How To Find Customers & Employees Who Will Fuel Your Business Growth (& Won't Churn After 6 Months)
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Summary
In this episode of the Growth Accelerator podcast, we have a one-on-one interview with the founder of Team Town, a company that does unlimited graphic design for flat monthly fees. We talk about how they got started, how they're scaling, and how they plan to continue to grow in the future.
Transcript
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Usually the smaller you are, then you wear more hats and the bigger you are,
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the less hats you wear. So when you started your company, Charles,
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I'm assuming you wore all the hats and it was you.
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Yeah. Pumped for our conversation. A few questions to kick things off. What is the
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name of the company and what do you do? And then how did you start the company? Where
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Yeah. So the company that we're chatting about today is called Team Town. We do unlimited
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graphic design for flat monthly rate. So we have another business as well. It's a property
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vacation rental and property management company, which has been around for about three and a
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half years or so so in covert times obviously no one's traveling so we pivoted that company at the
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same time we didn't have too much to do so we made this we set this one up as well um yeah it's kind
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of background and the team town's been around since about uh october or november and where's
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the business at today size team yes clients have um we are 14 clients 130 000 annual run rate
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I kind of wrote something very specific at the start,
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but just because the fact that we're on one-on-one here,
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I couldn't just watch on your YouTube necessarily
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completely changed how we did things with the marketing.
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already um has is crazy like that's probably that's probably you know such a small thing but
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it's not such a big difference um so i'll start just with a kind of a generic question i guess
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is a big one so right now um in about 45 days so we've gone from zero to 130 run rate um i'm just
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wondering from your point of view from from just a general thing we want to be at a million uh annual
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required revenue in 12 months. What do you think the biggest things that you should focus on?
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I mean, the reality, Charles, this is what I see people make the mistake. As a client in
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Growth Accelerator, you see the frameworks that I teach, the growth map, the focus,
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just the attention to doing less but doing the things right. And what I see people do is they
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actually start to get traction, but then they stop doing the things that they used to do
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to get traction, right? They think there's this other thing to do. What I would recommend is
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look at what you're doing and just try to optimize and repeat what's working.
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So if I were to ask you that, what's working right now for you to,
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you know, acquire customers and get them onboarded and sticking around?
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Yeah. So it's the ads. And we actually spoke about a week ago and I asked you,
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what should we do the ads? And you said, if the ads are working, do more of them,
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do youtube ads do you know keep focusing on that and that's kind of all we're going to do now
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which is going to keep focusing more and more on ads and improving and optimizing them so it sounds
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like you're going to keep investing in the ads investing in that what you think's broken or
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missing for you guys to continue to scale well we're so early on right now um i i'm my my thoughts
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just based off looking at the industry of our industry is that churn is incredibly high and
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it's happy churn um when people sign up for a service it's estimated that 50 of your clients
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that sign up will churn within six months and it'll be because of happy churn they just no longer need
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design their projects finished so it looks like the business that we're in we have to scale so
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fast to account for that churn because only 25 of clients will actually stay forever a lifetime
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clients but the average yeah about six thousand dollars and our caps around 600 bucks so what i
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would want to ask is what's true about the customers that stick around versus the ones that don't um
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what we've known is it's it's it's niching down so it would be agencies the one again we're so
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early on this is what i'm guessing is that the agency is so there's two type of clients we have
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the small businesses which will sign up because they need graphic design and they'll turn because
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you know that their company doesn't need it and then there's design agencies that work with 25
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clients and will need design for the rest of time so they won't churn they won't have happy
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churn at least so that's what i'm thinking that's what we want to niche down on a lot
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so what i'm hearing is the ones that stick around have an agency model so they have this ongoing
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need yeah so here's here's the reality is that if you're losing 50 of your customers in the first
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six months, it makes it really tough to build the MRR because you're having to replace the lost MRR.
