Jeremy Weisz 8:05
said a couple things I want to hit on, which is one is acquisition. So I love to hear learnings from acquisition because you know, I talked to a lot of people and so to you. And they’re always toying this idea of acquire another company to expand maybe to a niche market and maybe image service. What were some of the learnings for you in the acquisition?
David Hernandez 8:27
There was a lot because we knew just enough to be dangerous. And then once we were in it, we realized we didn’t really know anything. And it was it was a there was a lot of, you know, fail fast.
Jeremy Weisz 8:43
And how did it come about in the beginning? Were you thinking we want to acquire someone in the home and housewares or did you just meet? You know, Rachel, how did it first come about?
David Hernandez 8:56
Right? So the Genesis was we met as opposite sides to a client. And they were handling, Rachel was handling the public relations side with her team. And we were handling social media, social media marketing. And we just hit it off. We both from New Jersey. We both love Bruce Springsteen. We had, we had lots of overlaps and and she and she’s just a wish you could meet her. She’s just a person with a great spirit and a great personality and it meshed really well with us, just culturally. And it kind of just I feel like it grew organically. I don’t know if she said at first, I think she said at first and and basically we thought well, wow, that would actually be a great move for us. Because it would allow us to really expand into that space and have the entree of having a true expert at the helm of that of that initiative. Right. Which she is and she still is And she was for us for a number of years. And it really helped establish us quickly. And it was a way to really accelerate that entrance, as opposed to us kind of just trying to break down that door by ourselves. So, was there a lot of challenges? Yes. Where were we frustrated sometimes with things? Yes. Because you’re trying to Mel to different cultures. And there’s just a lot that you don’t know until, you know, you know, what were a couple of those.
Jeremy Weisz 10:30
And some of those key learnings, you know, obviously, it sounds like it kind of happened naturally, it’s kind of like dating, you would kind of work together before with a client. So you kind of knew each other’s style and what your capabilities and capacity was. And then but when you go to merge, right, I guess I compare it to marriage, right? Like when you move in together, you live together for a little bit. It’s not that you’re past the honeymoon phase. But what were some of the learnings or challenges that you’re like, Okay, going back, and if we were to acquire another company, we would do it this way.
David Hernandez 11:05
Right. So I think part of it is really digging in more to understanding their processes working with clients, as opposed to just looking at the results, and the client, and basically, also buying a book of business, that’s part of it as well. But not really digging into that we didn’t realize how different it was from our process, in working with clients and how we measured profitability, for example, and how we measured generating results versus what’s what retainers look like, etc. It was a series of finer points that we we kind of glossed over or didn’t really pay attention to, which led to surprises, but no, Ill will not. And there was no no ill intentions on anyone’s part, it’s really about a learning process, because we’ve never done it before. So that’s what I would do differently in our next acquisition is to really look at that and go, Okay, let’s really understand how this agency works. Top down, how do they work with clients? How do you know what’s their process look like? Everything from onboarding all the way through to execution? All those finer points are critical, so that you really understand what you’re getting in terms of revenue versus profitability. And then, of course, is this a culture that we can really get our arms around? And have it fit in? Without too much pain into the culture that is lotus823?
Jeremy Weisz 12:39
And David, you don’t want to share exact numbers or anything? But I’m just curious, from a multiple perspective, how did you figure out the valuation?
David Hernandez 12:48
So really, we looked at a couple of things. One is the book of business, the valuation was really built on, what does that revenue look like? And what, what clients are also locked in as clients? Because you got to think about that part, too. Once there is an acquisition, does that spook clients that don’t have any long term contracts? And don’t even give it a chance? And say, oh, no, you know, I’m out of here. You know, that’s not, that’s not what I signed up for.
So that that was sort of the, you know, the key indicator, they were a boutique agency like us as well, a bit smaller than us. So it was really about by buying that book of business and her expertise and her, if you will, her brand in the space as an as a subject matter expert for public relations with home and housewares. And so that those, those were kind of the key factors. We didn’t really look at it from a, from a multiple standpoint, because it wasn’t really an agency of that size. And that didn’t they, at the time, didn’t have that many brands that we felt were were signed on to long term contracts, which would I think, kick in something like that. But so in that, in that sense, it made it a much simpler acquisition. The challenges, as I mentioned to you really came on the other side of the details of how do you really incorporate this now into the way we work?
