Podcast appearances and mentions of babak azad

Welcome back to Making Bank. On today's episode, we have a compilation of previous episodes with Garrett Gunderson, Babak Azad, Henry Kaminski, Marshall Sylver, Mark Podolsky, Cole Hatter and Steven Kotler and in this episode you will hear tips and tricks from top entrepreneurs about the guide to success.   (2:42) Garrett Gunderson Morning rituals are very important. They will be responsible for how your day will be therefore having a healthy morning ritual is the first step to success. You can start with meditation, exercise and a bit of stretching. After this you can also write down in your journal and lastly you can listen to podcasts or shows about personal developments.   (6:01) Babak Azad Before the launch of anything in your business, it's crucial to establish a clear brand identity, defining the promise to customers and positioning the product uniquely, ensuring it stands out among competitors with superior offerings. This not only drives sales and revenue growth but also establishes a foundation of trust and credibility.    (14:50) Henry Kaminski The competition is very high today. You need to be absolutely clear on what you are selling. Ask yourself what your business is offering. Are you offering a better product? A better design? Are you offering better services? What value are you offering to your customers? Find a way to help others get the most value out of your business.   (18:17) Marshall Sylver Avoid WGAs, Minimum Wage Activities. Hire someone else to help you with that. As an entrepreneur, your job is to focus on IGAs, Income Generating Activities. Focus on things that help you make more money. Another important thing you should do is to let people ask you what you're selling and have them believe it was their idea. These are the skills that will get you wealthy.   (21:57) Mark Podolsky Focus on things that will really make you happy. Remember that you are working for freedom and flexibility. Do not ever lose yourself in the pursuit of that. Focus on the quality of your relationship with your family and people around you. Having all the money is great but it will be a very empty life if you do not have anyone around you that you care for.    (26:15) Cole Hatter Being an entrepreneur will give you more security than a day job. Having a job is less secure as compared to knowing how to make money on your own. Learning how to make money is more superior than relying on a skillset where you will be compensated for it. Remember to concentrate on skills that will help you acquire more money.

Welcome back to Making Bank. On today's episode, we have a compilation of previous episodes with Garrett Gunderson, Babak Azad, Henry Kaminski, Marshall Sylver, Mark Podolsky, Cole Hatter and Steven Kotler and in this episode you will hear tips and tricks from top entrepreneurs about the guide to success.   (2:42) Garrett Gunderson Morning rituals are very important. They will be responsible for how your day will be therefore having a healthy morning ritual is the first step to success. You can start with meditation, exercise and a bit of stretching. After this you can also write down in your journal and lastly you can listen to podcasts or shows about personal developments.   (6:01) Babak Azad Before the launch of anything in your business, it's crucial to establish a clear brand identity, defining the promise to customers and positioning the product uniquely, ensuring it stands out among competitors with superior offerings. This not only drives sales and revenue growth but also establishes a foundation of trust and credibility.    (14:50) Henry Kaminski The competition is very high today. You need to be absolutely clear on what you are selling. Ask yourself what your business is offering. Are you offering a better product? A better design? Are you offering better services? What value are you offering to your customers? Find a way to help others get the most value out of your business.   (18:17) Marshall Sylver Avoid WGAs, Minimum Wage Activities. Hire someone else to help you with that. As an entrepreneur, your job is to focus on IGAs, Income Generating Activities. Focus on things that help you make more money. Another important thing you should do is to let people ask you what you're selling and have them believe it was their idea. These are the skills that will get you wealthy.   (21:57) Mark Podolsky Focus on things that will really make you happy. Remember that you are working for freedom and flexibility. Do not ever lose yourself in the pursuit of that. Focus on the quality of your relationship with your family and people around you. Having all the money is great but it will be a very empty life if you do not have anyone around you that you care for.    (26:15) Cole Hatter Being an entrepreneur will give you more security than a day job. Having a job is less secure as compared to knowing how to make money on your own. Learning how to make money is more superior than relying on a skillset where you will be compensated for it. Remember to concentrate on skills that will help you acquire more money.

Welcome back to Making Bank. On today's episode, we have a compilation of previous episodes with Garrett Gunderson, Babak Azad, Henry Kaminski, Marshall Sylver, Mark Podolsky, Cole Hatter and Steven Kotler and in this episode you will hear tips and tricks from top entrepreneurs about the guide to success.   (2:42) Garrett Gunderson Morning rituals are very important. They will be responsible for how your day will be therefore having a healthy morning ritual is the first step to success. You can start with meditation, exercise and a bit of stretching. After this you can also write down in your journal and lastly you can listen to podcasts or shows about personal developments.   (6:01) Babak Azad Before the launch of anything in your business, it's crucial to establish a clear brand identity, defining the promise to customers and positioning the product uniquely, ensuring it stands out among competitors with superior offerings. This not only drives sales and revenue growth but also establishes a foundation of trust and credibility.    (14:50) Henry Kaminski The competition is very high today. You need to be absolutely clear on what you are selling. Ask yourself what your business is offering. Are you offering a better product? A better design? Are you offering better services? What value are you offering to your customers? Find a way to help others get the most value out of your business.   (18:17) Marshall Sylver Avoid WGAs, Minimum Wage Activities. Hire someone else to help you with that. As an entrepreneur, your job is to focus on IGAs, Income Generating Activities. Focus on things that help you make more money. Another important thing you should do is to let people ask you what you're selling and have them believe it was their idea. These are the skills that will get you wealthy.   (21:57) Mark Podolsky Focus on things that will really make you happy. Remember that you are working for freedom and flexibility. Do not ever lose yourself in the pursuit of that. Focus on the quality of your relationship with your family and people around you. Having all the money is great but it will be a very empty life if you do not have anyone around you that you care for.    (26:15) Cole Hatter Being an entrepreneur will give you more security than a day job. Having a job is less secure as compared to knowing how to make money on your own. Learning how to make money is more superior than relying on a skillset where you will be compensated for it. Remember to concentrate on skills that will help you acquire more money.

Welcome back to Making Bank. On today's episode, we have a compilation of previous episodes with Garrett Gunderson, Babak Azad, Henry Kaminski, Marshall Sylver, Mark Podolsky, Cole Hatter and Steven Kotler and in this episode you will hear tips and tricks from top entrepreneurs about the guide to success.   (2:42) Garrett Gunderson Morning rituals are very important. They will be responsible for how your day will be therefore having a healthy morning ritual is the first step to success. You can start with meditation, exercise and a bit of stretching. After this you can also write down in your journal and lastly you can listen to podcasts or shows about personal developments.   (6:01) Babak Azad Before the launch of anything in your business, it's crucial to establish a clear brand identity, defining the promise to customers and positioning the product uniquely, ensuring it stands out among competitors with superior offerings. This not only drives sales and revenue growth but also establishes a foundation of trust and credibility.    (14:50) Henry Kaminski The competition is very high today. You need to be absolutely clear on what you are selling. Ask yourself what your business is offering. Are you offering a better product? A better design? Are you offering better services? What value are you offering to your customers? Find a way to help others get the most value out of your business.   (18:17) Marshall Sylver Avoid WGAs, Minimum Wage Activities. Hire someone else to help you with that. As an entrepreneur, your job is to focus on IGAs, Income Generating Activities. Focus on things that help you make more money. Another important thing you should do is to let people ask you what you're selling and have them believe it was their idea. These are the skills that will get you wealthy.   (21:57) Mark Podolsky Focus on things that will really make you happy. Remember that you are working for freedom and flexibility. Do not ever lose yourself in the pursuit of that. Focus on the quality of your relationship with your family and people around you. Having all the money is great but it will be a very empty life if you do not have anyone around you that you care for.    (26:15) Cole Hatter Being an entrepreneur will give you more security than a day job. Having a job is less secure as compared to knowing how to make money on your own. Learning how to make money is more superior than relying on a skillset where you will be compensated for it. Remember to concentrate on skills that will help you acquire more money.

Babak Azad is a direct marketing legend. He's spent north of $700 million on ads in his career and worked with brands like NOBULL, Butcher Box and Athletic Greens, just to name a few. But he got his big break at Beachbody – the makers of P90X, Insanity and Shakeology. He joined at $100 million in revenue and left as they surpassed $1 billion. Today, he's the CMO of GoodRx. So we wanted to pick his brain about what he’s been up to there and what he learned along the way.

