Tim Ringel is Founder and CEO of Meet the People, a 500+ person agency group that started in late 2021. Tim tells us why working at a boring job at a German bank inspired him to become a startup founder, why he believes in-housing comes in waves, why he gives all of his employees equity, why he believes agency should go after the next 500 companies after the Fortune 500, how to build a great culture in large organizations, and why he believes agencies will never die.
Tim Ringel is Founder and CEO of Meet the People, a 500+ person agency group that started in late 2021. Tim tells us why working at a boring job at a German bank inspired him to become a startup founder, why he believes in-housing comes in waves, why he gives all of his employees equity, why he believes agency should go after the next 500 companies after the Fortune 500, how to build a great culture in large organizations, and why he believes agencies will never die.
Purple Cow: Transform Your Business by Being Remarkable, a book by Seth Godin
What Got You Here Won’t Get You There, a book by Marshall Goldsmith
David Rodnitzky (David) (00:02): In this episode of Agentic Shift, I talked to Tim Ringel, Founder and CEO of Meet the People, a 500+ person agency group that started in late 2021. Tim tells us why working at a boring job at a German bank inspired him to become a startup founder, why he believes in-housing comes in waves, why he gives all of his employees equity, why he believes agency should go after the next 500 companies after the Fortune 500, how to build a great culture in large organizations, and why he believes agencies will never die. Enjoy the show.
Tim, thanks for joining us today on Agentic Shift.
Tim Ringel (Tim) (00:36): Hello, hi. Thanks for having me.
David (00:37): Yeah. It’s great talking to you again. You have an agency that is unusual for this podcast in two ways. One is that it really is pretty much brand new. And two is it’s a holding company. So why don’t you tell us about your founder story? How did you decide to launch what the world needs, which is another holding company?
Tim (00:56): That hurts. Already my heart already bleeds because we’re trying not to position ourselves as a holding company.
David (01:03): Oh, oh.
Tim (01:03): That’s okay. That’s okay.
David (01:03): I think you said that on your website, though. I don’t think I’m making it.
Tim (01:07): No, no, no. I’m 100% sure it’s not called holding company. Anyway-
David (01:10): Good. So you’re not a holding company.
Tim (01:12) We’re building a new generation of agency group. I mean holding company is a description of that because of, I would say, the 24 years I’ve been in this industry. And the vision I had, not really from Day 1, you know, like every garage founder would say that, yeah, I felt it in my bones that I wanted to do this. It’s absolutely not true. I dabbled with many things before I actually somehow fell into the agency industry, but once we got to scale with my first business, I had this urge to build something that was new.
I can tell you the whole story. I know we have about an hour. My story takes around 10. So brace yourself.
David (01:52): Let’s do it. I like it. That works for me, Tim. I just have to sit here and listen.
Tim (01:56): Okay, excellent. So I started my first business when I was 21-something, and I started it while I was in college and at the same working in the IT department of a large bank because I felt that I needed to pay for my internet bills myself. Let me rephrase, my dad told me to pay for my internet bills for myself. And therefore, studying Eastern Asian economics, I decided to get a job as an administrator in a bank, and eventually ran this department together with two of my best buddies, who were also students configuring AS/400 systems, you know these beautiful black boxes that every administrator gets excited about still today.
But as my university time was extremely boring to me because at heart, I was an engineer really. I got a personal computer when I was 11, taught myself coding, and really always dabbled with websites and the internet early on. So I really enjoyed that and it was a lot of fun, and I really felt me studying Eastern Asian economics was something that does not really fit to my purpose, but I did that because I really sucked at school.
I was really bad in school. I was bored. I only cared computers, and therefore, I didn’t get the right grades to graduate to study information technology. Anyway, long story short, I found an alternate way to fulfill my passion, and that was being SysAd at a bank. Whoever would trust me with these computers and hundreds of clients. But the reality was on the side, eventually in a tech session at uni, my buddy, Marko, basically hit me up and said like, “You know what, this is so incredibly boring. Do you want to just start a company so we could gain more.” I said, “Well, that’s very tempting. Let’s just do it.”
And this is really how it started in ‘98 that we moved two computers together in the basement of my friend in his house and decided let’s start a business. And the first couple of ideas were pretty terrible. I mean in hindsight today, they were great, but at the time, there was no money, no experience, not even knowing how to establish a company was terrible. So we lost about a year just dabbling with ideas, building sites, nobody needed all this kind of stuff.
And on the site, to just pay the bills, we always built very cheap websites for friends, for our friends and business that our parents would know, whatever. Like anyone who was ready to need a website for 500 bucks, that’s what we would build.
And eventually through that, because websites need traffic, even if they’re the most ugly websites on the planet, especially they need traffic actually, we started dabbling with SEO, and SEO in ‘99 was like- We were dancing.
So everybody can download the license from Hello Engine at the time. So we figured this out this is actually pretty easy. And because I was a little less introverted than my cofounder, I was the one who had to do sales. So once we figured out how it worked and we could acquire traffic on AltaVista, Infoseek, you name it, I picked up the phone and just randomly called some companies. Said like, “Hey, do you want to be listed in search engines?” And somehow, all the chief marketing officers, marketing directors, they were like, “Yeah, we love that stuff. We don’t know how to do it. So can you do it.” I said, “Sure.” “How much is it?” I said, “500 bucks a month.” “Okay.” “What’s the 10 keywords you want.” That’s really how the business started.
And what accelerated our growth was when Google came to Germany where I am natively from. And they opened an office in Hamburg. I was not in Hamburg. And they started these sponsored links on top of organic results. And at the time, one of my clients had many great brands as clients, but one of my, I would say, most recognizable clients was Citibank in Germany, and we were optimizing 10 keywords on SEO for 500 bucks a month, things like bank account, credit card, in the top three. I had no clue what that meant in terms of the value for their business at the time.
And then Google came to Germany, opened an office, started the sponsored links. And Citibank calls me and says like, “We’re not a number one anymore.” I said like, “Well, you know it happens. Let me take look.” And there was this sponsored listing. And it looked like an organic result. At the beginning it really looked like an organic result. I said, “But this is advertising. It’s not for us. Call publicists, your media agency. They’re going to sort it out. And she called me back and said, “They really don’t know how to do this. Can you call Google and fix this for us.” “Sure.”
[laughter]
David (06:18): Get Larry on the phone.
Tim (06:19): Exactly. So I went through forums and all the SEO forums at the time and got a telephone number in Mount View, just called that number, and they said, “Well, you do not seem to be calling from the United States, my friend. So where are you calling from.” I said, “Well, I’m here in Germany.” “Oh that’s great. Here’s the number of our newly established Hamburg office. Call them and they’re going to help you.” I called them and it was a Regus office. They rented a room in a Regus office, assembling IKEA furniture when I called, and I ended up being the first—definitely one of the first—but I think actually the first Google IO they ever received in 2001 for Citibank.
And when I asked them, “I want to buy these sponsored listings for Citibank.” They said, “Well, it’s $150,000 for six months for three keywords.” I said like, “Wow, that’s steep compared to the $500 I get.” And I called Citi and said, “Well, you don’t need this. This is really expensive. You’re just going to be number 2. It’s fine. It’s organic results, right?” And they said, “No. We really want to do it. Can you just do that?” And I did not have $150,000 to spend nor to prepay or anything like that. So Google gave me, what was it? A 60 days payment terms and I collected the money. And when I signed the IO, Google called me back. And this was the golden times, not to be repeated. And they called me back and said, “Listen, Tim. Thank you for the client. He’s amazing. Thanks you very much. You’re going to get a 75% discount.” I said, “What do you mean?” “Well, you get a discount for bringing us a new client. It’s our incentive to bring clients.”
