Episode Transcript
Speaker 0 00:00:00 While you're interviewing people, while you're looking at their tests, while you're, you're giving them interview questions, you're not looking for the right answers. People know how to BS interviews, you're looking for the red flags, you're looking for the wrong answers. What is this person telling me that shows they might not get along with the team, they might not be able to communicate effectively, they might not have the skill I need. And if you look at it from that perspective, I find that entrepreneurs and agency owners have a lot more success.
Speaker 2 00:00:25 Welcome to the Agency Hour podcast. This week we're joined by Nathan Hirsch, entrepreneur and founder of Outsource School Accounts, balance and e-com Balance and creator of Free Up, which he sold to the Hth. We talk about that he grew it from zero to 12 million a year in revenue. In this episode, we discuss how to remain sane while scaling, managing expectations by using your own language and how to find good software development talent, as well as why entrepreneurs should never do their own bookkeeping. We also dive into Nathan's fascinating story, as I mentioned, of starting a successful business selling baby products on Amazon while in college to creating his own agency that helps people hire pre-vetted freelancers. Going from $5,000 investment to 12 million in eventually selling it to the Hoff on Troy. Dean, stay with us. Ladies and gentlemen, please welcome to the agency hour, Nathan Hirsch. Hey Nathan, how are you
Speaker 0 00:01:18 Troy? I am doing great. How are you?
Speaker 2 00:01:21 I'm very well. Thanks for joining us on the Agency hour Now. Uh, you and I don't really know each other that well. We've just kind of crossed paths recently. So for my benefit and the benefit of the listeners, who are you, what are you doing here? What's your journey been and what are we talking about?
Speaker 0 00:01:35 Yeah, so I'm a a longtime entrepreneur. I've never had a, a real job, quote unquote. Uh, I started an Amazon business outta my college dorm room, originally selling textbooks before getting a cease and desist letter from my college, uh, telling me to stop competing with them. So that was my first glimpse into being an entrepreneur. And I pivoted through a lot of trial and error. I, I started selling baby products on Amazon. If you can imagine me as a 20 year old single college guy with more hair, uh, selling baby products on Amazon, uh, I was running this multimillion dollar business outta my college frat house. And, um, just learning a lot, making every mistake that the young entrepreneurs do. And one of the first things I had to do was learn how to hire and college kids were super unreliable. And I started building up these virtual assistants and, and freelancers.
Speaker 0 00:02:25 Now Amazon started to get harder, more courses and stuff came out, and we started offering these VAs and, and freelancers to, uh, other e-commerce sellers, eventually other marketers. And that became the, the Free Up marketplace. So similar model to an agency, uh, slightly different, but we, we grew this business to, from a million dollars in the first year to doing $12 million by year four. Uh, we were acquired at the end of 2019. And since then I've been working on two different ventures, outsource school that teaches our hiring process and our monthly bookkeeping service for agency's account balance. So that's the kind of the short, long version <laugh>.
Speaker 2 00:03:00 Dude, I have so many questions. What were you studying at college?
Speaker 0 00:03:05 I actually was studying entrepreneurship. I went to Quinnipiac University in Connecticut and I went in undecided and all the deans of each, uh, each major went up on stage and gave you a little spiel on why you should take finance or economics or whatever. And the entrepreneur person just went up there and just said, if you ever wanna make real money, if you ever want real freedom, the only way to do it is become an entrepreneur. And then she just walked off stage and that was it. I was like, boom, I'm in <laugh>.
Speaker 2 00:03:33 That's awesome. Uh, and true. Um, and so, okay, so now it kinda makes sense. You're studying entrepreneurship, you ha what, what, what, hang on. All your mates right in college must just be having like the time of their life in a frat house, partying, having a great time. You start a business in your f in your, in the frat house. Like what were your friends? Like, what are you doing? You nerd, why don't you just come out and party with us? This is like supposed to be the best time of your life and you are hunking over a computer learning how to start a business. Like was that, was that a normal thing to do or, or were you kind of a, an outsider for doing that?
Speaker 0 00:04:06 Not a normal thing to do. People definitely thought it was a scam. Uh, being an Amazon seller wasn't a thing back then. Now there's Facebook groups and courses and coaches, uh, didn't exist. This was 2008, 2009. Um, people didn't know what I was doing, but I slowly started to hire all my friends and, and people from my fraternity. So people kind of started to get the inside and a lot, a lot of friends didn't work out. I'm still friends with them, but parted ways from business side. And, uh, one of my, my earlier hires, Connor Gillin actually became my business partner. So then there were two of us in our frat house, uh, running this business. And, and words started to spread a little bit, but it was a, a fun, wild time and, and I definitely did a lot of partying and enjoyed college, but also, um, focusing on the business as well.
Speaker 2 00:04:49 Excellent. And did you, so did you complete the entrepreneurship degree?
Speaker 0 00:04:53 I did. My parents are both teachers, so dropping outta college wasn't a, a real option,
Speaker 2 00:04:56 Not an option. <laugh>, um,
Speaker 0 00:04:58 I, I did have job offers lined up and these internships and that was a tough decision. Do I turn down the, the health insurance of Steady Pay? My parents were definitely not forcing me, but pushing me towards that. And I had this Amazon business and I remember talking to my aunt who's an entrepreneur who just said, you can always get, go get a job. You're young. Like, take the risk. And that was one of the, the best decisions I ever made.
Speaker 2 00:05:21 Wow. Talk to me about the pivot from being an Amazon seller to starting free up. At what point did you realize, you obviously saw the writing on the wall, that the Amazon thing was getting harder and harder, more competitive. At what point did you say, okay, I'm gonna abandon the Amazon thing and just go all in on free Up? Was it once Free Up had overtaken in terms of revenue or what, what, what, what, what was that kind of decision making process for you?
