BHAG-ing Smaller Clients into Big Time Growth

Jake Tanner, of Digital Hyve (Syracuse, New York) explains how Big, Hairy, Audacious Goal-setting, clearly-defined core values, local-market-focused concierge marketing, and enlightened leadership coaching set up his full service digital marketing agency for three-year “hockey-stick” growth in a mid-sized college town.

digitalhyve.com

Episode Transcript:

Rob: Welcome to the Marketing Agency Leadership Podcast. I’m your host, Rob Kischuk, and I’m excited to be joined today by Jake Tanner, co-founder of Digital Hyve, based in Syracuse, New York. Welcome, Jake.

Jake: Hey, how are you?

Rob: I’m doing great. How about you?

Jake: Good. Good.

Rob: Excellent.

Jake: I’m—recovering from last night. I’m a big—I was into gaming when I was younger and I watched the Drake and someone else break that Twitch record last night, if anyone knows what that is.

Rob: How many people? So, it was a record for the most people watching a Twitch stream at once; is that what it was?

Jake: Yeah, yeah. They had 600 thousand people watching Drake and someone else play a video game.

Rob: Watching live. What game were they playing?

Jake: Fortnight.

Rob: Okay. Yup. I hear Fortnight’s blown up pretty big right now.

Jake: Yeah, it’s pretty—it’s pretty funny—that. It’s kind of—it’s an emerging culture. So, I’m little—just waking up from that. It was up ‘til 3:00 or 4:00 in the morning.

Rob: That’s awesome. Normally, people are up late like watching a basketball game, a football game, but now it’s E-sports; which is pretty cool.

Jake: Yeah.

Rob: Why don’t you start off by telling us a little bit about Digital Hyve and about what you’re great at?

Jake: Yeah. So, Digital Hive is a full service digital marketing agency. We wanted to only focus on digital and not do any kind of traditional advertising, so we stayed away from the TV, billboard, radio advertising world and focused on Facebook ads and Google ads, SEO, building websites. We do all of that stuff in-house; which I think is a really big advantage. We built our whole team in-house; they are all locally based—in our own offices. I originally started my own consulting business as a one-man show. From there, I met the man who is now my business partner, Jeff Canalis. He met me when I did a talk when I was a little bit younger, I was still in college, I think, when he met me. And we ended up becoming friends. He was the sales manager at a local TV station and we ended up partnering together in building Digital Hyve.

Before that, I had been an SEO marketer for two years. And from there—it’s about three-and-a-half years ago, we partnered together and started Digital Hyve at that point.

Rob: And what made you think that you’d be good partners together? How did that go from somebody you met to someone you trusted enough to be attached at the hip every day?

Jake: It was funny because I was thinking about expanding and growing and how I wanted to do that at that point. I was a one-man show and I was doing well. I was a 20-year old college student and I was doing well. I think my one-man consulting business was doing anywhere from like $15 to $20 thousand dollars a month in billing. And from there, I thought, “Hey, I could just do this. You know, I’d be happy. I could live out life doing a one-man consulting show.”

But then, I wanted to build something grander and greater and then something that you see and people know—a name in the marketing world. And that’s what we’re going for now; I decided I wanted to do that. I started looking for salespeople because I knew I was never a people person. I was never the person who could go out and talk and sell really well. I did it. I was doing it because I forced myself to do it to make money and to help clients. But I knew I hated doing it. I love sitting behind a computer and then building out—doing SEO campaigns and actually building back links or doing Facebook ads or creating funnels. Those kind of things, I really enjoyed.

When we partnered, it was great because Jeff was the sales guy. He knew how to build relationships and how to build out a sales team because he had all that experience at the local TV station, from being the sales manager there. When I gave a talk, he knew that I knew what I was talking about. Once I gave that talk, he gave me a couple of his clients to try stuff out on, because they didn’t do digital at the TV station.

Rob: Right.

Jake: I gained trust with him and vice versa from him—just from him giving me clients and us building that relationship together. Over time, it grew into something where we thought, “Hey, we could we could possibly do this.” He was about to get a promotion, just had a newborn baby on the way, and he had just had a house built. He liked the idea, “Yeah. I’ll take the leap and we’ll start this new company together.” It was a bigger leap for him than for me because I was already doing it. I was like, “I know I can do this.” He had never tried to be an entrepreneur. He never tried to get into that and I was probably an entrepreneur from the age of 16.