One of the misconceptions people often have about Quiet Light Brokerage is that most of our transactions are e-commerce based. In reality, we have got quite a sizeable number of SaaS deals in our portfolio as well. Today, the Saas CFO Blog founder Ben Murray is here talking about his career, the blog, and his passion for sharing the metrics founders need for better planning and forecasting. Through his blog, Ben shares his passion for organizing the numbers, implementing SaaS metrics, and forecasting. Ben's advice is all about getting the lumps out of the profit and loss. Anyone looking to learn more about the topic both from the acquisition and the ownership side, this is the guy to know and this is the episode to listen to. Episode Highlights: The value in forecasting. Why do it in the first place. Things that proper forecasting might protect your business from. Software recommendations for businesses looking to get started with inputting the financial data. Types of metrics that are important for the owner and potential buyer to dial in on. The Rose Metric. Numbers a potential buyer should be looking for in a healthy acquisition prospect. How deep should the buyer look into the metrics? Warning signs to look for in a business evaluation. The why behind the data. Healthy levels of sustainability in the balance between recurring revenue and sales/marketing expenses. How Ben became so interested in the SaaS arena and why he feels compelled to share his knowledge with his readers. The cash runway forecast model. How to get started in forecasting. Transcription: Joe: Mark one of the misconceptions about Quiet Light Brokerage is that some people think we do; the vast majority of our transactions are e-commerce related when in fact we've got quite a sizeable SaaS component as well. And I understand you had Ben Murray from SaaS CFO on the podcast recently. Mark: Yeah I just recently became familiar with Ben. I was going out and taking a look at some of the people that are writing in this space and just kind of doing some research trying to expand our network in this area and I happened upon Ben's blog and I was absolutely blown away. So Ben is a CFO obviously and specializes in the SaaS arena and talks a lot about the metrics that we want to be able to track in the SaaS world for better forecasting and better planning on the part of SaaS founders. So naturally, I thought I had to have this guy on the podcast. We also sponsored a little ad in his newsletter as well to promote David's webinar. David Newell for those of you that don't know recently did a webinar on how to solve a SaaS business for 6, 7, or 8 figures. We're going to include those in the show notes we'll also make sure that we advertise that in our weekly newsletter if you don't get that; a really, really well received. We've had hundreds of people attend and have had great response from that webinar. We partnered with Ben to help promote that webinar as well. And as I told you Joe just before this call he knows more about SaaS than you and I will ever really know because he lives and breathes this on a day in day out basis. And so we talked a lot about some of the metrics to look at, how to think about some of the metrics, how to calculate some of the metrics in a way that makes sense because we know that we're supposed to be tracking some things like lifetime value, churn, and everything else but how do you actually construct these calculations in a way that makes sense for your business and then forecasting as well. So the topic; I'll be honest, I got a little wide-ranging with my questions because I wanted to ask him every question at once. And it was difficult to stay focused because I wanted to ask every question at once but there's just some really cool nuggets in this podcast including one that you and I talk about all the time and that's cash versus accrual accounting. Joe: Yeah, most people think about it only in terms of e-commerce but SaaS and content they've got to do it as well just to get the lumps out of the P&L. Mark: Yeah I mean look it just comes down to this basic concept accounting; double-entry accounting system has been around for a long time and it's been around for a long time because it works. And so we should be making sure that we're actually paying attention to our books in the proper way and understanding what sort of insights we can pull out of this. Ben talks a lot about the need for forecasting which is something that I'm increasingly growing aware of as being an important tool for business owners. And we talked a little bit about how to do that in the SaaS world in this podcast as well so it's super interesting. And I think for anyone that's interested in SaaS both from an acquisition or an ownership standpoint, Ben is a guy to know, this is a podcast definitely to listen to. Joe: I'm looking forward to listening to it myself. Let's get to it. Mark: All right I have Ben Murray from the SaaSCFO.com, Ben thank you so much for taking the time for a conversation here on SaaS businesses, CFO and everything metric heavy. I'm really excited for this conversation. Ben: Thanks Mark, it's great to be here. Mark: So let's start out pretty simple and give just a quick background on yourself; what you do, and also a little bit about the blog. I found you through your blog the SaaSCFO.com but a little background on yourself so that our listeners know who I'm speaking with. Ben: Sure yeah. My name is Ben Murray and I've been in finance and accounting for the past 20 plus years and my background has been airlines and software specifically SaaS. And so I've been a SaaS CFO for about the last 8 plus years or so. And about 3½ years ago I started blogging at the SaaSCFO.com where I just wanted to share my metrics, models, templates that I've been using and creating over the years and hoping that others will have; they could use those and implement the models and metrics in their businesses right away. Mark: Yeah and look there's a lot of people that write on this material, right? I've come across a lot of different blogs that kind of become this intersection of marketing and metrics and company structure and everything else. Yours is really focused on metrics and metrics from a kind of financial outlook perspective and probably a deeper dive than I found in most other places. So I can definitely really, really appreciate what you're doing here on the blog and some of the information that you share. I want to start off with just kind of a big question, your website title is Ben's post on SaaS metrics and forecast; pretty simple. I want to talk about that second half there and the forecasting side of it. I know a lot of business owners and even buyers who are looking at acquiring a business look at forecasts with a bit of a skeptical eye and wonder well what's the real value on them? Now I think people that are growing businesses at a higher level tend to see the forecasts and see the value in them. But I'd love to pick your brain a little bit about the value in forecasting and creating a good forecasting model and maybe what the foundations are for that. So why don't we start with that first question as why forecast in the first place? I mean isn't it really more wishful thinking or is there a real science behind this. Ben: Yeah there's definitely a science behind it because it really leverages your operational understanding of your business and I really feel you can't forecast until you know where you've been. So really understanding your historical financials, all the metrics around that, and then once you have that then you can put a very good forecast together. But if you don't understand your current financial state it's going to be really hard to create a forecast and obviously, the number one thing is cash, right? Cash is king. So if cash is tight or you think it might be tight you definitely need that forecast to balance resource requests versus cash balances. So that's number one. After that say if you have decent margins then again it's really understanding where your revenue is trending; your margins are trending. And as you scale so you don't get in trouble down the road; if you hire too fast, invest too fast. So forecasts it's definitely I'd say part of science part of intuition but it's really critical I think in any business as you scale and of course just understanding your cash and then the metrics that are coming out of your forecast. Mark: Yeah, what are some common areas that you see people running into with a lack of forecasting; just kind of sticking their finger up in the air and feeling where the wind blowing today as they're growing maybe a rapidly growing business. You already mentioned one, hiring too fast and bringing on too much support staff maybe anticipating more growth in the future. What are some other things that proper forecasting might be able to protect you from? Ben: I think when you create that first financial forecast and you have been forecasting it really exposes areas in your business that are kind of weak data-wise. The number one thing is like booking; tracking your monthly bookings whether that's MRR or ARR basis you need to know when new lows are coming in or new customers are coming in any expansion business churn downgrades. So that sometimes exposes that tracking. You're going to be kind of revenue forecast together. It all starts with your booking patterns. So that's one thing. And then it's just basic stuff. What's your current MRR? What are your current customer accounts? How many paying customers do you have so you can put again that revenue forecast together and then it's just understanding where you spend. You know one big thing that I see with SaaS firms is that they're coding all their expenses to one big bucket. And I think once you reach say a million or two ARR you really have to have more sophistication in your financial forecast than you're coding expenses to buy an apartment because without that you really can't create any SAAS metrics from that. So you really need clarity around your expenses as well to see that quite a bit. Mark: Yeah and so much of this when I give presentations at a conference and I get to the part where I'm talking about keeping good clean accurate verifiable books I get the sense sometimes that it gets glossed over. And I talked to a lot of entrepreneurs who say yeah I know my books are important but then when you find out are they actually managing them well we found out that they aren't and because it becomes sort of an afterthought to it. But what you said there at the end I think is so clear. Once you start having good numbers brought in to the business and you're starting to analyze these numbers it brings clarity to the business as well and being able to identify maybe the risks that are actually present in your company that you aren't seeing because you're not looking at the data. A lot of what you're saying here about forecasting, of course, requires keeping track of the numbers in the right way and you need to start somewhere. For somebody that's maybe at the smaller end of the spectrum in a SaaS operation, say sub one million dollars in revenue what sort of recommendations do you have to make sure that the data that they're getting is A. getting input correctly and categorized correctly and B. do you have any recommended software any recommended systems that you would start out with? Ben: Yeah I wrote a post because that was a question I was getting a lot on what SaaS accounting software can you recommend. And of course, when I speak with founders 9 out of 10 times their financials are in QuickBooks . So that's kind of a ubiquitous accounting system out there. And I've seen all sorts P&Ls but really it's good organization to your expense categories. Not having too many. Sometimes you see a QuickBooks P&L and it's 50 expense categories and you've got $5 posted in February and 10 the next month; just too much detail on that where a SaaS company is really 70 to 80% employee wages, benefits, taxes, etcetera. So that's the big thing is getting to know your wages classify them correctly; encoded by department. Then it comes down to travel, rent, commissions, so they're big expense categories that are common within SaaS, advertising, that you want to see those coded and classified correctly and kept track of each month so you're not getting behind and have very lumpy financials. So that would be the big thing is just to clearly categorize P&L by expense category and then obviously the other one is just not applying proper reverec which you can't blame SaaS founders that saved some 1 million but they're not playing proper reverec to their revenue. But eventually, you will need that in order to calculate again good metrics, good gross margin and so forth. Mark: Can you explain that last part a little bit more? Ben: Yeah, about the reverec? Mark: Yes. Ben: So often rates with an MRR business it's not as pronounced where you invoice monthly and recognize monthly but with annual contracts say quarterly, semiannual, annual, multi-year contracts you see a lot of SaaS companies posting that revenue right to their P&L. So, for example, a $12,000 annual contract that should be advertised and recognized over twelve months. They're posting twelve thousand in just one month. You'll see very lumpy revenue that it could be 50 or 100,000 in one month and it's $1,000 a month the next month and I've even seen negative in some months. And with that, you really cannot manage your SaaS business without a proper reverec and that could be finding a SaaS accounter bookkeeper who is familiar with the SaaS business model. But without that, you don't know your gross margins at all. You really don't know what's going on with your business kind of on a good steady run-rate basis. So again under a million, I get it. A million and two and scaling you definitely have to get to that point. Mark: Yeah. And so in our world again we've talked about this a lot on this podcast and pretty much every chance I get. And it's that simple difference between accrual and cash basis counting, right? Instead of saying oh I just got $12,000 in on an annual contract saying well I have an annual contract which means I need to service this client for the full 12 months and that equates out to $1,000 a month which I'm earning as I go along with this contract. It's kind of a foreign concept to a lot of people. But again the importance here is not treating the P&L like a statement of cash flows only and treat it again as a profit and loss statement. I would imagine Ben, this is something I didn't see on your site but I'm sure you've covered because your site is extremely comprehensive, it would make sense at that point to look at your financial statements and understand the balance sheet is going to be important in here as well. What role do you see and let me see if I can back up; I'm kind of all over the place right now but I'll ask this in a very basic way. I know a lot of people are kind of scared or mystified by the balance sheet. How much emphasis do you think people should put on actually getting familiar with the statement like that or do you think it's more important to look at some of the other metrics instead and focus on those? Ben: Yeah I think say as a founder-owner you do need to understand the balance sheet to some extent because the SaaS balance sheet is a little different than others. One obviously is deferred revenue, so in the example, we talked about when you invoice that 12k it's actually posted at the balance sheet as deferred revenue; as a liability, because you have an obligation now to say perform or to service that customer. The second thing with the new reverec standards you now have to capitalize the contract costs that arise when signing contracts with customers, for example, enabling commissions now that becomes an asset on your balance sheet. So that's the second area that's different with SaaS and that's actually new and then, of course, capitalizing software development. You can also capitalize software development once it reaches technological feasibility. And again that's another asset on your balance sheet. Other than that SaaS balance sheets are pretty straightforward but if you're applying the proper accounting you probably will see; you definitely should see deferred revenue and probably capitalized commissions. Mark: Yeah I can kind of hear the collective groan from people listening thinking well I thought we're going to be talking about SaaS metrics here and here we are back in the old accounting stuff but this stuff plays together, right? I mean when we go into some of the other more advanced metrics that you're talking about it depends on having those books done correctly so that you can pull out the right metrics and the right ratios that you're looking for. But let's get into some of those other metrics and just kind of a very basic question here, what do you consider especially forward for companies that 1 million maybe 5 million 10 million and then above as we kind of work up the strata here, what sort of metrics would you generally say are really important for an owner or potentially an acquirer to really dial in on a SaaS business? Ben: Yeah I think once you're past that early stage where you really have to manage your cash flow I mean it's going to be your go-to-market, sales, and marketing efficiency metrics and that's something I'm constantly looking at. So it's really all; it becomes a lot about the go-to-market efficiency. One are your inbound or outbound sales engine and marketing engines and then one metric that's a favorite of mine is cost of ARR, cost of MRR where you're looking at your ARR and MRR bookings and comparing that against your sales and marketing expense to see how much it costs you to acquire one that new dollar or ARR or MRR; that's a big one. And there's a great survey out there, a SaaS survey put out by KeyBank each year that provides those private company metrics so you can compare how you're doing against other SaaS companies who put data into that survey. So it's a great benchmarking tool. But again there are a lot of sales and marketing efficiency metrics that yeah as you're scaling, how efficient are you, how much cash is going to be required to hit your booking plan, and then really just that balance; it comes down to that balance between bookings and sales marketing. Mark: Yeah that's great. Let's talk employees it seems to be one of the costs that seems to kind of spiral out of control with SaaS companies on occasion right? The cost of supporting the clients can be higher and higher. You have something on the blog which I'd just kind of chanced upon which you came up with called the Rose Metric. Can you explain that a little bit? Ben: Yes sure. Again it kind of gets back to the concept that really a SaaS company or any software company is all about the staff; the employees because that's the major expense or as I call merits that investment in the business around your staff. And you see that revenue graph that you metric out there is kind of a general gauge around efficiency which I think is just too high level; too generic. So I want to look at really it's so important that your investing employees, that employees are happy because they are creating that software company; they're creating the product. And really comparing how efficient are we in headcount wages versus the bookings coming in. So it gets you kind of a balance of as we scale what resources do we need to support our bookings plan or rounding plan and just see how efficient we are in acquiring new MRR or ARR against our kind of employee headcount or employee wages. Mark: Yeah it's an interesting piece and again I'd recommend people take a look at the blog and kind of dig into some of these employee metrics. It's one that we don't see as much in our world and I think it's an interesting one to take a look at. From a merger and acquisition standpoint if you're a buyer coming into a business and trying to evaluate it where are you going to begin looking at a company's books? What sort of numbers are you going to be looking at in trying to calculate within that first day as you're trying to see is this a good opportunity and a healthy company? Ben: Yeah obviously the first thing you're going to look at is just are they good books are you inaudible[00:19:12.5] accounting so they're good financial statements. And then after that, it's really understanding the health of the recurring revenue because a lot of valuations are based on almost full of ARR or MRR and then also EBIDTA. So really when I look at it you know it's really looking into that recurring revenue; so the bookings data, what's your gross dollar retention, net revenue retention, how many logos are you losing per month, how many dollars are you losing per month, and churn and dock rates. And then of course if you've got multiple products it's understanding all of those metrics by the product lines. Because that's what you're really buying is the recurring revenue stream and of course any profitability or lack of profitability that goes along with that recurring revenue stream in the form of EBIDTA. So those are the same first things that I dive into is really understanding the revenue streams and then really the business model; what does it take to support that recurring revenue stream? Do you have tech support? Do you have CSMs? What's needed support that revenue? And then, of course, another big thing is to go to market engine; understanding sales and marketing, how they're acquiring customers, how efficient they are, and then of course looking into GNA, RND, the product roadmap etcetera. Mark: Sure absolutely. As far as dealing with a company with weak books like of we're evaluating a company that maybe has this lumpy revenue because they're recording everything on a cash basis. Are there ways that you can suggest that would not involve a whole deconstruction of books but maybe to be able to evaluate a business that has weaker books or weaker data tracking practices? Ben: Yeah if you really can rely on the financials for the revenue stream then you have to really build a backup through their bookings data or their invoicing data. So getting say a couple years of invoicing history of their subscriptions; so dollar amounts, start and end dates, it helps if you knew is this a new logo expansion etcetera so that you can reconstruct what the revenue stream should look like and then get back into you know what kind of expansion are you seeing, churn are they seeing so you can build out that revenue stream if it's not; if they're not [inaudible 00:21:30.3] to the financial statements. Mark: Sure. What would be some warning signs that you would look for an acquisition? Obviously, you said you would really look at the health of the recurring revenue. How trustworthy is it? Also the go-to-market cost as well. What are some things that would be just kind of a deal-breaker for you if you were evaluating a business? Ben: I mean a couple of things would be looking at again I think it's going to be around churn and payback periods. So payback periods are extremely important. So how fast are you paying back those upfront customer acquisition costs. So one looking at their cash balance, of course, are they trying to [inaudible 00:22:10.5] fund working capital through lines of credit or debt that their business model isn't quite working for some reason or the payback period is too long or they have just too much cash tied up in check. And then, of course, new logo acquisition, do they have the go-to-market model proofed out or product-market fit and then again just is churn under control, can they acquire customers but then can they retain them over time. So again those are some of the things that if you see warning flags; you might see some warning flags there that the metrics just as a whole don't add up together. Mark: Right. You mentioned payback periods. This is something that I've ran into a number of times where I see somebody pretty plainly put out there hey my LTV is this my CSC is this so look I'm going to acquire the customer for 80 bucks the lifetime value is $400 and you're going to make a great return on your investment on that. But when you dig into it a little bit deeper you find out that if you take like an 80% cohort, if you're taking a look at the majority of customers the lifetime value is much lower. There are a couple of unicorns in there that are pulling in this really high value. What are some ways that you can recommend dissecting this when you get this kind of flat up numbers of my lifetime value is X and my cost of acquisition is Y so, therefore, you're going to make that killing on this business. How can you sort of dissect that and actually get some better insights there? Ben: Yeah especially with LTV because that can be so sensitive to the denominator or what churn number you're using as the dominator. So you really have to understand what inputs they're putting themselves because that lifetime value can be all over the place. So again you mentioned cohort analysis, are they taking the cohorts, are they using aggregate churn or are you looking at really with check and payback periods you should be looking at it's really a point in time like the cohort analysis that what's the most recent cohorts coming in and the paybacks on those and also lifetime churn from the cohorts say from the past 12 months. So you really have to I think look at the details on the numbers that are building up into those formulas to really prove out what they're saying that they can really claim great numbers. Mark: Yeah, it's one of the reasons that LTV to me I'm not a big fan of that metric on its own I mean it's interesting but I think it's just kind of a live number way. It doesn't color a whole lot when you're looking at it by itself, right? It can really take you to a lot of different factors. Ben: Yeah and I definitely calculate LTV it's interesting because I think SaaS metrics in isolation don't mean much. You kind of have to look at the big picture obviously it's LTV to check but also looking at cost of ARR payback periods. So maybe it's one data point but it's not telling the whole story. So I do look at LTV but again I think say cost of ARR or the payback on that is a much easier way to understand. And LTV I still think is kind of a ballpark because it's always changing and it's such a sensitive calculation that it's not the number to just look at alone. Mark: Yeah. A question I get all the time from people and it's really basic in your world so I apologize for even asking this but people ask me all the time well how am I supposed to calculate my lifetime value, how am I supposed to calculate my churn when I have people that are still; that have been with me from day one? And these numbers sometimes can be difficult to calculate because of that or even people that are dropping off but then coming back on and then dropping off again and then coming back on. Ben: Yeah. I hear that a lot too. Yeah especially if you're a couple of years in you really don't know your lifetime value yet. Again it's just a formula; it's a calculation so it's a ballpark but you don't really know true LTV yet if you've just been around a couple of months or a couple of years. And then the whole dropping off dropping on back on that's where it just becomes almost company-specific that you really just have to define internally what does a new customer mean, when does it really mean that they churn so that everyone within the company understands that. And if you're in any sort of M&A then that's clearly; that you're transparent with how you're actually tracking those stats. Mark: Yeah. And I think that part right there that point is probably the key that I think is so important especially from an acquisition standpoint. If you're looking to acquire a SaaS company and you're just looking at the metrics on the surface how does that seller define those metrics within their own company and why did they set up those rules because with multi churn you can look at that in a number of different ways. You can calculate that number using different approaches the same way with LTV numbers you can use different approaches and get different results. So why did you choose a certain method; why did you choose a certain approach to this? And that's the color I think from an acquisition standpoint that starts to get really important when you're looking at any of these metrics is understanding the why behind what data is being presented and then the rules and applying a sanity test to it. Are these people just giving numbers because that's what they're supposed to pick or are they actually looking at these and using these metrics within their company, yeah just a really good point on your side as far as understanding the metrics and where they're coming from? Moving beyond that cost of acquisition, moving beyond the lifetime value numbers and you've mentioned a few times the going to market costs as well, what are some health levels for the sustainability of ARR or MRR on a SaaS business. Ben: You mean as kind of as far as the balance between recurring revenue and sales marketing expense? Mark: Yes. Ben: Yeah, so healthy levels, the things that I look at and this is probably more mid-market enterprise but usually if you can acquire bookings for $1 of a new ARR for a dollar of sales market expense that's pretty good. So again there are some surveys out there that kind of give you some benchmarks and that's kind of you can say in whole new logo and expansions of course expansion in ourselves should be a lot cheaper than acquisition, maybe that's 30 to 50 cents of sales and marketing expense acquire one net new dollar of ARR. So certainly it's just that you look in and if it's higher you just need to understand from that business why it's taking longer and what's the story behind go to market. Is that a longer sales cycle that's impacting the [inaudible 00:28:48.6] so just different things to really understand their business model. Mark: That's great. I'm going to just take a quick break from some of that heavy metric discussion here because we're throwing around a lot of acronyms right now. How did you get your start in this rollout? You said that you had experience in the airplane industry and then also in the software industry. How did you get to be so passionate about this and kind of digging in as deep as you do? Ben: Yeah well I guess one that you really loved forecasting and financial forecasting though in Excel models and you kind of build-up that tool kit over time and just really enjoy it really understanding the economics of businesses and especially software is so interesting and yeah I did start in the airlines which is also kind of metric intensive and very financially disciplined and I kind of applied that to the SaaS areas. So I just noticed out there a lot of resources on SaaS but it didn't quite I felt go far enough or really just give you the whole story and the template that they were using it kind explained it but then you might have to go do an hour or two of work to recreate what that person did. And so I said; I thought you could be a little different by just providing the exact models, the templates that I'm using and hopefully the bits and pieces of those would be applicable to some people in SaaS that they could incorporate into their business and I received great feedback from readers, subscribers downloading templates that it's helped them out a lot, founders that are trying to do their first forecast. So I just wanted that kind of transparent value exchange out there and it's just really from my kind of on the job experience as a SaaS CFO and just things I encounter every day that are pain points for me that could be pain points for others and just help them out with maybe something with a template that I've used to solve some of those problems. Mark: Yeah you have all these comments on the site from people who have written into about the resources and I love the one here that says great resources that save a lot of time and brain damage to replicate. It's very true. Again there's a really good stuff on here. You brought up forecasting again so I'm going to start to bring this full circle here back to forecasting because we talked about that and it's a topic that I'm personally very interested in as well right now. You have a whole page here on the cash runway model. Can you explain that at a high level and maybe we can get into it a little bit? Ben: Yeah definitely because I have my financial plan out there that I live in Excel every day that I kind of take it for granted that other people can also open up Excel or just dive right in and for a lot of people it's still a little too advanced so with kind of that you could say advanced side of financial planning model. So I tried to create something very basic and it is really inspired by a founder I talked to who said that he got some funding just with a super basic cash forecast. So I thought well how could I take that and just make it super simple say for founders and non-excel people to just start inputting even it really gets to their cash invoicing. So they really could forecast their cash balance and how long that balance is going to last. If they funded it and then they're looking for investments that they could say hey here's my cash invoicing coming up, here's my headcount, here are some other metrics; that major expenses and then just forecast their cash balance in one tab. So that was the genesis of it just trying to really boil down to really something basic that founders and again non-excel people could hopefully use right away. Mark: Yeah. And you have this template available on the site. And you didn't actually answer it's kind of the question I was going to lead into and that is how does somebody get started with forecasting if they don't have the resources for a CFO like yourself what are some basic models that they can put together to start forecasting their cash flow? Ben: Yeah, definitely. I think really it's understanding their invoicing patterns; so what is your cash coming in whether that's funding or just the invoices you're sending out to your customers or their credit card payments they're making online line through your site. So that's really the first step. It's just that cash in. And then it's going to be headcount. Again headcounts the majority of expense for SaaS company so really and I'm quite informal as to how do we easily calculate and forecast that expense. So whether you've got one person 850 cut that into model, forecast that expense out. So the second thing again is headcount. And then any other major expenses, maybe it's rent, maybe it's tradeshow, advertisements, so it's kind of that 80-20 rule start with those big expenses; start with the big invoices as a place to start to put together kind of a basic forecast. Mark: Right then as with all things you can refine that as you go along and improve it and make it more accurate and you can look back to see how accurate was our forecasting and get the insights that you need from there and be able to really plan out what's going on or if you're looking for funding obviously very useful for that as well. This has been really interesting and maybe a little bit of a scattered conversation because I want to talk about everything at once. That's my downfall. I've never really claimed to be the greatest podcast host in the world but there is just so much here to be able to discuss. We are up against the clock at this point though and so I want to give you the chance to kind of round it out and with what you do you obviously have a passion for a lot of this in you being able to help out a lot of people. What are some of the common problems or common questions that you get at the blog and what would you say to SaaS founders currently operating a business right now or those that might be looking to get into this through acquisition? Ben: Yeah I mean the kind of questions or problems that I see really one is just how do you calculate this stuff, how do you calculate these metrics, what are the inputs? And that really comes back to just a nice clean P&L that you take the time; make that investment through your bookkeeper or accountant to really set up a well-organized P&L because that's where all the metrics emanate from. And if you don't have that it's going to be really hard to calculate the metrics and really have that financial transparency to manage your business. So really again it starts with what's your SaaS P&L and I try post on there on my site kind of walking through from bookings down to income; what the major components of the SaaS P&L are and again it's getting good organization and good fundamentals there and then you can build upon it then you can start forecasting then you can calculate metrics. So again it starts with I think a nicely organized SaaS P&L. Mark: You know I had Babak Azad who was with Beach Body; he grew that company into a billion-dollar company and he was talking a lot about the metrics that they use there and I asked him a similar question about how do you get started; how can you start tracking this and his response was just what yours is and that is just start; you just have to start with it right. And your advice to start with a P&L and having that set up correctly. It's what we've been preaching here at Quiet Light Brokerage for a very, very long time. Get those books in order. You want to have those books in order. It doesn't matter if you want to sell or not. As a business owner having good financial records it's irreplaceable. Once you get it you will be so happy that you've had it. But it starts with how you're inputting it. I've run into bookkeepers; maybe you have as well but I run into bookkeepers especially when somebody hires them remotely who kind of don't want to do an accrual basis books because they consider it to be more difficult but it's the proper way to do it and as you said all the metrics derive from there. Alright, one last time Ben where can people find you? What's the best way to contact you? Ben: Sure you can contact me through my site. It's the SaaSCFO.com and then actually later this month I'm launching the SaaS Academy.com. It's an online digital course for SaaS metrics and more so that's coming out soon as well. But definitely my blog you can contact me through to the site. Mark: That's fantastic. Thanks so much for coming on. I hope to have you on in the future. In the future, I'll choose one topic and I'll stick on that for the entire topic but thank you so much for this really good overview episode. I really appreciate it. Ben: Alright thanks, Mark. Thanks for having me.     Links and Resources: Ben's Blog The SaaS CFO Ben's Blog post: The ROSE Metric Ben's Software Recommendations David Newell SaaS Webinar

