DeepSpecialization_EP 110_Chris Martinez_Video_Edited_V1
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[00:00:00] Chris Martinez: One thing is true though, when you look at it from the context of what I'm building today is going to be an asset that I will sell one day, those buyers are going to give you a multiple of your ebitda. So it doesn't matter if you have 10 million in revenue, but a hundred thousand in ebitda. What's way better, and I think this is better for your lifestyle too, is you're doing 5 million in revenue and 2.5 million in ebitda, or 2 million in ebitda, and you're able to sell that business, or let's just call it 15 to to $18 million one day.
[00:00:38] Chris Martinez: You know, like that is really, really cool.
[00:00:40] 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, Cory Quinn. Let's jump into the show. Welcome back to the Deep Specialization Podcast.
[00:00:56] Corey Quinn: Today we have an amazing guest. He's a friend of mine. He embodies the journey from humble beginnings to big success in the agency world, and now he focuses on helping agency founders do the same. My guest is Chris Martinez. He is the CEO and founder of Bloom. Welcome to the show. Chris.
[00:01:17] Chris Martinez: Thank you so much, man.
[00:01:18] Chris Martinez: I know that we've been planning this for a while and you know, it's my fault that we haven't been able to do it sooner, but, uh, I'm so stoked to finally be here.
[00:01:26] Corey Quinn: Oh, I'm, I'm just thrilled for you to be here. I'm thrilled for our conversation, and I know that our audience is gonna to get a ton of value, both from your background, but also the, the impact of the work you're doing right now with agencies.
[00:01:37] Corey Quinn: So could you just give us. A little bit of information, just give a sort of an update on where you are today as it relates to the work you're doing, bloom, what do you do, what problems do you solve? And then we'll kind of get back into your, your backstory.
[00:01:50] Chris Martinez: Yeah, absolutely. So there's really like when you look at like the what of what we do, it is really just two things.
[00:01:56] Chris Martinez: So the first part is management consulting. So agencies that are having a fair amount of success, but there's just things that aren't professionalized yet. Maybe they don't have the right people, processes, systems, financials, those types of things. They come to us and they hire us because they wanna fix that with the ultimate goal for them being an exit one day, maybe that's two years, maybe it's 20 years, but they wanna make sure that they're setting the business up so that when that time comes, they can sell it for a big chunk of change.
[00:02:24] Chris Martinez: So that's one side, that's our biggest side. And then we also do mergers and acquisitions. So my business partner Alan, also, uh, our team member, Ruben, if an agency is looking to sell, then we can do that deal for them, find them the perfect buyer and help them make a ton of money. Also, on the acquisition side, if they're looking to acquire an agency as part of their growth strategy, that's also something that we can help them with.
[00:02:49] Chris Martinez: So that's what we're awesome. That's the fun stuff that we're working on every single day.
[00:02:53] Corey Quinn: Beautiful. And you know, you and I were together. I was at your event. I had the opportunity to speak on your stage, and one of the things that stood out to me. Was just the raw opportunity in the marketplace for agencies who are looking to be acquired.
[00:03:09] Corey Quinn: Yeah. Based on some of the presentations in the, at the right, at your event, you know, there's just literally trillions of dollars of what they call dry powder or dry money that is looking to be deployed in this category of agencies. And so I think it's a super interesting time. And so I definitely want to cover off on what are the things that acquirers are looking for?
[00:03:32] Corey Quinn: What should agency owners be doing now in order to set them up themselves, up for selling at a premium level, all of those things. Yep. But before we do, I wanna learn more about you. I wanna understand what, what were the things in life, in business that led you to running this company and helping agencies the way that you do?
[00:03:53] Chris Martinez: Yeah. I, I, I like this question. I, I knew that it was coming, so I had a little bit of time to prepare. I. Give you all the listeners something new maybe that I've not yet shared. I grew up in LA like you did, you know, and, and, and I think we're about the same age. I grew up in Torrance, so you know, probably 20 minutes away, if there's no traffic, it's 20 minutes away if there's traffic down the street, three hours.
[00:04:18] Chris Martinez: It was a tough time for me. You know, I, I didn't have a very good home life. Lot of physical emotional abuse that I had to deal with growing up. And because of that, this is what I've learned through therapy. Because of that, it manifested itself into me being kind of like a hoodlum kid when we got to my teenage years and I ran with that bad crowd and like, do you vividly remember the Rodney King RI riots The same way that I do?
[00:04:44] Chris Martinez: Sure, yeah. I remember they shut down the whole city.
[00:04:47] Corey Quinn: I remember, I remember it on tv, but I, I mean, I didn't live it in that way, but. The biggest impact I had, just, just to share for a sec, was I went to a public school, L-A-U-S-D, public school, and it was in a part of town that was a lot of kids from the inner city were bused in to, to this campus.
[00:05:05] Corey Quinn: And these were the kids that were in the middle of the LA riots, the Rodney King and all that. Yep, yep. And so what I remember is the tension that was on campus. Yep. All these young kids were all in high school and literally the city was rioting. And so it was definitely an emotional time for a lot of people.
[00:05:23] Corey Quinn: Yeah.
[00:05:23] Chris Martinez: Totally. And, and you know, I was a sociology major in college at UCSB, and, and we spent a significant amount of time, this is 20 something years ago, talking about the riots and what that meant for people. Yeah. Like that trial. So for those that don't know, Rodney King got beaten by the LAPD. It was very, very clear that they, that he got the crap beat out of him.
[00:05:45] Chris Martinez: And the community had been saying that there was police abuse on citizens for decades. This was the first time it was caught on camera. And so that community was finally, they, they felt like finally what we've been talking about is going to be validated and the, these, these police officers are gonna be held accountable.
[00:06:02] Chris Martinez: And then the guilt, the verdict came back and all of them were acquitted and then all hell broke loose. Geez. And, and it was, it was just, you know, the whole city was on fire or that whole area, I should say, was on fire for like a week. The point of this story that I'm trying to make is that as this troubled kid who, who's now.
[00:06:21] Chris Martinez: Creating this little group of other troubled kids. You know, like we're looking at all the, the violence and you know, we're like embracing gangster rap and like all these other things and like
[00:06:31] Corey Quinn: yeah,
[00:06:32] Chris Martinez: you know, we were, we were shitty little kids, you know. But at the end of the day, we were kids and I, I'm making this point because some of my friends, I would say the majority of my friends that I had during that time, they just kind of disappeared eventually.
[00:06:50] Chris Martinez: You know, like I was fortunate that my parents had a little bit of money and they were able to put me in, in club soccer, you know, travel soccer. So I was playing soccer a lot. And that's really to me, to my in, in my opinion, that's the only difference. That's the difference between me disappearing and me doing what I'm doing today is just because of the luck that I had, that I had one great parent and they had a little bit of money and they could invest in me being able to play soccer.
[00:07:20] Chris Martinez: That's it. And so from a business standpoint, I always consider myself an underdog. To me, that's a great word. And I see the agency owners that we work with, and a lot of them are, I would say the overwhelming majority of them are kind of like underdogs too. Didn't come from money. First generation entrepreneurs working their asses off, didn't get handed anything, working their asses off, and now have, you know, a, a multimillion dollar business sometimes, or a lot of the times they've built this multimillion dollar business through blood, sweat, and tears, and then they get stuck.
[00:07:55] Chris Martinez: And I just absolutely love helping these folks, you know, achieve a dream because, hey, so I don't know if you gotta see Kyle's talk. He was the, the wealth advisor that was there, super, super tall guy. So he asked, he had everybody write down, why are you doing this? You know, like, think deeply about why you're building this business and.
[00:08:16] Chris Martinez: I, I, I was, I was playing along and I, I was thinking about when I got started, what I was looking for was validation because that kid from 91 to 98 was absolutely looking for validation, just trying to prove that I was worth something. And, and I recognize that in myself when I started my agency. That's not the motivation anymore.
[00:08:44] Chris Martinez: Don't get me wrong. There's still a lot of people out there that I'm gonna prove wrong, but at the end of the day, like I'm way more comfortable with who I am as a person, that I'm not looking for that external validation in my business. 'cause at the end of the day, the people that only like you, because you've reached a certain level of success, or you have money or whatever, those are not your real people.
