DS_Raj Ramanan and Jason Hennessey_EP 108_Full Interview
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[00:00:00] Jason Hennessey: it was never really about the money. it was all about providing like world-class services and solving problems for law firms.
[00:00:07] Jason Hennessey: that's why I'm super excited about having Raj and the backing behind Herringbone Digital and Trinity Hunt, because now we can really kind of start to solve bigger and greater problems for, the market.
[00:00:18]
[00:00:31] Corey Quinn: Welcome back to the Deep Specialization Podcast. Today's episode is a little different and I think you're gonna love it. You may remember Jason Hennessy from our earlier episode back in December of 2024. Jason has built one of the top legal SEO agencies in the country, Hennessy Digital, and just six days ago, as of this recording, he announced his firm has been acquired by Herringbone Digital.
[00:00:59] Corey Quinn: Which is amazing news and I can't wait to, uh, to hear more about that. So I've invited Jason to join us along with Raj Ramadan. He's the CEO of Herringbone Digital to share all about this deal. In this conversation, we're gonna talk about why Jason said yes to this deal. After saying no to a bunch of others, how Jason navigated this transition with his team, his clients, the marketplace.
[00:01:27] Corey Quinn: And then we'll also get into the thesis behind what Herringbone Digital is building. So if you are running an agency and wondering, Hmm, could I ever sell this episode is for you. So let's get into it. Welcome Jason. Welcome Raj. Thank you so much for having a song, Corey. Appreciate it. Thank you Corey. Yeah, appreciate it as well.
[00:01:48] Corey Quinn: Yeah, it's gonna be fun. So Jason, let's start with you. Could you take us into sort of the world of Hennessy Digital? You've been in business, I believe, about 10 years, right? Yeah. As of, yeah. You started in 2015. So let's look back maybe the last 12 to six to 12 months as it relates to, what was happening in the agency that led up to this ultimate decision to, sell.
[00:02:11] Jason Hennessey: Yeah, it's funny, by the way, full transparency. Courtney and I just got together for lunch in person, last weekend. So for the first time, it was great to connect with you. I had mentioned at lunch that, it was 10 years in the making. I remember sitting, vividly in a coffee shop in Toluca Lake, and it was just by myself, with one client and one employee,
[00:02:28] Jason Hennessey: And so if. You're starting an agency and you're in inning number one. You know, definitely, keep striving, because, the future looks bright, right? and so if I go back, let's just say 12, 18 months, you know, so we just celebrated 10 years, in May. And ironically, that was the month that we actually, brought in Herringbone Digital as our partner.
[00:02:50] Jason Hennessey: And I'll explain why it's more of a partnership than an acquisition. We'll kind of get more into that, in greater detail. But, truthfully, like when you're building an asset, you are trying to make sure that you've got, something to sell at some point, right? And you wanna make sure that you've got a good reputation in the market.
[00:03:07] Jason Hennessey: for me, I was important about personal branding, you know, over the past 10 years. but truthfully, we weren't really. For sale just yet. you know, last year was the first year that we really focused on like profitability. we knew that if we wanted to grow from 20 million to a hundred million, that I don't think I had the proper, capital, to, to get us there.
[00:03:30] Jason Hennessey: and so I knew at some point I was going to have to bring in a capital partner to kinda really take us to that next level. And so the goal was from 2024 to 2027, bring in, as much EBITDA as we possibly can. And then in 2027, potentially look at exiting, right? So you start to run your business a little bit differently.
[00:03:50] Jason Hennessey: and then we got introduced. to herringbone digital. And to your point, we took a couple meetings with others,
[00:03:55] Jason Hennessey: And so, we had a couple meetings and things were okay, but it just wasn't the right fit.
[00:04:00] Jason Hennessey: Whether it was the thesis or what it would've meant to some of my clients if we did that. 'cause like, you, you wanna look at this like. You know, first I wanna make sure this is like the best deal possible for my clients, right? You know? Wanna make sure this is the best deal possible for my team.
[00:04:14] Jason Hennessey: And then third is it good for me too? Right? I think that's how you should be kind of trading, an acquisition. A lot of times agency owners look at selfishly for themselves and then you see kind of deals really kind of spiral outta control later. So that's kind of the genesis, you know, I'm happy to fill in more of the gaps there,
[00:04:32] Corey Quinn: Well, I mean, I think the acquisition's amazing. We'll go deep in that, but even before that, you've built a successful agency, a premium brand, very well respected in the industry. Looking back on these 10 years, what are some of the key success principles that brought you to this point? what are the things you got right?
[00:04:48] Jason Hennessey: Yeah, I think I always lean with the motto that if you take care of your people, they will take care of your customers, right? and so that's just kind of how we act. you know, you can fail and you're not gonna get blamed. usually if you fail, you're probably bringing something to the surface that needs to get.
[00:05:05] Jason Hennessey: Fixed. it's probably a system or process that's broken. It's not the human being that made the mistake. when you kinda lead with that type of, culture, you really start to recruit world class people and they stay A lot of our team has been with us seven years, eight years,
[00:05:20] Jason Hennessey: it's not like people just start and we're recycling people every four months, Some of our account manager, this is very unusual in digital marketing, but we've got account managers that have been managing their clients for seven years. You know what I mean? Like that's not normal in digital marketing usually it's being rotated in and out.
[00:05:37] Jason Hennessey: It's, you know, and that
[00:05:38] Corey Quinn: creates a wonderful client experience.
