From $0 to $10M: How to Structure a Marketing Agency That Lasts | John Chan

#019: Starting as a designer, he recognized the need to make his work measurable, leading him to dig into conversion rate optimization (CRO). His stint at Basecamp further honed his software skills. However, when going into software companies, he faced the challenge of commercializing their product, highlighting the importance of sustainable business practices. Through trial and error, he realized the significance of user acquisition and the value of continuous learning. As they transitioned into building an agency, Chan and his partners embraced the skill gaps they encountered, leading to the formation of a version three agency that aimed to be formidable. His insights shed light on the fast-paced nature of agency models, emphasizing the need for adaptable strategies and pricing models that prioritize quality. Through his experiences, Chan paints a vivid picture of the agency landscape, where skillful navigation and a commitment to sustainable growth are essential for success


00:00:00 - Starting a SaaS Company vs. Scaling an Agency
00:01:47 - Challenges in Building an Agency
00:03:34 - Building a Solid Business Foundation
00:05:29 - The Role of Marketing in Business Growth
00:07:29 - Choosing the Right Marketing Channels
00:12:20 - Importance of Thought Process and Fundamentals in Business
00:14:09 - Unique Selling Proposition of the Agency
00:18:43 - Identifying Opportunities and Exploiting Strengths
00:21:29 - Transition to Private Equity and Seeking New Opportunities
00:22:59 - Evolving Business Model and Transition to Private Equity
00:24:17 - Challenges of Acquiring Companies
00:25:08 - Learning from Acquiring a Brand
00:26:55 - Private Equity and the Agency Model
00:28:06 - Building the Agency
00:29:33 - Marketing Strategy and Campaign Structure
00:35:43 - Career Path and Business Growth
00:36:17 - Sharing Resources
00:36:58 - Importance of Calculating Unicornomics
00:37:49 - Accessibility and Community

John Chan's Links:
X:  jtcchan
IG: jtcchan
Website: 2x.agency

Dylan's Links:

• 🎙️Podcast: BusinessConfessionsPod
• 📽️YouTube: @BizConfessions
• 📷Instagram: DylanWillx
• Linked-In: /dylan-williams

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Past Guests: Chandler Saine, Daniel Martinez, Stratton Brown, Lee Maasen, Nico Lagan, Daniel Roman,Tim Branyan, David Van Beekum, Nick Hutchison, Deirdre Tshein, Sanchez Zehcnas, Christina Lopez, Keigan Carthy, Hemant Varshney, Taniela Fiefia, Jennifer Blake, Nicki Sciberras, John Chan

Transcript

Track 1: 0:00

You started a SaaS company and then skilled an agency that's backwards from the trend that you typically see nowadays. So it's usually agency jumping ship to software. It sounds like you figured something out. What is it?

john-chan--he-him-_1_02-06-2024_151909: 0:16

That we sucked at growing the SaaS company is what we figured out. So here's a punchline. when we built out our businesses, we always think about what's the skill gap and the skillset that we needed personally, that we needed to solve. And then what basically towards that. And so we didn't get into the history of. My, my career yet. but there was basically three, three major arcs. I started off my career. I dropped outta school. I started my career as a designer, and then I realized that in the design skillset that I needed to make it measurable. And I got into CRO, right? And then I got into, and then through CROI got connected with Basecamp. I worked there for a while as one of their conversion designers. And then I built out. Like a software skillset incidentally, through that work environment. And then when I was building the software companies, come back to your question. we had product traction'cause I was a good designer. I knew how to make good feature sets, but we couldn't commercialize it and make it sustainable. And coming from a place where I wanted to bootstrap the company almost matic to a fault. we eventually had to basically, fund ourselves to get away through. And the pro at the time, I told myself I wasn't good with user acquisition. I. So what do you do? You start hosting meetups and find out how other people do it. And when we got back to building out the agency, we weren't planning on building an agency. We just realized that halfway through that, there, there were skill things. The, there were skill gaps that my partners and I had that we still needed to learn and needed to mature ourselves. and that's what the agency became eventually was like a version three of how do I actually build out being a formidable.

Track 1: 1:44

Sounds like you had a problem and then you just went and solved it yourself, and then now you're helping others do that. Yeah. where are most agencies getting it wrong now?

john-chan--he-him-_1_02-06-2024_151909: 1:55

That's your cycle you have to go through. But in agency models, if you get your service model and you get the pricing wrong, you change it on the next sales call. And so the product iteration process is very fast and it's very quick. And so it allows you to adapt very quickly, should you need it. If the market shift, which it also does, then you have to adapt accordingly. So that's what the great thing about an agency model people get wrong is I think people oversell themselves, and I think agencies generally get a bad rep. Because people are always there to chase a next client. in some cases, that's also because of a pricing model inherently built in. If you don't have enough margins built into your pricing model, then we've certainly done that. We've learned that, firsthand, it just means that your qua your product quality suffers and your service quality suffers and your fulfillment suffers. And so I think that's where a lot of agencies get wrong because it's easy to get started, but sometimes it's true that it's really hard to scale. And we run into some of the problems ourselves because the decisions that you made months ago. begets you with, troubles that you have, months down the line. And so I think that's the part where agencies can get wrong and that's why people have a bad rep because, people don't like consultants

Track 1: 2:57

Yeah, there's always a lagging measure and people feel that, 30, 60, 90 days at least.

john-chan--he-him-_1_02-06-2024_151909: 3:05

in running the agency model, right? It's about scaling and how to get more revenue and you burn through fulfillment in some through, in some cases. It's like having long-term clients and having a partnership is actually the more sustainable way of building the business. But it's always hard to get there.

