Do you see yourself owning and managing multiple online businesses? If so, you should check out this episode!
Join us as we sit down with Tim Warren, a seasoned entrepreneur and CEO of a successful SEO firm, Helium. In this episode, Tim shares valuable lessons he has learned from his business acquisition journey and sheds light on the power of AI in optimizing search engine strategies.
Tim Warren is the CEO of the SEO firm Helium, where they have the goal of getting to $100M per year and work with clients like Honeywell, Watson, Premier Best Western, and a range of large companies down to solo business operators. They focus on SEO and SEM, and Tim also acquires businesses and real estate.
Let’s explore Tim’s remarkable journey of acquiring and merging three businesses into his primary SEO venture. Tim shares insights into his decision-making process, explaining why he chose to acquire rather than build or outsource. He also provides details on how he funded these deals, the lessons he learned through due diligence, and the intricate process of executing the acquisitions.
Moreover, Tim discusses using AI for SEO tasks, exposing the specific tasks that can be effectively accomplished through AI and those that should be approached differently. He highlights the importance of understanding the nuances between going fast, wide, and deep when it comes to content strategy, and how to determine the optimal approach for different types of businesses.
Don’t miss out on this opportunity to expand your knowledge about business acquisition and enhance your SEO expertise. Tune in to our captivating episode with Tim Warren, and learn to elevate your business to new heights!
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9:02 Synergy between businesses
10:53 Funding and Budget
19:20 Teamwork and team management
34:21 ROI of culture
38:40 Understanding business
44:02 Using AI to automate SEO tasks
Courses & Training
Courses & Training
➥ With acquisitions you can grow absolutely faster than doing it organically. That’s because organic growth is slow, it takes a lot of time to find and win clients.
➥ Acquisitions offer advantages such as gaining access to an established customer base, utilizing existing systems and processes, and leveraging the expertise of the acquired management.
➥ As your small business expands, your offerings should initially focus on a niche market, gradually growing alongside your company.
About The Guest
Tim Warren is the CEO of the SEO firm Helium, where they have the goal of getting to $100M per year and work with clients like Honeywell, Watson, Premier Best Western, and a range of large companies down to solo business operators. They focus on SEO and SEM, and Tim also acquires businesses and real estate.
Connect with Tim Warren
What is the smartest business for you to buy when building a portfolio of businesses? Hi, I'm Jaryd Krause. I am the host of the Buying Online Businesses Podcast. And today, I'm speaking with Tim Warren, who is the CEO of the SEO firm Helium, where they have the goal to get to $100 million per year in revenue and work with clients like Honeywell, Watson, Premier Best Western, a range of large companies, all the way down to solo operators. And they mainly focus on SEO and SEM (search engine marketing).
And Tim also acquires businesses and real estate. And in his podcast, we specifically talk about how he acquired three businesses, three seven-figure businesses, and merged them into his primary SEO business, why he decided to buy over building or outsourcing, and how he came to that conclusion, which I think is important for you guys to understand as building a portfolio and scaling a business too.
We also talk about how he funded these deals, what he learned through the process of doing due diligence and acquiring these deals, and some of the lessons that he would make sure he learned next time in terms of how he's going to structure the deal and how he talks to sellers. And I share a lot about acquiring businesses above that $500K range, and what you should be focusing on.
This isn't just on businesses over the $ 500K range, but how to focus on relationships, and how valuable they are, what you should be doing throughout the deal, and how you can set up a really good win-win for everybody involved in the deal.
In this podcast, we also talk about using AI for SEO tasks, what tasks you can use AI for, and which ones you shouldn't use AI for. And we talk about the difference between going fast, going wide, and going in depth with content, and what you should choose for each different type of business or niche, and why.
So initially, I got Tim on to talk about SEO and AI, and we just ended up talking about acquisitions and merging businesses into one another, and the scale of growth that you can get from doing so, and then we touched on AI and SEO towards the end of the podcast episode.
Now, this is such a valuable episode. I know you guys are going to absolutely love it. If you are wanting to buy a business, make sure you don't go away and just do it all on your own. Reach out for help. If you want my framework, my DD framework, you can go away and get that at buyingonlinebusinesses.com/freeresources. For now, let's dive into the show.
Do you have a website you might want to sell either now or in the future? We have a hungry list of cashed up and trained up buyers that want to buy your content website. If you have a site making over $300 per month and want to sell it, head to buyingonlinebusinesses.co/sellyourbusiness. Or email us at [email protected] because we'll likely have a buyer. The details are in the description.
Ready to go?
I'm ready, man.
Cool, all right. Just for the editor, we'll start now. And hey, Tim, welcome to the pod.
Hey, Jaryd. Thanks, man. Thanks for having me on.
I want to get you on and talk about some cool AI stuff, machine learning, SEM, SEO, all that sort of stuff, and how it's all evolving and what we can do as blog owners, content site owners, and business owners in the online space. But you mentioned you've had some acquisitions, and you've done some acquisitions. I'd love to dive into those.
Yeah. So I run a company called Helium. We've got about 50 to 60 employees spread out across the US. We're in the US, but we do work globally. And we have made three acquisitions so far at the company. Let's see, we started in 2018. So we've made three acquisitions spread out over about five years.
Cool. And why? Why did you acquire businesses? I feel like I know, but yeah, I'd love for people to start thinking about a portfolio of businesses and how to do strategic acquisitions. And I'm sure that was your sort of goal.
Yeah, totally. So there are multiple ways to grow as a company, but there are kind of two main ideas, right? Organic growth, inorganic growth So with organic growth, for which we have a sales team and do marketing, we doubled. So we were on the Inc. 5000. We were the 48th fastest growing marketing agency in the US last year.
Congrats. Tim Warren:
So we do sales, and we're all about sales and getting out in front of your customer through cold emails, cold phone calls, and getting in front of people. But organic growth can only do so much, Jaryd. There's just only so fast you can grow. And if people watching the podcast or listening to the podcast know, I mean, if you're a small company and you're starting up, you haven't taken a bunch of capital; there's just only so much you can do and so fast you can grow.
