DeepSpecialization_EP 101_Alex Melen_Video_Edited_V2
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[00:00:00] Alex Melen: It's not just taking all the profits and starting next year with zero and every year, slowly try and build up from that. I think you do have to invest in your team and your company and in your growth money I spend on marketing this month. I will not get back this month. Maybe, I don't know, in the near future, might not even get back this year.
[00:00:16] Alex Melen: Might just something you have to become comfortable with and I think many aren't in both the agency space and and on the client side.
[00:00:23] Corey Quinn: Welcome to the Deep Specialization podcast, the show where we blend focus, strategy and client intimacy in order to scale and simplify our businesses and our lives. I'm your host, Corey Quinn.
[00:00:34] Corey Quinn: Let's jump into the show Today. I'm thrilled to have Alex Mellon with us. Alex is the co-founder and CEO of Smart Sites, a full service digital marketing agency that has scaled to over 400 employees worldwide. Over a thousand clients and boasts, and this is pretty, pretty cool. 35% year over year growth for the last 13 years.
[00:01:01] Corey Quinn: Wow. That's pretty amazing. I am so excited, Alex, to have you on the show. Welcome.
[00:01:07] Alex Melen: Thank you. Thank you. Thank you for having me. I was a That was a good intro.
[00:01:12] Corey Quinn: It was fun writing it. Uh, would you mind just introducing a little bit more about yourself and, and tell us about Smart Sites, the, the agency, what you guys do and who you focus on?
[00:01:21] Alex Melen: Yeah, absolutely. Absolutely. So I've been in the tech digital space for a very long time. I started one of the first web hosting companies back in 1997. So I've been involved in, uh, this world for a very, very long time. Uh, smart sites. I started with my younger brother in 2011, so we just celebrated our 14th birthday.
[00:01:42] Alex Melen: Congratulations. Thank you. Thank you. It's been, uh, it doesn't feel like 14 years, lemme put it that way. It's, yeah, it's been a lot of fun. We started it with a handful, handful of people in a small office. Now we have, uh, 450 employees, uh, with six offices worldwide. Their goal is always 35% year over year growth.
[00:02:03] Alex Melen: We've never not hit that. So a lot of times we're above that. For a long time, our pace was doubling size every two years or so. So at that pace, we have four 50 employees now, and two years would be at 900 and so forth. And we're, we're pretty, pretty on pace with that from the year we started onwards. So it's been, it's not like the like, uh, Silicon Valley tech startup kind of pace where they're doubling like every week, but I think it's a comfortable.
[00:02:28] Alex Melen: Pace for us where we're not really sacrificing quality, which of course, uh, would affect our reputation and everything else. And we're not driving our employees too crazy because with the, the hyper growth creates a lot of, uh, difficult to work space environments for, for employees from, from a couple companies that I'm on the board for that I've been involved in.
[00:02:49] Alex Melen: So yeah, I'll say we we're at a comfortable. Comfortable, pace,
[00:02:53] Corey Quinn: comfortable 35 year over year. Well, that, that's the, that, that is quite a pace. I, I came from a digital marketing agency. I was the chief marketing officer over at Scorpion. Oh, very cool. And during my time there, yeah, during my time there, we, we grew from 20 million to about 200 million in about seven years.
[00:03:10] Alex Melen: And
[00:03:10] Corey Quinn: that was, I completely
[00:03:11] Alex Melen: forgot. So I, I scheduled a bunch of these, but I completely forgot you sent me the book. Right? I have your book somewhere here. Yes. Oh, I'm sorry. Anyone had, it's been such a crazy, a couple, couple weeks that, uh, I didn't even put two together, but there you go. I have your book right here.
[00:03:24] Alex Melen: Yes. Some reason they connect until least said Scorpion, but yes, I, I know Scorpion very well. Scorpion's bigger than us. I don't know the, I guess the exact, exact growth path, but I guess it's, it was, um, lot of private equity investments you guys took, right? Or that was later on.
[00:03:38] Corey Quinn: So that happened in 2020, the end of 2020.
[00:03:43] Corey Quinn: During Covid and all that craziness. And so previous to that, so I joined in 2014, about three years after you started, or 20 15, 3, 4 years after you started Smart sites. Yeah. At that time they were doing about 20 million and we grew it all organically. So back, back then, you were, you were obviously around, we were very focused on the legal market.
[00:04:06] Corey Quinn: Yes. Had, um, had a big partnership with Google. We're one of the sort of the premier partners with them. They helped fund us in some ways, you know, channel partner program.
[00:04:14] Alex Melen: I'm very, very channel partner program.
[00:04:16] Corey Quinn: Yes,
[00:04:16] Alex Melen: exactly.
[00:04:17] Corey Quinn: So we, we grew from just a, a focus on, uh, attorneys to home services and franchise and that kind of spurred a lot of the growth.
[00:04:25] Corey Quinn: But that's a separate podcast. We could talk about my, my stuff later. Also interesting note, I was around back in 19 96, 7 and eight. I started a streaming media business back then. That's great. And we raised a bunch of money to do that. So that was, uh, that was fun.
[00:04:40] Alex Melen: That's way, way ahead of its time.
[00:04:43] Corey Quinn: Way ahead of media.
[00:04:44] Corey Quinn: It was actually, you'll, you'll appreciate this. This is when Mark Cuban sold his streaming media business broadcast.com to Yahoo for $5.7 billion. Yeah. That's when I was doing my
[00:04:55] Alex Melen: business. Valuations of everything is so crazy. It's similarly, the hosting business. I mean, I, I started one of the first free hosting companies and it predates Google, predates even GeoCities, but similarly, GeoCities sold for a billion bucks also to Yahoo.
[00:05:09] Alex Melen: Yeah, yeah. Yahoo was making a lot of interesting purchases at the time. They, they themselves went up getting sold for like pennies at the end, but they were, uh, they were doing a lot of, they were, well, I think they, I think Yahoo had an issue with. Innovating. They were first to market in a lot of ways, but then, I don't know what happened culturally, but they, I think they really, they really got stuck doing any kind of innovation, which kind of forced them to buy companies that were innovating, but then they would buy them, absorb them, and like slow down their innovation.
[00:05:38] Alex Melen: So they went through a very weird cycle, unfortunately, but
[00:05:41] Corey Quinn: yeah. Yeah. I, I remember hearing something about, there's a big Yahoo campus here in Los Angeles, and so I would, I would hear about how they had a really hard time getting people into the office before covid, but getting people into the office was hard.
[00:05:54] Corey Quinn: And that, to your point, it was just a lot of fiefdoms and a lot of, um, you know, folks who weren't, weren't super. Flexible.
[00:06:02] Alex Melen: Yes, yes, yes. And I think, uh, uh, I think, uh, geez, what, uh, very early on they kind of lost the talent war. For whatever reason. They weren't the exciting, cool place to go. Yeah. And even before Google was one, they were still, they were way behind in the talent war.
[00:06:18] Alex Melen: Like, uh, I think that ultimately, and then like you said, they, there was a lot of subdivisions within the company. It was became, yeah. Became very, very rare. But they did, they did. Buy, buy a lot of companies for a lot of money.
[00:06:30] Corey Quinn: They did. They did. It made it, they made a lot of really rich, uh, entrepreneurs.
[00:06:34] Corey Quinn: Yes,
[00:06:34] Alex Melen: yes, yes. Very
[00:06:35] Corey Quinn: happy. Yes. So 35% year over year growth since your start in 2011. Yeah. How, like, how do you do that? Like what, what's the lightning in the bottle that you have that has created that outcome? It's,
[00:06:47] Alex Melen: yeah, so it's, it's, uh, there's no, I'll tell you, there's no, there's no magic formula for it.
[00:06:51] Alex Melen: It's the focus on, right. You have to be cognizant of that's what you're aiming for, for, for sure. In a lot of cases, it's easier to keep the status quo and that's okay for a lot of companies too. Right. And regardless of what, what industry you're in, we have a lot of clients that don't wanna. Grow, right? I don't know.
[00:07:09] Alex Melen: The roofer, plumber doctors, in lot case, they're very hard to grow, but sometimes they choose not, they're like, right, I don't wanna scale. I have five employees. I'm good where you are, where I am. So for sure it's, it's the constant focus on it. It's a cost constant investment in it. Right? So we, we invest in a lot of paid media to help us grow.
[00:07:28] Alex Melen: So we don't do any outbound marketing. It's all inbound. So we, we do a lot paid search, things like that, and that brings the calls in and then calls become the leads become clients. But it's a huge investment. We're, we're investing out $500,000 a month to bring the, the leads in to be able to generate that growth.
[00:07:45] Alex Melen: And I'm not getting that 500 grand back. This month or this year immediately. No,
[00:07:49] Corey Quinn: it's gonna take a while.
[00:07:50] Alex Melen: For sure. It takes a while and you have to be okay with that. I, I find a lot of, so we work with a lot of SMBs and a lot of small businesses. I think the challenge, especially recently as, uh, paid search and in general, advertising has become more competitive and more expensive.