[00:05:39] Jason Hennessey: Exactly right. Because you're building rapport. People are mailing gifts to my account managers when they're having babies and stuff. They're building deep, deep, deep relationships, you know? Um, and so. That's one of the things I think that we, we got right.
[00:05:52] Jason Hennessey: And it's a testament, you know, to my leadership team too. I really recruited a stronger leadership team to take a lot off of my plate so that I could focus on whatever my zone of genius is. you know, and I think that's really kind of building a deeper personal brand, in the market.
[00:06:07] Corey Quinn: just as a reminder, we had you on at the end of last year, and you could actually go deep about that process of hiring those executives, having a coach like Cameron Harold, and mm-hmm.
[00:06:17] Corey Quinn: That whole process. And I think it's definitely worth listening for folks who maybe haven't had a chance to hear about that. There's so many great insights.
[00:06:23] Jason Hennessey: Sure.
[00:06:24] Corey Quinn: So, so you mentioned earlier you're looking at 20 24, 20 27, you're gonna maximize profit, so you can get to that a hundred million dollar mark
[00:06:31] Jason Hennessey: potentially,
[00:06:32] Corey Quinn: right?
[00:06:32] Corey Quinn: That's
[00:06:32] Jason Hennessey: right. Mm-hmm.
[00:06:33] Corey Quinn: So what was happening in 2024 where you had, let's call it a successful agency like that was, that was a level of success there, but it wasn't quite enough. Or maybe there was something unresolved for you. Like what about being at 20 that, or maybe getting to a hundred that was important to you?
[00:06:48] Jason Hennessey: that's, funny, 'cause after everything kind of took place and money's being transferred around mm-hmm. Um, you know, you think like, I was just gonna kinda run home and my wife would open up the door and there'd be like a pile of a hundred dollars bills and I was just gonna like, jump in and swim on it.
[00:07:02] Jason Hennessey: You know what I mean? Like, was not the case. You know, like, I mean, like. For a good three hours. My wife let me celebrate, and then she's telling me to go to Costco 'cause we need toilet paper. You know what I mean? It's like, you know, it's like back to reality, you know? And then, and then Monday morning, you know, I'm back on the grind.
[00:07:18] Jason Hennessey: I'm jumping on calls with clients, I'm jumping on calls with my ams. I'm looking at ways that we can kind of get better results for our clients. You know, leveraging ai right. And so truthfully, it was never really about the money. It was all about kind of providing like world-class services and solving problems for law firms.
[00:07:35] Jason Hennessey: Um, and that's, you know, that's, that's why I'm super excited about like, having Raj and the backing behind Herringbone Digital and Trinity Hunt, because now we can really kind of start to solve bigger and greater problems for, the market.
[00:07:48] Corey Quinn: and just knowing you as I have, and now having had the opportunity to.
[00:07:52] Corey Quinn: Break bread with you that you are very, you know, you're very much client first. Like you're, you're, you're almost a servant, servant, you know, leadership type of approach to serving, serving clients that, that, that, that rings true for me. Thank you. And so when did the idea of seriously considering an exit first feel real?
[00:08:14] Corey Quinn: Like, when was that? When did, it was like, oh, I'm actually doing this.
[00:08:18] Jason Hennessey: so I think, you know, once, once we actually sign the LOI, um, you know, we, we took about two months to kind of go through the LOI, just so that like, it was just very specific, you know what I mean? like, hey, these are the terms, right?
[00:08:33] Jason Hennessey: This way we don't have to like, you know, go back and forth on points, later on, in the actual purchase agreement. And so we set very good boundaries in the beginning. but I think when it became real was, when I was on a call with a bunch of lawyers like all staring at me.
[00:08:48] Jason Hennessey: Right. You know what I mean? And it's like, and it, you know, don't get me wrong, like it was just like a great, um, it was a great experience, but I. It was just like, whoa, like this is really happening. You know what I mean? Like, it's, it's a, it's a law firm that's asking all these pointed questions just to make sure that, you know, all of the ducks are in order Right.
[00:09:05] Jason Hennessey: For this to kind of take place. Right. And it was just, you know, at that point, I guess it, it, it felt, it felt real. Yeah.
[00:09:11] Corey Quinn: Yeah.
[00:09:11] Jason Hennessey: It
[00:09:11] Corey Quinn: was happening.
[00:09:12] Jason Hennessey: It was happening. What,
[00:09:14] Corey Quinn: so what options did you explore before meeting Raj?
[00:09:18] Jason Hennessey: well, there was, you know, there was a couple other private equity groups.
[00:09:21] Jason Hennessey: There was one private equity. You know, you always get those knocks on the door. Right. You know, like, your house isn't for sale. Right. But hey, I'm in the neighborhood. You know, you can get this mu and so I. you know, and so we've, we've always kind of, at least entertained, some of those calls if it seemed like a serious party.
[00:09:38] Jason Hennessey: over the course of the past couple years, the timing just wasn't right. our profit wasn't there just yet, you know, because like I said, when you're selling, you position yourself to sell, right? You're either in hyper growth mode. Or you're in profit mode. there were times where my agency was at like a 9%.
[00:09:54] Jason Hennessey: Profit margin. when you're at that 9% profit margin, it's probably not the best time to sell. Right. And so, so, you know, we just kind of knew that we were growing our leadership team, we were investing in technology, we were building out proprietary platforms and stuff like that. But at some point we knew that, we were gonna look for a partner, to bring in some capital.
[00:10:14] Jason Hennessey: Yep.
