Growing An Email Agency To A Team Of 15 And $200K MRR [Sold]
Note: This business is no longer running. It was started in 2017 and ended in 2023. Reason for closure: Acquired.
Hello! Who are you and what business did you start?
Yo! Phil Rivers here. Email marketer extraordinaire and the King of Klaviyo.
I started Tetra, an email marketing agency for growing e-commerce and digital product businesses in 2019.
Growing the agency from a lonely one-man shop and a measly $5k/month in revenue to a team of 15 with $200k MRR and over $200,000,000 in sales generated for clients.
What's your backstory and how did you come up with the idea?
In 2012 I moved to NYC from LA. No money, no network, nothing. Just a young dude on a mission to figure it out.
At the time I was fascinated by startups, most specifically the growth potential, and trying to ride one to an exit.
After a couple of jobs for startups going nowhere I joined the biz dev team in the loyalty space to build out both sides of their marketplace (reward programs ie. banks, and reward providers ie. gift cards).
This was a slog. Long sales cycles, lots of corporate red tap, etc. The short of it is that I became bored, unfulfilled, and wanted more money.
Except I was too “comfortable” to leave (this was a big mistake looking back).
I started playing around with agency/freelancer-type stuff. Build a website here, run some ads there, and of course do some email marketing. And I was resourceful enough to scrape together a few thousand bucks each month.
But this was by no means a real business.
Ultimately, I said f--k it.
I decided I had had enough. I gave my boss my 2 weeks' notice and was determined to figure it out.
The “agency” was all I had moving so that was the obvious trail to blaze at the time. The only problem was I had no offer and no real closing experience.
Quite frankly, I chose email as the focus because it was what I knew the best and had the most confidence in that I can fulfill for clients at a high level.
Take us through the process of building the first version of your product.
The initial version of the product, or service if you prefer, was largely determined by market needs. Questions like, "What services does the market need?" "Where is their appetite?" "What can I sell it for?" and "What would it cost me to fulfill it?" dominated my early approach. I aimed to arbitrage the difference.
In the early days, I was engaged in web design, creating ads, managing emails, and anything else that came to mind that someone might need. It was essentially a case of casting a wide net but without focus or direction.
This lack of specificity meant I was spread all over the place, which as you can imagine, led to a lot of challenges. The varied requirements and demands from any client I managed to bring on board at the time made the fulfillment process quite complicated.
The onboarding was the easy part. Because the fulfillment was unique to each client it made executing and scaling impossible. This is what led me to niche down so that the entire process (marketing, sales, fulfillment) could be as repeatable as possible.
This chaotic situation was what led me to eliminate all the tasks that weren't within my "zone of genius", and instead, I decided to lean fully into email management. This was because I had the most confidence in my ability to handle it.
It provided a simplified target in comparison to the previous approach of offering a multitude of services. This focus not only made marketing and sales more effective but also streamlined the fulfillment process.
Ultimately, this is what encouraged me to get rid of everything else and lean into what I had the most confidence in fulfilling, which was email marketing and management.
Describe the process of launching the business.
Back in 2017/2018, the only marketing strategy I could think of was outreach. Looking back, I realize that I didn't have much experience in marketing, especially when it came to launching a new business. It was essentially the only option I thought I had. Managing to acquire three or four clients a month, in the beginning, was a decent start, but it was quite inefficient, as you can probably imagine.
From a launch preparation standpoint, launching a service business is relatively straightforward. At that time, I was responsible for all the marketing, selling, and fulfillment processes. I didn't have to rely on anyone else for any of it.
The initial website was hosted on Squarespace if I remember correctly. It was quite simple; I created a one-page website that described the service's value proposition, along with a link for booking a call.
I connected Calendly to the landing page and included a thank-you page on the backend. That was the extent of the front-end work needed to launch the business.
Regarding financing, this business didn't require much capital to get started. It mainly needed my intellectual property and hard work. There was no need for credit cards or loans. The only initial costs were for domain hosting, Squarespace, Google business email, and the cold outreach software I was using at the time, which I believe was Mailshake.
Reflecting on the whole experience, one of the biggest lessons I learned was that I should have started using ads earlier. At the time, I was unaware of the potential impact of ads because I had never run paid media before. In hindsight, if I had started using ads earlier, I would have progressed much further, much sooner. But, as the saying goes, it is what it is.
The biggest turning point for me was committing to get comfortable with being uncomfortable.
Since launch, what has worked to attract and retain customers?
From an attraction standpoint, in the beginning, I was relying on cold outreach as I mentioned earlier. Around 2018, I started posting organically on Facebook. I wasn't very active on Instagram, Twitter, or any other social media platforms at that time.
However, I found it challenging to achieve a consistent client acquisition rate each month using only cold outreach and organic posting. The numbers fluctuated from a few clients one month, to zero the next, and so on. I was in search of a more systematic approach that could also boost growth.
