SaaS Interviews with CEOs, Startups, Founders
665: Blessed or Gutsy? CEO Turns Down $400k Salary to Launch Own Agency
20 May 2017
Chapter 1: What inspired Joe Koufman to launch AgencySparks?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. Five and six million. He is hell-bent on global domination.
We just broke our 100,000-unit soul mark.
And I'm your host, Nathan Latka.
i just finished traveling southeast asia for 41 days and i usually always get sick when i travel and quite frankly eating is difficult for me it's hard to find a restaurant and i'm spoiled in austin with my personal chef well i took these little packets with me this time 30 of them in my carry-on suitcase they kept me totally healthy with 11 different secret ingredients you can see them at nathanlaca.com forward slash juice i'll tell you more later on in the show that's nathanlaca.com forward slash juice
Folks, many of you reach out to me and you say, Nathan, so many guests on your show talk about the importance of batching. But whenever I try and batch, you tell me this. You go, Nathan, they don't book back-to-back times. Or they don't show up after they book. It's frustrating. The answer is, guys, you have to use smart tools.
I use a tool called Acuity Scheduling at NathanLatke.com forward slash schedule.
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Chapter 2: How does AgencySparks generate revenue for brands and agencies?
I'll tell you specifically how I use it later on in the episode. This is episode 665 coming up tomorrow morning. I get the sentient COO to join us is John Epstein. They raised $100 million for A-B testing with their artificial intelligence software platform. Good morning, everybody. Nathan here. My guest this morning is Joe Kaufman, joining from down in Atlanta, Georgia.
And he is responsible for introducing at least three, he's only counting three, but at least three married couples and countless contacts who've established business relationships. In early 2014, he parlayed his passion for connecting people to found a company called Agency Sparks, which is essentially a dating service for brands and marketing agencies. Joe, are you ready to take us to the top?
I'm ready. All right. So tell us what Agency Sparks does. By the way, many people will hear that bio. They're going to go, oh, it's cheesy.
Chapter 3: What was Joe's highest salary offer before starting his own business?
What do you mean he connected people and it's business relationships? It's fluffy duffy. Tell us what Agency Sparks really does and how you generate revenue.
Yeah. I mean, unfortunately, when we talk about it as a essentially a dating service for brands and agencies, my mom thinks I actually work for a dating company.
that's funny but yeah so our focus is on making connections between brands and agencies we our model traditionally has been that we've been paid by the agencies to help them with their business development and outreach to potential clients okay so the agencies who are actively responding to rfps and things are you're helping them kind of fine-tune requests for proposals and land those deals with new brand clients
Yeah. In many cases, we actually can help subvert the RFP where you find a need. Yeah. And then the client will actually hire the agency directly. But we are being paid by the agencies to find the opportunity and then make the connection and then get out of the way.
OK, is there one you can tell us about, like the actual story?
Sure, sure, sure. So one of our agencies, I mean, a good example for here in Atlanta is obviously Coca-Cola is a really well-known brand. And one of my clients that I had a relationship with needed help telling a story about Coca-Cola's new water sustainability efforts and the fact that they are actually now water neutral in their manufacturing processes, which is a really big deal.
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Chapter 4: What challenges did Joe face in his first year with AgencySparks?
And it's been a lot of years in coming to get to that point. Well, they needed help telling that story, not only here in the United States, but internationally. And so we were able to make a connection to one of our agencies that is focused on public relations. And they did a deal and now helped tell that story.
Was it like a six-figure deal? I mean, how significant was the deal?
Yeah, I don't want to get into the detail of the numbers for that because it's not my deal. It's between Coca-Cola and the agency, but it was a pretty significant deal for the agency for sure.
Does it tie back to your revenue though? Are you paid on a percentage of the deals you get for your clients?
Yeah, we were traditionally, we're shifting the model a little bit here in 2017, and I can talk more about that. But we traditionally were paid by the agency to put them through a very thorough upfront vetting process. And then we were paid a monthly retainer as well as a percentage of the deal.
Okay. And what's the average monthly retainer, would you say?
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Chapter 5: How has AgencySparks adapted its business model over time?
$5,000 a month per agency. Okay.
And do you require like a six month minimum or? 12.
Yeah, it's a year deal.
They're paying all upfront?
No, it's monthly.
Okay, got it. But contractually, they're obliged? Correct. And what year did you launch the company in?
We launched it at the beginning of 2014.
And, I mean, what's the story there? I mean, were you at a corporate and left? Yep.
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Chapter 6: What is the significance of the labor efficiency ratio for AgencySparks?
Oh, that's what it was. Okay.
So, I spent eight years at a B2B lead gen company, a .com called KnowledgeStorm. Oh, yeah. We were acquired by TechTarget. Yeah, TechTarget went public, raised $130 million, and then used about half of the money to buy Knowledge Storm, but I think we sold for $58 million. Yeah, all cash, right? Oh yeah, exactly.
And then I joined a small digital shop that was then acquired by a full service agency called engage. And I spent six years leading business development and marketing there. And we were acquired by publicist group, which is one of the major holding companies. There are four holding companies that own almost all marketing agencies in the world. And when we got acquired by publicists,
We were doing around 40 plus million in revenue at Engage. And that was towards the end of 2013, mid to late 2013.
Chapter 7: What future plans does Joe have for AgencySparks?
And, you know, when I left, I had six job offers that were mostly from agencies that wanted me to do what I did for Engage, but do it for them. And that's when the idea came about to really help marketing agencies grow and really focus on independent, smaller agencies versus the big holding company.
I want to get like in your brain during that decision, see how ballsy you were. What was your highest salary to offer from one of these guys that you decided to say no to to start your own company?
400 K plus an earn out of 1.5 million because they were in the middle of an acquisition situation.
Interesting. Okay.
So you said, I'll say that with that money came absolutely batshit crazy expectations. And so I had to definitely temper their expectations as well as temper the, um, I said, you should maybe temper the salary along with the expectations.
So you say no to the salary. You jump and you start doing your own thing. Was this your first at-bat with entrepreneurship?
It was. I mean, other than joining a very young company twice.
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Chapter 8: What advice does Joe give for investing in relationships?
So when KnowledgeStorm was acquired, we were 130 people and I was employee number 10. Did you have equity there? Joe, did you have equity in KnowledgeStorm? No, a little bit. I mean, I bought a nice laptop with the money I made from that. Okay.
I was going to ask you one of the things that I like to understand too, because we have listeners who some of them are students that are like literally trying to do as much as they can with as little cash as possible. Other people, they've saved up savings and now want to use that to take a risk and quit their job. What was your first, and you can define this however you want to define it.
What was your first meaningful financial event in life that kind of gave you the ability to increase your risk level?
Well, I made a very big transition while I was at knowledge storm. That was interesting. Um, I had gone from being an account manager and I remember my salary was $60,000 a year. And what year was this? Uh, geez, 2011, 2000, 2000. And I had the opportunity after about three years of doing that, I really had an interest in sales and moving over to the sales side of things.
And what I realized was that if I moved into sales, They were going to offer me the exact same base salary plus commission. And so... I was trying to understand what the downside was for that for me.
And, um, you know, over time I was able to obviously do really well in sales and I guess not obviously, and really grow some business for the, we were working with very big software companies like Oracle and computer associates. And I was able to grow a lot of those accounts significantly. And, you know, by the time I left there, I was making, Pretty good chunk.
And I actually took a slight pay cut to go to work for an agency. Well, it's a pretty big chunk.
Like you had 63K base. And then what were you doing in commissions every year?
So I think my last salary when I left there was 210 or something.
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