Eli Rubel: 12:52
Yeah. So one component of what we do is we help visualize stuff that otherwise would be stuck in spreadsheets and, you know, QuickBooks data in a really beautiful, much more easy to understand format so that leadership teams who might otherwise, you know, their eyes. A lot of agency folks I talk to like their eyes, myself included actually, back in the day, my eyes would gloss over when I’d see a spreadsheet. I’m like, okay, but just tell me, like, what’s the point? What am I supposed to be gleaning from this? What’s the story that the data is telling me?
And so one of the components of what we offer are these dashboards that make it really simple to get to the point with the data rather than staring at a spreadsheet. And I think I overemphasize that in our messaging and on the site with our screenshots and put that front and center and people thought we were a software product. And so that I think was probably the biggest, biggest component of what was.
Dr. Jeremy Weisz: 13:52
So they thought, okay, you plug in your stuff, spreadsheets, QuickBooks, whatever data you have, and you get the spreadsheet or you get this nice dashboard and good luck with it.
Eli Rubel: 14:05
Yeah, exactly.
Dr. Jeremy Weisz: 14:05
Got it.
Eli Rubel: 14:06
Yeah. So I had to almost flip the messaging and the positioning to be we are a bookkeeping and accounting firm that only works with agency businesses. You know, most agencies I talk to are working with a bookkeeper or an accountant that they’re an SMB provider. So they work with any vertical. They might be helping the bakery down the street and your agency business.
And so the reality is that they don’t have the deep industry expertise to provide guidance and support in the way that an agency, you know, we run this pretty specific business, whether you’re running a creative firm, design firm, an advertising firm, marketing firm, recruiting firm, PR firm, like any of these, any of these categories, you know, the way that we manage labor costs and the way that we have to load balance labor based on, you know, client bandwidth, there’s just so many nitty gritty things that I fundamentally believe it makes sense to have a partner supporting you for the same price as any of these other generic SMB providers, but that only focuses on agency. So I needed to put that at the forefront and then say, and we also will give you a beautiful dashboard, and we’ll also give you a fractional CFO. And we’ll also, you know, so it’s just the pyramid of the messaging was upside down initially.
Dr. Jeremy Weisz: 15:33
So what we’re looking at here is kind of more of an explanation so people understand. So it’s agency bookkeeping, client invoicing, chasing down late payments, bill payment. So you guys will help with all these things.
Eli Rubel: 15:48
Yep. We will manage it all.
Dr. Jeremy Weisz: 15:50
So how does the chasing down late payments work?
Eli Rubel: 15:54
Great question. So whenever a client onboards with us, an agency client, what we do is we sit down with them and have a consultation where we develop an escalation plan for late payments. And so the way that works is every company is a little bit different with how aggressive or not aggressive they want to be with their clients. And so it’ll either be a 3 or 5 step sequence that the language escalates each time and gets a little bit more serious. And then at some point, there’s some sort of flag in place where we escalate it internally to the agency owner to say, hey, you might want to pick up the phone and call them as a last ditch effort before you either let this one go or send it to collections or whatever. You know, every agency handles it a bit differently.
But we manage that 3 to 5 step sequence and the escalation plan and monitor it so that as the agency owner, you never have to wonder, you know, is somebody paying attention to which clients are paying, which clients aren’t? Has somebody reminded them maybe they just didn’t get a reminder? Like none of that stuff has to. You don’t have to worry about any of that stuff.
Dr. Jeremy Weisz: 17:01
I could see that being one reason why people come with, you know, go to you right off the bat just from like a huge value proposition. They, you know, if someone has a bunch of X amount of dollars and, you know, late payments or chasing down money and like, okay, if we could hire this, forget about the rest of it. I mean, I’m sure it’s beneficial, but that would be enough value I could see in a company just to do it, just for that one bullet in my. I don’t know if you’ve seen that yet, but.