Track 1: 3:19

Yeah. Yeah. So you work with DTC brands and then SaaS companies, so let's lay the foundation for what are business needs before they hire on a growth agency.

john-chan--he-him-_1_02-06-2024_151909: 3:35

or any marketer, I would say the main foundation of what a marketer's job to do is to take, we talked about this earlier, right? Marketing is sales at scale. and so if you have a product or service that inherently has value that people want and need, the marketer's job is just to look at what has worked in the past from past sales. If you have a sales team, go look at sales recordings of what has worked in the talking points to get someone a prospect from zero to close. You as a marketer is you just need to do that. And so in the absence of those repeatable sales and those conversations and that data, it's really hard for a marketer to do their job, right? Because what they don't know is they don't know how app platforms are going to respond at auction, right? They don't know what the unops are. They don't know what kind of, messaging or angles is gonna resonate unless you have a lot of those data and evidence in the past. And so it's like the first rule of marketing is having a great product of service. because if it works and it works beautifully and you can have a same marketer apply the same techniques in one environment and basically have it completely bomb, versus have the same techniques apply in a different environment and have it completely scale and it's not, and it's easy to attribute it. Skillset to the marketer. And sometimes that's the case, especially if you're trying to push boundaries and things like that to come up with some unique or creative approach. But if you're going about this from a playbook perspective of how do I take something that's already worked in the past and apply it over here, then it really comes down to having, a repeatable business model that already works. So we're not talking about margins, we're not talking about those foundations. At a very basic level is you need to have a business where people are very happy with the product or service that they're happy to pay you for, and then the marketing can reverse engineer what the process of doing that and do it at scale.

Track 1: 5:16

Yeah, marketing should be fuel to the fire. And you should be able to handle the fire that you put on and what you get from that. and that goes down to the foundation. you're sitting here going through this, and I'm having realizations in my head too, Hey, I feel like I see a lot of people nowadays that are pushing, or saying they need help or they're looking for help for something in their business when it's probably a foundation issue that they need to. Fix first because hiring an agency to do this or do that is not gonna fix your foundation that you need to have built out first and your processes.

john-chan--he-him-_1_02-06-2024_151909: 5:50

works both ways. Where you also see why suddenly when you apply a marketer or growth agency and you see those like crazy returns within the first 30 to 60 days is because they're already sitting on top of a data set or evidence that things are working. Had they had the confidence to just push the boundaries. And so they don't know that. And so I think like any field, whether if it's a marketer or accountant or a lawyer, you just don't know what you don't know. And so when you go talk to an expert or an advisor on any field, it's really just important as a business skill to have good, ask, good advice, especially for fields that you don't know, think, ask any TCEO, right? It's like their job is not be the smartest person in the room. So if you get to a place where you can ask people in their respective fields and suss out if they're like, if they're lying to you or not, right? It's are this, is this person like blow smoke up my ass? do I, do they really know what they're talking about? If you can find that. It's like sweet spot as a non-expert in that field to find people that are really good at what they do. That's where magic happens. And so having, that ability to take your business on whatever level to, a certain level that hiring an agency or hiring a marketing person is not gonna break the bank for you, where it's not a lot of pressure and a lot of risk. That's when you can give them the leeway.'cause again. If you need ad budgets, they need to have enough margins and sales to carry that. And so crossing that minimum threshold where that higher is de-risked, that's usually the sweet spot.

Track 1: 7:13

Yeah, so once they had that foundation laid, they had a great product, they had those margins. What are you doing next?