Speaker 0 00:05:46 Yeah, so we sold 25 million on Amazon, but we peaked it around like five, six per year. So at the beginning we're we're thinking, oh, we're gonna take down Amazon, we're gonna be the bet next e-commerce Giant. Um, and then Amazon becomes harder, their algorithm changes, more sellers come on. And instead of doing five and 6,000,001 year, we're doing two and a half the next year, one and a half, then back up to two. And we're, we're selling other people's products. We're not passionate about baby products. Um, and we're not really growing a business anymore. We're just adjusting to what Amazon's doing. And then we started offering these VAs and freelancers to other Amazon sellers that we would network with. And that became really fun cuz instead of just posting something on Amazon and they'd push a customer to you, we had to build our own website and learn seo and do B2B and partnerships and podcasts and, and all this stuff you kind of learn in marketing, which was way more fun than selling baby products on Amazon. So Free up in the first year did Explode and, and we quickly, uh, phased out the Amazon business, but there was definitely a part of us when we were working on both sides that just hated working on the Amazon business by year seven, and we're ready for, for something new and, and something exciting.
Speaker 2 00:06:56 I imagine the margins on something like Free Up would be better than selling physical product on Amazon. And also you've, I imagine, and I've never sold stuff on Amazon, but I imagine you would have more control over those margins too, right? Because if you're sourcing stuff from a manufacturer and selling on Amazon and the manufacturing increases their pricing, then you are kind of playing this kind of triage game or this arbitrage game really of just trying to keep trying to maintain your margins. Whereas when you've got control over your own product or your own service, like free up, you, you, you just do have more control over your pricing strategy, right? Yeah,
Speaker 0 00:07:27 Absolutely. And I mean, Amazon fees are a killer. Um, the one thing I will say is people will pay anything for, for their kids, for their baby. Uh, my wife's pregnant now. That's great. So I kind of, I'm going through the drill, but um, so you can make good margins on it. Um, but yeah, I mean, free UP was definitely just more lucrative way, way, way, way, way more control. And um, like I said, our our own brand that we were building that wasn't dependent on Amazon. With Amazon, you could have a great product and they shut it down the next day, they could shut your whole account down the next day. Um, that wasn't gonna happen with our own website or anything.
Speaker 2 00:07:58 And so free UPS a marketplace of VAs is, is that how it, so you didn't, you didn't employ the VAs and then rent them to clients, you just pro it was essentially just a marketplace, right?
Speaker 0 00:08:08 Yeah. So we would get thousands of applicants each week by year two to, to get on our platform, and we'd only let in the top 1%. So we would've a recruitment team, a vetting team on our side. And our message to clients were, we have the one, we have a pool of the top 1% of VAs and freelancers clients create an account, they put in a request that I need a graphic designer, customer service reps, whatever it is, we'd match 'em up and all the billing would be through the platform and we would handle it if anything went wrong. We had great support, we'd cover replacement costs, whatever. Um, but we wouldn't actually manage the VA or freelancer, which is key to a lot of the scale it and growth because no one was checking in to us. We didn't know what they were necessarily doing with the client. We were just checking in to make sure they were having a good experience and hopefully kept billing more and more on the platform.
Speaker 2 00:08:54 I've dabbled in this for our clients, right? And I, so I've already got a headache thinking about this <laugh>, because this is a massive pain in the ass problem to solve. And as a business model, you, and I mean this respectfully, right? But you kind of, for me anyway, like I, you, you kind of end up being a kindergarten teacher where you're kind of like managing the expectations of the clients, you're managing the expectations of the VAs, you kind of, things always gonna go wrong in that because you're dealing with people and we're emotional sentient beings, and our expectations are always gonna get mismatched. So I imagine that your customer support team, I, I mean I, you couldn't pay me enough like to be on a customer support team to deal with those inquiries coming in or like trying to, you know, reset people's expectations. Walk me through how you managed to do that and stay sane and and scale to the level that you scaled. Yeah,
Speaker 0 00:09:48 So I think there's two parts of it. One, whenever you start a marketplace, you always have that chicken or egg situation. Like do you get more freelancers? Do you get clients if you get clients? But no freelancers, it doesn't work. Um, and I think one advantage that we had is we had all these VAs and freelancers from our Amazon business that we knew we trusted. They weren't all p full-time, some of them were seasonal. So we kind of had this pool to get started and, and build a lot of trust with our clients, and then also create created affiliate programs on both sides. So the freelancers were recommending their friends, Hey, it's great Nate gets you clients and clients on their side. Um, hopefully saying, Nate has good freelancers and, and VAs and you're, you're absolutely right about the, the customer service. I'm a big customer service person in, in everything that I do from Amazon to, to free up outsource school accounts balance.
Speaker 0 00:10:34 So we set up 24 7 support. If you messaged us at three o'clock in the morning, uh, we had someone right there for you. And our goal was to make both sides as ha p as possible, as quick as possible. So we we're very quick to kick freelancers and VAs off the platform. If they had multiple client issues, you'd never get another client with us again. So the freelancers liked that we would send them clients and that they would get hired quickly. They didn't have to interview against a hundred people. Um, and so they didn't want it kicked off. And then if a client came to us and their VA wasn't working out, our whole thing was, if a VA quits on you, we'll cover all replacement costs, which kept them on the marketplace. Hey, we'll pay the first three weeks of a new va, which short term you lose money long term, you make a lot more money.
Speaker 0 00:11:16 And then vice versa, if there was ever project-based situations, we would essentially go to the client and say, Hey, what do we need to do to make this right? And whether it's a full refund credit, if we had to split something with the, the freelancer, if we had to do a third, a third, a third where we cover a third, the freelancer refunds, a third client pays a third, like whatever the fastest way it is to make the client and the freelancer happy. So both of them continue to be on the platform, even if it was a little unfair to me. Technically, we always did that. And I mean props too, like the, the, our recruitment team for just having a lot of great VAs and freelancers that didn't cause a lot of issues, but whenever issues came up, we just resolved it. And that led to five star reviews. It led to lots of referrals. It led to both sides being really happy. And if a freelancer or VA was being unreasonable and they weren't willing to compromise, and they were just like, pay me. I'm not refunding anything or whatever, fine, here's your money. We're never sending you a client again. Move on and give the job to, to someone else.