I said, “Well, I’m going to call Citibank that this just became 75% cheaper.” They said, “No, no. This is for you for all your efforts.” I said, Well, I made 100 grand for three telephone calls? This sounds like a viable business model.
David (08:07): That never happened in the United States, by the way.
Tim (08:09): I know. That was how they can open Europe and how they can open other regions and this didn’t last very long as you can imagine, but that’s really how we got into paid search because I would have never thought about it, and from then onwards, not because of the discount but because just the viability of the product and the professionalism that was created during that time in 2000, 2001, 2002, we accelerated dramatically.
So we became 150 people. I opened offices in London, Switzerland.Opened an office in Hong Kong, opened an office in San Francisco primarily for one client. Only had three people there. So we started internationalizing and I realized, we’re slowing hitting the glass ceiling of what we can handle, brought in a professional CFO, and you know the stories. You build your business and you try your best.
And eventually, that was not actually when were 150 people. When we were 70 people, I got this random call from somebody at WPP saying like we want to buy your agency. I was like, “I don’t even know what WPP is.” Of course, I knew what it was, but you know what I mean. And they said like, “We want to give you here. We want to give you $10 million for your business.” I’m like, “One second. You don’t even know our numbers. What are you talking about, right?”
So we evaluated that. We did a structured bidding process, hired an expensive investment bank, burned a ton of cash for retainers, lawyers, and all this kind of stuff, and then decided not to sell to WPP because it was way too early. We were 70 people. We had lots of fun, lots of beer opening at 4:00 p.m., that kind of stuff. You build your business, you build you baby.
And then things changed. After that, we grew more, 150 people as I mentioned, and eventually, my business partner and I decided, okay, now it’s kind of time to do the next step because lots of my clients were asking for more international services. When are you opening Paris, when are you going to the US. When are we going to Singapore? What’s happening in Spain? I said, “Well, this is very expensive. We have to finance our cash flow. I don’t have so much cash flow.
So long story short, we found a partner. They acquired our business. My business partner left after roughly one year, and I realized oh, okay, internalization is fun. That’s something I really want to do. I moved from my small town in Germany to London, and we did a reverse takeover of the buyer within two years from a management perspective because our business was just extremely well-performing and the company that acquired us wasn’t doing that well compared to us. We were 150 people. They were around 300-something. So we got to a decent size, and I sold my shares in that business that was a listed company in Paris, NetBooster at the time. I sold that in 2016 after around four-and-a-half years of running it as CEO and then as a board member as well.
But we scaled it to nearly a thousand people and it was a ton of fun, 25 offices, 17 markets, like so much fun. And we were a player because we were moving real budget, one client all over the world, but the next logical step from my point of view would have been the US because we were primarily in Europe, Middle East, and Asia. And that was unique at the size, but the US is just, you know. I always knew the US is a totally different ball game.
David (11:13): You started in PPC, SEM. Was that the main focus in NetBooster? Was it a performance media agency?
Tim (11:19): It was a full service performance marketing agency with data consultancy as well because we were one of the few GA 360. They were called differently at the time, certified licensed, blah, blah. I don’t know what it was. GMP, I think it was Google Marketing Platform, whatever, something like that.
So we were one of the few, and it’s rocket fuel still today, if you have that reseller status, but it was rocket fuel at the time. We won Emirates Airlines in Dubai, and around Emirates Airlines, we built a business of 70 people in Mina within three years.
It was a lot of fun. The problem was that a listed company in the French Stock Exchange with a German CEO who failed tenth grade—literally failed tenth grade because the French teacher gave me an F. I had to repeat tenth grade because of that. It felt a bit like karma in the wrong way.
So we had 40% floored, 60% with a mix of shareholders, family offices, private equity out of Paris, and they wanted to sell to-, now this is so long ago. I can talk about it openly, but they wanted to sell to Havas Publicist because it would have great for their French play. I was totally against it. I said I want to go to the US, merge with someone, and just double in size and just be what we today know as a prospect but independent. And today, this would have been extremely valuable, but they didn’t want that.
So I told them, I really don’t want to go through a process of a five-year, not even were they a listed company. You can’t put an earn up, but you would have a terrible management contract for five years. So I decided that I didn’t really want that. I don’t want to work for a holding company, period.
So I made a deal with them, sold all my shares, and then decided to move to New York without knowing what I was going to do next.
David (13:07): Wow. No regrets.
Tim (13:09): No regrets. I think the reality of entrepreneurship, and I’m going to tell you all about it, what happened after that, but the reality of entrepreneurship is I don’t see these things as a setback at all. I actually think so forming that you have a big plan and then it doesn’t happen, but you still come out- it’s not like I suffered. I still made money and gained experience of running 1,000-people structure that I built to a large extent myself. So that’s a very fulfilling experience.
The only thing I’m obviously sad about is I had an amazing team, amazing managing directors in the markets. It was really, I would say, one of the peak moments in my entrepreneurship career having such a tight team that would pitch so successfully also. Anyway, but that’s how life is. And then it throws you a little curve ball and then you get up and you figure out what to do next.
So I moved to New York thinking I would establish a new agency, not that anyone in the United States needs a German coming to the US and building a performance marketing agency. Everybody has a dream. So that was in my head when I ran the marathon here in New York in November ‘16 and when we were looking for apartments and trying to find a school for our kids, and then IPG called.
IPG was one of the people who were building for my former company when they wanted to sell to the French holding companies. I was always friendly with these guys, but I knew I would never want to work for them. So they called me and said, like, “Well, we heard you’re moving to New York and you know-” I said like “Well, did you talk to my wife because she really is the only one who knows.” And they said, “No, no, no, we just heard. People told us,” and all this kind of stuff. “Do you want to come in? We want to offer you a job.” And I said, “No. That’s why I didn’t sell.” But they were very convincing, and I met them in what I now call the terrible pit of Manhattan, 33rd and 6th, Herald Square. It’s like one of the worst subway stations I think ever.
Anyway, I met them there at the office, and very charming everybody, and they put very interesting numbers on a whiteboard. And I was like, well, okay. I go home to my wife, and, “Okay, I have a choice here. So either we’re going to burn through a million dollars a year or I’m going to make more than that a year. I don’t know. What am I going to do?”
So I was very open to IPG and said, “You know what. It doesn’t really hurt for me to build a network in the US and understand the market better before I branch out to start my own business.” So I said, “I’m going to give you guys three years, and then you’re going to have to convince me to stay because I’m going to go and build.”
And we shook on it, and I inherited Reprise, that IPG bought in 2008. Reprise, when they bought it, was one of these beautiful paid search agencies in the United States, and they did what every holding company does with these companies. They take them apart into pieces and they try to do stuff with them that doesn’t come naturally to performance people.