Jeremy Weisz 14:27
I think about you know, what was the expectation of involvement at sound like, you know, Rachel brought a large body of expertise, and thought leadership, and she knew the industry. And I can imagine someone saying, some people want to stay some people like, I want to go retire on the beach. What was the expectation and plan for for Rachel, I know it sounds like she’s still involved, but maybe not as much as she was in the beginning.
David Hernandez 14:54
It really was from the beginning. We had to kind of lay out what What does this look like in terms of Rachel’s involvement, and when the when is it enough for her because that was part of it too is that she she wanted to be able to capitalize on all the hard work that she did do building this agency and its reputation. And and at some point be able to exit so that was talked about and and we had, we didn’t have a if I recall correctly, a specific date or, or year in mind, but we did have a window of when that was going to happen and it pretty much played out like that. The bonus that happened here is that Rachel has become a dear friend of ours and is a an advocate spokesperson and again, you know, continuing voice of experience for our team and for us and that’s like sort of the the the unexpected pot at the end of the rainbow separate to the business transaction that took place now.
Jeremy Weisz 16:01
I like to understand a little bit more in detail about what you do. And I love to talk about Peerless and I know you like I was going and doing research and if someone’s watching the video, they can see I am on lotus823.com And I just clicked on their their key study page here. And you see Audio Technica here you see Bamboozle here you see Roborock, Mackie, and then Peerless. So what what kind of how did you first start working with Peerless and right where to go from there?
David Hernandez 16:40
So Peerless, our partnership with Peerless is almost as long as the agencies life. They have been our client for over nine years. They are incredible, incredible partners as far as clients, you know, shout out to the entire Peerless team. And there’s been growth and changes within their team. But still everybody that we’ve worked with, including right to this day, just incredible, incredible people. But I want to talk about where Peerless sits there a b2b client. And that’s something that we we haven’t talked about yet. But we we do quite a bit of b2b business, especially on the PR side and on the digital side. And they’re specifically a company that does commercial installs with commercial mounts, and they are in the digital signage space. So think about when you drive through your favorite fast food restaurant.
How do those signs are they visible to you in in bright light, and you know, with sunlight? Well, that requires commercial level signage. That’s something that Peerless does. So a few years ago, we worked with them on, on on a specific strategy to help them reach out to very specific verticals, including hospitality. And this was sports technology publications. And really, we had, we just developed an incredible strategy that our team, and our team really built that out and generated, I don’t remember the exact numbers, but I think it’s north of half a billion impressions on this particular cow. There it is. Thank you. But you know, so my memory is not that bad. With 17 awards that were won by them,
Jeremy Weisz 18:32
you were only off by 52 million. So 552 million, it’s
David Hernandez 18:37
a drop in the bucket.
And as you can see there, you know, over 700 700 stories, including the you know, the Forbes hit. And it really helped elevate them into the digital signage space in those verticals that they wanted. And for us, that was a huge, a huge win for us. And but of course, it’s a huge win for us, because it’s a huge win for the client. All I can tell you is that over those nine and a half years, every every year has been a really a rewarding year for our team and and for their team working together as partners. It’s really they’re like part of the the lotus family at this point. And we really, it’s really, this is a great example of how lotus and this might be a good segue because I think you were touching on this before how lotus works. And they’re a perfect example along with a few others of us being a partner, not a vendor agency to the brand. And there’s a big for us. There’s a big distinction in that because it really requires a level of intimacy on the agency side and the agency team to treat the client not as Okay, here’s the services We signed on for and we’re just gonna go do that for you, but really be able to evolve strategy evolve tactics based on what the client’s business goals are. And you can say, well, a lot of that has to do with sales. But marketing is the support to sales, PR supports that we’re not responsible for sales directly, obviously, but it does have an impact that visibility, that credibility that happens through through third party media outlets. And for us to be able to say that we’ve worked with a client for over nine years, there has to be that level of partnering with the brand, and not just saying, okay, you know, we check the boxes this month, on to the next. Yeah,
Jeremy Weisz 20:48
I’d love to hear how in the beginning, I’m sure people come to you, David, they’re like, hey, we want this. And then that expands when I say, Oh, this this is well, what else can we do? What else can we do? So I’d love to hear what did Peerless start off with and then how did the services you do with them evolve. And I could see they’re doing some amazing things with screens and kiosks, and that must be exploding because I’m seeing more and more kiosks everywhere, you know, in stores and restaurants. And so this is this is pretty cool type of technology and business. What what are the services start out as? And then how do they expand?