john-chan--he-him-_1_02-06-2024_151909: 7:23

So the first thing to ask is, let's say from a marketing perspective, right? We're not talking about growth in no channels, right? Just from, wearing my hat, right? the usual suspects for DDC brands, we'll focus on that. The usual suspects of your, the channels that are available to you is paid search and paid social. And so paid search very broadly would be things like, Google search, bing search, and in some cases Amazon, right? It's it's a search environment, and I'll talk about the behavior of what the characteristics of that consumer will be like in just a second. But in the other environment will be paid social and I, I won't scrutinize whether it's meta, so like I ig, Facebook, TikTok. in some cases, snap, Reddit or Twitter, right? It doesn't really matter. But the fundamental difference from the consumer side is that in those two environments of search versus social is that on search, what you're doing is you're actively looking for something, right? You're typing in a keyword of something that you're looking for specifically. And so when you're thinking about, I'm looking for. a pair of shoes or what I'm looking for, this particular brand, you're actively buying right in the, in that process. Now, in paid social, it's different. In paid social, what you're doing is you are intersecting ads between your friends' feeds, motivational videos, other click, maybe articles. You're in your downtime, right? And so what you're doing is you're not actively looking for a product. You're not actively looking for a service to buy. And If you think of it in that way, these two platforms translate very well into demand generation for paid social where I wasn't thinking about a product or service, but now that I see the ad, I'm suddenly thinking about it versus demand capture where someone is actually looking for something and your ad unit or your organic result is in the right place at the right time to capture that sale. And so going back to your product service, which category do you belong to if you are in a market? There's a lot of existing demand or search. All you have to do is figure out whether if your products category or your price point has enough search volume that if I typed in, collagen pills or if I'm looking for X amount of red pair of shoes, right? Or a piece of luggage that your ad unit is competitive enough, both from a ratings perspective, from a visual perspective, and to compete against all the other options available to you so that you capture said, sale. and so that's, that search environment can be scaled for you if there's enough instead of search volume and that your listing was competitive. But if you aren't paid, social will be a better environment for you. And you've seen a lot of DTC brands grow over the last 10 years because, ad place placements were a lot cheaper back then. CPMs are lower back then, but it's an environment where you're not evaluating your product against a sea of other products. They're just evaluating you. And so that's why you'll see a lot of premium and more higher price items sell really well in that environment because if price wasn't a consideration, then all you have to look for is just consider the problem sets. You see a hook of a video creative, you see them explaining the product, and you're like, oh, shoot, I want that. And then you click, and then next you know you're on the landing page. There's no selection process, or there may be some, but then you'll have the position to add an angle. So it's about thinking about. Starting from the beginning of what product category do you fit in and which environment is best for you? And in most cases it's both, right? And that's usually multi-channel sort of approaches. But it's thinking, asking from the fundamentally first and saying, then you go back and ask, does a unit economics of the products of a margins and the cost of set respective app platforms. Make it such that I can pay for a customer and be first order profitable, or if I have to break even on set first product, does my skew selection and product sets have enough follow up products and purchases, either as a, a renewal or replenish product or from an adjacent product that I can make this customer like transact on our, in our, with a company over the course of a lifetime.

Track 1: 11:05

You could have the perfect product as well. And what I gained from this is you could have the perfect product and still be pushing on the wrong platform

john-chan--he-him-_1_02-06-2024_151909: 11:14

That's sometimes true.

Track 1: 11:15

and not get Yeah, because I didn't even think of it that way. I'm, I don't have any, I'm not a brand owner or anything like that, so I had to put the brand, the BTC hat on and think. Logistically that way, but that would make, that makes a lot of sense though. I can see that now

john-chan--he-him-_1_02-06-2024_151909: 11:33

absolutely.

Track 1: 11:34

and that's good to even, Yeah.

john-chan--he-him-_1_02-06-2024_151909: 11:37

Yeah. And I think that's why, sometimes when people are saying like, oh, I ran Facebook ads, it doesn't work. Or oh, I tested landing pages. It doesn't work. And it's no, it's your specific version of that experiment didn't work right. But there's a lot of situations and context that you have to think about that may or may not apply. And it's also why, when you're looking for marketers, it's about the, there's the hard technical skills of. do you know how to run Facebook ads? Do you know how to run Google ads? there's like the technical skills, but there's the soft skills of do you know how to answer problems in ambiguity? Can you look at data, interpret what to do next? It's easy to look at when things go right, but can you tell what to do when things go wrong? Those are much harder nuanced and very situational questions, that you can't capture in a case study or it's even hard to capture. It might be to capture in the interview, right? But it's about asking person, the person's thought process of what would you do in this environment and why would you go about that, that, that way?

Track 1: 12:29

Yeah. You talk about advanced marketing techniques. Have you touched base on this already?

john-chan--he-him-_1_02-06-2024_151909: 12:38

Not exactly. I don't necessarily think that it's about being advanced. I think it's about, following the right series of steps. If you look at I used to do martial arts, right? And so if you think about, I'll use a saying that's somewhat overused, but very true, right? It's like Bruce Lee talks about you're not afraid of the person that knows a thou, 10,000 Ks. You're always, you're worried about the person that can do 10,000 kicks. 10,000 times, single kick 10,000 times, and it's about the repetition of doing the same thing over and over again. And so it's always been go, going back to fundamentals, like techniques can change, right? But it's if you look at the backs of, all these successful businesses, a lot of them grew from zero to 1 million or one to 10 million. Not because they had, proprietary knowledge or tech or something along those lines. Of course, there's companies that do have those techno techniques that they can exploit, but a lot of'em are just following fundamentals. A lot of them is just asking the same questions of does the unit economics work? Can I spend a dollar to get$2? And is there enough margins for that to continue doing that? And is there enough volume for me to keep doing that? And if the answer was yes, then it. that's your business. And so it's not always about being advanced, it's about being, going back to basics in some cases, but also knowing the platforms well, because as with anything, it's understanding on a level about what people's behaviors are. because again, at the end you're selling to people, so it helps to know on search. This is, you're doing keyword research and you're doing bid bidding, what have you, but what are people actually doing? They're looking for something, right? If you go back to the basics that we as humans understand, the thing should make sense.

