In this episode, we dive deep into the world of service-based businesses with Eli Rubel, an incredible entrepreneur and founder of multiple thriving agencies, including No Boring Design and Mattermade. Since 2020, Eli has generated an impressive $9.8 million in profit with his service-based businesses, proving that you don't need VC funding or a revolutionary idea to build a highly profitable company.
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Eli:
So I have a very simple framework for this. Whenever I get to capacity, I increase my prices. The rule is I have to increase the prices to something I think no one will say yes to. It's as simple as that. So it's like, okay, our price is $1,000 a month. We're at capacity now. I'm going to increase it to, there's no fucking way someone would pay us $2,000 a month. That's double what we're charging. It's the same service for double what we're charging. That doesn't make sense. And the beautiful thing here is it doesn't hurt you if you're losing business because of this new price point. And almost always, without fail, over the course of the 30, 60, 90 days, it takes you to build up that capacity. you've started closing deals at that new price point. And then you're like, well, shit, that's our new price. That's our new floor.
Andy: Today, my guest is Eli Rubel, who's an incredible entrepreneur and founder who has built multiple thriving agencies, including No Boring Design, a design agency, and Mattermade, which is a performance marketing agency. Now, since 2020, Eli has generated an impressive 9.8 million in profit. Yes, y'all profit with his service based businesses, proving that you don't need VC or a revolutionary idea to build a highly profitable company. Now, what fascinates me about Eli is his practical, no nonsense approach to billing service businesses. So he's not just another agency founder. He's actually someone who systematically figured out how to create and scale profitable service companies by focusing on One, great operations, and two, smart pricing strategies. His journey from running a performance marketing agency charging $45,000 per month to building a design agency with a more accessible price point offers crazy awesome insights into these different business models. So in this episode, we're going to deep dive into Eli's experience building multiple successful agencies, explore his unique perspectives on pricing, labor arbitrage, and how to balance growth with profitability. Now, Eli has some really compelling insights on why you don't need a revolutionary idea to build a million dollar service business and how focusing on delighting your customers can be your best growth strategy. Now, whether you're thinking about starting a service business, running an agency, or just interested in building profitable companies, I can guarantee that you're going to walk away from this conversation with practical stuff that you can apply to your own work. Now, as always, if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It is the best way to avoid missing future episodes and help the podcast tremendously. So with that, I bring you Eli. Eli, what is up, my man? How are you doing?
Eli: How's it going, dude? I love your setup. Good, dude.
Andy: Good, Lil. You got the sick background going. Look at that. Dude, I just have your LinkedIn pull up, and I'm like, LP at Anderson Horowitz, Lightspeed, Tribe Capital, you know, GTM Fun. I'm like, you're like the Dos Equis man of sass, dude. This is what I'm thinking.
Eli: You know what? I don't think I deserve that title, but I sure will take it.
Andy: The most interesting man in sass, dude, this is crazy. So like, okay, dude, I have to ask you, like calm, great app. I see calm and I'm feeling like meditative just looking at it. But yeah, dude. So marketing advisor, a lot of these companies that are just like sweet logos, LPs at these sweet funds, like, what's the strategy here? I know you posted a little bit about this, like, online and you're like, Hey, I'm going to be an LP in these companies. And that's going to bring me business was kind of the idea. Like, am I wrong there?
Eli: Is that is that what's going on here? Yeah, no, that was that was the original game plan, right? I was like, Okay, all of all of the companies we like working with are backed by these shiny tech VCs. Yeah, the looms, the Dropbox, the comms of the world. And You know, how do we get into them? How do we build our referral machine? And so I wanted to work it from two angles. I wanted to work it from. Uh, as an investor, as an LP in these funds, which per my post ended up not working out at all or not as expected. And then, you know, the normal route of just doing great work and getting referrals within the portfolios. So, uh, turns out just doing great work and is, uh, is the, the way to go. And, but yeah.
Andy: Great work. So if someone was starting a new service business, because for people listening, and I know, dude, we just jumped right into it. That's usually how it goes. So because I like to make it conversational. And I always tell people like, other pods, people will be like, Oh, let's chat. And then they'll be like, Alright, we're gonna hit record. Now you're ready to go. And then like, their personality just totally changes, you know, so I'm like, avoid that at all costs. Yeah, just just have a combo here. Okay, so It actually didn't work right. Like as well as you thought it was going to be.
Eli: Yeah. I invested about a little over a million dollars in various funds. And I mean, part of the motivation was like, get good alts exposure, right? Uh, you know, diversify the portfolio on the investment side, but on the, Hey, I'm going to get intros to founders through their investors. That totally fell flat on its face. Uh, we only would get those intros if we had already worked with someone in the portfolio and we're vouched for or just like they were presenting the work to the board and the board took interest and then that would spin things up. But yeah, the LP investments never proved fruitful on the lead gen side.
Andy: And that's super interesting because you always think that it would, right? Theoretically.
Eli: It's logical, right? It makes sense.
Andy: Yeah. Yeah, it's logical. It's like, Oh, if I'm like in there, there'll be, there'll just be like, Oh, we have a designer in our LP. That's an LP that you should like go chat with. Right. Like it seems super logical.
Eli: Yeah. I think the learning there in reflecting is like, I am such a small, small, insignificant investor to those funds. Like they don't know who I am. They have probably never even seen my name. Like some person who is aggregating, you know, a bunch of LPs together. They, they saw my name and they probably still don't like it. There's no recollection there for them and no connection. Whereas some of the smaller firms that I've made investments with like GTM fund or newer to the scene. I do have a lot more exposure there and they do know my name. And so I, I think if I were to do it all again, or if there are folks listening who are thinking about rolling some sort of strategy like this, um, I think the way that it does work is you find funds that are emerging where you're one of their first checks in to, you know, fund one fund to fund three, something like that. And there you do get attention. They know who you are and they can plug you in when it makes sense.
Andy: Yeah. Interesting. So go for the smaller funds where you're kind of like, you know, they're not inundated with a gajillion dollars, right? They don't have a hundred billion million dollars.
Eli: Yeah. If they're raising money from endowments already, it's you're too late.