David Hernandez 21:25
And that’s, that’s a question that flows into lots of our client partners, where we start is not necessarily where we are today. And that’s both expansion, and contraction in services depending on the needs of the brand at any given time. So I don’t remember the specifics. I believe we started with just the PR portion, and then that expanded into work in SEO for them into some digital marketing techniques, even website consulting, all of that was part of the arc of our relationship with them. Our focus right now is back again, more on the the PR side, and support with PR for the various events like digital signage. Show that that’s held every year. They they and Infocomm, and several others several several other shows. And therefore their focus has changed because of expansion in their products. That changes the strategy as well. That’s also typical of lots of other clients where we may have started well, to give you an example with Audio Technica, we really started as their digital agency.
Gosh, and I think that’s 10 years ago. And with Audio Technica, we’ve done everything we’ve from the digital side content creation, SEO, all the way to where we are now where we’re fully integrated with them as their as their agency partner, and handle all of it including public relations for them. When they’ve launched products like in the gaming space, for example, we were there to help usher them into that space and help them really gain a foothold as subject matter experts in the space and working with influencers in the space and and that helped really solidify them as a player in that space as well as obviously their reputation in audio with headphones and microphones etc. From the fact the I think my microphone today shout out to Audio Technica, my podcast mic here is is an Audio Technica microphone.
Jeremy Weisz 23:40
Well, I own three of their mics actually. One of them’s you can’t see off the screen over there. So I do like their products as well. They’re an
David Hernandez 23:47
incredible brand and they they have a very wide footprint. They go from Ultra Pro, all the way to consumer, their turntables are phenomenal. In fact, that’s a very big part of who they are now is also the business and turntables along with their pro audio products and offerings.
Jeremy Weisz 24:07
Yeah, people are always asking me, What mics should I get? I’m like, a USB mic is good. And the Audio Technica ATR 2100 is like a real nice, simple mic that has lasted like a one on I think I’ve had one of them for like, six years or something and you plug in the computer, it works perfectly. So
David Hernandez 24:29
I love that. That’s what you want in a product, right? Yeah, exactly. Especially if you use it for your work for your business. You want to be able to plug it in, and it just works.
Jeremy Weisz 24:38
What are some of the misconceptions with PR, because some times I think, at least in the PR conversation, oh no. You just launched this PR campaign and then you’re done. It’s very short term. And what are some of the misconceptions and I’m sure your potential clients come to you and you kind of have to dispel some of these myths.
David Hernandez 24:57
Right. So there is an education process sometimes And I think we’ll tend to the first part, there’s two, there’s two big misconceptions. The first one is the belief that we’re going to bring you on for PR so we can get sales. And we have to educate the prospective client and saying, Well, that’s not really what PR is for. There’s lots of other tools that we have, and services that can help you with sales. But first and foremost, public relations, is the best tool to create credibility, earned credibility for the brand. And that’s not that is something that no ad campaign, no digital marketing campaign, no social media campaign can do for you, which is established third party objective credibility for the brand. That’s first and foremost. And along with that comes visibility. Because when you’re working with us, and you’re a consumer brand, and we’re getting you into top tier media outlets, your your views have gone now from whatever a couple million that maybe you had, when you met us, or you know, some more established brands have even had hundreds of millions, and we’re taking you now into billions of impressions. In some cases, when recent hardware brands that we’ve worked with year over year, we they generate a lot of media on their own, because they’re a well known name. However, with working with us, year over year, it was 1.6 billion more year over year working with us than than the previous year. That type of visibility helps you break into the a word which is awareness. And when you achieve brand awareness, now you’re having a different conversation with your possible community, right? Your probable customers,
Jeremy Weisz 26:49
stakeholders, it’s very different than visibility. Now you’re you’re starting to become ubiquitous, like Audio Technica, where you’re just people know the brand. And in many cases, they already have an image of the brand in their mind. There’s an emotional connection that’s made with the brand, if you’re talking to a client or potential client, and basically you’re saying what’s your goal here, and they say something like sales, then, you know, you may have different services that you will talk to them about, as opposed to, we really want to be top of mind. And then the PR PR, which is the awareness and the credibility of visibility is really the best
David Hernandez 27:30
tool for that. Correct. And we still may recommend some type of a PR campaign if they have no visibility in media, because it really does help and it becomes assets. I mean, it’s content at the end of the day. And if you have third party content that you can leverage on your social channels for that brand. That’s third party objective reviews, especially when you’re talking about something like a consumer technology product. Everybody wants to know, if you’re spending $300, for whatever that widget is, you want to be able to research the product and go okay, this, they have good reviews here, oh, this, wow, they got a great review in Wired. This is something I should check out. That helps the next piece, which is okay, we’re gonna run some digital advertising across social platforms, we’re going to maybe run Google ads, but whatever that looks like, and whatever the the entire strategy for the digital side looks like. It does get a lot of help if it’s got a boost from PR. Yeah, I
Jeremy Weisz 28:35
could see that someone’s thinking of getting a product. And nowadays, people do lots of research online. So that article may show up. I’m curious, is it common for a company to come in and go, Hey, we want to get in this publication? Or are they asking you Hey, what publications do you think we need to to to go in? Or maybe they’ve been coming and go, we want to be in the New York Times or something just because that’s what they want. Maybe it doesn’t serve their brand, and you have to kind of educate them. What are they come to you with? With their, I guess asks,
standpoint,
David Hernandez 29:10
from that standpoint, a lot. You know, a lot of brands, and rightfully so, will say that they want to be in the New York Times and the Wall Street Journal, of course, everybody wants to New York Times The Wall Street Journal for your brand, because that’s a lot of legitimacy.
