Hi, and welcome to this exciting live edition of Marketplace Masters, brought to you by MerchantSpring, the premier platform for agency client analytics and reporting.
Paul Sonneveld
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Hi, I'm Paul Sonneveld and I'm your host for today. And we're going to be diving into the strategies for scaling and exiting your agency. Joining me today is Ethan, co-founder of Kitchimo, a company dedicated to amplifying agency growth and facilitating successful exits. Ethan's journey includes founding, expanding, and successfully selling his Amazon agency Molzi for an impressive high seven-figure sum. Within just four years, Molzi grew from just a two-person startup to a powerhouse with 85 employees with offices across the UK, Spain, Hong Kong, and Brazil, attracting numerous acquisition offers and culminating in a settle to the renowned agency BrainLabs. Let's see if he's here. Thank you so much for joining us today, Ethan.
Ethan Kitching
Hey, thanks for having me.
Paul Sonneveld
You are most welcome. I also wanted to just mention that, and a reminder, this is a live show. We're doing a live Q&A as well. We'd love to hear from you. So, if you've got questions, if you're an agency owner out there, you've got questions about the process or Ethan's experience, please pop them in the comments below. I've listed some help here from Abhi Sharma, I don’t know if he's not on screen at the moment. Oh, there he is. Hey, Abhi, great to see you. If you find that someone's talking to you in the LinkedIn comments, that's Abhi. He's helping me out to make sure that your questions get in front of us. Thank you, Abhi.
All right, Ethan, again, fantastic to have you on the show. Let's dive right in. I want to sort of take you back really to those early days, when it was just maybe the two of you, or maybe a couple more and the like, those early days, probably distant memory now, but what are some of the biggest challenges that you faced in those early days in terms of scaling? And what did you do to address them? I mean, let's start with the challenges first.
Ethan Kitching
Yeah, no. So I mean, they're obviously starting an agency, there's plenty of challenges. And I think the fact that Chris and I were both salespeople kind of allowed us to get clients quite quickly. So we kind of started, it hit the ground running very early. So it had a load of clients on board within our own networks. But as we kind of obviously looked to get past our own networks, we faced the kind of the challenge that I guess most agency owners face, which is the credibility and trying to get in front of individuals that are sitting outside of your network.
For us, LinkedIn was a great tool. We kind of posted quite regularly. We didn't really have a strategy per se, but we kind of thought if we could address the challenges that were in the industry and started answering some of the questions that we were kind of facing, there then it would start creating that credibility and ultimately it did like people started engaging with the content we obviously were making sure that we were adding them when they did before so that they were able to kind of view the content that we were sharing.
But that kind of built that credibility up and allowed us to kind of have those initial conversations and then obviously when you start talking to a client and start addressing the challenges and kind of look at the opportunities that they have, it's easier to kind of then start working with them. So yeah, they were kind of how we were kind of taking on those challenges initially was kind of posting ideas, thoughts, insights to the market and seeing kind of who was interested and how we get in front of them to have a conversation with them and ultimately start work with them.
Paul Sonneveld
Yeah. really sort of trying to get that pipeline. I certainly resonate with that, trying to go beyond your own network and be seen as a kind of a trusted service provider out there, for sure.
Ethan Kitching
Yeah, absolutely. And that's the thing as well, because you're going new to market. And as I said, this is going to be a common challenge that a lot of agency owners face, because, I mean, initially, it's probably, it's relatively easy, because you do have a network that you can kind of tap into and whether they work with you straight away or have you in the back of their mind later down the line, it's easy to do that.
But to scale an agency, obviously, to the size that we did, we couldn't just tap into our network. We had to go far beyond that to grow the network. And as I said, the credibility piece was really important. And then from our own network and the work that we were doing with them, we're then able to create case studies that then allowed us to compel further into the outside of our network.
Paul Sonneveld
Yeah, that makes sense. You mentioned the word case studies. I want to move on to some other questions, but if we have time, I might go back to that one. So in the intro, I mentioned from two to 85 during the course of four years, that is amazing growth. You know, and I know kind of how challenged that is. So, you know, we're not at that size, but, you know, just growing is challenging. And I know that.
