DeepSpecialization_EP 92_Video_Edited_V1
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[00:00:00] Ned MacPherson: The elixir to growth for any company or any organization is rapid, empirically backed experimentation. Whoever's listening to this, if you really believe you've got a niche that brands aren't addressing, and you can provide that as a service and as a unique IP. Go give it away for free to a bunch of brands.
[00:00:16] Ned MacPherson: You'd be shocked to see how many of them will immediately want to pay you if it's actually that good.
[00:00:21] Corey Quinn: Welcome to the Deep Specialization Podcast, the show where we blend focus, strategy, and client intimacy in order to scale and simplify our businesses and our lives. I'm your host, Corey Quinn. Let's jump into the show today on the deep specialization podcast.
[00:00:37] Corey Quinn: I'm excited to welcome Ned McPherson. He's the chief growth officer of power digital, a 820 employee digital agency. He's also the founder of NROC growth and analytics, a firm he grew to 120 employees before selling it to a PE firm in December of 2023. I can't wait to hear his story. Welcome, Ned.
[00:01:01] Ned MacPherson: Thanks
[00:01:01] Corey Quinn: for having
[00:01:01] Ned MacPherson: me.
[00:01:02] Corey Quinn: Let's start with way back when you were involved in your company and ROK. About when did you start that company?
[00:01:12] Ned MacPherson: So the agency was January, 2019. Technically I had started the LLC to be technical earlier than that, about three years before that. Now, the reason why is it created a little LLC infrastructure to do some consulting on the side for.
[00:01:27] Ned MacPherson: Businesses to make sense of their analytics stacks. A lot of these were direct to consumer brands who had things like Google Analytics hooked up, candidly never looked at it, never inferred insight from their data. For the very few who did, they didn't really know what to do with it. Like, how do you transition this just mess of reporting into something actionable strategy?
[00:01:45] Ned MacPherson: And I had a knack for that. So I started helping brands kind of understand what their data meant, start to ideate around hypotheses, start to drive changes, start to drive experiments, etc. All things business growth related to what their data had suggested. So that became a little bit of my kind of offering out there in the marketplace.
[00:02:04] Ned MacPherson: I ended up aligning with about six or seven different brands where I was kind of like their, like de facto head of experimentation, if you will, as an outsourced individual. And so I did that for them for a few years. And then I just kept getting more and more demand and more companies asking. I was like, I can't do all of this myself.
[00:02:20] Ned MacPherson: I tried to take on more and it was just really challenging. So I was like, you know what, I'm going to pivot the whole company and I'm going to go create an agency. So that's where I created Endrock Growth and Analytics. And that was an agency in 2019 started literally kind of like jam to 2019. And. Yeah, yeah, we, we grew really fast and scaled up to about 120 people by 2023 and we were acquired.
[00:02:40] Ned MacPherson: So we kind of went into due diligence there in September of 23 and then completed the acquisition on December 4th of 23 to private equity back strategic.
[00:02:50] Corey Quinn: Okay. So there's a lot to unpack there. And by the way, you, you started the acquisition process in December, in September, you wrapped it up by December.
[00:02:58] Corey Quinn: That's amazing. It was great. Quick.
[00:03:01] Ned MacPherson: It was, it was quick. It was efficient. Quick ish. I mean, it's anyone who's gone through an acquisition, those due diligence, intense, right? It really is.
[00:03:08] Corey Quinn: Of course.
[00:03:09] Ned MacPherson: You know, because on top of the fact that, you know, you are answering myriad of different stakeholders as to insurance questions, finance questions, projections, legal.
[00:03:18] Ned MacPherson: I mean, everything you can imagine every single corner and every little granny of the business. You're answering questions around. You're also trying to run the business and maintain growth because. And the value, right, that, yeah, right off the ball too much, you know, you're going to end up getting retraded or something.
[00:03:33] Ned MacPherson: So, you know, it is a really intense window, but nonetheless, yeah, it was relatively, uh, quite efficient. And so, yeah, we were able to bump it up and gosh, almost exactly three months to the day.
[00:03:43] Corey Quinn: Well, that's, that's pretty awesome. I imagine. So I'm getting, I'm gathering, you know, your, your end rock was focused on analytics and growth in analytics, but obviously you are a numbers.
[00:03:53] Corey Quinn: Systems process guy, I'm assuming, which has probably served you in that acquisition and you had a lot of your, your things buttoned up, but in any event, let's start with, so NROC was something you had started in 2016. We, was it like a side hustle type of thing?
[00:04:12] Ned MacPherson: Yeah, I mean, kind of exactly. I was running another company at the time and we, you know, we were having moderate success and a business partner, a couple of business partners of, uh, you know, we were friends of mine and started a little business here in South Florida and we were doing okay, we were scaling just, you know, we made a ton of mistakes to be honest.
[00:04:27] Ned MacPherson: It's just early, early, you know, young business owners, to be honest, but we had some success, you know, we were able to build that company up a bit, a couple million dollar company. And it was scaling, but kind of on the side, I just. Candid was in these different CEO groups, and I used to listen to some of the challenges people had, and I would opine on what I thought they could do, and they seem to really enjoy and resonate with some of my recommendations.