Rob: Was he already in Syracuse and so, it was just natural; you’re in school, kind of nearby; right?

Jake: Yeah.

Rob: And was it a natural evolution to just start in Syracuse or was there a specific intention for starting there?

Jake: That’s where we both lived and that’s where we both kind of grew up—in this area. He was the sales manager at a local TV station in Syracuse. I was going to SUNY Oswego College and grew up in Syracuse. It was just a natural; he had just started a family. He’s like, “I don’t want to uproot and leave. Let’s just start here in Syracuse.”

The other big thing—there are not very many great digital marketing companies around here; it’s a lot of one or two-man show type things start-ups or you have to work with our local newspaper, TV stations that now say they offer digital. So, that was a big leap—to be one of the premier digital agencies locally.

Rob: Excellent. It seems, if I look at Digital Hyve on LinkedIn, like you’ve grown quite dramatically in just a few years. Tell me about that journey and what’s driving growth and how you’re—in a way—leading, digital marketing in Syracuse.

Jake: Yeah. Yeah. A lot of our clients don’t even—that when we first started, three or four years ago, they didn’t even know you could advertise on Facebook. They’re like, “What is that?” they’re like, “Hello? What’s a Facebook ad?” and it was crazy to get them into that. On day one, when Instagram came out, we were advertising on Instagram for Instagram ads. So, that was a big leap for people in Syracuse. They struggle, so they do a lot of traditional stuff here.

But from the growth side of it. That first six months Jeff and I got together, we might have just broke a little over six figures. And then from there, it was like hockey stick growth. They’re calling him. So, that’s our accounts calling. It went from there to a good—$700 thousand was year two, year three was $3 million and then this past year—so, it’s three and a half years—this past year, 2017 was $5.2 million in revenue; our annual revenue. Our growth goal this year is to try to hit $8 million in revenue.

Rob: That’s huge. How do you plan for that sort of growth? How do you plan to digest that much new business, that many new clients, and then building people who are better and better at different roles within the agency?

Jake: It was a steep learning curve, I would say, for both Jeff and I because we’d never done it before. We did have a lot of help; which was great. We made sure we hired leadership coaches. We made sure we hired a great leadership coach who was local. Surprisingly, he worked with a lot of—there’s really big healthcare business here in Syracuse—so, he worked with a lot of the CEOs of some of those big health care companies and hospitals. We hired him to help us with leadership and training and that side. Then we hired a person who helped us on the process operations side of things, on how to build out our processes and operations and those kind of things.

All that was super important for us. We knew that we wanted to grow super quickly and super-fast. We had really ambitious goals and we continue to have really ambitious goals. So, we work backwards from there. It’s like, “What’s obnoxious goal can we have?” “How many people do we need to hire this year?” “What’s our budgeting from that?” We have a great accounting team, a CPA firm that helps us budget those things. We kind did that all ourselves in the beginning. We were making up numbers pretty much. It was just like, “Yep, this is how we’re going to get there.” Some numbers seemed unrealistic, but we still did it. It was really great to get to work from that point. But from our experience, we really just did it. It was really one of those things where we’re like, “You know we have to hire two people to reach this growth goal. So, let’s just hire those people.” We took risks along the way, but I would say they were pretty calculated. But, we had to take those risks to reach those goals.

Sometimes, we preemptively hired a salesperson. We paid them a base salary for the first year because it takes time for a sales person to ramp up. Hopefully, the salesperson was good. We’d pay them for a year to see if they could get us new business. We looked at investing in those kind of risks with our dollars. We’ve never really taken on any debt, whatsoever. We funded everything with cash coming through the company or through the agency.

Rob: It was probably tempting—I think some people reach a certain size and they just kind of enjoy taking the money off the table and being that certain size. How do you think about growth and where you want to be from a growth perspective and resist the temptation to take a lot more money off the table and stay where you are?

Jake: That’s a big thing with Jeff and me. We thought about that and we said, “What are our big hairy ambitious goals? Where do we want to get to?” We knew that we would have to say, “Look, this is the most we’re going to take out in a year or in the next three years. Maybe, “This is the most we’re going to take out every year for the next three years. We’re not going to increase our pay by more than this. And let’s invest the rest in hiring great people, expanding growth, opening new offices.” We were really, really focusing on that kind of on that side of things.