You know, a lot of them, it's got to do with like doing lots of small things, right along the way, but now that you're sort of, cause you know, this happened, you've exited, you know, I think well over a year ago, maybe two years ago now. So you've had the, you have the benefit of, of like hindsight and maybe taking a bit of perspective and sort of looking at things from a thousand feet as well. If you go back, what would you say were some of those key strategic decisions that you felt really unlocked Molzi's growth? Which contributed the most?
Ethan Kitching
It always starts with mistakes. Even within the four years that we were running, there were obviously plenty of mistakes along the way. I think one of the things that we did initially was look to bring in resource to ultimately handle the workload that we were bringing in. As I said, myself and Chris were very good at selling and getting to the challenges of brands that we were working with. I think what we did was look to bring resource to manage that rather than to grow it.
So instead, what we started to look to do was bring in people that were probably a bit too experienced for what we needed. Ultimately, we were then able to help us scale further. So I think we always kind of, we started off with the hiring junior initially. But I don't think we necessarily had the bandwidth, I don't think it was necessarily fair to put them in that position. So instead what we changed quite early on was focused on more senior hires or mid to senior hires that then could bring in junior people that were able to kind of teach them and allow them to grow further.
So I think for us, it was bringing in those individuals at that more senior level to make sure, one, that they were up for getting their hands dirty initially, but with the mindset of they're looking to grow a team out. And then ultimately, we didn't have to worry about all 85 individuals at that point, because you'd have senior people in place that were able to kind of handle their departments or their clouds, as we call them, pods, they're called different things in different agencies. But that was kind of the layer that was most important because then that allowed for their own individual departments to scale because they had decent leadership there to kind of do that.
Paul Sonneveld
It sounds like you were hiring experienced people who knew what the next evolution of your business would look like and what would be required.
Ethan Kitching
Yeah, and I think the important thing as well is that you can hire senior but it takes specific individuals that, as I said, are able to kind of get their hands dirty and willing to get their hands dirty because startups are scrappy, like nothing's built, you know, everything's falling over and you have to kind of get the mindset of, okay, well, I need to build this along the way, but also need to service a client. So it's, yeah, it's tough. It's not for everyone.
Paul Sonneveld
How did you convince them to join you? Typically, most startups I know don't have the ability to pay at market or above to attract super great talent. Obviously, there's a lot of risk involved for the person that's coming in. In a way, you're asking them to take a step back in terms of their day job and really lead the growth in the area. Any specific tactics or tips in terms of just getting those individuals bought into the story and joining you on that journey.
Ethan Kitching
OK, so there's two things there. I think, first of all, again, we go into a mistake that we made. When you're a startup, everything's a sell, so you are selling, you know, working for Molzi will be the greatest thing, like it's a fast, exciting company to work for. And it was a fast and exciting company to work for but it was also very tough. I don't think we necessarily said that or mentioned that in the initial stage when hiring individuals so it was a bit of a for them, you know, there was they were brought into this exciting company they work for but you know, as I said, it was quite tough.
So we kind of flipped the way that we interviewed individuals at that point to kind of focus more on the fact that it is going to be tough, like, and you need to be the right type of person to join. So we weren't selling to work for us, we were kind of more downplaying it and saying, well, why would you want to work for us? What do you think you're going to be able to add here? These are the things that we're going to be needing. Yes, it's going to be very fulfilling because we are growing, we're growing rapidly and you're going to be part of that hopefully, but it's not going to be easy. So I think one of the key things is not selling to work for the agency because then you're bringing people in with false pretenses like it will be tough. So, we kind of changed the way that we kind of brought people in at that point.
The second part as well, in terms of hiring senior and maybe not being able to afford it or kind of looking at that as like a risk because they're working on higher salaries than possibly you could afford. We would always kind of look at the individuals to kind of understand, what are they going to bring in? So if they're looking at a very high salary, what revenue can we attach to that individual that then makes that less risky? I think it's actually risky if you're bringing in lower-paying individuals because you're kind of putting a chance out there and there's a possible chance of wastage there, whereas more senior individuals where you really know that they're going to make a huge impact, it's better to do.