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So there's a thing called the growth ceiling where essentially if you have 10% monthly churn,
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for example, if you have 10 clients and you're adding 10 clients a month, you're losing. If
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you add 10, you're now at 20, you lost two. So you don't feel it until you get up into the 100
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where you lose 10 and you add 10. Does that make sense? Yeah. So even though your growth is the
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same every month you're adding an x amount of new clients per month because the number is a percent
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of total accounts if you're losing 50 of those clients you're only retaining 30 of the customers
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long term it means every year you're having to replenish 70 of your customer base so it just
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gets harder and harder so a decision you can make today to help long term to avoid hitting what's
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called the growth ceiling um is choosing a better customer to position against and focus on
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in your marketing so that you don't have that 50 churn so what i'm hearing is that that's
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potentially the agency client is that correct yes now have you ever looked at segmenting just
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the agency client in regards to your cost to acquire a customer in your payback period
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that's kind of what we want to start looking at um we don't we we have a lot of age we have not a
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lot we have six agencies now so we can start looking at the numbers our churn right now again
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it's so early on the 71 is because we've had people sign up and say oh this is not what you
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know it just doesn't work for us right so they most of these people quit within our 15 day trial
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period um we've only had one person stay on and then quit after that um but the numbers again
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we've only worked with how many customers have you had 20 i'd say okay super early yeah yeah i mean
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even even when your business is super early you can start to see patterns right and like you know
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one data point doesn't make a trend but there's like you know you can kind of see like this
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customer seems to love us and this customer seems to keep paying and i mean it's just a natural
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thing it's like what kind of customer needs ongoing graphic support one that has a project
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and they come in and they're done or an agency that provides web design and has a continuous
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need for graphic design support right so that's kind of i i think it doesn't take a lot of data
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to make a bet on the second one um so obviously early days you're trying to figure that out what
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are some other challenges you're dealing with in the business that you want to chat about
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so with with both businesses that we have the biggest challenge i think we ever faced is hiring
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and people management um so i am i would say six months ago i was really really bad at hiring i
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think now maybe i'm just bad um starting a little bit better but i i don't really know what i'm
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doing with hiring i don't know how to find hiring a couple troubles we're trying to hire hire and
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train a good sales team um and i'm okay at sales right i've never worked a sales job before but
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obviously as as one of the founders you have i've done all the sales up to after hiring a first
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person and then people management um i am willing to i'm not like you know i'm not the person who
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doesn't trust people and wants to do everything themselves but i've had a hard problem passing
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things on and then them actually being done because you'll pass them on and they'll prioritize their
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own tasks so i guess to kind of wrap that up sum that up is how do you how do you hire well and
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how do you manage them so that they take the tasks on as their own responsibility and kind of work as
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a team yeah i mean recruiting is one of those things just like a sales process that requires
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you know multiple things to make it work right so so a few ideas that might give you some some um
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inspiration one this philosophy that i can't work with you till i work with you
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so that means that i've never hired somebody in my career now because as a developer when i started
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you know i could i could work on with somebody part-time on some code base so i could see if
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they were good and then over time i've used that same principle so i call that the test project
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So everybody I hire has to complete a test project.
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So if I'm hiring a marketer, I'm hiring a salesperson,
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To do that and to have three people at the finish line
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means you have to source a lot of people upfront, right?
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So having a strategy for getting your job placement,
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having an applicant tracking system like a bamboo or a Breezy
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or, you know, whatever ATS system you wanna use.
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And then the thing that I use to qualify people
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on the front end quickly is a video submission.
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right? And I ask people to submit a 60 second video and they have to answer certain questions.
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And honestly, if they can't figure out how to upload a video to share a link or they can't
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stick to the 60 seconds or whatever. So really you want to create a process for recruiting
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that's repeatable, scalable, that's going to get you high quality candidates. Even in there,
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I do a profile assessment. You can use whatever tool you want. There's Colby, there's Myers-Briggs,
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there's whatever. But understanding the psychology of people, as they come into your world,
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like at the end of the day, one of my mentors, this guy, Brian, who started 1-800-GOD-JUNK,
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he said, you can't teach people to smile. If you require somebody that's facing a customer
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to be high energy, empathetic, et cetera, you need to hire people that have that built into
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their character, right? Like people are who they are. So having a lot of candidates apply,
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using video to qualify people out of the gate, using profile assessments to kind of weed through
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certain characteristics that you need, you know, trying to build team dynamics. If you're a high
00:11:09.540
quick start and you hire an assistant, you don't want to hire a high quick start assistant. You
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want to hire a high follow through assistant. Right. And then, um, the test project that to
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me is going to be like, I don't force people on my team. I help them build a recruiting process.