We knew that if we took more of the dollars out, it would mean less growth for us the next year. And really, we want to be—how do we get to be a $25 million agency a year? How do we build to $50 million a year? How do we get to that? Our goals were so ambitious. We thought, “Let’s not worry about increasing salaries the next couple of years, we’ll still make good money. Let’s focus on doing something great and extravagant and grand.”

Rob: How do you think about—I think a lot of agencies somewhat privileged in that they’re in a really robust digital marketing area, geographically. You can kind of cheat in the hiring process and, as you’re growing, you can poach talent from other agencies that are a little bit more stagnant. But I get the sense that you are quickly building one of the bigger fish in the pond. How do you—are you having to pull talent from other industries? How are you finding people who can be really great at Digital Hyve, who may not have done the role that you’re looking for at a comparable agency before?

Jake: That’s pretty interesting. In the beginning, we were hiring a lot of people right out of college. I was training them myself on how to do digital marketing because I did everything on my own (at the beginning), knew how to do a lot of stuff really well, and had really great results for clients.

I started coming up with processes. I built out exactly; “Here is how you build a great AdWords campaign.” “Here’s how you optimize a great AdWords campaign.” “Here’s the way you build a great Facebook campaign.” I trained those people out of college on how to do that.

We focused more on people who were trainable, fit with our company values, and really saw the vision. They would learn and they kind of fit everything that we are.

We focused on (teaching skills) at first. Two years later, we focused on, “How do we find people at higher levels, so they can come in as managers and help manage our team that is growing larger and larger?” For those people, we were looking at—we did get some people from other agencies, but they applied to us because of our local name. We’ve never really gone out and aggressively looked for someone at any other agency here—or anything like that. We like to play nice with all the other agencies out there, but we do have people applying to us because those agencies are stagnant, as you said. So, we have people applying to us. We’ll throw the job up on our social media. Then people apply—the marketing manager for another agency that does some digital and some traditional will come to us and just do digital. They know that that’s the way the world is going.

Same thing with a couple of salespeople we had. They were doing sales, but a lot of them were doing sales at—our newest people are in Rochester, New York, in the office full-time. They did sales at a local TV station also; which is funny. That’s where Jeff came from. And so, they sold TV advertising–had great experience in advertising and selling advertising to local businesses. It was just, how would they make that jump to digital? It wasn’t a big leap. We just had to train them on how well digital can work and what it can do for clients.

Rob: Sure. They have a client rolodex and they get to modernize their skill set with something they can sell for a long time instead of being in the TV world.

Jake: Yeah.

Rob: You mentioned the Rochester office. How do you think about growth from 5 million, to 8 million, to a goal of 25 million? How do you think about growth? How big can the business get within Syracuse and how are you thinking about new offices; Rochester and beyond? How do you think about that growth and planning?

Jake: Yeah. So, our plan . . . Actually, I’ll take a step back and tell you how we’re structured. It’s a little different than other agencies, I would say. Our account managers or our account reps focus on the relationship side; they don’t actually do the execution.

At a lot of other agencies and traditional places, the account reps actually place orders for AdWords. They’ll do the keyword research or things like that and they have a third party fulfilling it or they themselves are fulfilling it. So, they’re the relationship person plus the execution person.

On our side, our account managers are project managers to our internal execution team here in our local office in Syracuse, but all their focus is relationship building and the day-to-day communication with any of our clients.

Rob: So, how did you reach the conclusion to do that? I can see it’s a specialization and I can understand you’re able to make the most of your people who do know how to place those ad orders. How did you decide . . . how did you reach the idea to do that instead of copying what you’d seen other people do?

Jake: Yeah, really—I really looked at it from the—It’s funny because that is how TV advertising sells; their account managers sell and place the TV spots too; they place the orders and everything and they also manage the relationships.

So, we are way different. I took it more from the SAS model for selling SAS software; which is funny because we’re selling a service-based business. I just thought, “Hey, let’s try this because a lot of people aren’t doing it. But I feel like (a salesperson) needs to be an expert in relationship building.” It’s two very distinct different people and it’s amazing if you find someone that can do both, but it’s super rare.

