show Notes provided by Mallard Creatives