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They get candidates. I do final interviews and then the team decides which people they want to
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work with, right? It's a lot of work, Charles, but I'll tell you what's expensive. Spending six
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months with somebody doing a function, them not succeeding, you spending time training them and
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them leaving, right? So I'd rather spend that time up front to get a really high caliber person
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than to try to fix it after the fact. Most people make this mistake. They hire their cousins and
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referrals and this person that responded to a Facebook comment. That's not how you build great
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companies okay yeah at the moment our process is um we put we put an ad up then we then we handle
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a first interview a second one we bring them in and i guess the biggest thing that you don't do
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you don't want to be doing first interviews you don't ask them to submit a video i will now yeah
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because like even the time to schedule in your calendar that first interview i literally can
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look at 100 videos and know real quick if the person has the intellect i can just tell by the
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the way they talk, I can tell how they answer my questions. I can tell, you know, we ask them,
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what are your top nonfiction books that you've read? They'd never read a nonfiction book. That's
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great. You can't work at my company. If you don't believe in investing in yourself and knowledge,
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you're just not going to gel with the culture of our company. Does that make sense?
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Yeah. So what, if it's across the board, right, let's say it's a lot of the jobs that we hire
00:12:51.920
in the other company is more on the client success side. But since we're, I would even consider,
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even though it's three years old, definitely it was still in school.
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about phase. It's not necessarily, and there's no coding or we're not hiring on the marketing scale.
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How would I put them through a part-time thing, like see how they interact with clients or?
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Test project. So for example, on the sales side, we never put them on a call with a real prospect.
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We just test it with our internal sales team. So they might do three sales calls following our
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sales script with an internal sales person, and then they'll vote and feed that back up to the
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sales manager. You want to protect your client base or your opportunities. Usually, if somebody's
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got a job, I'll just say, look, you have 10 hours to get a chance for us to work together. If I can't
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work with you until I work with you, I think it just makes sense to have that person get to know
00:13:45.120
me and me know them by working on a test project. Okay. I guess this is a pretty blank question.
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not sure if you can answer that details but do you think if i'm looking at hiring would you think
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that i should hire less people and hire more expensively or hire kind of you know start early
00:14:03.840
on and maybe provide a little equity position and pay less and take more people on so so they'd have
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less people with more responsibilities or more people with less responsibilities um usually
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the smaller you are then you wear more hats and the bigger you are the less hats you wear
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so when you started your company charles i'm assuming you wore all the hats and it was you
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right yeah and then as you hired you took a few hats and you gave it to this person and you took
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three hats and you gave it to this person and so it's the specialization versus generalization
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when you're early sub 12 people are going to wear whatever the hats are right so you want to find
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people that have the values the drive the hunger not necessarily the best practices i mean the truth
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is you can go on youtube and learn how to do something you can go buy a course online to learn
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how to do something you can get a mentor you can get a coach but what you can't hire or pay for
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is character and drive right so i would want to find people that have that first and foremost
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and then so they have the characteristic and you can train for the skill now obviously if you're
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hiring car mechanics or designers you want to have that base level experience but once they come in
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you can put them through training to get more advanced experience and you can ask somebody
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that's doing client work to also manage your social media account and i think that that's the
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right way when you're small when you get bigger and you have enough work to have somebody busy
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and dedicated just to that one area of the business great hire and specialize but it's kind of right
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time right action and right now you might be too small to have somebody dedicated so you want them
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them to wear multiple hats okay um last question on that hiring part then we generally so when you
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told us to specialize um on the on the host genius companies of property management we basically were
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doing five different types of marketing before i cut all four of them out and focusing on one of
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them which is something kind of new it's a new sales venture um again pretty not too much background
00:16:07.060
information. But in terms of hiring at this mid stage, I'd say at the at the just about the 1
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million mark and recurring revenue, would you say that we should try it out ourselves, see if it
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works and then hire someone or hire someone to figure out the model and work with them?