And so inorganic growth or acquisitions are kind of like steroids in business. It's how companies get very big, very quickly. You need capitalization. So you need a way to fund it. And that's a whole other story. I can tell you what we did and how we did it. But if you can get the funding to do acquisitions and there are creative ways to fund them, you can grow absolutely faster than you can grow organically. Because organic growth is slow. It takes a lot of time to find and win new clients, but you can go buy a business that already has a bunch of clients, right?
And so, I mean, for example, we made three acquisitions, one of which was to offer a new service line. So we wanted to offer website design and development. We didn't do that internally. And so in business, you have three options anytime you want to do a new thing. You can build it, you can outsource it, or you can buy it, right?
And so in this case, we said, “Well, do we want to build a whole creative team?” Not really; I don't know that space. I don't know creative directors. I don't really know enough about that. So if I built it, I probably wouldn't build it that well. Because I'm an SEO guy, right? I'm an SEO and SEM guy. That's what I know. I don't really know much about website design. I know how it works, but I'm not a designer.
And so then we said, “Well, can we outsource it?” We can. But at the end of the day, we're like, “Let's just buy it.” So we did an acquisition of a small creative team and brought them in and rebranded them Helium Interactive. And it was a great acquisition, right? It's more of an acqui-hire.
But then in 2020, in October 2020, we bought about a $2.5 million automotive agency that did SEO and SEM for automotive dealerships. We bought them because Helium, at the time, had no automotive clients, but we kept trying to break into automotive and sell to car dealerships. But car dealerships will only work with agencies that specialize in car dealerships.
They have this thing about it where they won't work with anyone unless you only do automotive. And so, because we didn't only do car dealerships, we couldn't get those clients, but there are 18,000 car dealerships. And as a group, car dealerships spend the largest amount of money, or disposable income, on marketing of any other group in the US.
So these guys are just throwing money around. Oh yeah, throwing money at marketing. All kinds of tools are left and right, conquest campaigns, email, social media, SEO, websites, gadgets, gizmos, and new shiny things. We're like, We've got to get into this, man. We do SEO and SEM. So we bought that agency.
The first one was a way for us to add a new service line. With Venture Automotive, it was literally a way for us to add an entire division, a whole company, that allowed us to not only provide a service to automotive dealers, but also massively grow the business.
So that year, we went from $4 million to $8 million in revenue because we grew $2 million organically and a couple $2.5 million via acquisition. We doubled the company, but we wouldn't have doubled if we hadn't made an acquisition that year.
Yeah. To get that 50% growth from 4 mil to 8 mil, what I have seen in my own businesses and working with a lot of other people scaling is that you get to a certain point in spending on ads or even content and media where your ROI starts to diminish after a certain point. And so then you have to play the patience and waiting game and just scale back to that point where you're getting maximum ROI for money spent on content, media, ads, or SEO.
And then you have to just play the patience game. Whereas a lot of acquisitions and people that want to grow their businesses are taking that part of their marketing budget that's not getting the best ROI and going, All right, what businesses are adjacent and parallel that I can bolt into this business to make it a conglomerate, right? And that's kind of what you've done.
And you are doing. I'm sure you'll probably buy more as you grow.
That's right. That's exactly what we're doing. And so for us, when we started Helium, we set the goal of $100 million in revenue by 2028. And so that was ten years out. And we said, “We want to do this without any VC funding, without taking venture capital funding. How do we get there and how do we do it?”
And so, really, that's been our goal is to become that conglomerate. And so I always tell people, The smaller you are, the less you should offer, right? The more niche you should be, the better. When you're really, really small, you should be hyper-focused, right?
So at first, when we started, it was just SEO—no SEM, no website. It was just month to month SEO, a thousand bucks a month, only in Cincinnati, basically, right? It was just a really small offering. And then you grow, and you offer more and more. Eventually, Jaryd, as we grow, I want to be able to offer social media, email, and all the different services under one conglomerate, which will probably be acquired, right?
We'll probably buy those companies as we get bigger. And then we'll be able to offer those services to existing clients with a new tech stack and all that stuff. But you just continue to bolt on because, at the end of the day, you own the relationship with the client, and then you bolt on all the other services they want to buy from you. You keep that relationship, and then you have four, five, or six service lines with the same companies.
Exactly, exactly. Yeah. And let us know if you need contacts for good email marketing businesses. I know quite a few good ones and other ones as well. I know a lot of people in this space who either own great businesses and may sell them or do want to sell them. So that's really, really cool.
Now let's talk about the funding, I guess. So we'll talk about some funding, and then let's talk about due diligence and how you went about it. So yeah. So did you just save up some marketing budget, or how did you get the creative financing for this?
Yeah, so good question. So the deal we did was multimillion. Well, I guess I'll kind of start at the top. So from a valuation standpoint, we came up with a valuation model, and we recommend anyone listening to the podcast do the same thing. You can do multiples of EBITDA. We did a unique one, which my CEO coach recommended, which is that we paid an average of 5 times EBITDA and 1 time revenue.
So whatever the average of those two numbers was, for example, if you have a million-dollar business and your EBITDA is $200 million, right? Then that would be a million top line plus five times EBITDA, which would be a million divided by two, which equals $1 million. So the value would be $1 million.
And the reason we did it that way, Jaryd, is that if a company has a low EBITDA but is very large and growing, that should add some value because of their size. Or if they're very small, but very profitable, that adds a multiplier, right? Because you're multiplying by EBITDA. But it takes both into consideration.
And so you don't end up with a business that's like, “Well, we're 10 million top line, so we want a 10 multiple.” We're like, “Nah, it's still 5 multiple EBITDA, right? But hey, you're 10 million, so it's going to be factored in, right?” So that's kind of the first step.
Then the second thing we did was say that when you're looking to fund these deals, don't talk to a giant bank. Don't go to the US Bank of America. Don't go to the really big banks. They're too big. They're not going to work with small companies. They're not going to work with you. If they do SBA deals, they're not going to lend on smaller deals.
So I recommend picking a regional bank that has maybe 15 or 20 locations, to the point where you can actually golf or sit down with the bank president. You could actually get to someone who has a pretty high level of authority that you're never going to get to with those giant banks. Because they're going to work with smaller companies. They're going to work with you on a much more relational level versus a US bank, who's like, They aren't going to lend to your SBA deal. It's just too hard to get it done.