[00:10:15] Corey Quinn: So as you were, again, mindset 2024 to 27, you're gonna, focus on profitability. However, this transaction or this opportunity came along, what made it feel right that this was the right time to partner with herringbone?
[00:10:31] Jason Hennessey: I mean, it was, it was the, the, the Trinity Hunt team, right? Because that's who I met initially.
[00:10:36] Jason Hennessey: Um, and when they started to tell me what they were building, and the thesis behind it, and the people that they were recruiting, like Raj, you know, I'll let Raj tell his story here, but, um, but just the team, I, I, I looked at it as, as though. Wow. This is kind of like a once in a lifetime opportunity and it's either I'm gonna jump on the train with them, or the train is gonna go by and I'm gonna be competing with them.
[00:11:03] Corey Quinn: Okay. Alright. Raj, you're up. So let's, let's start with, could you just share a little bit about, uh, yourself, uh, yeah, your background. We used to work together for a minute. I'd love to, we did. I'd love for people to, yeah, for people to know more about you first. Yeah, I'll kind of, kind of fly through it, uh, relatively quickly.
[00:11:21] Raj Ramanan: But yeah, graduated from Michigan. Diehard Wolverine fan. Started my career at McKinsey, then KKR, so very much going down this, uh, New York finance track. But it also wasn't me. I didn't fit in and I found big private equity to be very extractive, pulling value out of companies versus building something.
[00:11:39] Raj Ramanan: So, while at KKRI met. At this point, all of our mutual friend Daniel Street, we, we actually shared an office together and he kind of pulled the trigger, quit and moved to Austin and wrote a business plan for a startup. I wrote him his first check. He invited me down to Austin to kind of chat. It happened to be during ACL weekend, and I was like, all right, like, let's go do this.
[00:12:00] Raj Ramanan: And so he invited me to join him and we had this amazing ride. This was, I'm gonna date myself, but back in oh eight when the location based services or discovery apps were really popular, Foursquare Yelp. And so ours was a version to connect you with experiences happening around you. Five years moved to San Francisco, raised VC money and were fortunate enough to exit it, to sell it, to Groupon.
[00:12:19] Raj Ramanan: So this unbelievable journey. Since then, I've kind of been obsessed with building in local, so I ran a local digital agency. I turned around a media property owned by Hearst and then Scorpion, where, you and I, uh, overlapped and I have a ton of respect for Russin and what they built there, and a lot of the insights that came from there.
[00:12:39] Raj Ramanan: But as you know. Very much wanted to do this thesis, the build and buy and work with the best founders, kind of like Jason during at Scorpion. And that just wasn't in the cards, right? There wasn't that alignment around that strategy. So I did another stint as CEO of a kind of unrelated logistics company to kinda learn the skillset of being CEO.
[00:12:57] Raj Ramanan: And that's when Trinity Hunt reached out to me and, and kind of recruited me. Sure. And given my battle scars from private equity, it was kind of a long courtship. 'cause the, the thing I was doing was going really well is the Series C hit record revenue, recruit your great team. But here was the dream opportunity that kind of connect the dots of my entire experience, the exact thesis I believed in.
[00:13:19] Raj Ramanan: Trinity Hunt also is a very unique private equity firm in that they have deep expertise in. Build and buy rollups. And they're extraordinarily founder first and CEO first. And that's not just window dressing. I mean, we talked to, investors into Trinity Hunt, other CEOs in the portfolio, the managing partner, Blake.
[00:13:38] Raj Ramanan: Uh, and it, it kind of was the perfect storm. Uh. The offer, I couldn't refuse the, the chance of a lifetime is really how I feel. And so I officially came on board in December. Jason had already started talking to John, who's, principal at Trinity Hunt leading the investment and on our board. And it's just been so much fun.
[00:13:55] Raj Ramanan: Like the, you know, we can talk more about the team we've been able to put together and the pipeline and the deals and the story seems to be resonating. yeah, so again, it feels like the opportunity of a lifetime.
[00:14:04] Corey Quinn: So, so you were, you were, had this amazing CEO role in a company that was growing. You stepped away to step into this golden amazing opportunity.
[00:14:11] Corey Quinn: It sounds like it really aligns, it makes sense that it aligns with your background and your passions.
[00:14:16] Raj Ramanan: A hundred percent.
[00:14:17] Corey Quinn: when you look at the, the market for pe rollups, let's call it in the agency space, what, what do you think a lot of people are doing wrong?
[00:14:24] Raj Ramanan: That, that's such a great question. and not to talk ill of anybody else.
[00:14:28] Raj Ramanan: I think the differentiation is a couple things. Everybody on my team is an operator. Like we deeply understand local digital marketing and agencies. And so I think that sort of hands-on experience of I've been where you are when we're talking to a founder and wrestled with these exact problems.
[00:14:46] Raj Ramanan: the second thing which is near and dear to your heart, Corey, is we are just taking a deeply verticalized approach. Like I think going too broad, too fast, which is something you talk a lot about in your podcast is dangerous. Partnering with someone like Jason and kind of chasing the legal vertical, dental, elective med, maybe one day, home services.
[00:15:05] Raj Ramanan: just this very deeply focused path we think is sort of a path to winning for all the benefits that come from specialization And so I think, and I guess the third thing is. what if your whole model was just being good actors? So when we approach a founder, it's always in service of what's best for the client, what's best for the team, what's best for the founder.