[00:08:04] Alex Melen: A lot of, uh, businesses are very focused on transactional profitability. Uh, I mean, for us, uh, I guess the, that, that would translate into, I invested 500,000 in marketing this month. I wanna ROI, the ROI positive in that investment this month. Right? Yeah. And that might have been possible in prior years, but now it's not.
[00:08:25] Alex Melen: It's, it's for sure not for, almost for any business. Um, so you really have to think about lifetime value. It can be transactional value, and it's, it's for e-commerce. I think most businesses are realizing that, but the service guys still aren't right. Especially, I don't know, your, your, your, uh, paver, you paved driveways, right?
[00:08:43] Alex Melen: They're definitely not in a mindset that this guy will pave this driveway again in 10 years. They, that's just not how they work. It's all transactional, but it's not, it's not just getting that customer to come back to you in 10 years. It's about that customer being happy and then writing you a good review and then referring other business and how do you get them to refer you, right?
[00:09:02] Alex Melen: It's, it's a lot that goes into it. You could, could be doing a lot of very creative things to increase the value of that customer versus just trying to get as many of those, like one-time hit transactions as you can. And I think that's, that's, uh, that's, uh, gonna be an important mindset moving forward when.
[00:09:19] Alex Melen: Everything's a lot more expensive, right? I, I don't know. We're bidding on, I was gonna say a PPC agency and SEO and stuff like that, which is fun. We, we are, and those are $300 a click. And I think people, people are not shocked by that anymore, but we're bidding on our no own name. We bid on smart sites and that in some cases it's $300 a click.
[00:09:37] Alex Melen: Right? That's like insane. But we, we we're data focused. We're number focused. I know there's an R wine, that's, that's what we do it, but it's the, the, the cost of advertising. It's, it's, I don't know. It's the one thing that'll always go up, right? There's very few things that I could say forward looking statements that could make Yeah.
[00:09:55] Alex Melen: I've been involved, like you, I've been involved in the space so long that a lot of times I do public speaking and people are like, oh, what's the next big thing? Like, you must know it. You've seen everything. What's the, I'm like, I can't tell you anything. I could tell you the advertising, your Google cost per click next year will be more than this year that I could tell you.
[00:10:09] Alex Melen: And that's it. There's nothing, there's no other forward looking statements I can make. So as advertising becomes more expensive and as a lot of. Businesses are scaling through that. Right? I think
[00:10:19] Corey Quinn: you were talking about scaling.
[00:10:21] Alex Melen: Yeah. Yeah. So yeah, paid media is getting a lot more expensive. So it's, um, I think, uh, businesses will have to be a lot more creative in, in how they scale, how they grow, how they measure, uh, client value, things like that.
[00:10:34] Alex Melen: But that, that's, that's, you asked how, how we do the growth. That that's how it's been for us, we have that target of minimum 35%. We always do, and it starts from the marketing side. We spend more to advertise ourselves. We get more leads coming in, we hire more salespeople, and we need more account managers and so forth.
[00:10:50] Alex Melen: So it's been very, uh, can I say very strategic. It's certainly more expensive this year than it was. Last year, and I'm sure next year will be more expensive than this year. But that, that's, uh, that's our goal. That's a whole different conversation in terms of growth as a goal, like for us, the very few. So luckily being so, uh, my brother and I own the company, we have no investors.
[00:11:13] Alex Melen: We have no, we're not public. Uh, so we have beautiful no one to really answer to. So what that, what that allows us to do is, uh, create our own goals that make sense to us. So, for example, profitability and profit margins is not a goal for us. Our goal for us is our, our reputation, our, uh, our clients being happy, uh, employees being happy, and the growth and the, the growth.
[00:11:37] Alex Melen: It's an interesting one because like I said, some companies don't need to grow or don't want to grow for, for, for whatever reason. And I get asked that question a couple of times of like, well, 35% growth. I saw that another podcast you were talking about, or I saw it online. Like, why do you even need to do that?
[00:11:53] Alex Melen: So for us, it's been very interesting. I think growth for, especially for an agency, maybe other businesses, it's not as important. But for an agency, what that allows us to do is, number one, well, I was gonna say number one, but I think it's the most important, number one, two, and three. It's all, it's all literally the most important thing is it allows us to create the best workspace for employees.
[00:12:17] Alex Melen: And what I mean by that is if we're. Stagnant and not growing, and not doing new things and growing departments and adding new departments. It limits the growth for employees. And the, the best example I could give of that is probably a law firm, right? A typical law firm has like three partners. You join the law firm as a junior employee and your, your ability to move up in your career and earn more money and do more things is literally.
[00:12:46] Alex Melen: Tied to one of the partners, like passing away, right? That's like, that's your awkward mobility. You like wait for someone to retire. For us. By, by focusing on growth, we give employees the opportunity to move things around, right? Someone joins the PPC analyst and then we decided to introduce, we're now doing social media marketing.
[00:13:04] Alex Melen: A couple years ago that PPC analyst was like, wow, I've really, I've been doing social media PPC, but I really am interested in influencer marketing. Right? So they could join that other team, they could work hard, become manager and that team director or whatever, right? So with growth, we actually create a much better workplace for employees and at the end of the day, we don't really produce anything, right?
[00:13:25] Alex Melen: We don't make like widgets. I don't make like cell phones, right? Our product is our employees providing a service. So by having our employees be happy in what they're doing and actually being able to switch things, like I'm not forcing someone who wants to do social media to be doing not social media.
[00:13:41] Alex Melen: It creates a better product overall. So that's, that's how, that's how and why and, and when. A couple tangents, tangents there, but that's, uh, pretty much why and how of, of our growth goals and focus over the last 14 years.
[00:13:57] Corey Quinn: So a couple things. First off, we struggled at Scorpion to, to create kind of a, a clear linear path for employees to start as a junior, you know, assistant account manager all the way through to the chief marketing officer.
[00:14:11] Corey Quinn: There was, there was, it was very, very challenging for us. I think I remember while, while I was there, you, you had this culture of, it was very ambitious culture, but it was also people wanted to move up in the organization quickly and in some cases. They were because of friendships and relationships, it was big company, right?
[00:14:33] Corey Quinn: Yeah. In other cases, it wasn't possible or, you know, people would feel in some, in some cases they would feel like they should have deserved a, some kind of more responsibility, more pay, and it caused us to really have to invest in figuring out like what are the career paths and so on so forth. Sure. I think after I left, I think they, they began to figure that out, but, uh, but when I was there it was, it was very difficult.
[00:14:57] Alex Melen: And you guys were growing too. Imagine if you weren't right? Yeah. Like, I don't know, everyone wants to grow their career and you guys are same headcount, right? Like, I don't know, you wind up with like 20, the chief marketing officers. Yeah. Right? Like, I don't know, like ever you're a chief marketing officer and you're a chief market officer, right?
[00:15:14] Alex Melen: Like, so I think for that growth is super, super important because without it. Right. Like, I don't know, employees join and they could only move forward when someone quits or retires. Right. Like it's, it's also not, not great.
[00:15:30] Corey Quinn: Yeah. Well, the other thing that, what you shared, remind me of, we had, we had an opportunity as an executive team, we went down to the Disney Leadership Institute, which is effectively, it's an executive training for, for young leaders or aspiring leaders to learn how the Disney Way, and one of the things that always stuck with me from that training was that, that a saying or a philosophy, which is that your customers will only love your company as much as your employees do.
[00:15:58] Corey Quinn: In other words, their first customer, Disney's first customer of their employees, and when they create an environment where they feel empowered, they feel like they are fulfilled, then the impact of that is that the, the, the, the customers that they touch are gonna be happier. So I wanna, I wanna jump back into the comment you made.
[00:16:19] Corey Quinn: You, you mentioned the 35% growth. A lot of that is driven by your own advertising. You're spending 500 KA month potentially more next year, I'm sure. And there's gonna be a payback for that. Like your break even at some point will happen in, in several months, hopefully. And I'm sure you guys have done the math, but one of the things, just reflecting on my experience, one of the things that helped us be able to fund a lot of the growth like you're doing right now in these ads, is the fact that we knew that a, a, a client would stay with us from 24 36 months.
[00:16:51] Corey Quinn: Yeah. And so. It was a cash flow game where we knew we'd, we'd earn it back because the retention was really good. Yes. But we had to spend a lot of it upfront.
[00:16:59] Alex Melen: Yes, exactly. What, and so
[00:17:00] Corey Quinn: I think, you know, one of the big factors for success, long-term success for an agency is really that lifetime value, as you said.
[00:17:07] Alex Melen: I think the lifetime value, I think knowing your lifetime value. Right. And I think investing based on those numbers. 'cause I, I know a couple agencies that are good with their lifetime value. Exactly. They know it. But they're like, they don't wanna invest at 500,000 a month. Right. They're like, I'm, I'd rather be more cashflow positive this month and not, than not forward looking.
[00:17:27] Alex Melen: Right. It's, it's tough. It's tough to, yeah. Do you wanna grow
[00:17:30] Corey Quinn: or do you wanna have a lot of cash in around Yeah, it's tough to
[00:17:32] Alex Melen: juggle if like, I don't know. It's, it's, it's, it's huge investment and, and as, as the cost per click goes up and things are, like, SEO agency and PPC management are now like $200 a click.