And I think also the thing that we are we always look at is like annual salaries. And it's always overwhelming. It's like, oh my God, this is such a huge like annual salary. Actually, if you chop it up into monthly, what it's going to cost on a monthly basis, it's much easier to kind of say, oh, we can afford that. But to afford that, we need our revenue to be here. And therefore this individual needs to bring X amount of value in. So, if you kind of look at it a little bit differently, and bet on that growth, then I find that's probably less risky. But obviously, you have to do your due diligence, you have to be really comfortable with the individual that's going in. But it allows you to propel that much further, because you've got the right person that can do that.
Paul Sonneveld
I'm just throwing in a question here from Ali, which I think is very topical. You know, where do you actually get your hires from in those early days? Were you using recruiters or just going through your own network or LinkedIn? What works?
Ethan Kitching
Again, LinkedIn was a great platform for us. Posting on LinkedIn and sharing insights and having people engage with your content was important for three different reasons. One, obviously, new business. That's what I think a lot of people will focus on. Two is the possible exit, so people that are looking to acquire a business like yours. The three, is also individuals that want to join your agency. So that was very, very important.
A lot of the people, we weren't necessarily cold calling, like some of the senior hires were wanting to work with us because it looked like an exciting company to work for. and there were a lot of senior people that we said actually I don't know if this is going to be a good fit because we need to do x y z. But then some of the senior people that came in kind of knew what they were getting into and rightly or wrongly, hopefully they say rightly, joined in any case. So, yeah, that was really important, as I said, like from a new business point of view, but also from a recruitment element as well.
Paul Sonneveld
And, you know, can I ask and feel free to sort of pass on this one, but in terms of the staff that were joining, were you just paying them a standard salary or you're giving them like some share options there to incentivize them, you know, what that sort of remuneration mix look like?
Ethan Kitching
Yeah, so there would be a decent salary, but we were very much bonus and commission based. I think, again, myself and Chris, we were always incentivized with bonus and commission schemes. One of the main things we wanted to make sure is that we didn't have a capped commission scheme as well. So, then it would allow people to kind of go far beyond. So, there'd be like a but you can go far beyond that if you excel because ultimately the business is in a good position to do that.
Paul Sonneveld
So numbers line up, you can keep going. Yeah, exactly.
Ethan Kitching
Yeah.
Paul Sonneveld
Yeah, sure. So in terms of the actual team, I'm going to just go through the structure and, uh, I'd love to just for you to give us a snapshot, you know, at the end of year one, what did your team size and structure look like? And what does that sort of look like at different points? Love to just see how you particularly the approach you took to kind of structuring and reorganizing your teams in order to support that growth.
Ethan Kitching
Yeah. So I guess after year one, there were, I think there were four individuals that were working there at that point. Going into year two, I think it was probably around maybe 14 or so. And then going into, well, going into year three, it was probably around like the 50 or so mark. So that's like really where we saw it massively, massively grow.
The way that we structured it was, Chris and myself were very much, again, focused on the new business side of things. We brought in Charlie, Charlie Merrills that came in and was very focused on the client delivery. He came in, I think, 2020, which kind of allowed us to kind of go further. We had other individuals that were kind of managing the client services before that as well. But it just allowed us to focus on growing and because we, as I said, we had good senior hires that were making sure that we weren't just bringing in new clients and they were kind of falling out of the bottom because we were servicing them poorly.
They were solely focused on making sure that we were retaining and growing clients because ultimately, a brand works with an agency not to just be going on steadily, but they want rapid growth. So, they need to have that great agency that can work with them to kind of propel them to the next stage. So it wasn't just a case of retain them, make sure that okay, it was a case of, okay, well, what more can we do for them? How can we make them grow that much further?
And that also then helped us grow our own service offerings because we'd be asking them constantly, okay, well, what are the challenges that you're facing? What are we not currently looking at? What could we be looking at for you? So that whole feedback loop allowed us to kind of come up with different service offerings that then allowed us to grow those individual clients, but then also offer to the market as well as new business.
