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What to Spend Your Money On Now That You Have It

So you have some traction, you're making money, now what? How do you scale your eCommerce company effectively? On today's episode, Steve and Susana are joined by MuteSix COO, Daniel Rutberg. 

Episode Transcript — What to Spend Your Money On Now That You Have It

Speaker 1: You're listening to the Spend 10k a Day Podcast brought to you by the performance marketing experts at MuteSix. This is your source for cutting edge insight into the world of online advertising from the team with more Facebook case studies than any other agency on the planet. Here are your hosts, Susana Magaret and Steve Weiss.

Steve Weiss: Welcome, everyone, to another great episode of the Spend 10k a Day Podcast, your number-one source for entrepreneur and mostly digital marketing and ecommerce updates, news and everything e-commerce and marketing.

For all your enthusiasts who can't get enough, here we are again. Today we have a interesting topic. I actually have a couple of awesome people on today's podcast. I got Daniel Rutberg, my business partner and MuteSix.

Daniel Rutberg: How's it going?

Steve Weiss: And, obviously Susana Magaret as well.

Susana Magaret: Hey there.

Steve Weiss: Our leader from our campaign team. We're talking about a key entrepreneur. This podcast is more focused on entrepreneurial endeavors. Specifically one topic when it comes to how do you scale your business.

Now that you have some type of footing and you actually have some traction, you have some money in the bank, like what do you spend it on to scale your business? This is something that obviously, you know, me and Dan have had long hours and long talks about obviously we have some traction on the digital marketing side. What do we invest in most?

And, I think this is a really interesting topic because a lot of entrepreneurs go to the same kind of discussion in their mind. They're like, all right, we got some traction for this new idea that you're launching. Well, what do you invest in? Which specific team members do you invest in? When do you invest in an office? What about financial and legal advice? What about accounting? When do you hire a full-time accountant? When do you hire a recruiter?

These are all questions that we've evolved through as we've grown our business from four and a half years ago, sitting in a one-bedroom basement to where we're at right now.

Daniel Rutberg: That's really well put. Yeah, on top of team, I think team is always going to be number one, right? That's going to be the biggest expense for most companies, the team.

Usually the other biggest expense is going to be rent. If you're client-facing, you have to have a nice office. Is there special tools? Some tools can cost like, 10, $20,000 a month, right? And, when's the right time to do it?

So, when we think about anything money-wise, we think about runway, right? Most companies, I think there was a stat that said like 90, 80% of companies don't make it past the second year or third year or fourth year.

So why aren't they making it? Especially if they have a good business model. If they have a good product, what's preventing them from having a longer life? And, a lot of the times is people have a good business, they start it. Maybe they get funding, they get going. And, now they have a choice.

They have a limited amount of resources. If they make the wrong choice, maybe they have enough resources to make a couple bad bets and keep on going. A lot of the times, you don't have a lot of bets to make. And, if you make a couple bad ones, doesn't matter how good the initial ideas, you'll get buried under debt, you'll get buried under historical mistakes and then that trumps a good business.

Steve Weiss: So, I always say, in my opinion, the first couple hires you make are the most important hires, I think. The first people you bring on is your core group. And, they set the culture and they set the tone for the organization.

So when I think about how lucky we've got, we've hired some amazing people. We've been able to really, obviously, work through a lot of struggles over the years in terms of how to scale a business.

But I always think, when you first get some traction, figure out what treats do you want in your core group? Find people that you could specifically build around. Leaders, the people who are going to set the culture and set the tone of the organization. And that's something I think we obviously have some most amazing people I've ever worked with at MuteSix.

Daniel Rutberg: Yeah. I mean, what we do to make sure... We're not, perfect people. We can't look at someone in the eye and say, yeah, this is going to be the best hire for the next 10 years.

So we make sure that the whole team is involved in the hiring of every employee that comes on. So, starting off the first couple team members. Me, Steve, we spent weeks or months making sure that every new person that came on was a good fit, both skill-wise and culture-wise.

