How Directive Consulting CEO Garrett Mehrguth grew Directive Consulting to $20M revenue and 150 customers in 2021.

hey folks my guest today is garrett mayor gut he's building a tool and a company called directconsulting.com it's the customer generation agency for sas he's running it as ceo it's an award-winning performance marketing agency for software companies headquartered out in irvine california launched in 2014 the company has had exp has expanded the team of 20 95 people across three global offices la new york city and london gareth you ready garrett you already take us to the top yeah man let's have some fun with you yeah yeah this is interesting so what got you into this were you sort of a you know top sales rep at one of these sas companies and left or how what got you into sas no man i never did anything with sas actually um i was selling five dollar social media calendars on fiverr um yeah honestly so i was selling 500 social media calendars and then i got my first client was like a uh shawarma shop and i helped them out i was like i didn't know anything about search or digital yet i was mostly just doing like yelp and facebook pages and then from there essentially i just tried to do my best i came back to get paid on the 30th day he said come back tomorrow and the whole place was boarded up so that was our very first client and then i got a hookah shop did their seo so he asked me i did a website he's like hey can you do seo i was like i've never done it before i'll figure it out i ranked number one for everything in a couple of months and then from there i just kind of kept plugging brought my best friend along um what year was that how was probably 2014 2014. and guys i don't want to bury the lead i want you to you know stop the episode now the reason i brought garrett on is because he's now working with some of the you know the brand name sas companies whether it's sendoso or post ipo companies like blackline even folks like build.com obviously you guys heard alex bean come on from divi right before build.com bought those guys sumo logic we're gonna dive into all of that today so garrett fast forward to today how are you helping somebody like you know zach lee or sendos or zominfo yeah so there's a big problem we're trying to solve in the market that every marketing leader is getting their butt kicked by which is most sas organizations exist today because they saw they solve a specific problem in a specific niche and search which is the default i have a hundred grand i'm gonna spend it let's go to google ads is somehow this like default mentality but the problem with google ads is it has intent but not firmographics and so what happens is it's very difficult to scale while controlling your lifecycle stages down funnel and so what happens is people try to go to linkedin but then the problem with linkedin is it has firmware graphics but it doesn't have intent and so we developed our own methodology here called customer generation which is essentially looking to build upon the promise demand jen forgot about which is how do i actually increase revenue and so we help organizations move from mqls as like the sign posting to sqls so that everything we do is filtered through sales and then essentially deleted the go to market function that the playbook everybody uses on linkedin so the playbook on linkedin let's say if yourbill.com is like the ultimate guide to ap software decreasing accounts receivable or whatever that is right like they have this guide and then you do lead gen right like you download an asset and then you try to send it to an sdr and the sdr hates your guts because they call them and they've never read the asset before and the timing's not right and so what we figured out how to do is how do you get people to commit to a sales meeting directly from linkedin at scale and that can completely change your pipeline amongst a bunch of other tactics so let's start with like results and then work back to like how you got some of these results like via case study everyone knows sendoso really really well right they just did a big round they're basically you know corporates and really the leading corporate sort of sending program whether that's gifts or things like that can you talk about the results you drove for them and then backfill how you did it or at least tease us a little bit no i mean every account's different because some clients are going to want to do certain tactics they're not so it's not that there's like a universal playbook you can apply right it's like we have zoom info as well right so like all the kind of the top marketing softwares you think about they're either in our pipeline or or they're clients of ours um amongst other industries right a lot of cyber security a lot frankly everywhere i think we have about 125 accounts and they all are you know over 100 employees 25 plus million in funding okay so if someone's listening right now under 100 employees you're probably not going to be the right fit they need 100 million in funding and more than 100 employees 25 million in funding so we do help like series a type companies but they're usually let's say um the it companies if you know what i'm talking about like they usually have a little bit more funding they have a little bit more maturity in their marketing organization but the results wise i can just use myself as a case study i think it's more appropriate because i actually do this for myself i think if you're going to hire an agency you should hire someone who can do it for themselves can we here so i really i so i just i disagree with you there i really wanted this episode valuable for software founders listening and if you give an example of how a software company works with you they will take then they will learn from it even if they don't ever pay you for anything can we can we use a software company as an example yeah i'll use this like a metaphorical one so the the with software the way we like to look at is kind of short term and long long-term at the same time and so most software companies have actually a blessing in review sites and so most of companies have to try to grind out for years to kind of become number one or number two or number three in their category but what review sites let you do and what most people don't realize is you can essentially pay to be number one and so what we help do is we help to look at it holistically because the buying journey requires multiple a lot of times