[00:09:06] Chris Martinez: Those are the fake, fair weather friends that'll come and go. Right. You know, but in terms of like the work that we do, like, I just absolutely love helping those underdogs because in a way, like I'm, I'm trying to tap back into that kid who just needed some help and some guidance, you know, and I, I don't wanna, I wanna help that person.
[00:09:22] Chris Martinez: So I, I, I will say, you know, obviously there's a happier end to the story when I got to high school. I really, really got focused on soccer, so I know your son plays. Yeah. 1994, when I was 14, we had the World Cup in the United States. Yeah. And that was the first time I'd ever even heard of the World Cup.
[00:09:38] Chris Martinez: And then after that, it was the summer before I went into CO to a high school and I was just all in on soccer. I wanted to be a professional soccer player. I wanted to play in the World Cup and all these things. Life had a different, life, had a different path for me. I, I didn't end up making it obviously, but you know, I ended up getting through high school.
[00:09:56] Chris Martinez: I went to college at uc, Santa Barbara. That experience absolutely changed my life. And, and that is really where the seed of entrepreneurship was planted because I started to recognize that there were other things that I could do with my life than just what all my other friends. Parents were doing and what my parents were doing, my parents were not entrepreneurs.
[00:10:17] Chris Martinez: And when you're a kid, your perception of what's possible is really what you see your parents doing and what you see your friends' parents doing, your environment. Yeah, a hundred percent. So if you don't see somebody who's an entrepreneur and you don't get to see what the life of an entrepreneur looks like, good and bad, it doesn't even dawn on you that you can do that.
[00:10:38] Chris Martinez: Just like if you don't ever meet a doctor or a lawyer or an engineer or a scientist in your life growing up, it doesn't even dawn on you that that's possible. So through my university experience, I bring this up because a lot of people are shitting on four year universities. I do understand they're crazy priced.
[00:10:57] Chris Martinez: For me, the value of that college experience was, you know, I, I wouldn't trade it for anything.
[00:11:03] Corey Quinn: What happened in college that exposed you or maybe after college exposed you to the entrepreneurial lifestyle? Like was there someone in your life at that time that you modeled or what, how did that unfold?
[00:11:15] Chris Martinez: Yeah, so I, I'll tell you a very specific story that happened to me. It was either my freshman or my sophomore year. So I was talking to this kid, Noah, and you know, we were obviously the same age. His dad was a little bit older though, right? My parents were also older. My parents had me, my dad was 33 and my mom was 32, so in 1980.
[00:11:37] Chris Martinez: That was definitely outside the norm, but Noah's dad was like. You know, much, much older than any of the parents that I'd ever met. And so we were just chatting like kids do. 'cause you have time in between classes. And I don't think we were drinking at the time. So it was like that five hour window when we weren't drinking.
[00:11:54] Chris Martinez: I'm talking to him and somehow the, the topic of parents came up and he was telling me the story of his dad. His dad was a stockbroker and his dad had made all this money being a stockbroker. Yeah. And then when he turned 40, he decided, okay, well now that I'm financially set, I am gonna start, I'm gonna start a family, I'm gonna get married, I'm gonna have kids.
[00:12:14] Chris Martinez: Oh, I know what it was. It was because, no, his dad was retired already. So his dad worked his ass off at 40, made a ton of money, and at 40 retired and then started a family. And I remember, I remember that moment so clearly because in my mind I was like, holy crap, I didn't know you could do that.
[00:12:35] Corey Quinn: Right. You had no context for that.
[00:12:37] Chris Martinez: I didn't know that you could do that in life.
[00:12:39] Corey Quinn: Yeah.
[00:12:39] Chris Martinez: Now obviously being an entrepreneur and you know, like I recognize the opportunities and how everybody can pick their own path basically. But back then as an 18, 19-year-old kid, that was just like, like mind blowing for me. So that was one very, very specific moment where, it's a great example of how that one little conversation that we had in a dorm room changed the entire trajectory of how I thought about the world.
[00:13:05] Corey Quinn: And you made the point already, but being at college gave you that opportunity to have that. Conversation with Noah who had a different background than you did.
[00:13:12] Chris Martinez: Exactly. And there were so many little conversations. Like I, you know, so Santa Barbara is really interesting 'cause it's like, it's not technically the middle, but it was almost like the meeting place between Northern California and Southern California.
[00:13:25] Chris Martinez: And so the kids in Northern California, they grew up way differently. You know, like, you probably experienced this Santa Cruz, Cruz, I went to
[00:13:30] Corey Quinn: Santa Cruz. Santa, yeah. Right.
[00:13:32] Chris Martinez: Yeah. So, so that's definitely more NorCal. But you know, they say hella, they don't say the five freeway, they say five freeway. Just like these little things that we would like, you know, like, oh, our way is better.
[00:13:44] Chris Martinez: And stuff like that. I remember there were these kids from a very wealthy part of San Jose, California. They would have their grad night. The other thing that was crazy is that like when I was growing up, if you were smart, you were a nerd and you typically were not very athletic.
[00:13:59] Corey Quinn: Remember the, uh, the movie nerds?
[00:14:01] Chris Martinez: Yes, of course. Exactly. So I was, they were not cool
[00:14:06] Corey Quinn: kids.
[00:14:06] Chris Martinez: I, I was, I was smart, but I kind of had to pretend like I wasn't smart 'cause then I would be labeled dork. Right. But then I was athletic, you know, I've always been, uh, very athletic. And, and so when I got to college, I met all these kids. It was like, it was like you see in the movies, you know, the star quarterback happens to also be the valedictorian.
[00:14:28] Chris Martinez: And I was like, that doesn't happen where I'm from. So little things like that. I remember they were also telling me a story of how on their grad night everybody would go out and they'd get wasted and the adults would buy them alcohol, which was just mind blowing to me. And then if they got in trouble, the police would just drive them home.
[00:14:44] Chris Martinez: Nobody got thrown in the drunk tank At 18 years old. I'm like, what is this place?
[00:14:48] Corey Quinn: This does not happen. Very gone now.
[00:14:53] Chris Martinez: Yeah. It was like there was a movie. What was that movie where, uh, it was like black and white and the, the characters were in, they got sucked into a TV show and it was all black and white, and then they turned color.
[00:15:05] Chris Martinez: Oh my god. Remember? We'll have to put it into the, into the show notes. So anyways,
[00:15:08] Corey Quinn: yeah.
[00:15:09] Chris Martinez: So yeah, so that, that was really, really interesting. Just the, the different perspectives or the different backgrounds that people came from.
[00:15:18] Corey Quinn: What was your first entrepreneurial venture?
[00:15:20] Chris Martinez: I mean, I don't know if this is, if you would classify this, but, um, I really liked to throw parties in college and so I created a fake company.
[00:15:29] Chris Martinez: We didn't like file A DBA or anything like that, but we would put, we would have like this event company that we would do that was pretty entrepreneurial. Actually, you know what, I did do something in college that I do consider entrepreneurial. So at college they had a program where if you had a learning disability like dyslexia or a DHD or whatever, you could have another student in the class take notes for you and then the university would pay that student that's taking notes and it was like $250 quarter.
[00:15:59] Chris Martinez: So I did that and it was a great, it was great because it forced me to go to class 'cause I was getting paid. So I had, I, I had to load up on units 'cause I took a little bit of time off of school to work. And then when I came back I was so far behind. I had to take 20 units a quarter for like four or five quarters in a row just to get caught up and graduate.
[00:16:19] Chris Martinez: But it forced me to go to class and I had like five classes that all needed note takers. So that quarter I, I got paid like $1,200, which in 19 or 2003 and being a broach broke college student that, that's like a ton of money.
[00:16:35] Corey Quinn: Pays for a lot of college. Yeah,
[00:16:36] Chris Martinez: yeah. You know, the next quarter, none of my classes needed note takers, so I was like, well, crap.
[00:16:44] Chris Martinez: Like there goes that revenue stream. So I decided to sit in on sociology one and take notes, and then before the midterm and before the final, I had my friend that worked at a copy store, print up for free, a bunch of these little sheets that says, need notes for the midterm, contact this number. And so I put those on all the chairs.