I decided it would be much easier to train someone on, “Here’s how you do AdWords,” “Here’s how you execute a great ad campaign and write copy and do those things.” This other person, who is the account manager, says, “Here’s how you build relationships.” “Here’s how you stay top-of-mind.” “Here’s how to run your weekly or monthly meetings with your clients and what to say to them and how to find an article and send it out to them and say, ‘Hey, I was just thinking of you guys’ and focus on that side of thing and building great local relationships.” So, we’re very local based in that respect. From there, we just said, “Let’s try it out. If it doesn’t work, we can always change things.” It works so well, we just expanded that model.

To grow in other areas, our goal is keep the execution team here in our local Syracuse-based office. We recently moved from a 1,500 square foot to about 9,000 square foot office. And it’s really cool; it’s like a little googleplex place. It’s all storefront glass and open—an open office with big, giant ceilings and all that stuff; it’s like two floors. It’s pretty sweet. So, we {pumped} all that. We just moved in in November. But we felt, let’s keep execution here in Syracuse. We will have local boots on the ground—account managers and sales teams in the other local offices in different cities.

In that way, those people can actually focus on local face-to-face relationships; which is much different than other agencies who are just selling through the Internet. I think it’s helped us grow very quickly, because we get a lot more people saying, “Hey, I met with so-and-so in person. You can set up a meeting with them. They’ll come out and meet your business and learn about it. They’re local experts about the local area and they know what works locally and what people are talking about and doing in the local market. So, you guys should really look at working with them.” That’s worked a lot better than saying, “Hey, let’s just hire an agency out of California that I Google-searched.

Rob: With local sales reps, how are you going to decide when a market is pretty mature and when you’re ready to go for, let’s say, your third market or your fourth market?

Jake: We’ve had experience in these two markets, so that’s why we started here, too. Jeff worked in both the Rochester and the Syracuse market; that’s why we started with Rochester. We knew that Syracuse was getting pretty saturated because we knew the businesses in and out in Syracuse. It’s going to be a bigger leap of faith when we decide what Rochester can handle, because we have an idea, but it is very much us putting a budget into that market and then saying, “Let’s hit it.”

Say for Rochester this year, I’m not sure off the top of my head what it is, but we actually put a budget in place and said, “We have to hit $3 million. If we hit that this year, let’s look at next year opening a new office in . . .”—our next place would be either Albany or Buffalo or New York; which are bigger markets than the two that we’re in right now and more competition, too. So, let’s figure it out with Rochester.

I really think with us, the sky’s the limit with that. We want to move forward faster than we possibly think we can, because right now is where the big opportunity is. It’s the time right now to grow a local marketing agency because there’s just so much business out there in the digital world—in the digital space it’s the same. There’s no shortage of business, I would say, right now, in that digital space, because there are not enough people who can actually perform the work that local clients need.

I wouldn’t say we have an exact number or an exact science to it yet, but we definitely will be expanding next year into another office as long as we hit our goals this year; we know that.

Rob: And how do you resist—or is that even a temptation—being in New York, there’s sort of this gravitational pull in the marketing world down to New York City and some of those budgets are just absolutely huge, like life-changing budgets. How do you resist that temptation and that pull in that direction or is it even tempting for you?

Jake: It’s funny because it’s not tempting to us; I don’t think at all. We never want to get into a giant market. We know that’s where the huge competition is, that’s where you can lose those clients any single day because it’s less relationship focused. It’s much more, I would say, money driven. So, it’s “Who can give you what discounts,” “Who can do this cheaper,” “Who can do this—you know—here’s all these RFPs?” There’s a lot of ‘RFP’ type things. We don’t do a lot of RFPs. We sell a lot of our business through proposals and local sales marketing and we don’t want to do RFP type business.

So, for us, we know that there is amazing—we don’t want to be competing with the VaynerMedias of the world. I would say we’re not, at this point anyway. That’s not us, that’s not our goal. We think there’s so much business in that small- to medium-sized market where, I would say, our average client is spending five thousand dollars a month on digital advertising.