these sas companies buying center so you have to figure out how do you get someone from apathy to action so on linkedin we're running convo ads on review sites for positioning what's a convo what's a convo ad yeah so a combo ad is a new ad unit on linkedin and so convo ads are really really special you can only send a a linkedin user can only receive one ad every 30 days now the problem with combo ads is they recommend the default bids to be like 30 cents and so a lot of people send them but they never get received because they get outbid we don't ever do a bid for less than five dollars for example because it's this valuable real estate and it's about 70 cheaper than sponsored content it functions like a lead gen ad but the key to this is gift cards so what we help people do is use gift cards with a full ltd cac model and then base that off of opportunities or deals to drive revenue so let's say we're working with sendozo and actually ironically sending gift cards with their platform yeah the the goal here is to look at all your channels in the ltd cac model you take an account your gross margin retention rate of customers churn all your kpis and you actually build out your life cycle stages and you can start to answer the question hey if i raised another 10 100 million dollars in funding where would i allocate it and so we help our clients get really good with capital allocation and then within the actual convo ad we're writing the copy and then using gift cards to get people to a meeting and then we're using tools like chili piper to get it to be scheduled so you decrease your no-show rates and we're essentially helping them drive pipeline whether it's through convo ads organic or even let's say google ads gara let's stay on this real quick the client is sendoso they're paying you to help them get leads give me the copy let's say i was one of the target audiences i was a head of hr at a big company that sendoso wants to get me to send gifts out right to my employees right so i'm a target customer what might you put like what's the actual text of that combo ad that you might send me and what's the gift card size yeah so we've tested millions of dollars of gift cards um the most effective price point is a hundred bucks i don't use a hundred dollars because it doesn't i like everything we do to be shockingly memorable so the copy would go like this hi nathan 29 minutes 105 gift cards and gift giving technology you've never dreamed as possible that's the hook and then we help brands like x y and z deliver gifts and delight in a new modern era take 29 minutes pop on a call with one of our team members at the end of the call we're going to send you 105 gift cards sound good and then it goes into conditional logic and so the way a combo ad works it uses like yes no and so let's say and so we can qualify him still so we'll say hey do you manage gift giving at your organization let's say yes or no and if they say yes we can put them into our sales funnel if they say no we can put them into like a slack community or some type of bridge where they can still interact with the brand even though they're not ready to buy that's interesting give us a couple more examples let's say you're doing this for bill.com what white what might their copy say you could do the same thing man it doesn't have to be well well well no it's 29 minutes is 105 gift card but but you just said do you leave corporate gifting right that's obviously sendo specific what would like a billspecific.com sound like do you manage arap or something like that so you're just taking it into that value prop now the bigger mistake is actually not the copy you can play with and get better at there's a bigger issue of what happens at sas organizations when they go to market they're not disciplined and what i mean by that is i can't tell you how many organizations let's just say honestly frankly like 99 of them have too small of a budget for amount of verticals and personas they're trying to target it's like the number one plague that's killing them and so essentially what they do is let's say they have a 50 000 a month to spend they'll then want to spread that out across healthcare government whatever those industries are right let's say five industries and then we all have this lie that we've been told that we need to market to decision makers and that's bs so the biggest problem in sas is they all think the c level and the v level is how you market digitally and it's actually not true i have a saying that i believe the champion is more important than the decision maker so what we help our clients do is we'll go through their client list we'll work with their finance organization their sales organization and we'll start to pull out which vertical has the highest close rate which vertical has the best gross margin which vertical is the largest ltv cool can i go through your clients and see who your point of contact is in all those engagements and then i'll enrich it with their title now all of a sudden i've started to get who's truly there your persona because it's never what the marketing and sales org thinks it's always you know we sell the seeds like bill.com they would always sell the cfo the truth is you're you're you're your person is actually the accounting manager it's not the cfo but everybody that's valuable give a couple more examples of that so who did sandozo think they were selling to and who did you discover they're actually selling to oh i don't know that one to be honest i mean what about sumo logic so i don't know i mean i've got like 150 employees man i don't run the campaigns personally all the time i mean can you give can you give one or two other examples of sas companies yeah so like let's say uh zoom info like you might think at zoom info that maybe um the sales org buys it but you might find that a lot of your buyers could actually be the it org because they're the ones actually doing the data mining so another way you can figure this out if you're an organization is you can use the linkedin pixel and so what the linkedin pixel does is you can put that on the footer of your website even if you're not running ads and you can set up your event tracking and you can start to understand which personas and titles and functions are actually buying from you it's another way to do it but my favorite way is just going through your client list and then trying to identify who your point of contact is and then it's a lot easier to