Speaker 2 00:12:12 Love it. Love the, I love the, I love the philosophy and I think there's a lot to be learned here. I'm curious, how did you, you know, did you educate clients? Cuz one of the biggest problems with this, right? Is that client and I, I, I've made this mistake myself and I've seen thousands of our clients make the same mistake. Is your hire VA in the Philippines or Vietnam or wherever and they expect to hire someone to do eight jobs in like half the time. Right? How did, did you educate the clients And and who and who were the clients? Were they small business owners or were they agencies?
Speaker 0 00:12:43 Uh, yeah, so we started off with Amazon sellers in year one. And by year two we branched out to Shopify, eBay, Walmart sellers. By year three, we got into agencies and people in the marketing space, ClickFunnel space, all of that. Um, and then you, by year four, we're getting all sorts of referrals for random businesses, real estate agents, whatever. Um, and yeah, education is key. I'm a big fan of simplicity. Like for example, uh, accounts balance or bookkeeping service. We do one thing. We charge you on the first, you get books by the 15th AUP statement, balance sheet, cashflow, that's it. No add-on services, very straightforward. And with the VAs it was very similar. So we tried to structure it. So, hey, on the platform and, and we teach this at outsource school too, cuz even if you don't use free up, this is a, a good thing to, to learn and, and use in your business.
Speaker 0 00:13:29 We got followers, we got doers, and we got experts, followers, virtual assistant, five to 10 bucks an hour. They have years of experience. We're not a marketplace for newbies, but they're there to follow your systems, your process. If you don't have systems, you can't say, Hey, go find me profitable products, go do my customer service. You have to show them how you want it done. Then you got the doers, graphic designers, writers, they do one thing 10 hours a day, they're there to do projects for you. Um, they're kinda like your Rolodex, uh, of people you can go to. They're not consulting with you, they're not following SOPs, they're doing that one thing. And then we got experts, the consultants, people with their own systems, their own processes, agencies on the platform, uh, whatever it is. And when you put people in that mentality, um, it, it definitely helps with the expectations. And when we would get job postings that were clearly wrong, it was someone who needed an expert but was asking for a follower. It was super easy for us to say, Hey, we can't get you an expert for five bucks an hour. Um, you gotta raise your price or ask for a follower. Um, and that kind of simplicity across every business we create, I think is really important because I think sometimes people can do overkill on the educating the client part.
Speaker 2 00:14:34 A hundred percent. What I like, what I like what you've done here, and I'm reminded of what Brunson talks about in, I don't know, in one of his books, I, I think it's Expert Secrets. He, he talks about creating your own language and your own lingo, and that's what you've, you've kind of trained the client to talk your language and get them thinking, okay, well if, if I'm hiring a follower, I'm paying $7 an hour. If I need someone who's got a bit more proactivity and can kind of create SOPs for me and bring their expertise, then I'm gonna be paying more than that. So you're kind of setting expectations from the get-go, which is great. Um, the, now, now I don't know how can you, how, how much can you talk about the acquisition of Free Up
Speaker 0 00:15:10 <laugh>? Everything except for the exact dollar amount that I sold it for, but, uh, besides that, we're good
Speaker 2 00:15:15 <laugh>, because that's the only thing we wanna know. Right. Uh, now how long did you were running free up for how long before you sold it? Uh,
Speaker 0 00:15:21 Four years. So we started free up with $5,000 and we got it to doing about 12 million a year by year four. Oh
Speaker 2 00:15:26 Man, that is insane. Congratulations, dude. That is like, thank you. That, that, like, people don't e people people hear that. I don't think people realize how many problems you've had to solve to do that and how many sleepless nights you've had. Right. And props to your, your pregnant wife right now who, because she's like talked you off the ledge a million times on that journey. Right? We get it. <laugh>. Exactly. I get it. Um, so, uh, at what point did the acqui, at what point did selling this thing become an idea in your head? Were you approached by the hath or did you approach them? How did that happen?
Speaker 0 00:16:00 So they were actually a customer, a free up. And we, they reached out to us and we, we scheduled a phone call. Me and my partner Connor, and their message to us was, Hey, we like free up. We use free up. Uh, we buy businesses, we don't start them. We wanna get into the VA and freelancer space. Uh, would you guys be interested in being acquired? And like anything else, we, we heard them out. We, we never really planned to, to sell free up, but we're always kind of open to anything. And we're getting to that size where you're kind of hearing whispers like, Hey, it's an option if you want it to be. Um, but yeah, we, so we, we had that initial call. Uh, we knew our numbers really well, so when they asked us questions, we were able to kind of answer those and then they ended up making us a, an offer.
Speaker 0 00:16:40 And from there, you're, you're kind of weighing a lot of things like, Hey, we got this business at 12 million. If we're gonna get a 25, we're gonna have to make some pretty drastic changes. Maybe make less money in the short term for long money in the more money in the long term. Um, if we turn it down, are we gonna regret it? Is it bad for our team if we turn it down? Uh, this is pre Covid, so the economy's an all time high. Mm-hmm. <affirmative>, is it a, um, is it a good time to sell? You're kind of thinking about all those things. And when we kind of decided, hey, this is the, the right time, then it was probably the most stressful five, six months of my life. Cuz you're just going through due diligence. They're doing, going through due diligence on us.
Speaker 0 00:17:16 We're doing the same thing on them. We want to know their success, their failure, their plans, how they treat people. We, we don't, we wanna sell it to nice people at the same values. We don't want to end up in a lawsuit with these guys down the line or, or not get, um, every penny that we owed. And, and then once the lawyers get involved, it's the biggest moment of our life for the lawyers. It's another Tuesday. They got other clients, they go on vacation. So you got back and forth there. Um, and, and so we, we kind of kept the mentality, Hey, this deal could fall through at any minute. Um, stay focused on growing the business. Very tough to do. We, my business partner and I would remind ourselves every day, um, until we actually signed the, the dotted line and it was done, but it was a, a hell of a process.
