Agency or SaaS? ($2.4M Earned)

what's going on guys Nick here in this video I'm going to take a departure from the usual sorts of videos that I've been recording which typically deal with tools and uh how to optimize various aspects of your workflow and instead I just want to talk a little more generally about a trend that I'm seeing a lot of people fall prey to unfortunately and uh it's resulting in just a lot of disappointment it's resulting in a lot of people unable to learn the sorts of business skills that I think you need in order to succeed and it's resulting in a ton of people burning out and it's what I call starting a SAS as your first business now a lot of people uh that you know get into business seem to do so or at least want to do so through the SAS route they think hey I'm going to build this fancy amazing product that solves all these amazing problems and it's just going to be there and people are going to sign up to my [ __ ] and pay me tons of money for it what they don't realize is that starting a SAS is probably the worst company that you could do if you've never started a business before and that 99% of the people that are probably watching this video or that haden't started a business before would do way better if they took a couple steps back and then just started an agency instead you're going to add less than 6 months total time to like the turnaround and kind of work cycle um and maybe not even that like you might actually be able to develop your staff significantly faster because of all the money and all of the skills that you're going to learn building an agency so I'm very bullish on agencies I mean I know that uh everybody's like agencies are dead and you know the agency era is pass and all that [ __ ] I disagree completely I mean I think that you know services in general are getting more difficult to manage at scale as people are becoming more aware of some of the major pitfalls of Outsourcing and globalization is equalizing Market rates across countries but I don't necessarily think that means that agencies as a business model are bad to go into and I don't know if they'll ever be bad to go into and that's what I'm going to talk about in this video I'm going to show you logically why you should start an agency instead of a SAS company if this is your first time considering a business hell even if it's your second third fourth fifth time considering a business if you just like want to start a sass the likelihood of success is so [ __ ] low that you would almost always be served just thinking a little bit more about okay is there a service that I could provide instead of the SAS um that you know I can figure all the [ __ ] out manually and then you know I can build a productized or software solution afterwards so here is what we're going to talk about today number one agencies give you more upfront Revenue I'll talk about why that's important number two I'll talk about the business fundamentals that you learn starting an agency that you do not learn starting a SAS and then number three I'm going to talk about the mindset and why agency mindsets are just so much more profitable uh and just better for the vast majority of business owners than the mindsets that people have when they build SAS so let's start with number one okay I view business on like a gradient and the gradient is on the one side you have extremely scalable businesses that can go to the multi-billion dollar Mark okay these are like Network effect consumer software businesses like Facebook or Instagram or whatever where you know like there's so little inherent value that getting the flywheel started is so goddamn difficult like imagine how difficult it was to get the first customer of Facebook let's say versus like an agency was probably uh what's the value there you just go on a you just sign up to a website and look at a blank page there's no friends there's no nothing right but anyway that business is still extremely scalable and it tends to grow better and better with the more people on it right and then you know you make billions of dollars that's on one side that's a super scalable business and then the other side you have unscalable businesses that can make a lot of money very quickly but then can't really go past that cap and these are agencies can make a lot of money very quickly but the vast majority of people that run agencies just can't scale them because they either lack some management knowhow or maybe the service is inherently difficult with scope or all that [ __ ] so the point that I'm making is I just want you to view business as this like this gradient where you have scalability on the one side and then you have uh you know just like fast easy growth easy pickings initially on the other side and if it's your first business like you should not be starting the extremely scalable extremely difficult to get running business you should not be trying to start the next Facebook build a SAS when you don't even know the fundamentals of like a client acquisition or anything like that you should go for the easy wins you should make a [ __ ] ton of money extremely quickly like myself and many other of my friends that are in the agency space and then once you have those fundamentals it becomes so much easier to do everything later on and you also you have like a fair amount of cash which is uh I think just like existential existentially really beneficial okay so here are uh some of

the maybe not facts some of these are heavily opinionated but uh let's be real my opinions are basically facts at this point um if it's your first time running a business you should know that agencies are going to make anywhere from like 10 to 20 times more Revenue upfront than a SAS company will even if you're doing some type of monthly billing with an agency like you're going to make just so much more consider a managed service with an agency like graphic design or uh I don't know in my case content writing or maybe some big SEO package or whatever like you're charging you know three four five 10 $15,000 a month for that package most the vast majority of the low touch SAS companies that you know people are thinking about when they're like oh I want to start a SAS that like solves this time of little problem you're making like 10 or 20 bucks a month for it um you know how many customers do you have to get uh to equivalent that right like 500 or something so it's like what's going to be faster you building the Flyway up to get 500 customers when you don't even have any of the infrastructure built up or you just going out hauling ass and then getting like one customer that pays you 10K month obviously the ladder and that's why agencies are so much easier as a first Revenue