buy okay tell me more about you as a founder how do you make money doing this what do brands pay you to run this um you know we we have pretty decent rates i'd say right now we're about a percent of spence was like let's say 15 to spend okay um but you know average engagement you know it's probably 150 grand plus over what period of time one year we only do annual engagements just like our clients okay excited so 150 k which means we have to multiply that times what times six right because that's basically fifteen percent of whatever the total spend is no i mean that just depends i mean a lot of our clients are spending two million a month so i mean so you count that it's not always it's not always fifteen percent then of spend it'll go down yeah like the more you spend with us it'll go down just depending on the engagement the channels like are we running connected tv for you are we running programmatic are you in a mia in apac like there's a lot that goes into it i would just say like 150 is like our low end slash average to be honest and and how many customers are you like did you work with i guess last year in all of 2020 right around like probably 150 and is that sort of a max you can you know you don't want to go more than that you deluded and less than that you have to fire people no i mean we have a really strong people ops function here so you know we got a lot of recruiters i'm essentially a people business right like my product is my people so i've got a lot of investment in learning and development and recruiting people operations we also have our own product function here so how do you like standardize deliverable because if you go get a world-class strategist from another organization they might be super talented but like we don't use third-party data when we advertise and everyone else in the world does so there's nuance to how we go to market like we have a genuinely different approach so like 99.9 of people who advertise on linkedin use the industries to target you know what i'm talking about when you're running a linkedin ad it's like industry computer software what i've found is 50 of that data is incorrect and so most of our clients come to us and i would argue almost 50 percent of their budget is wasted pre-impression yeah just wrong targeting yeah it's really important to get that right um [Music] i want to focus more i want to get so we got like the user story how you're helping questions i want to dig more though you as the founder so you got this one in 2014 you go from hookah shop you end up with like sumo logic and sendo so there's a lot of journey happening in between there um i guess so 2014 take me through when was your first million dollar year do you remember that year um i'm not a huge money guy but i'd probably say like 2016 2017. okay cool and what did that feel like as a founder was that a big moment for you have you done this many times before oh no i just started this straight out of school man i've never done really anything i had like five jobs i was like so what that must would take us in your head 2016 2017 how do you feel motivated i don't know man i'm not like i'm not nearly where i want to be so i'm like a pretty driven dude so i i still work you know all day every day to be honest like for eight years straight like i mean i tore my achilles twice and i'll go to work the same day after surgery i'll go and lead the exact team like i'm not one of those like people who like my whole thing is i'm here to become a better man and individual and leader um you know like if i wanted to go make a bunch of money i could probably just go to independent consulting and charge a bag of money to whoever i wanted to so to me it's not really all money related it's more like culture and leadership related so like i'm more proud that like knowing that my organization makes less than seventy thousand dollars you know we have 100 health care we have really really really strong values that are fully integrated to the rest of the organization to me the money is just a signpost it means you're doing well the problem is a lot of people in the agency world they like to make their blog they like to make their brand about how successful they are but like the money you make as an agency is indifferent from the results you drive for clients and they're usually not correlated because the quickest way to make money in the agency is you just kill your people essentially you just increase your capacity but that creates burnout you have poor retention how many people do you have today full time i think we're like 135 yeah like but i think i've hired 150 people in the last six months i mean it's pretty like wait sorry i'm confused you're at 135 full-time right now but you hired 150 in the past 12 months because you have like churn you don't get to keep everybody unfortunately i wish we could oh interesting that's a lot of turn though uh how many 150 minus 15 i don't know you said four you have 450 right now no i only have 135 and i've hired like 150 in the last one you so basically the whole team has churned in the past six months 15 people 150 minus 135 i'm so confused you've hired 150 people in the past six months and today you have 135 so you you hired your whole team in the past six months a lot of it yeah oh you've exploded yeah okay that okay yeah so i'm just missing part of the story here got it so you were you how many people did you have in uh 2019 40 35. okay got it got it got it got it okay there's been a lot of growth in the past 12 months yeah in the last since uh march i see okay what happened post covet everyone everyone has budget now oh yeah kobe was tough i was about like 60 to 75 people in 2019 2020 and then we downsized in kovid um right in the beginning but then we held really strong we grew about one percent last year and then this year rough geez i have no idea insane number um mostly because like i was saying our methodology is different um everybody's getting their butt kicked on linkedin and they can't scale on google ads like genuinely it's a really really bad problem because everybody's doing on linkedin they're still slinging asset downloads and then they're trying to send like mqls to sdrs yeah i i want to keep focusing because we get it i mean everyone listening understands like they're wasting money on linkedin and you have a better way so i get that but so you scale down to 45 during code you're scaled back up to 135 today will you guys be profitable this