The third thing is that we use an SBA loan. And so the way we did the deal is, it was a multimillion-dollar deal, and then we put down 10% cash, which we just saved up from our own EBITDA from our own profit. We put down 10% cash. The seller had a 10% carryback, or 10% seller note. Then the bank financed 80% of it. And so we did an SBA 7(a) deal. And in the SBA 7(a) deal, the benefit is that the guy got 90% at closing. And then it was a ten-year amortization because of a 7(a) loan. We couldn't pay on his note for two years. And then we're paying on his note for eight years. So it ends up being a pretty good deal for him.
There are pros and cons to doing it that way. The pro of using SBA is that it has a ten-year amortization, which keeps the cost low. It is not a fixed rate, though. It's a floating rate. In the last 12 months, our rates doubled because rates went up so much.
So it went from 5.5% to 10%. So that can happen. So when you do these deals, make sure you're not on a razor thin margin because the interest rate can go up. The downside of doing an SBA deal, though, is if you're in the US, and I don't think you can do an SBA outside the US.
You can't. I help a lot of people with SBA. Yeah, well, there's a small business administration in America. It's an American government thing. Yeah. For people outside the United States, there are other ways that you can fund yourself. This is my bread and butter. This is like everything you're talking about is like everything that I teach.
Oh, perfect. But I'm just talking about the US, then, because I know that one. But the SBA is a good deal.
Most people listening are from the States as well.
Oh, sweet. So one downside, just be aware of this for you guys. One big downside of using the SBA is that they require you to buy 100% of the business, and the owner has to leave within a year. And they can't stay. He or she can't stay on as an employee. They have to be consultants, and you can renew their consulting agreement.
Now there are ways around all this stuff, and the SBA is a point compliance program, which means they only check your compliance at the time you close the loan. They never check it again. So they'll never come back a year later to see if that owner is actually out of business. But these are just things you have to be aware of.
So the downside of doing an SBA deal is that there are limitations. So if you want to come in and say, “I'm going to buy 50% of your business,” then, nope, you can't do that. Can't do earnouts. They don't let you do that either. So there are some limitations, and I will say for anybody watching who's done an agency deal in the future that, from what I learned from buying this business, I didn't do an earnout and I should have.
We just paid the amount, and it was up to us to deal with it. But if you're going to buy a business worth, let's say, seven and a half million to ten million, the owner's relationships are very crucial to the health of that business. They just are. They're going to be magic on some level. So I would probably do it on an earnout.
I often teach people that the relationships that you have, the relationships that you build in a deal are more valuable than the deal itself. And coming to your point on SBA, under the five-million range-ish, it's tricky because people want to settle the sale faster, especially if they're buying these businesses through brokerages.
They don't want to deal; they'd rather have cash. They'd rather sell somebody with cash than go for a one-to-two-month thing around SBA and all the things that are involved with it. It does slow the sale down, but obviously you are not using your own money. So it’s probably the best way to go, if you can.
I mean, I've got a lot of thoughts on that. So there's an SEO company in Texas; I won't give the name, but she was looking to sell, and we had all these conversations, and she was open to an earnout, and we met through a broker because I was looking to buy more businesses. And kind of as we're going through the process, I just gave her some advice because she ultimately decided not to sell her business and then decided to sell it later.
That can happen with sellers. They can back out. You've got to understand that selling a business is a very emotional thing. You put a lot of time and energy into this thing. And so sellers are going to be very emotional. It's something that a lot of your self image as a business owner is tied to. And so people can even get to the finish line and say, “What am I going to do with my time now? Nevermind, I'm backing out.”
So, I mean, even that deal that I did in 2020 blew up like a week before it was supposed to close. The guy got cold feet, backed out, and killed the deal. And then, he had a whole weekend to think about it, sat down, and went to church on Sunday. And he's like, “I made a mistake.”
And he emails me on Monday morning, he's like, “Sorry, I made a mistake, I want back in.” And I was like, “Dude, we can't keep doing this. We can't do deals on, deals off, deals on. This can't be friends and like dating. Are we on a break? What's going on here? We have to make a decision.”
And basically, as we started talking, he said, “Well, my attorney convinced me that you guys were going to buy me and then sue me and not pay out all the stuff.” And I was like, “What?” But his attorney on the other side of the deal was convincing him, and he was trying to stretch out the negotiations as long as possible to get a bigger fee, right?
Isn't that disgusting? Isn't that absolutely disgusting?
And it's like, dude, because I came to the table, Jaryd, and I already had the purchase agreements done. I had all the elections. Here's 338(h)(10). Here's how we should do this. Here's what's best for you. I had everything ready to go. And so I had a very clear, if we follow boom, boom, boom, we'll have deals done.
We spend the least amount of money on attorneys, and we get this thing done. It was so simple. But his attorney—I don't know if he just hated that I already had it ready and he didn't want that—or he didn't trust me or something. But his attorney just completely torpedoed the deal.
This is why you need the best people on your team. It's a team job; it's teamwork.
Oh, yeah, absolutely.
And it's a people job, and you need the best people on your team to make these deals run smoothly. And being really good at building relationships, understanding people, and being a great human being—that's what gets deals done, right? And putting the right people on the team.
Man, and I'll tell you something I learned from my CEO coach, which I think your listeners are going to appreciate. Because the team that I typically work with on deals is myself as the deal negotiator, I've got an accountant, and I've got an attorney, right? But then, ahead of time, before I even look at the deal, I've coached my accountant, “I'm only going to bring you in once the deal is totally negotiated because I just want you to paper over the tax details.
But I don't want to pay your fee to sit in all the meetings and then have the guy back out, right? ” Same with my attorney, “I'm only going to bring you in at the very end when we've decided what's going to happen. So I don't have to pay your fee the whole way and the guy backs out.”
And so I heard this, but I want to pass it along. Which is the best way to do a deal—a sale of a business or buying a business—if you take the guy to lunch or dinner? And you say, “Look, you and I are going to argue this out. And we're going to discuss it out. And then we're going to decide together what it is.