[00:17:45] Alex Melen: Right. It's a big pill to swallow that today I'm gonna, I'm gonna spend $5,000 to acquire a client that's gonna pay me $500 a month. Right. But you have, yeah. I, I think more so than before, you have to be really data. Driven, you have to know the numbers, right? Yeah. That's number one. And then you have to be very disciplined in saying that, I will invest, even though I'll lose money on that investment this month and I'll lose money month six.
[00:18:10] Alex Melen: But I know that month seven I, I become profitable. And it's not an agency example, but I think out of all the companies that I know, the company that really squeezes this out the most they can is GoDaddy and I, I know GoDaddy very well from, from my hosting business days, and Sure. GoDaddy. If you look at their math, if you try it wrong.
[00:18:29] Alex Melen: And the reason why the whole hosting industry consolidated, by the way, for those not familiar with the hosting industry, even the hosting conferences. So it used to be hosting Con, they'd be very popular. I spoke at, I think I spoke at the first one and the last one, they, it stopped because the whole industry became GoDaddy and EIG, the other big company.
[00:18:47] Alex Melen: They bought everyone up. And the reason it consolidated is because, uh, all the small, even medium players couldn't compete with the big company model like GoDaddy were. So, GoDaddy would spend, I don't know, a thousand dollars to acquire client that pays $5 a month. And no one could go out there and do that.
[00:19:05] Alex Melen: And for GoDaddy, the way they did it is, number one, they would upsell them on a million things, right? If you've tried to purchase, uh, even a domain on GoDaddy recently, right? You have, uh, privacy protection, then you have like privacy protection plus, and then you have privacy protection advanced. Right?
[00:19:21] Alex Melen: They'll then email you next week, or, oh, you probably need a higher level of privacy protection. So they upsell you. So the, the, the, the wallet size is bigger, the average purchase size is bigger, and then they're okay with not making money for the first eight years. Right. It's crazy. I, I think when, when I was still running, I still actually run my hosting business, but when I was trying to compete with them on a client acquisition cost, like actually bid on keywords for hosting and domain stuff, I.
[00:19:50] Alex Melen: The math that I try to do with their numbers is they're not, they're not breaking even until like year eight. And I, I don't think any small medium company could play that game. Like, like, I don't know, on the agency, in the agency world now it's, it's like you're still within a year you'll break even, right?
[00:20:06] Alex Melen: If you're, if you're not breaking even until year eight, there's no, there's no annual can compete with that. So that, that industry consolidate a lot and GoDaddy still spends a lot and they're still okay with that. They have a lot of funding and they're okay with that model. But that model is out of all the industries and companies, I know that that one continues to be the craziest where, uh, if you look at their shared hosting that they sell, I think it's still like a dollar 99 a month, right?
[00:20:29] Alex Melen: And, uh, to bid on the word cPanel hosting or shared hosting or keywords are like that are like $30. So they're paying 30, $40 for that click. And that client will pay them a dollar 95 a month. Right? Like tr like even, even if they have like, like 50% conversion rate, if you do the math, it's still, you're not breaking even this year, no matter what, let alone, like your margins at dollar 95, right?
[00:20:51] Alex Melen: Like your dollar 95 revenue on that hostings not profit. So the, the numbers are insane. It's, now, I'm sure if you do the math, it's past 10 year break even. So, um, luckily most industries are not as crazy as hosting and domain registration, but I, I, I think agency owners have to really come to terms with that, that that's, that's the direction we're going for sure.
[00:21:13] Alex Melen: That you can't, you're not gonna, you're not gonna be ROI positive this month than would you invest this month? It's just not in the, in the past it might've been okay, but you're definitely not gonna be in today's world.
[00:21:23] Corey Quinn: So you mentioned the three, I'll call 'em pillars. You mentioned reputation. Yeah. Is number one.
[00:21:28] Corey Quinn: Number two is happy employees and happy clients. And number three is growth. I'm assuming that all of that. Done right. Results in really great retention. Let me ask, how do you, how do you measure your reputation? Like when, when you say reputation, like what does that mean specifically? Yeah, good, good, good question.
[00:21:44] Alex Melen: Luckily, it's very easily measured. It's, uh, you're, you're, these days with the intern, the internet made everything so much more measurable. I worked a little for a couple years before starting smart sites at Publicis, where they were still at that point they were entering the digital world. But it was a lot of like, uh, tv uh, magazines like that kind of advertising or billboards where.
[00:22:04] Alex Melen: It really isn't measurable. Like TV you measure with, like Nielsen, like has boxes and a couple homes, and then they project out, right? Newspapers for if anyone's worked in print advertising, newspapers, magazines, whatever. They measure consumption based on how many they print. So if you like, on the corners in New York City, see stacks of newspapers because they, they are incentivized to print more to saying their, their circulation counts.
[00:22:26] Alex Melen: I wanna summarize. Yeah. Their circulation counts higher. It's based on printing, not on literally eyeballs. Right, right. So it, it, digital world has been amazing in terms of measurability some of, for reputation, I think before digital 30 years ago, a question is like, how do you measure your reputation?
[00:22:41] Alex Melen: Right? It would be like, I don't know, comScore studies of favorability. But now it's very easy. It's like, search your brand name online and look at all the sites to review and like Google my businesses. Probably the biggest one, but third party sites that where clients could leave your reviews. And for us it's super, super important to have a stellar reputation.
[00:23:01] Alex Melen: I think we still have one of the best, if not the best, uh, for in the agency world and very hard to maintain. 'cause as, as you know well in any business line, but usually clients leave reviews when they have something bad to say, not something good. Right. And I think it's at every industry and they're emotional.
[00:23:17] Alex Melen: Yeah. You really like, it's, it's like you'd have to, yeah. There's no, like, if you provide like a, a minus service, no one's leaving your review. Right. Or b plus or whatever. Right. If you provide a terrible service, you're gonna get review from everyone, right. And the A and the A plus, and then you get the A plus service.
[00:23:33] Alex Melen: So you really have to focus on the A plus, because if you're, if you're providing a B minus, B plus service, you're not gonna get the the, so yeah. Reputation I think is very measurable. Online for us it's number, number of reviews and five star reviews and things like that.
[00:23:46] Corey Quinn: So you have 4 0, 450 employees, plus how do you maintain.
[00:23:52] Corey Quinn: A client experience that results in. Such a great reputation online.
[00:23:57] Alex Melen: Yeah, that's that's a tough one. And that's, that's the, that's been something to focus on as we grow, right. And as we've now, so we, we were New Jersey based pre covid. Uh, we still have an office in New Jersey just because commercial leasing is trickier and less protected than residential leasing.
[00:24:15] Alex Melen: So we still have an office, no one comes into it. It be definitely becomes harder as, as we become more global and harder to make culture and all of that. And for sure, I don't have, I don't have magic answer to it. Right. It's, uh, it's creating accountability at every senior level within the company, creating it in such a way that the directors, managers at every, anyone in any kind of seniorship role takes accountability and understands how important it is to, to the, to the company.
[00:24:44] Alex Melen: Instilling that is obviously very difficult. Uh, everyone's different and it's, it's. It's hard to force that, I could say. Yeah. But it's, I think it's one of the most important things in a service business, right? If you're, if you're like, I don't know, if you're producing something, you're producing a cell phone service is not gonna be, obviously it's still important, right?
[00:25:01] Alex Melen: But it's not as important as the quality of the product at the end of the day. Or you could overcome service issues with a very good product when we're just as results. In other words, we're just a service. And it's literally like, right, there's no widget to sell. It's super, super important. But yeah, it's, uh, I think accountability is a big one.
[00:25:19] Alex Melen: Trying to maintain culture. We do in-person events, even though we've now gone, uh, remote. It's, it's things like that. But that, that, that's something for sure. I struggle with as we continue to grow to make sure. 'cause without that, I think it all falls apart. I think then the, the re reputation suffers and everything goes downhill very quickly.
[00:25:39] Corey Quinn: So do you consider yourself more of a generalist agency? Yeah. I mean, sure. You do websites and seo, A PBC, but are you more of a generalist or do you see yourself as more of a vertical, multi vertical specialist?
[00:25:51] Alex Melen: So, um, we try to be, I, I think a mix of both. So we we're, in every industry, there's no industry that's more than 5% of our business.
[00:25:59] Alex Melen: But internally we are organized in different verticals, not as vertical specific as, um, as, as you were in, uh, in your role as your comp your, that your company was completely scorpion. I think like 90% probably legal, right? 95.
[00:26:16] Corey Quinn: Yeah. Uh, to start, and then home Services came in and that was a separate business unit, but that came through.
[00:26:23] Corey Quinn: We franchise, we're not that much.
[00:26:24] Alex Melen: We have verticals that will, the, the people focus on small business service clients are different than the e-commerce guys, just because it's like slightly different skillset, but we don't have like a legal, although, so I'm big automotive. I, I speak, I personally, I'm just a big auto guy.