Track 1: 14:05

That's really good. Where, what makes you unique compared to another agency?

john-chan--he-him-_1_02-06-2024_151909: 14:14

I wouldn't dare to say that we're

Track 1: 14:15

I.

john-chan--he-him-_1_02-06-2024_151909: 14:15

a sense that we don't have skill sets that other people do not have. But if you look at any individual entrepreneur or any individual hire. You always know about their unique stories and circumstances that leads to them being having a superpower of sorts. And so if you look at my superpower, that translates into our agency service model. It comes down to being really good at learning and going from zero to 60 in a particular field. Very fast. That lends itself to consulting really well. So for me personally, I have a lot of conversations with brand owners or SaaS founders where they're like, wow, you just heard my business for the first five or 10 minutes, but you knew some things about my business that I didn't think about myself. And so that part is one aspect of it. then the. Question is, do we have skillset or tools or techniques that allow us to exploit that in such a way that allows you to be profitable? That's like the thing, right? but I would also say that as like a boutique agency, we're relatively small, right? We're about eight people, full-timers who are part-timers. But in terms of like the breadth of what we need to do as a small team is that we have to think about things on a full funnel basis.'cause I see brands and in some cases agencies have to, hire. right? You hire a Google Ads person, you hire a Facebook ads person, you hire someone doing email, and they don't talk to each other. And what happens is when you have the ability to think, as a brand owner, you don't get the luxury because you have to wear multiple hats. But when you start thinking about how these channels integrate together, right? Then you start doing techniques that makes a lot of sense. For example, if you're running on paid. paid social, right? What happens is not everybody clicks out on their phone'cause their phone is not a useful interface to type in, like shopping or review reviews, right? So what you'll do is they'll take that, product category or they'll look up your brand and they'll run a Google search on it. And so the next thing you know, if you don't have brand search campaigns running on search, you end up seeing a lot of the meta. Driven demand generation sort of volume goes towards a competing product because you didn't have the demand capture set up to anticipate someone doing that sort of search. or in

Track 1: 16:10

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 16:11

would be like, oh, if you realize that your product category is, your competitors is a really important source, then not having the landing page that does a comparison ad between how your product is better than the next person. You could have person run a, Google you can bid against competing. Terms, but not remembering or not knowing that you need a designated landing page that fits that narrative after that click, that's important. And so as a brand owner, they inherently think that way because they're dealing with all these other things. But as an agency, it's also important to think about because that's where a lot of your best volume would come from. And if you see other competitors in their space not doing that's usually an advantage and an angle that you can take.

Track 1: 16:49

I wanna take it back to what you said originally

john-chan--he-him-_1_02-06-2024_151909: 16:51

I.

Track 1: 16:52

where you have spoke with business owners and realize things or see things in their business that they not even seen. You've been looking at it for, what, 15 minutes? You know what? What do you contribute that to?

john-chan--he-him-_1_02-06-2024_151909: 17:08

I attribute it to the same questions that you ask, which is you ask about a personal's history. Because if you think about brand owners, most people start businesses because they're trying to make a quick buck, right? But there are other brand owners that started something because they're trying to scratch their own itch. They're trying to solve something that are very deeply rooted into them. And what ends up happening is like what you asked earlier, which is what makes you unique. As a product, and if you think about us as a product, right? We have a service that we fulfill. It comes with a core strength that we have that we see in the market that we're able to exploit. And so when you talk to a brand owner and you think about the course of decisions. Chances are there are strengths about the product or service category that the founding team has that you can then use in your messaging and your marketing, or the fact that they have certain things that it's like a blind spot for them. Because when you're an expert in something, you don't know that you're really good at it. Like you, you ask experts like, oh, why are you good at this? And they're, most of the time they'll be like, oh, I don't know. I'm just good at this because of like X, Y, and Z. I think they're not always able to articulate it, but when you see this from an external perspective and see it on the outside, it's sometimes more obvious and you're like, oh, that there? That's not normal. You should keep running with that thing. Or in some cases it'll be like, Hey, they'll do certain things where it's like, Hey, this has worked really well in the past, but shiny object syndrome sends it into a different direction. And you're like, guys, really it back in? You could explore that because that helps you stay fulfilled or what have you, but this is the money maker and you should really double down on this. And those things are just aren't not obvious. And It's listening to those patterns, but a lot of it comes down to uncovering what the person has said to you or what about their history that led to the decision making that will become more obvious if you see how the dots connect.

