Die Schwächen des Agentur-Geschäftsmodells

0:00Yes. Yes. So, I will I will speak pretty definitively to I rarely do about like this model is better than that model. Agencies are exceptionally easy to get to and you know, caveat caveat for the internet trolls of the world, right? Like exceptionally easy to get to a million, 3 million, even 10 million dollars a year. In almost any version of the model.

0:25Beyond that, it becomes exceptionally difficult because you have human capital. So, it becomes really it's more and more difficult to attract, you know, talent to do higher level work. And typically the businesses that go from, you know, zero to 10 million, they're servicing SMBs and VSBs, so very small business owners and and small business owners. If you take one of the the way that I like to think about any industry if I want to get into is I look at what the people who are the biggest in that industry are doing and think, okay, what's different about what they're doing versus what everyone else is doing. And the biggest agencies in the world service the Fortune 100. And so, I take that as the natural extreme of like what is the best version of this business is that you deal with businesses that always pay their bills, they never churn, they sign five-year contracts at 5 million a year, and they're good for it.

1:07And so, the process of agency scaling is very much scaling the avatar, and you basically have to just keep earning your way up, which you're already on the right track, of how can I get an avatar that actually can keep their word? And once you get to there, number one, and number two, you'll have a telltale sign of like, am I dealing with an avatar that's too low? If you want to start doing more of their business for them. And so, if they're like, I can't close a door, right? Or I like you're like, maybe I'll do my sales for them. No.

1:36You have to deal with a business who knows how to sell because your services are not I will do acquisition for you. It is I will do this I will do this more I'll do lead gen. Right, exactly. And so, it really comes down to who's the perfect avatar for only this very narrow service that I have I have tremendous margins on. And so, that's where we get really clear on like, well, if they actually like I've been selling people who have over 10 people head count, but if I have over 50, my turn is like 1%.

2:01Yeah. And so it's like I really should just build that and not have all of this. Now, what happens is we we always incur debt. So, it's not like there's something wrong. Every business incurs debt when you start. 100%. You either incur talent debt, tech debt, financial debt, you incur debt. You want to incur the debt that's the easiest to pay back. Right? And so right now you can also incur reputational debt. Like there's debt. Um you're you're selling some people that you know you shouldn't sell so you can pay the bills.

2:29Fine. I'm not going to get on an ethical, you know, whatever with you. Um but the sooner you can draw the line of saying I want to Like if you told your team work How many sales a month you do? Sales velocity? Three, four. Okay. I'm okay with us going to one deal a month. And where this gets more interesting is that when you get that correct, truly correct avatar, the price elasticity uh changes. And so all of a sudden it's like if I actually were to price to my correct avatar, I might be able to charge two times as much. And by charging two times as much, I might 5x my profit. And by doing that, I'm actually more than happy to have my quote revenue growth rate be slower than what it was before when I had these people, but the amount of operational drag that you incur also like team morale of like I just on board this guy and he's already turned out. Like it just feels like such a pain. Whereas if they know that they're going to be creating long-term relationships with the customers, you will get a stickier business that's more fun to run and way more profitable. So, part of this is like a lot of entrepreneur a lot of the correct moves in entrepreneurship are counterintuitive because all the intuitive ones you've already done.

3:34You do those naturally. You wouldn't need You don't think about it because all the things that are intuitive you already did it and they already worked. Where you get stuck is the counterintuitive solutions. They're the ones where you're like Wait, so for me to grow I need to sell fewer people and have higher qualifications. It's hard to do. That's why most people don't do it. It's also why most people don't make money.