And then we're going to give that to the attorneys to paper it over. But we're not going to bring the attorneys in, and we all sit and argue through meeting after meeting because we rack up a ton of fees. And then you have four opinions, and nothing can ever get done. You're the guy selling; I'm the guy buying.
Let's come to an agreement and shake hands. And then we tell our attorneys what to paper over. Don't make any changes. We've already decided.” And that's how the deal should have happened. And once we did it that way, the deal happened without a hitch, and everybody was super happy.
Yeah, I love it. I love it. Because the most important thing at the end of the day is that you’re the decision maker if you're going to purchase, and they're the decision maker if they're going to sell, but then you get the right other people on your shoulder that can be influential. In this case, for that attorney on his side, based on their own agenda, unfortunately.
And I don't know if it needs to be an argument, but to say, “Hey, what would a successful exit look like for you?” This is what I like to tell people. Speak to this person who's selling the business and say, “Why are you selling? What will be a huge win for you? How would you like to receive funds? What would a successful exit for you look like?”
And then, as you, as the person who's acquiring it, go away, become creative with financing and deal terms and structure on how you're going to purchase it, and then present that to them and say, “This is what you asked for. This is what you want to be successful.
How about we do it this way? Which would allow me to win and for you to win, and let's get the structure, the terms, all that sort of stuff settled and agreed upon, and then let's bring in the final phases of due diligence, basically with your attorney and your CPA.” Tim Warren:
Jaryd, do you recommend to your buyers that they do due diligence themselves to learn all the things about the business? Or do you have them bring in external people and pay for due diligence?
It depends. It depends on the size of the business and also on the individual. A lot of people that are buying businesses under $500k are going to be mostly operators, and then they're also going to be hiring people in and working with those people that are going to be operators. So I think it's really damn valuable for them to understand how the business works and to look at multiple businesses and do due diligence on multiple businesses in that price range that they're looking for to be able to understand the market.
Also, that will help them understand what the business is actually worth because they understand the market. But also, by looking at so many businesses, they get an education in themselves about that type of business and what the risks are, how to reduce them, and how to possibly grow the business because I've looked at so many of them.
As you go above the $500k range, that's when you start to say, Right, I'm going to be an owner, and I'm going to hire different parts or people to operate the business, or I'm going to have one operator that manages all the other people that are working in the business. And that's where it's important to have someone like myself or a strategic acquisition coach work with you to help you understand the due diligence done by an outside service and point out risks and opportunities, and then also work with you to get the team built out after the acquisition or how to merge it into whatever, say, your business that you purchased, the automotive one, how do you merge that with some of your team if you're going to or if you're going to keep it separate as well?
So to answer your question, it really depends on the size of the deal, the motivation of the purchaser, and how much involvement they want in the business. Because if they do want some level of involvement and they want to build a portfolio with their touch and flavor sprinkled through it, then it's very worth them doing DD themselves or at least understanding it.
So yeah, but above that 500k range, a lot of people are like, “Look, I always want to buy something for five mil. I want to buy something for 10 mil. And I want to know that I'm not getting taken for a ride with the due diligence service that I've used, the attorney and the CPA,” and they need somebody like an outside person that's not tied to the deal, like myself, to point out things and nurse them through it.
Yeah, I think so. So, for those listening, I did due diligence on all three of the deals we've done at Helium. But at the same time, I've been in business long enough that I could do them myself. And I was also buying in areas where I knew what I was doing, right?
If I were going to buy a manufacturing company, I wouldn't do the due diligence myself because I don't know that space. But if I'm buying an agency, I know how to look for the buried bodies. And I know what doors to open and ask, so let's look in there, right? Because I know the space.
And I think your advice is really spot on. I think size matters too. Because when something's pretty small, it's fine. Under $500k, it gets small enough that there's not a lot of due diligence to do, right? There's just not a lot of revenue. So there’s not a ton in there. But as you get into the multi million and above, there are more things to understand financially. And due diligence matters. But also making sure you really know what questions to ask. That would be my two cents.
Spot on. The last thing you said was that knowing what questions to ask is the most important thing. Because it's like what Tony Robbins says, “The quality of your life is determined by the quality of questions you have.” And also, the quality of the businesses you have is determined by the quality of questions you ask—the businesses you already own, I'm talking about. But the quality of the business that you purchase will be determined by the quality of the questions that you ask and by understanding what's at risk.
For example, there's a deal that we're working on at the moment with somebody, and they're getting a portion of traffic from direct traffic, and it's 36%, right? And the rest is organic, among others. But 36% is the lion's share. And I'm like, Cool, that’s direct traffic. But what is that direct traffic? Is it coming straight from people's sites? And it's 36%, so it's hard to believe it is.
And they were ready to buy the deal, right? They were sold on it because one of the people who's going to operate the business is in that niche and in that field, and “I could just grow this thing like a monster,” right? And she could, which is great. But I had to slow them down and go, “Whoa, whoa. Have you even seen that 30% of this traffic is direct and you don't even know what that means?”
And if you'd lost all that direct traffic afterwards, say, for example, the person who owned the business might own a Twitter account, a Facebook account, and a YouTube account that are linked, it looks like it's direct traffic in Google Analytics. And it's going to, but they're not coming along with a deal. Imagine how much of a risk that would be, right? And they just turn that off and redirect it to their new site that they're going to work on once they've sold it. If you don't understand that and don't know how to look for it, you're cooked.
You're going to be in trouble. Yeah, good point.
That's why I suggest even for yourself on your next deal, find somebody that can comb over the DD and go, “What's this? What's that? You need to understand this. Can you tell me more about that? And if you don't know, understand it, then you need to go and find out more about it, sort of thing.”
Especially the direct traffic piece you're talking about. Because, in recent iterations of Google Analytics, if Google doesn't know how to qualify traffic, it just puts an end to direct traffic. So, I mean, that could even be organic traffic that is coming from who knows where and that's not being tagged correctly.
That could be a UTM tag failure. I mean, that could be a bunch of stuff. And so, to your point, it's really important that you figure out what that is. Because if those are from sources that are just properly incorrectly pixeled, and that stuff goes away tomorrow, that's bad. That's A.