Andy: Okay. There's the rule though. None from endowment. All right. So I love your LinkedIn headline, dude, which is 9.8 million in profit since 2020 art school dropout building in the open. Dude, 9.8 million in profit since 2020. I have two things I wanna get into, which is one, I think let's talk about service-based businesses and like getting in the weeds here, because I think these type of businesses are like, if you wanna make money more quicker than building a SaaS, do a service business, right? And so I'm kind of thinking of like, I have this theory of, you know, I think the future of SaaS is like half service half SaaS businesses, right, which is like you use in again, like you have your SaaS and let me give you an example. distribute, we help create digital sales rooms. Basically what that means is you have like notion like pages in our system and you can create content based on call transcripts. So, hey, I want a business case. Great. Let's use all the calls you've had with this account and then create a business case for you automatically using AI, you know, and talk about ROI and all that stuff based on your calls with these people automatically. So that's what we do. Love it. you know, what I'm noticing is that we have some customers are like, Hey, can you create us like a business case template? Or you can you create us like a piece of content for this that all of our reps can share with customers and all this stuff. And I'm like, interesting. There might be like a service based component to this business, right? And so I started asking around and we had was seen from pilot.com. Founder of pilot and he's big on this too. It's like a service based SAS, right? Where they do accounting for companies and they have the people kind of work aspect of doing the accounting, but then they have the software that goes along with it as well that they charge for. Yep. Um, and so I'm starting to see this more and more. Right. And I don't know if you've come across this and this is a whole separate topic from building just a straight service business, but, um, I don't know, like, where's, have you seen that happening as a trend or, you know, where, where's that coming? Cause you're helping design a bunch of stuff these days. Right. So I would be curious.
Eli: Yeah. And you know, where my, my, where my mind goes when I think about that is there's an opportunity for some entrepreneur to build. This is going to be a little meta, build a services business that helps startups or, you know, emerging tech companies who know that they need some services arm, but it's like secondary to their main focus of growing MRR with the product revenue. They know that services revenue isn't going to really count as much towards their valuation if any. So it's like a necessary evil. Cause they need to support their customers, whatever. I've never talked to, never I've, I, most of the time when I talk to people who are in that position that you just described, they're kind of begrudgingly standing up the services arm. It's not something that they're really like excited about. They just need to do it. And so I think there's this meta option opportunity for someone who really understands how to build and scale services, businesses to create an agency that works with these companies to. operate, like stand up and operate their services arms. So it's like services, service arm done for you kind of thing. Like people hire podcasting agencies to podcasting done for you. But like, what if you could do that with your service? It would be, it would be a hard business, but I think if you could do it right, that would be a huge, huge business to run.
Andy: Yeah. And then how would you think those people would be compensated? Would they be like, you know, a percentage of the, of the total, like, you know, revenue from the services or what do you think?
Eli: What would be the best way to do that? That's another area that it could be pretty cool where it's like two things. You could set it up so that they're carrying all the costs. Yeah. Like they're going to pay, they're going to pay all the salaries. The people are going to be employed by them. You're just going to orchestrate it all. So you're almost like a, like a recruiting and operations excellence division and you have a couple of like really key senior people that you do pay for, but everyone else, the costs are covered by the, by the software companies. And then you, yeah, you just take like, Hey, we're going to take 30%, 30, 35% of whatever we generate, because Hey, at the end of the day, you don't actually care that much about this revenue. It's nice, but it's not like, it's not your core goal. You really just care about delighting your customers, having an ecosystem where they're supported. I think, I think founders would buy into that.
Andy: Dude, I I'm sold already. Yeah, I'm so like, that's I think it's great. Um, you know, for a few reasons, just because like, it is a necessary evil, right? It's if you have investors, like my investor, and most investors there, if you're building a SaaS, they don't, I don't want to say don't care, but like, I'll tell you one investor of mine that I was talking to for distribute was like, Oh, I was like, Hey, we might need to build this services arm. And like, not implementation of the SAS, but like services after we implement them where we're helping them build content, almost like a content agency in a way. Right. And they're like, every, every investor I talked to was like, no, because you're not a services business. You know, like, that's not what we're investing in. We're investing for you to be a tech business. So even investors of companies are like, we don't want you focusing on that, right? Like focus on the technology and the AI and all the fun, juicy stuff today, whatever. And so even them, I think they would like be like, keen on that, because they're like, hey, if you could use it to use revenue, to support salaries, and you know, fund the business and great because and become profitable, you know, because that's the mo today, then great. So dude, why don't you start it?
Eli: Eli, why don't you start this, man? You know, I'm getting hyped up on it, as we're just talking about it. I do think it's a good idea. It would be a challenging business.
Andy: Lots of moving parts, right? Definitely. Right. Especially when it's not like an area you're a pro in, um, you're a pro in design yourself, right? Like design, I think in ads is, is what you do too. You have a, you have two firms, one that does design and one that does ads, right?
Eli: So, yeah. So we have the paid media agency matter made to performance marketing for like mid market and above. Um, and then we have the, we do ads and brands, right? for the design agency, no boring design.
Andy: Nice. Nice. Okay. Interesting. Okay. So let's get into the, let's talk about building a services business. Cause you're the man when it comes to this, obviously you've had about 10 million profits since you're on 20. That's profit EBITDA is what I'm guessing that is. Right. And so if you've had 10 million in profit, that means you've done. I don't want to know 30, 40 million in revenues. Maybe 20. I don't know. Is that a number you're willing to share or no?
Eli: So I would have to like look back. So, okay. We're about to jump up on a, I'm going to jump up on a soapbox here because one of my pet peeves, like I don't know about you, but I'm in some of these CEO groups and I fucking hate it when I hope I'm allowed to swear here. I really hate it. Oh yeah. You are a brother. Hell yeah. There we go. There we go. So I hate it when someone's like, Oh yeah, my business did 5 million this year. And I'm like, Oh dope. Like that's a hell of a lot of EBITDA. Good job. Congratulations. That's huge. And they're like, no, no, that's top line revenue. Like motherfucker, you, your business didn't do $5 million, $5 million of invoices. Like the actual success of your business is the bottom line, not the top line, unless you're in software where it's different and valuations are weighted differently. But in the services world, I, I just get so riled up when people anchor on like, they anchor their self-worth on. top line, you top line, as opposed to like, what did they actually get taxed on this year?