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So one of the biggest mistakes that people make on sales is that they hire somebody else to do the
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searching and repeatability part. And you can do that if you hire the right person that that
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you know is motivated and curious and hungry and you know that right but the reality is
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there's risk there that they won't figure out fast enough a to make you money or b for them to be
00:16:51.300
making enough money to stick around right so i've always built that process in-house so if you think
00:16:58.260
of like a normal sales process you have you have qualifying you have closing and you have kind of
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customer success right you have your sales development reps you have your account execs
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and you have your customer success managers typically in the early days the founder does
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all three right the most logical thing to do is once you have enough volume of sales
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you're documenting the whole time you're creating a repeatable process so if you don't have a sales
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playbook that you're starting to copy and paste emails into copy and paste you know outlines of
00:17:26.820
the sales script right like answering questions like here's how i deal with objections here are
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are some case studies to recommend, here are some things to note, here are some ways to
00:17:35.760
deal with guarantees, here's the offer, and have that documented, then you're never going
00:17:43.220
to win hiring people because they need to be trained. And if you got to sit there and
00:17:46.420
train every person, it's going to be a losing battle, right? So typically, you do the whole
00:17:51.880
stack, then you're going to want to hire people, for me, to onboard new accounts, because that's
00:17:58.480
pretty predictable like you know once you get them to buy here's the process this is the first 100
00:18:03.680
days here's the sequence of things document it have somebody else execute it right and while
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you're doing it record yourself record the zoom video with your clients record the sales calls
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record the emails like record everything and save it in that document under training so usually once
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you get 20 of your time dedicated to onboarding new accounts give that to somebody else then
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Then the sales development rep side, document that, give that to somebody junior.
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And then eventually what will happen is that your calendar, you qualify harder, that person
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really makes sure you only get on calls with people that are qualified and ready to buy.
00:18:42.160
And you'll get to a point where you'll be spending 50, 60% of your week doing sales.
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And then what you do is you'll hire somebody to replace the SDR, the sales development rep.
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they'll sell in parallel to you and usually you want to hire two sales development reps because
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somebody might not work out and then all of a sudden now you have two sales people that are
00:19:01.360
qualifying and setting appointments you're now working your way out of sailing and that person
00:19:06.880
becomes a primary and you've built this career path for people to start here and eventually move up
00:19:12.000
and if they get bored of selling usually about two years into it then you can have a path where they
00:19:16.080
can move into a customer success role because they really understand the customers and the product
00:19:19.920
that is how founders remove themselves from selling directly okay so from what i understand
00:19:26.640
then i should be looking a lot of my time on the sales side
00:19:32.240
so where should you be spending your time it it all depends okay so it's it's a nuanced question
00:19:40.720
when people go like how do i scale my company i teach this this whole process called the buyback
00:19:45.120
principle but the essence is simple there's certain types of activities that bring you energy
00:19:49.680
and create value for your business okay if selling takes energy from you and you absolutely hate to
00:19:55.680
do it then no it should not be where you spend your time right but if you like to sell and it
00:20:01.520
brings you energy and it creates value for your business which it does sales then i would say
00:20:07.120
investigate how you spend more time there and everything else on your calendar that's the
00:20:11.440
buyback principle is saying i'm going to hire people to add to buy back time out of my calendar
00:20:16.560
not just hire people to add capacity. A lot of people hire people like a support person, a
00:20:22.160
developer, a salesperson to add capacity. But the only way that we build companies and free up our
00:20:28.240
time to work on the business, not in the business, is to have the time to think strategically, to have
00:20:34.000
those partnership conversations, to refine the product, to look at the data, to connect and
00:20:38.800
correlate innovation and say, oh, we're spending way too much time marketing this customer doesn't
00:20:43.760
stick around like that's the strategy side of the business that's on the business right so i'm a big
00:20:49.280
fan of saying if you've got any free cash flow you have any profit you have any cash reserved
00:20:54.240
and you're trying to hire you should hire first and foremost for your calendar free up your time
00:21:00.000
and use the the filter of what what you know what creates value for me what creates the most value
00:21:05.920
for me as a business what energizes me the most keep those things and get everything off your
00:21:10.480
plate because that energy that you bring to your day at that point will be contagious right because
00:21:16.400
all of a sudden you literally wake up and do everything you love to do and when you stop
00:21:19.920
loving to do it spend more money buy back that time out of your calendar okay that makes sense
00:21:27.280
i'm trying to think which question first then we're still because this kind of came up as you
00:21:32.880
mentioned it with the calendar side um so with team town i have i don't have too much of my
00:21:38.480
my attention on it right now just because host genius i feel like the team is is not as good
00:21:45.920
you know we haven't built a good team culture at the same time so i'm focusing on that
00:21:49.440
but let's just say in two weeks i'll be done with that back in the team town at the current moment
00:21:53.840
we have two sales guys handling all the sales we have someone doing client success building
00:21:58.000
relationships with the customers someone building our product um and managing the design team so
00:22:04.080
we're so but we're so early on it feels a bit unnatural to me because i feel like i should be
00:22:08.000
more because I guess it's my second startup. I feel like to be more in there, but I'm not saying
00:22:12.880
I should. It just feels like, what should I be doing at such an early stage as a CEO?