However, not in every case, is that going to move the needle for that brand? It really depends on who their audiences and relevancy, right? So if it’s an if it’s a gaming product, well, the Wall Street Journal, maybe, but maybe not, maybe it’s a better fit for them through the tech outlets. Maybe it’s a better fit, working an influencer program, in tandem with PR that targets very specific gamers that have great communities. And I’m not talking about a I’m not talking about mega influencers, I’m talking about nano micro influencers with highly engaged communities that are going to actually care that that influencer is wearing those headphones. So that’s a different transaction and a different strategy than say something that maybe it’s more of a lifestyle product that could benefit greatly from the Wall Street Journal or a New York Times head. But along with those, those two very esteemed publications, there’s many others, like I mentioned, whether it’s a wired or it’s CNET, or what have you. There’s a big ecosystem out there of media, especially digital media outlets, that have great followings, and very in very specific areas. If you’re got a Mac, adjacent Apple adjacent product, well, you want to be in those in those outlets, because the people that are looking in those outlets are reading those articles, specifically because they use Mac’s or they use Apple products, things like
Jeremy Weisz 30:58
that. How do influencer, influencer programs as well? How does that work? I can see that being huge for people because they already like you said have audiences that know like and trust them. They’re recommending a product that they are enduring, they’re endorsing a product. How does that work with when you’re working with the brand and the influencer? Sure.
David Hernandez 31:21
So when we build out an influencer strategy program for a brand, we’re looking for a couple of things, number one relevancy. It’s not about the numbers, if, if a client comes to us, and they’re, they’re, you know, they’re talking about celebrities, we really try to redirect them. And say, we’re happy to do that for you if you really, really believe that. That’s what you want. But let us tell you what we know works. And it really is about relevant influencers with truly engaged communities that have a great reputation. Really, it’s almost a subset of PR, if you look at it, those influencers are being are essentially trust agents, to those communities. And you want though, that type of influencer, not an influencer, that’s, that’s holding up a product, because they have 3 million followers. And you know that they’re never going to use that product that’s not going to resonate for the brand. So we looked for relevancy. And then we talked about our process, which is, is a two pronged approach, we have our own database that we’ve built over the years of 1000s of influencers that we’ve had experiences with that, we know are good fit for X, Y, and Z verticals. And then we also use software as well to support that, because there’s always new influencers on the horizon. And we’d like to stay abreast of every change that’s happening in that space. But it’s ultimately about relevancy and community. First, before we really, we really launch anything, if you don’t have those two elements, it’s not going to be successful for the brand. And the end, the the content that’s created by that influencer, lives in perpetuity. So you want it to be the right influencers, that are representing your client, and you want them to have the right type of communities that are relevant for your client.
Jeremy Weisz 33:16
David, I want to talk about the company itself for a second, and I know that you’re big on, you know, what is your why you really want to partner with companies and love for you know, culture is very important to you. So I love for you to talk about how do you maintain culture and the things that you do as a company?
