Digital Agency Mastermind with Jason Swenk, Agency Mentor, Coach & Advisor

Russell Benaroya: Hey, everyone. Welcome back to another episode of the Stride 2 Freedom podcast where we help business leaders get and stay in their genius zone. My name is Russell Benaroya, and I am your host.

Stride 2 Freedom is brought to you by Stride Services. We are an outsourced bookkeeping, accounting, and fractional CFO services firm providing services to high-growth professional service companies like digital marketing and IT-managed service providers. Stride’s genius zone is helping its clients use data to make better business decisions. You can learn more about Stride at www.stride.services.

But enough about that. Today, my friends, is a swanky day because I have the pleasure of having my friend Jason Swenk on the episode. Hey, Jason?

Jason Swenk: Hello.

Russell Benaroya: So good to see you. Jason is a bit iconic in the world of digital marketing. Not only does Jason run an elite mastermind group with some of the most high-performing digital marketing companies around the United States, but he’s also a digital marketing entrepreneur who has built and exited multiple digital marketing businesses. He has a passion for helping others achieve this.

I was introduced to Jason through a mutual friend, John Corcoran from Rise 25, and I’ve had the pleasure of following Jason’s machine of online outreach with a level of authenticity that I appreciate and rarely experience. Today we’re going to talk about agency scaling, why it’s hard, and why you can do it. You’re ready to jump in?

Jason Swenk: Awesome. Let’s go for it. And I’ll need you to introduce me whenever I go anywhere. I’m just going to put you in the pocket.

Russell Benaroya: I know. I want you to feel so good because you’re awesome. I appreciate you on the show. I remember when you and I met originally, and you shared with me that you lived in Durango, Colorado, one of the things I appreciated is you struck me as an individual who has a bit of a formula around life design. You’ve created the life that you want and then you have figured out how to architect what you do around that. Is that fair?

Jason Swenk: Yeah. It’s taken me a long time to figure that out, but yes.

Russell Benaroya: When you work with your digital agency owners, do you talk about the broader picture of the totality of the life that they are trying to build? And business is an important part of that, but don’t lose yourself in the business at the expense of all of these other things that are worthy in your life. I’m just curious.

Jason Swenk: Yeah. I started my first digital agency in 1999. When I started my first agency in ’99, I was an accidental agency owner and accidental entrepreneur. I knew how to do something cool, someone offered me money, and then I was on the way. A couple of years down the road, I got to a couple of million in revenue and I was completely miserable.

I didn’t know what was going on. The business was making more money, I was making less. I was working 1,000 more hours than I needed to. I remember my wife going, “Well, why don’t you just shut it down and go get a job?” And I seriously thought about it, and a lot of people who listen to the podcasts I’ve done have heard it multiple times.

I remember interviewing with a small company called NASCAR. They asked me two questions that changed everything for me. That’s where I start when I work with people and I go, “We need to get some clarity of where you want to go. What don’t you ever want to do again? What do you want to build?” Rather than what people think they want is to build a huge business and sell it off. But not necessarily is that the fact.

Russell Benaroya: So, you had that interview with that small company, and they asked you a couple of questions. And it dawned on you that you’re not ready.

Jason Swenk: They asked, “What do you love doing every day? What don’t you want to do again?” I went back and one of the exercises I did was to take a sheet of paper out. Put your fist on it and draw a circle around it. Everything on the outside of the circle, write down all the shit you never want to do ever again. Mine was I don’t want to deal with clients. I don’t want to hire people.

Then I started thinking, well, what are the things I love doing? Well, I love the creative process. I love building better leaders. I love being the face of the organization. From that, I understood what I could say no to, what I needed to hire, and what I needed to delegate. Then I could start putting a plan together. And then I have more control now than I would working for someone else.

When I did that, I had instant clarity of what my role needed to be. And then I shaped the business around that. That’s what I’ve been doing in this particular business and just creating rules that most of the time I don’t break. Today I’m actually breaking one rule.

Russell Benaroya: I wrote a book called One Life to Lead: Business Success Through Better Life Design, and it has a lot of rules and guidelines in there as well. And I break them too. Knowledge is the most important thing and awareness because you’re going to break them. Know when you do, and course-correct if you can. So I appreciate that intro.