Andy: Yeah, Joel. Yeah, yeah. And that's football for service base. That's what's important, right? Because, you know, yeah, like, and I'm sure for Ecom, it's very similar. Maybe I'm making this up. And I don't know a ton about Ecom. But Ecom, you can do stupid revenue numbers. But the but, you know, 99% of it could have been ad spend that you had to spend to get those sales. Right. So it's kind of like, It's like, you know, so you see these Shopify charts and you're like, well, how much did you actually spend to get the 50 million in revenue? Right. You probably spent 49, you know, like, come on.
Eli: It's like, if you were to use a blue collar example, it's like construction companies, you know, they're like, Oh, we, we build, you know, it was, we're $45 million business. It's like, well, no. Yeah. You, you paid a bunch of subcontractors, a lot of money. And at the end of the day, you maybe made 3 million, which is still a great fucking business, but like, you're not a $45 million business. You're a $3 million business.
Andy: Yeah. Interesting. Okay. Now, no, this is good. This is good. No, I liked it. Well, let's get into building like a sick service business because, um, I've only done software, right? Like, well, I've done like my, I have like a course business as well, but like, uh, which I'm thinking about adding like a, a service business on, on the back end of that. Right. Um, you've probably seen that playbook, but, uh, again, just up in the air right now on this, but, um, When it comes to service business, what like, is it you just running this? I'm guessing not. You're not like a one man service business show. Are you?
Eli: No, no, no.
Andy: Okay, guy. Because there is that one design joy guy on Twitter that I see. Yeah, that it's just him. Yeah, Brett. It's just him, right? I'm sure he's great. But I'm like, dude, that's crazy that he can do that as a one man show. but you know, we can get into that. But for you, if you want to build a true service business, not a one man solopreneur thing, but like, like you have something to offer, which for you, let's talk about no boring design. Cause I think that's the, that's the one that I see a lot or hear about more. Um, so like, where do people start right with building the service business and like, what's kind of the playbook that you've seen work best?
Eli: Yeah. So, I mean, I think it all just like with software, it all starts with a hypothesis. You have to have some sort of, idea and conviction as to why you'd go and burn the midnight oil in the first place. And so with NBD, my starting hypothesis was this was 2021, 2020, going into 2022. So the tech market was freaking out. All the investors were telling their founders to stop spending money on any agencies. Um, fire as much of your team as you can while like, you know, trying not to look like an asshole and prepare for winter. Right. You probably remember those times in the market. And so I was thinking about it. I was like, okay, I would venture to guess that most tech companies that are calling like startup through series C probably just fired all or most of their designers. Because design at the end of the day is seen as a nice to have when they're just like going through a P and L and thinking about expenses and where they can cut relative to the business dying. Yeah, sure. Get rid of design. But then fast forward. So the hypothesis was these businesses give them three, six months. The CEO is going to come to marketing and be like, why are our campaigns not go like, what's the issue here? Why are these look bad? Why can't I get support here? And they're like, well, you fired your whole design team. but then there would still be a hiring freeze, right? There's no allowed to hire designers back. And so this was, this was the hypothesis was like, let's fill that void. Let's create a really flexible solution where companies can come to us. They can pay a monthly subscription price and we'll solve that whole category of them. That is, I need an ebook design. I need an ad design. I need a landing page design. I need, you know, whatever it is, production design. We can do that for you on a flexible monthly basis. So you don't have to commit like you're hiring an employee. It's, you can turn it on and off. And so that was the hypothesis that we started off with.
Andy: And so you start with a hypothesis and then, and then you say, okay, you're part of these LPs. And how did you go about, so your theory for getting customers was I'm going to be part of these LP funds, right? And we're kind of, we're, we're weaving now coming back to this, but, uh, you're coming back to it. You start this, you had this hypothesis. Now, how do you start getting customers like from your end?
Eli: Yeah. So by the time I started no boring design, I think I had backed off of believing that the LP thing was going to be fruitful in any way. So I knew I needed to come up with something from scratch. Uh, The, the nice thing about no brainer so matter made the performance marketing agency that I have. higher ticket, you know, $15,000 minimum to work with us. It used to be $45,000 in 2021 when everybody had a shit ton of money. And that's per month, right?
Andy: Oh, per month. It was 45. Oh my gosh.
Eli: Yeah. It was crazy. Those were good times. Yeah. Yeah. RIP. Um, but yeah, yeah. So like 15 K is our minimum. So I was like, I want something that's the exact opposite business model as a counterbalance that ballast. So with NBD, it was like, Let's have our starting price point be 3,500 a month. Like really, really affordable. It's a credit. It can be a credit card swipe. Um, low commitment as opposed to MatterMate's high commitment. So I just liked the idea of having opposing business models. And yeah, so that's, that's on like the pricing and packaging, which I think is a whole nother topic. That's super important in services world. And a lot of agencies are not profitable or not as profitable as they could be because they don't price and package well. Or they don't do like, they don't perform price sensitivity testing on a regular basis. There's all sorts of like little, uh, we could chase down a bunch of different topics here, but to go back to what you were talking about, how do you get your first customers? I was burnt out on being super reliant on referrals, which is how matter made had grown because you can't really control referrals, right? It's like, you can do good work, but you can't say this month we need to increase referrals by 15%. It's just not going to happen. It's you're kind of at the whim of, of customers. So I wanted to have a really diversified channel mix for No Boring Design. So when we first launched, I was reaching out to B2B influencers to do partnerships, paid partnerships, unpaid partnerships. I was standing up cold email and just going like, let's shotgun the whole market and see what it comes up with. Test it into different segments, test with different messaging. And I think in those early days, it's super important to be testing different messaging because it's just great to get that signal as quickly as possible. cold email, cold LinkedIn outreach, started getting more active on my own LinkedIn. So I'd say that those are kind of the general sources. We turned on paid media after a couple of months. Those were the general sources that we were focused on and brought in our first 10 customers with.