[00:04:49] Ned MacPherson: And a lot of those were built around me to seem like, hey, let me look under the hood. Let me see what's going on. Show me your just send me your analytics access. Let me look. And then I come back and give them all these strategies and be like, oh, that was so helpful. And we really enjoyed it or we implemented.
[00:05:01] Ned MacPherson: We saw an immediate change, whatever they would say. So, you know, I kind of saw the writing on the wall and it was 1 of those classics where I started to like, consult on the side, small, little couple K contract type of thing. Then I started to get another one. Then I started to get another one, etc. And those started to scale up over time.
[00:05:16] Ned MacPherson: And I had started some other ventures in that meantime, too, that I was working on full time. But it was, it was one of those that like, no matter where I went, I kept getting pulled back in this direction. It was just all the money. People just kept wanting to pay me for this next thing, you know, and they were like, you're the guy to do this.
[00:05:32] Ned MacPherson: Can you come do it for us? And so eventually I just was like, you know what, this is, this is really where I need to spend my time and focus. Yeah.
[00:05:38] Corey Quinn: So do the initial six to seven brands came to that CEO group effectively?
[00:05:42] Ned MacPherson: Yes, exactly. Well, that was where client one came from. Who's still with me today. By the way.
[00:05:47] Ned MacPherson: Yeah. So I was helping them along the side for now going on nine years. Right. And this was long before I like created the structure of the agency in a real company, it was me just trading some of my time for money and such or in the early days, but again, is really, really scaled up. So.
[00:06:03] Corey Quinn: And so in 2019, you started officially the agency.
[00:06:06] Corey Quinn: What was the service you were providing? Like, what was like. How did you characterize that specialization?
[00:06:11] Ned MacPherson: Yeah, industry specific, it's called conversion rate optimization, which is exactly what it sounds like. You know, you've got a lot of websites out there. You've got mobile web applications. You've got B2B brands that are trying to drive lead generation or form submits or whatever it is.
[00:06:25] Ned MacPherson: And we spend a lot of time in the digital space talking about acquisition strategies. How do we find more traffic? How do we find cheaper traffic? How do we find fill in the blank? Right? What we don't talk a lot about is well, is the environment in which that traffic lands optimize to convert them to whatever it is that we're trying to convert them into as an example.
[00:06:45] Ned MacPherson: So that might be. A sale, like on an e commerce site, it might be an email submission. I'd be informed submission. They request a demo, a download an app, whatever. And so my whole career and what I focus on are the heuristics, the analytics and the behavioral psychology that goes into taking a landing page or a website or a mobile app and getting it to convert better.
[00:07:06] Ned MacPherson: That's it. It's like the other side of the coin to acquisition. And part of, you know, why it works so well is not just the least of what you create immediate lifts and conversion rate, which often means just more contributed revenue to the brand, but it's also has this beautiful halo effect that impacts all the top of funnel channels.
[00:07:21] Ned MacPherson: Because if your conversion rate goes up, that means your return on ad spend or your incrementality or your CR for like paid media goes up or your CPAs go down. So you can open the aperture and go target more users. So it has this beautiful, like rising of the tide lifts all ship. It's kind of a fact, right?
[00:07:38] Ned MacPherson: So because of that, we have a lot of great kind of partnerships over the years with different paid social media agencies, SEO agencies, SEM, email, you name it, cause we were a great like add on to a lot of the work that we're doing with clients. But yeah, conversion rate optimization is technically it.
[00:07:55] Corey Quinn: I'm very familiar with when I was at an agency after I left business school, we sold PPC and SEO to enter large enterprise brands, a lot of, a lot of e com.
[00:08:04] Corey Quinn: And that was one of the services we bolted on probably not nearly as, uh, sophisticated as an approach as you did. It was very simple, you know, AB testing back in the day, quite a few years ago. But, uh,
[00:08:14] Ned MacPherson: yeah.
[00:08:15] Corey Quinn: So, so the focus was of your specialization was in conversion rate optimization. Did you target. Any specific industries with that?
[00:08:24] Corey Quinn: Or was it kind of any business that has a conversion rate challenge or is, is, is, you know, based on those you would work with?
[00:08:31] Ned MacPherson: Yeah. Technically any business that has a digital conversion event, right? So again, it could be a form submit. We have a number of B2B clients could be a lead generation and app download.
[00:08:41] Ned MacPherson: But that being said, the majority of clients where we've had the most success and where we've just. Magnetically pulled in the most amount of leads and success stories over the years is e commerce, right? So we've got a lot, you know, hundreds and hundreds of e commerce clients, right? So classic, you know, beauty brand, fashion brand, accessories brand, C.
[00:08:58] Ned MacPherson: P. G. brand, what have you that's selling an item or usually many items, right? Collections of items online and. They've got landing pages, home pages, navigation architecture, cart infrastructure, interstitials, product pages, collection pages, checkout pages, post checkout. All of these play into the consumer psychology.
[00:09:16] Ned MacPherson: Right? And you can affect change based on what and how you say things on those pages. That's where we're really dangerous is to be able to to increase.
[00:09:28] Corey Quinn: And as you were growing the agency at this point, did you expand into sort of complimentary services, like acquisition type of services, or was it exclusively just doing the analytics and the, and the sort of the testing?
[00:09:41] Ned MacPherson: Yeah, that, the shiny thing was there. I can't tell you how many clients would like, we love working with you all.
