What Did Frank Kern Learn from His Failed Agencies?

Have you had a few failures in the agency world? Everyone is afraid of failure. But when you change perspective and treat it like a lesson instead of a defeat. That's the lesson from today's guest, Frank Kern, a well-known marketing consultant and agency owner who has ventured to start several agencies over the years. In this episode, Frank discusses some of his failures from these past businesses, the lessons learned, and what he would do differently. He offers valuable advice for anyone starting a digital marketing agency. He offers an honest and upfront take on every stumble, from starting in the advertising world without really knowing the rules, not listening to his own advice, and taking on every client, even the bad ones.

1. Don’t be afraid to start over. Frank shares the knowledge he has gained over the years starting different agencies and learning from the mistakes made in each new venture. He has never been afraid to start over. “That’s what I love about the advertising business,” he says, “it’s never going away”. So there’s always a new opportunity waiting for the ones who dare to take that step and learn from past mistakes. He is now enjoying his most successful venture and is very glad everything happened as it did.
2. Don’t try to grow too fast. This is the first lesson Frank has taken from his past agencies. Where in the past he used to take as many clients as he could get, now he sets a target. Five clients a week. This enables him and his team to not be reactive and build out operations. It’s been a learning curve for them. Drilling into the process, making sure there are checklists, getting better at inner team communications. But Frank says it’s been worth it and that he’s definitely seeing the results.
3. Take accountability. Having a business partner is not easy and takes serious commitment. Some prefer to not even attempt it. Frank has been lucky to have a few amicable separations from past partners. The secret? He doesn’t really know, but he shares the importance of taking accountability for your mistakes. “If things are your damn fault, you have to realize they’re your fault”.

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Don't Be Afraid to Start Over in the Agency World, Just Like Frank Kern

Jason: [00:00:00] What's up, agency owners? Jason Swenk here, and I have another amazing guest, Frank Kern. If you guys haven't heard of, uh, he is amazing. I've learned so much from him over the years on writing copy and marketing and direct response. Kind of the godfather of direct response marketing.

A lot of you guys know Frank Kern and he's done a bunch of agencies in the past, so we're going to talk about his experience with marketing and his agency.

Let's go ahead and get into the show.

What’s up, Frank? How's it going?

Frank: [00:00:40] Dude, I was just watching the intro roll. I love the just two seconds of pensive staring off into the distance.

Jason: [00:00:47] Well, I don't want to lose anybody's attention. Especially people with ADD like us. So, you know, you got try to keep them there.

Frank: [00:00:55] I didn't tell you this pre-interview. So if I don't make any sense today it’s because I have dyslexia and ADD and I woke up at 12:52 and… No, or 12 something, and my dyslexia…

I mean, I have the biggest font size ever on my watch. And I thought it was, I thought it said 4:52. So I took my ADD meds, which I keep right beside the bed. And they kicked in. I've been awake since 2:00 AM

I’m just like… so stupid right now.

Jason: [00:01:24] There you go. Well, that makes it fun for a podcast.

Frank: [00:01:28] Yeah, that's my disclaimer.

Jason: [00:01:30] Awesome. Well, um, for the people that have lived under a rock for a little bit… Tell us kind of a little bit of your origin story about how and why you've wanted to create an agency over the past couple of years.

Frank: [00:01:45] Uh, okay. I'll be mercifully brief because this isn't even remotely interesting for anybody.

Um, sold credit card machines door to door. Hated it, very bad at it. Um, Googled or there wasn't Google back then, it was 1999. Did a search for how to sell credit card machines on the internet cause I didn't wanna have to talk to people. They were all mean to me because I was going door to door and interrupting their, uh, place of business.

Discovered direct response marketing and advertising that way and started selling courses. Sold one that got me in trouble with the government. Um, it's important to learn the rules of advertising if you want to do advertising. I did not learn them, but, uh, after that I did. And um, then, sold stuff about dog training and kind of cut my teeth on that and sold a lot of marketing-related information.