[00:26:39] Alex Melen: I have a automotive book out and I, I speak at every I know I was gonna ask you about that.
[00:26:44] Corey Quinn: Yeah.
[00:26:45] Alex Melen: I speak at all the auto events, so I'm, I'm, I'm very autocentric and within our company we do have a couple people that are also autocentric, but I think aside from that, we're we, we. We create departments within the company, mostly on skillset.
[00:26:59] Alex Melen: And what I mean by that is the skillset to do SEO pay per click for a doctor isn't gonna be that much different than a roofer plumber, the different d different business lines completely. But in general, the, the approach, the data centric, uh, PPC approach, all of that is e-commerce. Non e-commerce obviously is very different.
[00:27:19] Alex Melen: SMB versus enterprise client is obviously very different. Automotive is it's, it's its own world. But aside from that, we're not completely vertically specialized. We're more specialized based on the skill sets like the SMB versus enterprise, for example.
[00:27:35] Corey Quinn: So what, what's been, what's prevented you from doing, taking more of a specialized approach?
[00:27:38] Corey Quinn: For example, automotive, you said that you don't have more than 5% of any, like any, any vertical doesn't represent more than 5% of your revenue, but. At some point, did you consider it? What were the things that went, made that decision margin? Uh, man, we,
[00:27:52] Alex Melen: we probably could and should, and I, I actually, there's always pros and cons when I consider the, the scorpion approach of at least starting off and purely probably, um, so I speak at a lot of conferences, automotive, and not automotive for sure.
[00:28:04] Alex Melen: Showing up at the automotive conferences. I see a lot more success because I get, uh, I'm known in the industry. I know the vendors, I know the people, I know how to speak the language. So there's definitely a benefit to being specialized, right? We could easily just say, you know what, all, all we're gotta do is automotive and expand that industry.
[00:28:21] Alex Melen: 'cause now I know that industry so well. But then it becomes, uh, I don't want to be, I can't say I don't want to be. I don't wanna be the bottleneck for the growth. If, uh, if it, if it's, if it's the path is to grow other automotive through me, I will certainly be the bottleneck because I have too many other things I'm responsible for.
[00:28:38] Alex Melen: The, the other, the other point of that is just the way we approach marketing. So we literally bid on things like SEO agency, PPC agency. So we don't, we don't bid for like legal SEO or we, we bid, we bid more generally. Yeah. Which means that we don't necessarily control the product mix, which, uh, in the product mix and the vertical mix, which in itself is a challenge, right?
[00:29:01] Alex Melen: Like even so, like I was saying before, we're, we're, we're, I don't know, we have, uh, the SMB team, we have the enterprise team and many other teams, but let's just take those two if for all sudden one month and we get a hundred new clients and they're all enterprise clients, right? That creates a very big staffing imbalance.
[00:29:18] Alex Melen: So there's a lot of challenges in our approach of just like. Putting ourselves out there and whatever comes in, comes in. But that, that's, that's just been our approach. I, I for sure see a lot of benefits in specializing, and I've slowly grown the automotive team internally. And what's interesting is, uh, a lot of verticals like automotive, I don't think we would naturally get a lot of business from, and we didn't until I got involved in the industry.
[00:29:42] Alex Melen: And, uh, the reason for that is the industry is very tight knit and it's very, um, how can I say? The automotive dealerships aren't often going. On Google and typing marketing for automotive dealerships. It's all word of mouth. And there's a Yeah, and there's a, there's a couple industries like that, so For sure.
[00:30:00] Alex Melen: Uh, and I think legal for sure too. I know a couple, uh, I know Jason Hennessy very well from, from Hennessy Vigil. He's also very automotive. Uh, I mean, he is also very legal centric. Yep. I, and he literally, his team attends every single legal conference, and he's known as the legal, like the legal SEO guy.
[00:30:17] Alex Melen: There's definitely a lot of, I think, benefit to that. But I think, like, like I was saying, if I were to pursue that, even automotive, I think I'll very quickly become the bottleneck to our growth. I think that the key to our growth is to be able to do an amazing job in as many industries as possible. In a lot of industries, we don't.
[00:30:35] Alex Melen: Right. People come to us and we're like, this a back there, right? Sure. There's, there's, we definitely, that's also been a very important learning for us as we've grown. And I remember at a conference, I got questionnaire, what you're doing, what are you doing now differently than you did? 14 years ago, and that was one of the big ones we got, we got much better at knowing when a client isn't a good fit.
[00:30:56] Alex Melen: And when we just started, we'd be like, of course, of course we'll tell. Like we, we definitely did not turn down any clients. Yeah, of course. I think year one, year two, because you're an entrepreneur
[00:31:04] Corey Quinn: and you wanna be in business. Yeah. And even, even
[00:31:06] Alex Melen: budgeting wise, we did so many silly things. We would take on clients that, like, at a price point that made no sense to anyone.
[00:31:12] Alex Melen: Like, and ev everyone loses, right? So, uh, we make that a website for a thousand bucks. Like how does that work out feasibility wise? Right. We wound up having to do very, I don't know, a lot of work for very low money. Very. We wound up losing money. Sure. Project probably winds up taking too much time because we have to outsource things to different people and we can't use our own employees.
[00:31:33] Alex Melen: And, uh, the client's not happy. A client doesn't care that they only paid a thousand bucks. Right. So, and then like the client gets a bad product. They leave a bad review. Project manager is pissed for, for, for the process that to be involved in. We can't use like our own employees because it wasn't enough margin.
[00:31:49] Alex Melen: It was very silly things. But it's, it's a learning process. It's a learning process of, yeah. Figuring out your price point of figuring out your value add and figuring out when clients aren't good fit. We're not, we're not gonna provide, we wanna be able to provide amazing results and an ROI to our clients and if we're not able to, it's just not a good fit.
[00:32:07] Alex Melen: We will not, there's it, it's a lose lose for everyone, for me to take on a client that we're not gonna provide good results for. Because ultimately them leaving a bad review, you're gonna Yeah. Right. It not being happy will hurt me more than any money they could pay. So, short-term
[00:32:20] Corey Quinn: money, well, can I, can I share with you some data points?
[00:32:24] Alex Melen: Yeah,
[00:32:24] Corey Quinn: of course. So I was the chief marketing officer at Scorpion, and we also had a 500 KA month budget. But of the sales that came in, generally speaking, 10% of our revenue growth was from ads. Half of our revenue growth was from outbound, and then the rest of it was from events. Makes sense, right? Because, because if you're bidding on a lawyer, marketing or lawyer, SEO, the volume is so low.
[00:32:50] Corey Quinn: You can't, you can't, uh, subsist on, on the volume. Right. You have to do other things, right?
[00:32:56] Alex Melen: Yeah. No, it's crazy. So for us, for us, so we get, I don't know, a lot of it comes from the paid search directory stuff. Paid marketing. Yep. We have not been able to do very well with outbound at all, or, or events like, I don't think we even break even on it.
[00:33:12] Alex Melen: And we do it a lot and just something that. And I think there, there's a couple things to that. I, I think number one, you, your company was very vertically integrated and knowledgeable. Yeah. Meaning, uh, the conference, the automotive conferences I speak at, people often ask me, oh, you guys are getting a booth or whatever.
[00:33:31] Alex Melen: I'm like, absolutely not. If I send, like, my, my general salespeople who are used to dealing with like SMBs to these automotive conferences are gonna get like torn apart, right? Like, I don't know. They're, they're gonna confuse a Honda Accord with a Toyota Camry and like, right, right. They're screw it all up.
[00:33:45] Alex Melen: It's gonna be, it's gonna be over on that step. We could have the best product, the best people. You're gonna mention the wrong car. You're gonna call it like a Toyota Accord or something. That's it. You lost that person forever. So I, I think that's. Part of it, I think, um, being very vertically focused, it gives you a huge advantage at events.
[00:34:03] Alex Melen: Yeah. 'cause your people could speak the language. And then outbound, we just never, I, the little bit we did, we wound up with, so like literally people left us bad reviews because of the outbound calls and I'm like, I can't respond. That's horrible, right? Yeah. I, I can can't. That's like the worst thing.
[00:34:20] Corey Quinn: You're spending money to get bad reviews, right? Yeah.
[00:34:22] Alex Melen: Yeah. I'm like, that's that we're out. But yeah, those are the two things that like we actually, I know, I know other agencies are able to Yeah. Have been able to ROI on and we just struggle on.
[00:34:32] Corey Quinn: I get it. And you know, from my, my perspective is that it, it all starts with the vertical specialization.
[00:34:39] Corey Quinn: Like outbound is really rough if you are more of a generalist. But through the specialization, you're kind of able to break through some of the noise that you get in the outbound channel. But you're an author of a book that you wrote for the automotive industry. Yes. And so how, what impact has that book had on the agency?
[00:34:57] Corey Quinn: Thinking about it more from like a, you know, a, a founder of an agency who writes a book for about marketing, like Hennessy wrote a book about, you know, legal marketing and whatnot. Yes. I, I, I, I have books somewhere
[00:35:08] Alex Melen: here also, although I didn't read. So to be fair, I didn't read your book yet. I was going to know.