There’s so much business in that space. We’re so good at that—that sweet spot. We have clients anywhere from $2 thousand a month, as our minimum, up to $30 or $40 thousand a month in spend. We want to stay in that spot. That’s not to say we wouldn’t take on a company that came to us and said, “Hey, we want to use . . .” If Universal comes to us and says, “We want to use you guys for our digital advertising.” We would not be, “Hell, no.” We would be, “Yeah, sure. Right away.” We’ll figure it out. We won’t tell them we’ll figure it out, we’d say, “Yes” and then we would go back and say, “Yeah, we’ll figure this out” after we said yes.

Rob: I was having a conversation this morning with another agency owner. Just the value of saying “yes” and figuring it out is how some of the best agencies that we know of have been built. I like the point you mentioned, that peaking at 40 thousand a month from your biggest client and quick math suggests. From a revenue concentration perspective, I think this is an interesting thing for people to think about. I know some agencies where 70 percent of their business is one customer.

Jake: We definitely focus on wanting to split that. The big reason why we did that was because we want to mitigate the risk of having one client be half of our business or one client being a huge chunk of our business. We have some larger clients, but if we lost them, we wouldn’t have to fire anyone tomorrow. So we don’t want to be in that business.

Rob: It seems like your biggest client is maybe 10 percent of your revenue instead of 30 or 50 or 70 percent of your revenue.

Jake: Yeah. Yeah, that’s exactly right; yeah.

Rob: Excellent. I think that’s a good thing for people to think about and maybe a special benefit of being in the local business and being great at that. What are some things you’ve learned from building Digital Hyve? I mean, clearly, it’s been a heck of a ride; it’s been a rocket ship. What have you learned that you might do differently if you were starting from scratch again?

Jake: If I was starting from scratch, I think one thing I would learn to do more quickly—I would definitely let people go faster if they weren’t the right fit. That’s for sure. That’s one of the big things I learned so far from this experience—if someone’ is not a right fit, they’re probably not going to be right fit—ever. You definitely have to give them the tools and the knowledge base and everything to succeed, but then, after doing that for so long—you can kind of tell after a good month of time, most the time, if it’s going to work out or not. That’s something I would definitely recommend.

Another thing that I definitely learned—it took me a longer time to learn this—was my knowledge of leadership and leadership training and how that works into growing a business. A year or two ago, I was a very different person and leader. I learned some very awesome things that have helped me a lot along the way. A big part of it was, everyone’s pretty much looking at you and looking up to you to see—everyone that works for you is really saying, “Let’s follow the lead of that person.” You don’t even realize that that’s happening.

If you’re showing up late every day just because you can—you’re the boss—people see that and take note. It’s very difficult to overcome that. It’s actually—it stings a lot when—the reason why I learned all this thing out better was because our leadership coach said, “Here, you need to give this anonymous survey to all of your employees.”

When I got my scores back, oh man, I was not happy. I was like, “Are you kidding me? We give these people jobs. We do all these things we’re doing—all this awesome stuff for them.” Then I slept on it for a night. I woke up the next day and I was like, “Man, most of those are right. They don’t know that I’m working late every night. Or I’m working early in the morning before I come in and then I just come in late because I was working at home. They don’t see that; they don’t know.”

I was like, “I’m going to make a conscious effort to make sure I’m in early, I leave a little bit later, and I just work in the office, so that people see that I’m doing that.” It made such a big difference; just that little aspect of it.

Same thing with talking to people. I always acted like I was busy, instead of giving them all my attention or focus. I’d keep typing at my computer, like, “Yes, sure, you can keep talking; just tell me,” like “I’m listening. I get it” and I’m one of those people who can keep typing and working on what I’m working on and hear what they say. Maybe I’d give them a response minutes later. But lots of times, it’d be that silence, and they’d be like, “I don’t know if he’s listening, I don’t know if he’s focusing on me.” I got that feedback, too. I didn’t realize how people felt until I (got that feedback). That made a huge difference in everything that I was doing.

I think the one of the last things was building our core values as a company—that was a huge turning point in our business, too. We built our core values and we said, “Let’s live by these. Let’s hire people by these. Let’s fire people by these. If they follow something like our—you know—passion is one of our values, if they’re not passionate about the work we do every day, then I don’t know that they’re going to be a great fit here long term.” So let’s—

Rob: What are the other four core values then?