Speaker 2 00:17:57 I remember hearing Rob Walling, who sold Drip talk about this. Um, he, he played it really cool when the guys from Lead Pages reached out, uh, and wanted to talk about acquisition. And he said, you know, the most important thing, and I've heard, I've listened, I've heard a lot of entrepreneurs talk about this on the Built to Sell podcast. Have you been on Built To Sell, by the way? With, uh, John Marlet? You have. I think that's where I might know your name from. Uh, cuz I've, I followed the Built to Sell podcast. I love that podcast. That's great. That's great. Um, he talks about the most important thing is to keep running the business as if you are not going to get acquired because the chances of a, the chances of the, the, the chances of deals falling through at the last minute are really high.
Speaker 2 00:18:36 So you're lucky. You cannot bank on the fact that this is gonna actually happen until the money is in the bank account. And I remember Rob Walling telling the story, they were at camp with their kids when the money hit his bank account. And he showed, uh, he showed his, his wife, uh, Sherry, who who's been on our podcast a bunch of times and spoken at our events. He showed his wife Sherry, the the bank balance on his phone. He's like, look. And they both just started crying and opened a bottle of whiskey and had a shot of whiskey. And, and, and that was their celebration. Right. And, um, because there was this release that it was like, and, and Rob, he didn't talk about the money, but he did talk about the fact that it was life changing, right. He didn't talk about the amount, but he was like, it was life changing money and the pressure that they'd been under for the five or six months leading up to that, where it may not happen, you're like living on a knife s edge, and then eventually the money's in the bank. And it's like, you almost can't believe that it's finally happened and the release must be just an incredible feeling. And I, again, I'm not gonna ask you about the numbers, but I'd like to know how, what, like your mental state, once the deal landed and you got the money, what, what, how, how did that feel?
Speaker 0 00:19:40 Yeah, I'll even add one more thing. I think you, it's better, it's obviously way better to be in a position where you don't have to sell the business if you don't want to. Like, I'll talk to entrepreneurs all the time who, they're burnt out, they're had enough, they're ready to move on the next thing. Mm-hmm. <affirmative>, that is the worst possible time to sell a
Speaker 2 00:19:55 Business. A hundred percent. Like
Speaker 0 00:19:56 Free Up was extremely profitable. We were enjoying it. We liked our team. I, I think as you go through due diligence and the months trickle by then you're like, you're starting to mentally be like, Hey, what am I gonna do next? And this is gonna be over soon, whatever. But you try, you try not to do that. Um, yeah, so for us, I mean, it was definitely, I mentioned how stressful is six months where I was kind of stressed out every day, checking my emails, contacting lawyers while trying to run the business. Then I was in Florida the time Orlando, my business partner in Denver, he flew in The haw is in Tampa, uh, St. Pete. So we drove down to their office, uh, met with them, took us, they took us out to lunch. Um, we ended up signing the, like the document there and, um, getting wired the money and you're refreshing a bank account on your phone, sending a text to my wife, similar story, um, to that.
Speaker 0 00:20:43 Wow. And right afterwards it was like, okay, we have to sell our, we have to tell our team, um, not sell our team, tell our team. Um, and we, so we, part of our agreement with them is they could not talk to our team un until they actually, until the deal was actually done. Which I think added a, uh, a weird element because we, we negotiated a, a large amount of money to go to our team. So I think that, but in their mind they, they're thinking why would these people pay all this money to their team if they didn't really like them? Um, but at the same time, they've never met these people. We're talking them up, we know they're great, they are great and, and all that, but it parting ways with them was one of the toughest things. So after we signed all that, we had to zoom with them and say, Hey, by the way, we sold the company. Everyone's obviously freaking out. They think they're gonna lose their jobs. We had to repeat a hundred times. They're not gonna lose their jobs. They're gonna get a bonus. Yeah. Um, stuff like that and introduce them to new owners. And that was kind of our process. And then once we told the team and all the emotions kind of got out of it and the team saw the money that they were getting, everyone kind of relaxed. And then Connor and I could really enjoy it.
Speaker 2 00:21:45 That's awesome. I've heard this, I've never heard this before, that the owners paid the team a bonus. That's, that's fair. That's genius. Um, and, and just, just an awesome thing to do. I've heard John Warlow talk about this a lot on his podcast, that when, when, uh, when a company gets sold, of course the current team are freaking out thinking they're gonna lose their job. Right? The worst time to replace the team is when a new owner buys the company because the new owner just wants to keep the company going with the current status quo, right. For a period of time. And then reassess. So like, it's very, it's very common for a current team to keep their job and the new owner comes in and just doesn't make any changes in the short term. And I think that's a big anxiety that you need to manage, um, when an acquisition goes through. Um, again, don't wanna talk about the numbers, but I'm, I'm interested in the deal. Was there a buyout pr Did you have to hang around for a period of time to hit certain numbers or were you just like, we paid, we're gone.
Speaker 0 00:22:38 So it was definitely a money up upfront and then an earn out. But we were only gonna do this deal if Connor and I were out. We didn't want to be employees of another company. I actually, I have buddies of mine that have sold companies that are like, oh, I'm gonna stick on as employee for two years. And I've told them straight up, I'm like, you're gonna hate it. You're gonna want out there so fast. And sure enough, a few months later they, they, they're trying to get out of it. Um, so for us it was like, Hey, we wanna make sure free up successful, we wanna make sure the team keeps their jobs and that it's a win for everyone. We're happy to help however we can, but there's gotta be some kind of reasonable transition out time. So I think we made it 90 days. They're pretty quick. They've done it before they've bought businesses. So, um, wow. We were out of there within maybe a month and a half. And even then we were only checking in here and there and for, for the next year, like randomly they'd reach out to us for our opinion on stuff and we were happy to, to do it. Um, but yeah, I mean, outside of that we were, we were out real fast and, uh, that was that. And then Covid hit shortly after, which was kind of weird.