And always felt like… It's going to sound really weird, but I always felt like it didn't count, you know? Like that's… to use my, uh, my late grandfather’s term it’s Mickey mouse BS. And I was like, I need to do it for real. I need to actually build campaigns and do stuff with real businesses. So it was for that reason and because I absolutely love advertising and I get to hit refresh on other people's stats besides my own.

Um, that's why I did it.

Jason: [00:03:00] Yeah. Well, um, you, uh, like I told you a couple of years ago, you kn… I found you and Jeff Walker and a couple other people through a Tony Robbins event I went, where they sent out the, I guess the money masters or something. And that's right when I was coming off selling the agency and I’d never heard of direct response at all.

And I was like, wow, if I could put this together with what I know here… I was like, man, this could be a pretty good machine. Uh, so I want to thank you for, for, for doing what you've done over the years. And, and, uh, you've been… Someone that has really figured out how to make someone kind of respond to you. You know, especially in the marketing front.

What what's kind of like, how did you go about figuring that out? Or was that just kind of intuition? Like I know you were saying, well, I just hated getting kicked out of strip joints and all these kinds of restaurants I was going into. I needed to get them to come to me. You know, how did you figured it out?

Frank: [00:04:05] Well, I started by making horribly egregious unsubstantiated claims in advertising because that's what I responded to.

And of course, I didn't realize there were things like regulatory bodies. This is again in 1999. And then I learned that you really can't do that and it's frowned upon. Um, so I wanted to see, well, what, what if you don't do that at all? And, um, I kind of stumbled over the whole philosophy of results in advance, which is the easiest way to convince somebody you can help them is to actually help them in advance of asking for their business.

So that's always been my big secret, you know, and it was just doing that.

Jason: [00:04:43] Yeah. And so when, when you started the first agency, what were some of the challenges that you experienced? Uh, and how did you overcome them?

Frank: [00:04:57] Dude, so the first one… I think this is number four for me. We've got it right now, finally. But I've been attempting this since 2010, all right? So we're 12 years into your boy, Frankie, trying to make, trying to work 30 times harder for way less money, basically. When you, I know, but I like it. I can't help it, you know, and I would rather do this and make less money than do the other stuff. I don't know why.

But anyway, the first one was a partnership between my cousin, Trey Smith and I and Jordan "Wolf of Wall Street" Belfort. And we had a plan, Trey and I mainly had this plan, which was we would create lead gen pages for home services companies and then manage their Google PPC accounts.

We would charge a flat fee and then like, you know, let's say it was 600 bucks a month or something. And we'd spend 400 bucks on traffic and we'd keep the $200 bucks. It, uh, we did roughly 15 seconds of research, you know, and were convinced that we were geniuses.

And Jordan's job was to, uh, hire and train salespeople. Cause neither Trey nor I are qualified to do that at all. So, um, that failed spectacularly, you know? So we, uh, by we, I mean, I leased a bank building in, uh, on Prospect Street all the way in California that… You know, we hired, I wanna say 40 people off of Craigslist. You know, and Jordan was training them up and then he had to go on tour to sell his stuff.

And then like, nothing really happened. I got to, I got to have a lease on a bank building for a couple of years. So that was fun.

Jason: [00:06:41] So why did that fail though? Like what, looking back, what could you have done to make that work?

Frank: [00:06:48] Um, I could have, uh, used ads to get them, you know. So for whatever dumb reason, uh, I oftentimes fail to heed my own advice, which is all right if you want to grow the business, take the thing that's working real good and do a whole lot more of that. And then find a way to systemize and automate and scale from there.

So we had this method of getting customers, which was internet ads. But when we partnered with Jordan, we were like, nope, we're not going to do that, we're going to do something we have no idea how to do, which is to call them out of the blue and then, uh, try to sell them something, you know, and so that was dumb.

Uh, I mean, I’m sure people make it work, but we didn't know what the heck we were doing. And of course that model, I think would probably have ultimately doomed us because there wasn't enough margin in it.

