John (00:01): Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch, and my guest today is Todd Rammler. He’s the president and founder of Michigan CFO Associates Affirm offering outsourced chief financial officer services to small business owners. He’s also the author of a book 30 Day Total Business Makeover, and we’re going to talk about a fun and exciting topic today, embezzlement in small business. Again, not so fun, but certainly essential. Todd, welcome to the show.

Todd (00:34): Thanks so much for having me, John.

John (00:36): So particularly if I think if somebody’s been embezzled, they probably know a lot about this topic, but if this never really happened to you, you might be thinking, well, what are some of the ways that particularly small businesses commonly get embezzled? What have you seen?

Todd (00:52): Yeah, the most common way is something to do with billings or collections generally. So fake invoices or collections, like setting up the fraudster will set up a company name similar to a customer name, and then collect those checks and deposit them into their own account. So there’s a lot of different ways, but they tend to be creating false documents or creating a company and bringing in company property into their own personal accounts.

John (01:24): It was my personal physician that had one of these separate clinic practices outside of a hospital, and he just turned everything over to the person that was doing the books and turns out she was creating all these credit cards and then charging things on these credit cards and then just ignoring to pay them and eventually went down the road four or $500,000 later. So is it typically, I mean, is that a really common thing that it’s somebody inside the business that you’ve just handed the keys to?

Todd (01:54): Absolutely. It tends to be relationships that have been trusted for a long period of time, and for whatever reason that person feels a perceived need or injustice or something, and then it’s a slippery slope. They take one step, get away with it, take a bigger step, and the next thing you know it’s going on for 12 months.

John (02:14): So I’m sure a lot of practices you have, here’s our set of guardrails. I mean, what are some of the common things that you should do or maybe the opposite of that should never do?

Todd (02:24): Yeah, the number one thing I tell people, we’re dealing with small businesses. So the playbook says segregation of duties don’t have the same person creating vendors and then approving purchase orders or sending invoices and collecting money. But it’s difficult in a small business to do that segregation effectively, whereas in a large company, you have a bunch of different people. So the number one thing I tell people is get employee dishonesty insurance as your stop gap. A lot of companies don’t have that, right? And so that’s like after the embezzlement occurred, if you have that coverage to be protected, that’s the first thing I would do. Well,

John (03:04): Can I go there? Because as somebody who’s been in business forever, I’ve never even heard of that. So is that just you call up your property casualty person and say, I need this kind of insurance?

Todd (03:13): Absolutely, yeah. And then they will ask you how much coverage you want, and there’s ways to estimate that. What’s the likely amount of embezzlement or fraud that might take place? I can tell you statistically in companies under a hundred employees, that number is the median is 150,000. So you probably don’t need millions of dollars of this coverage, and it’s not super expensive, but shockingly, many companies don’t have it. And that’s the number one thing I would do for protection. In terms of prevention, we go back to segregation of duties and not having the same people do where these weaknesses doing the same things. But another very effective tool is presenting yourself as paying attention even if you’re not really paying attention,

John (04:00): Because

Todd (04:00): If people think that you’re looking and poking around, they’re much less likely to take that risk. But in a lot of small companies, the owner or the leadership team may have a very loosey goosey attitude towards it, and then that opportunity becomes more likely to be acted upon.

John (04:19): And again, if you’re the business owner, sometimes you have to make hard decisions. But do you find that sometimes business owners struggle with, Hey, if I put all these internal controls in place, like nobody thinks I trust them, is that an issue or it really can it be spun in a different way?

Todd (04:34): Yeah, I mean, I think it is an issue, but we start with what Ronald Reagan used to say, trust but verify.

John (04:40): Right? I hear that actually a lot of people have claimed who have said that, but go ahead.

Todd (04:45): Yeah, he was one. So the truth is it’s difficult, but as I said, putting stringent controls in a small company is difficult, but if you set the expectation on the front of this is how we’re going to operate, we expect transparency, and I’m going to be checking things, and if not me as the owner, maybe it’s your CPA, maybe it’s your fractional CFO like us, but somebody is going to have some oversight and be poking around. And even back in the old days when we used to write paper checks all the time, typically the owner would get a stack of checks to write every week or two weeks, whatever the cycle was, and a little bit of background or supporting documentation. But if you start asking questions about that, even if you already know the answer to the question, it gives the impression

John (05:31): That

Todd (05:31): You’re paying attention and someone’s going to be less likely to go down that slippery slope of embezzlement.