Track 1: 18:44

That's good. and I ask that selfishly because I have, what I've been told is I'm good at. Finding and what, how could I put this, I'm trying to put this in a way that would make sense too. I'm good at finding in improving procedures essentially. and procedures is probably not a good term, but. I, and I can't even say processes. It's more so of identifying opportunity, I guess I would say in a general sense. And I've been trying,'cause you mentioned that earlier, that you then find the tools and systems to, to help with those. So what I've been struggling with, and this is totally switching gears here, but I feel like you can help me with this, is I've been trying to, I. System systematize or productize a service that I've been doing with other friends on. Anytime I see a business I'm like, oh, this could be improved. This could be improved, and I would do this right here. And then it's converting, three x. what tools have you used whenever you go into a business? Are you seeing things like that or are there tools or, systems that you're putting that you're, putting in process on that end? I.

john-chan--he-him-_1_02-06-2024_151909: 20:05

you in so the so short answer to what your question was. No, but to answer what you're doing right is just apply the same process, is that if you think about what

Track 1: 20:13

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 20:14

skill sets are. Think about your genesis of like your career, right? You built a massive business building off real estate empire, right? You started investment firms and you're transitioning to being a holding company such that you can take an existing business and do better with it, right? But a large part of that comes from identifying opportunities, as you have said, because that's what real estate investment is all about. You have a sea of deals that are available to you, but the acquisition process is looking at the numbers and saying, you know what? This one checks out, this one does not. And then you start doing the that back and back. Back at the napkin math of would this pencil out if I actually,

Track 1: 20:47

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 20:47

so you're applying the same mental process in that environment where it's, there's a lot of reps that you practice with into a different environment and you say, you know what, if I were to go into this software business, how do I apply the same level of thinking that I have here that you could apply to here? And that's why starting a new company, it's very hard. No existing data, no existing, comparables. going to real estate for you to benchmark against, but when you're like, you know what, this was doing a million dollars per year and it was doing these type of things, what would I do if I had did this, and this? can start operationalizing and systemize and that's where you talk about I opportunities and unlocking value. And that's why building a private equity firm or holding company makes sense given that's where your background you come from. And so if you look at any type of founder, they always have these things like the writings on the wall. It's always there. But like you said, it's not easy for them to articulate it'cause they're just doing what they're doing. It's exactly what you talked about. but realistically, that's what you're doing. And so when you can identify, that's the angle and messaging and the value that you bring. Think about the partnership conversations you're gonna have with other people. If you were to build a personal brand, right? Marketing is sales at how do you take that and say, you know what? I was really good with this environment, therefore I go into this and I can do really well. And that could be a fundraising pitch. That could be, that could be your angle for finding new partners, but that could also be the angle that you have for hiring people and bring them in-house and say why they should work for you versus for somebody else. Does that all make sense?

Track 1: 22:08

that's good. Yeah. Looking at it at a totally different angle than I was looking at it before. just repeat what's working and then find opportunities inside of what's already working with some, with something else. I like that.

john-chan--he-him-_1_02-06-2024_151909: 22:21

that's exactly what you're doing and that's why that transition happened.

Track 1: 22:24

Mind spinning here. that's really good. So we've been all over the place today. I'm gonna jump even around even more now'cause you've got my wheels turning on this. You've transitioned or you're starting to transition into private equity, it looks like, from what I've seen. You wanna talk about that a little bit?

john-chan--he-him-_1_02-06-2024_151909: 22:42

bad call on our part, but I tell you what, part of the thinking that we had was that when, going back to, the arcs that I had in a career in my

Track 1: 22:51

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 22:51

strength and superpower, I've always looked for the next opportunity to transition into. And so I said, I jokingly

Track 1: 22:57

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 22:57

I'll come back to the reasons why in just a second. But the thinking here is that I'm always looking for the next iteration of how to solve the same problem set so that I can take this existing skillset and pay dividends. a carry forward. and so with private equity, part of the conversation that we were having was trying to think about a business model that were more aligned with our, the agency clients we were serving at the time. And for a while I was thinking about, the retainer model. It was just, wasn't aligned in a sense that it, that people didn't believe that we had invested interest. And so in the initial thinking was that if we had vested interest in growing the business with you and treat us like as real partners as opposed to being mercenaries, I thought that the conversation would be more aligned. that was one part aspect of it. But the other aspect of it was that I was trying to think about, client services in a way where I don't get pigeonholed into the set of services that we had. Where it's I was just thinking about beta buying as a marketer. let's bring the marketing person to think about. It was more like, how does fulfillment and how does supply chain impact the way that I think about economics and my marketing, right? how do I approach it in that way? again, going back to landing pages, what have you, like how does landing page impact the marketing campaigns? I'm trying to think more holistically about the entire business. around 20 19, 20 20, part of that, evolution of that business model was just me asking for advice of how do I structure something like this? And the conversations and advice I was given at the time was like, if you're gonna go down the path, what do you buy the company? Instead of consulting for equity, why do you buy the company? And back then I just kept saying,'cause we didn't have capital. We didn't have capital. And one person was like, I got capital. And so that kind of changed the possibilities of oh, okay, what would happen if we were to acquire companies? And so at the time, what we wanted to do was we wanted to basically like tiptoe into it. Private equity is not something you dip into. And the reason why I say that is because when you buy a small company, you need to make sure that it has enough operational expenses and revenue to us to basically service that company. And so what ends up happening was as we're growing those businesses out, skill wise and opportunities wise, we basically expanded our skillset and we were able to think about it holistically. I actually think it was a distraction thinking back. And so what I wish we did more, if I were to go back two years, there's certain parts of the business that I think I did really well with, which was acquiring a brand allow us to go through the motions of thinking about all the sort of components that makes a great brand great. It got us through the exercise of doing due diligence of, if we were to acquire a brand, can we actually go to this thing? And those are really important exercises that I don't think was actually a bad call, but after you acquired a company and the amount of energy dedication you can. Getting to it. I think that becomes a problem. And so I think if I were to revisit the private equity model, I think we should be probably maybe two or three times larger so that we have a CEO that can dedicate and champion the private equity side separate from the agency side.'cause at the current stage of the agency, I think it's a distraction.