Hi everyone, today's interview is with Babak Azad, Former SVP of Customer Acquisition at Beachbody, who joined Beachbody in 2007 when they were a $100M company and since then managed over $500M in media and acquired more than 10 million customers. In today's interview we talk about the importance of smart analysis for any business, the framework he used to grow Beachbody, and how to become a better marketer without having to get an MBA. Click here for show notes. Leave some feedback: What should I talk about next? Who should I interview? Please let me know on Twitter or in the comments below. Did you enjoy this episode? If so, leave a short review here. Subscribe to Growth Everywhere on iTunes. Get the non-iTunes RSS feed  Connect with Eric Siu: Growth Everywhere Single Grain Twitter @ericosiu

In this episode of the Growth Machine Podcast we are joined by Wilson Hung, the Director of Growth for Kettle & Fire. Wilson wrote a phenomenal tweetstorm and article about the relationship between the cost to acquire new customers and their lifetime value. Links from the Episode Mentioned in the show Wilson Hung Kettle & Fire Sumome [1:31] Justin Mares [1:54] Ahrefs [2:17] Joe Rogan podcast [4:49] Tim Ferriss podcast [4:49] Perfect Keto [9:11] Google Trends [9:24] Shopify [13:17] Bridgerock Data [16:39] Babak Azad [18:25] Beachbody [18:25] Blue Apron [20:59] Hello Fresh [20:59] getARPU [23:15] Carthook [24:35] Articles mentioned The golden era of DNVB is over on Twitter The Golden Era of DNVBs Are Over Show Topics 0:41 - How Wilson and Nat new of each other in Sumome’s awesome Alumni network. 30 day strategy proposal to get a new job. Ahrefs and link building with affiliates. Videos and indirectly ranking for bone broth. 3:14 - Saturating growth channels, ads cost started rising. Thought: if customer acquisition costs (CAC) continue to grow, then customer lifetime value (LTV) is the variable to act on to hit the top line revenue targets. 5:25 - Improving LTV. Identifying points of direct LTV improvement (data infrastructure, margins, repeat purchases, etc). Slowing down the rate of increase of CAC (increasing efficiency, diversifying to non-paid acquisition channels, SEO, referrals, etc). Benefits of scaling Facebook Ads when you already have a large audience. When to try non-paid before than paid channels and vice versa. 9:53 - Increasing LTV. Less mature brands tend to measure success only on the first purchase, revenue per visitor or the return on ad spend on the first purchase, vs considering subscriptions. Attention to metrics that aren’t in line with long term goals. 12:08 - Valuing customers differently. Willingness to pay more for a subscriber than a non subscriber. Segmenting customers by the acquisition channel (paid/non-paid). How to build the company’s customer data. Cumulative revenue and blended margins. Cashflow issues if you pick the wrong LTV timeframe. Maintenance and guardrails. Past performance is not a guarantee for future performance. Metrics Wilson receives weekly. 18:55 - Guiding people to subscriptions. Increasing subscription opt-ins at first purchase or at upgrade. How dev agencies come into play to increase subscriptions. Examples of how they are improving opt-ins at K&F. Finding way people subscribe by surveys and identifying potential subscriptors based on keyword search. 22:19 - Developing clever tools for helping do better with LTV. What to focus when sales are in the $10k-$20k range. Tools to optimize for revenue per visitor. Paying attention not over optimizing bundles to break the free shipping barrier, to the point conversion rates start to diminish. 25:52 - Sweet spots with free shipping and pop-up discounts. Understanding the costs of fulfillment. LTV is not just revenue, margins play an important role too. With better margins one can afford more expensive customer acquisition. Margin improvements. 29:25 - LTV and CAC summary. 30:41 - Find Wilson at his website and @. Go to growthmachinepodcast.com/freecourse to get the 7 part, in-depth series about building a blog to success. Go to growthmachinepodcast.com and subscribe for future episodes. Lookf for growthmachinepodcast.com on iTunes and Stitcher. If you are enjoying the show, leave a review!