Eli Rubel: 17:30
Yeah, you know, I call it just being stuck in the weeds. You know, so many of us agency owners, it’s easy to, you know, we feel like we can do it faster than anyone else, whatever that it is. And so it’s easy to get sucked back into the minutia of the business. And a lot of that minutia ends up being financial admin work. That shouldn’t be.
Like that’s not I would almost guarantee that any agency owner, their zone of genius, the thing that gets them fired up and that they’re best at and that helps grow their business, is not chasing clients for late payments or managing any of that, you know, paying bills. Financial admin, payroll reconciliation, any of these things that doesn’t get any of us out of bed. I would guess.
Dr. Jeremy Weisz: 18:12
I’m going to throw one other thing out there to add to this list. Just put it on the Kanban board or whatever you do. But I think a chargeback. I was talking to an agency owner and a client that they serviced in a great way, charged back several payments. What it felt like the story felt so criminal, like the person just did it because they could do it.
So yeah, if you add that to your service line, I’m sure you’ll get a ton of people like this person. So criminal. So anyways, I felt for them when they were telling me the story. So maybe in the future, who knows? Profit Labs will be like they’ll chase down the criminal people that charge you back your hard earned money.
Eli Rubel: 19:05
Like Dog the Bounty Hunter.
Dr. Jeremy Weisz: 19:07
You know, it’s often. Yeah, exactly. It’s often a big milestone from a first client perspective. So again, you’ve been through this rodeo many times. But talk about the first client of Profit Labs.
Eli Rubel: 19:22
Yeah, absolutely. This is one I’m really proud of. I think in agency land time to value is super critical. And a lot of these financial partners that I’ve worked with in the past and just folks sign up with, they have a long onboarding process, right? There’s a lot to ingest.
There’s a lot to, you know, get signed into all the bank accounts and all the things that we need access to. And so it can very easily be one of the case of, hey, you know, I sign up, I wait 30 days to just get all the technical onboarding done before, like, you’re even seeing the right data. And then, you know, another 30 days before you’re seeing any dashboards and another 30 days before. And it’s just like delay after delay after delay. And so with our first client, she came to us with a very specific problem, like top of mind problem.
She goes, you know, hey, I’ve got x number of people that I’m considering letting go. Some of them are full time, some of them are part time, some of them are, you know, like a certain number of hours. And then there’s some people I want to hire. And then on top of that, we have some clients that are swapping out, some new clients are signing up. And it was about to go into, I think it was the 4th of July holiday weekend.
And she was like, I’m just really stressed out and I don’t have clarity on what to do. And that’s kind of where I’m at. And so I said, hey, listen, like we do need to do our technical onboarding and get all of that right. But why don’t we? Rather than waiting for that to happen, why don’t we have you hop on with your fractional CFO tomorrow?
Let’s get them the few documents that they need access to tonight and tomorrow afternoon, we can come with a recommendation and a simple financial model that’s going to show you exactly what each of those scenarios that you’re considering would mean for the bottom line of the business, so that you can toggle on like, oh, what if we what if this person stayed and this person didn’t, or what, if any, one of these, what if this client signs before, you know, July 10th. And what if they don’t? These sorts of things.
And so we met with her that next afternoon. And I feel like you can just see it when, when someone especially a business owner, when a business owner gets that thing that they’ve been like chewing on in their head, and it’s been keeping them up at night and they finally, like, see the path that they want to pursue. It’s just like a weight gets lifted off their shoulders. And I saw that in her. And at the end of the call she was like, guys, this was so helpful.
Like, I just feel like I can go into the holiday weekend with my family, relax. I know what we’re going to do now. This is incredible. And so that for me was just such a fun first win with the first client and I think sets a good tone for the types of moments that I want all of our clients to have when they’re onboarding with us and throughout the relationship.
Dr. Jeremy Weisz: 22:30
It just gave that person the clarity they needed to make decisions.
Eli Rubel: 22:35
Exactly.
Dr. Jeremy Weisz: 22:37
I love to talk about the team for a second and early on, you know, with the first business with Glider was a SaaS business, I can’t remember. Did you raise money for that? That business?