[00:35:12] Alex Melen: That's okay. Dealing with a lot of, a lot of crap, but at Jason's book's. Yeah. Perfect.
[00:35:16] Corey Quinn: Right, exactly. It is, it's a best practice, right. Bill Haer. Yeah. So it's, bill Haer wrote a book about legal marketing. Yes.
[00:35:23] Alex Melen: Oh yes. Do have Bill's book. I don't have his book. Bill. Bill's a, Bill's like a Domaining guy. I know him from like the hosting domaining conferences.
[00:35:30] Alex Melen: Yeah.
[00:35:30] Corey Quinn: So
[00:35:31] Alex Melen: what can I say? It's, um. Um, automotive being so, such a small part of what we do, I don't think it's necessarily been impactful for our agency. Yeah. I think it was a very good experience for me. So I wrote it. I wrote it, uh, geez, a little over two years ago. So it, I, I wrote it the old fashioned way, like one keystroke at a time.
[00:35:52] Alex Melen: Yeah. Noche. That's how I did it. No gener, no generative ai. It's like, uh, when I, you miss it,
[00:35:57] Corey Quinn: but like, you know this much.
[00:35:59] Alex Melen: Yes. Yeah. And then, oh man, at the end of my book, I'm like, this, this generative AI stuff coming. And I even put some forecasts, you know, in my book. I thought at, at least on organic Seo OI thought that Google, at the very least, if they would not ban AI content, they would be able to identify it.
[00:36:15] Alex Melen: So I thought the way this all goes down. Is Google. They, they own DeepMind and a lot of other ai, uh, I wanna say projects, but they're even more than projects. They're big parts of Google. They could easily identify what content is AI generated. Right. Without a doubt, there's three tools that could do it for you.
[00:36:32] Alex Melen: Google could do it. I thought they would like literally be like a label AI generated. But, uh, listen, I, I can't, I can't be right with everything, but yeah, I did it. I did it. The old f the old fashioned way, I, I explain it to people. I tell 'em to picture a typewriter and you just do one stroke at a time. It was a good experience.
[00:36:50] Alex Melen: Sure. It was like, you know what? It helped me. It, it, and I, I recommended to other people too, and I had such an easy time with it, first of all, 'cause I've just been doing this for so long and I, I had presentations I do, so I literally just took. I took presentation content and put in in book form, and I typed really quick, so I did it one month.
[00:37:07] Alex Melen: I did one hour a day for, for literally, it was the month of November. Yeah. And I thought I was gonna do it for every industry. I'm like, this was so rewarding for me personally because it helped me put together my thoughts of how we sell our product. It helped me later make presentations better. It helped me understand consumers or clients better, because when you actually write something on paper that's gonna be published and everyone's gonna read, you give it more thoughts.
[00:37:31] Alex Melen: So you
[00:37:31] Corey Quinn: have to figure out how to articulate it causes you to think.
[00:37:37] Alex Melen: A lot of the typical things I would say are presentations. When I wrote it down on paper, I'm like, this sounds so confusing. Yeah. I'm like, nobody's gonna follow this. Right, right. So that was a amazing process I thought I was gonna do for every industry. And then the publishing company I wrote in November, we published in April.
[00:37:53] Alex Melen: They fought me like on every single, like, I'm one of those people. Like I wrote it, let's it, let's publish it. And I, I think the publishing company, most book publishing, they said, so a book publishing company. I worked with a pretty big one, I guess average. There were bigger ones than there were. There were, they said, average person takes two years to write a book.
[00:38:10] Alex Melen: So I think that's how their process is. So when I wrote it and like one month, like, I'm like, I warn them they weren't yet, like, I'm starting tomorrow. I'm gonna, I I, I was like, I'm gonna have the book to you, but it was in November. I was like, by Thanksgiving I'll have you the book. They're like, sure, sure.
[00:38:22] Alex Melen: So I send them the book. I'm like, when are we publishing? Yeah, let's go. And they're like, well. They're like, now we have to review it and edit it. And they didn't like the screenshot. I had screenshots of Google in there. They're like, Google's gonna sue us. I'm like, ultimately I was like, get we got rid of all the screenshots.
[00:38:38] Alex Melen: Yeah. Like literally all the screenshots were out. And it still took, it was such a painful process actually publishing that. I haven't done it since, but now I have to update it because our industry, that was the other thing. So it took six months to publish and I had to rush them and like be like, no edits, just publish the way it is in this industry.
[00:38:54] Alex Melen: You know how irrelevant things are six months later. And I, I could tell you how irrelevant they are when I, my book doesn't mention Chad, right? The way I prompt
[00:39:02] Corey Quinn: nothing
[00:39:03] Alex Melen: as nothing. Like literally I had like, like a little like, uh, towards the end my, my little forward looking vision of like, I see a world where Google flags AI content one year later and then like two months later Google comes down and they're like, AI content.
[00:39:18] Alex Melen: I content. We don't care. We'll publish it all. So what, what, so what besides
[00:39:22] Corey Quinn: obviously. You shared. And I, and I can, I can confirm The experience is very gratifying and, and clarifying. It's really wonderful to write. Yes. But has it, has it had an impact on your business as it relates to maybe the automotive vertical?
[00:39:35] Alex Melen: Probably not. Probably not. I think it was more, it, it was like similar to me, public speaking, so I started public speaking, not so much to get clients. Well, that's nice to do too, but for personal development. And that similarly was always, uh, very personally gratifying. Uh, for sure. It's super helpful to become more well known in the industry and have our brand well known.
[00:39:54] Alex Melen: But like the direct ROI of me. Spending three days at a conference and having like three clients sign with us is not there. Right? Yeah. Our sales team signing 10 clients a day, meet me like hu hustling in Vegas and staying up all night and networking and everything to sign like two clients is, is not, is not the ROI and someone was familiar with the book.
[00:40:12] Alex Melen: It's not a, I don't think it's a direct ROI thing definitely helps establish me and smart sites as a thought leader. Yeah. Which I think that, that, that part is important. Direct ROIs in there, but I, I don't think it was ever the focus. I think some Ja so I think Jason, Jason does directly r OIS market. Yes.
[00:40:29] Alex Melen: He sends out his book like hundreds a month to
[00:40:32] Corey Quinn: his
[00:40:32] Alex Melen: prospects. He sends it as a marketing thing. It's a prospects they send. So I, I, I think certainly it could be used in a, in a, in that way. I, we just haven't yet much or haven't, I think. I, I think it's possible. I think it's definitely possible. It just wasn't a pers it wasn't a goal.
[00:40:50] Alex Melen: Yeah. The goal for me, similar to public speaking, the for the primary goal is personal development, and now we're kind of thinking of how do we leverage this book? Yeah. So I mean, if you have, you have a direct thought process plan of how to be ROI positive on writing a book, that's fantastic. But I think if you don't, that's okay too.
[00:41:07] Alex Melen: But it, I think the process itself is very, put
[00:41:10] Corey Quinn: it, put it in a box with a bunch of cookies to your high value prospects.
[00:41:13] Alex Melen: That's what you think. Yes. That's how you do it. Yes.
[00:41:15] Corey Quinn: Yes
[00:41:15] Alex Melen: and no. That, that, that was, that was great. And I still, I still, I actually have a flight tomorrow. I'm Oh, beautiful. That's awesome.
[00:41:23] Alex Melen: I haven't had a chance to read it yet, but I'll take it. Look, one
[00:41:25] Corey Quinn: of the things we we're, we're gonna wrap up here in just a minute, but one of the things that I want to touch on before we do is I love just kind of understanding your process as it relates to stepping out of the sales role. You mentioned that you have a sales team, but.
[00:41:38] Corey Quinn: Who was, how did you manage, like what, at what point in the, in the company you started in 2011, did you hire your first salesperson? Did that first salesperson work out? What? What was the story behind that?
[00:41:49] Alex Melen: Yeah, very, very good question. We hired, so, uh, our, uh, our, uh, chief, chief Sales Officer CSOs, uh, Matt preface, he, he was our first salesperson.
[00:41:59] Alex Melen: He actually hired him, I think for a different role for like content or something, I forget, but he was probably our, our sixth employee of the company. He's still with us. He's head of the sales team now. So he is grown with us as a company's, has grown. Awesome. It, I, I've, I've heard different best practices for this.
[00:42:15] Alex Melen: I, I've heard, I've heard it's important to hire salesperson early. I've heard that you should hire later than earlier, but that, that's, that's what it was for us. We were fortunate enough that. When we started Smart sites, uh, my brother had a SEO company that, that was very link building focused. Nice. Um, I still had my web hosting business and I had, I was coming from, uh, Publicis where I was doing paid search for three years.
[00:42:40] Alex Melen: So we had, we had a lot of background. We had clients from, from his business and from my hosting business just off the bat. So we, we, we didn't need funding. We were profitable month one. So I think we were in a little different situation than other people were. And we were very cl quick to just adver start advertising for ourselves and that sales started coming in.
