What We Learned From Acquiring Companies, Why 'Best Practices' Fuel Mediocrity, How Long Does It Take to Generate Revenue After You Speak At A Conference?

In episode #2943, Eric Siu and Neil Patel discuss key acquisition lessons, emphasizing cultural alignment, founder involvement, and complementary services. They highlight risks, strategies for successful M&A, and Nvidia’s approach. The conversation ends with the long-term value of speaking engagements for industry relevance. TIME-STAMPED SHOW NOTES (00:00) Lessons from Acquisitions (03:13) The Importance of Complementary Services (05:58) Cultural Alignment in Acquisitions (08:46) Strategies for Successful M&A (12:09) The Nvidia Way and Its Lessons (14:56) The Long Game of Speaking Engagements Prefer single topic episodes? Head over to our YouTube channel. To suggest a topic, go to https://www.marketingschool.io. For more content from Eric and Neil, check out Eric’s Leveling Up with Eric Siu YouTube channel and Neil’s Neil Patel YouTube channel. Connect with Us: Single Grain << Eric's ad agency NP Digital << Neil’s ad agency X @neilpatel, @ericosiu Instagram @neilpatel, @ericosiu Drop Us a Review If You Enjoyed the Episode!

• 0:00Speaker 00

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• 0:36Speaker 01

  Do you want to go first? Because you've acquired two companies and neither worked out, right?

• 0:40Speaker 00

  Yeah, so the two most recent ones didn't work out. So let's talk about these. So, and then I want to get your side, because you've now done like, what, 15?

• 0:48Speaker 01

  I don't know.

• 0:49Speaker 00

  16?

• 0:50Speaker 01

  It depends which company you're talking about. Well, we acquired a lot.

• 0:53Speaker 00

  Okay, so I'll go on my side. I'll just go with the lessons here. And so

• 1:00Speaker 00

  my main thing, looking back now, is at the time, the two I bought, there are actually two other ones that were very additive, that were, and they were acquired by, by, um, by like agencies that are, that are well-known. One, I should have bought agencies that are complementary, okay? Meaning that if I did SEO and paid media, for example, there's actually an analytics firm I was looking at that's doing very, and they actually had software too. So I was looking at them. And then I was looking at a creative firm as well. But instead, I bought an e-commerce paid media firm. And I bought a, a small business SEO firm, okay? The other thing is this, so if that part makes sense to you, do you have any clarifying questions there?

• 1:42Speaker 01

  No.

• 1:43Speaker 00

  Second part is, I would have, go ahead.

• 1:45Speaker 01

  Wait, do you want to explain to the audience on why you would choose something that's complementary? So they can get a better understanding?

• 1:51Speaker 00

  Because it's easy to cross-sell, up-sell, and then to build, so one, you get higher retention, two, your, your LTV goes higher, your lifetime value goes higher. And then, three, the other thing too, is people generally like, they, they as long as you can do things pretty well across the board, they, they'd rather de-risk you. They, they see this as, as de-risking if they're Going through a firm that can do multiple things. So Amazon, for example, a long time ago, we did paid media for them. They're like, dude, you guys are really good at paid media. But we need someone that does a lot of these different things and you guys don't do that. So.

• 2:20Speaker 01

  Yeah. So what Eric is talking about, just to give you guys all more context. If Eric does SEO and another company does just paid media and he acquires them. What ends up happening is is their customers, in theory, if they're doing paid media, could also use SEO. So you can now pitch all of their customers on SEO services. And for Eric's customers that all pay him for SEO, in theory, he could pitch them all on paid media services. So when you combine the entities. If they do a million in revenue and Eric does a million in revenue, you don't have two million. You ideally want to see if you can get to 2.5 or 3 million because you're cross selling. The second thing he's talking about with churn is if someone pays you for one service. It's not as sticky as if they paid you for two services or three or four.

• 3:05Speaker 01

  Because the moment they pay you for a lot of things, they're more reliant on you, which makes it harder for them to leave you. So then you make more money because they pay you for longer. But those are the main two aspects that he's talking about when he says complimentary.

