Why a Solid Recurring Revenue Stream is the Key to Agency Growth

Are you creating a solid recurring revenue stream for your agency? Dan Sundgren has been involved in the digital marketing industry since he became one of the first employees at Google around 2003. After years of witnessing the rise of that tech giant, he eventually started his digital agency, FreeGren, which specializes in SEM, SEO, SMM and Website Development and Maintenance. He sat down with Jason to talk about the lessons he learned at Google about breaking the rules and how there's always a different way to look at things. He also talked about his decision to work with contractors rather than having employees, and why recurring revenue is the goal.

3 Golden Nuggets

1. Breaking the rules. Working at Google for many years since its beginning Dan had the opportunity to witness how that company grew, broke many rules, and created a new paradigm for corporations. One of the lessons he carries with him from that time is that you don't necessarily have to follow hard and fast rules. There's always a different way to look at things. And it’s good to remember that you can flip things on their head and think about it differently.
2. Working with contractors. Another learning experience with Google was the way they took care of their employees. However, Dan and his partner decided early on that they would work with independent contractors. To do this, Dan spent years building a network of trusted partners that have now worked with him for years. He relies on them to do the heavy lifting. It has its own complications, as Dan admits, but he exclusively works with people he can trust. After all, it takes years to build a reputation and a name and he doesn’t want to sabotage that by doing crappy work.
3. Recurring revenue is the goal. Like Frank Kern a few weeks ago, Dan talks about how he chose to scale slow and make sure his agency had solid recurring revenue streams for PPC, SEO, website maintenance, etc, where it is very repeatable. Now this gives him the tools to make pretty accurate forecasts, to the point that he can tell where his agency will be in 12 months.

Sponsors and Resources

Wix: Today's episode is sponsored by the Wix Partner Program. Being a Wix Partner is ideal for freelancers and digital agencies that design and develop websites for their clients. Check out Wix.com/Partners to learn more and become a member of the community for free.

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Contractors vs Employees and Remember that Recurring Revenue is the Goal

Jason: [00:00:00] Hey, agency owners. Welcome to another episode of the Smart Agency Masterclass. I am Jason Swenk and I have an amazing guest, Dan. We're going to talk about his building his agency over the past four years. But also what he's learned. He's one of the very first employees at Google. Um, I think he was telling me back in 2003 or 2004, he can correct me in a, in a second.

Um, and we're going to talk about really amazing things. So I can't wait. Um, but before we get into the episode, I want you to do something. I want you to take a screenshot of the podcast and then upload it to your favorite social media. Tag us, so I can give you a shout-out for listening to the show. And let's go ahead and jump into it and talk to Dan.

Hey, Dan. Welcome to the show.

Dan: [00:00:53] Thanks for having me, Jason.

Jason: [00:00:54] Yeah, man, excited to have you on. So tell us who you are and what do you do?

Dan: [00:00:59] Uh, my name is Dan Sundgren. Uh, I started an agency over four years ago with a partner of mine, Scott Freeborn. The Genesis of our agency is FreeGren. After a long and laborious naming process, we mashed our names up at five o'clock and decided to call it good.

And we named our company FreeGren because we're a 50-50 two-headed beast. And we've just had a blast last four years building our little agency up here in the Northwest. Um, Scott came from Dexcom Media. Um, my experience was with Google, and AOL, and Merkel. Uh, worked in-house and built teams for 20 plus years.

Done quite a few things. And, uh, managed, in my estimation, over a billion dollars in paid advertising. Which at the very least gives me some scars on my back to figure something out, uh, you know, in the future. So, so that's what we're doing.

Jason: [00:01:58] So I have one question that I have to ask, are you the one that would send out the AOL CDs to us?

Dan: [00:02:04] Yeah, no, I, I think, I think, yeah, those were the…

Jason: [00:02:09] For all the old people. Uh, for us to get on the internet, AOL literally used to send out CDs so we can get on the internet and they give us like 50 hours.

Dan: [00:02:18] Yeah. The stacks of CDs, just carpet bombed in, in the mailboxes. Yeah.

Jason: [00:02:24] I love it. Well, um, tell us, uh, you know, what, what did you do for Google? Um, and tell us a little bit about the early days. And did I get it right in the intro? Was it 2003 or four?