[00:09:46] Ned MacPherson: Can we give you our paid media? And we were just like, it's not our thing. Like we don't do acquisition. So we, we turned down most of that. With the exception of we did have a development division just because there's a lot of development and design work that goes into launching. So naturally we did take on quite a bit of development work with clients.
[00:10:03] Ned MacPherson: And then of course we, you know, we're pretty sharp in the analytics front. So we would take on some analytics contracts, but now every time they would push out, you know, on email, taking over email or SEM or pay media, we would, we would say no to all of those. And, you know, ultimately in the long run, I think that was the right move.
[00:10:17] Ned MacPherson: We stayed very centric and we grew really fast and. Obviously, others saw a lot of value in us, hence the acquisition. And, you know, I'm super happy to say it wasn't just up to the acquisition. We were actually the fastest growing division within the acquiring power digital within our acquire last year.
[00:10:33] Ned MacPherson: So in 2024, you know, to prove the thesis out of their acquisition. I mean, we doubled. So,
[00:10:38] Corey Quinn: yeah, so as you were, so you started again, going back to 19 to 2019, I'm just curious on the answer of the growth journey, who is the first employee that you hired?
[00:10:49] Ned MacPherson: That was a developer. Yeah. So I hired a developer. I mean, that was, I couldn't do much without a developer.
[00:10:53] Ned MacPherson: Right. So I had worked with him on a few different projects in 2018 and then. Was like, Hey, I'd love to bring you on full time. So brought him on full time and we started working on projects and no kidding, two and a half, three weeks later, I was like, we need another developer. And he was like, I got a friend I could bring in.
[00:11:08] Ned MacPherson: I was like, great. I was like, amazing. And I was like, we need a designer. He's like one of my childhood, best friends and award winning UI UX designer. And to this day. Migue, our designer, still my head of design has been for six years now and really fun. Then after that, I was like, we need an account manager.
[00:11:22] Ned MacPherson: And he was like, well, my other friends, little sister is looking for a job. And so we hired Nash. Nash started as a junior account manager, made her way through to become our head of basically our senior account manager, then became a growth lead, which is a more senior position than head of growth leads.
[00:11:37] Ned MacPherson: And she's actually the head of the whole department now. Now that I'm C. G. O. for power, she took over and runs the entire 160 person, 200 something client C. R. O. Department. So really fun story there. She started with kind of green in the industry and just she's so, so intensely talented that was able to grow into that role and relatively short amount of time when you think about it.
[00:12:00] Corey Quinn: It's so all these, uh, sort of serendipitous moments. It's like, it's meant this, this whole thing was meant to be on some lot of product
[00:12:06] Ned MacPherson: market fit. Yeah. I mean, my, my favorite line to describe that is they said, if you, if you don't have product market fit, it feels like you're pushing a boulder up a Hill.
[00:12:13] Ned MacPherson: If you do have it, it feels like you're chasing one down a Hill. And I was like, that's the best description of product market fit I've ever heard from like January 2nd, 2019 until even today, it feels like we're just constantly chasing to keep up with. Demand and to constantly make our product better, et cetera.
[00:12:31] Ned MacPherson: And that's, you know, that's product market fit.
[00:12:35] Corey Quinn: Have you ever, or do you, do you employ salespeople for the, now the division, but for, for Enron?
[00:12:41] Ned MacPherson: No, we never had any sales, never had any marketing. It was a hundred percent referral and organic growth over the years. I still, to this day, do all of the sales, if you will, which is as uh, leads and interests come in.
[00:12:52] Ned MacPherson: Candidly, I've, I've done really the same thing from day one, which is let me on a complimentary basis, do an audit for you. I'll take a look under the hood. I'll look at your and just like I did all the way back in 20. It's much better now. But I did back in 2016, 17 and 18. I look under the hood. I do a full diagnostic of their analytics.
[00:13:09] Ned MacPherson: I find immediate data points that we could optimize, pull some ideas out, give them an idea of how we think, how we operate the types of ideas that we have. And that's complimentary for any brand that's interested. And that's, you know, I'm a big believer in trying to add as much value as I can up front before we get sure discussions around an engagement.
[00:13:26] Ned MacPherson: And, uh, That's done well for us and paid us dividends handsomely over the years, so.
[00:13:31] Corey Quinn: So you mentioned 100 percent organically driven growth through referrals and, and, uh, and whatnot. What, what had to be true in the eight year business at your agency to, to generate that kind of growth? Like again, the referral based specifically, you know, what are some key lessons learned potentially around client retention and satisfaction?
[00:13:52] Ned MacPherson: Yeah, a couple things there. One, fundamentally, does the product and service work? Like, candidly, you know, did we actually drive lift? I mean, we've had a few brands have said, you know, crazy success stories, right? So certainly that's probably arguably number 1. I would say a close 2nd to that is even for brands that worked with us, right?
[00:14:11] Ned MacPherson: That would say, Hey, you know, we enjoyed working together, but, you know, it's not for us after 6 months, 12 months, whatever it was. We usually would get very warm response. And they'd be like, your team is super responsive and on the ball all the time. We just, for whatever reason they were in housing or there could be a variety of reasons why they didn't want to pursue any further.
[00:14:30] Ned MacPherson: So very often I would continue to get referrals in leads, even from some of, you know, we didn't have much churn, but from some of the clients who did churn. So that to me was always Hallmark that it was. Yes, the quality of our service, but also, I mean, we were, you know, just a very responsive and very, I would say, organized team.