Andy: Nice, nice. And so you got in your first, so you kind of tried a bunch of different channels, cold email, LinkedIn outreach, you know, all that fun stuff. Now you're super active on LinkedIn. I see you posting all the time, dude. And which is good. And you're doing a lot of video stuff, which is good. So you got your first 10 customers. And I want to come back to the pricing and packaging because it sounds like there, there is some, uh, this is always like a living, breathing thing. Not only with SaaS, I feel I'm sure with services even more so. Right. So like you said, there's a lot of stuff to think about there. Like, let's get into it, man. Like what? How do you, how, let's talk about how you do price this. And then after we go into the pricing, and I'm sure we could spend an hour on this. I wanna like, so that people can take something away from this. I wanna get into like, what are some service-based opportunities that you see out there right now, right? Like get into some ideas here, but let's talk into the pricing and stuff and see like, you said you're at 3,500 and I'm sure you didn't just say, let's do 3,500, cool. Let's go. So, okay. Let's talk about it. Yeah. Let's get into it.
Eli: Yeah. So we'll start with price sensitivity testing. Cause I think this is the least utilized in the services world and provides the most upside as far as profit is concerned. So I'll take you back in time with MatterMade. Okay. Performance marketing agency. So MatterMade, we started out charging. Guess the number.
Andy: $45,000. $45,000. $3,500. $3,500 is my favorite starting number. Okay, you started at $3,500, but then you went all the way up to $45,000?
Eli: From 2019 to 2021, we walked our price from $3,500 a month to $45,000 a month by sensitivity testing. Dude.
Andy: Okay, dude, you have some cojones to do that, dude. I'm not going to lie to, to, to go from 3,500 to that much is insane. Okay.
Eli: Okay. And then with NBD and I'll explain how I do this in a second, uh, with NBD, the no boring design, the design agency, we started with, I think it was a thousand dollars a month was the starting price. And we've moved our average selling price up to 5,500 roughly per month now across our client base. So. Not, not crazy big numbers compared to matter made, but it's still a five X improvement over, and that's over a 18 month period.
Andy: Wow. Okay. So now I'm like, how, like how, what's the, how, right? Like how do you know what to charge?
Eli: Yeah. So I have a very simple framework for this. The framework is with a services business. You have a finite amount of bandwidth, right? Like your team can only handle so much before you're at capacity. So the first thing is you need to know what at capacity means for your business and it's going to be different for everyone. But whenever I get to capacity, I increase my prices. The rule is I have to increase the prices to something I think no one will say yes to or something that like it's going to turn off so many customers and I'm going to have to roll it back. And if it doesn't give me that gut reaction, then it's not high enough. So. It's as simple as that. So it's like, okay, our price is a thousand dollars a month. We're at capacity now. I'm going to increase it to, there's no fucking way someone would pay us $2,000 a month. That's double what we're charging. Like it's the same service for double what we're charging. That doesn't make sense. But you know what, that's our, that makes me uncomfortable. So that's going to be the price that we test. Right. So we put $2,000 into the market as the price. And the beautiful thing here is. it doesn't hurt you if you're losing business because of this new price point, because you don't have capacity to take on new clients anyway. And if you did, you'd start breaking your ship and your clients would get mad and things would go bad. Like you need some lead time to go higher and build the team so that you have more capacity to service new clients. And almost always without fail, over the course of the 30, 60, 90 days, it takes you to build up that capacity. You've started closing deals at that new price point. And then you're like, well, shit, that's our new price. That's our new floor. And then same thing. As soon as you get to capacity again, rinse and repeat. And that's a very simple framework I've used for both of these companies.
Andy: Yeah. I call it like the, I don't give a shit framework of getting your customer, right? Like we're going to raise this to 10 grand a month. If we don't get anyone, I don't give a shit. We're like, great. But then you start seeing like people come in and you're like, well, okay. Like it works, you know, um, that's interesting. I like that. I like that. And it's just really like, it removes a lot of the pressure, right. Of, and, and thought behind, like when, even with SAS, right, let's talk just pricing in general. I'm like, when you raise the price, you worry about what people are going to think. Right, exactly. Right. Are they gonna be like, Oh, shoot, like this guy's out of his mind, or these people are out of their mind or whatever. But then people start to pay it, and they'll pay the subscription. Like for us, we have a bottoms up and mostly top down as our, you know, we want to sell to businesses, but we have top down where you can sign up and PLG and pay your own and we increase the price from 49 to 99 double. And dude, like it hasn't changed how many people pay us on our conversion rate. It's like sticking to the same. We're like, Holy shit. Why weren't we charging 99 the whole time? You know? Um, and so it's good. I'm glad you told me this. Cause now I'm like, okay, no problem. Things are still happening. What if I increased the one 49, you know, like what's, what's going to happen. And so, um, you know, but with you, you're at capacity with SAS, the idea is you don't have capacity because you can, But yeah, it's a beautiful thing, right? You can just say, oh yeah, sure. More accounts, more accounts, more accounts. Pluses and minuses, obviously, right? But yeah, that's interesting, man. I like that. And for you, so you're stuck at no boring design at 3,500, or no, 5,500 currently.
Eli: Yeah, that's our ASP. So we have plans that scale below that and above that. But our average, if you average out the client base, is at 55, roughly.
Andy: Dang, that's crazy. And so you hit capacity in with the service business, you have getting new sales. And I think a lot of people are focused on that these days, like the gurus that I see is like, how do we get more sales on that, you know, whatever. But then the other important part that I think people don't talk a lot of is how do you make those clients happy as hell? Yes. Right. And, and in fulfillment is kind of the buzzword for it, right? Like how do you fulfill everything you have at a, at a, where you make every customer happy. So for you, how do you think about that? Right? Like from a, from a getting new customers to you, you know, to fulfilling everything and making sure they're all happy. Cause you don't want to just turn, get one in one out, one in one out, especially for service. I'm sure that's a bigger pain in the ass and every than anything, right?
Eli: Huge pain in the ass. And that's the thing that I loved so much about, the lower price point, higher customer base volume play of no boring design, because I can look at it and run it a lot more like a SAS business from a growth and servicing perspective. And the metrics are all very similar. And what I mean by that is, so this has been a, a lesson that I have taken too long to learn. Honestly, I, Because my first company was a SAS business and we're venture backed. And I started that company when I was like 20. I very much grew up in the school of business of just like growth at all costs. Let's fucking go smash, smash, smash.
Andy: Like whatever the stereotypical Valley top get as much revenue top line as you can, you know, whatever. Yeah.