Speaker 2 00:23:33 <laugh> Wow. And wow. And so what a weird space to be in. And so a good time to sell, by the way, just before Covid <laugh>. Uh, and then, so what did you do? How long did you, did you take some time off after you sold, after you sold Frout?
Speaker 0 00:23:44 Well, the original plan was to take a year off. I thought my business partner was gonna travel the world and I wouldn't see him for a year. And then shortly after that Covid hit and all our, we had to cancel everything. We're stuck inside. We have no business to run. We can only watch so much Netflix like everyone else. So yeah, we started brainstorming different ideas and we didn't have any, anything unique. Um, we had a lot of bad ideas, but a buddy of ours reached out to us and said, Hey, what if you sell a course on your hiring process? Because you gotta remember free up, there's thousands of VAs and freelance on the platform. Our internal team was 30 people, all VAs in the Philippines, no US employees, no office that did everything from sales calls to customer service to lead generation. Wow.
Speaker 0 00:24:25 Bookkeeping, you name it. So we have very good hiring processes that we kind of built over our first few years in the Amazon business when we had no idea how to hire. So that kind of became the outsource school that we sell now, where people learn our interviewing, onboarding, training, and managing process. And that became a, a nice passive income stream. Um, people are really happy with it, gets good reviews. Uh, but then we kind of realized, okay, like this isn't a 40, 50 hour a week thing. If we wanna build the next free up or build something that's bigger, we gotta do something different that something outside of the VA freelancer space. We also did not compete, we wouldn't build another VA marketplace anyway. Um, but we were allowed to, to sell a membership in a course. And, uh, a year later after brainstorming, that's when we, we got to our bookkeeping idea.
Speaker 2 00:25:08 Got it. Do you, uh, I'm curious, would could you recruit, could you get back into the recruitment game, not have a marketplace, but could you do like done for your recruitment?
Speaker 0 00:25:17 There is technicalities of it that we can and cannot do, to be honest. We're, we're done with it. We don't want to do it. Yeah, yeah. Um, it's kind of, we did it for four years. Uh, we also just have a, we have a great relationship with the people that bought the company. I mean, when you're selling the company, you're kind of crossing your fingers like, okay, are they gonna honor their word? Are they gonna pay me? Are they gonna treat our, our team well? And I mean, mark Hargrove and David Martin are great entrepreneurs. Like paid us every penny. Our team still works with them. We talk to our team, uh, still and they're great. Uh, free up is doing well, they're happy with the deal. And it, it couldn't have been more of a, a win-win win. So could we like bend the rules and try to get back into it? Maybe, but outta respect to them, but also cuz we're not that interested in it, we, we probably won't.
Speaker 2 00:25:59 Sure, sure. Okay. So then you take what you've learned about hiring people, you put it into a, a product called outsource school. We'll leave some, uh, links in the show notes here, very relevant to our audience and I suggest people go check it out. We have a a we, we did done for your recruitment for a period of time and we have a similar thing called Team Accelerator, which teaches people how to hire specifically for agencies. But you know, you, you, I I think people should do all the courses on all the things and learn all the things from all the people, right? So I'm advocating you should go check out outsource school.com cuz these guys clearly know what they're doing. Then you take that knowledge and then you hire some VAs to start a bookkeeping service. Is that the way it works? So the, the team, the bookkeeping team are also remote.
Speaker 0 00:26:40 Yeah. So I, I think I like unsexy businesses, boring businesses, hiring and bookkeeping <laugh>. Um, I've never been one to kind of create the next Uber. I I think I said that. But, um, so we kinda looked at like, okay, what, what are big markets that, um, maybe we could do something differently that we could capture a small percentage of the market. There's other things we look for in a business like stickiness, reoccurring revenue, stuff like that. Um, and just through a lot of brainstorm, we kind of came across bookkeeping. So we did a lot of market research and if you check out our, our blog, you can kind of see our interviews. We interviewed all these entrepreneurs like, what do you like about your bookkeeper? What do you hate about your bookkeeper? And uh, essentially a lot of bookkeepers are, a lot of bookkeeping services are run by bookkeepers, not entrepreneurs.
Speaker 0 00:27:21 And they struggle to hire, they struggle to scale, they struggle to build processes and, and automate stuff and make things efficiently, which on paper, uh, we still need to execute it. But on paper, that's what Connor and I do really well. And we're not bookkeepers, we're not CPAs. So we went out, we, we kind of hired a controller, built a bookkeeping team around her, and, and started offering, uh, this monthly bookkeeping service with all of our businesses. We're, we're a big fan of, of minimum viable product. Like Amazon. We, we sold a few baby products. If people hated it, we would've shut the business down. Uh, free up. We gave some free hours of VAs or discounted prices to our initial client, uh, outsource school. We did a, a big promo at a discounted rate and, uh, gay people and, and, um, accounts balance is no different.
Speaker 0 00:28:02 We said, Hey, two free months of bookkeeping in return, you gotta give us feedback. Tell us what you like, tell us what you don't like. Help us break everything. And so we got 25, 30 people to sign up. A bunch of agency owners in there. Um, and yeah, we just kind of use those people to figure it out and build a team and, and make sure that we, um, have our process down and everything from getting a quote, pricing to getting integrated, getting us access to a kickoff call, to, to getting caught up. Cuz some people might be two years behind a bookkeeping to a, a good monthly process and putting things in a way that entrepreneurs can, can understand and make decisions on. Uh, that was kind of our year one, figuring everything out. And now we're kind of in a, a fun place going to year two, which hopefully we can scale it like free up.
Speaker 2 00:28:46 So with free open accounts balance, I'm imagining there's also some tech involved in these companies, right? There's some software, there's a platform behind. Where do you get that? How do you find, I'm selfishly asking this by the way. How do you find good development talent to build that stuff out for you?