Track 1: 25:31

No, that's a really good point. private equity is not something, like you said, you don't tiptoe into private equity. It's taking something and that's why a lot only there's not everybody does it, we see it now, we see that Alex, her Moses's, that are coming up here and we're, oh, we wanna do this, we wanna get into private equity, but. People that have not ran companies like that, and there's a reason why private equity as well doesn't take on smaller companies. They have criteria that they take on. And you can't just take on, a million dollar company, a seven figure company without that infrastructure in place.

john-chan--he-him-_1_02-06-2024_151909: 26:08

And there's a bit. It's more nuance than that too, right? there's no small cap. Private equity firms, not lot to exist. A lot of them basically move up market because if you raise a$10 million fund, a$20 million fund, right? Like how many small checks can you, or sorry, maybe even go larger. You've write a$50 million fund or a hundred million dollars fund. How many$1 million checks are you gonna write? And so I saw that as opportunity because there's a gap between private equity firms that are actually gonna go into small cap sort of private equity to, to buy out smaller deals. And it just meant that the people that were buying those were high net worth individuals that had some spending capital to deploy. And so I think in that sense, if you're like semi-retired and you wanna get into something that, and you have that was your sole focus, I think that could actually work a little bit better. but as an agency model, I think the way that we approached it, we tried to think about it as like client services and it doesn't translate exactly that well. And so if you look at the people that we have on staff now, you end up with an operations manager for e-comm, right? And you end up with like customer success and you end up with and it just fragments the company. And so I think. if we didn't do that, I think that would've been better for the core agency business. And I think if we were just patient, let's call it like two or three years, we probably would've been grown larger to have a larger headcount to basically fulfill fulfillment instead of leaving a business basically on the back burner. Which is it exactly. It is, but it's not growing at the pace that it needs to be. which is also doesn't lend itself well to future fundraising conversations. You should look at historical performances, so I. it just put us in different directions. So learning wise and skill gap wise, I think we learned a ton. A lot of the things my level of decision making and the quality of decision making, I think has been a lot sharper because I went down that path. and I'm more thoughtful about fundraising and more about, track working, those type of things. But like hard metrics of like, how the businesses perform individually. I think it would've been better if we didn't do that.

Track 1: 27:51

Going through that now and knowing that how have you doubled down on the agency side?

john-chan--he-him-_1_02-06-2024_151909: 27:55

it?

Track 1: 27:57

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 27:58

I think it's, if you look at the core functions of an agency, you have sales and marketing, you have fulfillment, and you have, operations at the back end. And I think the level of growth that gets into it is, I. the first level of parts that you wanna delegate, which you've done successfully was delegating sort of the admin, like low value, like tasks first. And so that part of the operations

Track 1: 28:18

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 28:19

strong and very robust. the second layer that you improve on is the fulfillment layer. And so I think improving to fulfillment layer is about developing SOPs, sure that you're removed from the. Most of the operational tasks that comes along with, like deliverables to clients and have that really strong, that's layer that we basically have now. And then the third layer is delegating sales and marketing. And that's the layer that we're working on. And each of these layers that you work into, and I think about it in those levels is that the founding team basically have to get the hands dirty and built at the first iterations. and going back, I think, our stage of our growth. In this case, why I'm doing these podcasts, for example, is largely a function of be trying to systemize and productize and have, like work products that we can, assets we can distribute largely.'cause you can focusing on the sales and marketing aspect of it so that if we didn't focus on the first two layers of developing all these useful skill sets that we have something to actually talk about. it'll make the sales and marketing a lot much harder to talk about.

