Blessed or Gutsy? CEO Turns Down $400k Salary to Launch Own Agency

Joe Koufman

In Episode #665, Nathan interviews Joe Koufman. He’s responsible for introducing at least 3 married couples in countless contacts to establish business relationships. In early 2014, he parlayed his passion for connecting people and founded a company called AgencySparks, which is essentially a dating service for brands and marketing agencies

Famous Five:

  • Favorite Book? – The Challenger Sale
  • What CEO do you follow? – Jeff Hilimire
  • Favorite online tool? — Lucky Orange
  • How many hours of sleep do you get?— “I try to get 7”
  • If you could let your 20-year old self, know one thing, what would it be? – “I would have invested even more in relationships. They will absolutely pay off down the road”

Time Stamped Show Notes:

  • 01:36 – Nathan introduces Joe to the show
  • 02:29 – AgencySparks focuses on making connections for brands and agencies
  • 02:34 – AgencySparks is paid by the agencies to help them with their business development and outreach to potential clients
  • 02:50 – In many cases, AgencySparks can help subvert the RFP and the client will hire the agency directly
  • 03:15 – One of AgencySparks’ clients tells them about Coca-cola’s water sustainability efforts and that they need the story to be everywhere
    • 03:46 – AgencySparks was able to make a connection with one of their agencies that focuses on public relations and they made a deal
  • 04:13 – AgencySparks is shifting their model now
  • 04:20 – AgencySparks is traditionally paid by agencies to get them through a thorough, upfront, vetting process
    • 04:27 – AgencySparks is getting paid through monthly retainers and a percentage of the deal
    • 04:34 – The monthly retainer is $5K per agency, which is 12-month deal
  • 04:50 – AgencySparks was launched in early 2014
  • 04:58 – Joe spent years with KnowledgeStorm which was acquired by TechTarget
    • 05:05 – TechTarget went public and bought KnowledgeStorm for $58M
    • 05:26 – Joe spent 6 years building marketing and business development in Engauge
    • 05:31 – Engauge was then acquired by Publicis
    • 05:56 – When Joe left Engauge, he had job offers from 6 different agencies and that’s when he had the idea of AgencySparks
    • 06:21 – Joe’s highest offer from one of the agencies was $400K and he said “no”
  • 06:55 – AgencySparks is Joe’s first entrepreneurship stint
  • 07:11 – Joe didn’t have any equity in KnowledgeStorm
  • 07:45 – Joe made a big transition while he was at KnowledgeStorm
    • 07:47 – Joe started as an account manager in 2000
    • 08:05 – Joe moved to sales and realized that he was just going to have the same exact salary
    • 08:23 – Joe did well in sales and had grown big accounts
    • 08:50 – Joe’s last salary was $210K, in 2007
    • 09:20 – By the time Joe left, he was making around $300K in 2013
  • 09:43 – When Joe started AgencySparks, he knew that we wouldn’t have much revenue, at first
  • 09:52 – First year revenue was $270K
    • 10:03 – Year 2 was $370K and Year 3: $430K
  • 10:13 – 2017’s goal is to double
  • 10:25 – To achieve their goal, they have to change their model a bit
    • 10:45 – The client is asking AgencySparks for different options
    • 10:59 – They want to have multiple agencies in one category
  • 11:27 – AgencySparks currently has 11 clients
  • 11:40 – AgencySparks has other revenue streams
    • 11:48 – The commission percentage is 10%
    • 12:10 – AgencySparks offers other services like info-product
  • 12:40 – March 2017 revenue
  • 13:00 – Team size is 4 and all are in Atlanta
  • 13:18 – Greg Crabtree’s labor efficiency ratio is the idea of hovering between 2 and to 3.5, so for every dollar spent on payroll, you should be bringing in $2.50 – $3.50, in terms of revenue
    • 13:47 – As a CEO of a company, if you’re not pulling out the salary that you would be making as a hired CEO, then your business isn’t profitable
  • 14:00 – Nathan’s computation within The Top’s 600 interviews done with SaaS companies
  • 15:04 – AgencySparks’ net margin
  • 15:27 – Joe is the guy who would re-invest his money into the business
  • 15:33 – Joe isn’t a family business guy
  • 15:44 – Joe is looking into 5 years, then selling his business
  • 15:52 – AgencySparks already has interesting offers
  • 16:14 – AgencySparks has a method that is a repeatable and sustainable as a business development process—which is part of what they’re teaching
  • 16:57 – “The challenge is that this is a very relationship-focused business”
  • 18:28 – The Famous Five

3 Key Points:

  1. As a CEO of a company, if you’re not pulling out the salary that you would be making as a hired CEO, then your business is NOT profitable.
  2. Continue to grow your business as much as you can, but be mindful of the interesting offers that come along the way.
  3. Invest in relationships.

Resources Mentioned:

  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • Organifi – The juice was Nathan’s life saver during his trip in Southeast Asia
  • Klipfolio – Track your business performance across all departments for FREE
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Freshbooks – Nathan doesn’t waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW
  • Show Notes provided by Mallard Creatives