Eli: And it's taken me a really long time to course correct that I really didn't come off of that until I was in my thirties. And it's taken me, you know, more than half of my thirties to get to a place of maturity where I realized that the best growth strategy, the best growth driver for a services business is to get laser focused on delighting your customers. And that sounds super stupid, right? It's a non-statement. It's an obvious statement, but I used to think of it. As of course the lighting, our customers are super important. Duh. That's why I hire really great people to do really great work. And then I set them free and I go focus on growth. So like. That totally works. And we have lots of happy customers. We've had lots of happy customers in the past when I was operating from that headspace. But the new headspace is like, I'm not cutting these people loose and just like, they're smart. They can figure it out. Great. Now I'm going to go grow more business. It's like, we're in the trenches together. We need to figure out like our pro. What is our product beyond the obvious? The obvious, the obvious is we solve design problems for you. Right. But what is our, how, how can our product be like a delightful experience where they're bragging to their friends about it? If they solve design and love the agency, the people are so great. Oh my gosh. Like getting really creative with ideas to invest in that. And an example, I could give you a tangible example, something we're going to do next year. So. We have, I have this lake house, um, up in Rocky mountain national park.
Andy: And I started no big deal that when you got 9.8 million in profit, y'all you have the lake house. Let's go. Okay.
Eli: You gotta get it. You gotta get it. Uh, and so I started posting videos on LinkedIn from the porch of the lake house. And it's like very serene in the background. It was like people rowing their row boats in the, you know, through the fog and people started commenting. They're like, bro, where are you? Like, that's, that looks amazing. And it got me thinking like, you know what we should do? We should do a customer appreciation event a couple of times a year for our top customers, where we invite them out. We have our, we hire a private chef. We don't have much of an agenda, but we basically say, Hey, we're going to invite like six or seven of your peers, other CMOs, other VPs of marketing off the record. We're just going to put you in this really cool environment and let you talk about whatever's top of mind for you. Like what's working, what's not. And so that's something that's not at all related to our product of design, but it is the product of delivering a delightful experience to our customers and adding value to their lives. So that's kind of where I've shifted my focus in recent years.
Andy: Interesting, which is like, and that stuff works. And I don't hear of service-based businesses doing that, right? Which is actually an interesting approach. So what I'm hearing from you is you've taken some like SaaS type methodologies, let's call them. And you know, because you have your customer advisory board, and you do a customer event and all that. And this is what the SaaS companies will do, right, to try and like get people to stay and build connections and stuff like that. You don't hear of a lot of service based businesses doing that. So that is, um, That's amazing, dude. Like that is, that's amazing. It's like, it makes me want to be like, Hey, when we need a design firm, I'm going to go and be like, Hey Eli, uh, I'll sign, but I got to get an invite to this Lake dude.
Eli: Uh, you know, you know, you're on the list.
Andy: Yeah. Yes. Let's go. Uh, actually I'm going with Adam Robinson on Friday, me, him and Chris Walker going, uh, wake surfing on Friday morning. So, uh, yeah, Adam's one of my good buddies here. I'm in Austin too. So, Uh, if you're ever down here, man, come, come by. Yeah.
Eli: I'm going to hit you up. We're redoing, uh, we're doing Adam's brand and like new brand, new website for RB to be, and it's going to launch soon. So I'm stoked for you.
Andy: Oh, I'll ask him about it on Friday. I'm excited, dude. Yeah. I'm excited. Yes. Um, this is great. This is great. So yeah, but no, that's interesting, man. And then, you know, going back to this topic, delighting your customers. And I think, um, you know, going back to what I said when we went into this is, A lot of people are so focused on new business, right, that they and it's kind of like the shiny object syndrome, I think is what what goes on here is like, I don't know why, but that's just what the business world tells us is like, get leads and get business and all this. And it's like, when I don't know, I don't have the data to back this up your time, when you already have your business rolling, not when you're getting started, obviously, because you need business when you're getting started. But when you're rolling, you know, in your business fairly well, and you're in a good spot, I think a lot of people just forget about their current customers, right? Like, you know, maybe not on the service side, but I think on the software side, you know, I see people post on like, LinkedIn, like, hey, XYZ company, I've reached out to CSMs. And you know, da da da da, and I had to reach out to your CEO to get a response. And you're like, what in the hell? Like, that is crazy. Right. And so I think in what they say is that like, you know, a lot of your your revenue increases sometimes come from current customer basis. I know in SAS, you know, Jason Limpkin had this, this, this tweet the other day, which is like, here's how you sell, you sell a small amount, and then you sell a little more, and then a little more, and then a little more, and you rinse and repeat that process over five years, right? Which is like, which was like the best way to describe it. Right. And but the only way you can do that is actually focusing on your customer base, like, very intentionally. And I don't mean just like, you know, answering their support tickets, but like, how do you go out of your world to delight, especially these days when buyers have 50 different options, you know, it's kind of a moat. And when investors, when we were raising for distribute, and I know I'm going on a tangent here, but I want people to understand how important this is. You know, they say, what's your moat? And I go, our moat is going to be brand. Right. Because look at liquid death. Like we're going to, we're not going to be a vanilla software brand. And Adam actually, and I have had this discussion for like a year now, it's going to be brand, which is probably why he's all over, you know, doing a brand. It's going to be brand. And it's going to just be when people think of us, which is part of the brand is like amazing fucking product. And every time I interact with that company, I have a good time. Yeah. You know, love that. And like, that's it. That's the emotional feeling. And when people say, what does brand mean? I say brand is, you know, and I'm not a marketer, right? I've never been a marketer. I've just been, you know, I was an engineer. Right. And I'm like, but I'm a people, uh, I'm a people pleaser for sure. And so there's blessings and curses that go along with that, but at the end of the day, I want people to come and be like, holy shit. And every time I interact with them, even on our first, after you download our product or first email to you, it's like an awesome fucking note from me. That's like, Hey, Maria, you know, my mom is, you know, making tacos to celebrate that you've signed up with us. Like, so every time, you know, right. Every touch point is kind of like invoking that, like, Hey, this is, I'm having a good time invoking that feeling. I know it's a little like woo woo or whatever. No, but it's true, man. You want people when people think of you, like I always tell you, I want them to feel like every time we interact that they're going into their favorite taco shop in the city, you know, like, hell yeah, I'm ready to eat.