the second thing is and this is sort of related to that point having a bunch of money changes the way that you do business the vast majority of these SAS guys that you know either think they have to finance or and I'll get into financing later Finance or you know they've just never really operated a business before they're like super afraid to like invest money into growth and marketing and stuff like that uh it's just because they're broke they don't have any money with an agency you make a fair amount of money very quickly and then you can start making like actual investment and operational decisions that you know have outsized success potential with your Capital uh you know if you make like $30,000 one month and then after operating expenses you have I don't know let's just say 10K left over so you have like 40% margin or something like that that's still $10,000 freaking dollars um you know how many ad campaigns is that or cold email campaigns like you can actually start hiring people pretty quick um so there

there's just a lot of potential you learn how to use money and handle money a lot faster which is obviously extremely avable um another thing is uh you can also just like make a fair amount of money extremely quickly and then use that money to pour gasoline on the fire of a sass company later I see tons of people do this and man this is just like the number one most like statistically likely way to achieve success in the SAS field just having a ton of money while also not being relying on outset investors um and then there's also just a bunch of Lifestyle benefits which I find really hard to operationalize but like you know a lot of these SAS Founders and I see them on Twitter every day and I talk to them on Twitter I'm like dude you should just make some money first like um a lot of these guys are just like eating [ __ ] packet Ramen all day or they're just like super freaking broke and they just hate their lives and they're chugging along this dream right they can't pay their bills rent they're always stressed out always worrying about the next dollar meanwhile they picked literally like the most difficult way to make that next dollar it's just completely illogical what you should do is you should solve that lifestyle uh myopia first right like you should solve the blockers that you have that prevent you from being able to make long-term decisions because you're always so worried about your rent and your food and [ __ ] and then once you have that all taken care of and like your near-term security is handled well then get one rung up on the maso's hierarchy baby you can actually start thinking long term about the sorts of bigger plays that you want to do with your life uh and a lot of the time you know that intentionality leads you to way greater success than just starting a SAS company and hating your life for a few years does on the outsize chance outsized unlikely chance that you will succeed big which most people don't so