A great deal of the businesses we sell at Quiet Light are founded by entrepreneurs looking for the rush of finding the next thing. Sometimes they look to sell because of burnout and sometimes it's just boredom. Today's guest's business is designed to help entrepreneurs really question the goal of the businesses they run. Jason Zook earned social media fame and experienced that burnout while on his first entrepreneurial ride after walking away from his day job. For five years Jason ran IWearYourShirt, creating thousands of videos, photos, posts on social media, and had countless media outlets talking about IWYS during the early days of social media marketing. At some point, Jason realized he had almost created a self-made work prison for himself. He and his creative wife started their company to guide owners towards financial freedom and a business they actually want to work on. Jason's focus is now on working to live rather than living to work. He strives for entrepreneurship with a healthy balance. Episode Highlights: The backstory on Jason's current company, Wandering Aimfully. Why the t-shirt business had to end. The things Jason learned from that business and his subsequent years of starting and growing companies. How Jason and his wife formulated the idea for the business. The importance of setting a mark and working towards it. What the “enough” number means to Jason and his wife. How to create the balance between getting ahead and falling behind. How that balance applies to the business creep that can often take over work-life balance. Ways Wandering Aimfully helps people build their business impactfully based on what they need, How Jason uses challenges to create habits. Transcription: Joe: Most of the businesses that we sell Mark … well maybe not most but a great deal of them are businesses where someone bootstrapped it, put all their energies into it, got it up to a certain level, and then looked around and thought “man, this is kind of work now I'm not loving this day to day anymore; I'm not happy with this challenge and I'm getting burnt out”. It happened to me. I had a cushy gig, I was working 20 hours a week, easy business, recurring revenue, and I looked around and said this isn't fulfilling me, I'm burnt out I need to move on. A lot of buyers that are from the corporate world don't understand that. Those people that are in the entrepreneurial world know that they need that new challenge, that exciting challenge. And as I understand it you had Jason Zook on the podcast; a husband and wife team actually and they talked about working to live not living to work and trying to overcome that burnout challenge. Mark: Yeah, Jason got completely burnt out with one of his 1st businesses and one of his 1st businesses; really simple concept, he would wear a t- shirt that was a sponsor. It would be their company on the t-shirt and he would wear a t- shirt every single day and put up a YouTube video of that and the prices increased every single day for that sponsorship. And so as he put it he said I was doing daily videos before Casey Neistat made that cool to publish daily videos on YouTube. He said it was great initially and he was making money by just wearing t-shirts and having people follow him around with cameras. But then this organization grew and it grew more and more and his whole life every single day was being documented and he built this prison. And I think as entrepreneurs a lot of us can relate with this idea that you build prisons sometimes for yourselves with the businesses that we've built. And so he naturally got completely burned out on that and now his whole focus and life as entrepreneurship but with a healthy balance in that life and understanding what are the real goals of your life. What do you really need and why are you doing what you're doing? And I think these are really important lessons for all of us just to keep in mind and have as a focus when we're pushing that entrepreneurialism envelope like why are we pushing growth, why are we adding this new feature to our business, and really understand what is our goal as an entrepreneur? Maybe you want to be a billionaire and if that's your goal all right then go for it but I think most of us get into this entrepreneurship game for the lifestyle. We get into it for the freedom. We get into it to be able to do what we want to do by our own rules. So are we actually doing that? Are you doing that? And is what you're doing fulfilling you today? So this whole podcast … Jason is somebody that I did not know before this podcast. He and I had never talked before and … just a fascinating guy, an absolutely magnetic personality so I'm excited to share this interview with everyone today. Joe: I don't think we can have enough people on the podcast talking about work life balance. We had Ezra Firestone; Ezra's got a staff of 25 or 30 VA's working all over the world and his work life balance is his primary focus. He and his wife they've got a certain lifestyle that they want to live and he is growing the business but at the same time making sure everybody within the business understands that work life balance. So I'm excited to hear what Jason has to say, it's always interesting to hear somebodies approach in what they do on a day to day basis. Let's go right to it. Mark: Jason, I'm super excited to have you on the podcast. Thank you for agreeing to come on here based off a completely cold and random e-mail that I sent to you. Jason: It was a good cold and random e-mail. As someone who has sent thousands of cold and random e-mails in my time as an entrepreneur, it was a good one. You didn't just kind of like lay out exactly what you wanted, you were kind, you were nice, you really presented yourself well and I was like yeah I'll say yes to this interview. I have no idea who you are, we're meeting for the 1st time in this conversation which I think is fun. Mark: Yeah absolutely and I'll tell you why I wanted to have you on the podcast. I think I said it in an intro e-mail that I sent to you. But on your website, you and your wife have a phrase on there and it's actually one of the core values that I consider my company Quiet Light Brokerage to have and that is that we work so that we can live we don't live so that we can work. This idea that hey we're entrepreneurs, we get obsessed, we love the grind, we like that sort of thing but at a certain point it's got to have something else beyond just the work itself; right? Jason: Yeah. Mark: I would love to get your story, have you share your story real quick with the listeners as to how you kind of came about this with Wandering Aimfully and this new mission that you and your wife have. Jason: Yeah sure. My entrepreneurial journey actually started kind of way late in life for a lot of people who are entrepreneurs like had lemonade stands and they like went door to door and did all those things and started businesses super early; I didn't. I started my 1st business when I was 27 on a whim after leaving a full time job that I in all essence liked it just was a very boring job and I didn't see a lot of potential for myself there. And I really felt this drive and this pull to do something better and something else. I started my own design company. It was just two people and from there I had this kind of crazy idea to get paid to wear t-shirts for a living for no reason whatsoever other than I just thought social media is kind of growing. This was 2008, 2009 I just … I don't know there was just something about it that seemed interesting to me and it struck me one day when I was literally standing in my closet looking at all these clothes that I had paid brands to own and then walk around and kind of schlep and promote. I was like wait why am I doing this? This is so weird. Could someone just pay me to wear their shirt? So that idea did not take off. I launched a website called iwearyourshirt.com five people showed up on the 1st day. I think three of them were my grandmother like refreshing the page, no joke. And then I really had to start doing the entrepreneurial kind of hustle and sprint that we all do to get things started. I was e-mailing friends and family and I was getting on Twitter and jumping in conversations back when Twitter wasn't just a barrage of political nightmare that it is now and that's not to say there's not some still good stuff on Twitter but this was 2008 so it's very different; a very small community. And yeah that idea just kind of took off on its own after a lot of hard work putting in a daily YouTube video. So I recorded 889 videos straight every single day before vlogging was a thing before Casey Neistat was recording videos and we were all watching them and loving them all I was making really terrible videos every day. But yeah that led into a couple of different ventures along the way. I created a software company to help people build and sell online courses because I wanted to build and sell online courses I just wasn't a good one at the time, a couple of other little random things and then yeah just a couple of weird different changes and ebbs and flows. My wife actually worked for my I Wear Your Shirt business and when that had to shut down in 2013 after 5 years she was kind of left with like I don't wanna go back to the nine to five world, I'm going to start my own business as well and so she started a business. So we kind of worked like 12 feet from each other but we always chatted and then we kind of came back together this past year on this Wandering Aimfully project. Mark: So why did the t-shirt business has to end? Jason: So many factors that we can dive into, I'll lay down on the couch and we can talk about them all. Truthfully it was my 1st business and I think so many people can resonate when you start your 1st business you don't know what you don't know. And I didn't know about managing people, I didn't know about managing money, the pricing scheme of I Wear Your Shirt was very poorly designed for paying people at a consistent salary. So the 1st year it was just myself and it was a dollar on the 1st day, $2 in the 2nd day, $3 in the 3rd day and so that pricing scheme is cool because it's so low barrier entry in the beginning and towards the end of the year once you build momentum it makes sense and it adds up. It made $66,795 in the 1st year which is really cool. But when you have five employees as I grew the company too because I thought I had to scale up, I thought I had to grow, I'm reading and watching all of the things that we're all reading and watching and I'm thinking that's what I have to do. I ended up having $30,000 in salary in January when my business only made $800. That doesn't work out well and so it was just a lot of those things where I just was so new to things; we had billables, we were printing all of the t-shirts through an outsourced printing service. I didn't know about just like paying invoices and all those things and so I got very back on bills and I actually built up a $100,000 in debt not overnight but in about a year and a half and it just it was so crazy to me because Mark it went from I was making almost $100,000 with literally no expenses, literally getting e-mails from PayPal like “hey there's a $100,000 in your PayPal account what's going on” to people e-mailing me and going “hey what's going on you can't pay your bills or you're 30 days late in your bills”. And so eventually I just saw the writing on the wall and I was just like this isn't sustainable. I tried this thing, it kind of grabbed its moment in time in social media and the landscape of it and I just wanted to move on to other things plus I really overworked myself every single day running the business, wearing a shirt, managing people, doing all of the marketing and sales and interviews and things. It was just time at the end of five years to move on. Mark: Five years is a long time to be wearing other people's shirts. Jason: And I'm still wearing other people's shirts if you think about it I'm just not talking about them at all. And almost none of them have a brand name on them because I'm just so burnt out from that. But yeah I actually don't regret any of it. I think I learned so many unbelievably important valuable lessons that I continue to use to this day in everything that I do. So while it ended not on a wonderful note and I don't feel like I have like this crazy awesome success story I also have a really relatable story that so many business owners can kind of stand behind me or stand with me and go “yeah my 1st business didn't do well either or my 2nd, or 3rd, or 4th it fizzled out or I didn't manage it properly” and you just learn from those experiences and you kind of take those with you and you kind of take your lumps and move forward. Mark: Yeah you know I would disagree I actually think the idea that you were able to take something as simple as wearing a t-shirt and having somebody paying for that and turning that into something that actually generated revenue is pretty remarkable. Now obviously is it sustainable, eventually, you're going to run into the problem that you ran into which is I don't want to wear your shirt anymore and I don't want to be on TV … have a video done every day and everything else that you ran into. You said something in there in that story that you were reading and listening to what everybody else was reading and listening to, there's a sort of like momentum that's out there in the business community where there is this almost like a psych guy stuff here's what you should be doing and it's all towards drive, drive, drive, grind, grow, expand, and all this sort of stuff. What are some of the things you've learned over the years with all the different ventures that you've been in about listening to that or not listening to it? Jason: The 1st one is more money more problems and as silly and as dumb as that sounds it's true. I mean it's just I don't know any business owners that have taken their business from one level to another level whatever that means and not encountered so much more work, so much more stress, so much more all of the things. And I saw that with myself like in that 1st year of I Wear Your Shirt I was making almost $100,000 because I had some other sponsorship stuff in there. There was literally almost no stress. I mean the daily creativity and all the things I had to do was a lot of work but in the 3rd year of I Wear Your Shirt when I had five employees, we had five sponsors per day, we made almost $600,000 that year; I was so much stressed. It was a nightmare almost. And I'll tell you I made $30,000 that year. I got paid the least as the person who was doing the most. And I think so many people can relate to that and so I just saw all of these things that I was latching onto of like I wanted a million dollar business what does that mean? I wanted this big house, why? I don't need a big house, I actually like having a small place where I know where everything is and I don't have a lot of stuff. And so I really just started to look at a lot of these different values that I was buying into or believing into especially the ones that society puts pressure on you and when you read Entrepreneur.com, or Business Insider, or Forbes, or whatever you're reading we all read these stories of millions and billions and all this stuff. It's like where are the people who are just making $100,000 or a couple $100,000 or $50,000 that are super happy? And it's because those stories don't sell. Those headlines don't get clicked and I really just started to reevaluate all these decisions and it was through a lot of conversations with my wife and we just kept saying this phrase what is it all for? Like what is all of the work for, what is all of the time for, what is all the energy being put into this for if at the end of a day or the end of a week or a month or a year you're so tired and you don't enjoy the life you've created? Why are we doing that? I should just go get a nine to five job at Target and clock in and clock out and leave and that's it like I don't even think about it. And so I do think there's just a lot of misnomers that go on with this like buying into up into the right mentality and you should always be growing and social media landscape can change so you got to grab all the Facebook advertising stuff you can do. It's like no you don't have to do that. You build the business around the life that you want and you really figure out what that means to you and I think that's so personal and subjective to everybody that's starting a business. Mark: At what moment of your life did you really start to formulate that when you and your wife were thinking what are the values that we actually want to have? Because look I agree with you 100%, this idea of I want a million dollar business and once I get a million dollar business I want a 10 million dollar business. When I talk to some of our clients, some of the people that are preparing to sell and I ask them what are your goals, why are you thinking about selling? Because one of the things that I try and impress especially on sellers … I'll tell you a quick story here; the 1st client that I worked with, a good friend of mine he had a company and he came in and said “Hey would you help me sell my business?” Well this is how Quiet Light Brokerage started and I went through the process, we got it sold. I won't say exactly for how much but you know what he was in financial trouble just a couple of years later. He gave up a lifestyle business for a big pile of cash today thinking this is going to set me free only to find out that he was back in the grind that he was in before. And so I'm curious from your standpoint what was it where you started to question that up until right mentality and same maybe it's on up into the right maybe it's whatever is right in front of me today? Jason: Yeah it's funny I get chills because I think back to the exact moment. I was in Fargo, North Dakota speaking at a very small conference called Misfit Con; they don't even do it anymore. And this is like literally 120 people and I was a speaker. No one knew who the speakers were so it's just a group of us sitting in this really cool yoga studio actually kind of converted into this space. A guy stepped on stage and he had well-coiffed hair and he had skinny jeans and he had really nice boots and I'm like this guy's going to tell me all the secrets that I need to know to succeed. And he started telling the story and it was eerily similar to mine of trying to grow, being focused on the money, the big house, the things, the stuff and I come to find out that was Joshua Fields Millburn of The Minimalists and his story was so akin to mine. And then when he started talking about these specific values and these specific things and really questioning all of the stuff that we buy into both societal and personal and these things it really hit me. It hit me hard sitting there and I remember sitting with my wife at the time just looking at her and going like uh-oh we got to rethink everything. And I think I spoke like two or three spaces after him and I just remember spilling my guts about how everything wasn't perfect at the time for my I Wear Your Shirt business and yet I was there to talk about this is a business that was supposedly doing so well. And that flight home after that conference we basically sat down and were just like what do we actually need to live? What do we want our lives to look like? Then those questions are so big and they're so heavy and they're scary because you tend to find yourself thinking well if I'm going to make a decision that's the decision forever. That's just not true. It can be a decision for the next three months, six months, a year, two years, five years, whatever it is and we've changed so much in that time since that conversation; that was 2012, 2013 and it's just been really big for us too at every turn and every opportunity where we can do more or we can sell more or make more is to ask ourselves hold on what is this going to add to our plate. And just like your story with the client that you worked with I find that question to be so interesting to me, I was like if I sell a business or anything I'm a part of, like I have a software company, the online course business, like if I sold that business and I made X amount of money from it what would I do with that time? I like working on that business. I actually enjoy it and I want to invest in it and so if I just sold it for a small chunk of cash which is a sizable chunk of cash, in a long term it's not really that big of a chunk of cash I'm going to have to start over. And I think we see that with so many people and you suppose this way more than I do but so many people sell a business that they actually enjoyed working on only to then find themselves a couple of months or years later bored out of their minds wishing they had something that fulfilled them to work on every day. And that for me is kind of where this comes from too of like I want to make enough money that we don't have to think about money and truthfully we're not there yet. We don't make enough money every month. We were just like we don't care about money but we've set what mark looks like and we're working toward that mark. We call that our enough number and once we hit that number we're just going to stop trying to make money. And you are going to have to fill in gaps [inaudible 00:08:45.1] we have a lot of monthly recurring business stuff. And so it's always going to be a game to just kind of stay around that enough number but I love the work that I'm doing so I'm happy to do that. Mark: How would you balance out the difference between … I think there's two motivations for working hard, right? One is to get ahead the other one is to not fall behind. Jason: Yeah. Mark: Because oftentimes in business I've seen it some of our clients that come to us with distressed businesses where they got to that enough number or probably more than enough and then they're like I made it and then they relaxed and then a year later they're thinking oh my gosh my business just completely fell apart underneath me. How would you approach that in your own life when you get to that stage of having enough to make sure that you're also not necessarily falling behind? Jason: Yeah I think it really depends on your lifestyle and I think lifestyle creep is such an interesting idea that we all run into and just like you started saying earlier it's like well you create a million dollar business and then you want to make a 10 million dollar business or even just a two million dollar business and the reason that that tends to happen is not because you need that money, you don't need the money, it's that you go oh well now I can afford this and so now I'm going to … I need more money to kind of balance that out. And so I think for Caroline and myself, my wife, we really just started to try and define what are the things that we love and want in life and if we don't have those now what does it actually take to get those things? And to really put a price tag on those and then to question those things and to go … for one thing for us has been looking at buying or building a dream home and for most people, that's in like the millions of dollars. For us, I think we could actually do it for a couple hundred thousand dollars. Like we just want a 1200 square foot cool modern pretty fab place and we keep going through the effort of that and just going you know what though the cash that it would take up from for it, the time and stress to deal with everybody building all the things right now in our lives it just doesn't fit. And it may be something we do down the road but it just is not … I don't want to creep into that and have that completely change our life. So to answer your question I really think it's about checking in constantly with the things that matter to you and then really questioning every single one of those things and just going like do I need more money to do this or do I just need to change something in my life or change something in the way that I operate because I kind of … I tend to find for myself at least like flexibility and control of my time is the number one thing I want. Of course, I want more money in the bank but if I can make a little bit less money and have a little bit more time because I'm not working to make more money I'm happier because I can then choose my schedule every single day of my life. I don't have to give up and sacrifice things at the whim of making money and that to me becomes a really important discussion to constantly be having with yourself and thinking about. Because just like you said with that client you can reach your enough number and then just fall back and go okay I'm good like I don't have to do anything anymore and it's like yeah but that's not how business works. You just don't get to a finish line and then you're done and you won the race. You kind of have to stay in the race at a certain point and you find that pace that you can kind of go at that makes sense with you. Mark: Yeah I think something that's interesting with business as well because you talk about lifestyle creep and that's obviously a problem. I think anybody can relate with that but there's also business lifestyle creep that I've found where when you start up a new business some of it … a lot of it is bootstrapping, you're going out there and you're figuring out how am I going to make this business work with whatever little money I have and then you get that client they pay you less money and like awesome I can now pay for ads. It how you start paying for ads, you have an ad budget and then you hire a few employees and now have those employee … the next thing you know your monthly budget is ramping up and you have the added stress of I got to keep layering on more and more revenue to be able to cover this monthly budget as well. I think it's an interesting concept to say core value is both for the business core value is also for yourself and keep reminding yourself of those core values in order to stay true to that and have a balanced life. That's what you question, just kind of riffing on what you're saying there. Jason: No and I do think it's a really valid one because we've thought about that. My wife and I, we live and work at home so where we would have a dining room table we have our desks and it's been that way for the past six years, five years something like that. And for a lot of people that would probably be the worst thing ever. They'd be like oh I don't want to look at my work I want to be completely separate so I need an office or I need a studio or whatever. And so I do think there are some decisions you could make for your business being separate from your life if that really matters to you. For us we run very creative businesses, we love the community that we built so I don't hate my e-mail inbox. I don't loathe looking at these things so for us it is such a blend and lifestyle career business creep for us would potentially be like oh we want like a really cool office base like we've talked about this before. And it's like yeah but we have that in our home it's just not a full dedicated space and we don't actually need that. So it's continuing to come back to that and then honestly I think a big part of it too is not watching all of the videos and reading all the stories of the cool office spaces. Because then you just get stuck in that mode of like oh yeah but I really want a ping pong table and the full living wall and it's like I don't need that. That's just a cool thing and I can appreciate someone else having that. Mark: I do want to nap pad. I'm just going to say it like I want a nap pad in my office because that would be awesome. I've got a glass door you can actually see it. If you're listening in your car you can't see it of course but I have a glass door behind me so I can't really take naps in my office. Let's talk a little bit about your community. I love what you guys are doing with the community over at WanderingAimfully.com. Tell me a little bit about it and who it's targeted towards and what the whole purpose of this is. Jason: Yeah I think it's a really good question of who it's targeted toward because when we started to blend Caroline and mines two businesses together in March of 2018 … and actually the conversation started many months before that. We weren't sure who to target because her business was targeted to soulful creatives which is kind of general in a way and my business was targeted to business owners who just want to get better at taking action. Again very general audience it's not like stay home moms who love to cook vegan meals. It's like it's not as focused as it could be. And so when we started Wandering Aimfully it was very generic of like independent creative business owners and that's designers, musicians, artists, [inaudible 00:24:57.5] and we really found that it was tough to get people to identify of like hey I'm raising my hand I fit within Wandering Aimfully. They kind of felt like they did but it just wasn't kind of niche enough if you will. And so in the past couple of months we really decided to hone in further on okay who have we attracted over the years that we've made the most impact for? And what we found is that that's service based business owners or like client based business owners; so that is your designers, that's your developers, that's your coaches, that's people who have clients and that they want to move away from selling their time one on one to building digital product businesses. So it's having online courses, books, workshops, membership communities of their own whatever that is. And we went back to the root of what did we do when we were getting started and that's exactly what we did. We were service based business owners and we wanted to stop trading our time for money and we want to try and reach more people and make more of an impact based on what we had learned and experienced. And so now that's essentially who Wandering Aimfully is for and there are some fringe benefits to people who are not those people but if you run a service business and you want to transition into selling digital products we're the perfect community for you because we ourselves have had that exact experience. We know exactly how to help you. We built now a six months program that helps people really do that without burning out because we just decided the people need to slow the hell down and not try and transition their entire business in 24 to 48 hours or a couple of weeks. And it's been really interesting to shift the focus on this is exactly who we are for and it's a smaller audience and you have people who self-identify much faster than we did before where people are like I don't know if it's right for me it's like now they know that it's right for them and then for everybody else they can still kind of try and figure out if it's right for them but we can now more clearly identify. Mark: That's pretty cool. I've kind of poked around through your website and you guys have all sorts of prepackaged courses and checklists and everything else. One thing I love about this and I can relate with buyers who are acquiring a new business or anyone growing a business as well you get into something and there's a sense of I've got to be doing all the things all right now. I got to have my Facebook marketing strategy, do some CRO, get an Instagram account going because it doesn't have that and it's this long list of things and you're going to just kill yourself in trying to do that. What you guys have through this community, I saw you have a bunch of checklists and action plans for some pretty normal things that a lot of different companies are going to have to deal with as well. And it seems like the entire goal and correct me if I'm wrong but the entire goal is just that breaking up these projects into bite sized pieces. Jason: Yeah absolutely and we just want to help people navigate. Like you said when someone is running a business or starting a business or making that transition from clients to products there's a lot that can be done and really what we try and do because it's what we've done for ourselves is to identify what do you need to do. Like what is actually going to make an impact? Because for so many people a Facebook ad campaign or an Instagram account is not at all what they should be focusing on. What they should be focusing on is creating some type of really valuable content that can be searched for on the internet because Google is still the number one place that people go on the internet and that is not going to change for quite a while. And so we've just seen through a lot of experience that people want the shiny new and fancy and we've been there as well, we've been one of those things too but you find that they actually don't make that big of an impact on your business and it's a lot of time spent without a lot of return. And listen I'm all for branding, I'm all for hitting the word out about your business and going where people's attention is but I think that there's a lot to be said for having a good foundation for your business, making sure that your ducks are in a row and so much and you probably see this so often is as business owners a lot of times we don't even know the basics of expenses and cash flow and I know that stuff can sound really silly to people like oh how do you not know that? It's because it's different for every business. So what we're taught about how to run a business may not be applicable to the business we actually create and start. And so I think that so much of that we've seen is just trying to help people navigate their own journey based on our experiences, experiences of community members, identifying bigger tasks like you said that people want to do like if you want to start a podcast that's a pretty big task. There's a lot of things that go into that that you don't see and so we've broken it down. I think it's in like I don't know … I want to say less than 100 steps and that sounds like a ton but some of the steps are like name your podcast step cool, check it off the list. But it gives you this incredible bite sized thing and people find it so helpful to just have this list to be able to like yes I did that, yes I did that, and go through and knock it all out as opposed to having to think of everything themselves. Mark: Yeah it reminds me of a couple of other episodes that we did here at the Quiet Light Podcast. One was with Bjork Ostrom who owns Food Blogger Pro and a few other pretty big food blogs and he talked a lot about … he's grown that company from nothing into a significant enterprise and he talked a lot about this idea of I'm not going to try and double my business tomorrow. I'm going to try and have this single daily marginal improvement and the compound in effect of this on a day to day basis. The other person … you talked about going back to the basics and focusing on those things that really work well the person you're agreeing with right now Babak Azad who grew Beach Body into a billion dollar business that was on the podcast and he told me … he said people are focusing on way too many advertising channels. He said that you should really be focusing on just a few; probably one, maybe two because if you're focusing on six that means you're not doing any of them well. You've got to focus on those basics so I think that's fantastic advice. Okay, I'm going to round this out with a final question here for you and this is really the content on your site. I absolutely love … I've always liked this kind of I'm doing this productivity experiment or just whatever sort of experiment. Jason: Yeah. Mark: You recently rode a stationary bike at your standing desk for 30 days and I haven't read how it finishes out but how did that go? Jason: Cliff hanger, okay, so the reason why I did this experiment … why I love doing 30 day challenges specifically is because it's just like you said with like you do these little daily things that can add up and incrementally make a big change or make a big impact. And it's hard to change, it's hard to build habits, it's hard to do those things and I highly recommend a book Atomic Habits by James Clear; a friend of mine and just a super smart guy when it comes out. So if anybody is like I'm bad at habits James will help you, that book is really great. But for me, I just always like breaking these things down into 30 day challenges. So to round this out I rode a stationary bike at my standing desk every single day for 30 days. I just wanted to know could I get a little bit of exercise every day because I'm just at my desk. I didn't want to sit at my desk and do those things and I ended up burning 18,339 calories in 30 days. It's insane. And I wrote this at the end of the thing and I talked about this in the video that I kind of recapped and put it all together it did not feel like I was working out. It felt like I was sitting at my desk very slowly methodically riding this bike while doing e-mails and bunch of other admin tasks and the average amount of time that I rode the bike a day was one hour. It didn't feel like I was riding an hour because I would break it up into different chunks throughout the day. I rode an average of 25 miles a day and at the end of it my pants fit better, I had more energy every day, and it really became a good solid habit for me. So it was super … just a weird random thing I wanted to do but now like I still have the bike we're now a couple of weeks after that I've finished up I'm still riding it. It's great. My wife is starting to ride it and it's just one of those things that's like challenge yourself to do something for 30 days that you might think is weird or out there are different and see what kind of tangible result you get cumulatively over the time and you might realize like wow yeah in a couple of days of course I didn't get like six pack abs from riding this bike but I think if I do this for six months I'm probably going to be in a better shape than I would have been than just if I'd continue doing at the gym and eating better and all those things. Mark: That's fantastic. I absolutely love everything that you guys stand for. I think it's so easy for all of us entrepreneurs to build businesses but at the same time build little prisons for ourselves as well because we get so driven by productivity when we worship at that altar and then also by just having more and more and more instead of thinking about like you said at the beginning that focus on the goals and ask yourself a question and I'm encouraging everyone listening that's thinking about buying a business or maybe you want to sell the business or you're building something right now to ask those questions; why, for what, what are your goals, what are your values, what do you value in life, a really good advice. Jason: Yeah, absolutely. Great chatting with you. Mark: Thanks for having … thanks for coming on I should say. Way to end that professionally. Alright, thanks for having … for coming on Jason. Jason: Yeah no problem.   Links and Resources: https://wanderingaimfully.com/ Atomic Habit