David Hernandez 33:35
This is, uh, you know, this is kind of a tricky question, because when you ask that question, everybody says,
oh, it’s all about people. But really,
Does everybody follow that, and we’ve really, really, sincerely have tried to be a people first company. And the reason Allison and I chose that path is our undying belief that you will get great people. Keep those great people, and they will do great work, if they have a work environment of work, family, whatever your work team, that is a balanced,
Team balanced meaning that the culture of the company allows for the reality that each person is actually a human being, and has a life outside of work. And that many mental stability and security is important, and that the overall health of the person, both emotionally and mentally is important. Because that’s how you get transformative work. When you have people that feel great about their work environment. And if you’ve done the right job and hire great people, that means you have great teams, because you have people that are genuinely happy to be working with each other. Oh, All of those things make our job as, as managing partners, much easier, much easier. There’s a book that was has been one of our go to books for years. And it’s called Good to Great by Jim Collins. And in that he talks about if you find yourself managing someone too tightly, you’ve made the wrong hire. Or you, they may be the right hire, but they’re in the wrong seat. But either way, if you find yourself managing someone too tightly, something’s wrong. You can’t you can’t run a business like that, and have the type of results that you want to have, when you’re when you’re us at least, and want to aspire to have the type of brand clients that we have. If you’re running it, and you’re running, and you’re managing everyone tightly, it just, it’s, you’re gonna have mediocre work. So that, that overriding why their drives everything else, it drives the fact that we have flex schedules for everyone. Because we’re respectful that everyone has lives. We are a hybrid company, meaning we have physical offices, but we don’t force anyone to come into that physical office, if you’re not comfortable, comfortable coming to the office, or for whatever other reasons, by the way, that’s also created in advance that allows us to have folks in different parts of the country, which is great. We have team members now in Florida, as well as in Chicago, and in New York, because we’re New Jersey based.
But what that allows, is it, it allows our staff to really build their schedules in a way that allows them to do the things they need to do in their personal life. And then when they’re focused on our on lotus work with with our clients, they’re all in, you can’t you can’t accomplish that in our minds in any other way, other than treating people with respect. Giving them that flexibility and having that trust. When you give that trust, you get it back. The other piece is we have unlimited paid time off. And again, that’s a trust factor, that’s a belief in the team in our leadership, that it’s going to be managed correctly and not abused.
And, frankly, with the pandemic, we have, we have switched everything in terms of our focus, we focus strictly on results now, and not the amount of time that it takes you to do it. Because at the end of the day, it’s the results that matter. It’s the execution that matters. It’s the these campaigns and the strategies that are effective that matter. So treating people like adults, giving them the flexibility and then having that support through the various benefits like unlimited PTO, having, you know, having health insurance, having a 401k All of those things, create an environment where people it’s not just a job, you know, they feel tied to the company in some way they feel tied to their teammates, they feel they feel a connection with the work that they’re doing. And it ties back to having a sense of identity, that you feel good about the place that you come to work to every day. Do you have
Jeremy Weisz 38:20
One last question that reminds me of one of my favorite books by Daniel Pink, Drive, which he kind of talks about those those factors of autonomy mastery purpose and, and what really people care about and in the workplace. So, so thanks for sharing some of that last question. And before I you know, ask it I want to point people to lotus823.com. L O T U S 823.com. Check out more learn more about David and his company. And check out more episodes of InspiredInsider.com. David, last question is about I know you are big on relationships and partnerships, also and champions I love for you to mention a couple you know, you mentioned Rachel but some, you know, champions and valuable partnerships for you over the years allows you to do the work that you do. Sure,
David Hernandez 39:12
you can’t do this alone. You have to have partnerships out there you have to have a network that you can rely on and for for me, besides our clients, I know we talked about Peerless and our nine and a half year relationship and, you know, shout out to Nick Belcore and John Potts, who are incredible and Becky Khan, who runs the global PR and her team. But beyond that, I’ve made relationships on the sales distribution rep side, because that also is an important element for our clients. So I have really great relationships and actual friendships with folks like David Rhodes over at the Carlson Group and Bob Marcantonio Levin Consulting and Yohan Jacob over at Retailbound. These are all really great folks really great guys and, and Mike Smart at Greenline Marketing, another great guy that I’ve worked with over the years. And the reason I mentioned them is not only are they effective at what they do, but they share similar core values about their approach to business in terms of honesty and integrity and being respectful to the clients they work with. And being able to say no, not just taking somebody on and taking their money if they don’t believe that they can really help them. Those things are important to us as well. And again, many times we’ve worked on opposite sides for clients. And that’s how we met but then we’ve nurtured our friendships, our relationships throughout the years and they’ve been invaluable in helping us in our success stories because they they do the that other very important piece, which is sales and distribution.
Jeremy Weisz 40:56
David, I’ll be the first one to thank you check out lotus823.com Thanks, ever. Thanks, everyone. Thank you. Thank you so much.