[00:17:05] Chris Martinez: And granted, this is a huge lecture hall. It's got like a thousand seats. A thousand thousand students in this lecture hall. Put it on all the seats. I made like $1,500, 1500 bucks from that. So I would say true entrepreneurial, like that, that was my first true, like entrepreneurial venture. The first business that I actually formed was a, a soccer magazine, though that was in 2007, right after my dad died, he died of cancer.
[00:17:32] Chris Martinez: He was diagnosed, he died within a month. And then I had this crazy idea that I was gonna start soccer magazine because I love soccer. Great product. Terrible, terrible idea. That's a whole hour long show we can talk about.
[00:17:47] Corey Quinn: Sure. So, so you lost your dad and then a month later you, you started a business.
[00:17:53] Chris Martinez: It was like two months later.
[00:17:54] Chris Martinez: Okay. So I, my dad, my dad, uh, spent a little bit of time there. So my dad was, he had a back pain, right? He was 59 at the time. So, you know what, what 59-year-old doesn't have lower back pain and he kept going to the doctor and they're, you know, running tests and they're giving him medicine. They think it's bacterial or viral or whatever, and it's just not, you know, it would get better, but then it would get worse.
[00:18:18] Chris Martinez: And then eventually, this is December, I think it was like December 9th or eighth, they ran some more tests and then I get the phone call and I'm living in Redondo Beach at the time and he's up in PA in Palos Verdes and pv and I get the call and they're like, Hey, I need you to drive up to the house. And it was just one of those things where, you know that what's coming after that is not a good conversation.
[00:18:44] Chris Martinez: I will say that everything that was going in my, on, in my life up to that point was pretty dang good. You know, like I got a job outta college that I, I was working in sales, right. And I did really well and I became one of the youngest managers in the whole, the whole company, you know, it was 30,000 salespeople or something like that.
[00:19:01] Chris Martinez: I was top 10%. Wow. I left that job and I was, you know, started doing some kind of freelance sales, 10 99 contractor sales, you know, like I was finding my way. And then I get to the, my dad's house and I'll, I'll never forget, like the lighting of the room. It was, you know, it was December, so it's dark out early.
[00:19:20] Chris Martinez: And they only had like one light on in the living room and, and it was like a lamp, uh, that was lit. So, and then like the TV screen was on just kind of in the background with a mute. It was muted. And then he, he said, you know, we have some bad news. We went to the doctor, I got diagnosed with liver cancer.
[00:19:38] Chris Martinez: So immediately we Google, when we get home, Google like survival rates for liver cancer and it's like 10%. It's pretty bad. I call my brother, he's three years younger and we are like, you know, just kind of chit chat about it. He and I aren't super close and we don't talk a lot, but, you know, we had to have a conversation about this.
[00:19:57] Chris Martinez: And from that point on, we had a lot more tests that we're, they were gonna run and we were gonna see other doctors and, and, and. About two weeks go by and they do an endoscopy. And that two week period from December 9th to, I believe it was like December 20th or something like that, he declined health wise really, really bad.
[00:20:20] Chris Martinez: Like it was a massive decline in that two week period. And, and so they do the endoscopy. The doctor come out of the, the, uh, I don't know if it's considered the OR, and they're like, Hey, we have some bad news. It's actually pancreatic cancer. And the reason why we thought that it was liver cancer is because it had metas metastasized to the liver.
[00:20:45] Chris Martinez: My dad was so skinny. I remember he was in that hospital bed after the endoscopy and, and he was so skinny in his neck, you could see his heart beating through his neck. And I'd never seen that before. You know, I'm 26 at the time. And when we got that news, then we knew that it's over. Like this is game over.
[00:21:07] Chris Martinez: There's really nothing else that we're gonna be able to do. We didn't wanna admit it, we didn't wanna talk about it, but in the back of our minds, we knew at the end that this was gonna be the end. Wow. Right. It's inevitable and, and I actually, speaking of parties, going back to my parties, I threw a New Year's Eve party that that same month and we sold tickets and stuff like that.
[00:21:27] Chris Martinez: And so I had this big New Year's Eve party. Me and my wife, my dad is at the condo that he lived at dying, literally dying. And so I'm trying to put on this New Year's Eve party and like be happy and fun and all I wanted to do really was just be with him.
[00:21:41] Corey Quinn: Yeah.
[00:21:42] Chris Martinez: January 2nd. So New Year's party goes great.
[00:21:45] Chris Martinez: Didn't go great, but it went okay. New Year's Eve party goes good. And I show up to his, or I get a call from my stepmother and on January 2nd and she's like, I need you to come to the house. He's not able to take fluids. Can you take him to the urgent care to try and get some fluids? He was very, uh, against going to the hospital.
[00:22:08] Chris Martinez: 'cause he, he was like, I don't wanna die. He, he told me, he's like, I don't wanna die in the hospital. So he didn't wanna go to the hospital. So I take him to urgent care and they look at him, they're like, you need to get him to an emergency room now. Yeah. Take him to the emergency room. Wheel him in. They're like, he's in very bad shape.
[00:22:24] Chris Martinez: He's gonna be here for a while. You need to go out and park the car. And over the next week we talked to doctors, we talked to, I remember there was one doctor who specializes in end of life care. Um, I can't remember the specialty of his, the cancer doctor who is a living piece of shit. And I hate you to this day, Dr.
[00:22:42] Chris Martinez: Deloy, wherever you are. We were fighting to try and get this guy to come and see my dad for two days. He shows up and he is like, your dad's got three months to live. I was livid. Like, I'm a very, I'm a very aggressive human being, especially when I'm angry. So I'm like, where the fuck have you been? We've been waiting for everybody saying that you're gonna save my dad.
[00:23:00] Chris Martinez: And he just casually strolls in one day and he's like. Your dad's got, you know, like I asked like, how long does he have? He's like three months. My dad died like five days later or four days later. Right. So we end up talking to this end of life care doctor. 'cause I'm in the hospital from the moment they allowed me to be there from five 30 in the morning or whatever, 5:00 AM 6:00 AM until they kicked me out at, you know, midnight, one o'clock in the morning.
[00:23:27] Chris Martinez: I'm there all day long, just being there with him, making sure that he's comfortable, you know, and he's drifting in and out of consciousness. And I talked to this end of life doctor and I'm like, you know, I, I need you to tell me like, how much time do we have? And he's like, at this point, you guys are gonna be lucky if you have three weeks.
[00:23:45] Chris Martinez: And I'm like, well the cancer doctor said we had three months. What do you mean? And he is like, I'm sorry that guy did not tell you the right information. Huh. So what happens is we end up arranging for him to go home. They released him for to, um, the, uh, oh my gosh, what's the name of the service? Hospice.
[00:24:00] Chris Martinez: Hospice. They, they release him to hospice care. I go to the house, I set up the bed, and it's this very strange feeling that like I'm setting up the, the, the bed that my dad's going to die in. And, uh, so I, you know, he comes back to the house. He was there for another day, and then the, like at around 1220 in the morning on Jo, uh, January 10th, um, he died.
[00:24:22] Chris Martinez: And we were all there with him by his side. Deep stuff, man.
[00:24:27] Corey Quinn: Yeah, it's interesting because I, I have a dad who's in my, my, my dad is actually in long-term care right now, so I've got, I've, um, we can, we can continue the chat, but
[00:24:37] Chris Martinez: yeah. It's really, really hard. Cory, like I,
[00:24:40] Corey Quinn: yeah, yeah.
[00:24:40] Chris Martinez: If you've not gone through it, this is what I tell people who are losing parents to cancer or loved ones to cancer.
[00:24:48] Chris Martinez: Your brain is incapable of preparing you for that amount of pain and loss. It is, it is too overwhelming for your brain to even comprehend. And so whenever that time comes and your person moves on to the next journey, your brain's gonna do all kinds of crazy things. Yeah. And that's normal. Yeah. And that's okay.
[00:25:12] Chris Martinez: And don't be ashamed of it.
[00:25:13] Corey Quinn: Yeah. So you had your father passed and then what was, what were the conditions in your life that led you to, you know, starting a business like that was, that was gonna be your next focus,
[00:25:27] Chris Martinez: right? Yeah. If I'm honest, I was, well, I'm always honest. It was that validation piece. I wanted to, oh, this is where I'm gonna cry.
[00:25:37] Chris Martinez: Because he didn't get to see me build the type of success that I wanted. I wanted to prove to him. Through this soccer magazine that I was worth it, you know, that I was worth something. I don't think I've ever talked about this on, uh, on a show before. So you are getting an exclusive from me.