Dan: [00:02:39] Yeah, I started, um, towards the end of 2003.

Jason: [00:02:43] Wow. It must have been crazy seeing all that growth.

Dan: [00:02:48] It, it was wild. Um, we were, obviously, we weren't public yet. Um, we would go down to campus in Mountain View because we started the Seattle office, a handful of us to really support the sales operation.

The engineers weren't even here yet. And, um, we have these global sales summits down there every year for the first three years, I think. Which were, we would like rent, Google would rent the village of Lake Tahoe and just run wild and engineers would be running around with bottles of booze and it was a, it was a wild time. It was a very wild time.

Um, got to meet chef Charlie who's, I don't know if you know the backstory, but Larry and Sergei hired The Grateful Dead chef. So chef Charlie was the guy who invented the entire food ecosystem at Google with just this gorgeous spreads and sushi bars and, you know, the works, right. That was his Genesis of, of like taking extra good care of people with their, you know, their stomachs.

So it was really crazy to watch them reinvent the way companies even think about employees. Really, that's what they were doing.

Jason: [00:03:56] I love the movie Internship that features Google like pre-show. Is it really like that? And you're like, no, it's just a lot more drinking.

Dan: [00:04:07] I was, again, I was in the sales team, so, yeah. Um, so there was definitely, there was a definitely a class system at Google. Um, and I think there's still, it's very engineering-run. Um, sales is sort of, I think in the big picture at the company sales and marketing and sort of a nice to have, I guess we've got to have those folks. But really the brain it always has been is with engineers.

It's an engineering-driven company. Um, not all tech companies are though, right? Some are very sales rooty. You know, um, some are a little of both. But they're still the hardcore… The engineers are running it. We know what's best for the user, blah, blah, blah. And I, you know, I don't know what it is today because it's so big, but…

Jason: [00:04:53] Yeah, well, I remember, um, my dad was my stockbroker for many, many years. I remember when Google was about to go public and I said, I want to buy stock. I want to buy a lot of stock.

Um, and he goes, no, no, no. $45 is way too much.

Dan: [00:05:12] Reverse Dutch Auction. Yeah. I remember they came out with that and the engineers again decided, and Larry, and so you're like, we're smarter than the market. We're going to do a Reverse Dutch Auction and all the brokers were like, you can't do that. Like why not?

And they did, they've constantly done things that are contrary to what you're supposed to do. Which I always found super refreshing, especially when I was working there. But I've watched them for the last 17, 18 years… geez. Continue to do things that sometimes you scratch your head and like… There's always something, right?

Like Jason, like, oh, no broad match modified is going away. Or there's a big algo(rithm) change. I'm like, yeah. Okay. They're, they're just going to keep, I mean, of course, they’re constantly….

Jason: [00:05:58] So, what, what have you learned from them and your years at Google? And did you guys call each other Googlers? Um, what did you guys…?

Dan: [00:06:08] Googlers, yeah. I got my… Right behind me is my hat. See the new that's called a Noogler hat.

Jason: [00:06:11] Oh, it is true.

Dan: [00:06:16] You had to wear it your first day. It had a propeller.

Jason: [00:06:19] Oh, that's funny. That's…

Dan: [00:06:21] Yeah. Around campus. So it's, it's a real thing. Um, I think what I've taken away is that you don't necessarily have to have hard and fast rules.

There's, there's always a different way to look at things. Um, there's always a different way to flip things on their head and kind of think about it differently. But, um, they inherently do obsess over their employees. They, they take ridiculously good care. And again, now it's 150,000 people, definitely different company, but it was clear from the get-go that this was a new paradigm of corporations.

Of… We want to take care of every need you have. And your personal life as well. I mean, nursing station and dry cleaning and like… All that stuff, it all kind of adds up to you feel like you're in a very comfortable environment that you don't have to worry about a lot and you can just do great work. And really they have the 10, was it the 10 per 10% time or 20% time? Sorry, 20.

Which again, one of those little Google things like take a day every week and just spitball stuff. Like, you know, that was unheard of, really. HP and Dell weren't doing that.

Jason: [00:07:31] No, no, they were too corporate.

Dan: [00:07:36] Yeah. It, you know, and so we, we try to like, with our little agency, we don't have any employees, actually.