What are some of the big challenges that are facing digital marketing agency owners today?

Jason Swenk: Well, I don’t think they have enough time, or they don’t think they have enough time. What do they always say? “I’m just too busy, I don’t have time to update my website. I don’t have time to update my own marketing that I can do really well for other people.”

If that’s you, then it’s a telltale sign that you’re not charging enough. If you go back to the very beginning of when you started, yeah, you’ve probably raised prices over time. I remember I was chatting with my mastermind a couple of weeks ago and I said, “When’s the last time you guys raised your prices?” Some people were like five years, 10 years. Some people were like last week. I’m like, okay, good.

It’s so hard to think about, what are we worth? I think a lot of agencies don’t understand what they’re worth, or they don’t understand the value that they’re delivering. And if they don’t understand the value that they’re delivering, well, the clients probably don’t either. Then that leads it up to, well, you’re probably a commodity to them.

We’ve all been there. We’re like, “Why did we lose that client? We were doing an amazing job.?” Well, you probably did, but you didn’t communicate that, which is half the job.

Russell Benaroya: You’re so right. I like to say that heroes create victims and villains. So when you’re a hero by not charging your worth because you want them to feel really good, you end up, despite your best efforts, despite your desire to want to be seen as somebody who is helping that client be successful and maybe save a little bit, you end up getting villainized.

Jason Swenk: Yeah, and it has to work for both parties. If you feel like you’re undercharging and that client is taking advantage of you, you’re probably not gonna do the best job. Then the client’s going to be like, “Well, you’re not doing the best job and you’re not giving me all the attention I need.” It just doesn’t work.

But if you can figure out what you’re worth and what you need to be charging, and think about yourself; why did you start the agency? Where do you want the agency going? What do you want to be made from the agency? Or what do you need to be making for you to feel whole?

Because if you’re not getting paid what you’re worth, you’re going to have resentment against the agency. Then you’re going to come to me and go, “Jason, will you buy my agency?” And I’d be like, “Well, we would, but if you work a little bit harder, we’d probably give you 10 times more if you work on these little things.” A lot of times people are inches off from knocking it out of the park or getting that hole-in-one.

Russell Benaroya: It sounds like your genius zone is the advising, guiding, the empathy, and compassion you provide to other agency owners that are traversing their own experience and trying to figure out how to build whatever it is that they want to build. Tell me if that’s right, and how you’ve architected that into the business that you run today.

Jason Swenk: I kind of fell into this business as well. After I sold my first agency, I thought, I’m screwed, I’ll never get another agency. I’m getting way out of it. I’m going to go develop an iPhone app. I thought the grass was greener on the other side, but I realized the grass was greener on the side that you water.

What I realized was a lot of my competitors at the agency were reaching out. They were like, “How do you sell? How do you get these big clients? How are you profitable? How do you go to the racetrack and race cars all the time and not work around the clock?”

So I started helping them out. I put a framework together. Then I started thinking about, well, let’s go back to the exercise that I originally did that changed the agency. I did the same thing with this. I said, “These are the things I love doing and these are the things I never want to do.”

And I thought about what’s the way to get that clarity to give myself as well as my team direction so they can call me out on my shit when I’m outside the direction. I just said, “Well, I want to be the resource I wish I had when I was running my first agency.” I want to help people create the right systems. I want to help people be able to get more freedom in their lives.

I think there are a lot of people out there that work around the clock and that’s not me. And I don’t think that’s life. They try to work around the clock in order to sell and then they’ll enjoy it, which may happen when they’re 60, 70, 80. But then you can’t really go do the fun stuff.

Every Friday, me and my one crazy-ass friend, we call it epic Fridays. We go do really cool stuff. If you guys want to see the stuff we do, just follow me on Instagram. It’s just @jswenk. I don’t post any business stuff there. It’s just all fun stuff.

We’ll go rock climbing or we’ll take the mountain bikes down a really steep mountain, or we’ll just do fun stuff that most people don’t do just to really live. I want people to be able to have that freedom too. They don’t have to go do stupid stuff like we do, but have the freedom to go fishing or whatever makes their fancy.