Jason: [00:07:42] Yeah. So what was version two?

Frank: [00:07:46] Uh, let's see. Version two was current branding. It, that was so close to working. That's where, uh, we would do video campaigns for people. So we'd script their videos. They would shoot the footage. We would have it edited. We would run them. Excuse me, I'm losing my voice already. That's what happens in the wake up at two.

Um, we would run their Facebook media for them and everything. And that actually was going pretty good. Um, I did what, uh, what I think a lot of people who are creative types do is I immediately outsource the operation. And I outsourced it to someone who didn't understand advertising. Really good understanding of operations, but didn't understand advertising.

And all of this is on me because I never sat down and said, here's how the business works and here's how all the moving pieces work. So we ended up over-hiring tremendously and didn't make any money, you know, but that was, that was pretty close.

Jason: [00:08:46] Okay. And then what about option three or version three? 3.0.

Frank: [00:08:50] So version 3 was, uh, we tried, um, in-house again, uh, current branding once again. But instead of doing all that production for people, we were like, you know what, man? We're just gonna run their media for them at a pretty decent price.

I just arbitrarily pulled 2,800 bucks off my butt. You know, like seems like an easy yes. And, um, that was going great. And then I decided it would be a good idea to partner with Grant Cardone and, uh, form Cardone Kern. I did that because I made a lot of assumptions that I'd never discussed with Grant. Uh, so again, I, I want to take full responsibility for this. I'm not here to say Grant is a bad guy or anything.

So I partnered with him thinking that they would have the infrastructure that we needed to grow the agency. Cause you know, you go down to his operation, it's pretty impressive. They got meetings and stuff and… you know, meetings and stuff and people wear suits and they, they really look like they know what they're doing. And they do, but not for an ad agency.

So when we partnered together, oh, and I also thought his audience was primarily business owners like brick and mortar people. So my vision for that, and this was incidentally, a conclusion that I drew after going to one event and talking to one attendee who was a roofer. And I was like, this would be the easiest client to win forever.

This must be what all of his customer base is like. We should partner up, you know, and so zero foresight on, uh, on my part. So we, it, it blew up. Um, well it blew up in a good way. We got to walk clients really fast. We grew it to damn it, it was $895 a month, just under $900, a grand. And then, uh, we started hemorrhaging because the operations were bad.

We, uh, by we, I mean, I, uh, had to hire a team. And then I had one dude to help me manage them. And he was good, but he was inexperienced too, in terms of trying to manage a team that big. So we just did a bad job, ultimately. Mainly is a result of operations, like missing calls, you know, like dumb things that operations people know how to do.

Jason: [00:11:04] So what were some of the… I don't want to put words in your mouth about some of the assumptions, like thinking about, you know, if you were going to partner… Because a lot of people listening on the show, they, they reach a, a plateau or they're, they're kind of an inner plateau and they go, I need a partner because I can't, I don't, I feel like I've reached my max and I need to work with someone.

And then they were like, well, let's just join together. So, you know, so many people are doing this and then it blows up in their face. So what would, what would have been some of those questions or assumptions to check with your partner and go, and then be like, oh, well let's kind of try this out or no, this is probably not going to work out that you could have avoided.

Frank: [00:11:48] Yeah, I probably should have said, okay, I'm operating under the assumption that you're going to provide this team. Is that a true assumption? And he would have said no, because he doesn't lie. You know, he's not a bad person. Just, I've never had the damn sense to ask him. And Grant so busy he's like, all right, cool. Don't mess it up. Sounds like a good idea. Let's go.

You know, so it was, we didn't really talk it out. So that probably would have been the first question was, you know, here's my assumption is this accurate? And, um, that would, that really would have been it. I think we could have overcome everything else.

You know, he would've said, no, dude, I don't have that. And I'm not going to give you that you got to go build your own. I would have said, oh, I could do that on my own; I don't need us to partner together for this. We would rather keep all of the money and… You know, if I'm going to have all the headaches anyway, I might as well keep all the money.