Eli Rubel: 22:50
Yeah, that one was venture funded.
Dr. Jeremy Weisz: 22:52
So for this one, what was the thought of, because, you know, you obviously previously have scaled up businesses quickly. How did you handle that for Profit Labs?
Eli Rubel: 23:06
For.
Dr. Jeremy Weisz: 23:06
For like okay I’m going to bootstrap this raise money. And knowing I don’t know, you know, what the team was going to look like initially knowing you were going to grow the team.
Eli Rubel: 23:16
Yeah, absolutely. Ever since going the VC route the first time, which I’m super grateful for that experience. I mean, my background before that, I didn’t go to business school. I actually was an art school dropout. I was waiting tables in Los Angeles trying to make it as a starving artist and had what I call my quarter life crisis, where I quit my job and moved into my mom’s basement in Portland, Oregon, where flood with water in the winter. And I told myself I wasn’t allowed to leave the basement till I’d started a company, because I realized after reading The 4-Hour Workweek by Tim Ferriss, that there was a path in the business world for misfits like me who didn’t fit the the schooling mold and who didn’t fit the mold, but that we could still be successful commercially.
And I saw that as a path to the life and the freedom that I wanted for myself and my future family. And so the idea that an investor would hand me a cheque six months after quitting my table waiting job to go build something, and really, like if we read between the lines, they’re writing a cheque for me to go learn how to do business and learn how to build something with the hopes that it provides a return for them. So I’m so grateful for that experience.
Having said that, I love the freedom and I would never go back to that model now of bootstrapping and, you know, self-funding and using the profit from the business to scale the business and not ever look, not ever looking for outside capital. I just think there’s a lot of freedom and relaxation that can be had in that space, because you’re not accountable to anybody. If you want to pump the brakes for six months and kind of coast. You can. And if you want to go super hard for a year, you can.
Like it’s just anything is possible. If you want to stop working on Wednesdays, that’s totally fine too. It’s like you’re in control of everything. And so for me, that aligns really well for the lifestyle that I’ve created for myself and for my family. And I couldn’t go back.
Dr. Jeremy Weisz: 25:32
So early on, again, I want to talk about the other agencies too. And like, what are the things you did to step away, right? Because that allows you to do what you’re doing now with Profit Labs. But what’s the kind of hiring or team trajectory with Profit Labs?
Eli Rubel: 25:52
Yeah, I mean, we are in the process of right now, our team is four people that are fully remote offshore and then. Three people who are based in LatAm. I’m a big fan of nearshore offshore. I just love the quality of talent that you can give to clients for a really reasonable price.
I mean, all of the finance managers and fractional CFOs that were offering to our clients have a master’s in finance. They’ve been, you know, had multiple stints as CFOs or FP&A leaders across like a variety of a lot of them come from backgrounds like the big four. So and so to do that with stateside talent candidly like nobody would pay the price. Very few people would be willing to pay the prices that it would. We would have to charge to do, to offer the exact same level of quality, but just with someone in the US.
So I’m a big proponent of finding the best talent and compensating them really well with labor arbitrage like that. So yeah, it’s we’re we’re in the process of hiring two more folks right now. And it’s exciting times.
Dr. Jeremy Weisz: 27:13
Eli for you, and you know, I know at what point did you bring the people on? Were you like, okay, I have them in the you know, I’m actually interviewing people, knowing when I get these first few customers, I’ll hire them. Or do you, you’re like, listen, I have a little bit of capital. I’ll invest it and I’ll hire these people ahead of time knowing I’m going to make some sales. How did that timeline work?
Eli Rubel: 27:36
Yeah. So I got to cheat a little bit. And I’ll explain what I mean by that. So because I own multiple businesses, those businesses already had, they were already spending money on a bookkeeping accounting firm. So I knew from day zero even before launch that I could transition those accounts over to Profit Labs to kind of give it some real cash flow without negatively impacting my other businesses because they were just writing checks to some other agency that was managing finances before them.