[00:43:02] Alex Melen: Right. So we needed a salesperson pretty quickly to feel that. And for a little while being, being a small business, we were all salespeople, right. We had. Geez, probably for the first four years, the, the phone system was like round robin, like clients called everyone in the office, whoever could pick up first would pick up.
[00:43:18] Alex Melen: So everyone was a salesperson. Yeah. Ultimately it would get funneled towards someone who could answer the detailed questions, but at least the initial conversation it was, it was literally everyone was a salesperson. But I think it is important, I think it is important, I think creating a sales team, uh, at least for us, sales is always the first step in growing the company, right?
[00:43:37] Alex Melen: We increase how many leads we get, we increase the sales team, and then everything else follows. Yeah. So every increased step comes from the sales side because at the, literally the top of funnel, right?
[00:43:47] Corey Quinn: So sales, sales drives growth. And so as you, as you have more absolutely leads more salespeople, more salespeople, more deals, and then you hire to backfill effectively.
[00:43:57] Alex Melen: Correct, correct. That's always the first step in growth. Like how, what's our next step in, uh, obviously new products, better products, better everything else, but generally speaking, first step in growth. We, we spend more on our own marketing. We have more leads coming in than the salespeople can handle. We hire an extra sales person than take it down from
[00:44:14] Corey Quinn: And about how big is the sales team today?
[00:44:16] Alex Melen: 20 people.
[00:44:18] Corey Quinn: What are their success criteria? Obviously they're, they're probably managing a lot of the inbounds. Are they expected to close a number of deals per month or how, how are they? What? Oh man.
[00:44:26] Alex Melen: So I'm, I, I've been, uh, luckily been very disconnected from, from the sales team. I got kicked off very early on.
[00:44:32] Alex Melen: I'm not a good salesperson. I'm not like, uh, I don't know. You really have to have the personality for sales. Yeah. Like, I don't know, people would call up with their business ideas and they, I been okay, like business ideas, but to me I was like, this is a terrible idea. Yeah. They're like, but I want you to make me this website.
[00:44:47] Alex Melen: And I'd be like, this sounds like a terrible idea. Don't do it. So I, I got kicked off the sales team very early just because it's not, I'm not, uh, I'm not, I don't have the sales personality and. Luckily since then, I, I haven't been as involved. My, my brother is much more involved in the sales team, so I, I don't have the direct visibility into all of that.
[00:45:04] Alex Melen: Yeah. But for sure there, there's metrics they need to hit. Yeah. We've scaled the sales team just like any other department where there's more senior people and then, uh, the junior people get trained by them and they have goals to hit and expectations based on experience. Luckily, we're 14 years into it now, so we know where an individual needs to be.
[00:45:23] Alex Melen: You have a system, so Yeah. Yeah. Yeah.
[00:45:26] Corey Quinn: Alright folks, we are back. We had some technical issues and we are back. Alex, you are wearing the same shirt. I'm wearing a different shirt, so if you're watching the record, we bruised everything. That's it. I know you, you know that we had to, uh, we had to pick up a couple days later, so we were just at the end of an amazing episode.
[00:45:44] Corey Quinn: Wonderful interview. I just have a couple of wrap up questions for you. Yeah. And then we'll let you get back to your day. So, wanted to just dive in a little bit about specialization, some trade-offs. You know, you mostly have taken more of a generalized approach across number of verticals. Yeah. But I'm curious, have you ever lost a client or a deal to the fact that you weren't specialized in their industry enough?
[00:46:08] Alex Melen: Yeah, good question. I, I don't think we've had that direct feedback 'cause ultimately we're large enough in size where we could always find people who are familiar enough with that industry, even though as a company we're not specific in that vertical. Yeah. But for sure, I think there's differences where when we go to conferences, for example, so I, I do a lot in automotive personally, but I wouldn't send my sales team to an automotive conference just because they're not specialized enough to speak that language.
[00:46:34] Alex Melen: So yeah, in places like that I think we, it, it would feel, we would feel it a little bit in terms of actual providing very good marketing services. I think we, in terms of performance, I don't think it affects anything. And I think it, if anything, it affects, uh, maybe perceptions and it would affect like conferences, industry conferences, things like that.
[00:46:53] Alex Melen: Yeah. But yeah. Interesting thought. I know agencies that have done different approaches. I know where you worked before, they were very legal. Legal in vertical, specialized, right?
[00:47:04] Corey Quinn: That's right. Yeah. And I think to your point. It helped us to stand out in the marketplace. The crowds marketplace. People came to us 'cause they, they recognized, ah, these guys know specifically how to cha solve our challenge.
[00:47:16] Corey Quinn: Yes. But I think given the fact that smart Sites is now in very established brand in the space, you have a lot of clients that help to promote the experience. Yeah. We work with every
[00:47:26] Alex Melen: Yeah. We, even if we're not vertical specific, we work in every vertical. So we, I dunno, we go to a dental conference, even though we are not only dental marketing, right.
[00:47:35] Alex Melen: We, we show them dozens of examples of dental websites we made that marketing we've done. So we're, even though we're not vertical industry specialized, we are in every vertical. I don't think we've ever not not touched the vertical. So that helps a ton for sure. For companies who are smaller. And they're not vertical, specialized and never touched on vertical at all.
[00:47:54] Alex Melen: For sure. They'll, there there's always gonna be learnings, right? And you right, the, the, the clients never wanna be the Guinea pigs. Like for example, in, in real estate, a lot of it has to do with, uh, MLS feeds, the feeds of real estate coming into your website and it's complicated. IDX feed that you work with, there's, there's definitely issues with it.
[00:48:12] Alex Melen: And for the, I'm I'm sure any agency who took our funders, real estate clients went through a lot of headaches. I don't know who necessarily wound up paying for that, but it's for sure we, that the first couple are, are getting fixed. So yeah, we're fortunate enough that we've been doing this long enough and are big enough that we've worked with every industry at this point and know the complexities of every industry.
[00:48:32] Alex Melen: Yeah. But very, I think, very good question. It's very specific decision for an agency to make. Yeah. Whether they wanna specialize specifically in a vertical and become known, uh, what I, what I've seen myself in the auto space. Yeah. And so my, my com smart sites is in every vertical, uh, every industry.
[00:48:50] Alex Melen: There's no industry. It's more than 5% of what we do. So we're literally just spread through every industry. But being myself in the auto space, I could see the advantages of being known in that space. Like when I go, when I speak at conferences, now I know the vendors, I know the people attending, people know me.
[00:49:06] Alex Melen: Right. Uh, you become like a thought leader in the space. So For sure. Benefits of, of both approaches. I think very, I would say it would have to be a very strategic decision. Yeah. If an, an agency should make, and, and I think it's important for that decision to be made and not that just to be wishy-washy, like, well, we're legal, but we'll do whatever comes our way.
[00:49:25] Alex Melen: Right. Right. I, I think you have to very intentionally and strategically decide. Which way you wanna go with that?
[00:49:32] Corey Quinn: If you were gonna start your agency over today, knowing what you know today, would you take more of a generalist approach across verticals or would you take more of a specialized approach and why?
[00:49:42] Alex Melen: Very, very good question. I think it's easier to start being, being specific to verticals. So for example, me being well known in the auto space and I have a book in auto space, I speak all the conferences, smart sets, closes down. I starting a new agency would be so much easier for me to do it in the auto space because not only a like thought leader in that space, you could take that out of the equation and just say, I pick a randomly issue.
[00:50:08] Alex Melen: But I know the challenges of that industry very, very well and it would be a lot easier for me to articulate. The solutions my agency would provide to those challenges. So I think, I think in terms of path of least resistance, especially if you're familiar with an industry, right? If you're not, yeah, then I think it's a little bit different.
[00:50:27] Alex Melen: But if you have any experience of, had maybe a couple clients in that industry, if you're familiar with any industry, I think it's a lot easier to just concentrate on that and very, you, you then very well know the exact. Not only problems those clients are trying to solve, but literally their day-to-day struggles, right?
[00:50:47] Alex Melen: You're very in tune with exactly what they're trying to solve, and you're very in tune with how to communicate, how to solve that, right? And for thinking back to automotive, again, automotive folks are very automotive centric, right? If you're not a car, like don't have to be a car person, right? Like I'm a huge car person, that's why I got involved in vertical.
[00:51:06] Alex Melen: My brother is the complete opposite, is not car person at all. Right? In that space you have to be a car person, right? If, if you like go to pitch, pitch a dealership and like, I don't know, instead a Honda Accord to call it like a Toyota Accord, like that's it. Like, yeah, you give out the best sales pitch, best sales process in the world, best product, but you have to speak the language, right?
[00:51:27] Alex Melen: So I, I, I, I, I think starting over from scratch, I think it is easier to really laser focus. I. On the industry. But then I think ultimately as you grow, it will limit your growth. And I think that's where you saw the, uh, at, where you worked. I think you guys started off being, uh, legal specific, but then added Correct.
[00:51:44] Alex Melen: From services franchising, right. As you grew.