Speaker 0 00:29:01 Yeah, so we have a developer that we use in our Amazon business to build some software and then we took 'em over to Free Up and he built the marketplace behind Free Up. Uh, you're absolutely right. We build software behind all our businesses, uh, free up. It's kind of,
Speaker 2 00:29:13 Which is a hard thing to do. Like building software's one of the hardest things that I've planet apart from parenting, right? I'm, that's why
Speaker 0 00:29:18 I'm jealous of all the, the SaaS founders, that's one thing I've never been able
Speaker 2 00:29:21 To do. Yeah, right. It's like, yeah, like, so finding good software development talent is really freaking hard. What, what's, what's your secret source? How do you find them? Yeah,
Speaker 0 00:29:29 Honestly, it, it's kind like my business partner Connor. I kind of ran into this guy who was trustworthy, who had the same values, who was a good developer. And then I know nothing about development. We've kind of learned small things over the years. Uh, to be honest, my business partner manages all of that. It's my least favorite part of the company. So I kinda let him mm-hmm. <affirmative>, uh, do that. But from, from him, then you kind of learn like what works and what doesn't work. And with Free Up, we built kind of a small dev team around him. Uh, and then when we sold Free Up, we said, we're not giving you our developer. Uh, that was the one person that's coming with us. So with, with the accounts balance, same thing. We have a client portal. You create an account, you fill out a pricing form, your affiliates are in there, your payments are in there.
Speaker 0 00:30:05 Um, we're not trying to replace QuickBooks or anything like that. We still use QuickBooks, although we kind of build stuff, uh, behind the scenes that, that our team uses to, to be more efficient and stuff like that. Um, to answer your questions, good developers is hard. You really need someone that knows development that, that can test them. And my advice would be, um, find, find a good developer that owns a either a dev consulting service or is high up in some company that has a truck record that has referrals. And use them to vet your developers, pay them to, to test them, to interview them, to be there on interviews. Like you're just guessing if you're doing it yourself, if you don't know anything about developers. And we had lots of meetings with different entrepreneurs that knew development more than I, and, or more than Connor and I, and, and we kind of showed them Russell's work and, and all of that. And they checked off on it before we really moved forward with Free Up.
Speaker 2 00:30:54 Ah, smart. Um, just on the, so I think there's something here about recruiting and hiring in general is what, what is the, we have some frameworks that we use to help people kind of pre-vet and test people. But if there's an agency listening to this and they're like, well, I need a hire developer in the Philippines or somewhere to kind of start doing my dev work and get me off the tools. What are the, what are the mistakes they're gonna make? Or what are the, like the two or three things that they should look out for if this is their first rodeo?
Speaker 0 00:31:19 So we have what we call our, our care interview process in outdoor school. And it's communication, attitude, red flags and experience. And experience is really skill. Um, what we like to do is test for skill first because of the per, if it's a skilled job, like developer, writer, whatever it is, and they don't have the skill, nothing else really matters. So especially if you're hiring, a lot of them design some kind of test. Like we have a bookkeeping test, we don't talk to someone, we don't interview them unless they pass this bookkeeping test that we made on the harder side. Um, from there, then you're interviewing them and you're looking for attitude and communication. Uh, for communication. Do they speak English? Do they, can they get on the same page quickly? Are you talking in circles? Um, make sure that they can communicate in the same way that you are.
Speaker 0 00:32:01 If you're zooming a lot, they gotta be able to zoom without issues. If you're using Slack mm-hmm. <affirmative>, they gotta be able to respond quickly on Slack. So that's very business specific. And then the last thing, which is the key to it all is attitude. Because most people listening, you're not gonna be able to compete with other companies on money. There's always gonna be someone out there that can pay more money than you can. So if this person only cares about money, that's gonna be very, very hard to keep 'em around. You gotta find people that care about stability, about growth, about self-improvement, about being part of a team. Like those are the kind of things that, that we look for in someone. And we look for that trifecta of skill, attitude, um, and experience and or skill, attitude in communication. And then while you're interviewing people, while you're looking at their task, while you're, you're giving them interview questions, you're not looking for the right answers. People know how to BS interviews, you're looking for the red flags, you're looking for the wrong answers. What is this person telling me that shows they might not get along with the team, they might not be able to communicate effectively, they might not have the skill I need. And if you look at it from that perspective, I find that entrepreneurs and agency owners have a lot more success.
Speaker 2 00:33:07 Mm-hmm. <affirmative>, that's great. I love it. The care framework, we'll put a link to that in the show notes. Communication, attitude, red flags and experience. I love the fact that, uh, you don't even talk to people until they, I think we do this backwards. I think we do like a culture interview first where we just kind of hang out to see if we're gonna get along and then we start getting into the competencies. And if they don't kind of pass that test. But I think we've wasted some time, if I'm honest, we've wasted some time in the past talking to people who seem like a good fit, but then just can't do the freaking job. Right. <laugh>, right. So, uh, and, and so just being, and I think part of it is, and I know this from talking to other agency owners as well, is like, part of this is fomo, right?
Speaker 2 00:33:43 Like, so I, I put out an ad, it's a tight labor market. It has been since Covid, right? I mean, you must have seen the labor market changed since Covid. People have especially, uh, I dunno what it's like in the States, but you know, people here in Australia have a massive sense of entitlement. Everyone wants to work from home now because they were during Covid. So the labor market's really tight and it has changed. And I think what we've done in the past is we just wanna talk to everyone because we, because we're not sure we're gonna find someone. Right. So the fact that you are so brutal at filtering people out and only talking to the top 1%, do you, does it mean that you are just slower to higher but you get better quality talent? Or like how do you manage the, the FOMO around that?
Speaker 0 00:34:24 Yeah, it's a good question. So the answer school process, it designed too, hire relatively quickly. Like we're not, if we're trying to start a business or hire people for it, like we can't wait three months. Most of the time, if you do that, uh, you're, you're missing out. And there are is some benefits to hiring an a minus person fast rather than an A player slow. Not in all situations, just in some situations, but there, there is a certain trust, the process element to it that you gotta buy into as an entrepreneur. Even if you don't use my process, if they use yours or someone else's, you gotta be able to trust the process where you're, you're kind of treating it like a funnel that you're putting people in and only the, the worthy people, for lack of a better word, get keep going to the next phase of the funnel.