• 3:17Speaker 00

  I'm going to give you two more and then I'm going to flip it to you. So the second one is. For one of them, I would have kept the founder because the founder, ideally, you're buying a company where the founders stay because a lot of these agencies are. It's almost like a little cult. They're, they follow the founder. The founder drives a lot of the energy. And usually they're the ones bringing a lot of the ideas, the strategy. They're just pushers, right? That's how they, they started this thing. One guy was an absolute grinder and I, I would, I think, had we just done that from the beginning, it would have worked out perfectly. And I could tell he just loves working. He doesn't stop, right? Now, the other company, this will lead into the third piece, the, the, the third piece here is. You want to make sure whatever you're buying, the culture aligns. So for the guy that was a grinder, that actually goes through the entire organization. People follow the leader, right?

• 4:00Speaker 00

  And they were much more aligned with us versus the other one, the guy optimized the business to not grow. So he, he wanted to cap the revenue and not grow and therefore I didn't vet the culture. And so when you look at one of the cultures, like, okay, I think we can make this one work. But the other one was just like, people want to chill during a client call. Sometimes they might not show up to the client call to go do yoga class instead, right? Um, they didn't care enough because it was a job to chill. And he also didn't pay his people that well. He paid people like really low. Um, and so then we ran into those issues too, right? So even though he had um, a lot of people, it was a lot of people that weren't really motivated and a lot of people that weren't incentivized to be motivated.

• 4:40Speaker 00

  Um, and plus it was my logic there was to combine that SMB, all those SMB people with the software that we had at the time, the SEO software. I was like, okay, I think we might be able to make that work. But because the tech wasn't good enough, um, that didn't work. So we had a lot of technical debt. So, but that that's a whole nother conversation, but I'll, I'll, I'll give you those three and I'm sure you have more.

• 4:58Speaker 01

  Well, you, you recently did two acquisitions. They did not work out. What was the, if you had a

• 5:06Speaker 01

  take away the biggest thing that you would do differently? Um, in those acquisitions, what would it be? Give me your top three.

• 5:14Speaker 00

  I'm just gonna give you top one, top one, okay? Top one is had I been involved from the very beginning with those acquisitions? All three probably would have worked out. Had I been involved, like we're talking, because each acquisition will add like hours to your day. I probably should have been working until like 12 AM or so. But I drank the Kool-Aid and we hired a GM and that GM actually ended up stealing from us. And then stole clients and stole people and had done the same thing their previous agency and did the same thing in the next agency. Um, so while, so you have each acquisition, you're adding a ton of debt, like a lot to shoulder. One, you add two, that's already like two big weights on your shoulders. Then you add in someone that's stealing from you, that's three big weights on your shoulders. And plus arguably the most valuable person at that time to drive things forward was me and I was sitting on the sidelines.

• 6:00Speaker 01

  Yeah. So I've learned quite a few things as well. I've done a lot of deals between all my organizations. Some of them have been as simple as buying a domain name, like I bought Kissmetrics from my previous. Um, yeah, company that I co-founded for $500,000. That deal was really well worth it for me.

• 6:19Speaker 00

  Uber suggest?

• 6:20Speaker 01

  Uber says I bought for a hundred and twenty something thousand bucks.

• 6:23Speaker 00

  See, the funny thing is that the week before I bought a senior living site and the next week you're like, look what I bought. I got this idea from you. I was like, oh, that's nice.

• 6:30Speaker 01

  Well, it was in the works for quite a bit more than a week, but yes.

• 6:33Speaker 00

  But it, um, but continue, continue.

• 6:35Speaker 01

  Yeah, um, uh, but Uber says, I don't know what we put into the company. My guess is three to five million afterwards.

• 6:41Speaker 00

  The domain didn't come with employees. Uh, Kiss Me, Chris didn't put Uber suggest, did it come with employees?

• 6:46Speaker 01

  Uh-uh. Answer the public did not come with employees.

• 6:48Speaker 00

  Okay. See, so that that's actually important. So these three did not have employees.