So they had Reprise. They told me it’s 600 people or something like that. And they asked me, “Build a digital front. We need a digital front or a media agency, and you’re going to build it.” “Okay. Great. Love it.” Inherited this team of 600 people, realized they really only do search and they have no direct lines and they work as an internal service agency for the other agencies. I said like, “Wow. That’s impressive. I didn’t know that works.” I made a plan. You know, typical 100-day three-year plan, presented that. Everybody was thinking I was crazy because I said I’m going to double this business in three years, and I’m going to make it a front door and it will be amazing. And they said like, okay, let this guy do what he thinks is best.
So I merged a social agency into Reprise and mobile agency into Reprise. So I merged society and Ansible at the time into Reprise that got us to around 1,000-something people. That didn’t count as doubling because that was internal assets. And when I left the company three years later, it was 3,000 people and 315 million net revenue.
David (17:04): So what drove that?
Tim (17:05): What drove it was the fact that, and you know this, as an independent entrepreneur, you know how to build a direct sales pipeline, you know how to acquire direct business. That actually comes very naturally to you. What I completely didn’t know, underestimated was the incredible pipe of business that comes into these holding companies unfiltered. There’s this waterpipe that is as big as my car, and it just streams out. And you basically just move stuff to two piles, yes, no, yes, no, yes, no every day. It’s incredible.
And as an entrepreneur who build your own business, you’re just not used to that. You have to hunt for your business. Yes, of course, people call you, references, and people refer you, but you do not drink out of this water hose. We basically had three main sales channels. One was in this water hose of companies just throwing money at media agencies. The other one was the direct sales pipeline that we built ourselves, and the third one was the other agencies because IPG has 100 agency brands. And I don’t want to disrespect anyone, but out of 100 agency brands, I guarantee you, 90 of them don’t even know how to write SEO or paid search or social.
So we used all three sales channels, and that got us to 3,000 people, 70 offices, very good profitability, and very good net revenue growth, but you hear these stories all the time. In year three, I started spending more time on politics than on the business, and it became just not a great experience anymore because there’s this dude who’s not from here, who’s not climbed the corporate ladder, but becomes the fastest-growing agency in the network and that was profitable because the only transparent agency in the network that is profitable.
That is not really liked by a lot of people, but I obviously always had support from Michael Roth and the IPG leadership team because they loved the fact that this stream of money was coming and that we were building something really awesome.
David (19:00): And you’ve worked at now certainly two companies over 1,000 people, NetBooster and then Reprise plus IPG. And I guess my question to you is, do you think it’s possible to maintain a great culture, a nonpolitical culture, a client-driven culture at over 1,000 people?
Tim (19:18): Nonpolitical at all would be a lie. You can interview people to death, but you’re always going to find people who are more self-oriented than team-oriented. And that’s human behavior, I guess. So nonpolitical, no, of course not, but less political than what I experienced over there, absolutely.
David (19:34): How do you do that?
Tim (19:35): So what creates politics? It’s usually created by misalignment of incentives, number one. The second thing is also giving people power who do not really contribute to the growth or the success of the business. So understanding that a business in change, so in Reprise specifically because we grew 55% year on year like dramatic growth at scale, the team and lots of numbers still tell you about these townhalls we had where the team, in the Q&A, would like say, Tim, I don’t understand why we’re restructuring again. We just restructured nine months ago. What’s going on? I really would like to have a certain stability in my title, in my responsibilities. Guys, we just grew 50% year on year. A company does not grow like it looks on a nice beautiful chart in an investor presentation. A company doesn’t grow, except in parallel to your revenues. A company grows in steps and it retracts in steps.
So every time you make a large step, you do have to reshuffle how your company operates. You cannot have industry client teams anymore at a certain point because it’s just not going to work how to utilize central functions, all these kinds of things. So I think if you keep innovating your structure and adjusting it to your size, you have a chance of getting rid of a lot of the politics and, of course, identifying people who shouldn’t be in the business anymore. Either the business has outlived them or they have outlived the business. So it’s extremely important.
I’m not saying I solved it. I’m just saying my belief is if you create the right incentives, people are going to understand that as a team, you’re going to be able to achieve more. If nobody cares or takes the credit, you’re going to deliver the best work. But the problem with, I’m bashing holding companies too much, but because they are what they are.
David (21:18): I made a mistake of calling you a holding company earlier on. Now you feel defensive. It’s okay.
Tim (21:24): No, but they’re built over this for 60 years. I don’t even judge them for it, but the point is if you incentivize people against an individual P&L and give the management team, the next management team a discretionary bonus against P&L targets instead of looking at the bigger picture, you’re not going to get any transversal business.
So I landed up in other agencies in telling them, “We have this amazing performance marketing services. We can help you make more money.” And I said, “That’s awesome, but we’re not going to give you anything for it because it pumps my P&L.” I love it. So that’s the wrong incentive structure.
So this is why when you look at what’s happening in the industry right now, not that it’s dramatically intelligent or new, but a unitarian incentive structure makes a shitload of sense, pardon my French. I’m European. A unitarian incentive structure can be a game-changer if implemented correctly.
So why am I telling this whole life story? Because technically I have two life stories. We’re talking about one of them right now. All these inspirations and all these experiences I made, when I left IPG, I sat down and thought, nothing has changed of what I wanted to build 10 years ago. I wanted to build the coolest, independent, at that time, performance marketing agency in the world. There were clients would want to work with because it’s amazing, it’s fun, it’s great.
David (22:42): Second to 3Q Digital, of course. I mean you can’t be the top, but you can be Number 2, so.
Tim (22:47): Right. Okay. Fair enough. So I had still had that vision and I was like, okay, I have tried to build it, selling my business, and dealing with what I inherited in terms of a listing of a company and the investor structure, learned a lot, made money, but I don’t think that was the key to do it because I wasn’t holding the keys to the car. I was still just sitting on a seat in the car. Okay. So that doesn’t work. The second version of that was try to do within a holding company where you have all the means, all the money in the world, theoretically, an endless pipeline of business coming your way, but you have zero control over your destiny. Also doesn’t work. So I was asking myself, what’s the best way to do it. And I realized a dispersed shareholder structure, bad idea. No ownership, bad idea.
So I mapped it out, and I have to say this full disclosure, I’m not doing these things myself I have an amazing team of people that have followed me through this journey. My CFO, my COO, now my US president Craig Allis, who I worked with over three years in Reprise building it. I didn’t do these things myself. I’m actually not so good at it, but assembling amazing people around you like Tom Armbruster who’s my COO, Craig, who’s my US president, Natalie who is our Chief of Staff. All people I’ve worked with over the last 12 years building these companies.
So I think the secret is Unitarian incentive structure, building something I really believed in for the last 10, 15 years I anyways wanted to do. And the secret to the sauce or let’s say version number four, if I’m honest about it, will be this one investor, very clear aligned targets and incentives across the entire group and building the structure from the ground up. Let’s hope it works. It’s going to work. The question is how’s it going to look in three to four years? I hope it’s amazing, but you only know when you’re there.
David (24:40): And so that’s the foundation of Meet the People. You’ve got one investor, founder-led, but you’ve all also made some acquisitions. I think you made three acquisitions pretty much immediately upon founding the company, right?
Tim (24:51): Right. And we’re going to do many more. Obviously, the sentiment in the industry has changed. And I don’t know how much the people who listen to your podcast know about the big movements in the industry. I’m going to explain it for two seconds.
David (25:06): Most people listening to this, I think, are performance agency folks who are worried about whether Google is changing the algorithm.