Speaker 0 00:35:05 And if you're doing that, then you're, you're not really rushing it. But if you're, if you're posting on ZipRecruiter or whatever, um, platform you're using free up Upwork and you're getting lots of applicants, you can hire a VA to, to run your recruitment inbox and, and, and ask some basic questions before you give 'em a skill test. Just like, like where do you live? What rate do you want? Just like basic information to just weed out someone who's completely not a fit. Give someone a skill test, have a good process for it. Something that doesn't take your time where you don't have to be there and they can just send you a video of it. Um, and then have those Slack interviews and, and really zero in on the, the communication attitude. So I think you can build a really efficient process. It is, there are some benefits to doing it yourself, to being a little slower early on because hiring mistakes are killer to to small businesses. But you can get a VA involved, you can make it so you only come in at the end and the process works if you set it up correctly.
Speaker 2 00:35:58 Mm-hmm. Love it. Uh, and I think there is a, there is, there is a mindset shift that I think that needs to happen because a lot of small business owners or agencies think if they're hiring remote staff, I mean, I like, I just, I just, I prefer talking about remote staff, not virtual. I just kind of have a thing about virtual assistance cuz there's nothing virtual about them. They're real human beings. They just happen to work in a different geographic location. But I think the mindset is, well economically, this is gonna be a lot cheaper than hiring someone locally. However, they don't, I think the mindset shift that needs to take place is, is not, you know, I'm just doing this because it's cheaper than hiring someone locally. That was originally why we started hiring in, in, uh, in developing economies. But what we then found out is that it's a numbers game, right?
Speaker 2 00:36:40 Is that the talent pool is larger than here because Australia's a fairly small country. And if I'm talking about developers or um, designers or customer support, I can just find more of them in India or the Philippines or Vietnam than I can here in Australia just because of a population. And also they're kind of geared up to learn those skills to serve western countries, right? Whereas in Australia it's really hard to find because everyone's be an entrepreneur, everyone wants to do their own thing. Everyone wants 150 grand a year as a starting salary and they wanna work in a management position straight outta college. And there's that real sense of entitlement. And I mean that respectfully. So, but I think the mindset is that if that needs to be as if I'm hiring someone remotely, I need to treat them as if I was hiring them locally.
Speaker 2 00:37:28 So if I hired a local person, I wouldn't expect them to do three jobs. They have a particular skill set I'm hiring to do one job, right? And then also if I'm, if I'm paying a bit more to get better talent, I don't, my, the question I've always asked myself is not, well, this is cheaper than my hourly rate because it makes sense. The question I've always asked myself is, now that I've freed an hour up of my day, how much value can I add to the company in that hour where I can now think and strategize and plan the next move because I'm not worried about these details because I've got a team member taking care of it.
Speaker 0 00:37:57 Yeah. I like to frame it as how can I become this person's favorite client? Because like I said, you can't compete on money. So what else is it? Do you have this awesome company culture? Do you have a great team, uh, that, that they're gonna get along with? Can you make tweaks to their schedule and give them, hey, half set, half hybrid or more flexible depending on what the role is. Like what are those things around just the, the dollars per hour, um, and a job that, that you can become their, their favorite client in. And, and that's why I love hiring from the Philippines. They're, they're all about family. It's a big part of their culture. Mm-hmm. <affirmative>, we'll have, like, we did a team meetup last week that we posted about it on, on LinkedIn, if anyone follows me there. Um, but you, you get people to, to like each other, to like what you're building, to like the perks around the business besides money.
Speaker 0 00:38:40 And then they don't wanna leave. And then they'll get re once you have a small enough team, you can even use them to get referrals for other people because they're going around telling people how awesome it is to work for your company, how you treat them. Well, if you're not your virtual assistant or, or really any hires favorite client, you're always waking up every day hoping that they don't quit on you. You gotta figure out how to do that. And it can be as simple as just asking them what's important to them. Um, and, and you'll, you never know what you, you'll kind of, um, learn. Like we had one VA who was awesome and she didn't seem that happy and she just needed a two hour lunch break instead of a one hour lunch break to like pick her kid up from school. Boom. No big deal. Happiest VA in the world and you never know that stuff until you ask.
Speaker 2 00:39:22 Yeah. Love it. Um, now you've also got, I'm just, I just was, was stalking your LinkedIn before we jumped on this call. You've also got like a podcast outreach program. What does that, how does that work, <laugh>?
Speaker 0 00:39:33 Yeah, so I've gone on a lot of podcasts. I've been on 700 plus. Um, and I use a VA <laugh>, I use a VA to get me on podcasts. So in outdoor school, I mentioned you get our interviewing, onboarding, training and managing process. We also just give you all of our SOPs. Like we have marketing SOPs, backlink, SOPs, and one of the most popular ones, and the only one that we sell separately is the, the podcast outreach formula. So if you join outsource school, you get the podcast outreach formula. If you just wanna buy that separately, you can, uh, but essentially had to hire a VA for three to five hours a week to pitch podcasts for you. I all the same material that I, I probably sent you or I sent, uh, max your producer before the show. All that's in there. You can steal my sales pitches, my my prep docs, all of that kind of stuff. And super simple way and just a big fan of podcasting. It's good for, for networking. I, I was able to to meet you today, which is awesome. And, uh, good for back links and SEO and brand awareness and, uh, podcasting was a, a big part of, of growing free up. So I'm a big proponent of it.
Speaker 2 00:40:32 Yeah, it's great. We, I mean obviously you preach another converted here. I love it. And I love the fact that you include these SOPs. I'm gonna flick outsource school off to, uh, Emily, my ceo, uh, to make sure we grab this. And we'll probably also sign up as an affiliate because I imagine we can, uh, refer you a bunch of, uh, a bunch of clients, which is always a good thing. Um, so account talk to me, just walk me through accounts balance before we wrap up. Accounts. Balance is designed specifically for agency SAS coaches, consultants, course creators. Um, the, I'm, look, I'm on the website at the moment. The pricing is 300 a month. If you're a six figure agency or a six figure business, four 50 if you're seven figures and 800 if you're eight figures, it's a flat fee. Uh, they're not a, we we're not accountants though, right?