Jason: [00:12:38] Yeah. And so what, what are we looking like at version four now of, you know, post, you know, kind of making that partnership go away? I think this is the version you're on right now. Is that right?

Frank: [00:12:53] Yes. Yeah. So we're looking great. What I learned is number one, don't try to grow too fast. So our target is five clients a week, you know, where it used to be as many as you can get, let's just hire more people, right? Nope, five a week. That's it, you know.

So that was lesson number one. And that enables you to not be reactive and building out your operations. And lesson number, whatever number we're on is most of this stuff, I mean, I don't know about you dude, but ads are easy, you know? It's not, I mean, don't, don't tell clients it's for God's sake, but it's not really that hard. But the operations behind it, especially when you do it, we do, which is we're full service.

So we'll, you know, the first thing we typically do is go fix their email. Cause that makes everything work better and they get immediate sales and then they're happy, you know? So that requires so many tiny little things to go right. That, um, that's just been a tremendous. Um, a lesson it has been that big of a learning curve, really.

It's just more. Okay. Let's just keep drilling into this process, you know? And make sure there's checklists and yada yada, yada, yada. So it's been good. And then inner team communication is still we're good at it, but we could really be better at that. Um, but with clients we're good. But between ourselves, you know, we’re doing…

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Yeah. When I, when I look at kind of the stages of agency owners that go through, they go through, there's like six. And I look at kind of the first stage is like, figuring out, like, how do I get the clients? And then the next is like, how do we get the right clients? The next is like, like, how do I replace myself from not being the salesperson or being the account manager for the clients?

And then it's like, how do I build the team? And it's just like all these little stages you have to go through or systems that you need to actually set up in order to kind of, you know, get you to a point where you can pick and choose and do the things that you love doing. Like, cause I was telling you years ago it was like most agency owners are accidental.

They don't want to get into it. They just, they knew how to do something really cool in marketing. And someone's like, hey, do you do this for me? And they're like, okay, you're going to give me money to do this? Like, all right, let me go do more of that and, uh, you just kind of fall into it. And then, like you're saying you're being reactionary.

Um, one thing I, I have a question and probably a lot of people have a question on is, let's say you have a partner now. You got in, we didn't go over the assumptions that we figured out. Um, how can they actually go to their partner… Like how can we make a pleasant split up? Uh, you know, in order for us to go our own ways, because a lot of people, even including me, I had a partner and I looked at it like, if you don't know the bad partner, you're the bad partner.

Um, that's kinda how I looked at it. And that's one of the reasons why we sold, um, you know, it was a good offer, but still I probably would have been still doing it. Um, I'm lucky that I had did have a partner that we disagree. But like what, what, what would you suggest to these people listening? Like how can you do a, a good breakup?

Frank: [00:17:17] I have no idea. Um, I just ended up giving everything to the partner. I'm like, okay. Like, well, our very first one, you know, it was clear that it wasn't working and everything was in my name. So I was able to be like, all right, guys, this isn't working. Um, I'll keep paying the lease. It's in my name. See y'all later. And nobody, you know, no one cared, uh, because they're like, oh, thank God we have to mess with this anymore. This was way harder than we thought.

With Grant, I just gave him the agency. I was like, we were still doing, um, I can't remember, maybe half a million a month or something in billings? At the time, I was like, you can have it. And I never talked to him, actually. I talked to other people in the organization.

I voiced some things that I needed and I wasn't able to get them. And I was like, well, this isn't really gonna work for me. Um, y'all can just have this, if you want. We can just be cool. And they're like, alright.

Jason: [00:18:18] So how do you get to a point where… I love that, because a lot of people would spend years and years fighting back and forth.

No, I did this, my name is on blah, blah, blah, all this kind of stuff. And like tons of resentment versus you're like, fucking take it. Like, let me restart. Like, how do you do that? How do you, how do you get rid of those emotions that a lot of us would struggle with?

Frank: [00:18:46] Well, if things are your damn fault, you have to realize they’re your fault.