Tim (25:14): I know. I’m worried about that as well. There’s a worry that comes on top. So the big movements are the advertising industry at large has not necessarily been the most exciting industry for financial investors over the last 10 years. If you build a successful agency, there was always a way how you can make your money and sell your business and whatnot. But holding companies for the last 10 years were valued at what 1, 1.25 times net revenue. So your $10 billion business, you basically valued at $10 billion. So for gross capital, not really an attractive field to really go into. Only attractive if you are a smaller shop and you want to sell to this guy.
David (25:56): No. It’s not exponential return from investing in an agency typically.
Tim (25:59): Right, but that has changed. And that has changed when Sorrell left WPP on his free will. Who knows? For him to clarify. But when he left WPP and started S4, he started telling a story that we performance marketers have always told. The difference is he had a totally different audience and obviously totally different financial means to build something that’s today as for capital and media. And that sentiment has been building over the last, I would say, five, six years with the incubation of You & Mr. Jones. Now it’s called Brandtech.
Same with Stagwell that’s now Stagwell MDC/Stagwell. This sentiment has been building up and valuations for these next generation holding companies have been incredibly accelerated on the back of the claim. Some people are the Teslas of the advertising industries, obviously complete garbage, but the reality is that a lot of capital looking for investment opportunity at the same time much more viable business models who are not tied down by the 80-year-old infrastructure of a holding company, they just start building a lot of business.
So there’s a new generation, there’s a new wave that has been building up over five, six years, and is now, I don’t know if it’s hitting its peak, but definitely hitting its glory. And that just makes our mission assembling multiple agencies under one roof, building a new infrastructure, applying the new work ethic that just became very popular now during COVID but was there in agencies before already, just the package makes it extremely attractive to investors.
David (27:40): So how much of the story do you believe and how much do you not believe? It sounds like you were skeptical of the notion that S4 is the Tesla of the agency world, but you also have said that some of these bigger established holding companies, there’s a lot of things that are getting in the way of innovation there.
Tim (27:56): Totally. why do startups exist? Because if you bid infrastructure from the ground up with the tools that are state-of-the-art today, you’re just going to be simply more efficient. That’s the reality of it. If I give you a 50-year-old business and you have to turn it around, it’s going to take you 10 years just to move a pencil.
So it’s not their fault. It’s not the fault of the holding companies that they are what they are because they get shareholder pressure from here. They get banks ripping them because they have massive loans. But every industry at some point comes to a point where disruption is inevitable. I think the advertising industry is there, but does that comply with, and I’m quoting old numbers here, eight times net revenue multiplicate and valuation of S4 Capital? I would say no because we’re not a tech company in this industry; we are service company.
So when I say the discrepancy between the reality of where a holding company at 10 billion revenue trades and where a Sorrell has traded a couple of months ago at, what was it, 5 billion, there’s just no reality or sense in that. That has been adjusted. Now he’s trading at 3 billion. Not saying that’s appropriate, but he’s trading at a more reasonable valuation. But the point is that if financial markets understand, clients understand, and the industry understands it’s time for disruption, then there is an opportunity to build something new, especially because you can raise capital against your vision, and that’s exactly what I did, what you did, and what we do in this industry now. And that’s exciting. That’s great. And if you can then increase the value two, three times and also give some of that beautiful value creation to your employees, then I think you have a pretty good recipe for success.
David (29:34): Yeah, it makes sense on paper, so to speak. I’ve sometimes tried to describe what I’ve tried to do is create a credible alternative to the traditional holding companies. Or another way of describing it is when an old brand works with an old holding company, it’s like two dinosaurs getting married before the meteor hits.
Tim (29:52): But they might be very happy until that point, you know?
David (29:55): They’re very happy until they grow up. The other interesting thing about it, though, is at the end of the day, a lot of decisions that people make are not necessarily rational decisions. And I’ll just share a memory. When I went and met with the Head of SEM at Apple, this is like 15 years ago, I was having lunch in the Apple cafeteria, which by the way, the only free item on the menu is Apple, for those of you who have been there.
I said to him, “So would consider working with my agency for your SEM.” He goes, “Apple would never work with an agency that has less than 300 people at it.” And so I wonder if like, will we ever get to the point where Procter & Gamble says, you know what? We don’t have to choose between the top four holding companies. We are going to give all of our business. You could say that there’s a value that holding companies provide there, too, which is that if Procter & Gamble needs 500 people working on 40 different products, they can bring those people in. They have the staff.
Tim (30:48): I would say no to that question. Why? And it again has nothing to do with the reality of what your company or my company can provide as a service. And usually independents are better at specific services than a holding company can ever be. The reality is you have to think about the audience you’re talking to. So when you talk to P&G, to Apple, and no disrespect. Would love to work for P&G as we all do, the reality is you’re talking to a VP, SVP performance marketing, if you’re lucky, right? What’s the ambition of that decision maker. The ambition is to first of all, and again, pardon my French, not to fuck it up. And secondly, so look really good in front of their boss. And again, no disrespect for that, but that’s how the corporate ladder works.
And you climb that corporate ladder six, five years until you get a promotion in these companies. And it’s a very big new paycheck you’re going to get. So this famous quote still applies. Nobody ever got fired for hiring IBM. So that’s the reality. And this is why I sold my first business because I figured I’m hitting this glass ceiling because I can’t tick the box of us being 350 people. I can’t tick the box of me having an office in Paris, even though you’re never going to visit that office in Paris.
So I realized that at some point scale matters as one of the many boxes. You’re not going to get paid better for it, but you’re going to have the potential to win more pitches. And we did. We won pitches. I would have not been able to win as a German-built Brand performance marketing agency.
So scale does matter to win these kind of accounts, but I do believe, and one of our ambitions is we are working for these companies. We’re working for IBM, we’re working for Google, we’re working for these large, large companies but as specialists, meaning in one specific trade and we are really good at it. And that’s why they pick us for certain services. Even if we end up being 5,000 people, 6,000, whatever it might be, we’re never going to be the AOR for digital marketing of any of these brands. I just don’t believe it. And if I do, maybe I’m going to give myself an extra day of vacation, but I don’t think it’s going to happen. The reality is the next level of clients is where the sweet spot is.
So I cluster clients in these three layers. The first layer is the A brands, the Fortune 500, the companies everybody wants to be involved with and where your young talent wants to work on and all these beautiful things, the Disneys and whatnot. The reality is we are only going to be specialists. Maybe we’ll be allowed to branch over two, three services at a time for a specific subdivision of that business or whatnot.
The second layer of companies is companies around half a billion to 3, 4 billion of revenue a year. First of all, you talk to the C level directly, usually CMO, CEO, or the private equity fund who owns it. And because they cannot afford the overhead to have one director or VP for each of the different channels, they need more service from you. They need more strategy from you, more business planning from you. You become a business partner, and these relationships, as you have experienced it and I have experienced it, last for 10+ years if you do a great job. And you can do everything for them if you do it right, if you do it well.
And then the third layer is new companies: startups, high growths, fast paced, very exciting. Also very exciting for staff, very exciting for the team to work on these accounts because they become famous overnight. The problem is that it’s intense volatility of budgets. Today, we have a million dollars we just raised capital. Tomorrow, oh, we are dry. We can’t do anything. Can we do more SEO overnight? You know what I mean? Like it’s just this constant volatility, but you can build a beautiful business on the back of that. And I have to say, congrats, David, you did that.