Track 1: 29:12

That's actually something we're trying to do right now with, the marketing. You mentioned the marketing, building out the marketing side of it. what can you share? I. That you've learned so far with Mark, or what's your approach essentially with the marketing? Are you more there's so many different ways, some people, how people build things out or scale things or how they go about things. What's your approach on building out the marketing side?

john-chan--he-him-_1_02-06-2024_151909: 29:34

a large part of it comes down to looking at what's already working in the past. So I'll go back to that for a second. there's different facets of marketing. So if we're just talking about running a paid ad campaign, right? But if it's paid search, paid social, first one is delineating between which one should you double down on? And it goes back to what my earlier thought around category is there a lot of search volume. Is your product, if you had showed up in the search environment, would it be competitive? those are the kind of questions that you would ask because in a sense, Google ad campaigns are also a little bit easier to set up. You take the product feeds, you take the Google A, you just take your search campaigns, you throw it up. There are, video and search YouTube shorts. There are like assets based creatives that are important, but if the company doesn't have existing assets, let lend itself very well to it. You basically go produce it. Those are like the easier parts we capture first. There's also another reason for that. If you look at the consumer journey that happens from, for someone to not know anything about the product, to knowing about the product or knowing, not knowing about the problems to being product aware or solution aware, the people that are closer to the purchase decisions are the ones that are down funnel, right? That are like, I know what product I'm looking for. I know. And so again, from that perspective. Usually find your best dollars spent, on search first. So I might prioritize first, but let's say that was environment was available or it wasn't available, then social's good. The next environment, in most cases, like I talked about with an existing brand, new companies are very hard'cause they're cold start, existing companies have existing campaigns and data. So we just took on a new brand lab, maybe a week or two ago. And the first thing we do is go through an audit and sometimes agencies would do audits as like a way to Talk bad poorly about the other agencies and all the other stuff that they've done, but realistically what we're looking for is we're looking for what have they tried that seems to have worked, that we could make improvements on. And for example, during the audit, I'll find all kinds of things, right? I'll find things like, oh, conversion tracking wasn't set up properly. Or that there was not passing enough data. And you can cross reference that between the source data, so you could, in this case, Shopify, to see what the actual order counts are to the events that were being passed in and tracked within Facebook pixels. And it's some, iOS 14, that changes certain environments, and so you see that all the purchase events are not being captured. Then you're like, okay, that's gonna be a problem. So then when you look at all the campaigns that have run historically, you'll be like, There's gonna be, there's reasons why those campaigns didn't work out right, not because those campaigns were necessarily bad campaigns. They could have all the right settings, they could have all the other things. But if this one sort of problem of conversion tracking screws up, it throws all the alerting off, and you won't have the right data sets to improve on timing matters. History matters, but then we're looking for things like that so that when you start starting your first campaign, you have a pott of attack and you basically say, listen client, so we're not a hundred percent sure this is going to work, but based on what we saw here, this is what I'll try first. And you're basically systematically going down the list of trying things that, make the most reasonable sense. And that's on a campaign, structural level. And the last piece to it from a paid social or. search in some cases is being clear around what kind of angles and messaging are, things you build out in your creative. And so right now on, on social channels, the creative is very important because there's fewer levers than we used to around the targeting that you could do or the types of target you should do. A lot of it is about broad targeting right now. Or in some cases you'll see campaigns like a SC within Facebook campaigns, if you're familiar with that, where it's basically productized. Broad campaigns where you don't get to choose the audience sets,'cause the machine is gonna figure it out for you. But then it means leavers are having good creatives. And so if you have good creatives that reflect the customer journey. If you see past customers say they like it because of this, they solve these type of problems, communicate that in your ad. And so if you review any previous ad creatives, that takes a while to get that messaging across. Or worse, they don't say any of the same things that people said were the reasons why they bought. That's usually a gap. So is it gonna work? For sure? Who knows? But take that messaging and put it in your ad creative, deliver in the most appealing and quick way that should help improve sales. And then you take a step back and you start. Going back to calculations, what kind of target ROAS do you need to hit as an or target return on ad spend, and you calculate that based on what the average order value is. What's the cost of fulfillment from your w going into, from the manufacturer going to your warehouse? What are your Shopify and fulfillment fees? All the things that help you blow down to if I have a$50 product, cost fulfillment was. 30% that, you have$35 to captive first sale. And then you ask, the repeat purchases, do you have adjacent products you can sell? And you start building your campaign accordingly. So strategics first go into ad accounts afterwards asking, thoughtful questions that lead you to making educated guests about what's going to work and to reverse engineering what's already worked in the past and capture that in a format that is applicable to the respective channels.