Paul Sonneveld
Yeah. And how did you, You know, I really resonated with this in the sense of talking to clients, fantastic, right? Because you discover all these new needs, pain points that you can build a product or a service around, right? So, but there's also this bit around, you can't do everything, right? And some things are super client specific, where other things may be shared between multiple clients, and you go, actually, this could be much more of a kind of a scalable product to have much broader appeal.
If you take yourself back to maybe some of those conversations, I mean, how did you go through the process or to work out what are you going to pursue and build out versus what are you not going to do? Like, for example, you know, I'm sure the question would have come up, right? Are we going to do clients on eBay? Are we going to do clients on on by, and we can go to Walmart in the US do we want to run Shopify sites? So we're going to do creatives. Um, you know, how did you sort of internally deal with those topics?
Ethan Kitching
It's fair to say that we probably weren't disciplined enough when it came to that because we always saw these opportunities and we always kind of went there but then you'd have to circle back and say okay well actually that's not scalable. And also, you know, looking back, if there's challenges that someone presents to you and you can't solve them, don't solve them. You'll make things much worse for yourself. But if there are challenges there that you can solve, then absolutely go for it.
I think also you hear a common trend of different brands are facing this challenge. So if you can't solve that challenge, how could you solve that challenge? So for example, shortages and chargebacks was a huge one from our point of view in terms of something that clients were coming back to us and saying, profitability is a challenge. It's OK. Why is profitability a challenge? Because Amazon are charging us shortages and they're charging us chargebacks. Okay, we don't necessarily have a service for that at the moment. But what we then did was start looking into how could we resolve that? And then we brought on Zoe, who was able to come up with the offering of shortage and chargeback reclaim as a service. But we wouldn't offer that before we had that person in place to make sure that we were able to actually provide that service as and when they came in.
There were a lot of different marketplaces as well that we were looking to work with, and then we were like, okay, well, we're doing just as much, if not more work than we're doing on Amazon. But the revenue is far lower and therefore how we can charge a client is going to be far lower at that point. So they're highly unprofitable. So it just doesn't work for us. So yes, that is a challenge, but it's probably not a challenge that we're best placed to solve. So yeah, it would be going back through that. But as I said, we probably could have been a bit more disciplined on that we maybe just got a bit too excited at times.
But yeah, there was definitely elements where we kind of went for it, but then kind of took a step back. said, okay, well, actually, how do we service them properly? And yeah, it's, it's one of those things where you're always kind of want to get onto it straight away. But if you just take a few months to kind of get the pieces in place, then you're, you're going to be far better at it. And then as I said, you don't have them as case studies, and then you can kind of push on from there.
Paul Sonneveld
Yeah. Now, that's so spot on. It's one of the hardest thing, I think, as a founder is to say no to new opportunities, right? And really go with it, you know, fake until you make it type of thing, you know, sort of like, yeah, learn on the go for sure. So it's kind of sort of, you know, counter advice to that, which is which is super interesting.
Ethan Kitching
Yeah. And it's easier said than done as well. That's the thing. I don't want to be here being like, oh, well, you need to turn down opportunities like it's easier said than done. But in hindsight, that definitely is something that we could have done.
Paul Sonneveld
Yeah, no, for sure. For sure. Hey, I'm just going to throw a question in here from Tino. Because we're talking about, you know, developing, you know, products and services, meeting clients pain points. And he's actually asking a question about kind of different revenue streams. Were there any different types of revenue streams or products or services that you were able to earn from clients that actually ended up being super profitable in terms of ow amount of work versus the fees you're able to charge?
Like, were there some things there you go, you know, I just like, for example, when we run an agency many, many years ago, we had really high margins on content production, right, which funded a lot of the development of MerchantSpring at the time. You know, whereas on the marketplace management side, actually, the margins were way thinner. Now, probably because of the Australian market, I think, the way our economics work here, but what did you see? I mean, what are the products or the revenue streams you go, man, that was a great little product or a great business, nice margins.