And that was a total shit show. So it was great to get off of there and bring it over to Profit Labs. So that provided a good pop of initial revenue that paid for the first couple of hires. And then the other way that I get to cheat a little bit is I have a management company which handwavy terms. It’s basically I took up all of the leaders across each discipline that I love so much from the other businesses.
So I have a head of sales, I have a head of operations, head of talent acquisition, I have my EA. And so everybody sits those folks, those roles where they’re kind of universally applicable, rather than just having them sit in one company, I have them sit in the management company, and they’re able to essentially provide fractional services to each of the companies that I have in the portfolio. And so that allowed me to have, you know, incredible hiring, you know, talent acquisition chops from day one have incredible operational chops from day one, sales chops, all these things. So that was also a way where I was on, on, and on the books. There was basically very little cost.
And you know, in reality, I had a very senior five person team from day zero. So that’s a little bit of an unfair advantage that I’ve created for myself.
Dr. Jeremy Weisz: 29:40
Well, no, I think that’s helpful to hear because like, you know, obviously you’re like, we’re already allocating this amount of dollars across these companies for this type of service. And so if we just allocate it to hiring people and doing this internally, I mean, as long as you’re starting a separate business out of it, because if someone wasn’t, then it’s just a lot of time, energy and money. They could just like outsource it. And that’s why people hire agencies like your agencies that I have to manage all those pieces. But in this case, since you’re like, listen, I’m going to be launching this service, it made sense to kind of allocate that to a team. So you already kind of had it allocated. And that’s kind of funds the startup phase of this business. That’s helpful to hear.
I’m curious, going back, and it could be with NoBoringDesign, it could be with MatterMade or made, obviously you’re still the owner, but you’ve stepped away from those businesses. I don’t know which one would be the most instructive to talk about. Maybe the first one that you did. Like the steps you took to actually step away because obviously this is your baby. You’ve worked on it and then you’re now okay, I’m stepping away. So what were some of the key things you did to now you’re the owner, you’re not working in the business anymore?
Eli Rubel: 30:54
Yeah, I’ll use NoBoringDesign for the example, just because that was the most recent one that I stepped away from. So it’s fresh in my mind and I stepped away. I stepped away at the end of last year, and that was a hard one to step away from because the business was thriving, growing. The leadership team was amazing. Like I got energy from showing up to meetings with this leadership team.
And so I almost knew that it was the right path for me personally to step away because I felt a little bit stagnant, like I’d done this before and I wanted a new challenge. But like everything else was telling me, stay. You know, this is like super fun. Things are going great. Just continue.
Basically having fun time with this team and growing the company. Ultimately, I chose to, you know, stay true to what I knew was best as a next step for me in my own career. And so I’m a big proponent of, you know, promoting from within if there are people who, you know, rise to the occasion and show you what they’ve got and their level of dedication and just work ethic over time. I’d much rather give someone who’s on paper not as qualified as someone you might hire externally a real shot at something than than hiring externally.
And so the woman who is running NoBoringDesign now, she actually started off as my EA three years prior to taking over, and she just from from day one was top caliber and just would always go above and beyond and built trust with the team really early on and then started basically I knew that if I got hit by a bus, everything would be fine. And so yeah, I felt really, really good about giving this the opportunity. And in typical fashion, I asked her, I said, hey, you know, I, I want to hire someone to run this business. Would you be interested in that? And she said, I remember this.
She said, like, I’ll go wherever you need me the most. She’s like, if it’s most helpful for me to follow you to the next business and continue in the capacity I am, I’ll do that. If it’s most helpful for me to run this business and let you go do that other thing. I’ll do that. And I thought that was just a testament to the character and personality that had me interested in creating that opportunity for her in the first place.
So then, you know, logistically speaking, we had a team offsite in Mexico, about two hours outside of Mexico City, where we flew everyone in from all the different countries they live in and talked about, you know, did a retro for the year, did a retro for Q4, talked about plans for next year, and then I announced that was going to be taking over. And it was one of these things where she already had built so much trust with the leadership team by being on it, that everyone was.