Babak Azad had planned this for over a year. He had quit his eight-year career at Beachbody, where he helped excel their revenue from $100MM to $1B. But after three months of working together ... he and his business partners split up. Babak’s wife had just given birth to their second child. With a growing household, no job, no business, Babak had to do something. This is his story and his lessons on leadership. On this episode of the Lead to Grow podcast, we get a chance to hear from the founder of Round Two Partners. He discusses how his view on leadership has evolved since starting his own company, where he now helps businesses within the $15 to $20MM range scale.

If you want to know the value of your business and where it comes from, do the work. Take the time to collect the data, then hone in on what is the right fit for your company. Prioritize figuring out what makes your business tick in order to grow a sustainable brand. The bulk of Babak Azad's body of work lies in growing the Beach Body brand from 100 million to over 1 billion in revenue in eight years. Now working as a consultant in marketing for multimillion dollar businesses, Babak and his team focus on customer acquisition, retention, and the power of customer experience. Babak is here today to talk to us about building a lasting brand by helping business find a few channels that work well and hitting those home. Episode Highlights: Babak shares his unique way of looking at customer acquisition in every type of business he touches. Why business metrics are not as difficult as people think if they start with the basics. Start somewhere and then refine over time. The importance of knowing what a good customer is worth in any business. The things business owners should be tracking at a minimum. Look at the levels and the patterns. Get things right for a few to start off before rushing around trying to scale up too quickly. It is crucial to your success as a marketer to seek out and hone in on the best channels for your business. What your strategy should look like once those channels have been targeted effectively. Use service marketplaces such as Fiverr and Upwork to find small ways to find qualified staff to collect crucial data. How Babak helps clients discover the right intersection of branding and direct marketing then infuses that with customer sustainability. Why it is so important to start taking care of the customer. Hear Babak's 4 pillars of brand building. Transcription: Joe: So Mark I know that amongst all the Quiet Light Brokerage, Jason is probably the fittest. But I occasionally do get my butt kicked by someone online with beachbody.com. Most recently a young lady … I can't remember her name but I keep going back to it. I love the program and I love the story behind Beachbody's success. Because as you know I'm an old radio spot ad, radio infomercial, TV infomercial guy and that is where Beachbody started; I believe. And you had them on the podcast is that right? Mark: I did. Yeah, I think pretty much everybody has heard of Beachbody at some point or another. I mean it's a huge brand; huge name. I was able to talk to Babak Azad. He was the Senior Vice President for Media and Acquisitions; really fancy title, big companies … that comes with the big companies are fancy titles but his role at beach body was to figure out their customer acquisition strip. And this is what he does now. He's no longer with Beachbody. He did leave a little while ago. He's now with Round Two Ventures and they help e-commerce companies eight figure or nine figure, primarily e-commerce companies hone in on their customer acquisition strategies. What was great about this discussion is seeing as at scale, seeing what a … somebody who's in charge of a business that when he came into to Beachbody they were doing 100 million dollars in revenue annually. That's a lot of money. Joe: It's a lot. Mark: When he left in just a few years later they were doing over a billion dollars in annual revenue. Joe: Wow. How long was he there for? Mark: I don't know. I would have to take a look to see but it wasn't more than a few years. So he's really responsible for the explosive growth. I mean again a lot of people have heard about Beachbody or remember hearing about them. Way back when I was in college which unfortunately is too long ago now, so I remember hearing about them then. Now I mean everybody knows Beachbody. Everybody knows the brand and that was because of his customer acquisition strategy. We talked a lot about what that was and we talked a lot about problems and mistakes he sees especially in seven figure e-commerce businesses and even eight figure e-commerce businesses as they're trying to grow. I'll leave some of the mystery for the actual episode here but a couple of things that I pulled away from this that I thought were really good; one, he said that if he comes across a company and they have more than four main acquisition channels that he's guaranteeing they're wasting money and that they are completely … not doing what they should. Some people get all worked up and you know they think oh I need to be on Pinterest, I need to be on Instagram, I need to be on Facebook, I need to be here or there and everywhere. And he said that's not how it works. He said find a few channels. He says it should be no more than four. Ideally, it should probably be maybe three or even two to start. And do those well and just milk those for what they're worth. Really hit those homes. That was one thing that I really pulled away and the other thing I pulled away was his emphasis on data collection. And I run into this problem since that I own all the time as I always want the data collection to be perfect. And then I get kind of lost in the weeds, right? You get all the state in front of you. You have your analytics. You have all this stuff coming in and you're like what do I do with this? And his response was what I've heard from so many other successful entrepreneurs, just start doing something with it. You know he said go out and hire a college kid, go out on Upwork and have them put it into Excel and start analyzing the data. He said the data will start bubbling up from that by itself and start giving you insights and then that can direct you into what you should actually be collecting; a fascinating conversation from somebody who's done some pretty big time stuff. Joe: Yeah. It sounds like the data will speak to eventually. And even though when he left it's a billion dollar company I think that the lessons that he's learned along the way are incredibly valuable for those doing six and seven figures in revenue. You know a few weeks ago we had Ryan Daniel Moran on the podcast and he said: “find your customers”. Find your customers and then send them to the least half of resistance to ordering. So it's going to be interesting to see how those two things jive with … back in what he said here in the podcast. Let's get to it. Mark: Absolutely, let's go. Mark: Babak Azad thank you for joining me. Babak: Thanks a lot Mark, glad to be here. Mark: Did I butcher your name? Babak: You did not. You did it well the first time. Thank you. Mark: We literally just rehearsed this. We rehearsed it and then I hit record. I'm like I'm so going to screw this thing up. Cool, I … thank you so much for joining me. I know you and I talked about a year ago for a piece I wrote on entrepreneur.com and I'm super glad to have you on the podcast right now. We have a little bit of a tradition here at Quiet Light where we have our guests introduce themselves because hey you're better at knowing what your background is than I am. So why don't you go ahead and introduce yourself real quick? Babak: Sure. I live here in LA with my wife and two boys. I started out as a math major investment banking business school. I kind of came from that route. I started a magazine here in LA which failed miserably; best 25 grand I ever lost. I needed some humble pie, what I read that point of my life and then spent eight years in Beachbody. So the bulk of my professional experience was there; built analytics and then oversaw media and customer acquisition. So P90X, Insanity, 21 Day Fix, Shakeology, all that. Those efforts are for eight years and we kind of had a nice clean 10X. I already got there at 100 million so there's already substantial scale; really I obviously helped to push that thing to over a billion when I left three years ago right when my second son was born. The simple version of it, I have to start something, the team fell apart really quickly and then I started working on building a consulting business. So that's what I do right now; help generally seven and eight figure businesses, sometimes nine on … heavy on marketing, support around customer acquisition, retention, and analytics and really much more recently heavily infused with customer experience and really how to … I'm leading to writing a book about it too but really just the power of customer experience that's very much consistent with performance marketing approach but also really layering in building a lasting brand. That's really where my focus is today and I love what I'm doing. I have some great clients and yeah … so I'm having a good time with it. Mark: I love that you lead with the fact that you had a magazine startup that failed and then you just kind of glossed over the fact that you were part of the team that grew Beachbody from 100 million to a billion dollars. You know just a small footnote in your career history there. Babak: Yeah it's a … you know I have a … I appreciate all the experiences. You never want to go through those negative ones. I think we all have gone through them and just … I had to say I'm not sure I'm as humble as I need to be at times but [inaudible 00:07:25.5] as I mentioned it was an important thing of learning what it's like. I've been really much more of an analyst at that point. And then yeah I mean Beachbody was awesome. I had a great experience and … but it was time for me to go. You know eight years was a long time there and I grew a lot. I met my wife through one of my best friends there and [inaudible 00:07:41.6] me up for kind of this next chapter that I'm in right now. Mark: Cool we're going to be talking today about customer acquisition and also building a brand and some of the lessons that you pulled away from Beachbody and are now doing at Round Two Ventures is that right you're doing this at Round Two? Babak: Correct. Mark: Okay. I will link to Round Two Ventures and then your personal blog in our show notes and anything else that you want us to link to in the show notes. But … so we're going to talking a little bit about customer acquisition, lifetime value, and this intersection of branding. You have kind of this unique way of looking at this customer acquisition strategy, maybe we could just kind of start with kind of a general look at your philosophy when it comes to customer acquisition in the e-commerce but also in the SaaS world. You know I think metrics, being really metric heavy on customer acquisition and lifetime values, this is really kind of a SaaS world sort of conversation but you take it towards e-commerce and towards every other type of business as well. Babak: Yeah it's funny because I started really with physical products and given that distinction which I mean physical products, we sold DVDs and multi-vitamins at Beachbody. And that's really where a lot of my real marketing and just … I would say professional experience came from. And so this distinction of physical versus info versus SaaS really was nothing I ever really considered until I started frankly getting out of that world and talking to other folks. You know when I was at Beachbody and then started to learn about this but yeah I mean … so first off I was a math major but you know I wrote a piece a bunch of years ago saying business metrics are not college math, [inaudible 00:09:12.7] barely high school math. And I think that's the first thing is … I think I know a lot of people who are intimidated by the metrics or surely daunted by how do you do it or their systems. And you know I'm a firm believer first just to start with something. I think Peter Drucker you know said what you don't measure doesn't get better and so with the opposite is very much the case. That what you do measure, what you report on, what you send in an email or whenever it's your phone because it's fun to mine you just start to pay attention. So there's always a bit of grounding of just the basics in fundamentals. And that's really I think my approach. I'm not a shiny bright object guy. I believe that if you get the basics and fundamentals then much of what you need to do starts to take care of them itself. But really when it comes to customer lifetime … I mean I look at e-com and frankly all of the businesses, you know fundamental is I grew up as a paid media guy in marketing. And I think it's evolving over time but you know from a Beachbody and beyond heavy on TV, heavy on digital, you know that was what I knew. And certainly one of the core 10X. If you're going to run paid is you've got to know what a customer is worth. You know people sometimes ask like what's a good CPA? It's like I don't answer that question because I don't know your business. I don't know what a customer is worth. You know are you … do you have business constraints around needing to be casual positive on day one, on day 30, ideal business goals. There's so many factors that come in so this but really my belief is … and I just don't know any other way is especially when you're running paid media you need to know what a customer is worth because you need to know how much you can afford to pay for them. That sounds really basic and fundamental and hopefully for a lot of folks that is. But you know that's the core of it because ultimately it's how do you know if you're going to spend more or less? How do you know if your numbers whether in Facebook or otherwise are good or not? You have to have some of that measure. So a lot of the core work that I do with folks … and really I'd write about and all that is really if you're going to be running paid you need to understand those basics around customer acquisition. And then again start with whatever you have even if it's all customers that's … you're not dissecting by ad said or by Facebook versus Google. Just start somewhere and then you start to refine this overtime. Mark: All right. I love these conversations because I go into them sometimes not knowing what I'm going to ask and then after the first two or three minutes I've got a list of questions. So let's start with basics, you said start with the basics and fundamentals. What are those? What should somebody be tracking at a minimum? Babak: So let's assume [inaudible 00:11:39.2] whether you're a SaaS business, info product, physical product you know certainly from a from a traffic side the core stuff of spend, click through rates, CPC's, [inaudible 00:11:50.5], cost per click, conversions, cost per acquisition … whatever that means for you; for some folks, that's if your lead gen versus you're loop driving to an order. Those are just conventions and so the philosophical stuff and the strategic stuff applies to both. Certainly, you want funnel metrics, how many people hit your site whether it's landers or blog pages … you know get through the funnel and so whether you have one step or a five step process I would say again start with … if you have GA set up or you have others tools set up, what kind of just basic tracking of how many people are hitting pages, what's your conversion rate, average order value, and then ideally over time … and whether it's someone converts on day zero or beyond, what is the value of those people over time. So I generally try to look in ice sized chunks of day one … day zero, day one to 30, 31 to 60, and then beyond. And depending on your risk profile, your business goals, all those things you may determine how long you want to look out and how much you want to apply towards customer acquisition. Mark: Let's talk about that a little bit here because this is something that I've run across a few times recently. You know looking out over these different strata of periods of time; zero to 28 and then this kind of second up to maybe around 60 days; why are you taking a look at that? And you're taking a look at this in terms of the value that client is going to bring to you right? Babak: Right. Mark: So why break it out into those different groups? Babak: Well first and foremost depending on the business goals and constraints, that can oftentimes going to define how you're going to approach managing. Let's say … I mean I'm going to talk about paid media for a moment, that's going to manage that because if you look at … if you need to be breakeven based on credit terms, cash flow, whatever that is; if you need to be breakeven by day 30 or day 60 then you need to know what that customer is worth. And so based on a margin basis not just certainly on a revenue basis but on a margin basis you need to know how much you're making by day 30, by day 60 cumulative and that's going to help to define what your CPA targets are. And then it's … again for me, there is no right and wrong whether you're managing to a breakeven, to a margin percent, and if you are just revenue driven and you've got venture funding and you need to be driving those are not for me to say. And I never have a perspective of right and wrong … it's those are personal and business decisions but you need to understand that. And then frankly once you have some of these base lines then it's a matter of how do you start to improve those things over time. So if you know what day one, day 30, 31 to 60 then presumably someone in your team whether it's the owner, the single person, or someone on the team is spending time testing to say how do we actually start to drive this and improve that. And again different models you may need to look at 180 days, you may look at a year … I mean I work with folks that have a one year break even because they can afford to do that; some folks breakeven on day one. And so different businesses and different models can allow for that and some it's much more difficult. So you just have to understand the nature of your business and then what kind of things you're trying to constrain with. Mark: Yeah, by the way, some example … so something that I've run into in a business recently where we had a solid lifetime value number, and we were able to calculate it pretty well by taking a look at customers that had … this was a subscription based business, we took a look at customers that have canceled over the last six months and looked at their average lifetime value. And you know the number was something like I don't know $130, $140 but the average ticket value for any single sale was maybe about $30-35. What we found was that there was these whales and there right? These whales in there that were spending $3,000 and it took them years to be able to get to that point. So when you take a look at that lifetime value analysis we say okay that they might be worth $140 or $130 whatever the number was but was in order to do that you need a couple of these whales to wait for three, four years before you can actually get that value back. Babak: Right. Mark: So we had to kind of take a look at that from that kind of strategic way [inaudible 00:15:50.3] okay actually what are we getting from clients on average in month one and then in month two and then a month three and beyond that. We're not going to care too much about the lifetime value because it's going to take too long to recoup that cost. Babak: Right. Yeah and some businesses may not be able to afford to wait that long for those whales to kick in. And really then it means A. you're managing your risk in a certain way. Again, whatever is appropriate and then you're basically operating at a higher margin than maybe you could operate if you could tolerate that and maybe you want to take some of that and spend it into media. But if you can't wait that long and there's just too much risk and it's too small of a percent and too inconsistent then that may just be the way you run it. I think I get in some ways the same question when you're first starting, it's … that's great if you have five years of data and you have a much more sophisticated and robust [inaudible 00:16:37.1] data in your business. But if when you're just starting you probably need to start more conservative right? An owner that has bootstrapped the business knows that you start with what you can afford and then as you learn, as you develop and have this history… the history in the business then you start to understand your customers better; what they're worth and then maybe you can start to manage your media and how you think about that better and surely hopefully concurrently you're optimizing the funnel so your customers are worth more, you're converting better, all these types of things right? But that's just the nature of again where businesses are in there maturity and how long they've been around. Mark: Yeah one of the common objections I hear from people … because we ask people who are selling their business all the time what's the average lifetime value of a client? And one of the biggest objections I get to that is I have no idea because customers are still with me. And you said something at the beginning and that is just start. There's a lot of models out there, just start with something. Do you have a basic model that you like to follow? I know for myself I just like to take a look at okay I might sell if a customer is with us and from the Quiet Light perspective we can say the same thing. Our business is typically one off but we have people who have sold two, three, four businesses. All the same, we don't want to assume that, we're just going to take a look at what … the lifetime value I spend right now with the assumption it could grow. Do you have a recommended model for people that are saying I don't know how to [inaudible 00:17:58.7] for these people that are still with us? Babak: So the fact that a customer is still with you for me is not a reason to not understand what a customer is worth. And so let's say they've been with you for … let's say the businesses have been around for a year and you've got 20%, 50% of the customers have been around that long. Do the average based on how ever long that cohort has been around. And if the other ones are … you know seem like they're directionally going that way then great. And then as you get more information you can start to build your model and add to it. But you know I think part of the thing also to be careful over depending on how long the business has been around is how many people are you looking at? So if you've got 100 customers versus 10,000 you trust more volume, right? And then the other part is just looking at I like to break