[00:15:25] Raj Ramanan: And the nature of Trinity Hunt's model is like I. Radical alignment of incentives. So by that I mean there's only one class of equity when a private equity firm comes in, a lot of times they'll have a preferred equity stack and they get the first chunk of return. No, there's one class of equity. They have the same equity as me and as Jason and.
[00:15:46] Raj Ramanan: The deal model, the whole deal thesis of what we're building was shared with Jason during diligence, was shared with me, as I was accepting my offer. And so it's very clear what we're all playing for. And so you combine those three things, deep industry expertise, betting on great founders, deep alignment of incentives.
[00:16:03] Raj Ramanan: it's kind a powerful formula that seems to be resonating, in the marketplace. And also something I am deeply convicted in.
[00:16:10] Corey Quinn: Why are you so convicted? What about it makes it clear that it's the right path?
[00:16:15] Raj Ramanan: Yeah, so this is the question I've wrestled with, I mean, for the better part of 15 years in terms of how do you scale in local.
[00:16:21] Raj Ramanan: And so again, ton of admiration for Scorpion and for Rustin, but you take, they're arguably the biggest business in local digital advertising, and they're about a $250 million business. You look at any other industry. General marketing, the auto industry construction, the top company is typically multiple billions of dollars in revenue.
[00:16:42] Raj Ramanan: So there's something about local that's just fundamentally hard to scale, and so this thesis of betting on the absolute best agencies, the best founders supporting them, and. Providing value, kind of taking some of the back office off and consolidating some of the operations, but really letting the founders focus on what they do best feels like the right way to scale in this marketplace.
[00:17:04] Raj Ramanan: Now it's a bet, but it's a bet that I fully believe in, and then I'm betting my career on.
[00:17:10] Corey Quinn: Clearly and Jason's deal. Hennessy Digital was one of the first deals that you announced. Correct. Why was his deal so important from a timing perspective?
[00:17:19] Raj Ramanan: Oh man, there, there's so much I can say and I, I wanna make sure that I'm not cliched,
[00:17:23] Raj Ramanan: Jason is just one of the best, if not the best in this industry, this intersection of legal and SEO super well regarded. this was true, you know, few friends in the industry before we announced him, certainly after, but to a man, no one has anything bad to say about him, and there's so many other founders that actually look up to him.
[00:17:42] Raj Ramanan: Either. He's directly. Coach them or mentored them, or they're like, I want to be where that guy is in five years or 10 years. So to partner with a founder of this caliber and a team and a company with this type of reputation, so early in our journey is like the ultimate way to kind of launch and come out.
[00:17:59] Corey Quinn: So you mentioned this as it relates to, Herringbone, obviously you have the Hennessy digital acquisition in place. What are the type of, companies you're looking for as it relates to going forward? what would be a really attractive.
[00:18:15] Corey Quinn: agency for this model for
[00:18:17] Raj Ramanan: you guys. Yeah, for sure. I'm gonna answer this a little long-winded. so what we're building, and again, I feel so much, kinship with both of you in terms of how we look at this market. Digital marketing is almost like the gateway drug, the Trojan horse of what I want to build.
[00:18:31] Raj Ramanan: What I really want to be is the wingman or the co-pilot to the entrepreneur. I think anyone who founds a business, any business, is a hero. It's an act of heroism to put your name out there and, you know, hang up your shingle. And how cool is it to be the business partner, to be the person that supports the entrepreneur on that journey?
[00:18:49] Raj Ramanan: So, yes, agencies, but we're also gonna look beyond agencies into like related services. So in the world of legal or dental, that could be intake and insurance verification and coaching. Like what can we do to sort of expand the stack to. Help the founder and the entrepreneur be as successful as they can so they can make a bigger impact on their clients, their team, their families, their community.
[00:19:10] Raj Ramanan: I mean, that's really what I feel passion for is to support that journey. So yes, the initial thing is gonna be looking at agencies. But we are gonna look at service providers beyond just agencies that are related, right? Like some of the categories I mentioned specifically with agencies.
[00:19:26] Raj Ramanan: A big part of the thesis is we don't want directly competing assets. What we want is a great company and a great founder by segment in each of our core verticals. So in legal, it seems to segment by price point. Corey and Jason, you have deep experience here, so it's something Jason and I are talking about in terms of how to segment it.
[00:19:46] Raj Ramanan: Jason is obviously working with the very, very high end PI attorneys. What we're looking for is, is someone to kind of come in and. Take the segment just below Jason and then the segment below that, because as you know, there's just a massive TAM of smaller firms and startup firms that are difficult to support at scale and profitably, but that's something that we could either build or buy and complete the legal stack from the agency marketing side.
[00:20:13] Raj Ramanan: On the dental side, it's segments into general dentistry. Specialty dentistry and DSO focused. And so we're looking for great agencies that target each of those segments. Similarly, if and when we enter elective med and home services, we will think about segmentation that way. Now, this is probably a five-year journey, and we could talk more about the private equity model.
[00:20:35] Raj Ramanan: Right now we're targeting these sort of halo brands, these kind of hero companies like Jason and Hennessy Digital. Over time, once we complete the segments, we will look for smaller agencies just to tuck in. if there's a great high-end bespoke small PI firm that Jason believes in, we would buy it and kind of tuck it into Hennessy Digital.
[00:20:56] Corey Quinn: So you mentioned verticalization being deeply verticalized is a key pillar to this strategy. Why is verticalization important?
[00:21:03] Raj Ramanan: Oh man. I feel like you can answer this question better than me. It's, I mean,
[00:21:06] Corey Quinn: leading the witness here a little bit.