Dr. Jeremy Weisz: 34:09
A natural transition.
Eli Rubel: 34:10
Yeah, nobody was surprised. Everyone was excited. And she, in Q1 of this year, she had grown 136% over the prior quarter. It was like an insane, I mean, she just peddled the metal and she continues to do really well. So yeah, that’s the most recent one.
Dr. Jeremy Weisz: 34:37
Talk about mistakes you find agencies make. And this could be ones you made in MatterMade and in NoBoringDesign, or just obviously you are working with a lot of agencies with Profit Labs. What are some of the key mistakes that you see coming across your desk?
Eli Rubel: 34:54
Yeah. So I mean, aside from the one that I’m most passionate about, which is that I feel like people just don’t have the clarity that they need. I think there’s a tendency. So. The market changes, right?
Sometimes we’ll be in a bullish market and everything’s you know, money’s flying all over the place. Clients are signing up left and right. And then sometimes the market retracts and there’s nothing that we can really do about that to some extent. You know, some scenarios. Of course, there are things we can do about it, but if it’s a macro level shift in buyer behavior.
You might be able to optimize a little bit. But there’s it’s you just kind of have to call a spade a spade. And I think a lot of agency owners, myself included, this was one of the most painful business experiences. It was probably the single most painful business experience that I’ve gone through was in 2021. Times were great.
You know, VC tech money was all over the place. It was like a cash booth, you know, grabbing. And then in 2022, it was, I think they called it like the VC tech winter. And all of the VCs were like, fire all of your agencies. You need to have at least two years worth of cash in the bank and basically prepare to let go of most of your team.
And that’s when we saw a ton of layoffs. For anybody who remembers or is around that, that industry in ‘22, ‘23, even into a bit of ‘24, we started to recover. I held on to the team for way too long. I thought, oh, you know, this is just temporary. We’ve been through bumps before, and I just justified and justified and justified and got to a place where the business was.
We went from 4.2 million in EBITDA in 2021 to burning lighting on fire, $200,000 of cash every month in 2022 until I’d course corrected. So I think, you know, I probably burned around $1 million. That could have been profit. By simply putting my head in the sand and believing that, you know, oh, it’s going to change next month. Oh, it’s going to change next month.
And so, I think, to get back to your question, staying closely in touch with team utilization and having some rules in place whereby you know if team utilization, I have a rule of thumb. If team utilization falls below 75% and stays there for more than three months, which I think is very generous, then you cut the bottom performers within the company, and you cut enough of them such that it brings the utilization of the company up to 85 or 90%. And I think a lot of folks just either aren’t willing to do it, don’t have enough clarity to do it, or are tricking themselves into believing that, you know, shiny hope is right around the corner next month and just hold on a little longer. So I think that’s a really common agency challenge and mistake that a lot of us have made.
Dr. Jeremy Weisz: 38:14
What I predicted you were going to say okay, was, time tracking, not doing time tracking, which relates to the utilization piece, because I know you posted something about this and you got some pushback from people and, you know, someone I guess wouldn’t know their utilization unless they do time tracking.
Eli Rubel: 38:35
Exactly. Exactly. Yep.
Dr. Jeremy Weisz: 38:37
What are some other strong stances like that or, I don’t know, strong like, you know, time tracking is one of them, obviously, that you’re like, listen, this is a must. What are some of the other things that you talk about?
Eli Rubel: 38:51
Price sensitivity testing like price elasticity? I know for a fact that the majority of agency owners will set their prices, get into a good sales cadence and then leave their prices alone because it’s working. Like, why would you mess with it? And I think the reality is you, we all have no idea what people are willing to pay until we reach. Until we reach a wall of nos.