Um, we built a virtual agency from day one, Scott and I, um, have very, very deeply in, in trusted partners. And we rely on them to do a lot of the heavy lifting and the nitty gritty. But that's for, with 20 years of vetting really good partners that we've entrusted those people as part of our company. But they're independent contractors.

Jason: [00:08:07] Yeah. Well, let's talk about that because I mean, you're, uh, a couple of million in revenue. And it's just you two, but you guys use contractors and strategic partners. And a lot of people are like, well, how do you do that? Right? Like what, like walk us through that a little bit.

Dan: [00:08:27] Yeah. That's probably the hardest thing to do and also the most important. Um, luckily I've been very involved for 20 years in, uh, marketing, uh, networking groups. So, um, we have a group up here in the Northwest called Seattle Interactive, and, uh, um, I've been on the board of that since the inception. There's another group in Portland that's fantastic.

It's um, they, they throw a search fast every year. It's SCM PDX, and I'm sort of the Seattle liaison there. So over the years. Um, I've slowly built this base on, you know, LinkedIn for instance of four or 5,000 people that I've met and talk to and, you know, kiss babies and shook hands and work the floor and how it got out there.

And, and through that Genesis, you start to build, um, a couple things, a big, big network. But also, B, uh, sort of the spidey sense of people that you would want to work with and you can inherently trust and, um, you can feed off each other in a positive way. So you can kind of weed through a lot of that. And the metamorphosis of that great network is when we started this, I had just started calling people and I was like, so-and-so is really good. We should talk to them.

And putting those p… those building blocks in place, and those partners are with us today, four years later. So, yeah, but it's hard and there's challenges, right? Not having employees versus outsourcing. Um, I'll be the first one to admit that when we were looking to scale a little bit and, you know, when people tap out, as far as their time and what they have to give you, because they have other clients too. We have to find some bench strength and that's, you know, we were very, very careful and meticulous about that.

Jason: [00:10:21] Um, so how are you always recruiting that talent then and making sure like you can fill…?

Dan: [00:10:30] Yeah. Uh, it's through, through my network, um, asking, you know, just literally asking around and talking to different folks, remembering people. Oh, you know that, I remember that guy was a WordPress developer. I met him. He was solid.

Kind of, we interview and vet them like you might an employee, but for what they do as a contractor. And we have some hard and fast rules. We are myopic; I'll admit it, like we are US-based. We, uh, we just are myopic that way. I want… and even selfishly I'd like them to be on the West Coast. And even more, it would be great if they're in the backyard in Seattle or Portland.

Because there's just so much great talent and good people. And then, you know, there's sort of that affinity. And, um, when you build a big network, you have a reputation to uphold and you know this as well as anyone, right? Um, your, your name is your brand, is your worth, uh, to sort of the greater… thing out there, which is business. And, uh, I take that pretty seriously.

Like you, you know, if you spend 20 years nurturing a career, you don't want to sabotage that going, you know, by going out and doing crappy work and not taking care of clients. And, you know, because the word kind of gets out and you just don't want to be that person. You just want to continue to keep that bar high.

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Well, it takes what? 20 years to build a brand? And one second to tear it down.

Dan: [00:12:56] Yeah, right? Yeah. Good adage.

Jason: [00:12:59] Right? Like, we've seen that with many, I mean, I used to work for Arthur Anderson out of school. Right? And so we saw, you know, that was one of the biggest brands out there in the consulting practice. And then foom! You know, gone.

So it's, uh, it's, you gotta be very, very careful, um, at that. Um, what is, this has all been amazing. I love to kind of see the origin story and how you kind of tapped into that. Is there anything else that I didn't ask you that you think, you know, the audience would benefit from of what you've learned over the past four years of have grown your agency, and congrats, very quickly?

Dan: [00:13:45] Thanks. Um, well, a few, a few nuggets. I think that, um, and again, uh, I'm super transparent and love to share like you, so nothing's sort of off the table there. Um, but some nuggets that we picked up, um, from the get-go and still hold true are… Like the recurring revenue piece to me is the goal. Um, I just don't, I don't know how these web development shops go out and build their book every year.

I, it's a head-scratcher it just seems like a nightmare to me. That's just my 2 cents. Um, so we built, um, really solid recurring revenue streams in for PPC, SEO, website maintenance and hosting. Um, where it's very repeatable it's, um, we can, we can forecast with it pretty well. Um, let me, I can tell you probably in 12 months where we'll be, you know, in the big picture and, um, it continues to build on itself.