Russell Benaroya: What is going on in the head of the digital agency owner when they elect to work with you? When they come to you, what is the range of challenges that they’re facing that trips them over into,  “Yes, I’m ready to commit.”?

Jason Swenk: How long is this show?

Russell Benaroya: Probably not as long as it needs to be.

Jason Swenk: I already covered one of them. The other one is having the vision or the clarity to bring on the right people.

There are six stages of scaling an agency to the very top. I’m a mountain guy, obviously. The first one is staging. I’ll go through each of these really quickly and I’ll tell you the biggest challenge. And if you have that biggest challenge, you’re at that stage. Then I’ll tell you what you need to do to get over it.

The first one is you’re at the staging part of the mountain. If you’re climbing Everest, you’re at the staging. Now, if you don’t have clarity around your vision, your offering, or your niche, you’re probably at staging and that’s perfectly fine. You could be a multimillion-dollar business and still be at staging. What you need to do is get some clarity, the vision, define the niche, and define the offering.

The next one up is Basecamp. If you’re there, your biggest challenge is a lack of leads. In order to graduate, you need to build a lead generation system. But you can see how these are going in order. You can’t really build a lead generation system unless you know who you’re going after.

The next level up is what I call the climb. We’re starting to climb, we’re getting a little higher, but you’re not closing the right accounts. It’s because you don’t really have a sales system; the owner is doing all the sales. The only way to graduate this to get to the crux is for the  owner to hand off the sales process. You still can add color and be in some of the meetings, but you’re not following up, you’re not hunting down and all that kind of stuff.

The next one up is called the crux, and your team is not delivering consistently. There are a lot of issues going on. It’s because you’re probably too in the weeds. What you need to do is to build the right team so the owner can get out of the day-to-day operations.

Then the next level up is called the crest; great view from here. A lot of people stay here, and that’s perfectly fine. You don’t want to make the summit, that’s perfectly fun. But the next one up there is scaling and finding the right talent, bringing in the right people, and making them become the best leaders. And you’ll graduate to making it to the summit when you can actually get five roles as a CEO.

So you’re transforming yourself from an owner to a CEO, where you’re coaching and mentoring your team, you’re setting the vision of the agency and communicating it to them. You understand the financials and you work with people like you to help them do that and then you make the decisions. You’re assisting sales, building the key relationships, and you’re the main personality for the agency.

Russell Benaroya: Love it. Love the metaphors.  There’s a great book, by the way, called The Crux by a business school professor named Richard P. Rumelt. He published it recently. He talks about the crux in strategy being what is the problem before you that you need to solve in order to continue the climb? He’s an avid climber too.

Do you find that most people come to you at the Basecamp level or it just depends?

Jason Swenk: Most are coming to me when they’re at the climb and higher. But we have resources for the people at the staging or at Basecamp, which is an agency playbook. It’s an online framework that they can follow and build on from there. But almost all the people in the mastermind are all from climb, crux, even to the summit.

Russell Benaroya: Let’s talk about the mastermind, how that’s organized, what people are committing to, the community that you’ve built, and the expectations that you have of those who participate and vice versa.

Jason Swenk: I wanted to put a group together that I wanted, and I needed, and that I also enjoyed. I wanted people that were at a certain level, that knew that they needed help, and that could come in and be transparent. They could be humble. There are no douchebags allowed.

We only allow about 50% of the people that we chat with. So we’re really picky and that’s not bullshit like most people say. They’ll just let anybody with a paycheck in. I always tell Darby, when he’s evaluating people, “If you let someone in that doesn’t meet these criteria, you’re the one that’s going to be hanging out with them at our Digital Agency Experience. You’re going to be babysitting this person.”

So we’re really picky at who we get in. We want to highlight the members. I didn’t want just one person’s perspective. I wanted to be a fly on the wall of what the best agencies in the world were doing. I wanted them to be able to see the things I might not be able to see because they’re higher than me. They’ve been before and they can go, “Oh, you’re about to step on a glacier and you’re about to go down.”