[00:51:46] Corey Quinn: Yes,
[00:51:47] Alex Melen: exactly. You kept, you kept, Craig kept growing in the legal space, by the way. Correct. Opposed to, so Otto Otto's an interesting one, and I, I thought about it when I wrote my book, and I could have wrote about lots of verticals because I have experience in lots of them.
[00:52:00] Alex Melen: But I'm just passionate about auto. I'm like, I speak in auto, do auto. But when I was thinking about like, who's my market to buy my book, right? If you think about it, there's, I think 16,000 franchise car dealerships. In the US like 16,000 period. That is my market. Right? 16,000 and, and like, I don't know how many of them are in market for a marketing company at any time.
[00:52:20] Alex Melen: I don't know. Let's say 3%. Yeah. Right? Yeah. Yeah. So my market's like a thousand people, right? Or like a little bit over. Exactly. In market. Yeah. For, for lawyers. What I think 2 million legal practices in the us right? Five, five partners. Yeah. Much larger. Much, much larger. Yes. So I think in legal, you guys, uh, could have even kept expanding, right?
[00:52:40] Alex Melen: It's not, you're not as limited as like in the automotive space. Yeah. I think there's literally millions of legal practices and they make a lot of money. And spend a lot of money. So, yeah. So yeah. Yeah. Yeah. Go ahead.
[00:52:51] Corey Quinn: Yeah. Yeah. You're, you're making a great point. So some inside baseball, we, we had a founder who's very aggressive, really wanted to grow for good reason, really wanted to help a lot of businesses.
[00:53:02] Corey Quinn: And so the, the strategy was not either or, but both. In other words, correct. We're gonna invest heavily in legal, we're gonna continue to go to the conferences, do events and everything. That helps you
[00:53:11] Alex Melen: grow quicker. So that, that, that was my original point. When you laser focus on industry, I think ultimately even a big industry like legal, you'll be kind of capping your growth a little bit versus, uh, adding others so that that's a trade off.
[00:53:24] Alex Melen: You could become very well known in the industry. You could, uh, you could specialize, you could literally, I've learned myself speaking at conferences even. Even at my level, let alone sending salespeople, but as a, as a CEO of a company speaking at conferences, I won't win them over a on first meeting.
[00:53:40] Alex Melen: Right. You need to That's right. Meet people multiple times for it to happen. So when you focus on single industry, you become well known in that initiative. Fifth time you show up at that conference, right. That that's the Yeah. You're, you're like, uh, you're like, they're all
[00:53:52] Corey Quinn: best friends,
[00:53:52] Alex Melen: right? Yeah. It's like family, right?
[00:53:54] Alex Melen: So, so, so that's obviously a lot harder to do with lots of industries, but like you were saying that the, if you are aggressive on growth, I think ultimately you'll have to wind up adding other, other industries
[00:54:04] Corey Quinn: and, and doing it concurrently. So we didn't pull resources from legal to do home services. We actually added new resource in incremental resources.
[00:54:13] Corey Quinn: In other words, we hired a different sales team. We hired a different account management team. Right. Let's shift the conversation briefly to ai. Yeah. We're in a, let's call it a, a revolution and transformation across everything that we do, but specifically within the agency space. Some may say that it's commoditizing some of the aspects of the, uh, agency work.
[00:54:34] Corey Quinn: I don't know if you could, do you wanna debate that, but how do you see. You know, really where are the opportunities today for smart sites and for agencies in general, given the fact that AI has really impacted how, how we execute? Oh
[00:54:47] Alex Melen: man. So lots of disruption coming, doing this since the nineties. It's probably the most disruption I've seen since the start of the internet and across the board.
[00:54:55] Alex Melen: So in. Day-to-day operations, AI should be creating efficiencies, right? If it's not, you're being left behind on the different aspect of it. Uh, we're also very Google centric. Like we make websites that get found on Google, S-E-O-P-P-C and some other things. The whole Google experience is changing, right? Uh, not a little slower than some had thought it would happen.
[00:55:20] Alex Melen: And Google just record their earnings and they beat all the guidelines and searchers are up and everything. So PE people are ringing the alarm very loudly that no one's gonna be using Google anymore. But for sure, for the first time since the internet became from change, from Yahoo's vision of a directory to Google's vision of a search engine that's being disrupted, right?
[00:55:40] Alex Melen: Where how you're finding information is changing because of ai. So for sure lots of disruption across the board. Uh, I think for agencies, you really want to be thinking about efficiency when all this AI stuff first started coming out. We thought that, so we do a lot of content creation. So that, that was, that's like a no brainer, right?
[00:56:00] Alex Melen: Like, oh my God, we're gonna be able to create twice more content for twice less money and pass that on to clients. But then net result was a lot smaller gains than we had anticipated. Interesting. 'cause, because now there was a much bigger resource use of, uh, qa, qa, the AI content, rewriting the qa, uh, uh, the AI content, editing it, making sure that our writers are in like, duplicating content from other places or just copying, pasting from ai.
[00:56:30] Alex Melen: So there's a, yeah, there's a very big component that now before writers would just write an, an editor quickly check. Now we have to be doing so many other steps to make sure it's quality content that in the end run we are a little bit more efficient. But certainly like our, our thought would was that we'd be able to create twice more for twice less.
[00:56:51] Alex Melen: Right. That, that was like, yeah. Right. That was like, we ran the numbers and like this is literally twice more for twice less. That's the dream. That's the dream. And we didn't, like, we weren't even using, like, we weren't like copy pasting AI content ever, but we were using AI to help generate content. But yeah, there's efficiencies, but definitely not, not as much as we had anticipated.
[00:57:09] Alex Melen: And, and I think similarly efficiencies, AI will create efficiencies across the board. I think people who don't embrace it within their agency will be left behind. And I think the best recent example is literally when everyone went to type from typewriters to computers. Right. Before you'd have to be like, and this was recent, right?
[00:57:28] Alex Melen: 30 years ago. Yeah. In my lifetime. Literally people would type on the typewriter and they, they would make a mistake. They would have to white it out and go back. Right? Yeah. Like how crazy that I remember white out and, and the cha and I remember these are white out. I don't think my kids would even know what whiteout is if I explained that.
[00:57:46] Alex Melen: I had no idea. But literally you would, you would white out and go back and sew. Inefficient. And I remember, and when, when I talk about AI and there's all these, so now there's position prompt engineer positions you could go on. Indeed. You could search prompt engineer. It pays like. Six figure, like 300 brand.
[00:58:01] Alex Melen: The Fortune 500 companies are hiring prop engineers. And it reminds me when literally companies would hire consultants to help their company go from typewriters to PCs, right? Yeah. And those who became not just like, oh, I use it a little bit. I know how to use it. I know how to turn on the computer. But those who became really proficient at using PCs like, I don't know, Excel spreadsheets, formulas, right?
[00:58:23] Alex Melen: They really get the full value of the PC experience. And this is, again, thinking back to the nineties, became so much more valuable and companies who pushed. That kind of stuff became more efficient and those who didn't wanna outta business. And, and by the way, I, I referenced this also because a lot, I I, I talk about this, the prompt engineer, I show like a screenshot of indeed like 350 grand prompt engineer and everyone's hands go up and they're like, oh, my, my son's in college.
[00:58:49] Alex Melen: Should, should be. He, he be learning to become a prompt engineer. And I'm always like, do you, do you still see like consultants helping people move from typewriters to computers? No, it's, uh, I I don't think it's gonna be a pro prompt engineer. I don't think it's gonna be a profession that, uh, is around five years from now.
[00:59:06] Alex Melen: I think we, we'll all be prompt engineers five years from now. That's right.
[00:59:09] Corey Quinn: That's right. It'll be,
[00:59:11] Alex Melen: yeah.
[00:59:11] Corey Quinn: Yeah. Like learning how to use a, a, a mobile phone. Now you probably don't have to learn a lot. It's gonna be very intuitive in the future. Right now it's very mindful for, for those who
[00:59:19] Alex Melen: embrace, for those who don't, I think will become less, less valuable at work.
[00:59:23] Alex Melen: Right. You become, I don't know, you'll, you might, you might not lose your job, but for sure you'll become less valuable, less efficient than, uh, over time you'll get paid less and lose your job. So yeah, lots of change coming. And again, much quicker than we've seen. And a lot of people who work at smart sites and even colleagues I know of, other agencies weren't fully around for this process in the nineties.
[00:59:47] Alex Melen: So not even late nineties. I'm thinking like. Mid nineties, like all this like super hyper growth. And I don't think they fully understand how quickly all this stuff could move. And my best example of all of that is when all the mobile stuff came around. And at that time, this was before I started Smart Sites, I was working at Mediavest, which is part Publicis.
[01:00:06] Alex Melen: And I remember I was there three years. Great company. I loved it there. And this was the years of Mobile. Mobile becoming more prominent. And I remember, and Publica is a huge company, obviously. It's super important for them to be ahead of the game. And they had huge account, I think now they, they're literally now the biggest advertising marketing company.
[01:00:24] Alex Melen: So they were always trying to be at the forefront. And we used to be all these studies and everything and every year, and I was there three years. So all three of those years was the year of mobile. Right? Every year. Like, like they would go on stage and this is the year of mobile. We gotta refocus all our efforts.