And we built our agency purposely pretty slow where I, I call it like we’re, like a snake, right? Like we'll eat a big mouse and then we'll just, we'll take some time and digest. And, you know, we won't worry about getting a new client until we get that one dialed in and really plugged in and make their phone ring. Then we'll move, we'll move into the next, next mouse.

And so we built it really slow on purpose with that recurring revenue in place. So that we have a predictable business model and that's, that's kind of been something that's been really critical to our success, I think. Um, and then do, you and I were talking before the show, uh, one of the best things you can do is figure out what you don't know.

Like what are your blind spots? Um, and what's, and what's coming, right? Because, um, I was selling 88 x 31 banners in 99. And that was it. And 468 x 60s. So clearly things have gotten a little different

Jason: [00:15:40] A little bit. Little change.

Dan: [00:15:43] A little bit. Uh, yeah, it's always changing in, in social media and like, um, all the new flavors of media. You're still trying to reach an audience, but there's just different ways to do it. Different platforms, what's up and coming?

Um, You gotta break some eggs to make an omelet. And you know, if Pinterest is something that we should try for our clients, let's give it a chest. Let's not be afraid to just, I don't want to stay like, this is what we do. These are the four channels we, we only know.

Um, but also not, you know, spread yourself too thin and try and stay in your lane a little bit. So it's that balance, right?

Jason: [00:16:16] Yeah, it totally is. Yeah. I mean, I totally agree with you on recurring revenue. Like it’s… We all want, like, we all get into the agency space or create a business for predictability and freedom and money.

But a lot of times we create this kind of prison around us and we don't have predictability. We don't have freedom, we don't have money. Right? Like, and we keep hiring more people. Um, but, uh, you know, when you actually start figuring out some of that. Like our, our agency, we were 80% project-based. And how we got through it and how we create a predictability is we just created a huge pipeline.

Like I was chatting with a good buddy of mine a little while ago, and he was talking about how he's starting to resent some of his clients. And I told him, I said, look, buddy, like you're resenting your clients because you have a lead generation problem because you're too reliant on the existing client base. Rather than having a over abundance of people coming to you.

And then you just pick it up. And then charging what you're actually worth. Um, so, but I, I agree with you on the recurring revenue. And also too, like, if you're not always learning… Like that's always been a core value in our agency and our business now. Even when we bring on people in the mastermind I’m like, you have to always be like, am I, what am I learning today? What are the lessons that today taught me?

Or what are the lessons that the mistakes that I made last week or two seconds ago? Which happens a lot. That's what my team tells me a lot.

Dan: [00:17:56] No, absolutely. And knowing when to say no and stay, when I say stay in your lane, Jason, is like… If a client came and said, hey, do you guys do TV and radio?

We just, we trust you implicitly with the digital. I would be the first one to go. You know, we absolutely don't have any core expertise. That's just that staying in your lane, you know, that's, it's hard enough to stay on top of what we do do. Um, but maybe I could find a partner or, you know, maybe I could, I could vet, ask around that around town, whatever.

Um, I think a lot of you get in that trap of no, let's do everything, you know, let's do 15 different disciplines. Um, and if you do want to get into that, you know, subject matter experts, either employees or contractors and get someone good to really do the work. Don't pretend you can, you know, learn on the fly sometimes if you're going to slot that in.

Jason: [00:18:50] Yeah. And when you go to your clients that like, they give you that great honor, and be like, we trust you explicitly to do this and you go, hey, we don't feel comfortable with it, but let me connect you to two or three people. Like you, like, you're the connector. Like they will always come to you and they're coming to you for a problem and they'll keep coming rather than you take on a project that you just totally botch.

And then it's just, it's over.

Dan: [00:19:20] Yeah. Yeah. And then you're setting yourself up really, if you, if you take that, that other path, I think. Um, and trust, is it, I mean, that's, I guess if one, I mean, that's the big one, right? That's the cornerstone of everything is, is trust. And you probably hear time again from the best client relationships are that just it's like relationship.