[00:21:07] Corey Quinn: Yeah, for sure.
[00:21:08] Raj Ramanan: it's really everything we learned at Scorpion, at least for me, that take PI attorneys if you are vertically, focused everyone in the company, the salesperson, the account manager, the person building the websites, content writers, designers. Ha completely understands the client and has deep empathy for the problem that they are solving.
[00:21:29] Raj Ramanan: It's like a shortcut. It's like a hack that like you just build better products, things just go faster. It's so obvious that everyone can speak the language of the industry. And if you compare, let's say I. Personal injury and the needs of, and the personalities of these founders with home services, it's very, very different.
[00:21:47] Raj Ramanan: And so a lot of what you talk about in your podcast, you just get this like flywheel effect, right? You just get this, like these, these scale benefits really by niching down. And so our way of scaling is, can we accumulate niches with people that have already cracked the code, people that have figured this out and support them with talent, strategic guidance, and capital to kind of take the next step.
[00:22:10] Corey Quinn: You mentioned the PE model. Can you share a little bit about how that plays in the overall strategy?
[00:22:15] Raj Ramanan: Yeah, for sure. THPs model is a bit unique, but the idea is we're, we're kind of on a five-year journey. And so THPs average whole time is sort of three to seven years, but all of our models are built on five years.
[00:22:27] Raj Ramanan: And so our plan is to continue acquiring over the course of five years, starting with these sort of flagship acquisitions like Henessy Digital. And then moving into more tuck-ins, but then integrating go to market. A lot of founders do, founder-led sales.
[00:22:41] Raj Ramanan: You get to 10 and 20 million and it's kind of hard to scale and hard to maintain that growth rate. That's something that we can support at the platform level and sort of help crack the code on that. all the financial and back office integration. And then drive, organic growth and margin expansion through workflow, IMP improvement, AI implementation, things we kind of started to do, back in the scorpion days.
[00:23:02] Raj Ramanan: and then over five years have expanded ebitda, a bigger platform and ultimately exit likely to another larger private equity firm who would then continue the journey and ultimately potentially IPO.
[00:23:17] Corey Quinn: Okay. Got it. Let's shift gears a little bit into how this deal, your deal, Jason, actually rolled out with regard to your teams, your clients, the marketplace.
[00:23:26] Corey Quinn: Yeah. You've built a very high trust company, over the years, and I'm curious, what was your playbook for first telling your team and like, timing, like how did that all come together?
[00:23:40] Jason Hennessey: Yeah. So, you, you certainly don't want this to be a distraction, until it becomes real, right? And so, even though that you sign an LOI, right, and you're moving towards the same goalpost as the private equity group, you know, there's a lot of reasons why deals fall apart, right from the time that you sign the LOI till the signer closes.
[00:24:02] Jason Hennessey: And so just kind of knowing that, you know, I only brought in, those that would've been instrumental to making the deal happen. and so that was my. CFO, most importantly, because financials is the first thing that you look at just to make sure that, are you telling the truth? Are you who you say you are?
[00:24:21] Jason Hennessey: 'cause the LOI is predicated upon the data that you give them, right? And so if there's anybody listening, make sure that you've got a good, either a fractional CFO or somebody that Thoroughly does a good job with your books, because that's one of the most important pieces here. and so ours was great.
[00:24:37] Jason Hennessey: So brought her in, our COO as well. Later on we brought in our CTO right, to talk about some of the technology And there's a couple other people, like our director of client services that was brought in, when we were starting to kinda understand our clients. And that was basically kind of it, that was kind of who, you know, knew about this.
[00:24:57] Jason Hennessey: and then once it actually closed, right? the first meeting, was with my leadership team, breaking the news to them, and then very well received. and I think why was it well received is because. It wasn't like I, I'm a man of integrity. I'm a man of character. and so it would be very out of character for me.
[00:25:19] Jason Hennessey: After just kind of closing this big deal to come on and to kind of feed my team, my leadership team who helped me build this with some weird narrative. Right. You know, that would've been a lie, right? so, you know, I'm just very genuine about everything, and so I just kind of laid it out as it is and because they respect me and because they trust me.
[00:25:39] Jason Hennessey: Right. It wasn't like, oh boy, private equity's coming in. They're gonna start managing this from a spreadsheet. They're gonna kind of get rid of everything, every redundancy and get the profitability up. You know what I mean? I'm just like, that's not what's happening here. That's not what we're building here, you know?
[00:25:53] Jason Hennessey: And so then from there, then we had a call with our, our full team, right? So about 130 people. and so that was definitely well received as well. then I took it upon myself to schedule 15 minute meetings with every single client that I have a personal relationship with, whether or not I was the one that originally closed them.
[00:26:15] Jason Hennessey: my schedule was just booked.
[00:26:16] Jason Hennessey: Like, I was like zoom fatigue, 15 minute calls all day long for like three weeks. But I just wanted to kind of provide it directly from my mouth so that they didn't just get some random press release and have to fill in the dots by themselves. so I think that was a good playbook, that we set out.
[00:26:33] Jason Hennessey: We didn't have to do that. I've heard, that there's some, deals that take place where the clients don't even know. It's kind of still a secret, you know, that they were acquired, you know what I mean?That's not how we operate here. and I'm more excited about what we're building and the clients, what they're gonna get from this.
[00:26:49] Jason Hennessey: then once we did that, we did a full press release that went out. I recorded a video that also went out to like all of our partners, and everybody else. So it was like a six minute video of me kind of explaining it in an email. So we kind of make sure that we checked all the boxes.