So I think our sweet spot as larger independent is the second and the third layer because they do appreciate talking to the CEO about the latest stuff that’s happening, and then be a specialist for the really large companies. I hope that answers the question.
David (34:55): It does. I think I know the answer to this question, but if Procter & Gamble came to you and said- I know you just started. So you’re at, I think, 350, 400 people, right?
Tim (35:03): Actually 500 people.
David (35:03): Five hundred. All right, well, let’s say that a year and a half from now, you’re at 1,500, and Procter and Gamble comes to you and says, Hey, we’d like you to pitch for the digital AOR, are you going to pitch it? Are you going to say, this is a fishing expedition? And really the answer is it’s going to be WPP or a publicist, so I’m not going to even-
Tim (35:20): It’s a very interesting question because the word of fishing expedition in a pitch I only learned in holding companies. Somehow, we always jumped head and feet first into these opportunities. Like, as an example, we were what 800 people, performance marketing agency from Europe, had no experience in Middle East. Emirates calls. I know you have done a lot of work for Lufthansa and Swiss airlines. Do you want to pitch our paid search accounts, 50 million in paid search, 2 million in SEO. And we were like, well we know nothing about a centralized airline, and we know nothing about the Middle East.
But I put myself on a plane, flew there, and we put a team together and pitched it and won it. So I don’t think I would’ve had a chance, but again, it’s a specialty. It’s a special service where we had experience in the industry. So I think there’s more variables.
On P&G, I would most probably say, listen, we are not great globally. We are great in a region. We would like to give it a try in a region, something we can control. Even at Reprise, we pitched things like Unilever, won it, pitched things like Nestlé, Search AOR. And we did win it as a roster then out of four agencies. But we got really good adoption. We got 30 markets after a year or something like that. I think you do have a chance to go for that, but you have to be conscious of the people and money and stuff you burn through. But to answer your question, depending on the region, I might.
David (36:44): Okay. That’s fair. So let me ask a follow up to that. You’ve talked about why you’ve built this agency and maybe who you’re going to go after. What’s your elevator pitch? What’s the reason that people should choose Meet the People?
Tim (36:57): Yeah. So again, it depends on the audience. From a client perspective, if a client looks for an independent player who’s growing fast and can deliver fully integrated thinking, not only digital, but traditional and digital, because a lot of people don’t answer that call because of scale, it’s worth giving us a call.
So from a talent perspective, it’s really about working in a new work environment, fast-paced, offices everywhere, or it doesn’t matter because we have people in 20 states in the US, but we already have six offices in US and Canada, and we’re going to build more because I believe that new work works, but you need to have a bit of infrastructure and social life at the same time, and Unitarian incentive structure where everybody can participate in the success of the group. And I mean it when I say it, not just from a cash perspective.
We’re building an equity opportunity for everybody. So that’s unique, I think. And then from an agency perspective, so companies who want to join us, the pitches stay dependent, work with founders to build something for founders, and diversify the risk, really, and become part of something exciting, bigger that is not a holding company as such.
So we are actively acquiring more companies, but I don’t like to use the word acquisition because our deal is that we do obviously give the founders cash. It makes sense because they do want to have a liquidity event. But for me it’s much more that they become part of our equity story. So we don’t do earn-outs. It’s a 50% cash, 50% equity swap basically. And therefore they get a seat at the table and they stay independent as a brand. We don’t change the brand because we believe the brand has, if not more, as much value as the founders themselves, especially when the company’s not just two years old.
But lots of these companies, we bought into creative agency out of Chicago that’s more than 30 years old. Who would change that brand? That’s the biggest mistake ever. So we believe it’s just some things that can be done better than what we have seen in the past. And there is obviously the unitary brand approach that Sorrell is going for, and then there is the fragmented brand approach that Stagwell has been going for and then trying to figure it out now by merging this and that because they need to handle the growth. I think there is a golden way in the middle where you can keep agencies independent and best in class while you create a layer of integrated services or at least consultancy and strategy on top of it.
David (39:20): Does that mean that there’s a central team that is a Meet the People team that helps out clients across all the different agencies and strategy and the consultation service.
Tim (39:31): Again, if you build a client centric organization, you really have to pay attention to where’s the client coming from. Let’s say our creative agency out of Chicago, VSA Partners. Amazing company, 250 people, 30, 40 years in the business, creative design agency, incredible creative, right? If they win a client and that client also would like media execution, it would be a massive mistake to take the lead away from VSA and put it into Meet the People, because the ownership is clearly there. What drives the client to the group is there.
And that’s the tricky part. You need to educate each individual agency on the services they need so they can really understand them and they trust the quality they’re going to get. So certain services will be centralized. A lot of the strategy, media planning, for example, because it touches so many points, and even business consultancy.
When a client comes to me and says, ultimately, my goal is I just want to double my business. And I know it comes from digital and experiential, but how do I orchestrate this? My CMO doesn’t really know. So that happens actually quite a lot now, and I didn’t foresee that, to be very honest. I think nobody needs another agency brand. And that’s why we built Meet the People less around attracting clients, more around attracting talent because I thought nobody really needs another new generation holding company as such as a client. You’re not going to call me and say like, I want everything from you. It’s just not going to happen. You have to be realistic.
So I thought the main new business driver will be the actual agencies under their brands, and lo and behold, we are six months in, and I’m getting more and more inquiries from the top, of course partially, because I know so many people in the industry, but also because they really want to see how we can orchestrate it.
So we don’t know. We are building the plane where we are flying it. This is six months. We’ve acquired three amazing companies. We’re going to most probably close on three more until around into the second quarter. And we have a strong pipe for more. It’s exciting. And we’re building this not only in North America. We’re also building it in Europe in parallel.
David (41:29): Well someone’s going to be paying for that Paris office then. That’s great. It does sound differentiated. I’ve always wanted to do an ad and adage that says no one ever got fired for choosing a holding company, but then again, no one ever got promoted either.
Tim (41:49): Let’s do it together.
David (41:53): It’s one of 20 ideas that I’ll never actually do, but I’m happy to talk about.
Tim (41:56): Yeah.
David (41:58): So you talked about the Unitarian center and giving founders equity. I think that’s very interesting. Tell me more about the culture. How do you differentiate this culture from other agencies?
Tim (42:08): Obviously because we are six months in and we are a team of five people on the Meet the People corporate structure, we have not implemented something that I would say is outstanding in how we bring pieces together, because it’s such a new journey. But the ambition is that certain pieces are just a headache for everybody. Like benefits, not a headache for the people receiving them, but organizing that as an [crosstalk] benefits, taxes, finance, like all of these trades, they need to be at scale. You just have totally different leverage. Infrastructure. All these stuff just is extremely inefficient when you are a small agency. It just takes a lot of attention away from what’s core and that’s producing amazing work for clients. So that’s what we are focusing on first because we are basically delivering a service to these independent agencies because they run like independent agencies. It’s the difference that the former owners hold equity in the larger structure.
So I want to give them the tools to make their life easier. For example, rolling out an HR tool that actually works where the nine grid evaluation process is there instead of everybody building their own little thing. Lead generation or lead management across the sales funnel, there’s obvious solutions for that that make total sense, but an agency with 50 or 100 people has zero time in implementing that if the CEO or founder doesn’t put attention on it. That’s the reality. So you hit this self-made glass ceiling all the time where you’re like, crap, how do I get to 100 people? How do I get to 200 people? You have been there.