I wanted people to come in where they can get together on an ongoing basis. Then also a couple of times throughout the year, we do what we call the Digital Agency Experience. In the past, it’s been at my house on the mountain, or we’ll hike the mountain and we’ll take ATVs out to 13,000 feet. You’ll see amazing things but we’ll also work on your mountain.

This year, we rented out a 100,000-acre ranch with over 4,000 bison on it. We got to play cowboy and work on the business and do all kinds of fun stuff. It was a lot of fun.

Russell Benaroya: Amazing. What are participants committing to do? How often do you meet? What are the vehicles of communication?

Jason Swenk: We meet virtually twice a month, which is over Zoom. They’re committing to checking Slack on a regular basis for the community. They’re also committing to being transparent, showing up, and being helpful. We hate those people that come in and just take, take, take. We’re always making sure, what are the things that they can add to the group?

Every month, we do a “what’s working now” strategy from a member. We ask them, “What’s working now for you? What’s working really well that you could teach the other mastermind members?”  Everybody loves this because everyone would rather learn from them rather than me, which is a lot better?

Russell Benaroya: What are you hearing from agency owners as we looked into the proverbial crystal ball of a bit of an uncertain economic environment? What are you hearing in terms of preparing for that? Because when the sun is shining, we can all make hay. But when it’s not, it’s challenging,

Jason Swenk: Well, then you get a greenhouse.

Russell Benaroya: You get a greenhouse. Yes.

Jason Swenk: That’s what I tell people. Look, when the pandemic happened, no one’s ever been through this. Everything shut down. Businesses were not doing anything. I was like, “Well, I’m glad I’m at a point where I’ve saved a lot of money. I’m good.” But I was worried about everybody else.

We did a lot of free workshops just to help them out. But what we realized was the agency market in a bad time actually grows because everyone is looking for other ways to reach more customers or be more efficient. And that’s where agencies have that opportunity. I always tell people, when things are getting worse, that’s your opportunity because a lot of the traditional people will start pulling out. But the ones that are smarter are the ones that are going to invest and you could ride that ship.

I look back at when I started the first agency in ’99. So we went through the dot-bomb. We went through 9/11, we went through ’08. Those were three bad places where my agency always grew. Then when the pandemic happened, this business took off, and so did all the other agencies. So even if we go into recession, hope it comes because you’re going to benefit. You just can’t freak out.

And here’s a life hack: don’t watch the news. Don’t read the news. I don’t even know what’s going on anymore. Someone was like, “We’re at war with someone.” I’m like, “What? Okay.”

Russell Benaroya: That is good advice because there’s nothing you can do about it. You introduced me to Todd Taskey from Potomac Business Capital, and he was on the podcast last week talking about exiting your agency. I’m curious how you guide and have conversations with your mastermind participants around exiting, valuations, and expectations?

Jason Swenk: The funny thing is that I also have another agency called Republics with a number of different smart people. We started this about two and a half years ago, and we’ve been growing through acquisition. So we buy agencies. We’ve bought 11 agencies in the past two and a half years and we’re a little over eight figures and EBITDA, just to give you some perspective of how big it is.

Who cares about the top-line revenue? I always laugh when people say that. I’m like, “It’s about profit.” So I have a lot of perspective on this. When I sold my first agency, there were a number of different factors that went in. And I tell people, you should only sell if you meet these things.

One is you just don’t like it anymore, you should get out. That’s why I got out on that one. I didn’t like it anymore. I wanted something new. The other one is you could build something bigger with the other agency and they take all those headaches away from you. That was kind of there but I was leaning to the first one. And then the third, thankfully, I didn’t need the money for medical or something bad happened.

A lot of times when I chat with owners and they come to me wanting to sell, I talk them out of it. I’m like, “Well, the grass is not greener on the other side based on what you told me. If you work a little bit harder and work on this system, you can get to a point where you can get rid of the stuff you don’t want to do anymore and you can sit back.”

Zach’s been a client of mine for so many years. He got to a point where he was thinking about selling a long time ago, and I talked him out of it. He’s very glad I did. He makes millions now by being the chairman of his agency, and he has no responsibilities whatsoever. He just put the right people and the right team in place.