But then, as you grow a company, the existing team members, if they don't have a voice on everyone else, that's new coming on board, you really jeopardize the culture, you jeopardize all that you've invested. And, a lot of the times they'll identify things that you may not see, good or bad. And, I think that's been one of our biggest good ideas that we've done, is incorporating everyone in the hiring process.

Steve Weiss: So number one, what do you invest in? I think that if you look at us as a case study to answer that question, we invested in the best possible team members. So number one, team.

Obviously, what you're doing right now, you probably can't scale alone. And if your big aspirations, you've got to get people who are better, smarter and more hungry or just as hungry as you. And, I think that's something that I figured out.

I started MuteSix and I was the main Facebook campaign manager. I was really good at editing videos and really making magic happen on the news feed and creating action, sales conversions, leads, all that fun stuff. And I realized early on that if I'm the one running ads, then the overall business won't be growing. As much as I love going into ad accounts and playing around and optimizing e-commerce sites, business wouldn't grow if I was the one doing it.

I needed to transfer the skill set and make it widely available to other people who are better than me. I needed to find people who were better than me. And, I think we've done a really good job of finding people that are smarter than both me and Dan. People who have these specific skill sets that we don't have.

And, I think as you look at your organization, you're like, well, what can I do to scale? I have some money in the bank. I have some track early traction for my product. I think we should look for us to find people who will buy into your culture and people who are smart or just as smart or even smarter than you who will do your job even better than you could do it.

And, I think that's something that I would highly, highly encourage everyone listening to this podcast to really take ownership of really building a team and building an organization that you'd be excited to work for and be a part of as well.

Daniel Rutberg: Yeah. I got a couple points I wanted to add to that. I think a lot of people who start companies, they don't really have a longterm vision or they don't really believe that it's going to grow exponentially. If you want to have a successful business, you need to believe that it's going to grow over time and that you're going to eventually have to bring people on to take on the demand of more and more clients.

And then, that'll prepare you mentally. And it will also force you to sort of put in structures so you don't get to a situation where you can't handle growth.

A lot of companies fail because as you grow, you realize that you as a founder can't take on all the responsibilities that come with a growing company. And then, stuff starts falling apart.

But if you plan ahead and you say, okay, you know what? This small company, I'm in a basement, I'm in a small place, but I'm going to grow. What's the next five employees going to look like? What's the next 10 employees?

And if you do that properly, you'll grow seamlessly. If you don't... Every company, it almost changes. It's like a snake skin. You're sloughing off the old skin. You're like a new entity. Every time you grow by revenue or clients, from five to 10 to 25 to 50, however many employees you have or however many clients, you're a different type of organization.

And then, the hurdles you have to address or the things that are the most valuable for you to focus on... Like, when you're first starting off and you're just all by yourself, focus on delivering amazing results be cause you're the one who's providing those results.

But, you know what? Someone's got to do sales. Someone's got to negotiate the rent on the office. There's a lot of things that you have to change your priorities because the value that you get out of that is going to change over time.

If Steve jumps into a campaign today, and there's 40 other people on the team who are managing campaigns day in, day out, that's not a good use of his time five years into the business. It was a good idea right at day one, but not anymore. Sorry, buddy.

Steve Weiss: Yeah. I mean, obviously everything Dan's mentioning in his brief talk pertained to our aforementioned business, MuteSix, of how we've grown and how we've kind of evolved in this complex digital marketing world.

Obviously it doesn't pertain to every business, but the reality is that you need to find competent people who can kind of take over the day to day efforts and really allow you to focus on the grander vision of steering the business towards success and building culture, building leadership and trying to be a leader.

I think that's something that a lot of businesses and CEOs kind of struggle with, is how do you balance both the day to day as well as the other side, which is leading the company and setting the tone and setting the vision?

I think overall, number one, just to go back to the main topic of this podcast, what to spend your money on.

I'd spend my money and my time on building the best team possible in efforts to grow. The only way you're going to grow is with people. I don't care what business you have. Robots aren't going to come in and solve complex problems. You have to focus on people.