[00:25:59] Corey Quinn: Beautiful.
[00:25:59] Chris Martinez: I, uh, and that was the absolute worst reason to start a business.
[00:26:06] Chris Martinez: And so that magazine failed miserably and I lost all my money and I had all this debt on top of that because, you know, I was still trying to process the grief, which I didn't do very well until I ended up getting some therapy and I learned how to do it. I learned the skills to deal with the grief. So I lost all this money and there, but there was a part of me, because I funded this thing with life insurance that I got from my dad's death.
[00:26:30] Chris Martinez: It wasn't a lot of money, but there was a part of me.
[00:26:32] Corey Quinn: There was, there was, there was, but that was, there's a lot of meaning attached to that money.
[00:26:35] Chris Martinez: But here's the thing, the way that I looked at that money is I looked at it as it was blood money,
[00:26:41] Corey Quinn: right?
[00:26:42] Chris Martinez: And I didn't want it. I didn't wanna feel like I was profiting from my dad's death.
[00:26:47] Chris Martinez: So when I lost everything, and this is kind of, this is a weird thing that people do when it comes to like self-destructive behavior. When I lost all that money, when literally it's all gone and then all these creditors are chasing me 'cause I owe them a lot more money. But when it's all gone, I felt a sense of relief.
[00:27:05] Chris Martinez: And it's stupid. I mean, you know, somebody hands you a check, like be wise with that money, you know, my dad wanted me to keep that, to be able to do something, you know, buy a house one day or something like that, you know. But I, I, I felt a lot of relief by getting rid of that money at the end of
[00:27:22] Corey Quinn: the day. Do you think that that was a factor in the, in the, let's call it the failure of the soccer magazine business?
[00:27:31] Chris Martinez: I think so. Well, no. I mean, if, if we're doing facts, not feelings, you know. I made every mistake that you could possibly make. Like I was trying to do everything, uh, I was too. I was too in love with my product. I didn't really look at the business model and see how we were gonna be able to make it successful.
[00:27:48] Chris Martinez: I had zero experience in print publishing. By the way, this is 2007. It's the worst time in history to start a print magazine,
[00:27:57] Corey Quinn: right?
[00:27:57] Chris Martinez: So that was really stupid that
[00:27:58] Corey Quinn: off,
[00:27:59] Chris Martinez: you know this.
[00:27:59] Corey Quinn: Yeah.
[00:28:00] Chris Martinez: This is me letting my ego get in the way, trying to prove people wrong. Trying to prove to my dad that I was, you know, I was worth it.
[00:28:09] Chris Martinez: Just doing the business for the wrong reasons and letting my emotions drive those decisions and not logic and reason and facts.
[00:28:17] Corey Quinn: You mentioned that the, you went to therapy. How, how has that therapy helped you to be a better founder and now coach to other founders? Yeah, I
[00:28:25] Chris Martinez: still go, I still go, well, I, I should admit, as of today, June 30th, I have not gone in about, uh, five weeks because I had a little health thing and I wasn't able to, to get around very well.
[00:28:38] Chris Martinez: But I have a, an appointment for Monday, next Monday, so I would not be alive had it not been for the therapist that I found in 2009. So between 2007 and 2009, I was an absolute nightmare. Like just angry all the time, wanting to fight everybody. That was my way of dealing with emotions, you know, it's like straight to the, to anger.
[00:29:04] Chris Martinez: And my, my, my fuse is very, very short and my life was falling apart and I. Was, there was something that happened in my life and I was just so angry that I was like, chain smoking cigarettes, walking around the neighborhood in Manhattan Beach. And I, I was like, I couldn't see, I couldn't see straight 'cause I was so angry over nothing.
[00:29:30] Chris Martinez: Looking back, it was so stupid. And, and I'm like considering killing myself. I'm like, I can't continue to live like this. So when I look at my options that I have in my life, it's either I kill myself or I get better. And then I thought, you know, my dad wouldn't be very happy with me if I killed myself. So, you know, this is 2009 and, and you know, what is that?
[00:29:58] Chris Martinez: 16 years ago now, therapists weren't really online back then. So I had my giant book that the insurance company gives you. I had, I gotten a job, right? 'cause I have to pay off this debt. So I'm, I have a job and the health plan that I got through insurance or through the company, they give you this giant book and then you find therapists through that.
[00:30:19] Chris Martinez: And so I'm going down the list of people that are in my area in Manhattan Beach, and I'm calling and calling and calling. Nobody answers the phone. So in my stupid brain, I'm like, well, I can't leave a message because somebody that I know might be in the room and my voice is gonna be on the voicemail machine, which nobody uses anymore.
[00:30:39] Chris Martinez: But that's the craziness that was going on in my head at the time. So eventually nobody picks up. So I just started, uh, eventually I am like, oh, well I have to leave a message. So I just said, Hey, my, my name is Chris. I'd appreciate a call back. Here's my number click. And I do that to like 15 people. The first person that called me back was his name.
[00:30:56] Chris Martinez: Well, this woman named Susan. And so she's like, Hey, I'll have you come in for an introductory appointment. And we sit down and I'm talking to her and she was, she was like pushing back on me. She was, she's a ballbuster, you know? And, and it was exactly what I needed because I was gonna try and come in and bulldoze the situation and, you know, my anger was just fueling everything that I was doing at the time.
[00:31:19] Chris Martinez: And she's pushing back on me and I'm like, this little, this little older lady is like pushing back on me. Maybe she's maybe 110 pounds. And so I'm like, I don't like this, but I'm gonna come back. So then we come back and we start going Something
[00:31:31] Corey Quinn: about it.
[00:31:32] Chris Martinez: Yeah. Like regular man. I dunno why this is triggering, triggering something in me.
[00:31:39] Chris Martinez: With her. And after like the third session, I would come in and a lot of the times I'd come in and I'd be pissed about something and I'm angry about, you know, who knows what, maybe it was my roommates at the time, or somebody said something or something I saw on tv, who the hell knows. And this particular time I, I remember it was like I was blaming people or something like that.
[00:32:02] Chris Martinez: And she says like, okay. And I was like, well, this is the way that it is, or something like that. And she's like, okay, how's that? How's that viewpoint basically? How's that, how's that working out for you? And I was like, pissed because she's trying to propose that life is something different, that there's a different way of dealing with that situation.
[00:32:24] Chris Martinez: She's like, how's that working out for you? I was like, motherfucker, she's right. And I started to learn kind of the stoic behavior. The sto, the STO stoicism. Can't say that word. That ultimately it's up to me that no matter what gets thrown at me, I still have the choice of how I'm going to respond to these different scenarios.
[00:32:45] Chris Martinez: And that's just one of the tools that she taught me because of my upbringing. And I think a lot of people experience this as well, is like, I was never taught how to deal with these different emotions. It's very clear or a common with men of our age that were born in that eight, that, you know, seventies we're not to early eighties.
[00:33:04] Corey Quinn: Yeah. We don't, we are, we are, we don't have the tool set. There's no context for us to learn that.
[00:33:10] Chris Martinez: And, and what we were taught, or at least what I was taught directly or indirectly was like, boys don't cry. You just shove it down and keep going. You know, like we don't talk about these things. But what happened in that scenario with me, with the grief is that I didn't talk about it for two years and it came bubbling back up to the surface.
[00:33:28] Chris Martinez: And then the only are other options where suicide or go to therapy. You know what I mean? So, so Susan saved my life and, and then I ended up moving to San Diego and like, you know, things started getting better again. Started the agency in 2012. From a therapy standpoint though, I go, I get more value as a, as a CEO from my conversations with my therapist than I do pretty much any business guru that I talk to or worked with, or content that I digest.
[00:33:57] Chris Martinez: That for me is like the biggest thing. 'cause at this level, it, it's all mental, right? Probably at any level it's all mental, but like you being able to keep your thoughts together and keep your shit together and keep your composure when things go wrong, because they are gonna go wrong. Everything's gonna, everything's gonna break over and over and over.
[00:34:18] Chris Martinez: And so you learning the skills to be able to manage that is gonna make the difference between success and Taylor.