Then you asked me about valuations. I can tell you how I’ve seen the valuations and also how we’ve done them at Republics. What we’ll do is if you’re under a million in EBITDA, usually, we’ll do a valuation of 1-2x. When I tell people that, they’re like, “Damn, that sucks.” Because there are a lot of agencies around 200,000 in EBITDA a year. And that’s even after recasting and taking away a lot of the BS expenses that we put in there.

Now, that’s not the cash offer we would do. We do half cash and half later on at a certain time. Usually, under a million doesn’t make sense, but if you can get over a million, then you start getting the multiples that everyone hears. You can get 4-6x. I’ve even got some of our mastermind members and clients to 8x.

I always recommend using Todd so you guys go check it out Todd. He’s the one I always recommend. So if you get to a million, you might be able to get 8 million out of it over a certain timeframe. But then if you can get over 3 million, it increases even more. Then it starts going up substantially after around the 8 million or 9 million or 10 million in EBITDA.

I tell people, “If you’re making this much money, and you’re doing all the stuff you love, and you got rid of all this stuff you hate, why the hell do you want to sell? You’re getting millions, you have an amazing team, you can create an incubator agency where you can build other stuff through the team and all the stuff that you know. Why would you sell?”

My partners at Republics get mad at me because I’ll talk about it, but I always tell them, “No matter if it’s going to benefit me or not, I’m always going to tell people what they need, rather than what I want for them or for myself.”

Russell Benaroya: That’s great advice, Jason. You are also building this mastermind business. I mean, it’s a business. It’s a machine. You’ve got people, you’ve got an apparatus. I’m curious if you could share a little bit about the business of running a mastermind empire.

Jason Swenk: Well, I don’t know if it’s an empire. I think the secret of the sauce is creating something that you love and you enjoy. Then defining where you’re going, defining my core values, which would tell me if my team members share similar values as I would rather than I can hire a good salesperson that can sell anything, but they don’t believe in what I believe in.

And then being very selective about who you put in that circle. We’ve kicked out a lot of people over the years that tricked us in the very beginning or it took us a while to figure out. It’s kind of like a Vegas buffet. You’ve got to try out everything and say, “I don’t like that.” Then it’s about creating rules around your lifestyle.

I only do meetings on Tuesday, Wednesday, and Thursday. I’m breaking this one on Monday, which I hardly ever do. Then I have certain timeframes and I can go live my life.

I only do 10 hours of meetings every week. When I have my meetings, I am so focused. I’m so on point that I’m not burned out because I don’t ever want to burn out on this. If I ever burned out on this show, you won’t ever hear from me again.

Russell Benaroya: What is something people don’t usually ask you that you would be interested to share in giving listeners more insight into who you are?

Jason Swenk: That’s a good question. I don’t know, honestly. I’m kind of an open book. I don’t know.

Russell Benaroya: If people wanted to plug into the mastermind, how did they find out about you and explore the opportunity?

Jason Swenk: There are two places you can go. You can go to digitalagencyelite.com. That’s the link to the mastermind. But I would encourage you to go to the website and listen to our podcast called the Smart Agency Masterclass, or watch any of the 1,000s of videos that we’ve done first before you do the mastermind to be like, “Hey, I like this guy, or I understand his approach.”

Most people have digested our content for 2, 3, 4, 5 years before they ever even thought about the mastermind. And I’ve always loved that. If you go to jasonswenk.com, you can check out all the free stuff and make sure that I’m not a hacker.

Russell Benaroya: Jason, thank you so much for joining us today on the podcast. I really appreciate having you on. I see you as a voice for the industry. You’re a great guide. You’re a great convener. You’re authentic and intent and purposeful. You’re very creative. You’ve done a lot for the industry.

For me to have the opportunity to share that with our listeners and our clients in the community is a total gift. Thank you for walking us up the six stages and I want to have you on again, we’ll figure it out.

Jason Swenk: Thanks for having me on.

Russell Benaroya: Thanks, Jason. Have a great day, everybody. We will see you on the next episode of the Stride 2 Freedom podcast.