[00:14:49] Ned MacPherson: Right? And so we were always on it. And that's just a testament candidly to some of the amazing people I was able to hire over the years and retain to this day. And they're. You know, really the engine that made this all work.
[00:15:01] Corey Quinn: What is a responsive mean in this context? Like what does responsive look like?
[00:15:05] Ned MacPherson: Yeah. I mean, just, it's going to sound really basic, but just like time to reply. You know? I mean, I, I, I big rules of my team that it's like, don't go to bed any night without clearing your inbox. Right. That was one of my favorite lines. I think it was Sam Walton had his like clearing his desk theory, right.
[00:15:19] Ned MacPherson: You know, the founder of Walmart where obviously free internet, he would never leave the office apparently. And I may be butchering, maybe it wasn't him, but I think it was, he would never leave the office. Until his desk was cleared of all the messages and letters and notes from the deck. Right? And that was just a basic principle.
[00:15:33] Ned MacPherson: And I started to incorporate that. I mean, this is really rudimentary stuff, but candidly, I can't tell you in the early days when we were 3 employees, 5 employees, 7 employees where we would win deals going up against big agencies. Right? And they, the client would tell me straight up, they'd be like, we know you're not the most experienced.
[00:15:49] Ned MacPherson: You are the most responsive during the pitching process. And you seem to want it the most. That's what they would say. Right. So it's like, well, does that mean that like replying to your emails every day actually won you business? It's like, yeah, kind of, you know, and like that actually compounded and translated into some tremendous growth.
[00:16:03] Ned MacPherson: So, you know, that's part of it. And then also, you know, oftentimes. We're running experiments on sites, right? So we're changing things and we're implementing and affecting different chains. So if a client's having a bad day with revenue, as an example, oftentimes they're, they're really nervous when the day started.
[00:16:19] Ned MacPherson: Like, oh, my God, revenues really down. Is it this test? Should we stop the test? And so it's like, you've got to be really responsive there. You've got to address it, right? Not the least of which is maybe there is an issue with the experiment, right? Maybe it didn't pass QC parameters. Really, to be honest, 95 percent of the time, it's just some exogenous variable that's impacting and maybe revenue is just not great that day.
[00:16:40] Ned MacPherson: And so being able to dig in and be like, here's what I found, here's what the data is showing, I think it won't give it until noon, or you know, here's why I don't think we have to be worried, etc. That shows the client that you care, right? And you're just as passionate about the results as they are.
[00:16:54] Corey Quinn: You also mentioned being organized.
[00:16:56] Corey Quinn: What does that mean?
[00:16:58] Ned MacPherson: Yeah, absolutely. Which, you know, we're launching four to seven ish experiments per month per client across hundreds of clients. That's a lot of commits in a month. So oftentimes clients, you know, they're running businesses, right? I mean, you run a company before, you know, I've run companies before and it's like, you got a million things on your mind.
[00:17:13] Ned MacPherson: They're not going to remember what tests we necessarily declared as a winner. 3 weeks ago, and so a lot of times comes us come to us a bit like, wait, why did we push that change live on the site? You know, sometimes to be like, I don't like it. Like, why is that there again? It's like, great question. Here's why 3 and a half weeks ago.
[00:17:28] Ned MacPherson: We had just concluded this test. Here's a reminder slide 17 on the deck. Here's the stats markers. Here's the confidence intervals, et cetera. Here was the projected lift on it. We all discussed decided. Yep, that's an absolute win. So we hard coded it. So, you know, just being able to answer those questions quickly in an organized fashion with supporting evidence and data to back it.
[00:17:50] Ned MacPherson: Is key to addressing anybody, whether it's client or internal stakeholders concerns.
[00:17:56] Corey Quinn: That's beautiful. So curious if you have any advice for maybe someone who is considering specializing in a service area, such as conversion rate optimization. What's the best way to do that? And how do they know they're making the right moves?
[00:18:11] Ned MacPherson: Yeah, sure. I keep a very keen eye in the early days on product market fit, right, which is probably the best way to look at that is are any of the folks that you're providing this service for telling others? Are they saying things like, Oh, my, you know, friend Jane's company would really do well from this, right?
[00:18:28] Ned MacPherson: Or you should talk to John over here. Are they saying anything like that? It's a dead giveaway. Another good way to look at it is and this is a big one for me. I had taken some, some lessons from a guy who built a bunch of different internet courses a long, long time ago. He's, he's really well known in the industry.
[00:18:43] Ned MacPherson: And so I did a, a course with him. This was, you know, I mean, before I started anything with them, it was like 2014 timeframe. And he had told me something super profound, which is he said, he truly believed his paid course or whatever that he was selling was the best in the world for what it was selling, like how to do this thing.
[00:19:00] Ned MacPherson: He said, the second best one out there is the one I give away for free. And so that really imparted on me, which is to the degree of which you can provide tremendous value for free upfront will, will, I mean, put rocket boosters on your growth. So if you really believe whoever's listening to this, if you really believe you've got a niche that brands aren't addressing, and you can provide that as a service and as a unique IP.