[00:34:25] Corey Quinn: I'm reminded of a great book again and again. It's a, uh, John Maxwell, he wrote a book, a lot of leadership books and
[00:34:32] Chris Martinez: yeah,
[00:34:32] Corey Quinn: there's one book he called, it's called The 21 Irrefutable Laws of Leadership And The One Law, I read that one, yeah.
[00:34:37] Corey Quinn: Is the Law of the Lid. Right. Which is that a company could only go as fast as the, this is my paraphrasing, but as fast as the limiting beliefs of the founder.
[00:34:47] Chris Martinez: Yeah. The way that I, I rephrase that is I say the business is a reflection of you.
[00:34:53] Corey Quinn: Yeah.
[00:34:54] Chris Martinez: So where you are is a reflection of who you are.
[00:34:57] Corey Quinn: Let's talk about facts, not feelings.
[00:34:58] Corey Quinn: I know you wrote a book about that, but I also wanna understand the philosophical philosophy behind that. Where did that come from for you, and how does that play sort of a through line in the work you're doing now?
[00:35:09] Chris Martinez: Well, I've kind of, kind of, uh. Giving you a little bit of background on, because of the soccer magazine.
[00:35:14] Chris Martinez: Right. So just to talk about my agency life, right? So 2012, uh, actually 2011 I think I started working for Reach Local, which back in the day they were on a tear doing PPC management and they went public and they were hiring all these salespeople and, and. At that time, just to get in that story really quickly, I taught myself web design and I taught myself, uh, digital marketing for some other side projects, crazy entrepreneurial side projects that I had.
[00:35:43] Chris Martinez: And so then I, I got a job at Reach Local, and what really helped is my background. Like I understood websites and I understood digital marketing and PPC and stuff like that. Well. Reach local didn't do websites. And so I decided, 'cause I, you know, I would sell them these PPC campaigns.
[00:36:00] Corey Quinn: Scorpion ended up doing the fulfillment for those, by the way.
[00:36:03] Chris Martinez: Did you really? The
[00:36:04] Corey Quinn: websites.
[00:36:04] Chris Martinez: Okay, cool. So back in the day, this is 2012, you guys must have come in, come in later. I, you know, we were driving traffic to just crappy landing or crappy websites and then they wouldn't convert, of course. And I was like, well, why don't you guys have websites? That's just not something that we do.
[00:36:18] Chris Martinez: And like you can develop relationships with people in the, in the area and you can refer them to business. And I was like, hell no. Like I can do this. So I started an agency. I didn't even call it an agency back then. And so that's basically what we did. And then I was moonlighting for a year and then 2013 I got let go from a, I ended up becoming an online ad sales manager at two newspapers in, in LA.
[00:36:41] Chris Martinez: You know them, it's the Daily Breeze and then the Long Beach Press Telegram. I was the online ads manager, sales manager for those two, and then they let me go. They were like downsizing. Plus I hated it. I hated the people. It was like one of the worst jobs I ever had. And then I was like, full-time agency and you know, off to the races with that, my idea with this web design agency was that we were gonna get a million customers and at first we had a package was like $30 a month, including the hosting and like two blog posts a month.
[00:37:13] Chris Martinez: And all I was like, we're gonna get a million customers and we're gonna make so much money. And, and very emotional, right? Yes. And, and of course like we were getting customers and I was building this thing up. I wasn't making a ton of money, you know, and we had a little team in the Philippines and I was working 6:00 AM to 1:00 AM every single day.
[00:37:31] Chris Martinez: And, but it, it felt like we were making progress. Eventually we built that business up and we had a couple hundred clients. We had raised our prices, so we were doing, I don't know, maybe half a million bucks in revenue. And I still wasn't able to pay myself though. I was like, how is it that we're selling so much?
[00:37:48] Chris Martinez: But at the end of the day, like there's no money left over for growth and there's definitely no money left over for me. And I didn't know how to do like a proper performa, like I didn't know how to look at our financials. Again, I was all feelings like I feel like it should be working, but it's not. Yeah,
[00:38:05] Corey Quinn: I'm doing the things, why is it working?
[00:38:06] Corey Quinn: Doing the
[00:38:06] Chris Martinez: thing. So then we ended up launching because by the time we were at that l that, you know, having over 200 clients on retainer and you know, I built a team in Mexico, so I was one of the first people to go down into Tijuana and build a team to do fulfillment for my websites and all the other things that we were doing.
[00:38:24] Chris Martinez: And I was like, I wonder if I can build an outsourcing company after learning about Design Pickle back in the day. And. I launched it, so I called it dude. 'cause we're from Southern California and we say dude all the time. Right. It's just a fun term. Yeah. And we started getting clients, I started running ads, we started getting clients for our unlimited design and development for agencies program.
[00:38:46] Chris Martinez: That's what we offered back then. And we would use this team in Mexico and like that was revolutionary back then. They're like, some people were like, I didn't even know they had internet in Mexico. I was like, oh my god. This is 2017 by the way. You know, it's not like it was 1996 or something. So that that picked up scene.
[00:39:04] Chris Martinez: We ended up getting a booth at the trafficking conversion conference in 2018. And from that event alone, we generated over $400,000 in revenue. So now we're on a hiring tier. You know, we went from five people to 30 people in like nine months or something like that. Business is growing. And then in 2019 I hit the same roadblock the company's.
[00:39:29] Chris Martinez: Going Well, revenue rise. We were right around 900 grand on. But there's not enough money left over at the end of the month. It's always like we're struggling to pay the bills. And like, you know, like my business partners at the time was like, Hey, we can't afford this. And I'm like, how? How is this possible?
[00:39:47] Chris Martinez: So eventually I invest in Russ Perry. He had a coaching program and he taught me the proper way to do like what your financials should look like. This is what a CE O's responsible for. He taught me the facts of what an agency owner is supposed to do. And then I took that and I ran with it. I mean like we changed all of our numbers, we brought in the right people, all facts.
[00:40:07] Chris Martinez: You know, my wife came in 'cause she's an expert on HR and hiring and she built out job descriptions and just, you know, we revitalized the entire company. 20 20, 20 20. We had like a couple scary months when COVID hit, but it ended up being our most profitable year that we had had. And I was able to triple my own salary, all because I was able to run the business now based on facts and not feelings.
[00:40:32] Chris Martinez: Massive, massive difference. We won this DB award, which I think you can probably see right here. Mostly innovative company under a hundred employees. Actually, that was our second place trophy. It was most innovative. We got a minority owned business of the year for 2021. And you know, like, so we're doing well and, and then eventually we started coaching our, our clients on how to run their business with facts, not feelings.
[00:40:54] Chris Martinez: And then we ended up pivoting out of doing the outsourcing business model. 'cause in my opinion, that's just a dying business model now with all the technology and access and things like that. Yeah. And now we're into the management consulting and, and m and a and we were rebranded in in 2024. So the facts, not feelings really came from my experience, my personal experience, and my failures.
[00:41:16] Chris Martinez: And recognizing that this is a common problem that all agency owners have, unless you went to Harvard Business School or Wharton, or, you know, you got your MBA from Marshall, I think. Yeah, like, unless you learn the proper way to run a business or your family members that taught you, you kind of just don't know what you don't know.
[00:41:37] Chris Martinez: And the facts, not feelings, mantra are really like words to live by, you know? So that how we're running our business, it's always, no matter what department, if it's finance, hr, operations, sales, marketing, finance, of course, it's always facts, not feelings. We're always gonna make our decisions based on facts and not how we feel.
[00:41:59] Corey Quinn: I love it. I love that you've lived the, in some respects, the accidental business owner. Many agency founders are, you know, they're, they're great at websites or they're ambitious and they figure out PPC and then they start an agency and they Right, they, they build it to the place you've been through that.
[00:42:16] Corey Quinn: You've had some amazing breakthroughs and now you're, you've had this philosophical sort of approach, facts, not feelings, that to help you to break through some ceilings. And I definitely align with, with that approach. Let's talk about facts, like what are the, like what, maybe we should start with finance.
[00:42:34] Corey Quinn: Like what are some areas within the financial aspects of an agency Yep. That the agency owners should be really clear about and, and obsess over.
[00:42:43] Chris Martinez: Yeah. So, so let's look at it from the lens of the end goal, which is selling the business one day, maybe not now, but there will come a time when you're like, Hey, I'm ready to move on to the next thing.