• 6:51Speaker 01

  Yeah. Um, and I've done quite a few over the years. Like it's too many. I've done Hello Bar back in the day. Um, what I found from acquiring SaaS, because my background as entrepreneurs, not in the agency world, it genuinely is, is SaaS. I have way more SaaS experience than any other industry. It's easy for me to buy marketing SaaS and know how to fix it and grow it and not really need a ton of the people that were working ex- uh, prior on that corporation. I can't do that for all industries, but for marketing SaaS specifically, when I'm buying a company, I'm buying it because,

• 7:32Speaker 01

  call it, I quote unquote, have a bag of tricks and I can go in and implement the bag of tricks and I already know before I buy it, that company, how much more revenue and profit can I squeeze out literally within three, four months? And I could tell you I could squeeze out the profit in thirty days, but it takes me longer than thirty days to implement everything. Usually I get everything implemented within six months. Usually I get a lot implemented within the first three months. And, uh, that's gone really well because I'm just rinsing, repeating the same playbook over and over again that I've been doing.

• 8:05Speaker 00

  It's no different than like a Vista Equity or something like that.

• 8:07Speaker 01

  Yeah, they're just.

• 8:08Speaker 00

  You have a checklist.

• 8:08Speaker 01

  Exactly. This is just better at it with way more money than me and, uh, uh, Robert, their, you know, co-founder and Brian are on the Forbes list and I'm not. So just to give you an idea of their success versus mine.

• 8:21Speaker 00

  They're, they're, they're a little older too. So.

• 8:23Speaker 01

  Yeah. Um, when it comes to agencies.

• 8:27Speaker 01

  We bought some agencies and the big thing that we've tried optimizing for is A complimentary services. So what services are they offering that we don't offer a ton of or we're not known for? So for example, we bought Rebel House in Canada. They've done a lot of TV commercials like Snoop Dogg stuff or J Lo stuff and not even just the celebrity stuff. They've done really good work for B two B companies as well, like um, you know, SaaS companies. And they've done even corporate work as well for like the Marriott's of the world. And when I say corporate, I'm not talking about a Marriott commercial for TV. I'm talking about like merit commercials for um, uh, internal use or B two B use.

• 9:08Speaker 01

  And that was an easy plugin because they offered a service that we didn't really offer much of. So when we plugged it in, we were able to drive them revenue. And we were able to take their clients and sell them our services and it became a quick win win. Um, what we also found is by buying complimentary services or companies, we were able to get included in bigger pitches. Where if we didn't own that company, we would have never got included of. A great example that you mentioned was Amazon and how you lost Amazon because you didn't offer enough of what they're looking for. We weren't getting included in every single pitch that we should have been because we didn't offer enough services.

• 9:52Speaker 01

  We felt we should have been included in them, but reality is the customers didn't care. And there's still pitches today that we don't get included in because we don't meet the requirements. And another example of this is if if Microsoft issues that a global RFP, they expect you to have boots on the ground in almost every major country. We don't have that. We can say we're in 20 plus countries, but being in 20 plus countries is not being in 70, 80, 100. If you're not in all the countries that they require you to be in, you're not gonna um, get those deals. So we've been acquiring agencies and uh, other countries where we don't have as big of a team. And it infills the talent, the logos.

• 10:37Speaker 01

  And the reputation and that's helped us grow quite a bit. But when I look at our main M and A strategy, we keep the founders because the moment you don't have the founders, there's risk. There's always something a founder knows that you don't. And it's just risky to take it on without having the founders, especially when it's a business that requires relationships and maintaining the relationships. The second thing that I've really learned is out of all the acquisitions I've done, the ones that tend to work out the best are the ones where they offer a service that we don't.

• 11:11Speaker 01

  In ideally a region that we're not in. So when you combine both of them, you're now in a new region that assuming we have high demand for and a new service that we don't offer. So it plugs two holes and that

• 11:23Speaker 00

  One plus one equals four.

• 11:25Speaker 01

  Yeah, so tha- that causes the fastest growth for us. Um, and you know, by the time this podcast airs, we would have closed the company in the UK, even though we're in there. They infill a service that we're not known for and they only specialize on this uh uh service. And fast forward two more months, we'll acquire two more companies in Europe. It helps us infill on the regions and gives us a much bigger headcount, but it also provides services that we're not known for.

• 11:56Speaker 00

  Let me ask you something, side side note, so we can move on from this topic, but do you think in the next couple of years, within the next five years, you're going to be back in an office? You, just you.