[00:19:26] Ned MacPherson: Go give it away for free to a bunch of brands. You'd be shocked to see how many of them will immediately want to pay you if it's actually that good. And so a good litmus test of this is make your free offering so good that really sharp teams like the top 2% Shouldn't need to hire you. They should be able to take what you provided them and go figure it out themselves.
[00:19:45] Ned MacPherson: And that, that's where, candidly, that's it. I know a lot of people be like, Oh, you should never give it away for free. Give it away for free. Trust me. And that'll be an immediate way that you're going to learn. Do you have value, et cetera? And you'll learn a lot in that free process, those free audits, right?
[00:19:59] Ned MacPherson: Those free audits, those complimentary services, whatever it is. And obviously that's hard. You spend a lot of time and work doing that, but that's what I would recommend.
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[00:21:08] Corey Quinn: Visit Coreyquin. com slash DSA, that's Coreyquin. com slash DSA, to learn more about the next cohort that's starting soon. Now back to the show. You said mine the nickels and dimes and the dollars will take care of themselves.
[00:21:24] Ned MacPherson: Yeah. What does that mean? I was, uh, yeah, so early in my career with some of those other companies, like, you hear the story all the time.
[00:21:31] Ned MacPherson: I, you know, we would get, we would get airspeed and altitude and then we'd come down and we, I can't tell you how many times either me individually, or with the company, we were just like, right there on the edge of being going under. Right? And so. I just became just manic over the years about watching every single dollar to the point where I literally had a manual daily ledger until the day I sold and rock, even when we were.
[00:21:56] Ned MacPherson: You know, doing many millions in revenue every morning. The 1st thing I would do Monday through Friday when the banks are open is I would do a manual account of all the bank accounts. Every dollar that went in every dollar that went out and everything was labeled all in spreadsheets and all backed up.
[00:22:12] Ned MacPherson: And so that's I knew, and if there was anything ever off, my poor bookkeeper, I used to pull her in all the time and ask all these questions. She was a, but you know, it's like, no, cause I'll tell you, that'll get away from you in two seconds. I mean, you take your eye off that ball for two seconds and I promise you there's going to be massive gaps and money missing or unaccounted for, or just spending on things you don't need.
[00:22:36] Ned MacPherson: And so that's, you know, another entrepreneur had told me early in his career, he was like, you know, he said, mine, the nickels, mine, the dime, something like that. And the dollars take care of themselves. That was always my big thing is I, if I could just pay particular attention to knowing every single.
[00:22:49] Ned MacPherson: Outflow and inflow by the end of the month, we should maintain profitability, like good profitability. And even if we didn't, I knew exactly why and where. And yeah, we were extremely profitable. We never had a single month we weren't, you know, like deep into profitability. So we, we were very profitable all along.
[00:23:05] Ned MacPherson: I never wanted to raise capital. I never wanted to bring in any finance partners in. And so I didn't have to because we grew organically and profitably so well.
[00:23:13] Corey Quinn: Reminds me of the saying, what gets monitored gets managed.
[00:23:17] Ned MacPherson: Yeah, yeah, right, right. Yeah. That's a great way to look at it. A great way to look at it.
[00:23:21] Ned MacPherson: And so, yeah, I mean, I, and I just obviously being in data that created all these different models and elastic metrics around all the different financial KPIs and this and that. And I mean, I could talk for a day about all the different things I pulled out of that, but that's, that's 1 of the other things I obsess about is the ability to help businesses understand all of their expenditures and efficiencies and where there's optimizations for growth and.
[00:23:47] Ned MacPherson: Candidly, how they can oftentimes do a lot with a lot less. That's kind of the theme of that, to be honest.
[00:23:53] Corey Quinn: That is a, a superpower, uh, I'm sure for many, many businesses would benefit from that. So Ned, you had a deeply profitable agency with, yeah, I was growing organically, word of mouth. You're putting out an amazing product that, uh, is solving great problems, probably undercharging potentially for the value you guys are creating.
[00:24:14] Corey Quinn: And yet you sold at the end of 2023, you mentioned that you sold to, was it a PE firm or did you sell to PowerDigital? So it was,
[00:24:23] Ned MacPherson: it's, it's. It's a private equity backed strategic, right? So I mean, the sale itself was managed predominantly with the PE firm, of course, but it's, it's, I work with the buyer now, which is a larger strategic in the industry.
[00:24:36] Corey Quinn: Yeah, what was what were some of the things that led to that decision versus just continuing independently?
[00:24:41] Ned MacPherson: Yeah, I mean candidly I had no intent to sell. I mean if you go back to just spring of 23 Wasn't even on my radar we were working on a on a potential deal with another paid media agency where we were going to potentially look at like a kind of You know, combining of forces merger style deal to see if we could combine our EBITDAs and be worth considerably more and then accelerate further.
[00:25:02] Ned MacPherson: They were pre click. We were post click made a lot of sense, you know, and we were we were entertaining that I should say as an idea and. I got chatting with Todd Tasky, as you know, my banker, right? Obviously, it was just tremendous, by the way, as a representative for us and would strongly recommend anybody interested in a potential acquisition reach out to him.
[00:25:22] Ned MacPherson: But so I started talking with Todd and he really opened the aperture for me to understand what the M& A market looked like out there. I had some ideas in my head in terms of multiples on EBITDA of what we would be worth. He thought I was undershooting it a little bit. It would be higher candidly where they came in was considerably multiple turns, even higher than what he had said.