[01:00:38] Alex Melen: And like, and I remember like the numbers they would quote too, they would be like, last year the average person had five apps on their phone. Now it's 11 apps. That's it. This is the year mobile. And they kept saying it, kept saying it, and one year people just woke up and it was the year mobile. It wasn't like, it wasn't something that like, I don't know, there wasn't like balloons flying out the air.
[01:00:58] Alex Melen: Like it's, it's, it just very quickly came, came to that and it became that, I don't know, even, even the older generation and the example like to use is you come home and let's say your, your pipe is burst and your basement's flooding, right. Even the older generation will now by the default, take out their cell phone and look up That's it.
[01:01:15] Alex Melen: On your knee, on their cell phone's. Yeah. No, no. Yellow pages. Yeah. Like very quick. And it, so that kind transition, I think we see that with ai. I think it's ev we're gonna keep hearing, this is the year of ai, this is the year of ai, and then we wake up a year or two from now and we're only using it, uh, in our daily lives, much more than we're doing today.
[01:01:33] Corey Quinn: I, it reminds me, thinking back that I think a big tipping point was when I. We realized when the data came out that greater than 50% of web traffic was on the mobile phone.
[01:01:45] Alex Melen: I think by then it was already, it was the, it was already like two years exactly. Into the year mobile. But people didn't realize it.
[01:01:51] Alex Melen: It was like it's a year, mobile, year mobile, and then you wake up and like there's more, uh, mobile traffic than desktop traffic. That's right. And every consumer is using their mobile device for every kind of search. No one, no one's looking through the yellow Pages anymore. Right. That, that was kind of, to me it was, it was, uh, I knew it was coming and knew it was coming, and then somehow it, it happened and I didn't realize, I'm like, I just wake up one day and like for the last couple years, no one's using the yellow Pages.
[01:02:15] Alex Melen: So it's, yeah,
[01:02:16] Corey Quinn: exactly. So it was, it, it went from desktop first to mobile first, right? Yes. That was the whole. Transition.
[01:02:21] Alex Melen: It went, it was a mobile friendly first you wanted to be mobile friendly, and then it became friendly and, and that old sun Mobile first. Although I, I'm seeing the metrics I I'm seeing is it's still 50 50.
[01:02:34] Alex Melen: And for a lot of industries it's very industries specific. Interesting. But for example, for automotive people like searching cars on a desktop. Considerated per considerated.
[01:02:44] Corey Quinn: Per purchase.
[01:02:44] Alex Melen: Yeah. Purchase. Yeah. You kind of like research stuff. You still see very high desktop. Yes. But, but for sure everyone has a cell phone.
[01:02:51] Alex Melen: It's their first go-to when they wanna search something. Even, even if you wind up researching later in desktop, your initial search will most likely be on mobile.
[01:03:00] Corey Quinn: All right. Two, two final questions before we wrap up. Yeah. This is an amazing conversation. Again, there's, there's so much to unpack here, but, uh, I wanna be conscious of your time.
[01:03:08] Corey Quinn: Second to last question, what would be your parting advice, particularly for agency owners who are looking to scale, have some success, you know, emulate some of the success you've had, but they're struggling with scaling? What, what would be some parting advice you'd have for them?
[01:03:21] Alex Melen: Oh, man. Scaling scaling's a good one.
[01:03:23] Alex Melen: It's always a focus for us at Smart Sites. Uh, every year we have minimum 35% growth as a, as a marker, and we've never been under that. So we are very growth focused for various reasons. And I do think in the agency space, it's very important to be, uh, growth focused and not just status quo. I think a lot of it has to be getting comfortable with risk.
[01:03:45] Alex Melen: I think it's all about investing in your company. I think that should be. The first thing people do and, and I know a lot of other agency owners and they have a lot of other investments, let's put it that way, stock market, things like that. I. Profits from your business, invested in your own company and yourself will outpace any other investment.
[01:04:07] Alex Melen: So I think you just have to get comfortable with that thought. It's not just taking all the profits and starting next year with zero and every year. Slowly try and build up from that. I think you do have to invest in in your team, in your company, and in your growth. I think. Going forward, reputation's gonna be more important than ever in a couple ways.
[01:04:26] Alex Melen: I think, uh, for consumers, reputation is becoming more and more important and probably the first thing they check a back company. And, uh, from the generative AI perspective, I think branding and reputation will drive generative AI search results. So when someone's looking for, oh, I want a SEO agency, blah, blah, blah, how well your brand is established online drives the responses from generative ai.
[01:04:49] Alex Melen: So I think reputation is gonna be super, super important and to continue continuing investing literally in your business, in your employees, in your marketing and yourself. I think that's, that's, uh, that's literally the, the answer to growth and, uh, the reason that. Not everyone does that is, it's not always easy or comfortable.
[01:05:08] Alex Melen: And we spoke about this a little bit, um, um, a couple days ago. We are not transactionally positive on our marketing. Meaning, uh, money I spent on marketing this month. I will not back, get back this month. Maybe, I don't know, in the near future. Might not even get back this year. And just something you have to become comfortable with.
[01:05:25] Alex Melen: And I think many aren't in both the agency space and, and on the client side.
[01:05:29] Corey Quinn: So reinvest, reinvest in yourself and your growth. There's a, there's a great book by John C. Maxwell, the 21 Irrefutable Laws of Leadership. And one of the laws that he talks about that I'm always reminded of, and you just reminded me, which is the law of the lid, which is the company can only grow as fast as the leader.
[01:05:46] Corey Quinn: Right? So investing yourself. I have
[01:05:48] Alex Melen: not read that book, but I, I, I, I like highly recommend.
[01:05:51] Corey Quinn: Yeah, highly recommend it. And then reputation was reminded of, I was. Just sharing the stage with the, the c, the chief strategy officer of Yext. And they obviously do a lot of work around helping with, you know, feeds and, and, and local listings and whatnot.
[01:06:08] Corey Quinn: And one of the things that he was saying is that just like how to get listed in the maps, which is very heavily weighted on the reputation that also will serve you in getting listed in, uh, in the ai. So everything you're saying Totally, totally is, is, is great. I just have one last question for you, Alex, which is, what's your motivation?
[01:06:27] Alex Melen: Motivation? That's a good one. I dunno if I have any specific motivation. And it's funny, this, this kind of stuff comes up, especially when we have, uh, company events and all our employees are there and we always get a question of like, not exactly what's your motivation, but maybe a like, oh. You plan and sell smart sites or something like that.
[01:06:44] Alex Melen: And for both my stuff and my brother who were co-founders, co CEOs, we just don't see anything else. Like I, I don't, I really enjoy doing this. I just don't, to answer your motivation question, I, I'm naturally motivated by doing all this stuff. I've been doing this digital stuff, geez, more years than I want to can up right now.
[01:07:02] Alex Melen: Uh, probably approaching 30 years, I don't know. Yeah. And I'm literally motivated by all the really. Cool and interesting things that is possible in digital and the continued opportunities and growths, right? I love it As a industry, especially the digital marketing side, what you can do grows and changes so rapidly.
[01:07:24] Alex Melen: That for just learning all that stuff and doing it is, is, is my motivation. And, uh, for example, um, they just announced today that for P max, they're now gonna, we've been asking for a long time, but for Google Ads Pax, they're now gonna do channel breakdowns. Segment breakdowns. You might even be able to bid on different channels apart.
[01:07:42] Alex Melen: That for me is like super, super exciting, right? So like, I'm, that's awesome. I'm already thinking the all to cool things we could be doing. So that, that for me is, uh, I'm mo I'm naturally motivated by that. I don't see myself doing anything else. The question always comes up at the company events, like, oh, are you gonna sell smart sites?
[01:07:56] Alex Melen: I, I, I, I don't even know what I would do if, if I did. So this, I, I really enjoy doing all this stuff.
[01:08:03] Corey Quinn: A true technician at heart. Yeah.
[01:08:06] Alex Melen: That's awesome. Absolutely.
[01:08:07] Corey Quinn: Alex, where can people, uh, reach out to connect with you, learn more about you and, um, chat?
[01:08:12] Alex Melen: Yeah, absolutely. So Smart Sites is smart sites.com.
[01:08:14] Alex Melen: Simple enough. I have alex mellon.com, A-L-E-X-M-E-L-E n.com. And in the footer, I have all my social media profiles, um, probably most active on LinkedIn, but I, I encourage everyone to connect with me and message me. I'm, I, I love all this digital stuff. I love talking to people about this digital stuff, so I, I, I definitely would recommend people reaching out.
[01:08:35] Corey Quinn: Beautiful. Thank you so much for coming on the show, Alex. Perfect. Thank you. Thanks for tuning in to the Deep Specialization Podcast. If you haven't checked out my bestselling book, anyone, not everyone, you can download the audiobook for free right now by going to anyone, not everyone.com. That's anyone, not everyone.com.
[01:08:56] Corey Quinn: And finally, a special thank you to our sponsor, E two M. We'll see you in the next episode.