So first of all, we are going to help with that and with a lot of people centricity. So how can we make the experience for talent better? It’s not only because there’s obviously a massive talent crunch in our industry. In all honesty, in digital advertising, there has always been a talent crunch.
David (43:59): Now more than ever for sure.
Tim (44:00): I don’t remember a year where my team would say like, oh, it’s easy to hire in 24 years in the industry, but talent wants to work differently today and was all right. We are not a bank. We are not, as you said, a large CPG. We don’t have the constraints of these companies. We don’t own real estate and billions of dollars and have to use it so we don’t have to it off. It doesn’t exist. We can do beautiful mix of offices that can flex that we can operate the way we want it with war rooms around it, project rooms, and some coworking in the middle. And then in smaller regions, we can just partner with coworking spaces and own a piece of it.
So there’s so many ways how to just make this experience better, and we are definitely baby, baby steps in an infant structure right now because we are so young, but the vision is to be one of the leading forces when it comes to people-centric and people-oriented organizations in our industry.
I don’t know, but how many people do you know who have a full-time job in a holding company and as a side hustle help [friends? 45:01] with paid search. I mean everybody. So why do they do that? Because they feel they have to work in a holding company because that’s where the money is, and at the same, and they want to do something for their passion. Why is that not normal? You know what I mean? Like why can’t they do that in a day job without having to hustle? I don’t know. These are things that I think about a lot. So I really would like to figure out how to solve it or how do you give kudos to your coworkers? Like how do you really empower people? We try to implement this in IPG, and the HR team gave us little notes, like, when somebody did something great, write a little note. I said like
We are a digital agency. I just wanted to quickly mention this here. So why don’t we build a system where you can give kudos in form of points to people who did really well on a certain job. And if it’s a finite amount of coins or whatever it is, points, they have a value. And why can’t we transfer that value into equity at some point?
If you put yourself into the shoes of a junior who has four years under their belt, how do they feel connected to what I’m saying here? Like why does he or she or they care what vision I have, what I wanted to fulfill since I’m 21. They don’t care. So how do you give them a work environment that is better than out there because we can’t compete with. wait, was it Google, six weeks a year work from anywhere on the planet. How do I compete with that? It’s impossible.
David (46:40): Yeah. Well, having started the business in Silicon valley, I tell my team all the time. I say, if you want a 30% raise, all you have to do is answer the phone because someone’s going to offer to you. And trust me, that Uber, Google, Apple, Spotify, whoever else is a block from our office, they’re going to give you more compensation. They’re going to give you stock. They’re going to give all the cool t-shirts in the world, free lunch. They probably are going to give you free manicures once a week. But if you want to work for a culture that you really believe in and you want to learn faster than anywhere else on the planet, that care about learning, working at Uber, it’s cool in a lot of ways, but your knowledge of online marketing is not going to accelerate at the speed of working at an agency.
Tim (47:19): Right. Do 10 years with us and then you’re going to retire at Google. That’s much smarter.
David (47:23): Right. Exactly. I think one of the things about your model that I think is interesting, it actually reminds me of what Andreessen Horowitz has done in the venture capital community. Seth Godin has this book called Purple Cow where he talks about how when you go through the countryside, the first cow you see is cool, but the hundredth cow you see, you don’t even pay attention to, and there needs to be a purple cow to differentiate yourself.
And so Andreessen Horowitz came along and said, yeah, everyone’s money is equally green, but in addition to giving you money, we’re going to get you talent support and engineering support and HR support. And suddenly all these startups were like, well, I could take 10 million from Andreessen and 10 million from someone else, but they’re going to help me hire people. But now of course, everyone else has adopted that model. But that seems to be actually kind of central to your thesis.
Tim (48:03): Yeah, it is. And our hope is that over time the agencies will appreciate that they have business partners next to them who value their dollar as much as the other dollar. Because what I try to explain to the agencies also is like, listen, if every dollar is equal because everybody’s incentivized the same way on the equity portion of the value of the company, the dollar you’re giving to someone else actually is worth more because you don’t have to do the work yourself. You don’t have to hire someone else to do it. So there’s a beauty in that model. I’m going to report back in a year or two if it worked.
David (48:37): Yeah. Well, it’s a positive incentive.
Tim (48:40): Yeah. And what people mistake also, and I’m sounding like a wise old man here, but I think the mistake people make is that they think and building a new business, a new work model, you have it all figured out. And that’s what I tell the agencies all the time. We have nothing figured out. I want you to join us because I think your brain will be extremely helpful for us to figure out how we get to what I think it should be. You have a seat at the table. I’m not saying it’s a democracy all the time because you can’t run a business as a democracy, but the more smart people we surround ourselves with, the more likely is we’re going to figure out a system that works better than what we’ve seen before. So I have this ambition and I have this vision and luckily my capital partner believe in that as well.
And we’re going to build, and if we see it doesn’t work, we’re going to switch and build it differently. You have built businesses before successfully. I’ve built businesses successfully before. If you would’ve told me in ‘98, I’m going to sit in a New York building a multiple thousand people business with private equity money in the bag, I would have laughed at you. I would have said like, where are you from? Mars? Like you learn as you do it. And if you have the right ethical belief system, if you value people, if you value clients, and if you value their commitment and their money to your purpose, I think you’re going to figure it out somehow.
David (50:04): You know, we talked earlier about why is it that the culture of a large holding company isn’t what it maybe should be. And actually one of the things that occurred to me when we were talking about that was that the bigger you get, the more people have an incentive to keep the status quo and not to change. And so what you’re saying, which makes a ton of sense, is like you have to be willing to admit that you’re wrong and be willing to try new things. Inertia is probably the number one killer of ideas in any business, but especially as the business gets larger, because it’s like, oh, if I do that, I’m going to have to change the way I do my job, or I’m going to have to fire someone, or I’m going to have to learn a new technology. And being able to say, this is a living document as it were and we’re just going to keep on evolving is a huge cultural benefit.
Tim (50:47): But I think that’s what I tried to describe with my team at Reprise when we kept restructuring the business every six, nine months. And obviously people don’t like that. They don’t like the unpredictable, but at the same was the only way how to work with the growth. And yes, of course, some people don’t fit into that structure anymore and we have to be honest about it, and a lot of people intensely empowered because all of a sudden, there’s this new career path they can go on. So anyways, again, this is all wisdom and obviously my dream to build something like that. And it’s exciting, but we’re going to have to check in every couple of months to see how it’s going.
David (51:21): There’s a book called What Got You Here Won’t Get You There by Marshall Goldsmith and that’s kind of the same concept. And to be clear, I haven’t built an agency as large as the now third agency that you’re building. But going from 10 people to 50 people, even, I mean the people that were really effective at 10 people were not as effective at 50 people.
Tim (51:41): It’s incredible, right?
David (51:42): It’s so hard. It’s so hard to say to someone, you are amazing. You are a huge part of this business’ success. Now leave.
Tim (51:50): You. No, but it’s not always leaving. At a certain scale and with certain financial pressure and in holding companies, there was always financial pressure no matter how profitable you were because you had to make up for stuff that wasn’t working, but I think in my experience, it was not only changing people. It was also telling people, you know what? I think you need to focus on something else now within the business. What ideas do we have you would be passionate about? Because there’s always something new to build. I can’t even keep up to be honest. I can’t keep up with most of the stuff that’s happening.