And it’s very much worth it, especially in the agency model to test pricing. And the reason I say, especially in the agency model, is because, you know, we’re in the business of delivering a service, at least for now. All of that service is powered by majority human talent and then some mix of not human talent. So that means we have a capacity, a natural capacity within the business. And most agencies will bounce between oh my gosh, we’re like totally at capacity and we’re drowning.
And then like, holy crap, we’re totally underutilized and we need more sales. And it’s just this like ping pong until, you know, the agency owner sells the business or, you know, just pulls, pulls all the hair out. So that ping pong creates a natural opportunity to test pricing. Because when we’re at capacity, we really can’t say yes to any more deals without it really screwing things up.
And so that’s a perfect opportunity to create an environment where you might start hearing some no’s in your sales process. So what I like to do is anytime we’re nearing capacity, all it depends on the type of business. I’ll either double pricing from what it is, or I’ll increase it by 50%, like a meaningful step. And the way that I coach people and myself included to do this is if the price that you’re going to put down is the increased price doesn’t make you feel really uncomfortable, like people are going to laugh in my face, uncomfortable. There’s no way I could close the deal. Uncomfortable.
If it doesn’t create that effect in you, then it’s not high enough. You need to increase it more. And then continue taking sales calls like you have the capacity and see, you know, maybe maybe you get three no’s and then two yeses and you go, oh, you know, then you can also model out through a financial model and say, well, what if our average selling price through this new pricing moved from 3500 a month to 4500 a month over the course of the next 12 months. What would that mean for our profitability and our business growth and people?
I mean, like when you model this out for folks, pricing can really, really, really quickly change the outlook of a business really quickly because your labor costs remain the same generally. You’re already providing the service. So it’s really just the perceived value that you’re capturing by increasing pricing.
Dr. Jeremy Weisz: 41:48
Yeah. And I want to comment on that for a second, because I know I’ve heard you talk about this. You know, one of the stories, Eli, that is interesting is I know at one point you started at 2500 a month, and then one went to 45,000 at one point. So if we’re talking uncomfortable, I think of that. I mean, obviously it wasn’t all at once like, hey, it’s 2500, now it’s 45,000. But like you’ve lived that and you kind of, it’s a serious, you put those next to each other it’s almost ridiculous, right. I mean totally different.
But anyways, first of all, you know, I have one last question. I want to thank you for sharing your stories, your journey. I can go on and on with this and your experiences with all these companies, but I’d love to hear just some of your mentors and colleagues and some good, great advice that they’ve given you throughout the years. I mean, you mentioned Jason, you know, who gave you advice, is there, you know, in the recruiting industry, who are some other mentors and colleagues that have kind of helped you along the way?
Eli Rubel: 42:51
Yeah, I mean, there are a lot of friends and, and colleagues and just other agency folk that I, I really enjoy and each of them bring something to my life and my energy. I mentioned Jason already. I think Tyler Lane is another, another great one. He runs Session Interactive. They’re like SEO and paid media agency. He and I go out on mountain bike rides. And just like it’s good, he’s always good at staying balanced. And I really respect that.
Let’s see the guys over at Exec Viva Fineas and Adnan. Man those guys run a tight ship. They help place really, really high quality executive assistants for leaders at fast growing businesses. I think mostly in the tech sector. But yeah, just the way that they operate and execute is really impressive to me. Kyle Hunt, he runs an Agency Ops group. It’s like a paid community where you can learn from him. He’s like scaled a bunch of agencies and is just like a wizard with agency ops. Duncan, of course, who introduced us. Man, Duncan is like, I want to be Duncan when I grow up. He’s got so much swagger and he’s just like such a bright light of positive vibes in everything that he does.
So yeah, I could keep going on there. There are a bunch of people who are influential and positive influences in my day to day these days, so.
Dr. Jeremy Weisz: 44:33
I love it. Eli, first of all, I want to be the first one to thank you. Thanks for sharing the journey. Your lessons. People can check out Profit-Labs.co to learn more and more episodes of the podcast, and we’ll see everyone next time.
Eli, thanks so much.
Eli Rubel: 44:48
Thanks for having me.