This led me to start driving traffic on Facebook to a sales funnel. This allowed me to effectively leverage Facebook's user base, to scale what I had been doing organically but at a faster rate. At the outset, I experimented with various strategies from an advertising perspective.
I wasn't an experienced media buyer at the time, so I tried a range of different things, including various creatives, campaign objectives, and so on. It was a trial-and-error process, which resulted in considerable expenditure.
The biggest turning point for me was committing to get comfortable with being uncomfortable. For instance, when I first started running ads, none of them featured my face. However, I had a hunch that if I committed to do so, the results could be rewarding. Lo and behold, as soon as I started to include my face in the ads, everything began to change.
I still remember one particular ad that fundamentally transformed my business overnight. I called it "Inside the Account." This ad featured me walking through a client's account in real-time, highlighting what was wrong and why. The message was clear: if your account looks like this, you should get in touch with me.
At that time, there hadn't been any "Inside the Account" ads, so it was gratifying to see all the imitators that emerged in the aftermath. That ad changed the entire trajectory of my business.
Once I started having some moderate success with ads, I began focusing on improving my media buying skills, as I recognized it as a major leverage point for my business's growth.
However, as I began to figure out consistent client acquisition, it became apparent that I couldn't continue fulfilling all the work myself. As a result, I had to shift my focus towards learning new skills, specifically on how to find, attract, hire, and train a team, and then how to manage them.
This was an entirely new challenge, quite different from figuring out the marketing, learning how to sell on the phone, and fulfilling the service myself.
If you're going to hire an agency to manage your marketing, aim to spend as much as you can afford rather than the bare minimum.
How are you doing today and what does the future look like?
Before I sold the agency (in 2022), it was quite profitable. From a margin standpoint, the net margins were about 40-50%. Customer acquisition costs ranged anywhere from $500 to $2,000, depending on seasonality and the competition on the ad platform.
As for the advertising budget, I was spending anywhere from $10,000 to $30,000 a month. The return on ad spend, on a cash-collected basis, was usually 1 to 2 times. On a contracted revenue basis, the return on ad spend was anywhere from 5 to 8 times.
Through starting the business, have you learned anything particularly helpful or advantageous?
Since starting the business, I've learned numerous things that have proven advantageous in hindsight.
Firstly, learning how to run ads was a massive skill acquisition because many people struggle with it, as did I in the beginning.
Embracing discomfort was another key learning point. One piece of advice my father gave me when I was growing up was that if you increase your chances of getting struck by lightning, you also increase your chances of success. To do that, you have to be willing to do things that others aren't willing to do. This could be seen when I decided to feature my face on camera for the ads, which ended up significantly changing the business.
Another aspect is knowing your strengths and weaknesses, and making an effort to improve where you're weak. For instance, I recognized my need to improve in managing, hiring, and training a team. Having self-awareness and a presence of mind around these aspects has been incredibly valuable.
What platform/tools do you use for your business?
My Tech stack is pretty simple and straightforward. For the CMS I use click funnels, Klaviyo for email marketing (with a custom CF integration), Pipedrive for the sales CRM, Facebook ads for traffic, and Hyros for ad attribution.
What have been the most influential books, podcasts, or other resources?
Books:
- Shoe Dog - Inspirational origin story of the brand I love most
- Million Dollar Offers - Helps me breakdown and get creative with offers to bring to market
- Breakthrough Advertising - Helped me sharpen my sword as a copywriter
- Never Lose a Customer Again - All about customer experience and making it the best it can be. The agency business is all about service and retention
- Great Leads - Helped me become a better copywriter
- Blue Ocean Strategy - Strategic business book about what markets to go after
Podcasts:
- My First Million - is always entertaining and gives me ideas to think about
- Founders - History is the greatest teacher, this pod breaks down trials and tribulations from back in the day, but they’re still very relevant today
- Perpetual Traffic - Always looking for fresh takes on marketing
Advice for other entrepreneurs who want to get started or are just starting out?
My advice for other entrepreneurs who are just starting out or considering starting is: don't let the pursuit of perfection become the enemy of good enough. As humans, we often tend to overcomplicate things and think everything needs to be perfect before we take any action.
However, in reality, it's better if things aren't perfect when we initially go to market. Doing so will provide us with valuable data points we can use to improve, rather than delaying indefinitely while waiting for it to be perfect or for the "right" time.
Another piece of advice is that every entrepreneur should have at least a basic ability to manage their marketing. What I often observe is that people starting their businesses either don't want to learn about marketing, think it's beneath them, or fail to see its value.
As a result, they usually opt for the lowest-cost solution to market their product. However, especially during the early stages, without effective marketing, the product essentially amounts to nothing. Therefore, marketing is of utmost importance.
So, my recommendation is this: if you're going to hire an agency to manage your marketing, aim to spend as much as you can afford rather than the bare minimum. This is because marketing is critical to your business's growth.
Alternatively, consider learning how to do it yourself. The reason I advocate for this is because no one is going to care more about the growth of your business, especially in the beginning than you will.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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