[00:27:04] Jason Hennessey: I
[00:27:04] Raj Ramanan: think Jason might be a little humble here. 'cause like between consulting and private equity and leadership roles, I've done a lot of these sort of transitions and Jason was essentially a case study in change management and I mean that very sincerely, sort of to other founders that are listening, if you ever happen to go through a transaction, the way Jason handled it was first class and so.
[00:27:25] Raj Ramanan: Extremely transparent, very thoughtful about how he expanded the 10, like his initial management team, full team clients, very authentic. Like the video that he sent out is from the heart. you just completely believe why he did this and why it was right for the company and the clients. And speed you don't.
[00:27:42] Raj Ramanan: News, this is a small industry and it's a gossipy industry, and so you were on it, and I just, I have a lot of admiration that you took the time to do those 15 minute calls. I mean, that's how you maintain these key client relationships. He could have been drinking mai tais on the beach, but he was grinding, making those calls and so I just, I really appreciate how you led your team through this and I think it's a great example for other companies out there.
[00:28:04] Jason Hennessey: Thanks, Raj.
[00:28:05] Corey Quinn: So, you mentioned doing the 15 minute phone calls, videos. What other tools or sort of methodologies do you think was
[00:28:13] Jason Hennessey: super, this is funny. so I remember, uh, I remember, um, 'cause I've always bootstrapped mentality, right? Like I kinda do everything. So I remember like, you know, on a Saturday morning taking the initiative, I wrote like this press release.
[00:28:25] Jason Hennessey: I'm like, Hey, I sent it over to Raj. I'm like, Hey Raj, listen, I wrote this press release, you know, like. Edited as you see fit, we can come to terms and what, and then Raja's like, oh, ha ha ha. Like, you don't know how private equity works. He's like, we're gonna interview three PR companies and we're gonna kind of find the right, you know, team that can kind of get behind us and stuff like that.
[00:28:47] Jason Hennessey: And so, you know, it's just done in a more elegant kind of manner. and so I appreciate that, about that. And so then we met with a great PR company. They helped to kind of create the narrative. we sent it out across the different wires and now we're kinda leveraging that to go and tap into maybe the financial market or this market, or finding a different PR agency that can get that spin over in this particular vertical.
[00:29:09] Jason Hennessey: Right. So it's just fun and I'm learning so much. Like that's what I'm excited by because usually when you're the CEO of a company, There's nobody that you report to, there's nobody that's holding you accountable. and so the fact that I have access now to Raj, who helped build a very large agencies with you, Corey, right?
[00:29:28] Jason Hennessey: You know, is great. And then also Daniel Street, Having him now, in my corner as a mentor is just like, you just don't get those opportunities, in life, to have such amazing mentors like that.
[00:29:43] Corey Quinn: So looking forward, how, Jason, how are you planning on staying involved with your agency as well as what role will you play in herringbone?
[00:29:51] Jason Hennessey: Yeah. So for the foreseeable future, you know, I'm still the CEO of Hennessy Digital. I always like to say like every year, um, because I kept so many different ideas that I wanna bring to life with innovation, um, you know, but a lot of times, I've got a no person in my corner and my no person has always been my COO.
[00:30:11] Jason Hennessey: the reason why he's my no person is because we would never have any profitability, because we would be executing and bringing all my new ideas to life, right? And so I'm definitely a product guy. I am a visionary, I'm a technologist. I definitely have a lot of great ideas that I wanna bring to life.
[00:30:26] Jason Hennessey: and so that's something that I'm excited by, is to create some innovation in the marketplace. Especially in the world of ai. I just went to Stanford. I got an executive MBA there recently. I didn't have to do that. This was post-transaction, but it's because I'm infatuated with learning about large language models and AI and what can we do, right?
[00:30:43] Jason Hennessey: And so there's a lot of stuff like that. and then the other thing is recruitment too. Like, I wanna be able to recruit world class talent You know, being in this industry for 20 years, I can tap into a very large network with some of the most successful people in every single vertical in terms of AI and internet marketing.
[00:31:03] Jason Hennessey: And so just yesterday, you know, Raj and I were on a call with somebody that we're trying to recruit. That leads like a Fortune five company, you know, right now. Like, so like, you know, that's another thing is just to leverage and go out and try to find, recruit the people that I couldn't have afforded. To bring into Hennessy Digital, you know, before, getting access to capital,
[00:31:25] Raj Ramanan: you know?
[00:31:25] Raj Ramanan: Yeah. It's something that we really try to be clear about before we shake hands. So during diligence, Jason and I had breakfast and kind of continued the conversation like I. What's your superpower? What do you wanna be when you grow up? You know, those, those types of questions. And what's awesome about Hennessy Digital is the team is great, right?
[00:31:42] Raj Ramanan: Scott Blin, Michelle. Mm-hmm. Like a really strong team, which allows Jason to kind of play up. And so it hasn't been that long, but three kind of very unique world class talent profiles that, you know, we might end up working with that we would not have met without Jason. At least 10 or 12 intros to founders of great companies, agencies, things like that.
[00:32:05] Raj Ramanan: and then thought leadership, like no one knows, very few people know SEO the way Jason does. And so a big question is like, how does AI inform that? And he's already done, some really interesting testing in terms of like Google results versus chat results. And how do the rules of indexing change and like.
[00:32:21] Raj Ramanan: That's amazing. 'cause we wanna be front footed in all of that. So I think those three, those three roles and responsibilities. But the broader thing of like being the thought leader and a, and a partner to me in, in building this, particularly on the legal side, invaluable. Like, what, what an amazing luxury to, to start this journey with.