Jake: Yeah. So, we have from top to bottom. We actually list them in order of importance. Our crew is our first one. We call them crew—our employees, our people. Instead of saying people, we call them crew internally. And then our clients are a second core value. We did that on purpose. We want to put our crew in front of our clients. If you have a client who’s being, tor lack of a better term, not so nice to your employees, we’re not going to deal with that just because they’re the client. That that’s not acceptable; that’s not okay. You can’t treat people harshly or like dirt just because we’re the agency doing the work for you. That’s not acceptable to us. We want to make that clear to everyone internally, “That that’s not going to happen here and we will let those clients go if we need to.”

At the same time, our second value is client because you have to be working your butt off for your clients to make sure you’re doing everything you can to help them succeed and get results.

Then you get into passion as our next core value. And that, like I said, is our passion for doing the work, being passionate about being here, working with our colleagues, and passion about getting results for our clients.

Another one of our big core values is “Better every day.” We have that written on our wall here. It’s very much a “if you’re not striving to be better every day, if you’re not fitting in one of those core values, what are you doing here?” kind of thing. “Why are you not striving to be better?” “Why are you not striving to get better results for your clients?” “Why are not striving to grow our business?”

If you’re not here to help grow our business, if you’re not here to help get results for our clients, if you’re not here to help train other people internally and make them better, then why are you here? We now hire and fire people around all those things.

Rob: I think that’s helpful, too. And to especially have those core values in a way so that people know what they are, I think that’s something anyone can think about for their business.

Jake: Yeah.

Rob: When someone wants to get in touch with you and Digital Hyve, how can they find you?

Jake: Yes, you can go to digitalhyve.com. We’re actually spelled H-Y-V-E. There’s a funny story about that. Jeff, my business partner, his wife is from Finland. Hyve is actually hoo-vay, I believe, in Finnish and it means virtue. So, our big goal was . . . when we first started this, we saw so many SEO companies and AdWords companies just taking people’s money and either spending—you’d spend a thousand dollars and they would spend 200 of that on advertising—How is that even real? How are they even doing this? How are they just scamming people out of money? Or doing SEO and not doing anything. Clients are like, “Oh, yeah. I’m paying them 500 bucks a month. But it’s been six months, I don’t think I’ve heard from them once.” That’s crazy to me. Why was it happening? And it still happens a lot of places.

So, that’s kind of been a little bit behind our name, too. Our website is digitalhyve.com. You can search digital hyve, H-Y-V-E, to find us. The easiest way to contact us would be to go on the website and fill out the contact form or call the number there.

Rob: That’s good. Anything coming up for you at Digital Hyve that you want to plug and let people know about; that we should pay attention to?

Jake: Well, this this might be a big one—hopefully. Hopefully it happens. Like I can’t spoil it before it doesn’t, but we are hoping to be in the top 100 or top 200 or in 500 when that comes out. So, that’ll be really cool to see us rappel into the national spotlight. Our goal is to get into a lot more national spotlight, to get onto some talk shows and things like that more on a national level and they get picked up. Some national level articles and news sites and things like that. Pretty much doing what we’re doing now.

Rob: For people who don’t know the Inc. 500—you have to qualify and then get a couple of years past that before you can even be on the list. Is this the first year that you’re eligible?

Jake: Yeah. This is the first year we’re actually eligible. You have to be in business for at least three years. After that you can become eligible. The first year you have to make, I believe it’s a hundred and then at least 2 million in the third year to then be eligible.

Rob: Congrats in advance. We know you’ll be somewhere pretty prominent on the list; it’s just a question of where. So, that’s very exciting.

Jake: Yeah.

Rob: Thank you. I think you’ve shared a lot of good knowledge about growing quickly and about playing on your strengths and growing where you’re planted as well. I think those are—it’s exciting and I’m glad to see what you’ve accomplished and I can’t wait to see what’s next.

Jake: Yeah. Thanks so much for having me on it too. I love talking about this stuff. I could do it all day.

Rob: That’s awesome. It’s a privilege, Jake. Thanks so much.

Jake: Thanks a lot.

Thank you for listening. The marketing agency leadership podcast is presented by Converge. Converge helps digital marketing agencies and brands automate that report, so they can be more profitable accurate and responsive.

To learn more about how Converge can automate your marketing reporting, email info@convergehq.com or visit us on the web at convergehq.com.

 

Leave a Reply

Your email address will not be published. Required fields are marked *