[00:42:55] Chris Martinez: You know, I'm tired of doing this, I wanna sell it off to some, maybe you'll get an offer, right? From some, because we all get those emails and, and there will come a time when you're gonna wanna sell this thing. So from a financial standpoint, I need to be very, very clear that you are not going to get a multiple of just revenue.
[00:43:15] Chris Martinez: What they're going to look at is your ebitda. They're gonna look at your EBITDA and the trailing 36 months of ebitda, and they're going to give you a multiple of that. I bring this up because there are a lot of people in the like coaching space and I, I, I coach people, but I don't, we don't run a coaching business and that's just not what we do.
[00:43:34] Chris Martinez: Really. There are people in the agency coaching world that say, Hey, sell this package at 1500 and this one at 25 and this one at 3,500, and then all you have to do is sell like two of each one, and this is what you're gonna include in each package. And then within, you know, six months, you're gonna be at $83,000 a month.
[00:43:53] Chris Martinez: So you'll have that million dollar run rate and life's gonna be amazing. That sounds true, but the reality for a lot of people that follow that. Advice is that you are underpricing yourself and you're not taking into consideration your cost of goods sold. And then what ends up happening is that it's not a very profitable business.
[00:44:18] Corey Quinn: Right? So that sounds like an arbitrary, like an arbitrary price is like that, that you should just, these are the proven price tiers that you should, you should use, and you kind of have to figure it out on the back end.
[00:44:30] Chris Martinez: The reality is that every agency is a little bit different, right? Every market's different.
[00:44:33] Chris Martinez: Everybody, every buyer, every
[00:44:34] Corey Quinn: market, everything. Yeah.
[00:44:36] Chris Martinez: One thing is true though, when you, when you look at it from the context of what I'm building today is going to be an asset that I will sell one day, right? Those buyers are going to give you a multiple of your ebitda. So it doesn't matter if you have 10 million in revenue, but a hundred thousand in e.
[00:44:53] Chris Martinez: What matters, what, what's way better, and I think this is better for your lifestyle too, is you're doing 5 million in revenue and 2.5 million in ebitda, or 2 million in ebitda, and you're able to sell that business for, let's just call it 15 to to $18 million one day. You know, like that is really, really cool.
[00:45:19] Corey Quinn: Yes.
[00:45:19] Chris Martinez: And, and so when we look at the financials, definitely have to have revenue, of course, cost of goods sold and gross margin. And if you can grow deeper, like you can go buy line of business or by product, then your operating expenses, your EBITDA, and your net income. Those are the numbers that you have to be looking at every single month.
[00:45:42] Chris Martinez: And you know, if you say, well, you know, I don't really like that. I'm not a, I'm not a numbers person, I'm not a numbers person either. But from the context of what you do in your job, like as a CEO of an agency, your job is to increase the value of the company. How do you know if you're increasing the value of the company?
[00:46:00] Chris Martinez: You look at the EBITDA trailing 12 months every single month, that is part of your job. That's what you signed up for.
[00:46:07] Corey Quinn: Are there some ratios or sort of baseline metrics that you like to look, look for in an agency or work towards?
[00:46:15] Chris Martinez: Yeah, totally. So we wanna see th 30% EBITDA or better. So, uh, anything less than 20% not great.
[00:46:23] Chris Martinez: Anything less than 10% is definitely. There's a lot of room for improvement. Less than 20%. You know, you're, if we were to use the letter scoring in, in US schools, you're at about a D, D plus C minus 20 to 25, percent's about a C, 25 to 30 percent's about a B, and then if you're 30% plus, that's an A, right?
[00:46:44] Chris Martinez: That's what I wanna see on the, on the, on the ebitda.
[00:46:48] Corey Quinn: Yep.
[00:46:49] Chris Martinez: Cost of goods is the number one area where people are losing money, and so what we shoot for is 30 to 35% cost of goods. What does that mean? If you sell something for a thousand bucks, you're able to get it fulfilled with all your labor and your software for around 30% for 300 bucks.
[00:47:05] Chris Martinez: That's what we're shooting for. And then operating expenses, you know, depending on how that math works out, it can be 20 to 40%, somewhere in there. But the EBITDA really, really important.
[00:47:16] Corey Quinn: EBITDA cost of goods. Soul, I've heard sort of rule of thumb is you wanna charge three times your cost of goods. That's, I like to shoot for
[00:47:21] Chris Martinez: 3.5.
[00:47:22] Chris Martinez: I just add on point. A little 0.5.
[00:47:24] Corey Quinn: Okay. Yeah. Little margin. Let's create a little bit padding in.
[00:47:26] Chris Martinez: Yeah. Let's create a little bit more padding in there.
[00:47:30] Corey Quinn: When it comes to owner's salary, what do you typically find when that is off target? Like what, what are the, what are the typical ways that owners are not thinking about their salary, uh, in the right way?
[00:47:43] Chris Martinez: So I have to tread light lightly on this because I'm not a wealth advisor and I'm not a CPA. Yeah, I do. I will say that most agency owners are not paying themselves enough money. And, and part of that justification is like, we're growing the business and I'm willing to invest in other people, and I get that, but there comes a time where you need to be rewarded.
[00:48:01] Chris Martinez: It's too freaking hard for you to not get paid. I like to see at least 20% of the revenue going back to the owner. And that can be a combination of salary and distributions, you know, however you wanna do that. But let's make sure that you're getting paid. Like if you're running a million dollar agency and you're not getting at least 200 grand in take home income, what are we doing?
[00:48:24] Chris Martinez: You know, like you gotta be making money and, and, you know, different parts of the country are more affordable than others. Like you live in Los Angeles from the Palisades, I'm down in San Diego, like both very expensive places to live. I love it though. Like, you know, if anything that should motivate you to go out there and, and grow the business and run it better so that you can get paid more.
[00:48:42] Chris Martinez: But yeah, I like to see at least 20%.
[00:48:45] Corey Quinn: Well, I, I think from a valuation perspective, if you have a serious acquirer, even if you're only paying yourself in that, in that context, a hundred thousand dollars, they're going to assume what, what, what the cost of replacing the CEO would be. Yes. In their calculations to determine their valuation and ultimately their offer
[00:49:03] Chris Martinez: for you.
[00:49:04] Chris Martinez: Exactly. Let's dive into that just really quickly. So you need to be paying yourself at least market rate if you're planning on selling in the next three years, because what a buyer is going to do is, let's say you have a million dollars in ebitda, but you're only paying yourself 50 grand a year. Well, they're gonna say to replace you, I'm going to have to go out and hire a CEO and they're gonna be 250,000.
[00:49:29] Chris Martinez: So now your million dollars in EBITDA is now 800,000.
[00:49:34] Corey Quinn: Right,
[00:49:34] Chris Martinez: and the multiple on 800,000 is, betwe is usually two, three, or four x versus the multiple on a million is gonna be three, four, or five.
[00:49:47] Corey Quinn: Right? Multiple. So these are
[00:49:48] Chris Martinez: like that $200,000 is a big, big difference to your pocketbook when you go to sell.
[00:49:54] Chris Martinez: Yeah. So always, always pay yourself market rate, especially those three years leading up to the sell.
[00:49:59] Corey Quinn: That's great advice. Since we're talking about being acquired, what are some of the, let's call it financial documents and records that should be in place before you even think about selling.
[00:50:11] Chris Martinez: Well, we have to have all the financials in place for trailing three years, but I say go back as far as four because we were just asked for, and they were actually asking me for five years back.
[00:50:22] Chris Martinez: You know, like all your p and ls for sure. Balance sheet, you know, income statements, all that good stuff. That honestly, that's not my wheelhouse. That's Alan. He does all the, like, the number running. There's a list though. So basically, I, I can probably make your, make this available to your audience if they're interested.
[00:50:39] Chris Martinez: There's an exit checklist that we have that lists out all of this. Ooh. There's also a due diligence checklist and an add-backs checklist that we have access to. So somehow I'll make sure that your audience gets access to that. Maybe I'll drop it in the show notes or something. Um, and then I'll list out all the things that you have to prepare.
[00:50:57] Chris Martinez: So when you decide to sell, you're ultimately going to create, you're gonna, you know, work with somebody, or you're gonna have to create what's called a data room or a data room, depending on how you say data or data. This data room, it, it's like the most complicated Google Drive that you've ever seen.