If you look at the rabbit hole that SEO is, the rabbit hole that paid search is, the rabbit hole that social is, and the rabbit hole that TikTok is, [crosstalk]. So tell me what you’re passionate about and we see if it fits. Maybe we throw a couple hundred thousand dollars at it and see if it’s viable as a product for us. And if it doesn’t work, fair enough. We have to look into each other’s eyes and say, okay, that wasn’t a great idea. I don’t know. Be an entrepreneur building. I think that’s the secret.
David (52:47): What advice would you give to someone who’s starting an agency, whether it’s starting out with 350 people or starting with 5 people?
Tim (52:53): My belief is you have to be either extremely naïve like I was or extremely passionate about it to start an agency. The beauty of the agency business is there is no entry barrier as such. You don’t have to have a lot of capital to do something in the space. You can start with your own time and your own network and your own smarts. That’s incredibly powerful because you don’t need goods. You need a bit of tech, but you can license that easily.
Starting a digital agency with a network and some industry experience is actually not super complicated. The problem is scaling it. That’s really the problem. Getting from 2-3 people to 15 people, and then from 15 to 40 people, and then live with the fact that I’m 50 people. I need to create a second management layer. How do I trust these people when all the clients are calling me?
And the same thing happens at 200 people, again, where you are like, oh, now I need this extra infrastructure. I need to open office nationally. Like whatever. So my advice is, first of all, if it really has burned for a couple of years and there’s this inner feeling of like, I’m just done and I need to do this now, do it like. What’s going to happen? Of course, don’t burn through all your savings, but what’s going to happen? Because it’s your own time. There’s no CapEx or you can work from home now even better than ever before. So there’s really no barrier of entry. A larger organization raising capital and then eventually purchasing a company is a totally different animal.
If somebody doesn’t know a lot about how to run a large-scale P&L, how to track capital, how M&A works, that’s obviously very difficult. I wouldn’t advise for it. And I’ve seen a lot of, especially in the United States, and I’ve lived and worked in many countries in my life and built and acquired and sold and managed and merged agencies of all sizes, taste, scale, and smell, I think, especially in the United States. There is a trend of smaller agencies trying to acquire other smaller agencies. And in many cases that creates a debt burden. When they lose their largest client, they can’t handle anymore.
I’ve seen this over and over because acquiring depth in the United States for companies are so much easier than in Europe, for example. So again, a company that can grow out of its own cash flow is always the best. A company that needs external financing, if you don’t want to do large scale like we are building it now, you’re going to need depth and money doesn’t come for free.
David (55:18): Yeah. I think those are great points. And I think what you’re really saying is there are inflection points at every stage of a business. Going from one person to 20 people is a huge inflection point. And a lot of people don’t make it past that. Like you said, they don’t know how to build a second layer of management. They don’t know how to delegate and not be on every client call and every sales call, but also going from 200 people to 400 people is also-, one of the biggest mistakes that I made was I waited too long to hire a CFO. I just assumed like, you know, you just put things into a spreadsheet and you report much money you made this month and how much you owe.
Tim (55:49): Just numbers, isn’t it?
David (55:51): Man, when you see what a CFO can do in terms of just optimizing your financials, it’s game changing, but you have to learn that along the way.
Tim (56:00): Absolutely.
David (56:01): So my last question, I guess just very broad question is, what do you think the future holds for agencies? And what, if anything, are you worried about that that we need to be thinking about?
Tim (56:10): Yeah. So agencies are never going to go away. First thesis I always have is aren’t you concerned about in-housing?
David (56:18): That was one of my questions that I was still [inaudible 56:20]
Tim (56:21): In-housing comes in waves, and waves in the economy come with contraction and scale. So you go through a financial crisis, the CFO takes over the CFO. The CFO takes over, outsourcing starts. Once you come out a crisis and everything is golden, the CEO takes over, the vision takes over the in-source because they want to have people closer to the product. Once they hit this downfall again, the CFO is in charge. He calls the numbers, and they’re going to outsource.
So outsourcing comes in waves if you are not a one trick-pony. If you are one-trick pony, I would be more concerned. That’s why diversification and services said it. So it’s important. I know there’s a lot of fantastic specialized agencies out there, but I always had the urge to diversify at least a little bit on dependency on clients and on dependency on one service or channel.
So that’s one concern people very often have. The other concern is will AI replace all of us? So reality here is I’m so tired of this technology, innovation, digitalization, automation conversation, because in the end, all these tools, without a human being coming up with a great creative idea, with a great strategy that’s different towards ever been there before, not going to do anything but optimize rows. And that’s great. And they’re great to optimize rows. They’re great for you to design one image and make a thousand images out of it, and maybe even understand patterns, but you still need a human being to make sense of that from my perspective and come up with something. And that’s most important, that is different to anything that has been ever been there before. AI can’t do that. And maybe it can, but in the end, I don’t want to buy something from AI.
I still want to see someone. I don’t think agency is going to disappear because Google is going to succeed optimizing everything. I don’t believe it, but maybe I’m also old than naive. Who knows? That’s the second fear everybody has.
My main fear is macroeconomics because macroeconomics force workforce, force clients, force us as individuals to make decisions that uproot everything we have known before. And I think COVID, the pandemic, has been one of those. And luckily digital agencies surfed through that pretty resiliently purely because everything went D2C and everything went on. That’s how it is, but they were also losers there. That’s the reality of it. And whoever was winners now might be losers in 5 or 10 years when the next thing happens.
So these macroeconomics that we have no influence over, financial crisis, pandemic this stuff you just can’t write into a business plan ever. So that creates fear with me to be aware, not fear, but I’m concerned about that. One good example is overleveraging on debt. That can be avoided because the financial crisis will happen at some point again. We don’t know if it’s happening tomorrow, in 10 years, in 20 years, never, ever, but common sense.
David (59:27): Probably this week, that’d be my guess.
Tim (59:29): Well, who knows? So everything into crypto.
David (59:32): Yeah, exactly.
Tim (59:35): Just got to print some and hang them on my walls. Who knows. These are things that concern me. But in the end, if you build a business, where you build it, of course you can leverage your business. But if you build it and you don’t feel you are on the edge, like you don’t feel anxiety with your decisions, I think you are on a good path. Sometimes you need to feel anxiety or you need to feel uncomfortable, but if you’re constantly showing up to work managing your company and you always have fear, then something is definitely wrong. You know what I mean?
David (01:00:06): Well, I have some bad news for you. I didn’t want to tell you this, but I am actually artificial intelligence. So the touring effect has been proven that you’ve tricked and now all the ads are going to be created by bots.
Tim (01:00:17): You want to work for me?
David (01:00:20): I have to ask my operating system if that’s acceptable.
Tim (01:00:21): I going to pay you with better energy.
David (01:00:25): If it’s a Tesla solar system, then great.
Tim (01:00:28): Direct access to the matrix. That’s what I’m going to give you.
David (01:00:31): No, those are great.
Tim (01:00:32): We’re at time for sure, but we didn’t even talk about the other half of the brain, the whole venture capital startup stuff.