Eli: This explains the background.
Andy: This is it, dude. You're seeing me live it real time. Eli, you know, uh, Yeah, sorry, I'm not for hire dude for branding. But, but this is it. This is the way I think about it. Right. And I'm like, we just want to like be known to be like, have a great fucking product, and have a good time. And then the word of mouth after that kind of takes care of itself. Right where people start to talk about you, and give you referrals and like it takes time. But that's, it's more of a long term play. Right is kind of the way we're thinking about it. So completely. Yeah. Now, let me ask you, what are some switching gears here? What are some of the service based businesses right now where you think there's huge opportunity? Because I'd love for people to who are hearing this. Everyone wants to start a business. Let's be honest. Right. Like at some point, it's in the back of some people's minds. Some people will do it. Some people start it and then be like, holy shit, this is way too hard because it is. But for you, what are some in the B2B world, some service based businesses that you think are like, Holy shit. If I wasn't doing what I'm already doing, I would start that.
Eli: Oh, that'll be easy for me to answer because I'm, I'm going to do this next year. Oh, okay. You know what it's going to be. So I'm happy to talk about that. I think before I answer the exact question you asked, I want to say for like, for anyone who's listening, who's thinking about starting a services business, you can start, I fundamentally believe that you can start a services business in any category that's already well established. design product, content, SEO, marketing, like any category that is a normal agency type to hire. And you can get to a million dollars in profit period. Just it's not, it's completely attainable. And that's the beauty of like crowded spaces is, you know, there's a ton of demand out there and you just have to figure out your little angle and go and capture that demand and go and capture like a fraction of that demand too. So it doesn't take a lot. to get to that million dollars in profit watermark takes effort, obviously, but I think people get really hung up. And I certainly have gotten hung up in the past on like, Oh, I need this really unique idea. I need this, you know, something that other people aren't doing, man, I've got a mark. I've got a performance marketing agency and a design agency. These are both like highly, highly commoditized.
Andy: And he started them fairly recently, right? Like exactly.
Eli: Yeah. Yeah. Like we're, we're not first to market. We're like 10, a hundred thousand, 10 million. Yeah, exactly. It's nuts. Yeah. People have been doing this since like the seventies. So I think that's the first caveat is like, don't let not having a clever idea stop you from becoming an entrepreneur or becoming a services entrepreneur. Like just go fucking do it and get to that million. And then, then you can start getting cheeky from there. But to answer it now, your actual question, Um, I was looking at patterns, right? Okay. The, and what are my learnings from matter made to NBD, right? Because matter made was my first services business, learned a bunch of stuff. It's still operating and doing great and growing. Um, then started no boring design with some of the lessons learned to change how I built that business. And it's like, okay, what would I, what would the lesson be in, in version three? So the lessons from matter made to no boring design were. labor arbitrage, price, like being more clever with pricing and having like a higher volume customer base with a lower price point or some of the other learnings.
Eli: I don't remember if I said, I already said labor arbitrage. That's a really big one.
Eli: What do you mean by that? I mean that there's, talent all over the globe. And I used, I used to have this limiting belief that clients would perceive a near shore or offshore employee as lesser than, which is horrible to say and horrible to think. But I think a lot of us carry this, this like on whether we're aware of it or not, or maybe I'll just, maybe I should just speak for myself, but like, I certainly had this bias of like, Oh, well, like, Yeah. I can't sell someone that service for the same price point. If the person who's delivering that service lives somewhere else, because like they clearly will know that I'm getting a bargain. Like, you know, I'm whatever. And they'll just like, think down on it. And I was chatting with a buddy of mine who his business is entirely supported by overseas talent. And he just challenged me on it one day and it was great. It was a really good conversation. He was like, And I was a client of his, he's like, well, you've worked with my team now for what? Year and a half. I was like, yeah. And he's like, what do you think of them? I was like, they're fucking awesome. They're great. And he's like, so is it like, where's the disconnect, man? Like when you're thinking about it for yourself, you think there's no way. And people are gonna think lesser, but then you just described you're working, unless you're lying to me about the experience with my, with my agency, which I wasn't. Um, and I was like, no, man, like, you know, Vellamere is my boy. Like, he's awesome. He's like super fun to work with super talented and. So that was the kind of the walls coming down a little bit. And I in part created no boring design to experiment with that as a business model and as like a business tool. And it's just proven to be all of my preconceived notions were wrong. Um, and I think that the, the, the right type of customers don't care where your team are, as long as they're solving the problem that they came to you to solve and the wrong type of customers do, and they can go fuck off.
Andy: Dude, this is, okay, I'm glad you brought this up because this is not just for service space. This is also for like SaaS, man. Like I'll tell you, my entire engineering team is overseas and we've built one of the best digital sales rooms out there. Like, you know, if you AB test us with anyone and I'm not just saying that, cause I'm obviously the founder of the company, but they go, holy shit, this is an amazing product. Like we, we love your product. And you know, when people start liking your product, when they're like, I want a piece of merch, our merch happens to be fucking awesome, too. But, you know, and that's one thing. And there's that. And then the other things are like, my investors like, dude, how come your burn? How do you keep it so low? Like, like, how are you not spending way more with the team of your size? I'm like, overseas, dude. And you're able to get all this overseas. And I'm like, yeah. And in a way, I don't have to think about you know, a bunch of like, insurance stuff, I don't have to think about like, unemployment, I don't have to think about, you know, this, like, they're all technically contractors, right? And that blows some people's minds, right? They're like, because that's not how we've been taught, especially in the VC, you know, SaaS backed VC world, I'm kind of like the degenerate in that group of people, because I'm like, we're gonna have a sick brand that's not vanilla. We're going to have a donkey with a gold tooth. I don't give a shit. You know, I've been told that that's a bad, like that we're not investing because of that. That's a whole nother story. Seriously. Yeah. I don't want to, yeah. I don't want to call anyone out, but yes, I seriously had someone like, Oh, we love you. We love the product, but like that donkey with a gold tooth is just not our vibe. And I'm like, great. Yeah, not a good option. Yeah, it's crazy, dude. It's crazy. Some stuff you've heard. So I won't say names here. But yeah, some there's some interesting stuff like that. And I'm like, Okay, well, you're not a fit for us either. Because if you don't like that, you're not gonna like a lot of the shit we do. Right. So going back to it, you know, it is hard because when you think about a lot of VC backed SaaS, I think people are starting to realize now because now they're, everyone is like, you need to be profitable. Well, how do you do that? You have to get cheaper labor and all this fun stuff. Um, so for us, you know, I think what we're all told to do is, Oh, hire the smartest person and pay him a kajillion dollars. And, the more employees you have, the better, right? Because it's a flex and all this stuff. And I'm like, no, dude, I would rather have a company doing 10 million a year with 10 employees than a company doing 10 million a year that has a hundred employees. Just so I can say I have a hundred employees. Like I don't care. Like that's yeah.