things down into monthly cohorts. Let's assume it's just purchase, so I'm not lead gen but it's purchase, I like to look at who are all the people who first transacted in January, and then in February, and then in March and look at their relative month one, month two, month three revenues and certainly again margin and then start to see what kinds of patterns start to form and then again. And starting really that at that level and then you just start to refine this thing and as you get more data and … then great then you start to layer in. So worst case you're being conservative because you have customers who are going to stick around a little longer but that's a good thing and that's a good worst case to have as opposed to certainly the opposite where you may be overestimating or you may be overlooking at one group that's worth a ton and everyone else isn't remotely tracking towards that super high value group. Mark: I think a problem that people run into a lot is they've up the perfect be the enemy they good, they want to get that perfect model and if they think they can get it then they don't do it. I know I've fallen victim to that quite a bit as well. I want to [inaudible 00:19:41.4] Babak: Quote I have on my phone that shows up is perfect … done is better than perfect. And it's really easy to get stuck in that analysis paralysis perfection like … and also frankly this idea that everyone else has it better. I think a lot of people think that bigger companies or those using better tools always have better data but is definitely not the case. Like a lot of times the bigger companies they have too many legacy systems so I think oftentimes that comparison can pull people back because they think I'm never going to be able to achieve what someone else is doing or all that big data stuff. I mean just start with what you got and literally it could be Excel with a college kid and then you start building from there. Like literally it can be that that can be very very effective and I've seen it be that way. Mark: Yeah that's a good lead into my next question because you know you started at Beachbody with 100 million in revenue right? So you guys wanted to go ahead and start digesting data, you put a million dollars towards hiring on a new team just to be able to digest data. The entrepreneur who has an e-commerce business doing three million, four million bucks that's a lot more of a challenge for them to bring on that much of a team. Excel, analytics, are there any other programs they may want to look at or systems that you know of that might be a good starting point or would you even recommend going out and hiring a college kid or going onto a place like Upwork to be able to have somebody to crunch numbers? Babak: Yeah I mean so first of all when I joined again it was seven, what you think maybe a hundred million dollar business has in terms of systems and processes I would say first of all the tools today are so so much better. But I looking back, I work with some hundred million dollar businesses now that have dramatically better systems and reporting frankly because the tools are just much easier. So you know it took a year or so for me to get correlatively cleaner data and not even clean. So first of all even back then it wasn't like everything was so dialed in, that's kind of part of my point. And then second again like depending on people whether on Shopify or Magento or whatever your platform, honestly the basic thing is do a data dump. I've hired for multiple clients someone part time on Upwork to basically do some slicing and dicing; basic stuff, get some things in place. And we're not talking … so first of all even if you hire someone full time and let's say that person is 50,000 a year just picking a number, your exposure to that person is not 50,000 because within 90 days you should know whether that person is going to be working out or not. So let's say it's a quarter of that plus maybe a little bit more so oftentimes first people think about if you're going to bring on someone full time that that annualized cost that's really not what it is. You should know I think within 90 days that you're getting what you need and they're on a path. But at the very least there are definitely folks on Upwork and really just looking for someone who's got some similar work; I put people through an Excel test to make sure they can do the basics. It's all made up information and yeah you start with that and I've literally had college kids help out just … who were good at Excel. They don't need to know that much, they just need to know how to slice and dice some information. And maybe it's an MBA, I'm not saying you have to go there but certainly Upwork, Excel, using again basic tools. You do not need certainly anything remotely close to enterprise so you get stuff going. And I will say I do, I run some numbers for some of my clients and it's literally … I did one about a week ago, Excel, Hubspot, Shopify, GA piece it all together and we had a pretty rich view. It took some time obviously but we then had a pretty rich view of what those customers look like. Mark: So with somebody who has a Shopify store or an Amazon store where you can't really track customers as well with Amazon, but let's say Shopify store where you can track your customers, or a SaaS application or anything else where you're tracking those customers would you literally just go out and do a dump of that data of the customers and go back and start to calculate okay this is what … you know graphing it out, these customers are worth this much in those first 30 days and then it starts to look like this when we move out? Babak: Yup that's exactly. I mean … so and that's what we did. Let's say you're looking at 2017 data it's literally [inaudible 00:23:52.4] all the new customers and that's part of the thing is making sure they're new versus repeat. But let's just say you can identify that hopefully relatively easily; who are the new customers who purchased for the first time in January of '17, February of '17, March of '17 and literally track those people. Look at their February orders for January, look at the March orders for both like you know January and February and really that's literally started that way. And you can then start to slice and dice by traffic source, by product, by offer, by ad set. But that's next level, for some folks they just want to get the pure basics. Just start with that average thing and then once you have that and then you start to refine over time. But literally it's a data dump and you know if you can marry it with GA or with your CRM or ESP then great but at the very least start with the overall, start with maybe one line and then you just start to get better from that point. And frankly again that's what I did with Beachbody, that's what I do with my clients. And whether it's me or working with their teams you just start and then you start to refine over time. Mark: All right so let's go to the other side of this conversation. We started to get a good sense for our lifetime value and what a client brings to us in terms of different time frames; the first 30 days, the next … the first 60 days and so on and so forth and we know our cash flow requirements. Again, people listening, you have to keep in mind if you're going to spend $50 on a client and they're not going to pay you $50 until month six you need enough cash flow to be able to get to that payback period. Let's build a strategy, what does the strategy look like then at that point from acquiring the customers and going through different channels? I know obviously with Beachbody you guys did television, you did radio, you did a lot of media which was hard to track. And we see this a lot with … you know online platforms are really good right now at tracking with view through conversions and everything else but there's still some of those mediums out there that aren't great and imperfect. How does that sort of factor into your decisions when it comes to acquisition channels? Babak: Yeah I mean so no matter what channel you're in attribution is the bane of everyone's existence. A very very few people have it down and like oh I know what that means to have it down. You want to get to the point where you feel like a level of comfort and confidence. You know these days again most of the work … I have one client that I work with on TV and it's a very rare exception of how good their attribution model is but let's say that for the most part, most people are doing … I mean it's digital heavy. So for me, I basically focus and work with folks on really only a few channels so Google … which for me is Google and Bing. I mean people always forget about Bing, it's another 5, 10% and my joke is if you don't want that 5, 10% can I have it? And I'm joking but no one ever says yes. But it's using higher ROI's especially when you're talking slightly older demos. But Google and Bing, Facebook and Instagram, your internal e-mail and affiliates, and frankly just … and I said just but if you focus there I've seen plenty of businesses go well into nine figures; focus there. And then certainly you can layer on radio and podcast, TV, direct mail; but honestly Google, Facebook, affiliates, e-mail and internal … you know that's really where I put a lot of time and attention. And I'll say even then attribution is a bit of a mess because Facebook and Google don't talk to each other. So they're each one who takes some credit … you know or using GA last click, what's happening are people opting in through Facebook and then converting through e-mail? But you really just have to start to piece together things, at the end of the day again depending on your business model your PNL and bank account are the true measures of it. And so that sounds like a totally average overall view but yeah that's again I work with folks that have that and then they've got to a certain level of sophistication. So you start with … you know start and piece together what does Google say, what does Facebook say, like if you add up those two do you even have that many orders? You're going to have to be very careful about double counting but you just start to piece together this … the data starts to tell a bit of a story. I would just say one thing you mentioned view through, I am a very very very conservative on view through so the point of it I basically I ignore it; certainly from a GDN side and really even from Facebook. I just think unless you prove it I'd rather start with a [inaudible 00:28:07.2] and it doesn't work. I mean you got to prove it as opposed to just proving it. But I know that you know 28 day click one day view on Facebook is the standard set up. I moved most people to 7 day click not because it's right but mostly because it … we got to account for double counting, AdWords, what's going on in email, things like that. So there's … again there's no right and wrong but that's one of places I've kind of dialed in a little bit is looking at 7 day click. But honestly my biggest … the biggest mistake I oftentimes see with people with channels is they have too many. And so I think if people say oh I heard someone's doing something on Pinterest or YouTube or I got to do this, frankly if I see people who have four channels where it's 25% in each, that says actually something is not being done well enough. And usually, it's people who are really scaled, I kind of have this thing of two offers two channels, most businesses that have scaled substantively they've gone deep and hard in a couple channels which basically means they're left probably some money on the table elsewhere maybe but it means they're focused. And that means they're exploiting where things are working. And so I think that's one of the things, people think I got to be in so many places, I don't … I have not found that to be the case at all. And even though it sounds like you're concentrating your risk it also means you're exploiting an opportunity. And that's really I think oftentimes what you're really trying to do. Mark: How do you know when to give up on the channel if it's not working or would you? Babak: You know it's a good question I think at some point you have to make a call so it's … I don't have a rule around it and I put it that way hard and fast. I think it's … first of all, I like modeling off of other people; not copying but modeling. And so it is … it can be dangerous because you can see all these other people seemingly running a bunch of ads and yours may not be working but you may not know what their goals are and their goals may be different than yours. So I think it's always … you got to be careful about comparison but you know I think at some point you have to take … just like a lot of things you have to take an honest assessment and say do we feel like we've given this a fair shot? How much time and money have we invested? Frankly, what is it pulling because we all have tradeoffs whether you're a six figure business or a nine figure business everyone is resource constrained in their own relative way. So you have to pick and choose your battles and really where you think now. I guess … and sometimes the market maybe telling you something too that it may not be the channel but maybe the way you're executing on it right? Which may be kind of the same thing for you but I think that's one of the things too is really you have to take an honest assessment of what have you done, what have you tried, have you talked to people, have you pulled in whether experts or friends or done some research and you know. I think then it's relative to other things that you have in front of you, where is your time, your capital, your resources is better allocated. Mark: Yeah all right that's awesome. I told you before we started recording this that we were not going to get to the one thing I really wanted to talk to so I'm going to get to it now. And that is something I find fascinating about your approach to direct response marketing because direct response marketing we often think about in terms of the money that goes in we want to make sure that we're getting a positive ROI out of that and we're just measuring that and that alone. And we see it almost as this opposite of brand marketing which is splash it out there splash it out there and splash it out there and it's kind of a long play. But you have this intersection and you do this a lot with Beachbody as well, you have this intersection of brand and also the direct response. If somebody is focusing on those four that you put out, the Facebook, the Google, affiliate, and internal e-mail, what can they do to start building a brand and why is that important? Babak: So I think the first distinction is around something you said and I think a lot of people will latch onto which is brand marketing. And so really what I focus on and try to talk to folks about is building a brand. And so for me the distinction is brand marketing oftentimes is associated with you spend a bunch of money on media marketing whatever that's basically non-trackable and that is trying to build brand awareness but without necessarily tying it to some kind of metric. And I say that as opposed to focusing on building a brand. For me, that really comes down to the customer experience. And so those are totally can be integrated with a performance marketing direct response model. And really that's about how do you start to take care of the customer and treat them frankly like you would want to be treated if you were the customer. So I think it's less about brand marketing initiatives and it's more about this idea of does the word in the Lexicon around building a brand, about building something that's lasting; how often does that come up in the organization? I had breakfast actually with a friend this morning and we're talking about the idea of what's on brand versus off and what that means. But really at the end of the day, it's are you building something that's got some sense of sustainability? And I think oftentimes especially when you're earlier on the idea of shortcuts of doing things that are maybe … whether it's not as clean or not as brand building, I get that everyone's got to make their call all around those things but ultimately if you want to build something that's got some sense of scale and got some sense of sustainability I do believe you have to be focused on building a brand. Because when you do that you start to treat the customer better. You start to invest more in your product. You start to invest more in the kinds of media and frankly, that kind of stuff can be infused in your acquisition efforts. Did I mention that I'm writing a book on customer experience and that really came from how do you start to bring DR and brand together and really things like tapping into a sense of identity in community. That's not just brand marketing that's non-trackable, you can start to build that into your video ads on Facebook, Dollar Beard Club … now The Beard Club and they've done a phenomenal job of there's this sense of identity in association with you're a man with a beard. And so they tap into that and who you are, what that means, and so that is one layer of customer experience and building that brand that is clearly tied to performance marketing but it starts to infuse that. I would say two things like … you know so my four categories is really around the human and emotional stuff; there's product, there's the transactional experience, and then there's content like video. And they're not mutually exclusive [inaudible 00:34:16.0] stretch. But I'll say like with subscription businesses whether online … I mean media, SaaS, or physical box, one of the best places or best examples I see people have make some mistakes is around order notification. So this is not brand marketing, this is are you treating the customer better? Are you letting them know that next order is going to ship, that next feeling is going to happen? And oftentimes I see people say well if I send an email before that billing my churn rate is going to go up and my response is absolutely you're correct but also you know what happens is your customer is actually aware of that billing. They're not annoyed. I mean I think we all faced that thing where whether it's a meal subscription or otherwise, a billing happened and we didn't know about it we're annoyed we got to go cancel. We tell our friends, we post. That kind of stuff actually has an impact on the brand. And honestly one of the best examples I've seen of how to use that notification positively is Dollar Shave Club, they send a notification but they use that as a promotional opportunity to say your order is about the ship do you want to add something to it? And so whether it's their shaving cream or any of their other products they use that … and again 20 or 30% of people are going to open your email if you're lucky. So it's not everyone but you get the brand benefit of notification but then use that as a promotional opportunity and say do you want to add something more. And I would much rather be playing in that kind of world rather than trying to sneak in what you think is a one or two more orders but it's very hard to quantify. But you absolutely are hurting the brand if you're playing a longer game when you're trying to sneak stuff in and not be as clean and upfront. And yes Netflix and Direct TV don't do that but again those are very very different businesses than subscription boxes or something that you start on a risk free trial that frankly doesn't get the kind of use that Direct TV and Netflix would. Mark: Could you repeat those four categories again? Those are great. Babak: So the first one is really I talk about as like the human and emotional aspects. So that's things like identity, community, exclusivity, things that are raw human needs and traits. The second is really product, and there are multiple layers on it but I think it's kind of crazy that I have to focus and emphasize it but the number of people that I see that don't have the attention to detail on product. I've talked to people who's starting they want to private label fine but the better your product [inaudible 00:36:35.0] part it doesn't always win but a better product gives you a better chance at that. Third is the transactional experience, so how do you take people through your funnel, what is it like to get a refund, what it's like to get … I talked to customer service those kinds of things. And the fourth is content, so how do you use video, music, spokesperson, or a character. I mean really each of these things, there are plenty of examples of companies that are using all of them or just one of them to really start to enhance that experience and really start to rile their customers. That's the [inaudible 00:37:05.3] kind of thing but you basically need customers these days to be blown away. It is … you know I like to say it like it's … when people say it's the easiest time to start a business because generally the tools are easier but it's also like that means it's brutally difficult to compete and to differentiate. So you've got to be just a ton better than everyone else. And my experience is that customer experience and these kinds of things is really what you need and again it's infusing this idea of playing the longer game into performance marketing and direct response. These two are not at odds. Mark: Cool. All right you got a book that you're writing right now do you have any idea when that's going to be done? Babak: Best case is Thanksgiving time but I've started … I mean I'm happy to post a couple of links to some of the things I've started to write about whether in LinkedIn or in Twitter to just to kind of go a little bit deeper into these and show some specific examples. But yeah we're still talking a few months out. Mark: Okay I know we've had a couple of other people that are reading books and we always get e-mails after saying “Hey can I get notified when that book is out?” So do us a favor one when you do have that out send me a message and I'll make sure I update everyone that wants to be updated on that. And then where can people learn more about you? Obviously Round Two Ventures, any other place? Babak: Yeah I mean my business is Round Two, it's Round Two Partners. Visit the website. But yeah the same thing and it's like a holding company but my blog is the easiest. It's just my name, it's Babak Azad B-A-B-A-K-A-Z-A-D.com And that's what … I put a lot of content there and then frankly there and LinkedIn. I'm @BabakAzad pretty much on everything other than Gmail of all things but … another Babak Azad stole that from me but … he was earlier but yeah I'm on pretty much every platform. But my blog and LinkedIn are the two easiest platform. Mark: Fantastic, this is great. So thank you so much for coming on, I really do appreciate it. Babak: Thanks a lot Mark I'm glad to be here.   Links and Resources: Round Two Partners Babak's Blog LinkedIn