David (01:00:41): Well, yeah. I was going to say, I wish you could give me your secrets to investing in startups because I think I saw Airbnb and Palantir and a couple other pretty amazing companies on your list of angel investments. If I started an angel partnership, it Dumb Money LLC.
Tim (01:01:00): The opposite that you’re actually bringing real benefits to these companies because you actually know something.
David (01:01:06): I know something about marketing, but when it comes to investing, I think a lot of people think they know investing and turns out they don’t. Do you have a tip for how to come up with a great investment thesis?
Tim (01:01:15): During these times where the stock market is down 40% and crypto is more volatile than NFTs are, I don’t think so. But I think what I’ve learned is just as much as I knew about SEO in ‘98, ’99, 2000, there’s people who know just as much about certain asset classes. And learning from them is extremely helpful. Understanding the intricacies of these asset class, no matter if it’s early stage venture or if it is ETFs or if it is real estate or if it is leverage on things, crypto, NFTs, people are so deep in this rabbit hole. I could never be that deep in the rabbit hole. So what I do is I listen a lot and then I see if there’s an opportunity I feel comfortable with. And in the last 15 years, I’ve been lucky on some, but also I’ve been unlucky on many. It’s about what the expectations are.
David (01:02:08): So have you invested in NFTs? Let me ask you that.
Tim (01:02:11): I do not invest in NFTs, but I do invest into NFT infrastructure because I believe no matter how volatile Coinbase is a great example for crypto, they still make money. So infrastructure is key if you don’t feel comfortable going on every rabbit hole—one of the many learnings I made in my nearly 46 years of my life.
So I’m invested in a couple of companies in that space. One of them, OpenSea, through the Animoca brands investment we have, I’m invested in an NFT, Metaverse play, in the gaming industry. I wouldn’t go into a single NFT because I just simply don’t understand enough about it. That’s the reality. I just don’t know. So infrastructure, blockchain, crypto infrastructure, trading infrastructure, NFT trading infrastructure. Great. That works.
David (01:02:58): I think one of the problems with growing older is that our ability to really see a trend or get immersed in a trend gets harder and harder. I’m just imagining that 10 years from now, I’ll be hitting myself saying, well, if I just bought a Tom Brady NFT for $80, which is worth $800,000 today, I would have been such a genius. I just don’t have the brain power. I understand the concept and of course I understand the concept of blockchain and crypto and all that. I just don’t have the brain power to really wrap my head around it.
Tim (01:03:26): Exactly. And honestly, not the energy. Like I don’t have the energy to sit like nights and nights and read everything about Bored Apes. I just don’t have the energy. Not that I’m not interested because I know my kids are sometimes already in that rabbit hole. I just don’t have the energy and there’s just so many smarter people out there. I’m not saying we should listen to all the Clubhouse garbage that’s out there and all the Twitter tweets and dogecoin and stuff. I think if one is not comfortable with it, there is structured vehicles, and ETS is a very good way to do that, where you diversify your investment, it’s rather safe. None of it is safe, but it’s safer than going for an NFT.
In the crypto space, I think if people are not comfortable with crypto at large, because it’s super freaking volatile, wait for the first ETF. That will be mitigating the risk dramatically. Yeah, you’re going to be late to the game. Fair enough. But I was late to Google as well. I told I dad when pre-Google IPO. He said, “Should I buy Google stocks through my bank for $100,000?” It was trading at $85. I said, “No. I know how to hack Google. That can’t be good.”
David (01:04:34): But what’s interesting, though, is that you said, your story is you started doing SEM really when it came out because you were a young person who was like, well, this is better than working at the bank, and you’ve longed onto a trend because there was no opportunity cost loss for doing it. And the same as me. I started doing it the same time. And had we been born 10 years later, if we had started in 2011, we probably would have been social media experts. If we started in 2021, we probably would be crypto or NFT experts.
Tim (01:05:03): Yeah. Totally right. So what do we learn from that? When I built my first company, and I went to my dad, my dad was always supportive, but I needed $50,000. I had this genius plan of accelerating the growth of my non-existing business. And I went to my dad and he said, “I don’t have the liquidity, but I have this friend. He has a big company. Maybe he wants to give you some money.”
So I went there, pitched the whole story of how great it will be to replicate building websites, more automized, whatever, like complete garbage, of course. And he said, “No, I’m not going to give you 50 grand.” So what do we learn from that? My perspective is our job now in our generation is to support people who have innovative ideas. And this is why I started investing into early stage 15 years ago.
I’ve invested more than 50 companies or something since then, but lots of them failed, but that’s okay. That’s part of the game. But the ones that don’t, even if you just break even in the end, you have done a massive service to the next generation. So if you don’t break even and you’re actually up, amazing. There’s another vacation in there, maybe another car, maybe better solar panels, whatever it is we need to do for the next generation as well. But so far it has worked. I had some amazing exits, and I also had a lot of burn in these 15 years, but in the end, you feel amazing because you have helped to empower the next generation of founders. That’s part of what we have to do as entrepreneurs.
David (01:06:25): I love that sentiment. I will just say that the reason that I think I’m not a great angel investor is because I believe too much in entrepreneur. I want every entrepreneur to be successful and I just want to say yes to all of them, and a good investor says no to 95 out of a hundred pitches. But I’m like, I can totally see how this could work, and I can totally imagine that.
Tim (01:06:45): I’ve been there. I think the first 10 were my most terrible investments ever. Like one I failed three weeks after I put the money in, and it was a friend of mine. He said, “I have this fantastic idea. We going to build an SSP and it will be the thing in programmatic.” I said, “Yeah, I totally see it. Programmatic is big. That’s the next big shit.” And he said, “I just need $75,000.” I said, “Okay.” I write the check. Three weeks later, he calls me, “We’re bankrupt. The money’s gone, but you can be on stage of my conference now every year for free.” I said, “Great.”
But it’s part of it. I’m also in love with founders and I’m in love with their stories and I sometimes catch myself writing a check without having actually done the proper due diligence on the business. But I also learned that if I do it for making money, then I’m going to put it into venture capital funds as an LP because it’s diversified. It’s professional. If I do it to help someone, then I do it to help someone, but then don’t expect 100x.
David (01:07:41): Yeah. You got to set your expectations.
Tim (01:07:43): There you go. It’s the balance of things. It’s like you don’t put everything into crypto. You also want to own your house. Call me conservative.
David (01:07:53): Well, we got a bonus conversation on venture investing and we concluded that Tim is probably a better investor than I am.
Tim (01:08:01): That’s to be seen.
David (01:08:03): I think it’s been seen, but this was great, Tim. I appreciate you coming on and congrats on the launch. It sounds like it’s going to be a company to watch. And I guess we’ll have to check in, in the next couple months to see if all of your theories on how to grow the company have turned out as well as you’d hoped.
Tim (01:08:20): Yeah. I love that. Happy to come back. And again, thank you for giving me an hour and a half. It’s the longest I have done. So hour 17 actually. Longest I have done so far, and really appreciate it. It was great reconnecting, and I hope I see you very soon.
David (01:08:32): Me too. Absolutely.
A new episode of Agentic Shift drops every Wednesday. Subscribe on your favorite podcast platform or visit agenticshift.com to see the latest episode.
Links
Purple Cow: Transform Your Business by Being Remarkable, a book by Seth Godin
What Got You Here Won’t Get You There, a book by Marshall Goldsmith