• 12:06Speaker 01

  No.

• 12:07Speaker 00

  No.

• 12:07Speaker 01

  But I've never done well in an office.

• 12:09Speaker 00

  That's right. We talked about this last time, but do you think most of your people will be back in the office?

• 12:13Speaker 01

  No, I think it's too hard for us to go back into office as we're too remote. Once COVID happened, we stopped hiring within those cities. Uh, that's actually a wrong way to put it. We stopped making a requirement that you live in that city to work for us, like San Diego or Lehigh. And we more so made it where we'll pull from anywhere in the United States, even if we don't have an office. And we have some amazing people that work for us in a lot of random places throughout the world. Where it just makes it too hard to be like, we're required to go back to office. It's just, we're not big enough like a Microsoft or Apple where we have offices everywhere. And that would be just too expensive for our size.

• 12:56Speaker 00

  Yep. Frictionless Growth Marketing hosted by Sonya Thompson is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Frictionless Growth Marketing hosted by Sonya Thompson shows how modern brands grow by removing the friction in their marketing and customer experience that pushes customers away every single day, often without leaders even realizing it. Each episode delivers practical insights, real brand examples, and conversations with marketing leaders showing brands how to win with the new rules of growth, identity-driven marketing, cultural relevance, and frictionless customer experiences. Listen to Frictionless Growth Marketing wherever you get your podcasts. So I actually finished that Nvidia book. So there's this thing, Nvidia's, here, let's talk about this.

• 13:38Speaker 01

  Wait, do you want to first mention the title of the Nvidia book?

• 13:40Speaker 00

  The Nvidia Way. So the one thing I learned from the Nvidia Way, which is a tremendous book, I think it's worth rereading every year if you want to build a great culture that fits what you want to do.

• 13:50Speaker 01

  Yeah.

• 13:50Speaker 00

  I think Nvidia's unconventional culture proves one thing, that best practices fuel mediocrity, right? And so the whole thing about, oh, you should have one-on-ones. Oh, you should have like, you know, this structure over here. You should do it like this. You should listen to your board, you should do like, all these things, by the way, are advice from people with all different experiences. And I think what Jensen learned overall is that, forget criticize in private. He's just like, I'm just gonna do public feedback. Okay, that's number one. Two, he's like, I don't know what everyone's working on and I don't know what the latest trends are. Okay, we're gonna do top five emails. I want that from everyone, right? Three, we're gonna have a whiteboard in every single office, right? And I'm not saying I'm gonna copy all these things. I'm just saying, he learned that best practices fuel mediocrity. And he learned over time that he has to do things his way.

• 14:35Speaker 00

  And even his board, when Nvidia's stock was down 80%, I think 2013 or whatever, and he bet all in on AI and then Kuda and all those things. And they're like, hey, we don't know if this is the right bet. He's like, no, this is the right bet. You, he's stuck to his guns the whole time. And I think early entrepreneurs, early marketers, it's really easy to just read everything and just follow everything blindly, right? But I think as you get older, you don't do that. And here's the final thing, I'll pass it over to you. Remember Anand from CB Insights?

• 15:02Speaker 00

  Yeah, Anon Sonwall. Okay, so he has this company called CB Insights. They do really well. Um, but he tweeted this. He says, "One of the reasons I failed to scale as a CEO is I listen too much to smart sounding best practices, process, etc. This was a trap and I was too naive and not self-confident enough to push back. Don't make this mistake too. I certainly won't ever again." And the one good thing about you, Neil, is you've never fallen victim to these. Um, you're willing to try these things, but the thing is you don't, you'll talk to a lot of people. You just, you don't read a lot, so you won't get stuck into these traps too. And I think that's a benefit.

• 15:37Speaker 01

  Yes, and I, you, you hit it right on the nail. I found the people that have this issue the most are the entrepreneurs who tend to read a lot of quote unquote, "business and entrepreneur" books. Cause they're like, "Oh, I read this. This is how so and so did it. I'm gonna copy it." And it doesn't really work out that way most of the time.