Today's guest is no stranger to spending money on advertising. But as you'll learn, nowadays he's more focused on delivering an amazing customer experience than optimizing his ad spend. Babak Azad is the former SVP of Media & Customer Acquisition at Beachbody. During his time there, his team spent over half a billion dollars in media and acquired over 10 million customers through their website, on Amazon, and over the phone. Those are some big-time numbers. In today's episode, we discuss the danger of falling into the "Cost Per Acquisition > Lifetime Value Game" and share a few surprising things most ecommerce businesses are missing in their quest for scale. This is an exceptional episode with an exceptional guy! Episode Highlights 6:15 Chicken or the egg: Babak's thoughts on pushing sales vs brand awareness to build a brand. 8:44 Why customer experience is not just about online UI and UX. 11:31 The one thing you must do to create a great customer experience. 12:00 How being different can increase your sales and improve your customer experience. 13:30 The surprising thing that most ecommerce sites are not focusing on. 16:00 How shout-outs, badges & leaderboards help Peloton dial in their customer experience. 23:30 The 4 buckets Babak uses for breaking up and creating a great customer experience. 25:00 Why you need to understand who you're serving and what they really value.  28:55 How niching down and clearly speaking to your core customer can really help you succeed. 31:47 These are the metrics you should be reviewing to track customer experience Links and Resources Babak's Blog: Crafting Amazing Customer Experiences Brand Growth Experts Foxwell Digital Join the Membership If you liked this episode, you're going to love the Brand Growth Experts Membership.  It’s a community of top ecommerce business owners and marketers who I coach one-on-one to help scale up their businesses. Together we’ll create a plan that will help you scale up your business, and then I’ll help you execute it. If you want to make sure you’re growing as quickly and sustainably as possible, click here to learn more. Hope to see you on the inside!