[00:25:40] Ned MacPherson: So, you know, it was a factor of things, right? I certainly would not, I would certainly not dismiss the fact that some of it's financial motivated. I mean, they came in with a, you know. I mean, it's life changing, right? When you, you can sell a company like that. So obviously that was a big deal. And at the same time, I really wanted to see the model we had built accelerate into the upper echelons of clients, the big logos, and I saw ways that we, as a company slash going forward, maybe as a department could accelerate a lot faster.
[00:26:10] Ned MacPherson: And that's so far. Exactly. Forget all the compensation bits. That's exactly what's happened. I mean, we double interesting. We doubled the 12 months after acquisition, right? I mean, we have one of, you know, we have clients working in the fortune five. Right. Not even fortune 500 fortune five. We've got, you know, multi billion dollar organization clients, right.
[00:26:29] Ned MacPherson: Where we get a win on a test and it's like 7 million more dollars a year. And really impressive lifts. Right. So it's, it's fascinating. And my team's gotten tremendous experience. We've grown and it's kind of just like a, an accelerant to sharing the gospel. I mean, I really. Truly believe the elixir to growth for any company or any organization is rapid, empirically backed experimentation, identifying a metric that matters, determining if that metric is movable, and then running hypothesis back thoughtful, empirical highlight empirical.
[00:27:03] Ned MacPherson: Experimentation and rinse and repeat identify the line in the sand. You want to move that metric to run experiments. Did you get there? No, keep going. Yes. Okay. Move on to the next metric and it just keeps going. And to me, that's the elixir to success for any great organization from lemonade stand to a government.
[00:27:21] Ned MacPherson: Right? I mean, that's anything in between. And, uh, yeah. And so, you know, I really wanted to kind of share that with larger brands and power gave me a platform to do that at the same time. Also take my skills as an agency owner and help Power, which is also growing tremendously right now, accelerate. And, uh, yeah, it's, it's really been a.
[00:27:41] Corey Quinn: So just to feed that back to you, you were kind of exploring, potentially partnering up with another agency, a pre click agency that led maybe serendipitously to a conversation with, uh, Todd Tasky. Todd is obviously a mutual friend. He's been on the podcast. He is a force to be reckoned with. He's, he's a great guy.
[00:28:00] Corey Quinn: And so that led to, I'm sure a conversation with the PE firm slash PowerDigital. And sure financial opportunity, which I want to talk about in a second, but also gave you access to, to bigger logos with maybe that they currently had as an upsell, you know, across to your service and whatnot. What else have you found as a result of joining a, I imagine that power digital was a, was it a lot larger agency than yours or was it about the same?
[00:28:26] Ned MacPherson: Oh yeah. Yeah. I mean, they were high six hundreds and employees, right. I want to say when we joined, yeah. Cause when we combined, we were like, High 700s, I think, something like that, I want to say. And we brought 120 to the table, so.
[00:28:39] Corey Quinn: What did you find being 120 person agency, growing it from sort of bootstrapped all the way up?
[00:28:46] Corey Quinn: To joining a 600, 700 person agency. Like what, what are maybe some other benefits that you, that you accrued?
[00:28:52] Ned MacPherson: Benefits that I accrued specifically. I mean, I, I went from,
[00:28:55] Corey Quinn: or, or you or your organization.
[00:28:57] Ned MacPherson: Yeah, of course. I mean, it's, it's, you're getting into a far more sophisticated HR program, training program, a personnel development program.
[00:29:07] Ned MacPherson: You're getting far more robust on your financials. I mean, you know, like, some of the folks on our, on our finance department are 1 of them and 2 of them in particular, like, straight from, you know, and so, I mean, they're really sharp, like, really sharp. And so they absolutely understand not only. You know, how we're doing now, but are we on track for our 3 year plan or 4 year plan and not just like.
[00:29:30] Ned MacPherson: Speaking about that in hyperbolic language, I mean, quite literally, like, what metrics and what levers need to be pulled 2 day this month in this quarter to keep us on track with that growth. And that's a really interesting way to look at it. I was a little bit more narrow focused on, like, this week and next month type of thing.
[00:29:46] Ned MacPherson: And they're far more of a broader vision at the same time. You know, we're aggressive on our M and a strategy within power as well. And so that's been. A master class, candidly learning on how that works and how we identify opportunistic other groups to potentially acquire and bring into the family here.
[00:30:02] Ned MacPherson: Certainly not. I didn't have anything. I had never acquired another business within power. Right? So I never had any. I'm sorry within and rock. So. I'd never had any of that. And then just, you know, world class leaders. It's a bigger organization. I mean, some of the folks around me specifically in the C suite level are world class, you know, really well, they really are and my team is awesome.
[00:30:20] Ned MacPherson: Etcetera. I trained a lot of folks on my team and, you know, they've been really impressive. And it's been great to just kind of team up with other folks that followed their own path. Some of which were entrepreneurs that sold to power other, which were kind of hired in, but nonetheless. Yeah. All really impressive in their own right.
[00:30:36] Corey Quinn: That's awesome. So, I know that Todd talks about this concept of a second bite of the apple. Yeah. My understanding is that you chose to roll forward a significant part of your equity and your business into PowerDigital. Can you talk about that, what that decision was like and the reasons why you chose that versus more of a cash out type of approach?