B, to your point, if you don't really know what that direct traffic is and that's somebody literally bookmarking and going to the browser and punching this thing in, that's amazing. But that's probably unlikely to be that high. So what do you not know that's going to wreck this deal? Which can actually be a good question to ask yourself, which is doing a postmortem before you buy the deal. What would happen that would cause this business to fail?
Worst case scenario, yeah.
Yep. And then you ask those questions yourself. And that's kind of back to my point on the earnout, what I should have done a better job. And buying the Venture Deal has been great. And for the first three years, we got like 100% cash on cash returns. It was very nice. But I will say that, looking back on it, I would have done an earnout.
The reason I would earnout is because, at some point, that owner is going to leave. And he stayed with us for about three years—almost three years. But once he left, then we started losing some relationships where the clients were like, “Well, we were here because of that guy who started the company. And he's leaving. So now we're going to leave.” We knew that would happen at some point. But then for us, it was, How much do we put in? What churn should we expect from agency clients when he leaves?
So we expected like 10% or 20%, right? But maybe it’s 25% or 30%. So we probably should have done a better job if it's 35%. What would that do? Okay, hey, man, this is why we need an earnout because, hey, it's probably only going to be 10%. But if it's more than that, we can't pay the same amount. And that was a mistake, and we learned that I should do it differently next time.
Yeah. And it's not really a mistake because you learn, right? It's a huge educational piece. Also, with that, there are two parts to this that I want to mention is that when you have an earnout with them, whether you have an earnout with them or not, you could incorporate into the terms that if X amount of clients were to leave because of your key-person dependency in the business, that will have some contingency in play with the seller note being less.
And there might be a sliding scale on that seller note, which is something for the next deal. If some partnerships move on because of that key-person dependency, there's going to be a sliding scale there in terms of that seller note or whatever it is, all the earnout figures, and repayments.
And also, if you do go with an earnout, or seller financing, you can make the relationship last a lot longer. There are two ways to build a relationship faster, really. It's time with the person. But to deepen that connection, it's going through hard times together and something that's a pressure situation and coming out on top, and you have a lot more trust in one another.
When you manufacture a longer timeframe on an earnout, sometimes there will be storms that come through in business, like the highs and lows, and that person will help you weather them together. You build a stronger connection in that timeframe. And then once they do part the deal, and they don't have any work or advisory within the business or for the business anymore, you've still got this really strong relationship that he'd be like, “Hey. Can we just have a quick call, a half an hour question?” Or maybe even you pay them or whatever. But they're going to be more likely to do so because they like you more because you built that relationship over time.
So that's why I say, and it has happened in the past with my own deals and other people's deals, that the relationship can be more valuable than the acquisition and the business you end up purchasing. Because they might mention something in three years’ time. You're like, “Oh, I was wondering about this thing. How do you do it this way?
And what would you do if you're still the person running it?” And they might mention something that's like, Oh, it's this massive trigger. And just one little thing they mentioned might help you scale the business with less work. And that's just one thing, because you focus on the relationship rather than the deal itself.
No, I love that. And also, it's making sure when you buy the right business—I mean, you probably know this, Jaryd, but I think the numbers as high as 80% of acquisitions that are done fail to drive expected shareholder return not because of financial mistakes but because of cultural misalignment between the companies.
Yeah, yeah, it's so big. And that's why people that own their businesses that are selling will take less money to sell to the right person who's going to make sure that their team is looked after, and the culture stays as the same as possible. Because it's really hard to measure the ROI of culture.
It's super hard to measure. And that was kind of what I was going to say on this is, well, the ROI of culture can be hard to measure. But we also know that getting culture wrong in a deal is what kills a deal and causes the return to be really, really poor. But it's one of the things you talked about—relationships being the key. That's why I think focusing and making sure that the cultures of the two organizations can align and connect very tightly is important.
Because if you do a really good job buying a business where the people of that company really fit your culture, they're going to be people you like and enjoy, and there's rapport and respect, which means the relationships they currently have and the ideas they have are probably going to be great ideas for you. They're probably going to fit.
But if you buy a company, maybe they're profitable, but the culture doesn't fully align, they're fully remote, and you're fully in the office. Or they're in a different country, and there's just a kind of cultural difference; you don't fully understand each other, etc. Then the ideas and relationships they bring are less likely to be valuable because you guys don't connect that well. Versus a business, even if it's smaller, if you connect super well, some of the things that they bring to the table might be the missing piece that you needed. That's like, Oh, right. And sparks this idea that was like two parts of the candle; you put them together and boom, you got flame, right? And that's the missing piece.
Yeah. Like you said, and like you related this to earlier, a relationship of backwards and forwards Are we on? Are we off? Is it going to work? And I really think it's similar to that. If you're conscious of how you date and you want to find somebody amazing, why not start with your values and work out? All right. What are your values as a human being? And what are my values? And are they aligned?
And you repeat that in acquisition as well. When you sit down, like, “Let's go to lunch, mate. I just want to learn about your business. I want to learn what you want to do. What's the successful exit look like for you? But what are the values that you have personally? And then what are the values that your business has? And are they aligned? Because that can be more important than the deal itself as well. I’m so glad you mentioned that.
Yeah, that's super true. And here's the deal, this is an example. But when we did the automotive deal, before we bought that company, I did the outreach myself. So I knew I wanted to buy an automotive agency. Well, it wasn't just automotive. I was looking at different verticals.
So I went to ZoomInfo, and I built a list of 500 agencies of the right size—maybe 5 million and under, president, CEO, or owner title. And I did a four-drip email campaign to them that basically said, “Hey, are you open to a partnership or more?” And I think from there, I booked 50 Zoom meetings, which doing 50 Zoom meetings in and of itself, by the end, you're like, I don't want to buy anything anymore. I just want to be done. Because I have so many Zoom meetings.
But I remember talking, and I met some great people through the process. And I met some people who were not worth the time. I talked to one owner, and he was like, “Well, I think we're worth about 5 million.” I was like, “Well, what's your guys' EBITDA?” “Well, we're losing 50 grand a month right now. But it's going to turn around.” I'm like, “Well, but how do you get to the $5 million valuation? You're losing 50 grand a month.”