[00:32:39] Corey Quinn: That's awesome. So this question is for both of you or either of you, whomever wants to answer. what does success look like for Herringbone in the next 12 to 18 months from now?
[00:32:49] Raj Ramanan: Jason, you wanna go first?
[00:32:50] Jason Hennessey: Yeah. so I think, I think success, is finding, the partners that we would like to kind of bring under the tent with us.
[00:33:00] Jason Hennessey: I think we're being very selective and who, it's like we're setting up this table, right? And it's like we've got like seats for only a certain people right now. and so we're literally designating this seat for this person. That company's not for sale, right? But let me at least make a warm introduction, right?
[00:33:21] Jason Hennessey: So that we can actually share what we're building over here at Herringbone Digital, right? Then I bring in Raj and Ze to kind of formalize it a little bit. and then from there, hopefully get them to a place where they weren't for sale. But guess what? Now they're for sale and they're actually coming over and we're getting, now they're thought leadership.
[00:33:41] Jason Hennessey: We're getting their team, we're gonna get access to the clients. I think that's what success looks like for me is going out and building such an amazing company by acquiring those in which that we want to acquire.
[00:33:53] Raj Ramanan: I think that's exactly right. Like we talked about the segments in legal and dental. So fill out those segments, at least on the local digital side, in legal dental, probably elective med, and then prove that this model works, by which I mean this particular collection of founders.
[00:34:09] Raj Ramanan: The people that we have earmarked for the seats works in terms of driving incremental growth, incremental margin, incremental velocity. And in 18 months from now, if you know, we can have the right eight to 10 companies and founders in seat working collectively and the portfolio growth rate is ahead of plan and EBITDA's ahead of plan.
[00:34:31] Raj Ramanan: I am, I'm overjoyed. And I actually think we have line of sight to doing that.
[00:34:35] Jason Hennessey: one last comment, like, you know, in the world of, investing, there's a group called the Founders' Fund, right? Mm-hmm. Nobody has access to the Founders' Fund. Right. If you could somehow get access to the Founders' Fund you're investing in, like I.
[00:34:48] Jason Hennessey: Companies that you know are gonna like explode. Right. and so I kind of feel what we're building here at Herringbone Digital is our own version of like the Founder's Fund, right? Like it's hard to kinda get into this fund. But once you're in, it's like, boy, are you gonna come for a nice journey with us?
[00:35:06] Raj Ramanan: spot on. I think when we started it was like finding the Jason Hennessys and, and convincing them now, and, and a lot of credit goes to Jason as his story goes out. We are just meeting some of the most interesting companies and dynamic founders, and the job is really one of stewardship. Like, let's make sure we get the right folks in the right roles, like with the best athletes in the best spots to make a difference, to make impact.
[00:35:28] Raj Ramanan: and that's kind of what the job is evolving to. And man, is that a fun place to play from?
[00:35:34] Corey Quinn: Exciting. Very exciting guys. so what kind of founders should be reaching out to you?
[00:35:40] Raj Ramanan: yeah, a a hundred percent. So, Jason mentioned some of the, the financial things and so yes, like the agency needs to have certain financial criteria in terms of size.
[00:35:50] Raj Ramanan: We typically look for over a million of ebitda. Just is fundamental amount of scale that that makes it interesting. a growth rate retention is, is a God metric. Just it, it's what Jason said, right? This client first mentality, take care of the client. Everything sort of works out. so we actually index very hard on.
[00:36:07] Raj Ramanan: All the retention cuts we did back in the day, right? Logo, net revenue, gross revenue. We do customer NPS, we do customer interviews. Hennessy Digital's the best example. Their customers love them, right? And so that's a really, really important signal. but beyond the numbers, beyond the financials, what I really look for is high integrity, like.
[00:36:27] Raj Ramanan: Are you fundamentally a good person? Secondly, aligned motivation. If you're like, I got fire in the belly. I wanna lock arms and crack this problem once and for all. I wanna build the winning mousetrap in this industry for all entrepreneurs of local services businesses.
[00:36:42] Raj Ramanan: Yes, I want to, and you're like, Hey, I want a part of the equity. I believe in what you're building. and you know, just like the softer things of like, is this someone I wanna essentially get married to for the next five years? Like, that is the bet I'm making. We're not gonna have, you know, at the end of the journey, we might have 20, 25 companies.
[00:36:59] Raj Ramanan: and there's gonna be a collection of. 12 to 15 founders that we're working with really closely, like these are people we're gonna war with. And so it needs to pass that test of like, we're in this together. And that really is a differentiation.
[00:37:12] Raj Ramanan: Like we're not gonna compromise on that regardless of the numbers.
[00:37:15] Corey Quinn: what's the one thing you wish you knew before you start this process?
[00:37:20] Jason Hennessey: the one thing I wish I knew before I started this process, I think, you know, just diligence, there's gonna be so much need for so many different reports and just kind of getting all of your fears in order, and making sure that you're very organized.
[00:37:35] Jason Hennessey: That you don't slow the process down. granted we are pretty organized, but I think, now getting an MBA in, m and a over six months, I've got a much better frame of reference, of what it takes.
[00:37:48] Corey Quinn: What's the biggest myth about selling your agency?
[00:37:52] Jason Hennessey: I think the biggest myth, at least in my experience, it might not be in anybody else's experience, because when I was starting this process, I'm like, Hey, what do I need to watch out for?