Ethan Kitching
Yeah. I guess there’s number of different things in terms of what you have to think about here as well is possibly being too greedy as well in terms of when it comes to margin, which is which is always going to be worried, because if something's hard to do, then ultimately, you should get decent margin from that, because you've built up the tech that allows you to kind of do that. But obviously, you've put a lot of investment in the initial stage, you're kind of recouping what you put in from an investment stage from developing that tech. But then kind of looking at the different revenue streams that we had, like we had different ways of charging clients, but we need to make sure that the commercials align to what the client's needs are.
So, for example, we would have we would run a kind of revenue share with a lot of the clients that we were working with when we worked with a number of services. But then when we started looking at DSP and programmatic advertising, it didn't necessarily stack up with the revenue because we were looking a bit more top funnel on it. The work that was being put in didn't necessarily mesh up. So we needed to align that to the percentage of ad spend at that point.
When it came to shortages and chargebacks, we would have percentage of reclaimed value, no win, no fee. So, it kind of stacked up with them. It de-risked from their point of view as well. So yeah, there were some that were kind of on the face of it, that were high margin. But ultimately, when you think about the investment that you put in initially, which people a lot of people don't, because they look at it on a month to month basis, actually, it still was probably as profitable as the other. And obviously, the longer that it runs, and the less that you have to develop, the more profitable it becomes. But chances are with any tech that you build or kind of working on Amazon, everything needs iterations. And therefore, there's going to be a development that comes in at some point to kind of push it on a little bit further. Again, that eats into that profitability.
So yeah, I don't know if there was anything necessary that was like, wow, that's like incredible margins. And it just stayed that way. It was kind of battling out. But ultimately, how we work commercials were aligning it to the to the client's needs and making sure We wouldn't charge per hour or something along those lines. It would be kind of knowing what are the goals of the clients and how can we align our commercials so that it's a win-win on both sides.
Paul Sonneveld
Yeah, yeah, yeah. No, it makes sense. I want to take you towards some of the questions around the exit process and all that, but before we do, there's a few questions in the chat that I think worth asking now before we sort of, you know, take a left turn here. First one from, probably from Tino again, because it sort of relates to sort of how the structure evolved. And really that balance, right? between you and Chris were obviously, you know, selling, doing all the BD work, and you're sort of, I'm sure you're reeling in lots of new clients, but then you need new hires to ensure you've got that delivery capacity, right? So Tina's asking, you know, how do you really balance getting those new clients and the new hires on board? So that you don't have too much work, but also you don't have, you know, your costs don't blow out either.
Ethan Kitching
Yeah. So I guess initially it was very messy. Like there was, you know, the people that were running accounts was myself and Chris. So we would always kind of leave time in our calendar to focus on new business as well. So there would be the client work that was there, but we would never let the kind of the focus shift away from the new business that we'd have to bring in as well.
Obviously, as we were able to kind of generate more revenue and more profitability, we were able to bring in, as I said, initially resource but then late down line thinking about those more senior hires for us to place those bets. But we would always have an eye on new business. I think if you're just focused on the clients you're working for, all it takes is for one of them to go and you're kind of chasing a tail again trying to kind of recoup that revenue.
So there has to generate new business. And I think being disciplined with your calendar to make sure that you're putting aside time for new business pieces is massively important. And also setting those timelines of when will they start? What's an onboarding process look like for a client? They don't have to be taken on within two weeks. They could be taken on in six weeks, in which case you're going to have enough resource to bring them on.
So yeah, I think it's about making sure that you are able to have that time in your calendar to focus on new business. And if you don't necessarily have the capacity at the moment, I guess a lot of founders here and owners that will kind of say, well, probably what you'll end up doing is working outside of the nine to five, which is essential for those initial stages. But then that allows you to bring in people down the line to kind of add that resource in.
Paul Sonneveld
Yeah, I think I was going to throw Talal's question here, actually, and it looks like you're up very early. I think last time I checked, you were based on the East Coast. But I think a very relevant question, though, which is, you know, you're saying, look, most of my clients expect me to be the one on all the calls, right?
So how do you start weeding them off, and sort of hand them over to employees so you can actually continue to focus on business development, right? This is like the classic conundrum, like you do the business development, you get a client, then you become the delivery person. And before you know it, you've spent, you know, a whole month has gone by without any business development work.