He went on a little tirade that didn't make any sense. I was like, “But because as of right now, if you looked at a 12 or 10 multiple of your EBITDA, you would pay me to buy the business, right? You'd have to pay me $6 million or whatever.” He's like, “Well, I think it's worth this.” I'm like, “Well, let's agree to disagree. Well, let's follow up and get it a few years, right?”
It's so funny when there's somebody to whom you go, because we do some outreach on purchasing business as well. It's like, “Oh, yeah, I'd be interested in buying a business.” And they get this thing, like, “Oh, I would sell it for a cartwheel price.” Great. And then they got that price in their heads. And then they're like, “Okay, I want to sell my business. Let's have a chat with the person. What do they need to know about the business seller?”
First and foremost, having all these things sorted out, Like your finances, And understanding how your business operates and all the metrics that need to be tracked means that they need to be presentable. And then once they start to go, “Oh, this person may have realized we're losing $50,000 a month, okay, wow, that's the thing.
But they might not go back on the price that they have psychologically told themselves that they would sell it for because that's what they believed the business was worth based on their not understanding the business as well as they maybe should have as an owner. No offense to people who own businesses.
There are a lot of things in our businesses that we'd like; there are so many things going on. So it's hard to know. It's hard to do everything absolutely perfectly. But that's just a human thing, right? We get in the way of our businesses.
Yeah. What I would say about that, Jaryd, is that this is the story of talking to 50 companies and ending up buying one. And the one that I bought, initially, didn't want to meet, but he called me back because when I left the email, the voicemail, or whatever, He was like, “I get a bunch of these outreaches and I don't take him seriously.” But he said, “I went to your site. I looked you up. I looked up your company. I looked up your Glassdoor. I looked up your culture. And you looked like a company that matched our culture. You match our values.” So I want to connect that.
Because he said, “You guys are all about transparency when it comes to SEO and SCM. And how many links are you building? And what's the actual cost? What's my average management fee? What do I get for that billing for clients?” And so a big thing with Venture was that in the automotive industry, a lot of companies just mail their check to the auto agency, and the agency doesn't disclose management fees, right?
So imagine this, Jaryd. If you had a company spending 10 grand a month on AdWords and they mailed you 10 grand, and you said, “Okay, Jaryd. You're going to run the ads for me and take your management fee, right?” Imagine if there was no transparency there, like zero oversight. I just mailed you 10 grand every month. Guess how many companies, over time, would start to eat away at some of those dollars? And maybe we need to increase our management fee, or maybe this, or whatever.
So what's happened to the auto space is that most of these big companies, like dealer.com and these guys, don't disclose their fees. And so when the client pays them the 10 grand for advertising, they're like, “Well, we'll pay your ad spend.” They don't disclose the fees. And so oftentimes when we go in and we'll say, “Well, how much of your 10 grand is actually going to ads?” “I'm not sure.” “Oh, you don't know.” “No, we don't know. They don't disclose it.” “Well, let's find out.” And so then we find out, and it turns out, it's like $4,000 or $5,000 of the fee is going to ads. The rest is all management fees, 50%.
And so one of the unique things with Helium is that we said, “They’re all transparent.” We have a dashboard that shows you all the links. And you pay us our fee. You pay Google, Facebook, and LinkedIn directly. You pay them. You don't owe that to us. We want you to know where every single ad dollar is going. It's not going to Helium; it's going to the platform. And in the automotive space, that was groundbreaking. That's like a groundbreaking thing.
So the culture of our organization, which is total transparency, high deliverables, and high service, matches the culture of Venture, which is this thing they're pushing, which is dealers actually knowing how much they're spending on ads and not getting screwed. And so those cultural alignments are really important, and getting that part right was like, “Oh my gosh, I like this guy. This guy is great. We believe in the same thing, right?”
So that's a really good example. It could be similar to dating. You need to have trust. And say, for example, you're dating somebody and you're like, “All right. So what did you do the whole weekend?” You said, “I just went and caught up with my mom.” Okay, caught up for two hours. “What do you do to spend the rest of the time?”
Like, “I mostly just hang out with my mom.” And who cares what you did as long as you just tell the person that you're like, Yeah, this is what I did. I went for a surf, I went for a run, I hung out with some friends, I went to dinner—a lot of that sort of stuff, just being transparent. But they're going to be like, “This guy is hiding something.”
And the same with the ad spend. What are you hiding? And that's where you win is by being completely transparent, just being straight up. So yeah, good on you. That's a really good value to have in business. Now, Tim, this has been such a fun conversation. And we haven't even scratched the surface of what I got you to come here for—talking about SEO and how it's going to evolve. And let's dive into that, unless you have anything to add to the acquisitions.
No, no. Let's dive into some SEO.
Yeah, let's jump into that. So with SEO, it's changing a lot. With AI, it's changing a lot. And machine learning. And I know that you guys are doing some pretty cool things by trying to use AI to help you make your processes and SOPs better and automate certain parts of SEO. So where can people start using AI to automate some SEO tasks? And what will those tasks be first, and then what about SEO? Which way would you do it—with AI or machine learning?
Yeah. So there's a lot here. And if anybody listening wants to really go down this rabbit hole, I'm speaking at SMX. If you guys know SMX, it’s the Search Marketing Expo. So it's the trade show, put on by Third Door Media, Search Engine Land, and Search Engine Journal. That's on June 13th and 14th. So it's free to attend. I believe it's online.
Is there a replay? Because this will come out after this. This podcast will come out after that.
There should be a replay. And maybe in the show notes, we can link them to the presentation, the presentation notes, and all that stuff. Because it's going to come out after. But maybe we can edit this up to be whatever. But I'm actually talking about AI. So my topic—I've recorded my talk, but it goes live on the 13th and 14th—is how to use entity SEO and AI to dominate SERPs in the next two years. That's the whole talk. But I'll give you a summary of that here for the listeners. All right. So I'm going to talk about a bunch of this stuff. But I'll kind of skip to a couple points.