Eli: You know, that's like Adam's flex, right? He's like, I'm doing X ARR with six people, or this is how long I managed to do it with only six people. That's yeah, the dopest thing ever.
Andy: Right? Yeah, it's it's amazing. And it's amazing. Look, not everyone could do that. Because not everyone has like, if you want to do a SAS, and you're not an engineer, you need to find an engineering person and all that fun stuff. Right. And there's a lot of great lessons from from Adam, we were on the boat a couple weeks ago. And you know, something that he mentioned, which was very interesting. you know, I was thinking through some positioning for distribute, right? And digital sales room was like this vague category, right? It's like, well, it's, it means a lot of things. It means you can put a business case, a mutual action plan, all this stuff in one place. And then we were talking, he's like, dude, just call out one little thing and just double down on the one little thing. Like we do website visitors, right? He's like, and I'm only going to do that one thing. And I'm going to be just the best at that one thing. And he's like, That's sometimes what customers want, you know, is just that you're good at that one little thing. And I'm like, shit, you're so right. And so for us, we started thinking about it and I'm like, what's the one thing I'm in? I'm like, you know what, we're going to change our positioning to one click follow ups. Like we just help you do the one click followups, right? There's a lot of more shit in there, but when you follow up, you're following up with ROI and business case, but we're going to help you do it fast and easy, right?
Eli: That is funny that you say that, that resonates so hard for me right now because my seller literally came to us the other day and was like, so here's the email I've been sending to people. And it was a fucking novel. It was really long. It was great content. Like all the content was really, thoughtful and supportive and custom for that person. But she's like, it's killing me. And I don't think people are reading it cause it's so long. Like it, and it takes me so long to create these things. That's where most of my time is going instead of all the things I should be doing. So when you said one click followups, I was like, Oh shit, like send me the link. I think we need this.
Andy: You weren't saying that when I said digital sales room, you're like, fuck off. What does that mean? Right.
Eli: Okay. Good point though.
Andy: Yeah, it's a good point. And I'm like, but see, that little tweak and positioning dude is like, is talking about learnings and having built a few awesome, you know, go to market tools or SAS tools, whatever in the past, like little things like the positioning man can mean everything, right? Like the position is like, see, you didn't want to try it before. You're like, whatever. But now you're, I said that one little thing, like, let me get my team on it. You know, there's just like, it's fucking, that blows my mind. Right. It's like, and it's like one little tweak, you know, the products, the same thing. Yeah. It hasn't changed, but the way I've approached it in the market anyways, I'm sure you deal with this all the time. So let's go back to, um, I want to go back to the service-based thing here with you, Eli, which is like, okay, let's say someone, did we get into your idea of what you're going to build yet? No. Okay. Let's, let's go, let's go back here. Cause I know we're weaving everywhere and I hope people are following along, but let's go back to what that idea was. Cause I think we just went on a whole fricking channel here.
Eli: This is how people like you and I, our brains work in this weird, probably a lot of the listeners, like our brains are just all over the place anyway. So.
Andy: Exactly. People are like, well, how do you do all this? And I'm like, it's, it's wild up there, man. It's wild up there. Yeah. But it'll always come back to it, but it, there's going to be a 50 things in the middle here, but anyway, okay. What's this business. What's this business. All right.
Eli: So the, the, the lesson that I haven't yet learned. And by that, I mean, I haven't implemented the learnings. It was like, okay. With matter made the performance marketing agency. That marketing is the first budget to get cut when economic headwinds like change, when the marketing leader gets fired or quits, which let's face it, marketing leaders, it's like a revolving door and they're usually not there for super long. And so the agency usually goes with them when that decision is made. So there's a lot of natural churn and turnover that happens, even if you're doing a great job for that client. So that's that business. With NBD, No matter how much we can talk about it on podcasts, about how brand is like one of the most affordable brand and designer, one of the most affordable levers you could pull to impact how people think of you in the market and perceive you. Um, at the end of the day, people are going to view it as a nice to have. Right. And so if competing priorities, it's always going to be budget wise at the bottom of the stack. And it's really easy to say, you know what, actually let's pause. that initiative, we'll revisit it in Q2. The classic, we'll revisit in Q whatever, I hate that. And so- My everyday these days. Right?
Andy: Yeah, dude, I feel you. Right, new company, like, oh, okay, okay, yeah, yeah.