Was that an issue for you? Or were you and, you know, Chris very explicit at the start, I know you talked a lot about like, we're doing business development, like, were you on the tools at all in the delivery side? Or was it day one, you're, you're always on that part of that side of the fence?
Ethan Kitching
No, so I mean, we'd have to be on the tools initially, obviously, but then we brought in teams quite early on to kind of manage the clients ongoing. I think one of the questions I would ask on that would be like, what's the reason that they ask for you to be on the client call? I think it might be one of those cases of, have you had that conversation with them about what's the reason that you need to be on that call with them? Because chances are you probably don't.
If you feel like your employees can add just as much value, then you should feel empowered to enable them to have those calls. I think we got ourselves in a good place where we felt like we could lead the employees to speak to them firsthand. I think what we would look to do then would have relationships on a more quarterly or a monthly basis where we'd have touch bases and make sure that everything was going well. Obviously, we're checking with the client teams to make sure that everything was running smoothly as well.
But I think one of those ego hits of when you do move it over, you're like, ah, actually, it's probably running better than when I was talking to the client. It's just making that leap. But in most cases, they won't need to speak to you and certainly not speak to you as often as you think. So it's having those honest conversations with the clients and saying, OK, well, What do you need me on this call to do? Okay, well, you need me to do that. I feel like this individual will be able to do that just as well, if not better, because they are doing this day to day and have more first-hand experience than I do.
Paul Sonneveld
Yeah, that's some really good points. I think it's hard for founders to let go, particularly if you feel like they've nurtured and grown that client a bit on the client side as well. So, let's move towards the exit process, right? And I know you and I have spoken offline and I know You know, you guys at Molzi weren't like, you know, day one, how are we going to exit? How are we going to align things off? Like, it makes us a super plan process. You know, it's gone a lot more organically than that.
But I'd love to just understand, maybe from, you know, when it happened, as well as like, in hindsight now, financial management, right? What role did financial management play in preparing Molzi for a successful exit? You know, what was the reality? And perhaps what would you do differently now? Now that you're on the other side, you're out, you're like, how would you enhance it? Or what changes would you make if you were to do it again?
Ethan Kitching
Yeah, so I think going into year two, we took investment from a few people that were agency. So kind of going back even further, And like starting Molzi as an Amazon agency, like we didn't realize we were an agency until Amazon told us that we were. So Amazon came to us and said, okay, well, you're one of the biggest spending marketing agencies on the platform. And we said to them, we're not a marketing agency, we're a sales company. Like, well, what are you doing? We're like, we're advertising to grow sales. They're like, yeah, you are a marketing agency. Oh, Okay, well, we probably should understand a bit more about what marketing agencies do. And this was kind of quite early on.
So what we found that we had a huge knowledge gap of actually what an agency was. So in year two, we took investment not because we need the cash, but because we wanted to get that knowledge of what agency world is and we brought in an individual that was previously founded the company or founded an agency and sold it. We also brought in a kind of a CFO that was able to kind of help us with the finance element to it and then two other individuals that were also current that they had a good advisory board there of people that had a knowledge base of exactly what it was to do there.
I think one of the key things as well is that CFO piece because they allowed us to know where we would need to be and also the important thing was we knew that we would need him at the end when it came to an actual exit process. But what we found quite early, so as I said, LinkedIn was massively helpful because we started engaging with these individuals that we thought might want to buy Molzi.
But what we found out quite early was what terms agencies would want to buy Molzi on and a lot of it was about growth, like because the Amazon space was where it was very much focused on growth. So, that was what we were completely focused on. So we were betting, we were placing a load of bets, is what we called them, to kind of focus on that growth. So we had like, obviously, our office in Hong Kong, Spain, Brazil, but we had a lot of failed bets within there as well, which is obviously hugely hit the profitability.