And so like if it was a different scenario and Grant had misled me. And said, yeah, we got this, dude. Here's everything I'm going to do to the letter and then just didn't do it. And then it was like F you Frank. Then I would be mad, you know, we'd have a really serious problem. Um, but he didn't, I just didn't ask.

So I had to, it was my damn fault, you know. It wasn’t his. So what am I going to do? But you know, pitch a fit? If some dude, you know… he's got other stuff going on. He’s gotta roll on out. But also in our business, it's like, it's easy to just to start another one.

There's this, this is what I love about the advertising business. It's, it's never going away. You know, it doesn't matter what the economy does. It's like we ain't going anywhere. It could be world war three, you know. I've always made this joke and it's old by now that the world war three could happen and there'd be like seven people left. One of them selling cockroaches or something.

And he's going to go to the guy with a bigger cave wall and be like, hey, I'll give you five cockroaches. If I can advertise my cockroach sales on your wall there, you know, like in, it'll take off from there. It's just never going anywhere. So I have no scarcity around it.

Jason: [00:20:10] Well, you know, that's how I look at agencies is, you know, when we had the big gold rush, right?

And the people that got the richest were the ones selling the stuff to make gold. That's kind of how I look at agencies. Um, especially as when COVID hit and everything started shutting down, I was like, you know, hey agencies are going to get a lot of business because people can't do what they used to do anymore.

And, uh, and I, I guessed right on that. But I love how you, you say take ownership in your own mistake. It's like, it was my fault. And I, I think too many times, including myself, probably, I mean, that's a hard thing to do. Admitting, going, hey, I could have avoided this. This is my mistake. Let's just move on.

And hit the reset button. And it's kind of like monopoly, let's play another game, here we go. It's like, I screwed up that one.

Frank: [00:21:05] Yeah. I'm glad I screwed up that one. Cause this one's great. And I get to keep all of the money. So like, okay. You know, this actually worked out pretty good. Otherwise, it'd be giving most of the money to Grant.

Nice enough guy. But, um, I'd prefer that I keep it.

Jason: [00:21:22] I think he's got enough money too.

Frank: [00:21:25] Oh, yeah. I think he, I hope they're doing well.

Jason: [00:21:28] Yeah. Well, awesome. Well, Frank, this has been amazing, man. Is there anything I didn't ask you that you think would benefit the audience?

Frank: [00:21:37] No. I want to ask you something. Because you said something that really hit me at the beginning.

You were like, I've never even heard of direct response until after I'd sold the agency. And I think me and you were joking around about this by email. I was like, if I didn't have this damned, uh, I guess like moral compass and inability to sell something that is not measurable. I would be a zillionaire, you know, but I just can't do it.

And I don't even know how to attempt to do it. Because I know there was some value to it and like having cool stuff and well-branded things. I don't know how to make those things, but that's why God made other people, you know. Um, how do you sell that kind of stuff? Not with a clear conscience. I, I don't think there's anything wrong with doing it as long as a client knows the game going in, you know.  But how…?

Jason: [00:22:25] Well, we… Yeah, our agency, we developed, um, user experiences, you know, from websites and then we built applications. So if you think of sites like Legal Zoom, we built that, uh, you think of Hitachi Power Tools or Lotus Cars, their website, like none of those websites back then had really caught actions other than find my dealer, you know, Legal Zoom did about getting in, but we never really ran ads.

Um, so we always said, you have to have this amazing, like when someone comes to your website, you have to have this amazing experience and tell the right story in order for them to, um, you know, build an trust you. You know, we never really, we, we, we didn't get their people's email addresses; even though looking back at the agency, we were one of the first to build e-commerce stores.

We were one of the first to build an email marketing system. So our clients could broadcast to their clients. Like, and we were one of the first to build a CMS system, but we did what typical agency owners did was we kept working on our clients that kept paying the bills and we couldn't keep up. And then we, uh, started using other partners, like MailChimp. Like, we started all that before MailChimp.