year are you breaking and you're gonna reinvest everything back in the business no so like i usually run us like a little leaner on purpose because um we spend so much on sales and marketing uh you know i think that's what's kind of cool like i don't know in my world like agencies don't actually spend on advertising despite that's what they're supposed to be good at yeah so um for us we reinvest almost all of it but like we're kind of starting to go into that next phase uh where we have to kind of prepare to have the right trailing 12 months the right trailing 24 months of ebitda and so you know for us we are profitable and we have a really nice business model it just depends on how aggressive i'm pursuing top line revenue and that also depends on our capacity our recruiting function the job market's hell right now to be honest like it's really really difficult and so most of what we're doing right now is building for 2022 and then re-staffing and reorganizing because we scale so fast got it that's not like you know that that makes sense we're running out of time but just so just be clear 135 people and you said everyone makes more than 70k and you're profitable so 70k times 135 is about 9 million bucks in revenue is it fair to say you're doing more than that yeah definitely okay and what do you think you'll break in 2022 oh i don't share revenue man to be completely honest with you but um you just did right so you're above your above nine million bucks in revenue because you told team size and 70k is minimum yeah i don't really share numbers man sorry okay well you shared a bunch of numbers so what what i'm totally fine not and not asking you things that you're not comfortable sharing but you just shared sort of more than 9 million bucks in revenue what is your growth target for next year are you trying to grow 100 year over year you want to stay flat and stay consistent well right now we're doing about we're trying to grow 10 month over month so i try to use month over month because the cool part about using relative numbers when you think about okr setting is your team can always reset so most people set goals in quarterly functions and they use absolutes so we want to get x amount of revenue this quarter now the problem is if you have a bad month to start the quarter you have to reset and nobody and then it's like you're losing so then you spend the next two months where you're culturing the growth and the organization how your team's approaching it goes down so what i like to use is relative numbers because even if you missed let's say in july you only grew eight percent actually it's easier in august to grow 10 because you actually like it has diminishing marginal returns yeah so got it yeah and so just to be clear though um i mean when you said you had 150 customers earlier that the average pays 150 grand a year that would be 22 million dollars in revenue uh does it do people come in for lower than 150k per year not much lower um okay okay okay so okay got it so 10 came out that'd be like 120. so i mean you guys are doing more than 20 million bucks a year than in revenue right now i mean you could some people could argue that yeah yeah well i mean i'm just i'm multiplying your numbers if the average customer pays 10 grand a month and you you say 150 customers i can multiply those right yes you can okay cool well congratulations that's great um you've done all this bootstrapped or you raised no i didn't bootstrap i never put any money into the business i'm like i come from like blue collar like both me and my partner so now yeah we don't have any money we don't have any parents with money we don't have any experience we just work hard i love that working hard is good let's rapture with the famous five garrett number one favorite business book ooh i like good to great number two is there a ceo you're following or studying um i always find what elon does with pr interesting is there a strategy there or is it off the top i think accenture's like i think he knows how to move public markets with his personality yeah yep number three what's your favorite online tool for building a business oh i like fathom nobody really talks about that one fathom is pretty cool so like i still run a lot of our finances actually just because like i'm like hiring for a new head of finance so i like fathom it helps like i've been using it for about six seven years you can start to model out like hey if i wanted to get my gross margin to 65 percent what do i have to do with my variable cost or my price right now you can start to model out scenario planning um in a really easy way and they do a good job educating you if you're not a finance person um my background is economics so i kind of enjoy modeling and things like that um but yeah i love fathom it's a pretty cool tool number four how many hours of sleep to eat every night like i don't know i was about like 8 30 last night i woke up at seven so a lot okay that's good yeah and what's your situation married single kiddos uh married a family of i got 202 and i got a third on the way two under two and a third on those so three wow okay two and a half like i guess yeah yeah busy guy how old are you garrett uh just turned thirty thirty all right last question something you wishing you when you were 20. everything you don't know anything when you're 20. i still know anything um i would probably just say like industry you choose none of that really matters just go do it longer and work harder than everybody else like if you do that you can make more money and be more successful whatever you kind of use as your signpost so like me i never really tripped on what i got into i just kind of keep working hard and kind of go from there and just enjoy yourself like everybody worries too much you know guys director of consulting launch back in 2014 started with seo at a hookah shop and now over 135 folks on the team took a bit of a hit during kobe he went down to 45 folks but hired a bunch over the past 12 months lots of growth now working with 150 brands many of them the big sas brands you guys know sendoso sumo logic zoom info etc folks can get started at ten thousand bucks uh per month so 120 thousand bucks in acb doing well over 10 million bucks in revenue as he looks to scale 10 month over month garrett thanks for taking us to the top thanks david one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathanlacka.com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya