#222: A is for… Analytics. Agency. Acquisitions! with Bob Morris

There comes a time in every analyst’s career where they consider starting up their own consultancy. Or, if not that, then at least joining an agency or a consultancy. The nature of most businesses is to grow, and with growth comes the potential for an “exit.” This episode dives into that world in an attempt to demystify some of the ins and outs of the acquisition of analytics consultancies, from the owners’ perspectives, employees’ perspectives, and acquiring companies’ perspectives. Since these are all perspectives that none of your dear co-hosts really have, Bob Morris, the co-founder and managing partner for Bravery Group, joined us for a discussion of EBITDA, TTM, CIMs, and even aspects of the space that are not captured by acronyms!

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Episode Transcript


0:00:05.8 Announcer: Welcome to the Analytics Power Hour. Analytics topics covered conversationally and sometimes with explicit language. Here are your hosts, Moe, Michael, and Tim.

0:00:22.7 Michael Helbling: Hey everyone. It’s the Analytics Power Hour, and this is episode 222. Much of the business of data and analytics gets conducted within consulting firms and agencies and many of our listeners have spent years of their career working within one of these organisations. What goes on within these businesses when those companies are bought or sold and it’s an area that many of us have been impacted by, but not that much is known about. Well, we’re gonna try to do something about that. So get ready to discuss P&Ls and EBITDA and future cashflow or something, because we’re gonna talk about acquisitions in the agency space. Hey Moe, how you going?

0:01:08.4 Moe Kiss: I’m going pretty great.

0:01:10.4 MH: You don’t currently work in an agency, but you have in the past, I think. Correct?

0:01:15.1 MK: Yeah, definitely. And there’s… I mean, we’ve talked lots about how everyone should spend at least a bit of time at an agency, right? Like how good it is for your career.

0:01:24.3 MH: Sure. All right. And you have friends there, so this is important to you too. All right. And Tim how are you doing?

0:01:32.5 Tim Wilson: I’m doing great.

0:01:33.4 MH: Do you have an agency that you work at yet or what… Are you not prepared to make an announcement at this time?

0:01:39.7 TW: No announcement at this time.

0:01:41.1 MH: Okay. We’ll get… Well, you’ll hear it first folks on the podcast. No, but Tim, I think you and I have spent, at this point most of our analytics careers consulting in some capacity. I think.

0:01:53.7 TW: Not until you said that, that I realized that yeah, I definitely have now spent greater than 50%.

0:01:57.6 MH: Yeah. Same, same with me. So, and for me, as a majority over a small analyst consulting firm, this episode may be personally very self-serving to educate me, but anyway, we needed a guest, someone who could guide us through the ins and outs of the merger and acquisition space. Bob Morris is the managing partner of the Bravery Group, which is an advisories firm on the buy and sell side of agencies and consulting firms. Prior to that, he held numerous senior leadership roles at companies such as ICF Next, Ogilvy, Blast Radius and Critical Mass. And today he is our guest. Welcome to the show, Bob.

0:02:36.6 Bob Morris: Thank you sir. Glad to be here.

0:02:38.0 MH: Awesome. Well, we’re glad to have you. And I think this is an exciting topic because it’s a, not necessarily about doing analytics, but it’s something that impacts so many people in analytics. And so we’re excited to have you. But I think the first question, Bob, is how do you get into this business? How do you become the guy who helps guide the sales and acquisitions of all these companies?

0:03:02.8 BM: Wow, that’s a big question. Yeah. So I… My background is a little bit different than a lot of other people. If you look at the category from an M&A perspective, you’re gonna see a lot of folks who came from, backgrounds at Wharton, University of Chicago, Stanford, Harvard. That wasn’t kind of my course. I didn’t start in the industry as an M&A lead, if you will. And so what ended up happening actually was, one of the firms that I co-founded was really deep in kind of the digital transformation space. And as a result of that, we had a lot of partners that we worked with and one of those partners kind of recognized the value that we brought to the table as far as how unique we were just from our perspective on the industry.

0:03:50.4 BM: That company was actually, ICF International publicly traded, and they came to us when they were looking to make an acquisition in the space. And as a result of that, we took a buy-side position, which was a little bit unique for us at the time. It wasn’t something that we were specializing in or an area that was of interest to us, but we felt like we could do a really good job and we did. We led the acquisition of Olson advertising, which was a roll up by a private equity firm and completed that transaction, my goodness, what was that? About 2014, somewhere around there and that was kind of the beginning of the process. So from there, ironically, about a year and a half later, they came to us and had an interest in acquiring our firm. And so there I go from buying companies to selling my own. And so that kind of set the path forward for where we are today.

0:04:45.3 TW: Can I ask that whole… That buying and… I guess buying and then being sold, and this is… I mean this is one of many questions I feel like over the last couple of years, a little bit, even like in the analytics, in the digital analytics space, it’s like every company, save one that I can think of that was a consultancy 10 years ago is now being rolled up and probably half of those have then been rolled up again. So like what you just described sounds like it was one of those where you were… You were acquiring, but then that was, you were then being acquired. Like I don’t know how I just completely missed that. Is that really, really common? Like you’ve got the small buying the very small, then the medium buying then the… The small and then like as a path to growth to then be acquired. Is that just a standard thing?

0:05:40.0 BM: So that’s a couple questions, right? So I’ll try to answer them.

0:05:43.2 TW: That’s what I do. And if any of ’em made sense, just pick the one.

0:05:47.4 BM: Yeah. No. So a couple things, right? I mean, so we were acquired primarily because integration is hard, right? So you buy a large firm and you’re working to do that integration and sometimes it’s more valuable to have external capabilities that support that. And I think that was part of the rationale for our acquisition and also our capabilities and bringing our capabilities into the organisation, which, were digital transformation capabilities. So from that perspective that’s the answer there in terms of the stacking, if you will, of companies, right? So meaning the small kind of buys maybe another small firm and integrates it, and then the next thing you know is they’re a little bit bigger and now they they might buy something even a little bit larger and then they end up being acquired by somebody who’s a little bit larger.

0:06:37.2 BM: Yeah, there’s a lot of that, right? But it also comes down to what’s the objective? What’s the objective for you as an owner of a firm and what do you want to do and how are you trying to build your firm? And do you want to exit? And at what size do you want to exit into to what type of company? But yes, there’s a lot of kind of the, you get a little bit bigger and somebody buys that and then somebody else a little bit bigger buys that. And every once in a while you’ll find something that is actually relatively small, but it’s backed as an example by, PE and it’s not that large today, and it goes after something really, really significant because the PE sees a real opportunity to be able to do something that’s advantageous for their portfolio and what they’re trying to achieve. So it’s not necessarily a linear kind of path, if you will, when you start to look at some of these, they don’t necessarily look logical, but yeah. So there’s a lot behind it.

0:07:28.9 MK: So do most business owners sit out with the intent to do one or the other to like stay as their own company or to eventually sell? Or like, is it such a mixed mishmash that it kind of depends on the business owner?

0:07:44.3 BM: So it is a mishmash, but I… But I would tell you that part of it goes back to when you found a company, right? So it’s such a great question, right? Because when you found a company, the question becomes what’s the structure when it’s founded? So a lot of times if it’s a sole proprietor, they may just wanna run it for the life cycle of however long they want to be in business, right? And it may be a very healthy annuity, right? So it’s profitable, it throws off a very nice profit and therefore I pay myself well and I have distributions or some other mechanism that I… That I leverage. And that’s one approach. The other approach is that you might find is that, typically if you’re gonna have multiple owners, then you’re gonna find that you’re going to… You’re probably going to end up at some point in time doing some type of a strategic exit, right?

0:08:32.6 BM: Because one founder or another wants to exit. And again, you can do that in a lot of ways. You can bring in another founder and buy out someone, or… I’m sorry, another stakeholder in the company and buy out someone. There’s a lot of different avenues that you can… You can go down, but it’s, it solely depends on what that original structure, what that original intent is. Most individuals who’ve found a company aren’t necessarily looking for, I’ve got a three year exit strategy and that’s my plan and that’s what I’m going to do and I’m gonna build my business and then I’m going to have a liquidity event and go away. That’s just not the case in most instances. But again, if you turned around and you said no, what we did was we decided to found a company, we took some angel money, then we pivoted from Angel to venture capital and then from venture capital to private equity, those moves are all intended specifically to have a very significant exit at some point in time. So it comes down to, what’s the philosophy that you have?

0:09:28.8 TW: Is that kind of a… Is that one kind of demarcation that if you are… Because you’ll hear the phrase analysts… I’m just gonna… Or I mean lots of people, I’m just gonna hang up my own shingle, bootstrap or hang up my own shingle, I think sort of fall in the category of, well, we’ll see where it goes, but I’m kind of heading towards this so-called lifestyle, run it, hopefully I’m making good money and see where it goes versus I’m taking… Somebody is investing in this. If somebody is investing, does that almost definitionally mean there needs to be an expectation that there is an exit with a valuation that has a multiplier that pays them back? Or is that an oversimplification of how to look at that like where they are on day one?

0:10:20.8 BM: No, that’s actually, it’s… It’s a good… It’s a good explanation, right? I mean, the reality is, is that if you go off and you raise money, right? So you go to friends and family, angel investors, right? Is what we refer to them and they put money in, at some point they have an expectation that they’re getting their money back out and they’re getting their money back out at some type of a premium. So the business needs to be able to deliver against that premium. And typically to get angel investors to invest in the firm, there has to be a vision for what is a mechanism of liquidity on the end of that investment. Otherwise it’s just, here I’m putting a bunch of money into it and will I ever get my money back out? Right? That’s not really the intent. And so I think that you have to kinda look at it from a… From a structural perspective as far as when you start a business, how are you financing the business? What’s your real objective? Are you trying to build something that will be really substantive or are you building something that is, you noted, is it a lifestyle? It’s great, right? I only have to work four days a week or three days a week and it’s a decision as to where you’re trying to go.

0:11:30.1 MH: Alright, let’s step away from the show for a quick word about our newest sponsor, Piwik Pro. Tim, I know you’ve tried this out.

0:11:37.1 TW: I have. I implemented Piwik Pro on the podcast website a couple of months ago. It was pretty quick and pretty easy.

0:11:44.0 MH: I know, and, opportune, there’s only a few days before Google Analytics, universal is going away. And when I logged in, it was easy for me to find my way around the Piwik Pro platform. It’s structurally very similar, having great predefined views for those less technical users, but it also has great advanced features like custom reporting, segmentation and calculated metrics for your more power user.

0:12:10.0 TW: And Piwik Pro has both a free core plan as well as a paid enterprise plan that adds some scale and adds some additional features.

0:12:17.4 MH: Yeah, we’re already loving having Piwik Pro on board as a sponsor and on our website. Head over to piwik.pro and check ’em out for yourself with their free core plan. That’s piwik.pro. And now back to the show.

0:12:32.8 MK: Could I ask a really naive question? I guess I don’t… Particularly, when we’re talking about sort of like analytics consulting and firms and whatnot, I guess I didn’t realize that lots of people invested in them. I kind of just assumed rightly or wrongly that lots of people were like, I work at a consultancy, I do analytics consulting, I’m now gonna go set up my own business again for various motivations, but income stream is one of them. I guess I’d never really… Like how common is it that that type of business would be getting investment? ‘Cause it sounds like it’s… Well, way more common than I probably realized.

0:13:09.5 BM: Yeah, again, a great question. So we have a tendency to focus… So Bravery group has a tendency to focus more on the data and the analytics side of the… Of the equation. So, we may look at firms that are more agency esque, right? So there are a combination of, creative and UX and CX and a number of different kind of flavors of services all the way to product firms, right? That specialize in performance AI. The reality is, is that if I look at the list of buy side requests that we’re looking at even right now, analytics is in every… I mean it’d be rare for us to find a buy side somewhere globally that we’re talking to today that doesn’t have analytics in their target list.

0:13:58.6 MK: Just to clarify, when you say buy side, that means a client of yours wants to buy something with this particular functionality or product offering or whatever it is.

0:14:08.4 BM: That’s right. And it can either be a client of ours or it’s… We deal with a lot of firms that approach us, that want to give us their portfolio of what they’re looking to buy and then…

0:14:17.8 MK: Correct.

0:14:19.0 BM: They’re asking us if we have a firm or if we know of firms, and that helps us also to understand the trends, right? What are… What are people really looking for at this point in time? And analytics is an underpinning of a lot of those companies that they’re looking to buy. It may not be the core service offering that is sold into the market, but underneath it you’re gonna find data, right? And data is a heavy component of just about everything that we are having conversations around. And that could be everything from, we’re looking for firms that are… That have specialization in Salesforce, we’re looking at firms that have specialization in Amazon, right?

0:14:58.2 BM: From a retail perspective. All of those companies that are looking, see those services through the lens of data, right? They recognize and understand that if you own the data and you control the data, then you have the ability to be able to deliver really significant results. And in today’s day and age, if you really look at it, it’s frustrating to be honest, on one hand. It’s frustrating when we run into firms and you… And you are talking to them and… And when I say we run into firms we’re talking about like sell side firms. If you run into a sell side firm and you find out that they just have zero analytic capabilities, they have zero data capabilities, they’re just super creative. In my opinion, having been in this space for almost 30 years, those companies are gonna struggle, right? On a forward looking basis because data underpins everything. And if it’s all about, beauty and creativity, the reality is, is that, we… You can even be talking about user interface design and product design, digital product design for financial services company. If you’re not measuring it, then what are you doing with it? Right? And so that’s just a general perspective.

0:16:06.9 MH: And so in a certain sense, even then those agencies that are doing that work become buyers of analytics firms just so that they themselves become sellable. Right?

0:16:17.5 BM: Why they’re sellable or viable.

0:16:19.8 MH: Viable, right. Either one…

0:16:21.5 BM: ‘Cause the other side… Yeah. ‘Cause the other side of it is, is that you’re not very viable on a forward looking basis if you’re in significant pitches and you’re up against firms that actually can show you, in real time dashboards that show you the performance of the business, right? Or the performance of the campaign or the performance of the funnel, all of that stuff. And then you walk in and you have another agency and it’s kind of like, oh, bright shiny object, here we go. Right? I think that… I think viability is becoming more and more of a… Of an issue and especially in light of all that we’ve seen in the last six months, with AI.

0:16:58.7 TW: Well, and… And I… I mean back to Moe’s… I… Well one, I’ve certainly… I worked at a creative agency and found out like within a year or so of me leaving and we had a small analytics capability. I mean, it was… It was… It was tough. It was being the… I always said that their analytics was more like QA and project management. It was kind of the, yeah, yeah, you gotta sell that as well. But found out several years later that they had been… Around the time I was leaving and then shortly after they were shopping around to buy an analytics agency to merge with and then ultimately they got acquired by IBM. So it was one where that was a it. And… But I think Moe to your question, and this is where I feel like my view in the digital analytics space, like prepping for this episode, I started listing off the different consultancies I was aware of and I don’t have deep knowledge… There might have been some friends and family angel type investors, but a lot of ’em to me felt like they were consultancies that were bootstrapped, they were successful, they were growing at a steady pace, and then the owners just got exhausted. It’s like, either you don’t grow, you’re doing okay, you’re exhausted, but you’re one to three people and you say, forget it, I’m going back, I’m gonna just gonna to shut it down and go work for another company. Or I’m at 20 people or 30 people and I’m exhausted…

0:18:27.0 TW: I want to sell it, I want to get my life back because it’s crushing me but I don’t know… It does seem like it’s tougher in general those… A consultancy a professional services analytics thing as opposed to a product or platform analytics thing. I don’t see a lot of the external investing again from my narrow little view. So I guess Bob there’s my round about question. Yeah I mean are you seeing… Do you see these professional services… Analytics professional services under some guise, are those getting started up with an eye to an exit or are those more coming in from… There’s a creative agency that’s buying something that was bootstrapped like you were just talking about that they don’t have the data chops they need to round out what their portfolio is before they become viable.

0:19:31.2 BM: Yes so I’ll answer it in two different ways. So on one hand the level of M&A activity in the data and analytics side of the business on the consulting services side is really significant, so that might surprise you ’cause these are companies that might have 15 people, might have 25, might have 50, but they’re specialized.

0:19:56.8 TW: And they’re being… You’re saying they’re… M&A they’re being acquired.

0:20:00.5 BM: They’re being acquired. Yeah. Oh yeah so this one’s public… We did the Napkyn Analytics acquisition…

0:20:09.0 TW: Oh Michael you didn’t share that.

0:20:12.7 BM: So we didn’t meet…

0:20:12.6 TW: Well co-founder of the show.

0:20:12.7 MH: Yeah Jim Cain was the original co-founder of this podcast so… Yeah.

0:20:18.0 BM: Jim and Nish so they were acquired actually by Kepler and Kepler is part of kyu Collective which is K-Y-U Collective. And kyu Collective is actually owned by Hakuhodo, the private equity firm out of Japan. So that’s an example of a firm being acquired, we have one that we don’t publicly disclose but another one that if you dig around you can probably find it, that we’ve done, it’s in the exact same space. And so from a Google analytics perspective that’s an area of specialty that you see a lot of firms that have been making acquisitions. In particular you’ve seen a lot of firms that wanted to come into the North American market and one of the ways that they’ve come into the North American market out of places like Europe and other places is through the lens of data and analytics. They would prefer to come that way than to come straight in as a creative agency or creative boutique that’s now gonna try to compete against 100,000 plus agencies in the North American market. And if you look that up you actually find that number is probably relatively accurate. It is an insane number of… ‘Cause… Look, the truth of the matter is, is that I started a long time ago in this space. I tell people that I started when it was a 1.44 meg disc and there were four colours and that’s true.

0:21:36.2 BM: So I’ve been around a long time and I can tell you that barrier to entry is basically a laptop and Photoshop if you want to be an agency. There’s so little barrier to entry but when you start to get into data and you start to get into the depth of what you can do from a data perspective, it is not as easy number one, it may be fine to get to a two-person, three-person, four-person, five-person type consultancy but when you get to 25 people, 30, 40, 50 people, you have magnitude, you have scale and people want to buy scale and capability because with that you’re bringing all this talent and hopefully you’re also starting to build out real IP so it’s not just consulting services and at some point I do want to chat about that.

0:22:20.7 MK: So one thing that’s kind of in the back of my mind and you’ve mentioned a few examples already so it sounds like one of the reasons that people would be purchasing is scale, they want to grow quickly. Another is to bring in a particular capability or a technical expertise or whatnot, another is to enter new markets different geographic regions whatnot. There’s an acquisition here in Australia by a European company and they wanted to basically have an Australian footprint so they bought an Aussie company. I’m sure there’s other reasons for acquisitions that I’m not aware of, like, those sound like the big three but there must be other drivers I guess.

0:23:00.2 BM: There’s a lot of drivers, it can be everything from competitive risk and threat, it can be clients that are driving you in a particular direction that are requesting a specific set of services. We talk about offensive versus defensive so defensive acquisitions are clearly… You’re at risk because there’s a large ecosystem of agencies and if you think about big big clients you think about companies like the American Expresses of the world, the Walmarts of the world, the Targets of the world. And you’re operating in a very large ecosystem of different types of firms and so in many instances the acquisition may be specifically because you have a very large account and there’s risk. There’s risk in the profile and so it really comes down to just such a variety of reasons for acquisition that sometimes it’s hard to pinpoint exactly what they’re trying to do until you really get under the covers and then you can start to figure out Why do you want this. But I think your question is a really good one because the fact of the matter is that if you don’t enter into the objective from a M&A perspective with a very fine point of what you’re trying to achieve, you find lots of failures along the way and there’s a graveyard of acquisitions that have been done especially in the agency space where two years, three years later the asset is basically just…

0:24:24.7 BM: It no longer really exists and it no longer really adds value because they didn’t really understand what it was that they were acquiring and/or the cultural alignment was so poor that what you have is just massive turnover and then you don’t end up… You spent all this money and you don’t have anything. Which is one of the reasons why we really espouse that you need to have a combination of consulting services and intellectual property because if all you’re buying is a consulting services, the consulting services are people and people can leave and if they don’t like the culture that they’re going into and they don’t like the fact that now rather than being able to just focus on their work they’re being told that they have to focus exclusively on things like utilization and realization, they have to focus on the EBITDA number and they have to focus on the quarter of a quarter growth percentage, all that stuff suddenly makes them go, you know what I just don’t like this.

0:25:12.6 TW: Doesn’t that seem like… That almost to me feels like that’s just the expectation, if you get snapped up by one of the big three it’s just like… It feels like it’s a given that it’s like there’s gonna be either retention incentives of some sort, be it a retention bonus or earn-outs and then you literally can mark the calendar and say the main talent and maybe the people who had only barely started at the company and they got acquired they don’t really know any better but anybody who was saying, I was at this… We were of size 15 people or 30 people or 50 people and now I’m in a 10,000 person company and the vacation request system is ridiculous, it’s hard from the outside looking in of like where was the value? It’s like you took this thing and money changed hands and it got absorbed but the story is that, Oh those capabilities were brought in and the IP was brought in and integrated, in reality it seems like, no, money changed hands and then slowly people left and there’s no vestige left of it at the acquiring company and it feels wrong.

0:26:29.4 BM: No I mean I think… Look the truth of the matter is that there are a million reasons why things can go wrong in an acquisition. There just are. That might feel a little bit of a hyperbole. But here’s the thing, when you break it down number one, the first issue is that you have to understand why you want to sell. And then the second thing you have to understand is what is it that you want to achieve on a forward-looking basis with your team? And I can go down that list and basically just kind of keep building it out and saying like. Well what are you gonna do for the team? How does a team benefit? One of the things that you see that can happen very easily is that people become very disenfranchised or disenchanted in this process because it’s like Look I’ve worked for six years for this company and two-thirds of the IP has something to do with the work that I’ve done over this period of time and a founder decides that they’re gonna sell and then I don’t get anything, I get zero and now I have to go in and now I’m in a new organisation…

0:27:37.6 BM: It’s a struggle, there’s a lot of cultural issues. I’m being told now that I have to be even more available than I was previously, all these things start happening. And so part of it is also on the founders of the companies to ensure that it’s right for the people. It’s something that we look for when we’re talking to companies it doesn’t always play out this way, we would love if it always did but we’ve been very fortunate to have clients that value the teams that they have and value what the people have done for the organisation and as a result look at it to that lens and want to make sure that their people land in great positions and want to be there. And it’s gonna be sticky. And there’s just so many factors that are part of it.

0:28:20.4 MK: What’s some examples of what founders have done for their staff. Obviously there’s money, I’m sure a component but, there must be other things as well that founders can do to help their staff when they’re getting acquired.

0:28:34.2 BM: I mean there’s a lot that you could do. It’s everything from the structure of the deal itself, meaning does my team stay together? If my team was a team and now all of a sudden what they are is just they’re in a pool of resources and they don’t work with each other anymore and they’re just being assigned to various sets of projects. That’s harder. It’s hard culturally. So part of it is what is the landing for the individuals, other parts of it are, What’s the upside for them? Did you negotiate things like the stock for your employees in this new company and ultimately if they’re contributing and that stock is growing then they’re getting all that incremental value. Are there bonuses? Are there MBOs, Management By Objectives. So are there key achievements that these guys can be measured upon in which then they can rapidly move. One of the things I think that’s really important and you see this a lot with companies is they reach a threshold. If you’re the vice president of data engineering, where else can you go inside of the organisation that you’re in today if it’s a 25-person company. What’s the next step in your career? What’s the next level? And a lot of times people reach… Call it the ceiling. You can’t really move further because this is what the organisation has in terms of org structure.

0:29:57.9 BM: This is what it does in terms of capability but by being acquired you all of a sudden free up. Here comes all of this new opportunity for my team that my team has been wanting to have but I couldn’t really provide to them because even though we might be really growing or we might be providing really great services, our clients… It might even be our client base. Our client base might be mid-market and all of a sudden you have an opportunity to be able to go and work on Disney and you’re absolutely thrilled by the fact that you’re getting to work in new data sets and really interesting pieces of work. So there’s a lot of factors that go into it. I wish that you could say… I love it when people write these books and there’s tons of them around… The science of M&A and I always kind of laugh because I’m like there’s a lot more art than there is science. The Math portion of a transaction is pretty much a science. It’s a left or right exercise. The rest of it we’re talking about humans and we’re talking about personalities and we’re talking about ambitions and all those things are not a science.

0:30:57.1 MH: Why don’t we do something really quick and just talk about that left-to-right Math piece just for a second…

0:31:07.6 MK: Not quick. I really want to find out about this.

0:31:07.7 MH: No that’s fine but I think it’ll be instructive for our audience because I don’t think that’s necessarily something we… In our day-to-day as consultants we always even are exposed to in terms of like, Oh yeah the structure and the revenue and the profit margin and all the different things that maybe are looked at to value a firm.

0:31:27.9 BM: Yeah so there’s a number of factors that kind of go into it and every business is different so I just want to start off by saying every business is different and two, that every category of business is different. Grocery is a very, very, very, very, very low margin business. You’d be shocked at how low the margin is in that business. It’s something like 2.5%. Everybody thinks a grocery makes a ton of money and it really doesn’t. So this is all about scale and operational efficiency. In the data and the analytics side of the business and really in digital… And I hate to use the term digital because years ago it meant something now it’s like, Let’s go look at Scott Brinker’s list. How many companies do we have? How many categories do we have? But if you look at a business and say, is the business well performing, an acquiring firm typically is gonna want to look at a business and go, You know what? Our minimal threshold on an EBITDA perspective is about 20%. So EBITDA for anybody who doesn’t know is basically Earnings Before Interest Taxes Depreciation and Amortization it’s just a number that everybody looks at and goes, Okay well, how healthy is the business from a margin perspective and 20 is kind of the target threshold that most acquirers are looking for. I will also tell you that if you go further and you get way up in the EBITDA number the buyers don’t value that.

0:32:47.8 BM: And what I mean by that is when you get up above 35% in a consulting services type business, you’re basically into a realm of diminishing returns. Some people will argue that fact and say, That’s not true. The reality is that we hear it all the time from buyers which is if your firm is throwing out 55% margin, the reason why you’re probably throwing out 55% margin is because, A you’re not very mature, B you don’t have all the infrastructure, that sits behind that maturity issue, so you haven’t gone off and you don’t have a VP of Finance or a CFO you don’t have the level of project Management and project Management rigor. You don’t have a lot of things kind of in the business. You don’t have HR.

0:33:37.1 TW: So you’re saying not very mature you could be three people who just kind of organically work together but you have no overhead like you have because… All your business is word of mouth, you’re not doing marketing and you’re not doing sales and you’re charging a high bill rate… Interesting so you can have… Okay.

0:33:52.1 BM: It is really nicely profitable off the chart but then a buyer is gonna look at it and go, Yeah wait a minute, I gotta give you all this stuff. We actually have to track time, we actually have to have an invoicing system, we actually have to have… Legal has to actually review every contract, you guys don’t have legal, you just look at the contract and go, This looks pretty good right? All those things they have to put in. And so then they go, Well that’s all cost. It isn’t part of the business today and so therefore the business is not gonna run at this level once I acquire it so therefore I’m not gonna value it at a 55% margin basis and so there’s a lot of different factors that kind of go into that… So profit and profitability is one of the components, the historical trend of the business. So companies are valued typically on what they call a TTM basis… TTM stands for the Trailing Twelve Months. So people who look at… A business is gonna look at your business and go, how did it do over the last 12 months. That’s really kind of the performance metric that it’s using on a valuation. It’ll go backwards and look at typically the last three years of the business to really understand the trend line of the business but on a TTM, that’s basically how you’re gonna get valued. So I tell people this all the time… We’re in May?

0:34:52.4 BM: So if last year’s May was bad and this year’s May is good, you’re replacing a bad month with a good month which means that your valuation will go up. If you start replacing really good months on a historical basis with poor performance months then that has a negative implication to the valuation of the business on a forward looking basis and so then that’s one aspect. The other aspect to it is how do you get the valuations. Evaluations can kind of be all over the board, to be honest. In our category, when I say our category when I talk about digital and analytics, on the lower end on a valuation basis you’re talking about six times as a multiple of EBITDA. And then on the upper end you’re talking about numbers that can kind of range all over the place. They can get relatively stratospheric, we’ve seen some pretty big ones but the big ones are almost always gonna be predicated on there’s something remarkably unique about this business that I want to buy and therefore I see enormous value in a forward-looking basis ’cause if I’m gonna pay a really big multiple it means that I am expecting a really big return from that business, not a 20% per year kind of year over year growth.

0:36:31.0 BM: There’s something about it that I would really want to get my hands on, that can be either something like what we’ve seen over the last couple of years which is The Google Analytics Reseller Program. That GA 4, GA 360, that Reseller Program, it’s kind of a medallion. Think about pre-Uber taxi medallion, there’s very few companies that have it and if you want it and you are somebody wanting to have it in the North American market, the only way to get it for the most part, there’s been one that has gotten a new one that I’m aware of in the last 24 months… There might be more but I think I’m aware of one. Other than that you’re basically buying a firm and you’re gonna pay a pretty hefty premium to get your hands on that. Plus the capabilities of the firm.

0:37:17.0 TW: If… When you talk valuation, like I say, you’re saying it’s 6 EBITDA back… In business school, it was always that present value of all future cash flows or whatever the impossible calculation, but does that valuation… The acquiring firm wants to get the lowest possible valuation they can justify, does that valuation tend to operate on… We see you as an organisation, as a going concern, this is what we think your value is, or is the valuation based on if we acquire you and combine it with… We’re bringing that Google Analytics reseller medallion into all of our existing customer list, and it’s the value that we see you incrementally contributing to us internally, which hopefully is higher, or is it you’re trying to buy it at the lowest, so you wanna buy it based on… If you just keep doing what you’re doing, this is kind of your overall value, but we think we’re gonna then garner a lot more value from it, or is that the entire trick, that’s the goal you’re trying to buy and then bring it together and make more?

0:38:33.0 BM: So it’s a little bit different than trading stock, right, ’cause that’s all buy low sell high, buy low sell high. The reality is, is that for sophisticated sellers and buyers, they recognize the fact that you’re never gonna sell a firm, at a multiple. That absolutely doesn’t make sense. And there is… When we talk with sellers, there’s my business partner, Paul Newton, who is absolutely phenomenal. He talks… This is a point of indifference, and you just calculate it. The point of indifference is looking at it and going, Okay, if I have a three-year earn-out or whatever the period may be, right, let’s say there’s an earn-out as part of the acquisition, ’cause typically most… Especially in services businesses, most have an earn-out, and the reason for that is because I’m buying IP and I want you to stay right? And so therefore…

0:39:22.6 TW: Can we take a quick little side trip down exactly what… How earn-outs are and what they work, how they work? Or you wanna come back to that? Either way.

0:39:31.4 BM: I’ll finish the first train of thought, which is, to answer your question, there’s a point of indifference, which is, If I keep running this business and it keeps growing at the level that this business is growing at, I walk away making $4 million, more than I would if I kept my business. That’s it. And if you look at that number and you said, Wait a minute, I get $4 million more than I would if I just kept running the business and taking the profits out of it, so therefore it’s really a $4 million valuation is really what you’re giving me on my business, I’m not interested in selling my business. There’s a point of indifference where you look at it and go, You’re not offering me much value here. You’re saying it’s incredibly valuable to you, but when you put the dollars together, not really… And that’s where you start to get back to, well, why would I sell the business to you at this level versus, No, okay, this is a very lucrative scenario for me, or for us as a company.

0:40:33.3 S44: The earn-out portion of it, in many instances, is really built around the idea that number one, what we’re looking for is the stickiness of the individuals and to demonstrate a commitment to the business. The second is that there’s an expectation that this business will continue to perform and will continue to grow and it will meet certain thresholds, otherwise I’m overpaying for the business, and so therefore what I’m going to do is have you stay around to earn the remaining portion of the valuation, and you need to meet certain thresholds in order to be able to get there. If you hit those, we as a business that bought you are gonna do really well, and you as an individual, as a founder, are going to do very well. And we agree in principle, very much upfront of what those terms are in order to ensure that you can achieve them and that you’re gonna be supported, and that’s one component. Another component of an earn-out can be… And by the way, those metrics can all be… It is… It’s EBITDA growth, it’s year over year percentage growth from the top line revenue perspective, right? It is your utilization targets, it’s your charge ability, it’s all those kind of things, it could be your rate, in your average rate that all this can be built into a structure.

0:41:48.0 TW: Can you actually have the employee retention as part of that? As part of that as well, that seems like a [0:41:55.7] ____ from one.

0:41:55.8 BM: Absolutely. Yeah, employee retention is typically part of it as well. Now, employee retention would be more of an MBO, right? So that’s a management by objectives. So in the end, we’re big believers at Bravery, in the idea that if all you want someone to do is to live in the spreadsheet, if all you want people doing is banging away looking at change orders and all the stuff around the financials, then you’re probably not understanding the real value of what it is that you’re buying. So we push really hard for an MBO-type structure where it is things like, how many Fortune 100 new clients have we acquired in the last 12 months in a period. What training have you put in place for your employees, how many of your employees have gotten their certifications in a particular area of analytics? We want you focused on those things because if you do those things right, then the revenue should be coming, the growth should be there, the stickiness of the client. The moment that you sit down and say, The only thing that matters is basically the financial numbers, time and time again, we see it fail.

0:43:01.4 MK: Do you find that owners… Business owners are receptive to that, or I feel like they could go one of two ways, some of them would probably love to hear what you’re saying, and then there would be some that are like… The numbers matter. Do you know… I just feel like there could be like… And maybe it is a total grey zone of the different people that you work with.

0:43:20.1 BM: Well, the numbers are hard because once you’re inside of a larger organisation, the reality is, is you have to deal in all sorts of issues. Think about it this way. You own your own firm, you have 20 people, right? And your teams work on the work that you guys define and how you define it, and everything is kind of structured. All of a sudden you’re brought in and it’s like, Well, what happens if we start getting brought in on these huge pieces of business and these huge pitches, but the agency that bought us isn’t winning them. And the reason why they’re not winning them is because even though we’re new in the organisation and we bring all this great talent and capability, the company is not recognized for that.

0:44:00.3 BM: It’s not known for that. It’s gonna take a year or two years. Well, where do all of those pitches go, where does all of that non-billable time go if all that non-billable time goes against you, then in the end, all of a sudden what’s happening is your utilization is down, your margin is down, all these things are down and yet you’re being measured specifically on the financial performance of the business, and suddenly it’s like, Well, there went two and a half a million dollars this year that I didn’t earn because we weren’t able to achieve those numbers. And so what we try to do is balance it with all the pieces that will make it successful for the buyer and for the seller. So one of the things… I’m gonna flip the conversation just for a second and say, the way this process works is typically a company decides that it’s gonna go to market, it will select an advisor, so I’m gonna answer some questions I think that Moe tossed at me early. There we go. So not all companies select an advisor, we argue against that vehemently because man, if you’ve got a buyer that’s coming in, and especially if they’re a bigger firm and they have their own buy-side representation, they have tax, they have legal, they have all these things, and you’re like, I’m gonna do it with my accountant, right?

0:45:12.9 BM: You’re gonna get crushed. You’re just gonna get crushed in the process, right? There’s just so many pieces to it. So you select an advisor from the time that you are ready to go to market, or that you wanna go to market, to the time that you are prepared to be in market is typically a couple of months, and that’s really packaging of the business, that’s the financials, that’s really reconstituting the financials, putting them into the context of how M&A works. It’s getting everything that you know that you’re going to need, it’s the pre-set up, if you will, of all the materials that will be needed to go through an M&A process, not all of them, but at least we typically have a list, and it’s about 85 to 90 items that are the checklist. We’ve had due diligence that’s come through from buyers that’s been over 500 requests. That’s a lot of requests. Right?

0:45:58.9 TW: You said a couple of months, you ever come in and it’s such a… You go through that checklist and say, You gotta get your house. It’s gonna be a TTM. You literally need to change these things, and the way that you’re doing stuff so that you can get a… Your trailing 12 months is clean, like do you ever come in and…

0:46:15.8 BM: Totally. Yep all the time, because in a lot of cases, like even smaller businesses, if you’re under five million, you may be cash-based, you’re not accrual. So if you’re a cash-based accounting, you gotta flip it to accrual in order to be able to understand what do you have in terms of backlog, what do you have in terms of… All of the pieces that are part of the business, the cash reflects one thing, while the business reflects something very different, so in that context, you look at and go, Okay, yeah, maybe that business isn’t ready, and you say, You know what, you guys need another 12-24 months before you can really go to market, and here’s why.

0:46:51.7 TW: But these are the things you need to be doing. Okay.

0:46:54.4 BM: These are all things you need to be doing. After that first couple of months at the end, what you’re doing is you’re basically going to market and you’ve built a structured list of the type of buyers that you’re looking for. The seller has said, this is kind of where I wanna be, this is the type of firm that I would like to be inside of. This is who I’d like to be acquired by. You build out that list and then once you’ve built up that list, we pull all the research, everything that we’ve got, all of our contacts, and then we basically are building up what’s called a teaser CIM or a confidential information memorandum. It’s a couple of pages to a one page to a couple of page document that gets sent out that basically says, Here’s a little bit about this business, here’s what you need to know, and if you have an interest, execute an NDA, and then we’re gonna send you the CIM, which is again the confidential information memorandum. In our industry, in general, those have a tendency to…

0:47:45.7 TW: Do you name the firm, like the… The concept, [0:47:49.2] ____ so you say that you describe, Here’s the profile, if you’re interested, then it’s an NDA and then they’re good.

0:47:54.4 BM: Then they know. Once the NDA is executed. Yeah, typically their code name, it’s project peanut butter, whatever you wanna call it. It’s got some code name to it, and so once… So for us, one of things that’s interesting, and I think, again, I think it’s unique about Bravery, not selling us at all, just saying it’s unique, is we try to make our CIM be about 30 pages in length, and it’s the reason why we stay in the industry lanes that we stay in, we understand the businesses so exceptionally well, because after all these years, Paul came from data and analytics, he’s done 40 plus buy-side transactions. He’s done Global turnarounds. So we try to stay in our lane ’cause if you don’t stand your lane, and this is what typically M&A firms do, investment banks do, is they’ll do any deal, right.

0:48:47.6 BM: Which means that you’re getting a bunch of people assigned to the business that don’t even have a clue of really what the business does. At best, they may have a pretty good understanding of the category, but the team doesn’t really have a real understanding of the business and so if you talk to buy-side firms, they’ll tell you all the time, we get 100 page CIMs all day long, and you’re trying to read through it and throw pages away and send these pages over to this guy to look at this and this person, and this one, we need to look at this and all this kind of stuff, we try to keep ours to about 30 pages, and a reason why it’s because we understand the businesses exceptionally well, we don’t just target it at like 30 pages, and I almost always end up right about there, because I can tell you very easily exactly what this business does, why this business would be of value to you, what’s unique about this business and where the market’s going with this business’s services.

0:49:36.0 BM: That’s all you need to know. From there, you should be able to make a decision. And so we hear this… Time to time again, we hear people say to us to either the best CIM that they’ve ever seen or among the best that they’ve ever seen, because we understand the category really well, and that’s key as well. So once you go to market with the CIM what you want is people to be able to go, You know what, we wanna schedule executive meetings, leadership Q&As, we wanna get all the details that we possibly can get, because we wanna come back with an indicative offer. And that process usually takes, call it another 30 days to run that process. And then once you have indicative offers that are in and you make a selection and you go to exclusivity, which typically exclusivity means you’re gonna only negotiate with that company for a period of time, typically 60 to 90 days is the window that you’re gonna operate in, and at the end of that 60-90 day period, you have completed the due diligence process, which is them going through that huge checklist of everything that checks the boxes that says what we thought is true, what we thought is true…

0:50:38.6 BM: At the end of that period, then you close on the transaction. We use that 60 to 90 day period to focus much more on what the post-integration will be, so that day one, you are prepared to be running and teams can be incredibly effective versus using it as a period of time in which we’re trying to find if there’s problems, because our job is to basically make sure there’s no problems when we go into the process.

0:51:03.6 MH: Helpful.

0:51:06.6 MK: I’m speechless because I love finding out so much about a different industry or a line of work, and I’m just… Yeah, like you don’t think about all the detail that needs to go into it, but it’s… It’s fascinating.

0:51:16.4 TW: And there is… Lot’s of this does feel like it’s like a real estate broker. How do the advisors get… Is this the comp model for the buy-side and sell-side… How do advisors get paid? How and when.

0:51:32.4 BM: There’s lots of different models. They used to refer to it as the Leaman formula, that’s been gone for a long time, but it was kind of this tiered structure of percentages of a transaction, it’s typically a consulting services fee that’s charged, and that’s really to cover all of the expenses associated with packaging up the business and preparing the business and taking it to market, and then it’s a percentage of the actual transaction itself that’s charged back, and in total… It’s actually a very small percentage. I would tell you that that percentage is… For firms like ours is typically in the 2% to 3% range of a transaction, some firms charge a lot more, other firms have different models in which they don’t charge consulting services fee, but they charge a larger percentage of the transaction. What we tell everyone is, look, the risk is on us all the way the process because yes, you may be paying us, but in the end, if we do a $80 million transaction, the founders have walked away with $80 million, we clearly don’t walk away with anywhere near to wealth that the individuals have just walked away with, so it’s important to also make sure that there’s commitment and guarantees from all the parties that we’re all working towards the same objective, because let me tell you, let me be flat out, M&A is not easy, M&A can be very distracting for a business.

0:53:04.7 BM: It is a full-time job. Once you are in, you have a lot of people who are working on a lot of pieces. And it’s… Think about it this way, if you have a ton of contracts, if you’re a big firm and you have a ton of contracts and all those contracts are pretty bespoke, they’ve got all different types of terms and everything else in them, every single contract has to be reviewed every single contract. Now today we have AI, awesome. We put those contracts into a tool, and that tool will basically come back and tell you, Here are all the parameters here’s every that’s unique by contract. So the lawyers can then start to look at it and go, What liabilities do we have, what exposure do we have, so we no longer have to just do the manual parsing of every single contract.

0:53:40.6 MK: That’s cool.

0:53:44.0 BM: Yeah. So there’s some great tools that make the process much easier but the truth of the matter is, is that it’s not for the faint of heart. I will tell you that. And having sold my firm, I could tell you it’s not for the faint of heart. I could tell you that having lived it, I have a greater appreciation for what individuals have to go through as founders because I’ve been on that side.

0:54:05.1 MK: And so does it happen the other way though? So you kinda give this example of this analytics agency or consultancy basically being like, Okay, I’m ready to sell, and going down that process, does it happen where someone wants to buy and you’re basically given that brief of like, Okay, we wanna put an agency, that’s 15 to 25 people, this is what… And then do you cold contact people? How does that go?

0:54:33.6 BM: I try to avoid the term “cold contact”, but it is… Again, I think for me personally, it’s an advantage that I think that I have, and I think our team has, is that we’ve been in this space for a really long time and have a lot of connections. And so if you said to me… If a buy-side came to us and said, Hey, we’re looking for these types of firms, either one of two things can happen, either they can put a firm like ours under a contract and we are advising them to help them find the… Build the list and manage that process with them, and working all the way through to transaction or you can flip it and be like, No, you know what, we have all these relationships.

0:55:11.1 BM: And we’re just gonna go out and we’re gonna have a conversation with these particular firms. Sometimes what happens is a buyer will come and expresses an interest, and basically says, Hey look, we’re not… We already have a firm under contract for buy side advisory, we have our investment bank, they’re already doing that, but we know you operate in this industry, so if you have a firm that you’d like to potentially bring to us, we’d love to have a conversation with you. And we’ve actually done that, and then what we typically do is we’ll outreach to our own network and say, Hey, there’s a firm… We won’t expose who that firm is, but confidentially, there’s a firm, it’s a $2.4 billion publicly traded firm, they are looking for these types of skill sets, and would you have an interest in potentially taking the company to market? Now, would you have an interest in going exclusively to that opportunity, or do you wanna take the company out in the market in general? There’s different ways to manage the approach.

0:56:04.0 MH: Yeah. And on the buy side, they find you pretty quickly, like I… Stacked Analytica has only been around for two and a half years, and I get contacted semi-regularly already.

0:56:14.2 MK: Oh, that’s so interesting.

[overlapping conversation]

0:56:18.2 MH: Just out of the blue, people are like, Hey, we’re this kind of company. We invest in these investment firms, acquisitions, they want to get into this business because like you said at the top, Bob, it’s very in demand, especially for agencies, it must be a capability with an agency. So it’s kind of important. Alright, we are so over time, we’ve gotta stop on that. [laughter]

0:56:43.7 TW: But we didn’t cover it. We started to dance around it so many times. Like the tough they get…

0:56:47.1 MH: Okay. You know what? Go for it.

0:56:47.4 TW: There’s this confidentiality thing, but you talked about this. It seems like the stress on a founder of… Especially if they’ve been running this firm and been very open and they’re collectively building something with their employees, and it seems like once they kick into this, there’s just by necessity, they… It’s kind of a secretive thing. So I don’t know, maybe that may be a whole other can of worms. It just feels like that’s gotta put pressure on a founder. They wanna protect their employees, and you started to talk about some of the things they could do, but it still seems like 95% of the time, it’s kind of a surprise. It’s like if people have been around in the organisation, they… Well, I mean I was at Search Discovery, I knew when I started, they were on a path to some sort of exit, but still had no idea what was gonna happen and when. And that seems like that’s the case, it becomes a surprise, and that’s just puts this stress on the founders and owners to be like, We’re trying to do this thing, we may… Our behavior may get a little weird because we went through this checklist and we have to change some things, and we wanna protect these people we care about, but we also can’t be fully transparent to them because there are too many unknowns and there’s too much of a shifting landscape.

0:58:10.6 BM: That’s true, right? I think on one hand, it’s like… Look, I think it’s always helpful… From a personal perspective, I think it’s always helpful for not only your senior employees, your senior most employees, but as many as is necessary to really have an understanding of what the objective for the business is. The last thing you want is, man, I thought this was just gonna be… It’s a mom and pop, and we’re all in it together, and there’s 20 of us, and all of a sudden you’re like, you’re gonna sell us to a large global holding company? Wait a minute, that’s not what I signed up for. So part of it is, is I think it’s on the founder to ensure that people understand what you’re trying to achieve, what’s the end goal? If you keep growing and you just keep hiring people and you went from 15 to you’re 22 and you’re on plan to get to 30, and by next year, you expect to be at 50, somewhere along the line, people need to be asking the question of what’s the end game here? How big will we get? What are we going to do? But the other side of the equation is, is that there’s absolute confidentiality in a transaction for multiple reasons.

0:59:18.6 BM: One would be, you don’t want your clients finding out that you’re in market, and all of a sudden they’re like, Oh, oh, that’s a problem. And the next thing you know, is you lose a client because they’re concerned about what’s happening with your team and your company. The second is, is looking at it and going, Yeah, you also just don’t want employees knowing and then telling other people in the market that you’re in market, because that can also create all sorts of other issues, which is like even competitors, it’s like, Well, crap, if they’re in market, why aren’t we in market?

0:59:44.7 BM: Okay, well, wait a minute. There’s just a lot of factors that go into why you keep it as close to the chest as you can, but I do… Again, I would stress, I think it’s important for a founder to make sure that his or her key employees recognize and understand what you’re all working towards as an end game, and I think it’s also important that if you really wanna motivate those individuals, allow them to participate in that process with you and allow them to actually get a benefit out of the company being sold, not just, oh yeah, we gave you a $25,000 bonus, and I actually just walked away with $30 million. That’s probably not gonna bode well in the long run, I’m just saying.


1:00:26.5 MH: Alright, so educational. So helpful. Bob, thank you so much, this has been awesome. Alright, so we do have to start to wrap up. But one thing we like to do is go around the horn and share a last call, something that might be of interest to our audience. And Bob, you’re our guest, do you have a last call you’d like to share?

1:00:44.0 BM: Oh man, last call. So last call, I’m gonna throw out that I think that with the entire craze, and I call it the craze, the AI craze. Man, it feels like…

1:00:52.8 MH: It’s a craze, yeah.

1:00:54.2 BM: ’99, ’98 to what? 2000 period. I think that the emphasis and the focus on generative AI is the wrong focus. I think the emphasis needs to be in performance AI, because I don’t believe that you can really even do phenomenal generative AI without performance and the performance data that sits up underneath it. And I think what you’re seeing right now with all of the announcements from all of the different firms around generative, how many of them have you heard anything about on the performance side? Very, very little, and I think that’s the space, that’s just… There’s my… I throw it out there. I think if you’re looking in performance, you’re in the right place.

1:01:38.9 TW: So validating that my son just took a job as basically being a performance guy at a machine vision company that does really cool stuff, and he loves the performance stuff. So I’m like, Good.

1:01:53.4 MH: Nice.

1:01:53.7 TW: Of course, he made a good decision. He stayed away from me.

1:01:58.7 MH: That’s right. Alright. Tim, what about you? What’s your last call?

1:02:01.3 TW: Well, if something shows up in two different newsletters that I subscribe to, then it feels like it should be a last call. So Nathan Yau, Mr. Flowing data himself, did his own visualization, did… Where he visualized all the household types in the US just as little interconnect, little network diagrams and it… He pulled from some survey, he always pulls government data and came up with… It’s basically like one parent, parent and spouse, one child, two child, three child, friends, wound up with like 4700 different combinations. And then ranked them in order. But it then showed up in Phillip Bumps how to read this chart newsletter as well, so it was fun. I placed that like… Five years ago, I was the eighth most popular type of household in the US. I moved up to three since a couple of kids have left, but it’s kind of an interesting, not super digestible as a visualization, and Phillip Bump makes that same comment, but kind of an intriguing thing.

1:03:01.7 MK: So you were the third most popular household now?

1:03:04.7 TW: Type, because the third… I think the third most is spouse child.

1:03:09.8 MK: That the growing kids moved out. Oh, got you.

1:03:12.8 TW: Yes, spouse. The person, a spouse and a child.

1:03:15.3 MK: Got it, got it.

1:03:15.7 TW: The eighth most is a spouse and three children.

1:03:17.1 MK: Got it, okay.

1:03:19.4 TW: Yeah, so that’s kind of a fun data viz. I would say not super easy to digest, but an interesting experiment, and I aspire some day to be able to screw around with data sets like that.

1:03:34.7 MH: Awesome. Alright, thanks Tim. Moe, what about you? What’s your last call?

1:03:39.3 MK: So I feel like I talk about HBR way too often, but I love reading stuff on employee incentives and yeah… This one I’m still churning around in my head a bit, but I was reading a article on a pay to quit strategy, so it’s called How a Pay to quit strategy can reveal your most motivated employees, and it’s basically the idea that once a year or to a certain group of staff, you give them the option of like, Hey, we’ll give you five grand to leave the business. It’s really interesting ’cause there is actually… The author talks about a particular company that did it as a test. And I guess the reason I find it a bit interesting is because it does make the assumption that if you don’t take the money, then you’re highly motivated, and likewise, if you do take the money then you’re less motivated, which I don’t know, I just… Like I said, I’m still churning it around, but I do find some of these concepts kind of interesting when it talks about employee incentives and satisfaction at work, and how you can use some of those tools as a people manager.

1:04:43.8 TW: So when you leave Canva and grow your consultancy, and then you can try that out, and then you can go to Bob and when he gets, he’s like, Holy crap, there’s something missing on our checklist that we need to add. What the hell are you doing?

1:04:56.4 MH: That’s right. This pay to quit is negatively impacting your TTM.


1:05:04.1 TW: That’s interesting. What about you, Michael?

1:05:07.6 MH: It is interesting. Well, I’m glad you asked. So everyone is now, hopefully done with their GA4 migration, if you’re a Google Analytics user, but that means you’re probably dealing with BigQuery because GA4 is useless unless you’re using BigQuery with it. So I ran across a cool little tool that actually generates SQL for GA4 and BigQuery, so you just put in the table…

1:05:29.0 MK: Stop it.

1:05:31.2 MH: And try to pull out of it. Yeah, it’s called GA4SQL.com.

1:05:32.9 MK: Stop it.

1:05:37.3 MH: It’s actually really slick, it’s a really simple tool. I guess the guy behind it is… His name is Ahmed Ali, so I wanna give proper shout-outs to him. His company is called optimizationup.com, but GA4SQL.com is a pretty neat little tool. It doesn’t do everything in the world, but it’s as a starting point, if you’re in the GA4 space and you’re grappling with trying to get your data out of BigQuery or get some reporting set up, it will generate SQL for you, and that’s a pretty great starting point for a lot of people. So that’s…

1:06:04.2 TW: It’s funny, ’cause I threw questions at… I can’t remember if it was ChatGPT or BARD. Asked it to generate GA4 SQL for BigQuery. And yeah, it was definitely not good.

1:06:16.3 MH: Well, I think the other place to go would be Moe’s sister Michelle, it seems like she’s pretty good on that topic, so that would be the other person I would reach out to on the Measure Slack. Okay, you’ve probably been listening and you probably have a ton of questions or comments, and we would love to hear from you, and the best way to do that is on the Measure Slack group or on LinkedIn or on Twitter. And I would love to hear your thoughts, questions, things like that. Other topics we should cover in this vane. I think this has been an episode which I really enjoyed and learned a lot, so Bob, thank you again. I don’t think enough gets discussed, especially for people who work in consulting and agencies to understand this, so I appreciate you pulling back the covers a little bit. And Bob, are you active on social media anywhere? Do you have a Twitter account people could follow you or anything like that?

1:07:06.7 BM: I am on Twitter, but I would say you can follow Bravery on Twitter, Bravery Group on Twitter.

1:07:12.6 MH: Okay. Perfect.

1:07:14.4 TW: You Tweet out all the CIMs as soon as you wrapped up.

[overlapping conversation]

1:07:18.1 BM: Yeah. As soon as it wrapped up… Yeah, exactly. Exactly. Honor of the press. Honor of the press.


1:07:25.9 MH: Yeah. Not exactly. Okay, but perfect. Again, thank you so much, Bob, for coming on the show, I really appreciate it. And kind of giving us that information. And I know that I speak for both of my two co-hosts when I say that no show would be complete without a huge thank you to Josh Crowhurst, who is our Executive Producer. And so thank you, Josh, for all that you do to make the show happen. And I know that as you’re listening and as you’re going about your day-to-day, whether your company is a consulting firm or a product company or whatever, whether you’re in the M&A buy side or the sell side, remember, keep analyzing.


1:08:04.5 Announcer: Thanks for listening. Let’s keep the conversation going with your comments, suggestions and questions on Twitter at @analyticshour, on the web at analyticshour.io, our LinkedIn group and the Measure Chat Slack group. Music for the podcast by Josh Crowhurst.

1:08:22.4 Charles Barkley: So smart guys want to fit in, so they made up a term called analytics. Analytics don’t work.

1:08:28.5 Kamala Harris: But I love Venn diagrams. It’s just something about those three circles and the analysis about where there is the intersection, right?

1:08:35.7 TW: Rock flag and Hot CIMs. Get your Hot CIMs. We got your EBITDA for the TTM.


1:08:47.4 MK: Wow.

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