So for AI and search, Google is evolving to become a semantic search engine. So they no longer, five or ten years ago, typed in roofer Cincinnati or black high heels; they try to match that exact keyword as closely as they can. A semantic search engine means that it tries to match what you mean. When you search for a roofing company in Cincinnati, they assume, Oh, you want a home services roofing company with the best ratings for the best price in Cincinnati; here's this listing that I'm going to provide to you.
Either it's going to be a map listing, it's going to be a knowledge graph, or it's going to be Bard just answering your question to compete with OpenAI and ChatGPT. We're going to decide what you best want as a user. We're going to give you that information.
That's where Google is going as a semantic search engine. So they're trying to get better and better at understanding the search topic. And so all this matters is entity SEO, which is a big thing we're doing. If you want to learn about it, just Google entity SEO, read my article on Search Engine Land, it’s about 4000-word, get a glass of wine, take a bath, and read that article on a Friday night. It'll be a great time. But it walks through what an entity SEO is.
And this basic idea is that Google is getting away from just keyword optimized landing pages and moving towards who is creating the most authoritative content on any topic. And to have authoritative content, your site needs to look like Wikipedia or Wikidata. Tons and tons of content, lots of internal links, lots of subtopics. Are you really answering all the questions around an article, a topic, and an idea, right?
Well, to do that, you have to create a lot of content. Guess who's really good at creating lots of content? AI, right? And oftentimes, for a lot of these search terms, let's say that I want to rank for SEO-related keywords for Helium, which we do. But then, if you Google SEO, how many subtopics and entities are there?
Thousands, millions, probably, right? And then, if I wanted to create authoritative content or be the authority in SEO, I'd have to create thousands and thousands of articles about all of the SEO details and questions, the different search engines, and the different SERPs and how they work. I mean, let's say I just picked how to be the best SEO agency.
Think about all the people who also asked questions. Well, how much should I spend on an agency? What do agencies do? What are their service offerings? Should I also do SEM? What does SEM mean? What does SEO mean? You could go into the thousands.
So here's what we recommend, Jaryd, is break AI tools into two categories. One is, can the tool help me create content faster or wider? Because there are three ways you can focus on content if you're going to do content. You can go deeper, right? Deep expertise. I'm going to write these super Google Scholar articles, 47 pages long, with deep research. It's incredibly deep. AI can't do that. It's not there yet.
So you can go really deep. You can go really wide as a second one. So instead of just doing SEO content, I can write about everything in the air. SEO, SEM, CRO, and web design, and how to drive leads and funnels (top of funnel, middle funnel, bottom funnel). And I can have content on all these topics, okay? Or you can go faster. So what if I was always the first to have new content on every new SEO topic? I'm fast, right? faster
AI works really well with wider areas but does not work well with deeper ones. So if your content strategy is going to be to write super deep, well written articles, authoritative articles, that's still going to be human writing. But if your strategy is wide and fast, which is what a lot of these sites are doing, AI tools are the way to go.
So we actually use a tool called nobleseo.io. I mean, link in the description. But what that tool does is do all the SEO research for any keyword. You punch in the keyword and say, “I want to rank for roofer Cincinnati or best cheap high heels under 30 bucks,” or whatever the keyword is. And it goes and pulls all the SERP results for the first page, does all the TF-IDF, all the on-page operations, all the research, and H1 headers. And then you can use AI to write the entire article using ChatGPT 3.5 or 4.0. And so it does all the writing for us, which allows us to create content at a far faster rate.
And so where other SEO companies are writing their content from scratch, we're producing content at ten times the speed because we write it using AI and then edit it with a human editor at either 10 or 20 minutes per article. So we're pumping out ten new articles a day, compared to ten articles a month. So that's what we're recommending.
So per client, you mean? Ten articles per client? Ten articles a day?
No, ten articles a day for ourselves. Just for our own market. Oh no, for our clients, it's hundreds and hundreds and hundreds of articles. So what I was talking about just for our own marketing is that we're now doing ten articles a day for ourselves for our own SEO, whereas before we were doing maybe ten a month using AI.
Where does depth come into it? Because I understand speed. I understand well. For myself as a human being and also the type of human being I am, I love depth. Where does that fit into that place? If I put my hand up and say, “Hey, out of all of those three, I'm biased; I want depth, so where does that come into play?
Yeah, it's a good question. So you have to know the business, and you have to know your niche, right? So for the people listening online, you have to understand who your reader is, who your user is, and what they want. And Google wants the same. But at the same time, I don't want to get too technical, but I'm going to try.
It could be different for different types of sites and businesses. For example, a roofing company.
Going into depth into roofing. Is that really a thing? But as a hobby, surfing? Hell yeah. Really getting integrity and depth. So I can see it being different between those different types of niches and business models, right?
So let's take the one on surfing, okay? So let's say that you have a blog about surfing and that you make money on AdSense. But you also have a long-term plan to design your own surfboards and sell them through your site. So you're building out this content model, right? And it's just a long-term plan for you.
Well, you're not going to get users to your site if you have AI write about what a surfboard is. That's not going to work, okay? But you're going to get users if you write that you have the best blog on the wax and the boards and where to surf and like amazing content that surfers love, and they start to follow, right?
But let's say you want to drive more traffic to your site via organic, people who don't know of you but aren't finding you. And you need to start ranking for some higher-level terms, maybe not surfing, but like the best surfing blogs or best places to surf. And that's the way you want to get people in.
But then you start to do some research and realize, Well, this is a really competitive SEO topic, and the ads are really expensive as well. How do I rank for this entity? Because surfing locations as an entity in Google is really difficult,
So now I realize if I want to rank for that, I’ll create an amazing article, but I'm not authoritative enough in Google for that entity unless I have 200 or 300 articles about all the locations you can surf in the world. And AI would be amazing for that right there. So use AI to write an article about all of the different surfing locations. Use AI to create all those pages.
So here's the country, here's a map of all the places to surf, here's the thing, here's an article, and all those things. People aren't going to read those. The point of those is not to be read. The point of those is to produce authority in Google, so they see you as an entity leader and your amazing, super deep article is what ranks. Does that make sense?