• 15:55Speaker 00

  Yeah, I think, by the way, I think a, a 20-year-old version of me reading the Nvidia way would say, "Copy all these things." A, a 38-year-old version of me now would be, "Just do it my way." Like, it, like, you, you, you, you'll get different lessons from books at a different time, which I, this is why I think it's worth revisiting books. Um, so, so that's that. You wanna pick one?

• 16:12Speaker 01

  Well, also going back to the Nvidia way, Nvidia is a different type of corporation than yours. So what works for them doesn't necessarily work for you, because it's a different type of business. And two, even if it was the exact same business, you have to keep in mind, there's other factors that we can't control, like time. What worked 10 years ago may not work today, because there's different environmental conditions.

• 16:33Speaker 00

  And by the way, that, that's the whole Gestalt thing I, I, I mentioned, like, that's why direct advice is sometimes harmful, because there's so many different variables. And that's why when you just experience here instead, people can decide what they wanna do with that. And it absolves you from any harm that your advice might call, cause. Um, but, but that's that. So you actually have one over here on how long it takes to generate revenue after you speak at a conference. And I put in one right above it, right after.

• 16:56Speaker 01

  Uh, what was the one that you put right above it?

• 16:58Speaker 00

  So how to throw a slam dunk event that generates customers for you.

• 17:01Speaker 01

  Oh, okay.

• 17:04Speaker 01

  You and I have both spoken at many conferences for many years. How many times have you spoke where it's generated you a return right then and there where you pick up a customer?

• 17:15Speaker 00

  Very rare. Um, I can count on one hand, maybe.

• 17:19Speaker 01

  Same here. I know I can count on one hand, but I'm thinking, do I even have one or two examples? And I'm running blanks on.

• 17:25Speaker 00

  I have one. So I, I remember, um, uh, no, this one doesn't count because I was at this one. I was just an attendee, but two people caught me as I was just walking around and said, podcast guy. And then they signed pretty quickly. Yeah. But I wasn't speaking, so that's cheating. Yeah.

• 17:42Speaker 01

  I haven't had any that I can think of. There's probably been at least one because I've spoken at so many events, but I can't think of any. I'm literally drawing blanks. Where someone said, you know, this is great. I'm going to sign up with you. It's usually been, uh, this is great. Would love to learn more. And in many cases, they don't sign up right away. If they do sign up, it's six months to a year plus later. And a lot of the cases, when I spoke at a conference, the people that were interested in working with me or like what I had to say, I've had a lot of people say, love your speech, wanted to work with you, but it wasn't in my budget at X, Y, and Z company.

• 18:22Speaker 01

  I'm now at this new company. I have the budget. I would love to discuss how we can work together.

• 18:28Speaker 00

  Yep. And the name of the game here is just any type, I, I look at speaking as content creation. Any type of content creation is just bringing you top of mind again. And with a lot of this stuff, 95 to 99% of people are not a market to buy. Um, and you have to think about how you can constantly stay top of mind because usually when a lot of people, when they're thinking about choosing a new vendor or something like that, um, they usually think about who's top of mind first, and then also they might put on an RFP or something. Um, but in general, I, I've seen the same thing. It might take six, 12, maybe even a few years to get something done. Um, but people, when people do come back, I, I've heard this before, people do really appreciate the consistency that you've, you've, you're still, you're still out there creating content. You're still out there speaking.

• 19:10Speaker 00

  Cause that means you're still relevant and to stay relevant, that means you still have to be practicing your craft, which this podcast kind of forces us to stay on top of it. I bet you if we didn't do this podcast as much, I, we, we'd be a little bit rustier, a little bit, a little bit.

• 19:23Speaker 01

  I don't think so because we still would be working in marketing on our business.

• 19:27Speaker 00

  I think we'd still be doing it in our business. I knew you were going to say that part, but I think sometimes I'll get ideas from you. Sometimes you get ideas from me too. I think those help because in general, like even when you call me or I call you, well, that, that's still what happened anyway. Um, like it. Those help quite a bit and it's hard to find. You'll find that as you continue to grow in your career. Having a relationship like this where we call each other all the time or like with Sayed or Yaniv or other people, those are few and far between. So, that is it for today, guys. Please don't forget to rate, view, subscribe and we'll see you tomorrow.