[00:38:01] Jason Hennessey: Right? Because you, you're going into a marriage with somebody that you haven't slept with yet. And so, like, we're getting married now. and so I remember somebody told me, be careful, you know what I mean?
[00:38:10] Jason Hennessey: Like, they're gonna get you on the roof and then they're gonna pull out the ladder and now you're stuck on the roof. But that wasn't, you know, that wasn't the experience with Trinity Hunt, you know what I mean? Mm-hmm. Like, if anything, like, you know, if the ladder broke, they went and got me another ladder, to get down,
[00:38:24] Jason Hennessey: I mean, it's just been a great, uh, a great experience with this. Now, again, that's probably not the case with every single private equity deal. but in my experience, everything was just amazing.
[00:38:34] Corey Quinn: What's one reason this deal was worth it?
[00:38:36] Jason Hennessey: Truthfully, you know, and I'm not just saying this, I just like to add more value to my clients. that's why I wake up every morning and I wonder like. What can I do today? Like we have a meeting like once a week. It's called our 1% meeting, right? and there's a bunch of my executives and we just study.
[00:38:53] Jason Hennessey: And it's not the 1% of the client. It's not the 1% of like our team, like who's the 1%? It's actually how could we be 1% better for our clients? Yeah. So we'll just study something and we'll, like, we might look at like. Chat GPT results and like analyze things, right? So that we can learn so that we get just like one little tip that we can then apply to all of our clients so that they all get a benefit from that.
[00:39:15] Jason Hennessey: We don't have to have those meetings. we could just sit back and charge clients you know what I mean? But we're just always trying to get a little bit better for our clients and I think this just kind of allows us to bring so much more value to our clients.
[00:39:28] Corey Quinn: So good. Raj, you're up.
[00:39:30] Raj Ramanan: Yeah.
[00:39:30] Corey Quinn: what's one founder quality that you're drawn towards?
[00:39:33] Raj Ramanan: authenticity. If, if you just don't, when you see it, someone. Believes their story and is coming from a place of good and trying to do the, the right thing. It jumps through the screen or in person. it's so compelling and I think you can't fake it.
[00:39:50] Raj Ramanan: And in this market where owners of local services business are getting bombarded by different agencies and service providers, it's such a differentiator.
[00:39:59] Corey Quinn: Hmm. What's one misconception agency founders have about exits?
[00:40:06] Raj Ramanan: I'm, I'm gonna give you a two, A two for one. Um, one is that like, that's the end of the journey and, in reality it's the start of a new chapter.
[00:40:15] Raj Ramanan: And certainly in our structure, we, want that to be true. And then the second is like, that's the one bite of the apple. You're gonna have to create wealth. So it's very related to the first thing. There are many structures where sure, You take money off the table, which you've earned, you've created something magical and you deserve to be rewarded for it.
[00:40:33] Raj Ramanan: But the upside can actually be bigger. you know, with things like earnouts and rollover equity and things like that, I've seen, founders can be distrustful of that concept because there are sort of bad actors in this space. But when it works aligned, incentives, honest actors, it can be a very kind of lucrative thing for everyone.
[00:40:51] Corey Quinn: Great. Last question for you, Raj. you left a great role as a CEO and you stepped into herringbone. You have a very clear vision and a powerful thesis. What's your motivation?
[00:41:03] Raj Ramanan: So truthfully, you know, I've been very lucky and very fortunate in my career. it's legacy, right? Like I'm 47 and I truly feel in my heart I might never get an opportunity like this.
[00:41:15] Raj Ramanan: The set of cards that I'm holding in terms of investor board. Team. I mean, these are people that I know really, really well. I have fun on every call, every day. The caliber of founders we're getting to meet. The pressure, I feel is one of stewardship. It's not is this gonna be successful? It's how successful can it be?
[00:41:33] Raj Ramanan: And like the responsibility I feel to get the right, the right people in the right companies in and put the stack together. so it really is legacy like. This is likely my shot and I feel so grateful and very humbled by that opportunity, but also pressure to kind of do it right and take it all the way.
[00:41:52] Corey Quinn: Beautiful. What an amazing opportunity for you personally and professionally. I think it's super exciting.
[00:41:57] Raj Ramanan: Thank you Corey.
[00:41:57] Corey Quinn: where can people reach out to you if they want to lean in, learn more about opportunities that may exist with herringbone?
[00:42:03] Raj Ramanan: Easiest is just [email protected].
[00:42:07] Raj Ramanan: I'm very liberal with getting up my cell phone number. Please text instead of call, but 5 1 2 5 6 7 9 4 7 8. It's on our website. I love. Talking to founders, and even if it's not a fit today or a fit ever, if there's anything I can do to help you on your journey. Again, anyone who started a business, all three of us have an act of heroism.
[00:42:26] Raj Ramanan: And if there's something I can do to help you, a piece of advice, a nugget of wisdom hard won from, from the battle scars I've earned, it would be my pleasure. I love meeting with and working with founders. I just find it so inspiring. so yeah, I'm pretty easy to find and get ahold of.
[00:42:42] Corey Quinn: Well, thank you both so much for coming on, sharing all this wisdom.
[00:42:45] Corey Quinn: I'm excited for the two of you. It's gonna be amazing. Looking forward to maybe we'll do this again in a year. That'd be so fun. And I'll an update.
[00:42:51] Jason Hennessey: Okay. Thanks Corey. Appreciate the interview.
[00:42:54] Corey Quinn: Yeah.
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