So, you know, everyone, uh, misses the boat. Uh, I think we missed the boat, but at the end of the day, I'm right where I'm supposed to be. I'm loving life and doing everything, so…

Frank: [00:23:54] You get to have the pensive view off the balcony in your opening for the Podcast, man. The only way is like, we will make you more than you pay us or we'll refund the difference plus 20%.

I mean, the company is called Grow Ads for God's sake, but that's like hard work. I mean, it's actually not because you just choose the right clients, but you know what I mean? It seems to me, hey, the grass is always greener, but I'm like, man, these dudes that are getting paid half a million bucks to make a commercial. Those are the ones that are the smartest people in the room.

Jason: [00:24:24] Yeah. Well, I mean, it's, you got to do what you enjoy doing, right? Like you said, the grass is greener on the side that you water. So, you know, whatever side you want to water, like it's going to be, you know, you're going to enjoy it. I always just hate when people do something that they don't want to do in the agency just to make money.

I think that's a big, big mistake. I'm like the money will come. Like all the, you know, the mastermind members and the clients I've worked with over the years that have had, you know, the best lives, it's the ones that they, they didn't care about the money. They just cared about doing the right thing and doing what they wanted to do.

And that made all the difference. So…

Frank: [00:25:03] Well, you've made a whole boatload of it. And I've made, spent a whole boatload of it. At the end of the day. That's really it, you know, am I going to have a good time today?

Jason: [00:25:15] Well, I look at it as like you make money to save time in other things. So you have time to, um, you know, one of the things when, when I ask our mastermind members… I probably shouldn't tell people listening because now you know my trick question, but I ask them the first question usually is what do you do for fun?

If they say I work all the time, I don't let them in.

Frank: [00:25:37] Oh, dude, you wouldn't let me in then cause I really do all the time. But I love it so much, man. But because it's because I'm finally doing.

Jason: [00:25:44] Yeah, but you surf and you do all… or do you still surf or no?

Frank: [00:25:49] Seriously. Like, I'm in this little room right now and it's my pool house.And so I get up kind of pool house, go back.

Um, I've gotten that routine, you know, during COVID and everything. But really, I really like it, you know, like to me, it's so cool. But I’m an addict. Like I'm a hard core ad person specifically with direct response. So I get to hit refresh a whole lot of other people's stats all the time.

I get the dopamine hit constantly. You're like, ooh, hit, refresh on this to see how this is going. Okay. Is it refreshing over there? Hot damn. Moving on. What else can we do? You know? So to me it’s not work, really.

Jason: [00:26:27] Oh, yeah. Well, I mean, that's, that's the whole thing. But I still, I do want you to take some time off.

Gotta have some time. So...

Frank: [00:26:37] Well, you know, weekends and stuff. I'll sit around and walk over to the other house, the main house. Hang out there.

Jason: [00:26:44] Well, awesome. Well, what's the website people go in and check out? Is it growads.com or…?

Frank: [00:26:49] It’s .org. I didn't have the money for the.com. Actually, I never even looked to see how much the.com costs cause .org seemed cooler to me.

Jason: [00:26:58] Well, I think .org usually ranks higher anyway .org ranks higher in Google anyway.

Frank: [00:27:04] Oh, I don't even know about that stuff.

Jason: [00:27:06] Claim that.

Frank: [00:27:10] I have no idea about SEO because I have ads. You know, it’s like, you want to get known? Run ads. Yeah, or go to frankkern.com. Both of those sites will cure your insomnia pretty well. I think if you have it.

Jason: [00:27:26] Whatever. Everyone goes, check out both those sites. And thanks so much, Frank for coming on the show.

And if you guys want to be surrounded by amazing agency owners where, you know, we have a lot of fun, we're going over constantly what's working, what's not working. Sharing and being able to see what you're not able to see because we're too damn freaking close to it.

I want you guys to go to digitalagencyelite.com. This is our inclusive mastermind. And until next time have a Swenk day.