[00:51:17] Chris Martinez: They charge a crap load of money to have these things, these companies that build out these data rooms. And so there's gonna be a folder in, in each si, each folder. You have to upload documents in each, so all your financial documents are gonna be in there. And you're doing this also, knowing that the buyers, potential buyers are also gonna ask you a bunch of other questions.
[00:51:39] Chris Martinez: So just like really kind of like basics. You're gonna need to know your churn rates, you're gonna have to have your customer lists and how much those people were paying you for the past three years. So all of your customers, what each of those people were paying you month by month? The churn rates for every single one of those customers.
[00:51:58] Chris Martinez: And the overall churn rate, of course, you're gonna have the financials, you're gonna have to forecast. So you're gonna do a, uh, at least two years out forecast. Realistic forecast. I don't know if you consider this financials, but you're gonna have to know all your marketing and sales information, like cost of, uh, customer acquisition costs, close rates, the pipeline inside the financials.
[00:52:18] Chris Martinez: You're gonna look at your ARPU average revenue per unit. There's just like, there's a million things, but these are kind of like the ones that stick out on the top of my head.
[00:52:26] Corey Quinn: Love it. Well, sounds like your checklist could be really help helpful and valuable here. You talk about how even though you may not be thinking of selling your agency today, it is better.
[00:52:38] Corey Quinn: It's a better way to build a business such that it is a. Built so that it could be sold one day. Can you talk about that, the mindset maybe changing from an agency operator to an owner of an asset? Yeah. Like how do you, how do you think about that?
[00:52:52] Chris Martinez: We, we talked about this a lot actually, at the event.
[00:52:55] Corey Quinn: Yeah.
[00:52:55] Chris Martinez: You know, so I have to talk to people every single week. At least once a week I'm talking to somebody who's like, I wanna sell, or I need to sell, and I wanna get this number. And then I'm like looking at, I'm like talking to 'em, okay, well, like, what's your ebitda, what's your profitability? And if they know, it's usually very, very small.
[00:53:17] Chris Martinez: Like, that number is very small, and there's just this gigantic gap. I talked to a woman recently in LA and she's like, I, I'm running this business. I need to sell it. You know, like, I just had a baby and I, I can't do this business anymore. I've got other things that I need to do. The business is doing 500,000 in revenue.
[00:53:33] Chris Martinez: I'm like, okay, what's ebitda zero. Okay, what are you looking to get for the business? 1.5 million. I'm like, there's just absolutely no way, and like, I hate to be the bad guy, but this is the honest truth. It's like that business is not worth, it's worth something, but it's definitely like nobody in their right mind is gonna give you 1.5 million.
[00:53:52] Chris Martinez: It's just not worth that much. And, and that's the unfortunate situation is like, you don't know when something will come up, when you're gonna need to sell the business. It's better to build it though, so that it can be sold so that it's an asset that you can be, that can be sold for a good multiple. It's better to do that from the beginning than to, to run this thing and maybe you're doing, you know, a million dollars in revenue, seven figures or whatever, and then you go to sell it and then, you know, it kind of feels like a kick in the balls when they're like, well, it's only worth 300,000, which happens all the time.
[00:54:23] Chris Martinez: The other scenario that happens there is you're either gonna sell, you're either gonna close it down and walk away with nothing, or you're gonna sell it for a crappy number. And a lot of the times there's these vultures that are coming in that are looking to take advantage of people that are in a tough spot, and they're basically going to give you a job and they're gonna pay you a wage, which is their, you know, payment earn plan.
[00:54:45] Chris Martinez: Yeah. Their earnout, right? No interest, nothing. Right? And then, and then they fire you and they, they try and screw you outta the deal. Those are gonna be your two options, walk away or take a crappy deal. So let's start thinking differently about the business, right? This is what a smart individual would do, I think, is like, Hey, if, if this is my end goal one day, then I'm gonna make these small little improvements in the business over time so that we can get it to a place where it can be sold.
[00:55:16] Chris Martinez: For a nice multiple, and you know, whenever that day, I'm not looking to sell. At the end of the day, the best way to build an incredibly healthy business is to build a business that you never actually want to sell because it's running so well. You got all the key team members that are running it, you're not very involved.
[00:55:33] Chris Martinez: You's incredibly profitable and spinning off cash. And then when that buyer comes, they're gonna have to give you that crazy multiple to take it off of your hands. You're like, Hey, I, I'm clearing 2 million bucks a year. You know, $7 million isn't gonna get it done because that's just, you know, three and a half years of pay for me.
[00:55:52] Chris Martinez: You know, if you really wanna take this off my hand, you're gonna have to give me a better offer. And then they maybe will come in for 15 to 20. You know what I mean?
[00:56:01] Corey Quinn: Yeah. Oh, it happens.
[00:56:02] Chris Martinez: Yeah. Yep.
[00:56:04] Corey Quinn: So, in addition to the finances, what else attracts great acquirers,
[00:56:09] Chris Martinez: uh, team. So if you have a great team, I mean, this is something that's, it's imperative to have, because when you go to sell, you are not gonna be there forever.
[00:56:19] Chris Martinez: You might be there for a year or two, but at the, you know, most founders, after they sell, they want to spend some time on a beach, you know, like, go on a little vacation or just relax. And so there has to be a team in place to be able to run the business without you. So they're, they're gonna look at, you know, who's doing your account management, for example.
[00:56:40] Chris Martinez: Like, if you are the one with the relationship with every single client, that's a, that's a bad thing that will hurt you. They'll give you a lower multiple because of that. If you're overseeing all of the fulfillment, that's also very, very bad because when you're gone, who's going to do that fulfillment?
[00:56:56] Chris Martinez: Like we need competent people running the business. As I'm saying these things, it is difficult to do so, so when we look at all the things that we have to spend money on to build this business and then still be profitable, it is not easy. Like this is, this is like spinning 15 different plates at the same time, making sure that none of them fall down.
[00:57:16] Chris Martinez: So you have to have great pricing. You have to have great marketing and sales strategy. You have to have great people that are paid very well. You know, like it's not easy, but those team members, uh, they're so important. Not just to you having a great business that you enjoy now, but when the buyer comes in, they're gonna be like, okay, well these people all run the company good to go.
[00:57:36] Chris Martinez: You know, this truly is a good investment for us.
[00:57:39] Corey Quinn: So we're talking about systematizing taking an agency, let's say, that is more founder led, maybe less dependent on systems tried and true. How do you impact, like the agencies that you work with, they're hiring you to help with this, or how do you help them on this journey?
[00:57:57] Chris Martinez: Like our, our actual products that we offer? Yeah. Is that kind of your question? Oh, okay. Cool. I'm happy to share this. I was not aware that we were gonna be asked this question, but obviously I know our products, so, um,
[00:58:07] Corey Quinn: I wanna hear about it.
[00:58:08] Chris Martinez: The, we have two programs. So the first one is our incubator, and that's basically where you come in, you get access to our community, you get access to all the information that we know, all of our cheat sheets, all of our job descriptions, basically the entire playbook.
[00:58:22] Chris Martinez: And on top of that, you get to be able to ask us questions on our group calls that we do twice a week. And then we also have unlimited email support. And you, and all of your employees have access to this. So it's like, Hey, I need to hire this person. Like, how does this job description look, I tweaked it based on your template.
[00:58:39] Chris Martinez: This is what I need. What do you guys think? Email it in, we get back to you within 24 hours, give you our feedback. Hey, I need this resource. Hey, I got this question about my finances, my cost of goods sold. I just can't figure out how to get that down to 35%. I'm stuck at 45. What can I do? Group call or email in the question?
[00:58:57] Chris Martinez: It'll go to one of the, the one of the experts we have on our team. And so like, even like, um, a big one that we get is hiring and firing questions. Do you have a performance improvement plan template that I can use? Yes, we do. Do you like, how can I tweak this? What do I say to this employee that I need to let go?
[00:59:16] Chris Martinez: Like all those questions, like what can I legally say? To let this person go. All those questions can go to our HR expert, for example. So that's our incubator program. That's for everybody. But you know, typically if you're under 2 million, um, that's where you'll sit. Definitely under a million. You'll be in the incubator, and then we have our accelerator program.