00:22:19.440
Yeah. I mean, Charles, the reality of it is leaders set the strategy, manage the people,
00:22:27.040
ensure the reporting's being done, and then work on process, right? Like those are the four areas
00:22:32.880
that leadership, right? It's like, so if you have team members there that are doing stuff,
00:22:38.720
my question to you would be, what metrics are you monitoring that lets you know and
00:22:43.920
them know that they're making forward progress, right? What's your frequency for measuring that,
00:22:49.920
right? How is it driving behavior, decision-making from your point of view?
00:22:54.720
Never confuse activity and time invested with outputs and outcomes, right? Like you can
00:23:00.800
literally spend an hour a week managing a company and having 50 people in that company execute and
00:23:08.480
operate because you set up the game so that they can all perform incredibly well and you don't
00:23:14.720
think because it's only an hour a week that that's not important that that's what makes you a great
00:23:19.200
operator right having to spend a hundred hours a week with a team of four that's producing no
00:23:24.560
revenue even though it might feel like you're doing something it's actually very inefficient
00:23:32.140
of your leadership and operation is just lacking, right?
00:23:35.120
So always be careful to correlate activity to outcome,
00:23:42.440
I'm a big fan of having leaders that know how to lead people
00:24:01.540
So Charles, as we wrap up, I want to ask you, what's been the biggest takeaway from you in regards to the things that I've shared today?
00:24:14.780
Two of them, I would say, number one would be how we hire going forwards.
00:24:22.040
When you say it, it's so obvious, but we never did it before, was hire people to give yourself more time.
00:24:29.060
And I think, I think we were kind of on that process, but we didn't know about it, but
00:24:32.840
I'm going to focus a lot on, on, on freeing up time.
00:24:35.220
So I can continue to work on the business instead of in the business.
00:24:38.900
Um, and number two would be that way of recruiting what we're looking for.
00:24:44.580
Um, because even my mind was thinking, you know, 10 hours on interviews when I'm sure
00:24:51.080
I mean, not only 10 minutes, I can tell, like, I mean, just the act of making a video to qualify
00:25:01.840
them out of the process, because they literally have had people apply as an assistant that emails
00:25:07.960
and says, I can't figure out how to upload my video to share a link with you. Now, Charles,
00:25:14.060
do you think as a tech entrepreneur, I want to have somebody on my team that I have to teach
00:25:18.560
something as basic as uploading to a google drive or dropbox no so do you think i might have dodged
00:25:26.720
a bullet in that case yeah definitely right or if i'm trying to build a team that's got a
00:25:32.560
open culture and a communicative culture and a culture of collaboration that an introverted
00:25:37.680
programmer says i don't feel comfortable on video and i have a distributed team and we spend most
00:25:42.880
of our time on zoom on video if that's the right hire nope so just just think about what makes a
00:25:51.280
great person for your team and what are the filters that you could add and automate so that as people
00:25:57.200
work through it and the cool part is as they go through that recruiting process they're telling
00:26:01.360
themselves man this is a really smart company thoughtful organized impressive and it just
00:26:08.880
continues to sell them on the opportunity because if they make it to the end then they know holy
00:26:14.160
moly if everybody went through this process i know i'm not going to work with anybody on the team
00:26:18.560
that isn't capable because it wasn't easy to get to this point if that makes sense so even the
00:26:23.760
filters you add helps in the sales process to get the right person engaged because they're going to
00:26:30.080
feel accomplished and if that's what it's like just to get a job imagine what it's like working
00:26:34.640
for the team yeah awesome charles i'm excited for your future man keep up the hustle keep the focus
00:26:41.840
and uh focus on the business i mean two businesses not a big fan of i know you got both but if at one
00:26:49.440
point or the other you have a chance to focus on one that's usually where the biggest roi is going
00:26:53.680
to come from but again it's you need to understand what you want out of life and your entrepreneurial
00:26:57.840
journey and and if it's two companies fine but know that if somebody's focused on one they're
00:27:04.480
going to be able to compete against you because they don't have the distractions that make sense
00:27:09.440
yeah awesome cool well have an amazing day charles good talking yeah cheers