[00:30:54] Ned MacPherson: Yeah, I mean, mainly reason number 1 is just, I really believe in and, you know, thus far, the thesis is absolutely happening in powers growth, right? I mean, power is a really respected agency and you can see why if you worked with us for just, you know, 1 day, you'll see why. I mean, the professionalism is, um, is is really impressive within this organization across all the different verticals.
[00:31:15] Ned MacPherson: So I. Wanted to invest into the future growth. I really, really feel strongly about our private equity partner as well as well and their vision for the company. And so that was really the primary reason. 2nd reason to it is I felt it was a great alignment of incentives where. It keeps me pushing just as hard as I was as the sole owner as an example of the agency is now being, you know, I guess 1 of the owners on the on the cap table.
[00:31:40] Ned MacPherson: Right? In terms of, you know, it's my single largest investment by a long shot. As you can imagine, you know, it's a pretty hefty 8 figure investment. So, you know, that ability to affect the outcome of that. Right? Every day is really important for me. Right? And it kind of. Lights of fire under me every day.
[00:31:57] Ned MacPherson: And then lastly, just, you know, call for what it's, you know, the deal was, um, that was offered was structured in a way and was large enough that I didn't need to take more cash than we did just candidly at the stage of life. Being at, right. It just obviously made a massive impact and changed everything.
[00:32:13] Ned MacPherson: And, you know, it just made a lot of sense, right? I think all incentives were, were highly aligned there and candid power wanted the same thing. I think they wanted someone who was hungry and willing to roll forward and believe in them and their vision and was willing to put their money where their mouth was, and in this case, literally invest by rolling forward a substantial chunk of that offer, which yeah, was, you know, was, was 50%, so
[00:32:35] Corey Quinn: beautiful.
[00:32:36] Corey Quinn: All right. Well, I got, uh, Two, two final questions here for you, Ned. So first one would be, what would be your party advice when it comes to agency owners who are thinking about selling?
[00:32:49] Ned MacPherson: Yeah.
[00:32:50] Corey Quinn: What would you say to them?
[00:32:51] Ned MacPherson: It's a big question. It's a big consideration to make. The first thing I'd say, and this is not going to probably be new information, is it's all going to come down to who you identify as your, your partner, whether that's a PE firm that's going to back you as a.
[00:33:04] Ned MacPherson: You know, it's like the primary platform, or if you're going to be a roll up or a bolt on or whatever, it's going to be. You know, everyone says it, but like the culture of the acquiring organization is everything because that honeymoon stage is going to end real quick after the acquisitions over and then it's back to work.
[00:33:20] Ned MacPherson: And you've got to make sure not only you, but your team is going to vibe and work well with them, or otherwise it's not going to go well for any of you. So that's really the most important power. And my team have just a tremendous cultural and it was obvious right away. And it still is obvious. 2nd thing that I would look at is.
[00:33:37] Ned MacPherson: Start getting your ducks aligned now, meaning you've got to be wildly transparent. Do not, I mean, shade anything. Do not hide anything. Be ultra. High disclosure because you will shoot yourself in the foot. I mean, the due diligence is, is like, is like a colonoscopy. I mean, they're gonna find if there's any skeleton, they're gonna find it.
[00:33:57] Ned MacPherson: And so be very transport apparent from the get go and start getting all of your reporting and all of your metrics. As an example, measure every single client you've lost over the years and won and have an explanation, a paragraph for every single one. Why? Why did you win them? Where did they come from?
[00:34:13] Ned MacPherson: Who were they referred by? Why did they only last 12 months versus 10? I'm sorry, versus 24. Why did they last 10 months versus 12 every employee you acquire? Why did you? What was the thesis around hiring them? Right? Why did they leave if they did leave? Right? You need to have all of that buttoned up.
[00:34:29] Ned MacPherson: Obviously, my financial reporting was really tight. I could explain where every dollar went and why you want to get on that because if you can't answer that, that's going to ding you when it comes down to valuations and things like that. And then lastly, would just be personal, you know, Keep in mind that like, yeah, these numbers are big, but at the end of the day, you've got to take into consideration, you know, a lot of times people will hear about these, you know, big deck a million dollar offers that get thrown out and what have you.
[00:34:52] Ned MacPherson: And it's like, that's like changing money. It's like, true. Are you the only one on the cap table? If so, it's like, what is your infrastructure look like? Because there's going to be an indemnity hold back. They're going to ask to withhold money from the sale for one or two years to make sure everything you said was true, right?
[00:35:08] Ned MacPherson: That might be in the millions. There's going to be likely a networking capital adjustment. These are all things you need to be prepared for. You're going to have to pay bankers. You're going to have to pay lawyers. In our case, we had representation here in the United States and internationally because we have a lot of international folk on the team.
[00:35:23] Ned MacPherson: So we had two different law firms that we were racking up charges with, right? And then it's just, it's just, there's a lot to consider there. So just be really cognizant as to like, you personally, whoever's watching this, what do you want to exit with? Like, what's good for you and your family? And get realistic about what that number is because whatever they offer you, it's going to be a fraction of that.
[00:35:42] Ned MacPherson: They're going to ask you to roll forward. You know, you're going to have earnouts, all these things, so that big number is going to get chopped down and you'll get it back over time, but you've got to make sure you're super clear with that. And last thing I'll say to that is, is to that point, there was a number of events like instances throughout my process where there's something happened.