I think if we had, if we could go back we probably would focus a bit more on the profitability side of things. So, we'd increase our EBITDA, which would allow us much more choices, kind of at the exit process. But the important thing to note from our side as well is that we never put ourselves to market. And BrainLabs were the 13th people to kind of put an offer forward for Molzi just because of the excitement and the buzz that we kind of created around it. So, it kind of put the negotiations on our terms rather than kind of on the acquirer's terms because we didn't want to sell. And to be honest, it was just because a really good offer came in that we were like, well, yeah, I mean, that seems decent. It seems like a good fit. So we kind of went forward with it at that point.
Paul Sonneveld
Did you run the process yourself or did you engage an advisor just to help you sort of be the buffer between the potential or the parties of interest and yourselves?
Ethan Kitching
Yeah, so the M&A advisors were in between. I think that's massively important as well to kind of do, so you kind of stay out of like the emotional side of things. So, you can just focus on, okay, well, how is this going to work? on a practical level, like what is it that they want to see from us? And it's a bit more of like a collaborative conversation there at that point. And then you worry about the M&A advisors kind of doing the negotiation for you and you kind of saying, OK, well, this is what we would like to see. But that's kind of happening in the background.
Paul Sonneveld
Yeah, I think it's, I mean, it can be super time consuming, right? If you have to run that whole process yourself, it's more than a day job.
Ethan Kitching
Yeah.
Paul Sonneveld
You know, and that, you know, the last thing you want is to take your eyes off the business and sort of have the growth fall off and all of a sudden the investors back off and you're like, left with nothing. So yeah, super helpful, super helpful. I want to go through the actual process itself, right? Can you give us a sense of how long did the actual process take? And I'm talking not about the initial 13 parties, but perhaps from when there was the first serious conversation with BrainLabs to actually closing the deal. How long did that take? And a supplementary question here, what are the unexpected challenges that you didn't anticipate throughout that process?
Ethan Kitching
So, it was it was about a six month process. And to be honest, like obviously Chris was it was much more involved than there was. There were other individuals that knew about there weren't that many people that kind of knew about what was going on. There were a few in the leadership team that kind of knew it was happening. But I guess looking at the unexpected challenges, like it was one where actually we got really positive feedback. And I think this is, again, as I mentioned, like CFO and we had a finance director as well who was working there and everything was squeaky clean. So from a due diligence side of things, it ran really smoothly. There was like one red flag because someone was someone was working abroad for longer than they should have. And that was like the tiny little red flag that was thrown. But other than that, like it was all pretty, pretty plain sailing from there.
I think the unexpected thing from our side, it was when we were kind of meeting the leadership team from BrainLabs. And They were selling to us and we thought we were selling to them. So, it was kind of the bit where we were like doing it. They were almost pitching BrainLabs and we were like pitching Molzi and no one knew who was who was doing what at that point. But that was unexpected for us because we were like, OK, well, we need to get ready here because we need to kind of say how great we are. But then they started off with how great they were like. I don't really know what the dynamic is here.
*(both laugh)*
Paul Sonneveld
Your M&A advisor done a good job telling them there were another 12 people in the race, right?
Ethan Kitching
Yeah, well, yeah. Well, they weren't all at the same time, so no, it wasn't that it was competitive.
Paul Sonneveld
Very, very interesting. You know, the landscape has changed a little bit. I think sort of the market isn't as kind of hot as it was a few years ago.
Ethan Kitching
Yeah.
Paul Sonneveld
Despite that, many agency owners are looking to scale their businesses. And of course, with a view to exit, right? You know, a lot of us have made big sacrifices, traded off maybe nice, lush corporate jobs to do this. So, you know, agency owners are looking for a payoff at some point. Um, what, I mean, you could probably write a book about this, right? What would be some of the chapter headings in that book around learnings and advice that you'd give to potential agency owners?
Ethan Kitching
Yeah. So I think it's again, like when you're thinking about, well, what you're thinking about new business or thinking about an exit process, like if you're thinking about new business, like why would the client work with you? like, what is the reason that you're giving them to work with you? Why are you the least riskiest option for them to work with? Like, what is it about you that excites them to kind of work with you? And it's the same thing from a who will buy you down the line, like, why will they buy you?