And, the way you do that is you either a) get your hands dirty with recruiting, what me and Dan did initially. Or, B) you hire a head of HR. You make that one of your first hires, someone who can come in and be your best recruiter. Bringing on people who are going to bring value to the operation.

Daniel Rutberg: Yeah. And, never skimp on quality talent. If you don't think you can afford the top talent, well, like I said before, you need to imagine that this company is going to be bigger and better in the future. You need to sell that vision to your team.

And, a lot of people, they want to be part of something that's growing and something that's exciting. And eventually, if you have enough people who are really good on the team, then you can compensate everyone appropriately.

But, if you're just starting out and you're in a one-room apartment, yeah, you really have to have a clear vision and you have to communicate that to your team. But, if you hire on and you bring on your most valuable asset and you're spending your valuable, limited resources on team members that aren't up to snuff, then you're setting yourself up for failure right from the beginning.

Steve Weiss: Susanna, you haven't said much. You've kind of just been easing in. Is there anything you want to add to this?

Susana Magaret: I think you guys hit it on the nail exactly what needed to be covered. I mean, one thing I'm curious though, is what are you guys seeing in the space where people are investing their money in the wrong things? Yeah.

Steve Weiss: That's actually going to come up on the next podcast. We're going to talk about what not to invest in.

Daniel Rutberg: Oh, okay.

Steve Weiss: I think what comes to mind is expensive furniture. Obviously, stuff that is not going to drive the bottom line to the business.

One specific player that takes up the whole payroll, I would say. You want to really build character, build leadership. Single contributors are great, but they don't grow the business. And, I think that that's something that me and Dan talk about a lot is that we want team contributors.

Single contributors are awesome, if you find someone who's an amazing single contributor. But, I'd say some other things, obviously cars, houses, paying executives, paying themselves. I mean, it's great to have a lifestyle business that you don't want to grow, but it really depends on what your longterm vision is.

If you want to grow a business that's bigger than you, then obviously taking a massive salary initially is probably not going to be the best bet. But, if you want to instead grow a lifestyle business, then that's probably up to you. But, that's something to think about.

Daniel Rutberg: Yeah.

Susana Magaret: To be conservative on the short term?

Daniel Rutberg: Be conservative on the short term, invest in your team, and everything else outside of your team. The simple rule of thumb that we have is, keep things simple, right?

So, if you're going to invest in a person, if you're going to invest in a tool, if you're going to invest in rent, before you make the investment, you can predict what the ROI is on that investment. Because at the end of the day, any business, if you're alive, you're getting out more than you're investing in. That's what keeps the lights on in any company.

So, if you're investing in people, invest in the best people. And, everything else outside of the actual deliverables, you want to make sure that you set up amazing terms that give you the longest runway possible.

If you're going to negotiate your rent and your office space, figure out ways to get that as low as possible.

Steve Weiss: Credit card [crosstalk 00:14:03]

Daniel Rutberg: Credit card processing.

Steve Weiss: Yup.

Daniel Rutberg: Negotiate that every three months. Just keep going back. Find out how to get that. That's just going to eat you alive and there's no value to it.

People who have really successful businesses who've made it over that initial hump, they looked at their PNL every month and they said, what are things I can push on that's not pushing on their team. Their team is their biggest value. Everything else, figure out how can I squeeze a dollar out of that so I can actually put it more into my team, more into my product and give me a competitive advantage.

And, make sure that all the money is working towards the goal of the company and not just paying some landlord or some credit card processor.

Steve Weiss: All right. Sounds good, Dan. Stay tuned to the next podcast. It's going to be talking more about this topic. A lot more entrepreneurial topics coming up, specifically around what to look for in hiring a team. How to grow a marketing team. There's gonna be a lot of unique topics that we have planned coming up. So, thanks everyone, and talk soon.

Daniel Rutberg: Thanks, guys.

Susana Magaret: And remember, if you enjoyed the podcast, go and leave us a review and hit us up at MuteSix.com for more content.

Get in touch with us.