[00:36:00] Ned MacPherson: I'd be like, what? Like, I didn't know that in candidly. Every time it was not because they were, you know, PE was trying to get one over on me. It was my ignorance. I just didn't know the process. Now I know it much better. So educate yourself on those things and just be prepared for what reality actually is when you exit a company.
[00:36:19] Corey Quinn: So love all that culture is stood out to me because I came from an agency, a large agency where culture was extremely important as well. If you, considering being acquired by, let's say another agency, any tips or ideas beyond the obvious, uh, you know, how to, really get a sense of the culture. Like, how do you test for that?
[00:36:40] Ned MacPherson: Yeah, I think it starts with whoever their CEO slash founder are, right? I mean, as an example, in my process, we had three larger agencies that were all bidding for us pretty aggressively. And only one of them, the original founder and chairman, who was at the time leading kind of the M& A process and their CEO.
[00:36:57] Ned MacPherson: Obviously it's power, right? Yeah, reach out to me and was like, what's your number? Like, let's stay in touch. Let's text You know, i'm a big golfer. They golf. They were like, did you play this weekend? How'd you shoot? I mean we just chatted even to the point where he's like, hey, man, i'm curious how you address this We're running into this challenge over your power.
[00:37:11] Ned MacPherson: How do you address it? Like we exchanged ideas You know what? I mean became friends if you will and so that's where it starts is Founder to founder. How do you all get along? Right? Second to that is I would strongly recommend is get your leadership team in front of their leadership team. Get some time together, you know, have them go out for coffee, lunch, dinner, drinks, I don't know, whatever, right?
[00:37:31] Ned MacPherson: Spend a little time together, fly your team out to them or vice versa, and just see how you all get along, right? Just, I mean, this is basic stuff, right? And then start to ask hard questions, right? How do they deal with an upset client? How do they deal with A client who wants to service expand, right? What are the fundamental principles and like ethos that they believe in?
[00:37:52] Ned MacPherson: And you'll be able to pick it up real quickly. Not all that dissimilar to like dating if there's heavy alignment there or not. And you know, just be very cognizant of it because anywhere there's not alignment is gonna, is gonna 10x after you join forces. It's gonna be a lot more obvious, so.
[00:38:09] Corey Quinn: Excellent.
[00:38:10] Corey Quinn: It's all super high value. One last question, Ed. What's your motivation?
[00:38:15] Ned MacPherson: My motivation? Geez, on a professional side, I really, you know, this is going to sound maybe a little arrogant to say, I really think we have the answers. You know, candidly brand brands out there want to scale. They want to scale profitably.
[00:38:27] Ned MacPherson: They want to win. They want to grow. And we've got the playbook to do it. Obviously, you know, done this on the post click side. Power is majorly got the playbook time to do it on the pre click side. Yeah, I just I mean, that's really it. It's like, I really feel like we have the answers. Brands would be. Far better off giving even more autonomy in our direction.
[00:38:45] Ned MacPherson: We've got so many clients, so many success stories and so much data over the years to see how these brands went from zero to hero, right? Some of them to billions of dollars in acquisition, and we've seen it and been along with a lot of them along the ride. And so it's like there's a wealth of knowledge here.
[00:38:59] Ned MacPherson: And so, yeah, it's, uh, I know it sounds a little, a little, uh, way to say, but like, I feel like we really do have the answers. Yeah.
[00:39:07] Corey Quinn: Well, that, that is awesome. Is it fair to say, considering, I'm curious, Ned, you mentioned part of your growth strategy was working with agencies, uh, as a bolt on. Are you still offering that as, you know, for agencies as a kind of a bolt on now that you're with PowerDigital or does that not make sense anymore?
[00:39:23] Ned MacPherson: We are, I'll be honest, agencies aren't quite as keen on it now, but we are. We do have, you know, basically with a couple of them, we've got like these. Like Chinese wall style agreements that basically forbid us from bidding any of their clients on services that they offer because most of them will be honest or like paid media agencies acquisition, right?
[00:39:44] Ned MacPherson: Or like email or like Amazon maintenance or something like that. So in those cases, yes, we certainly do. It's a little harder for them to get around to it versus when it was just Enron because we were just CRO, but we certainly still have it. And yeah,
[00:39:56] Corey Quinn: where can people reach out to you if they want to connect with you, if they have more questions, they want to just say hello.
[00:40:01] Corey Quinn: What's a good place for them to do that?
[00:40:02] Ned MacPherson: Yeah. I mean, speak true to my word. I live around my inbox. So just Ned at power digital. com. Right. That's an easy one. Or just find me on LinkedIn. That's another one. Uh, I'm not really active to be honest on any of the other socials. So one of those two is usually best, um, or even our website, you know, and rocks old site or power digital site.
[00:40:19] Corey Quinn: Beautiful. Thank you so much for joining Ed.
[00:40:22] Ned MacPherson: You bet. Thanks for having me.
[00:40:23] Corey Quinn: Thanks for tuning in to the deep specialization podcast. If you haven't checked out my bestselling book, anyone, not everyone, you can download the audio book for free right now by going to anyone, not everyone. com. That's anyone, not everyone.
[00:40:39] Corey Quinn: com. And finally, a special thank you to our sponsor E2M. We'll see you in the next episode.