And you need to really be quite harsh on yourself and think, OK, well, why would they currently buy us? Or what would they want to see if they were looking to buy us? So I think that would be something that I would focus on, is to ask those questions of yourself as to what makes us different? What makes us special? And if you can't necessarily answer that, you probably need to start finding what is it that makes you special?
I think the other thing as well when you're kind of looking to like the landscape has changed, but the challenges are still there, the opportunities are still there for clients. So again, you need to drill into, okay, well, what are the challenges and how are we best placed to solve those challenges? What are the opportunities and how are we best place to take those opportunities. So it's still very basic, like if you make it as simple as you possibly can, I feel like you could kind of move in the direction. I think what happens is, and we definitely were guilty of this as well, we just overcomplicate things.
So you try and come up with new words for different things that have no real meaning because you think it sounds great. But actually, if you make it really quite simple of, OK, this is the challenge that you want solved and we know that we can solve it because we've done it with these clients. That's as easy and as simple as it needs to be. But yeah, as you said, the landscape has changed. But the challenge, the main challenge is sustainable growth being profitable growth. So what are the different things that you can do to influence profitable growth for clients and then start drilling into those individual things to kind of allow you to be interesting for brands to work with?
Paul Sonneveld
Yeah, great advice, great advice. We need to wrap up and maybe I'll just sort of one final question from me to sort of finish things off. You're working now with other agencies and advising them and as we say the market or the landscape certainly has moved somewhat. What are some of the new and emerging trends that you're seeing in this agency space that will impact either positively or negatively owners looking to exit or scale their business? What is it that you see that you put on agency owners' radar that maybe you didn't have to deal with your time at Molzi?
Ethan Kitching
Yeah, well, I think it's, well, a lot of the market and services that agencies are offering are being commoditized. And it's because there's more and more competition there. It's easy to access. There's in-house teams. I think, again, it's taking a step back and looking at the services that you're offering and how you can be unique. The trends that we're seeing aren't too dissimilar, like in terms of the fact that people are wanting loads of data, and they're wanting to understand their data. So they have more informative decisions to kind of go up with. I think, obviously, there's more platforms that are coming in, that have come in, and like TikTok and TikTok shop, for example. But then there's all the risk element to that.
So kind of the again, it's going with the overarching, what are the challenges of the clients and how do you best solve those challenges? That's the important part to kind of focus on always and also to not be a commodity. So, if you feel like your service offering is a commodity, how can you diversify that to allow you to have a unique element? Because there's probably going to be elements that you work with a client where it is going to be a commodity, which is fine because ultimately it kind of works out. But there has to be something in there that gives them the initial hook as to, oh, this is quite interesting or this seems like a good way to move forward for me. I think it's really looking into what services are you offering, and as I said, making sure that there's a really interesting part to get your foot in the door that then can allow you to expand from there.
Paul Sonneveld
Absolutely. Thanks for that. Ethan, really appreciate you coming on the show today. Thanks for having me. You've been very generous in terms of your sharing your expertise and your journey and also sharing some of the mistakes you've made along the way. Sometimes the deepest learnings is that's where we find them. Now, for any agency owners or viewers that are interested in maybe getting in touch with you, what is the best way to get hold of you to maybe continue some of this conversation?
Ethan Kitching
Yeah, so LinkedIn is always my platform of choice of my only form of social media. So yeah, LinkedIn, Ethan Kitching, or email at ethan@kitchimo.com.
Paul Sonneveld
Awesome. Thank you so much. All right, everyone, that is it for today's episode of Marketplace Masters. Thank you so much for tuning in to this enlightening episode on how to scale and exit your agency. If you are hungry for more, don't forget to visit our on-demand library for a treasure trove of insights. Just head to merchantspring.io and find a link to our library there.
And of course, if you're aiming to streamline your analytics to gain sharper insights, make sure to reach out to us, to me, direct message me on LinkedIn, and I'm very happy to share with you how MerchantSpring can transform your journey and drive efficiency and help you scale your agency. Last, I am all ears about what you want us to cover next. If you have a topic in mind or a burning question, please let me know and I'll do my best to find the relevant expert so we can tackle it together. Thank you so much for listening and until next time, take care.