Highlights from the interview include : How he got to where he is today His knowledge on analytics, media, and different selling channels What he did after he left Beachbody How he got his first few clients Pricing his services The work he does to hone his value proposition How he structures his time to make sure he gets to fill the pipeline Quotes: "I think one of the big wins is building a brand." "You have to be able to sell yourself and you have to be able to close business." Links: Napster - https://us.napster.com Beachbody - https://www.beachbody.com SoulCycle - https://www.soul-cycle.com/ Links and resources: https://www.linkedin.com/in/babakazad/ (Babak's LinkedIn ) http://www.babakazad.com (Babakazad.com) http://www.roundtwopartners.com (Round Two Partners) http://www.entrepreneurhotseat.com (Enterpreneur Hot Seat on the web) http://www.andystorch.com (Andy Storch Coaching) https://www.linkedin.com/in/andystorch/ (Connect with me on LinkedIn) If you are interested in coaching or have feedback or questions on the podcast, feel free to send me an email: andy@andystorch.com

Highlights from the interview include : How he got to where he is today His knowledge on analytics, media, and different selling channels What he did after he left Beachbody How he got his first few clients Pricing his services The work he does to hone his value proposition How he structures his time to make sure he gets to fill the pipeline Quotes: "I think one of the big wins is building a brand." "You have to be able to sell yourself and you have to be able to close business." Links: Napster - https://us.napster.com Beachbody - https://www.beachbody.com SoulCycle - https://www.soul-cycle.com/ Links and resources: Babak's LinkedIn Babakazad.com Round Two Partners Enterpreneur Hot Seat on the web Andy Storch Coaching Connect with me on LinkedIn If you are interested in coaching or have feedback or questions on the podcast, feel free to send me an email: andy@andystorch.com

Babak Azad left Iran when he was 4 years old to start a new life with his family in America. He studied hard and graduated from MIT and went into corporate.  He then left to start his own magazine and in his own words - Eat humble pie. It didn't work and he found a role in Beach Boy. He rode the wave of it going from a $100m business to a $1b business. He loved direct response marketing and enjoyed his senior V role. He became engaged in a high-level mastermind and realised there were cool projects he could work on which were more inspiring than his career role. So he planned for 16 months an exit and started his own consulting business. He talks about the support he received from family and friends as he went through the transition.   There were lots of great takeaways in the episode, so grab that pen and notepad, and enjoy! How a supportive wife is critical to success If you fail once doesn't mean you should not try again How to gradually migrate to running your own show Some great tips on how to optimise your marketing Importance of playing to your strengths  Why building an agency is not for everyone Don't fall into the trap of dipping into your savings Double down on what works well and don't be spread too thin How to use your calendar to prioritise work  Done is better than perfect    Important Links & Mentions From This Episode: Babak Azad's LinkedIn profile Babak Azad's Twitter profile Babak Azad's Blog LeaderShape Evernote Dropbox Audible https://themoth.org/podcast The Moth Podcast Risk! Live Show and Podcast

On the show today I’m joined by Babak Azad, who is the former Senior Vice President of Media & Customer Acquisition at Beachbody. During his time there, Babak helped grow the company from $100 million to over a billion dollar in sales, while overseeing more than $500 million in media spend. Now he is the founder of Round Two Partners, which helps performance marketers scale their businesses. I asked Babak to come on the show because he brings a very unique perspective from his days at Beachbody. You’ll be interested to hear how he had absolutely no direct response or performance marketing background prior to joining that company, but the lessons he has learned he now uses to help small business owners who are his clients. In this episode we talk about how you can understand the value of a customer, the importance of scaling, why it’s really all about context and fundamentals when it comes to business (regardless of which platform you’re using), and so much more. You may find that it takes a few minutes of us talking to get to the really good stuff in this interview, but I really like that we covered such a wide range of topics that can really applied to many types of different businesses.  As we talk about the show often, you’re going to hear that regardless of what level you’re at, you need to always be in a mode of testing and optimization. On the Show Today You’ll Learn:   The single biggest takeaway that Babak took from experience at Beachbody – and a significant mindset shift he had to make around advertising spend What you really need to know in order to succeed (especially if you’ve just launch or are bootstrapping things)! An area that he believes is missed opportunity that most companies aren’t taking advantage of What his two channels/two offers concept is all about and the importance of simplifying while scaling The reasons why it’s beneficial to go deep on the one channel that you’re seeing the most success in How to leverage our time so we’re spending it where it really matters, plus when to hire and how to know which tasks you should outsource!    

Would you like to discover the marketing secrets from the team that grew Beachbody from $100 million to more than $1 billion in revenue? Babak Azad was a leader within the marketing team that helped launch Beachbody into an iconic brand within the fitness industry.Today, Babak Azad is the founder and CEO of Round Two Partners which works with other brands and subscription companies to help them do the same. I recently caught up with him for an interview for my podcast, Membership and Subscription Growth. While Babak and I discussed several breakthroughs on the podcast, here are two that can have an immediate impact on your subscription revenue growth. Position Your Product as a Premium Product That TransformsYour subscription product is more than a simple transaction and needs to be treated differently. Rather than selling that product, you need to be selling results. The results that your customers are going to personally experience by using or receiving your product are where the focus of your sales message should be. Every time you mention your product, rather than talking about it, talk about the transformation or how that customer will feel because of your product. “You’ve got to be different from what everyone else is talking about,” suggests Babak. “I am talking so much more about brand and, really, the sense of experience, because that is one of the bigger things that I'm starting to see across pretty much every industry. That focus on creating an experience and creating a memory and stories around it is a big deal, but at the end of the day, it's, what's the promise? What is, whether it's the problem or solution, what is the thing that you're trying to either solve or help someone with? Are you delivering on it? Are you actually solving that? To what extent? How are you doing it? Things like that.” Your customers don't care about what you're going to deliver, they only care about how it's going to improve their lives or help them. Watch Your Membership KPIs to Discover Growth OpportunitiesFew subscription businesses are spending enough time looking at their numbers. Running your subscription business without proper KPI’s is similar to taking your family on a road trip without seeing where you are going, having a speedometer or a compass. KPI’s are like having GPS navigation for your subscription revenue growth. They tell you exactly what to do for fastest growth. Babak suggests you start with recording the lifespan of your subscribers’ activity. Measure how long your customers stay with you. How many billing cycles do they stay through before you lose them? Tracking this activity of each subscriber will reveal trends and opportunities to make changes to the subscription cycle at the point where you seem to be losing them. This data also helps you determine where to focus your time, staff functions, and dollars to promote growth. “You don't need a statistical tool. You need Excel and a data dump, and you will at least start to get there. Then undoubtedly, it raises questions and there are things that will start to trickle up. You at least have a baseline. If that means that you don't even go and backfill for 2016 and 2015, fine. Just start with where you are. Then, you've got to create a bit of a process that every month or two months, whatever it is, you update it and then you are trying to test and optimize, to improve those metrics,” adds Babak. Whether you are starting your subscription business or years deep in it, it is never too late to implement these practices of making your marketing message about your product’s results and then measuring the activity of your subscribers to find growth opportunities. You can discover more from the full interview with Babak Azad on the Membership and Subscription Growth podcast. Subscribe to the podcast to discover the keys to recurring revenue growth from successful entrepreneurs in the subscription economy. Previous and upcoming guests include Robbie Kellman Baxter (autho...

In this week's Best of the Week, Dave Sanderson talks about what it was like inside the plane before it crashed into the Hudson River, the Ask Jim & Jay crew discusses the relationship between thyroid and metabolism, Babak Azad talks about 2 pieces of advice he would give to his younger self that would’ve jumpstarted his success, and Rod Khleif shares why he believes finding mentors and coaches is the best thing you could do in your business. Check it out!   Dave Sanderson’s Interview:   http://www.gsdmode.com/davesanderson/   Ask Jim, Jay, & Dr. Grossman Episode 29   http://www.gsdmode.com/askjimandjayepisode29/   Rod Khleif’s Interview:   http://www.gsdmode.com/rodkhleif/   Babak Azad’s Interview:   http://www.gsdmode.com/babakazad/     Join the Free Private GSD Mode Facebook Group - http://www.facebook.com/groups/gsdmode     Thanks for watching don’t forget to subscribe for daily content!  https://www.youtube.com/subscription_center?add_user=joshuasmithaz   iTunes - https://itunes.apple.com/us/podcast/gsd-mode/id964583650?mt=2   Full Site - http://www.gsdmode.com     SUPPORTED BY   Perfect Storm (http://www.perfectstormnow.com)   90 Day Mastery (http://www.90daymastery.com)   GSD Apparel (http://www.gsdmode.com/product-category/tees/)   Hit Me Up!   Facebook: https://www.facebook.com/JoshuaSmithGSD   Instagram: https://instagram.com/joshuasmithgsd/   Twitter: https://twitter.com/JoshuaSmithGSD

Top Entrepreneur Babak Azad is the guy you call when you want to MASSIVELY scale your business. Former SVP of Beachbody, he helped grow the company from $100 Million in annual revenue up to $1 Billion in annual revenue! Now the founder of Round Two Partners, Babak helps others scale their business by focusing on 3 areas: Customer Lifetime Value, Brand Building, and Operational Excellence. Listen to Babak go over key areas most people make mistakes in their business, where to focus in your business to improve growth, how to discover your niche, and so much more. Babak is a guy who walks the talk! Check him out!     0:01 - Introduction 4:00 - Journey to entrepreneurship 8:00 - Ending his magazine and going through tough times 11:00 - How did you start scaling BeachBody in the beginning? 14:30 - How can you identify what you need to work on in your business by using analytics? 19:10 - What led to you deciding you wanted to leave where you were working and start your own business? 23:30 - What advice would you give to someone looking to transition out of their corporate job and into entrepreneurship? 27:30 - How did you identify what you were good at in your business so that you could focus on that and build around it? 31:00 - Suggestions for someone trying to find a niche 34:20 - Did you use feedback to discover your niche? 37:20 - What are some common things holding people back? 41:00 - How do you start tracking lifetime value and lifetime clients? 44:20 - Common mistakes people make with tracking 50:40 - How do you measure the customer experience? 55:50 - Where do people get started and what are the systems and processes? 1:02:00 - What would your recommendation be for somebody that needs to hire people but don’t have their systems in place yet? 1:08:00 - Who do these principles apply for? 1:10:00 - Where to find out more about Babak? 1:11:10 - Two pieces of advice to give to your younger self     Check out Babak’s website!   http://www.babakazad.com/     Join the Free Private GSD Mode Facebook Group - http://www.facebook.com/groups/gsdmode     Thanks for watching don’t forget to subscribe for daily content!  https://www.youtube.com/subscription_center?add_user=joshuasmithaz   iTunes - https://itunes.apple.com/us/podcast/gsd-mode/id964583650?mt=2   Full Site - http://www.gsdmode.com     SUPPORTED BY   Perfect Storm (http://www.perfectstormnow.com)   90 Day Mastery (http://www.90daymastery.com)   GSD Apparel (http://www.gsdmode.com/product-category/tees/)   Hit Me Up!   Facebook: https://www.facebook.com/JoshuaSmithGSD   Instagram: https://instagram.com/joshuasmithgsd/   Twitter: https://twitter.com/JoshuaSmithGSD

A business isn't just something that makes money, helps customers, or delivers value – it's a vehicle for you to live a BIG life and finance your life's purpose. However, if you want to build that vehicle, you need to start by building a sustainable company. Babak Azad is the former Senior Vice President of Media and Acquisition at Beach Body, creators of P90X, Insanity, and Shakeology. He led the team that grew the company from $100M to $1B in revenue, and he did it while building trust with their customers. He shares how you can develop a mindset that will help you strike a balance between delivering short-term revenue and building a brand that people trust.   The ONE Thing to Implement From This Episode: If you want to build a sustainable business, you need to make the word brand part of your daily lexicon and treat your customers the way they want to be treated. You can start by considering the following questions: What is the experience your customers want and prefer? How can you create a great experience for them? Living The ONE Thing is a lifelong journey, and the goal is not to be perfect. You're a human, and you're likely going to fail... but will you get back on the horse, move forward, and try to do better the next day?   In this episode you will learn... [8:10] The two key components of a brand. [11:05] ONE question we wish we had asked ourselves earlier. [16:20] How you can strike the right tension between short-term revenue and long-term trust.   AWESOME FREE RESOURCES FOR YOU! The Kick Ass Guide To Accountability Form your first power habit with your 66 Day Challenge Calendar Check out our awesome blog! [FREE Training] How to Start Time Blocking TODAY!   Links & Tools From This Episode Read Babak’s blog: BabakAzad.com Learn more about Round Two Partners: RoundTwoPartners.com   -- Do you ever wonder what it takes to develop the mindset of a master entrepreneur? Jeff Sandefer created the Acton School of Business to train aspiring entrepreneurs like you. If you want to learn alongside business legends and develop the mindset to become a great entrepreneur, head over to ActonMBA.org/ONE. The exclusive group of entrepreneurs teaching at Acton will help you develop the habits you need to navigate difficult decisions and succeed as an entrepreneur.   -- Production & Development for The ONE Thing Podcast by Podcast Masters

In this episode we talk to Babak Azad, Founder of Round Two Partners.

To make your real estate investing business successful, or any business for that matter, you have to know how to find, secure, and keep clients or customers. To help you know the best ways to do that Kent has invited his friend, Babak Azad to be on the show for this episode. Babak is one of those people who has an incredible story – he immigrated to the U.S. with his family and has become extremely successful as a direct response marketer. On this episode, he shares tips for customer acquisition, marketing, and much more. You won’t want to miss this helpful episode.