Speaker 2 00:41:12 We, we are just managing the books. We're doing all the data entry, the reconciliation, uh, and who, you know, one of the things I've mentioned with our agency clients is the bookkeeping is the first thing you should get off your plate because chances are you're not very good at it as an agency owner and it takes a lot of freaking time, right? Yep. Um, so walk me through the, the perfect client. What do they need to be syncing and what do they need to, what's their belief need to be to succeed with a service like accounts balance?
Speaker 0 00:41:40 Yeah, so I mean, you hit the nail on the head. Entrepreneurs, agency owners should never be doing their own bookkeeping. Uh, first of all, it's a bad use of your time. You should be spending on, on marketing, sales, expansion. And most of the time you do it if you don't know what you're doing, you just have to pay someone to redo it later. And it costs more to clean stuff up than to just do it right from day one. So that's a part of it. Um, we only do bookkeeping. We don't do tax. You need your own tax CPA person. Uh, we work with clients all, all over the world. Um, and there's lots of reasons to, to have good books. I mean, selling a company, we wouldn't have been able to do that, uh, without clean books, uh, funding or investment, if you ever want to do that.
Speaker 0 00:42:17 Uh, it obviously makes tax season less stressful if you're doing it every single month. But a lot of people don't sell their company or get investment or funding. The, the real reason to do bookkeeping is good decision making every single month. You should have a finance meeting on your calendar every single month. Mm-hmm. <affirmative>, your bookkeeper should get you your books before that meeting and during that meeting, that's when you go through your in income statement, your balance sheet, your cash flow. That's when you decide, do I hire more people? Do I cut back on expenses? Do I launch a new product or service? You don't make it outta gut. You don't make it by looking at money, going to your bank account. You make it by what the numbers are are actually telling you. And to me, uh, that's a key of all of it.
Speaker 0 00:42:55 And uh, you really hit the nail on the head. So with Free Up, the best decision we ever made was hiring a bookkeeper from day one with the Amazon business. We didn't do that. We went through the whole try it yourself, dump it on your cpa, try to get a bookkeeper, do it quarterly instead of monthly. And we realized the only way to do this is monthly. So free up bookkeeper day one. Um, before we were even profitable, just every single month we'd get the reports, we'd go through 'em together, we'd have that finance meeting and it helped us make decisions every single month. And when we went to sell the company and we had that initial call with the buyers, they asked us finance questions, we knew our numbers really well. Cause we had had that meeting every single month. When they did due diligence, they actually opened the books. They matched everything that we told them, which built a lot of trust. Um, so that, that's part of what gave us the idea for, for this bookkeeping business and just being able to kind of speak entrepreneur, like I'm not a bookkeeper, I have a great team of bookkeepers, but everything we do is designed for you, the agency owner, the entrepreneur, uh, to get reports you can read, understand, and make decisions on every single month.
Speaker 2 00:43:56 Love it. Uh, I've got a finance meeting at two o'clock today with my c e o and my cfo O who's also our accountant, and they also do all of our bookkeeping. Uh, jc he's also coming to our live event on the Gold Coast in a couple of weeks. Um, Mav Con for our agency owners to talk about and just kind of hang out and learn more about our business. Uh, I, dude, he's like my ceo, E o and my C f O are the two most important people in my professional life. Like I talk to them more than anything because without those numbers, we can't make decisions. Also, because we're a recurring revenue business. I had this conversation with someone yesterday. If you've got recurring revenue and you're profitable, it makes it easier to know when you can hire because you've got that predictable cash flow and you can kind of forecast into the future if you've got recurring revenue, but your books aren't up to date, you have no idea you're flying blind.
Speaker 2 00:44:41 And if your books are up to date and you're only working on project revenue, then you kind of, you know, you're winging it and you're kind of taking a punt that you've got enough revenue in the pipeline. So I, you know, and again, I did it myself when I first started out, and you would do it quarterly and then you'd spend like all weekend trying to get your books up to date and do your, you know, your, your tax statements. Uh, so yeah, it is absolutely the most important thing to get done from the get-go. So accounts balance.com, go and check that out. Um, hey, Nathan Hirsch, you spend a lot of fun hanging out. We're gonna do this again at some point. I'm certain, uh, where are you based? You're in, you're in Colorado, is that right? Yeah,
Speaker 0 00:45:12 Denver, Colorado,
Speaker 2 00:45:14 Man. I'm coming out to the States in October for our event, which is in Virginia, and then I think we're going to the high level summit in Texas in October. So, uh, while I'm out there, man, we should try and cross paths at some point in, uh, I'm
Speaker 0 00:45:26 Down, hang out, try to grab a beer or something.
Speaker 2 00:45:29 Yeah. Awesome. Um, any parting thoughts for our agency owners who are listening to this?
Speaker 0 00:45:34 No, I, if you want to connect with me on LinkedIn, Nathan Hirsch, my business partner, Connor Gilligan, also crushes LinkedIn does a lot in the SEO space. Um, he's a good person to follow and, uh, yeah, feel free to reach out to me. I love connecting with, with other entrepreneurs and I appreciate you having me out.
Speaker 2 00:45:49 Awesome. Nathan Hirst, thanks for joining us on the Agency Hour and all the best. Look forward to hanging out again sometime. Same.
Speaker 2 00:45:55 Thanks for listening to the Agency Hour podcast and a massive thanks to Nathan. Congratulations on all of your success. I just love your story, really inspiring stuff, and I can't wait to see what you do next. Okay, folks, don't forget to subscribe and please share this with anyone who you think may need to hear it. And don't forget to check out outsource school.com if you wanna learn how to hire now. Are you getting paid to close clients right now? We are guaranteeing you can get paid to close eight new clients in the next 30 days without doing any stupid free strategy sessions. If you'd like to chat with our team about how you can get paid to close, click the link beneath this episode. Let's get to work.