that's number one number two uh business fundamentals so I touched on this earlier but you know you have money so you need to start making decisions with that money um in addition to that another really cool part of agencies are that uh the vast majority of agencies provide some type of ongoing Service as a result of providing an ongoing service you need to learn client management skills you also need to learn team management skills and like project management skills but I guess all those somehow go hand inand but client management is one of the most important impactful skills that you can learn in business because client management is very similar to customer management and customer management can be done either by you jumping on the phone or sending them an email or when you later design your SAS just building in like user experience patterns that handle a lot of the [ __ ] that one of these customers or c might be giving you up front the only real way to get in the mindset of a customer somebody that is paying you a large amount of money is just to do it really often and it's very difficult to do so when you know that your justification or like you know the question that they're asking is this worth $5 like it's very difficult to understand that now if the question they're asking themselves is this worth $5,000 well then he can start [ __ ] learning this [ __ ] pretty quick right um pardon my French if you don't like swearing you should probably not watch my videos um any who so you learn client management you learn uh Team Management as well like agencies are a very people heavy business as automated as you know they can get nowadays like my business one second copy I'd considered extremely automated it's like very productized form of content writing there's very little like account executive BS there's very little project management aside from like the team sort of self-managing which is great um but you still have to hire people to get the stuff done right like you can probably work as a solo operator as freelancer up to like 10 or 20K a month but after that point you start needing to like hire people and your ility to manage a team uh is so much easier to learned in an agency where like you guys are doing a service together that's some type of deliverable with the client expectations needing to be manage and that sort of thing than in a SAS company when you're usually just hiring like some customer service or support rep uh it's just like one or so people for like the first like 20 or 30 or 40K so you learn how to manage a team which doesn't just make you better at running that agency it just makes you better like a more charismatic a more humble a more compassionate human being which is obviously just going to benefit you more generally in life um and then yeah you also learn how to manage projects and your ability to execute projects for your clients are going to roll over into your ability to execute projects for yourself one of your later projects might be k a sass well it's like okay well [ __ ] now I know how to actually like do that from a project management perspective I need to scope this out need to determine like the market demand for it I need to build like an MVP as quickly as possible and then I need to like validate and iterate on that right so you get to learn these things extremely quickly in an agency um and I've probably compressed like 10 years of running ass sass into like one and a half to years of running an agency uh which is super valuable and then the last thing is um the mindset that you have as a result of having an agency like agencies for the most part the vast majority of them do not raise money because there's just nothing proprietary about that business model and Venture capitalists do not give a [ __ ] about investing in stuff unless there's like a one a 0 1% chance you're going to be the next Uber even if your you know value proposition is good nobody's going to give a [ __ ] hence agencies find it either very difficult to invest uh they don't really want to spend time investing or whatever the case is that just means that like they're forced to bootstrap the vast majority of the time or Supply some type of like internal Capital to like keep the thing uh to selfinvest or get the flywheel started the difference in spending your own money versus somebody else's money cannot be overstated I work with like when I started my agency I did a bunch of research into the other companies in the space and all these businesses that like tried to be content agencies that also provided some like proprietary service and can't tell you like the four or the Five Guys that did this like back when I first started my business the four or five guys that like raised a fair amount of money and then tried to do some type of like Twist on just like the tried andrue service business model uh with like you know artificial intelligence or like some type of Fancy Pants like request ordering system or whatever you want to call these marketplaces um like the vast majority of them are now dead because they were spending somebody else's money they weren't spending their own money and when you spend somebody else's money it's so easy to forget how valuable that money is you really do lose the value of a dollar um when you cultivate a scrappy mindset where every dollar you spend is a dollar that you have to acquire from a customer or Supply yourself you become so much more creative about how you make that make those purchasing decisions you become significantly more like profit aware which is like obviously the most important freaking part of the business is cash flows people um you know why the hell would you operate at a negative for like the first 15 years if that's not your goal right uh but but you learn basically all the fundamental skills required in becoming a great business owner and then you cultivate this Scrappy mindset which l anybody aside from like a select few people in Silicon Valley venture capital Community like care about the most and those skills are going to take you extremely far in any business that you work with whether in the capacity of a client or whether you know you're starting your own SAS company or that sort of thing so this gorilla Scrappy sort of mindset this cash flow first this profit first mindset uh that is like the most valuable sort of just like uh Paradigm to use in business that I've personally ever found and the vast majority of the guys that are like I'm going to make this SAS company it's going to be unicorn and you know I need to go and get financing they never learn that [ __ ] another thing is uh looking for fundraising like optimizing or fundraising is a fundamentally skill than optimizing for profit uh like I just looked up SAS financing here and just look at all these [ __ ] charts with all these different you know steps and that sort of thing like this is like a very fundamentally different skill set that you're optimizing for you're attempting to impress investors with the possibility or potential of an idea rather than impressing customers with like concrete value that you're actually delivering today and you know I in 99. 9% of cases I would always prefer that first part I'm not here to sell a dream I'm here to like live an amazing Kick-Ass lifestyle make more money than 99% of people and work like less than 10% uh as much as my peers do to do that so don't optimize for impressing a bunch of people in suits optimize for making your customers love your product and then wanting to work with you uh long term and then the last part I'll say is you know really know why you're getting into business in the first place and the vast majority of people as I mentioned earlier are not in business because they want to make the next Uber or the next Facebook or whatever they're in business just because they sort of intuitively realize like hey I'm a pretty high performer and why should my performance earnings be capped by what somebody else says that I can make right why should I work at a company where I'm forced to just stare at a clock all day when in reality I can do most of that work in two or three hours like that's the vast majority of people that are in business and watching this video um you know if you're a high performer you just want like an outsized impact every hour that you spend delivers let's say 15 hours what you'd make in a company or something like that which is most people that are watching this video uh you know starting a SAS just does not make sense you can eventually have that SAS running and you know you could start it in a year or two after you've learned the rest of all these business practices and your expected value and your expected chances of success will be much higher and then it Mak sense to start a assas because now you know what the [ __ ] you're doing and you can actually make 10 or 15K a month keep 90% of it and then only have to work a few hours a week that's good but you know if if it's one of your first time starting a businesses times starting a business that's not you and you should just be pragmatic and intelligent and smart about it make some money as quickly as humanely possible and then use that money to grow whatever the hell else you want to do so I hope that makes sense that's just a little Deep dive into a thought that I've been having recently and what a lot of people on Twitter have been asking me about I if I could go back in time like I've ran through dozens of different business models at this point if I could go back in time I would just try and start an agency in a very simple service space that's well- defined to go uh to start and the reason why is because I don't really want my the focus to be on like imagining or dreaming up this new incredibly complex business model it's like I don't know any business model so I might as well just learn one that other people have validated for me learn that [ __ ] real well and then I can worry about you know making that new and fancy later on that's my mindset I hope that helps you if you guys like this video please like comment subscribe do all that fun stuff for the YouTube algo and let me know if you guys have any questions or anything like that you want me to cover thanks so much for watching have a great rest of today