Like you've gone through the fire, you’ve broken some eggs to make the omelet. You've, you've fixed things that have broken. But you know what? That's good because it's like the Nordstrom thing, right? When, when you go to Nordstrom, I dunno, I haven’t  been in Nordstrom for years. But their whole mantra was you don't like it? We'll, we'll take care of it.

Like we're just going to take care of it, and you just know that when you go in. Um, it's that white glove service, you know, things are going to go haywire, but we will fix them. We'll make it right. We'll, we'll answer our phone. Um, I can't tell you how much negligence we continue to run into in the agency world.

It's kind of, it's kind of disturbing, still, to take a client from an agency off the road and… They have no idea what they're getting. They just been stroking a check for 10 years. The guy won't call them back. They don't, they don't know where their Google analytics and their data is.

They have no idea what's going on and they're paying like eight grand a month for 10 years. And the guy that won't courtesy call them back and it's still happening. And that's kind of why we started our, our shop because, um, Scott, uh, worked at a company and a lot of that was happening and you’re just like, that shouldn’t still be happening.

Jason: [00:20:59] Yeah, I, it's amazing. So many people go to me as they're starting out and they go, uh, what's, what's the secret to scaling fast? I say, you have to be better than everyone else in the service that you deliver. Like, because I see so many, uh, these people will be nameless, but there are so many people that are really good at marketing themselves and selling. But then on delivering they fall down.

And they're like, why can't we grow? But then they keep putting out content to show people that… I'm like, good gosh, like, your model is broken. Like, take that dog behind the shed and shoot it, like stop. You're not built for this, so… But, uh, yeah. It's uh, yeah, so it's a, it's always a breath of fresh air when I find people that can deliver results and that actually care, you know, uh, about that.

So congrats on your success. Um, what's the website address where people can go and check out the agency?

Dan: [00:22:05] It's free. freegren.com.

Jason: [00:22:09] Awesome.

Dan: [00:22:09] Or, or Jason, you can go to nobullshit.agency.

Jason: [00:22:14] Oh, I like that one better. You should lead with that one.

Dan: [00:22:18] And, and you'll, and you'll end up on our, on our homepage.

Jason: [00:22:21] There you go. No bullshit dot agency? Oh, I love that. Yeah. Go there. Use that URL. That's way better.

Dan: [00:22:29] You know? Um, it's, it's, it's a little, I guess, you know, it'd be a little bit, yeah, you know, in your face.

Jason: [00:22:36] No, no. Like, like the people that you want to work with, just since you said that, like the people that you don't want to work with, they'll be the ones that get offended.

It's kind of like what I say on the mastermind, like on our mastermind page, like our first core value is no douche bags. And if you're offended by it, well, you're probably not going to do well.

Dan: [00:23:03] Yeah, yeah. We use the Tommy boy quote, you know, I will, you know, I can trust the butcher and put my head up cow's ass, but I might as well trust the butcher, you know, that, that old quote.

Jason: [00:23:12] Exactly. I can quote that whole movie. Guarantee it’s the best part. I got time.

Dan: [00:23:23] Yeah, the movie quote. I can talk and movie quotes probably for a good five minutes.

Jason: [00:23:27] Um, I think we should just come up with a podcast just to talk movie quotes, do it.

Dan: [00:23:33] We should do it. We should do it. That'd be a challenge. Can you, how long can you talk and movie quotes?

Jason: [00:23:36] Oh, I could do it for a long time. I mean, I just go back to the eighties and nineties movies that I grew up on, you know, exactly Happy Gilmore, Billy Madison.

Dan: [00:23:49] Yeah. Yeah. Yeah.

Jason: [00:23:51] All those. Sorry. We're so derailed. What about hosting?

Dan: [00:23:56] I like derailing. Derailing is good sometimes.

Jason: [00:24:01] Well, awesome. Well, everyone go check out, um, nobullshit.agency. I love that URL. See, I even remember it. I don't even remember the other one. So, yeah, that's memorable. So go check that out. And um, if you guys want to be surrounded by amazing agency owners, because look… We all have blind spots like we talked about and other people can see them a lot better.

I want to invite all of you to go to the digitalagencyelite.com and, uh, see if you qualify to be with the best agency owners all over the world, sharing what's working now. So you guys can grow your agency and scale it a lot faster and create that predictability, that freedom and the money that you want, and really the impact that you can have on the world.

So go do that now. And until next time, have a Swenk day.