[00:59:37] Chris Martinez: You have to at least at a million dollars in revenue to get into that program. Most of the agencies that are in that program are 2 million plus. We have a couple requirements in addition to just the revenue. You have to have at least one leadership team member on staff right now. Yeah, at least one. Just because we can't, there's a lot of things that need to happen and we can't just put everything on the CEO's shoulders because otherwise it's just not gonna get done.
[01:00:04] Chris Martinez: Yeah. So they have to have at least one leadership team member in the seats. You have to be able to afford it. So we've already looked at your financials by this point and gone through everything and we see the trajectory of where you're going. So we need to make sure that it is a financially good decision for you to, to be able to work with us.
[01:00:20] Chris Martinez: You have to be a great person. So we don't work with any jerks. And what else is there? Have to have a good business, like you have to have, you have to actually be getting results for clients. If your churn rates are really high because you have a crappy product and you're just selling them, you know, this, this crappy, you're overselling them and saying, Hey, I'm gonna get you a hundred leads for a thousand bucks a month.
[01:00:40] Chris Martinez: And you're just churning out customers. Like, we don't want any part of that at all.
[01:00:44] Corey Quinn: What are the problems that they're trying to solve when they're coming into your program?
[01:00:48] Chris Martinez: Yeah. Oh, one more thing about the accelerator too is, is we basically come in as your interim leadership team and we run the company like we are helping you to run the company.
[01:00:58] Chris Martinez: We're working with you every single week, fixing your financial problems, fixing your operational problems, making sure that we're getting the right people in the seats like we do your recruiting and training and that sort of stuff. We we're looking at your numbers, obviously every single week. Updating them in the performance to see how we're doing against finance.
[01:01:16] Chris Martinez: Um, forecast that happens every single month doing, helping you with your quarterly planning. We'll set up your leadership team meetings and how to track progress on all your big rocks and objectives that you have, like we come in and sell us and run the business alongside you with the ultimate goal of eventually when we're profitable enough, we'll come in and we will recruit the people that are gonna replace us, and then you're gonna sell the company.
[01:01:42] Corey Quinn: Interesting.
[01:01:43] Chris Martinez: But yeah, so in terms of the problems, like we get a lot of profitability questions because they've been following, these gurus have told them to sell a certain way and like don't take into consideration that hey, there's gotta be profit leftover. So there's financial challenges where they're not very profitable and these are fixable problems.
[01:02:01] Chris Martinez: A lot of people challenges. So I have this person and they're just not performing and they've been with me forever and, and I'm like, well, you know, it's probably time to let that person go and like bring in somebody with experience, hiring, training, hr. We do a little bit of marketing and sales, but we're more so on the reporting side of it.
[01:02:20] Chris Martinez: Like, you're great, your program is fantastic on the tactics. Thank you. And like what to like overall structure, but then also the tactics of what need to happen so that you can start closing more deals, generate more leads, and turning those leads into paying customers. We're setting up the reporting side of it, the SOPs behind it, you know, like things like that.
[01:02:39] Chris Martinez: Yeah. Account management, getting that churn number down, like that's definitely something that we, we help with a lot. So I, I would say those are kind of the big one. And then then SOPs operations, like making sure that the projects are getting done on time and on budget.
[01:02:53] Corey Quinn: Well, I think for the right agency who's listening to this and is jiving with what Chris is sharing about the problems he solves, but also his story.
[01:03:04] Corey Quinn: I mean, I've, I just spent a couple days with him. I've, I've, I've spoken on his stage now a couple times. He's just a real great guy. The people on his team are awesome. So, uh, definitely recommend reaching out to, to, to Chris. A couple last questions here as we wrap up. What would be your, let's call it parting advice for agency owners who are struggling with scaling?
[01:03:26] Chris Martinez: I've tried to pour everything into this interview, so I'm gonna search in, in my brain and see what other parting advice I can give for you guys. First of all, un understanding what scaling is. So it's just recognizing that it's, it's really a predictable outcome, predictable growth, outcome. And scaling doesn't feel fun ever.
[01:03:51] Chris Martinez: Like it's, it's constantly things breaking and, and then you're fixing 'em, and they'll work for six months a year, and then they're gonna break again, and you have to go back in and tweak them. I would just say have a plan. Like you need to have, like, okay, so here's the actual advice. If it doesn't work on paper, it will never, ever, ever work in the real world.
[01:04:14] Chris Martinez: You have to prove the model on paper first and run the numbers and make sure that it's financially feasible, that this plan will work for it to have even a shot of working in the real world. So getting it from paper to reality is still a massive hurdle, but if it doesn't work on the, on the napkin, on the spreadsheet.
[01:04:34] Chris Martinez: There's no way in hell it's gonna work in the real world. And I bring that up because had I run, had I did that with my soccer magazine, never would've have done it. Have I? Or I would've done it very, no, I wouldn't have done the soccer magazine with my marketing agency that I started in 2012. Had I done that, run the numbers and create the plan and see if it'll work on paper.
[01:04:52] Chris Martinez: I never would've charged the small prices that I was charging. I would've done that very, very differently. So it's gotta work on paper for it to have any chance of succeeding in the real world
[01:05:03] Corey Quinn: at Sage. Advice. One last question for you, Chris. Sure. What's your motivation?
[01:05:08] Chris Martinez: The cliche answer is like, I love helping my clients succeed.
[01:05:13] Chris Martinez: You know, like, personally, like when I die, I, I, I want to, you know, my goal is a billion dollars, right? It's a crazy goal, right? But I wanna be one of those people that donates a billion dollars to charities. You know, so if I die before my wife, she's obviously gonna live and have fun time, but all that money that's left over, or like it's going straight to charity, we'll leave maybe a little bit to some special people, a handful of special people in our lives, a little, little bit, but the rest of it is going to charity.
[01:05:40] Chris Martinez: So that's like a big motivator motivation for me. And like, I, I, I truly want to see our clients win. Like these are good, hardworking, honest people that when they have a good marketing agency, they are making a massive difference in their clients' lives. Like, you know that.
[01:05:57] Corey Quinn: Yeah.
[01:05:58] Chris Martinez: And I want to help those agency owners get rewarded, uh, with a nice pot of gold at the end of the rainbow whenever that happens.
[01:06:05] Chris Martinez: So that's what keeps me motivated and that's awesome. Gonna work every day.
[01:06:10] Corey Quinn: Where can people reach out and, um, connect with you? Learn more about. Yeah,
[01:06:14] Chris Martinez: so we do a lot of, uh, social media content. Instagram is probably my favorite. Chris from Bloom or Bloom Partners, I is our company account. Um, if you follow me personally, I post a lot of, uh, funny dog videos too, so you can watch those.
[01:06:28] Chris Martinez: You can go to our website, bloom partners.io. If you're interested in talk, talking with me, you can schedule an appointment. And then I, I do wanna give everybody a copy of my book. So my book is actually called my, my fourth Book, facts Not Feelings. It's the story of an agency owner who's got this agency that on paper, or I'm sorry, that in the, in the World, it looks like, you know, they're all, they're doing great on their, they're on, on social media, on Instagram.
[01:06:52] Chris Martinez: It looks like everything is going well and they're winning awards, but behind the scenes it's an absolute disaster. And it's the story of his transformation, learning how to run the business with facts, not feelings. And then at the end, he gets an offer, which is pretty cool. So, um, I'll give you guys a free copy of that.
[01:07:08] Chris Martinez: You can go to facts not feelings book.com and I'll give you a free PD version of.
[01:07:15] Corey Quinn: Beautiful. We'll put that into the, uh, the show notes as well. Chris, thanks so much for coming on the show. Sharing. Thank you. Your life, your journey. It's been awesome and just so much wisdom for all of us. So thanks again for coming on.
[01:07:30] Chris Martinez: Thank
[01:07:30] Corey Quinn: you so
[01:07:30] Chris Martinez: much, Corey, for allowing me to share.
[01:07:32] Corey Quinn: Thanks for tuning into the Deep Specialization podcast. Are you ready to find out if your agency is built to scale? Take my free five minute agency growth score [email protected]. That's agency growth score.com and get tailored insights across your positioning, marketing and sales systems.
[01:07:55] Corey Quinn: Also, be sure to subscribe for more episodes that help you specialize and scale your sales with dream clients.