Yeah, yeah. So it's also in terms of the journey of a user. They're coming because the audience wouldn't want to know where to surf, and then they're staying for like, “Oh, they're going to help me know which surfboard I should use for that break. And what sort of fins and what time of day and how to become a better surfer in general,” because they've pulled in with what people think they want. It's kind of like the saying, Sell them what they want, give them what they need.
Yes, that's exactly right.
Jaryd Krause: .
And use that fast-wide approach through AI content creation, with humans obviously having some quality assurance and proofreading it before it goes out. Massive caveat and disclaimer there, guys. And then having a few really in-depth articles that win people over and bring in that direct traffic.
Yeah. Because people still want a super deep expert in some cases. But then there are times when I don't want that either. Because if I'm trying to get a quick answer on something, like I'm in Australia, I want to go surfing, and I pull up my phone, I'm like, Best place to surf near me? I don't want to sit down and read your 5,000-word blog on surfing. I just want an answer. Like “Google, tell me, give me the answer.” Like “ChatGPT, give me an answer.” And so you have to think about the users too. Different content can serve different purposes, right? And then also the other thing, Jaryd, if you have to think about organic, for a lot of searches, people don't want to read a whole page, right? Think about yourself with the keywords that you'll search, add, or click on. Oftentimes, I only want to read the top of the page, and then I want to be able to take action and do something.
I don't want to actually read this entire page. I want it to be curated for me. But yet, if I'm reading something that's about a hobby, about a blog, or about whatever, I want to read the whole page because I'm interested in the piece of content.
So when I say deeper, faster, and wider, this does come down to knowing what you're trying to accomplish, knowing the type of site you have, and knowing the user that comes to it and what they're looking to accomplish.
But where can you use AI? So let's say that even where you want to go deeper, use an AI tool to help you with schema and getting your schema really right. Don't do that manually. Use an AI schema tool, right? Use an AI tool to help you generate a bunch of content ideas and write them yourself. Fine, right? Use an AI to do your outlines, and then you write them.
And that's why we like Noble so much. Noble, you can actually say, “I want to write it manually. I'm going to do it the hard way, but now do the outline for me and I'll write it myself.” Fine. “No, just do my H1s and my title for me.” So you can scale back to however deep you want to go and however much you want to write it. Or you can have it help you with certain pieces or all of them.
So our pitch is, and this is one thing to be aware of too. So some people have come to us, and we said, “Hey, if you don't know, Helium works with nationwide parties like companies like Party City and PetSmart and Lands’ End. Huge brands.
So you know, we work with enterprise companies all the way down to smaller businesses. And so we've worked with many, many companies, and we've never had a client with a penalty. Everything we're telling you is safe. It is what Google recommends.”
And so people have come out and said, “Well, should we use AI content? Are we going to? Is it black hat? Are we going to get our site banned?” Because that's a common fear right now. And yes, you can overdo it. I was talking to Andrew Ansley, who's our marketing director at Helium. And he heard of a site that went from zero to 3 million organic visitors in 12 months using just huge amounts of AI content. He’s like, “I think they got a penalty. They got penalized.”
It's not a natural scale. It’s a bit unnatural.
It's too much. But Jake Ward on Twitter came out and showed a site that went from zero to 750,000 that was a DR 51, I think, and it was in the software vertical. And they took it from zero to 750,000 in one year using byword.ai—7,000 articles. And to my knowledge, that didn't get penalized. So I think you can overdo it. But Google came out—if you want a podcast, you can google this. I think it came out in March. developer.google.com. They came out and stated their stance on AI content. So just go to Google and typeGoogle's stance on AI content. The top breaking thing is an article.
They said as long as you're creating it according to the EEAT framework, It's helpful content. We do not care if it is human written, human edited or fully AI written as long as it is helpful to the user and follows our EEAT framework. So for those of you guys worried about using too much AI, you don't need to be worried about that. Google has said it's safe as long as the content is of high quality.
Yeah. And the quality at the moment is coming from human beings putting quality assurance on it. It's not that the answer is “AI, do everything for me, and I'll publish it on my site. I'll cross my fingers and toes.
Yeah, yeah. And this is what I tell clients. Use AI. Use as many AI tools as you can. It's great. There are AI tools that will build the whole site, write all the content, and do everything from the ground up. That's probably black hat if you're using AI for every single part of it, because AI’s just not quite there yet where it can do all those pieces really well. So I wouldn't recommend that. We wouldn't recommend that for our clients.
We do still recommend AI-created, human-edited That's our recommendation. And I would probably still not use AI for creativity yet. Although mid-journey and some of those other ones are pretty crazy, what they're able to do is get there. But at the end of the day, if you think about Google's business model, it doesn't matter whether it's AI generated, make sure what you're offering is of high quality and valuable. And it's like, “Yeah, this is good.” If it's good, you're probably safe.
Love it. Love it. Tim, where can we send people to find out more about what you guys are doing at Helium?
Yeah. Just come to our website, helium-seo.com. We'd love to talk to you. We've got all of our content information on there too. I'm on LinkedIn. If you want to come to LinkedIn, hit me up on LinkedIn and send me a DM. Or just send me an email at [email protected]. I'd love to get back to you too.
Tim, thank you so much for coming on. I really, really appreciate it. It's been such a fun discussion.
Absolutely. Jaryd, thanks for having me on, and I love to talk. We could talk all day long about it and be happy to be there. Hopefully, it added some value.
You definitely added a lot of value. Guys, thank you for listening. Please do yourself a favor and relisten to this podcast episode. It's like when you read a book, you might read it one year, come back and listen to it again, and you're going to find golden nuggets that you did not get in the first round.
Also, for people who are wanting to buy a business and grow it with SEO, make sure you share this podcast episode with them. Give them the gift of giving. Yes, it helps me. Yes, it helps, Tim. But most importantly, why were you doing this, Tim? To help others. So share this.
Awesome. Thanks, guys. See you soon.
Want to have more financial and time freedom?
Jaryd Krause is a serial entrepreneur who helps people buy online businesses so they can spend more time doing what they love with who they love. He’s helped people buy and scale sites all the way up to 8 figures – from eCommerce to content websites. He spends his time surfing and traveling, and his biggest goals are around making a real tangible impact on people’s lives.
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