Track 1: 34:14

That's good. I'm so glad I have this recorded too, so I go ahead and take notes after this. That's really good. You've, you're a wealth of knowledge man. We were talking a little bit before on this, how technical about how we're gonna get on this. And I listened to some previous episodes, like I told you a podcast that you've been on and I knew that you knew your stuff. We talked about that. we've had guests before that, you can tell when they don't know their stuff. You definitely know your stuff. We've gained a lot of knowledge in this, episode for sure. Knowing everything you know too. Now, this is gonna be a tough one. I'm about to ask you. So if you had to leave a letter to a loved one or a child in regards to business, what would be on that letter?

john-chan--he-him-_1_02-06-2024_151909: 35:02

The most important thing

Track 1: 35:04

I.

john-chan--he-him-_1_02-06-2024_151909: 35:04

I took away from my career was if you want to do well in your career, it's focus on how to provide value in the same way that you said it. Except the way to think about it is if you know how to help someone make a million dollars, you're gonna figure out how to make a hundred k. You know what I mean? And so just focus and asking the skill sets of what does a company or business need to get to their next level? And so if you knew the skills required to take a company from 5 million to 10. You're gonna do well. And so if you go back to, I'm very grateful that you said that, we're, I have this wealth of knowledge, but a lot of it comes from the primary motivation of me trying to figure our, for ourselves. Going back to Genesis, we to user acquisition when we wrote a software company, and that's why we got down to Agency Path. And the agency was the environment where you can't not go through all of that and care about growing other people's business and walk away with not knowing how to grow the business. just see patterns all day long and you think about this work all day long. And so it's, in that letter it's basically my career path has always been around solving the next problem for our, for myself, but it largely was motivated around how do I make sure that the company or the organization that I joined was better than position that I found them because of the skillset I bring and just work backwards from there. it's hard to do that in an environment and not do well in life.

Track 1: 36:16

Man. That's good. That's really good. I was, I. Talking with your, marketing manager, who was setting this up for us, this interview today. And she mentioned something about some, what is it, audit templates, some profit calculators, just some essentially some good resources. Is that something you'd share with our listeners?

john-chan--he-him-_1_02-06-2024_151909: 36:39

they're not that hard to find. I'm actually trying to prioritize this and put it on our website, but if you reach out to me or I'll drop a link to it, right? there's calculators you can

Track 1: 36:46

Okay.

john-chan--he-him-_1_02-06-2024_151909: 36:46

are specific to e-com companies specifically. but they're basically just simple numbers that you would calculate, that you would punch in, and most companies should be doing this. Anyways. And so if you haven't done this exercise, sometimes it's a problem, right? But it's like this is where you would start. You would just punch in, what is the average order value that you would have? What is the cost fulfillment? And what you'll get is you'll get your contribution margins. But it's important to arrive at those numbers because when you go into your app platforms, you're trying to punch those numbers in to tell the machine and say, Hey, I need to hit a 2.0 ROAS in order for me to. Be profitable, right? Or I need to have a 2.3 if I need to account for 10% profit margins. That's basically the calculator. if there's questions

Track 1: 37:24

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 37:25

kind of thing, I can talk you through that as well. But it's an important exercise that any brand owner does to calculate economics.'cause the basis of a scalable, marketing campaign starts there. And so it's not something that every company comes with, but they absolutely should. And all those sophisticated ones generally do have it already. So it's not some sort of secret sauce that we know how to. Do math. Everybody knows how to do it too, but it's one of those things that I think would be useful for listeners.

Track 1: 37:49

Oh yeah, absolutely. People are good at complicating things and sometimes they don't, like you said, they get passionate about their own stuff and sometimes they don't systematize the stuff that they need to like that. So that'd be perfect. John, man, I appreciate you coming on today. Where can people, where do I need to direct traffic to? Where can people learn more too?

john-chan--he-him-_1_02-06-2024_151909: 38:06

Dylan. Appreciate that. we're, I'm easy to find online, so on Twitter, I'm JTC Chan, right on LinkedIn as we little harder. There's a lot of John Chans out there, so you might have to like, drop it in the show notes. but our marketing, our agency

Track 1: 38:17

Yeah.

john-chan--he-him-_1_02-06-2024_151909: 38:17

x agency, right? So you just put us a two

Track 1: 38:20

Okay.

john-chan--he-him-_1_02-06-2024_151909: 38:21

and you'll see, a media buying site and a creative agency that's us. And we're really accessible. book a call. It's no obligations. We don't have to sell you anything. We're just trying to figure out if there's an actual fit that your business can actually be grown. And if there is, I'll absolutely say we should work together. If it isn't, I'll be like, you should go find somebody else and here are the things you can go do to fix it. but yeah, appreciate the chat and thanks a lot Dylan. This is a lot of fun. I.

Track 1: 38:41

ab, absolutely, man. I appreciate you coming on.

38:44

Hold up. Before you go, I've got an opportunity for you guys that I don't think you're going to want to miss. We're at the beginning stages of this, but we've been creating a community, and we're about to launch it. And by the time you hear this, it'll be out. There's going to be a link in the description. If you've enjoyed what you've been hearing on the podcast, you've enjoyed the guest, enjoyed me talking and rambling on, and Want to know more or want to take something that you have and make it bigger scale it grow it We're gonna be sharing information that will probably help with that in this mastermind community that we're gonna be Growing over the next couple months. So if you want access to this will be a paid community, but right now it's gonna be free So that's the opportunity come join if you'd like to the links gonna be down in the description So go click on the link put your email address in and then we'll grant you access from there But we appreciate you guys