Eli: So it's like both of these businesses have the same exact problem, which is the product at the end of the day is not as sticky as I'd like it to be, even if you're doing great work. And so I was like, what is a services business That's so painful to churn that people don't do it. Something that like, you would only leave the company providing this service to you if they fucked up on like a grandiose scale. Like maybe they, like they did something that was almost breaking the law or like they did something that was just so flagrantly insane that you're like, I can't, we can't be associated with them. We've got to, we've got to, this, Like there's gross negligence type of a situation. And like, let me be clear. I don't want to run a business like that, but what's, what is the business that still manages to hold onto their customer base when they're not good at what they do? And then let me go and be good at that. Um, and so while I was thinking through this, our, um, our bookkeeping accounting firm, like our finance kind of FPNA bookkeeping, whatever, um, that we'd been with them for four years and they merged with a much larger company that does that. And as part of this merger, we had to like completely port over to all the new systems, all the new processes, the whole new team. Like it was basically like we had fired our existing firm and gone and hired someone new and we're starting from scratch. And I, would rather go to the dentist and have them pull teeth out of my face than go through that process again. It is awful. And I was like, holy shit, I've been with that other agency for like four years and I've never questioned it, not once. I'm just like, oh yeah, it's working. It's great. They're good guys. So yeah, so I, I went from, you know, someone who failed algebra one a, um, a bunch of times in high school until the teacher finally passed me so that I wouldn't be back in her classroom. And I never took a math class again after that. Like I, I am not an. In the past, I would have laughed myself just silly thinking about me starting a financial services firm, but. One is the opportunity I just described is like incredibly sticky. And then two is, if I look at the content that I've been producing lately and the things that actually fire me up, I think people are starting to know me as like, Oh, that's the agency profitability guy. Like he's, this is the something around that problem space. Like, Oh, a lot of agencies bring in revenue. Not a lot of agencies operate at, you know, between 45 and 55% net margin. And, you know, it's, it's, you know, That's my, that's my shit. Like I love that. And I love talking about it and all the, all the things we've been talking about, right. Feed into that. And so. I can naturally then combine these two things because if I do this and I just focus on like, we're going to do this, we're going to be the profitability firm for services, businesses, or for agencies of a certain size, like very specific targeting. I can create a ton of content about that because I I'm living it myself. And then we just. deliver in an awesome way. And the cool thing about this financial services, um, opportunities, like I have a hypothesis that firms that are large enough are going to be slow to adopt AI in this category because they want, like, they want to know that, you know, Jared was looking at their stuff and Jared said, these are the numbers and the numbers are good. And if something goes wrong, they can like strangle Jared. Um, But I think categorically financial services will be one of the first to be meaningfully supported by new tech and AI. And so there's a ton of, at the agency level, there's a ton of opportunity to take advantage of that new tech to become really efficient in how you deliver your service. You just need to be the face and the white glove and the experience to the client. So I think it's kind of insulated in an interesting way, unlike SMB, where they're going to be like, Hell yeah, I'll pay $5 a month to use this new AI product that's going to help me categorize my whatever, you know, like that kind of stuff. So that's my rambly excited explanation of what I'm going to be doing next year.
Andy: Nice. And by financial services, do you mean like bookkeeping as well as like consulting on like, Hey, here's where you can cut costs and all that fun stuff. And like, Oh, nice, nice dude. I'll say I use a, I use a pilot for finance, you know, pilot, which is like the, um, you know, bookkeeping and all that fun stuff. And I pay him like, I don't know right now, like 800 bucks a month or something. Um, but yeah, like I'm like, they do what they need to do. They do all my tax stuff. They do the thing, they do my bookkeeping. I don't need to like, I'm never going to not pay these guys, you know, like, like, and there's no reason to leave cause they know it all. And they all just do the same thing. You know, they're like the same thing. Unless someone comes to me and is like, Hey, in a 800, even if it was 500 bucks versus 800, I'd still stay stick with them. Cause I'm like the 300 bucks a month is not worth moving everything. Right. But yeah, getting more like verticalized for you for agencies, but the consulting on top of it, with like, hey, I've done this too. And here's how I was able to lower costs. And we're doing your bookkeeping. I noticed this. So that is also the most powerful position to be in is when you're like, I don't want to say cook in the books because that's actually a bad thing. But, uh, I'm not an accountant, dude. Whatever the term is for like, when, when you have access to the books, right. Um, you know, and you can look at the actual books and be like, Hey, this is where you need to do this, this, and this, that is the most powerful place to be in. Even in SAS, like when you're working with the CFO and saying like, Hey, we're going to decrease your SAS costs. Cause we're consolidating four tools in the one, like. You're like, you're in there like swimwear, man, you know, so you're right. I think it's especially when you have the credibility, right, which is, as we can talk about, I know we've got three minutes here. But this is also the this is also very important, which is When you're starting a service-based business, I think the people that I tend to lean towards are those that have the credibility of having used a service to build their own thing and have the credibility of like, oh, hey, we're going to do a design thing. It's like, well, I've designed my own SaaS products that did X amount. And you're like, Holy shit. Like there it is.
Eli: Yeah.
Andy: He's, he's actually done it. It's not just a service. That's like, you know, he thought to spin up one day, he's actually done the actual tasks associated with that to, to create something successful. Yeah. Um, like with anything, you know, so, um, yeah, man, anyways, Eli, this has been so great, dude. Um, thank you. Yeah. Like just to recap what I hope people got out of this is like one, when you have a, when you want to start a service business, you don't, you don't have to come up with something new, right? Like you don't have to come up with something new. We just talked about Eli's new service business. He's not even an accountant, right? He's like, look, but I've learned how to be profitable. And there's some overlap there. Right. Which is amazing. Um, to, I think something interesting that people talked about is like keeping customers happy. Right. Which is like, you know, fulfilling them in a way. And that could be your biggest, like, driver business as well. Um, and then three overseas talent, man, like how underrated that I think that still is, uh, for, for most businesses. So yeah, man, um, how should we end this?
Eli: Eli, any, any, anything else you want to leave people with a listen, you know, uh, find me on LinkedIn, connect with me there, Eli ruble on LinkedIn. And if you need design stuff, now, you know, NBD, no boring design. If you need marketing stuff now, you know, matter made. So I appreciate you having me on Andy. This was awesome.
Andy: Yeah, dude, this is like, this is amazing, man. Thanks for coming on and like, giving us all your stuff and the playbooks and all that. And you're right. Like, I always think about, you know, for personal brand, like you're the X guy, right? And for you, while you were talking something interesting that I was seeing, I was like, man, if I ever start a service based business or agency at some point in my life, I'm going to go to Eli first and be like, Hey, dude, I want to do this. Like, what do you think I should like, what do you think about this? So yeah, man, I think that's great. And everyone follow Eli on LinkedIn. He's also crushing it. That's a whole nother topic we could do at another point, which is like how you're using that to grow your service, which is great, man. But dude, I see Adam on Friday. I'll let him know that we hung out. I'm going to shoot him a text now and all that fun stuff. But I'm excited for the rebrand, man. And if I can help push anything, I'm sure he's going to text me for it. But happy to always help out on the LinkedIn side, dude, for whatever you need. Appreciate it, man. You're the man, dude.