John (05:40): So you hit on two things that I want to come back to. One is you should have an outside, I mean, obviously there are a lot of people that hire CPA, but they really just say, here’s my stuff for the taxes in a lot of cases. So you should actually have somebody who is routinely whether call it the fractional CFO model, I love because I think there are a lot of businesses that need CFO base at some point or oversight at some point, but maybe obviously can’t afford to hire that role or does it make sense for them to hire that role? But are you suggesting that’s a stop gap measure? If somebody from the outside is coming in and looking at stuff maybe once a month, that’s obviously going to discourage folks from thinking they can get away with stuff.

Todd (06:22): For sure. And I think it’s even a greater resource because that person really understands the behind the scenes accounting of what happens in the accounting system. And so typically owners are busy, they look at the p and l, but they don’t look at the balance sheet or they don’t look at a cashflow statement. And when you know how those three documents interact with each other, it becomes more apparent when something is out of whack or something needs investigation. And if you’re running a hundred miles an hour and you’re just top line, bottom line, it’s really hard to catch it if you’re not in the weeds.

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(08:03): Now, this offer is limited to new active campaign customers only. So what are you waiting for? Fuel your growth, boost revenue and save precious time by upgrading to active campaign today. Yeah, so the second part, and again, I’ve been doing this long enough that I had my checks with the carbon and I wrote that check and sent it off, and that was a record, and then I’d reconcile that against the bank statement, which actually also had the checks in it. That came back to me. What role has technology played in maybe providing security and maybe opening up holes?

Todd (08:37): Yeah, so I told you my number one safeguard is the insurance policy. The second is using your bank’s treasury management functions, and typically something like positive pay, for example, where you tell the bank only authorize these transactions. You can’t just write a check to a random name because it won’t go through the bank. It is a little more tedious, but it is very effective at eliminating some of these random withdrawals of cash. And then the other thing which gets more into cybersecurity is somebody spoofs your email address or your company URL and then sends invoices to your customers. And that’s a little harder. That requires IT security and two-factor authentication and that sort of stuff, which is beyond my scope here, but it is a changing environment for sure.

John (09:27): Yeah, I mean, we focus mostly on internal employee embezzlement, but you’re right, I mean there’s lots of silly things like trying to hack your website. I mean, we have security on our website several hundred times a day people try to hack into our website. So that has really, and obviously that can cause financial disaster for an organization. So is that, you just said it’s outside of what you do, but is that in the realm of risk management, so to speak, of finances? Is that a piece that you should be seeking outside? Not wait till it happens, but have somebody who’s actually making things a little hardened before disaster strikes?

Todd (10:07): Yeah, I mean a hundred percent transparency that happened to us. We had somebody spoof an email address, get into our system, and then email a customer with an address that looked like ours, but it wasn’t. And the customer wired them a large amount of money and it’s gone. You can’t get that back. So it’s just like embezzlement where you start finding the solutions after you’ve been a victim of it. Right.

John (10:31): Yeah,

Todd (10:32): And I think trying, one of the things we preach in embezzlement is map out all of the ways money comes in and all the ways money goes out and find those weak spots and build security around them and protections around them. But a lot of times you don’t know until it happens to you where that weakness is because we’re not very preventative in our approach a lot of times,

John (10:54): Again, I guess because I’ve been online so long, I’ve seen a lot of the scams and spoofs and things that come through, and I will say that they’re getting on top of trying to prey on people maybe that don’t have their guard up. They’re getting super sophisticated, being able to make it certainly look like it came from Chase Bank or whoever they’re trying to fool. And of course they’ve got the ability to anonymously send out millions of these, so they only need a couple to hit. So it’s pretty scary.

Todd (11:25): It is.

John (11:27): Talk a little bit about the fractional CFO role if you would. Obviously this is, I’m guessing a part of it that you would provide as a service, but what’s a typical, if I’m a small business owner and I’m thinking, well, I’ve got my bookkeeper and I send my taxes off once a year or once a quarter or whatever it is to the person that does those for me, what would looking at a fractional CFO role, what would you gain by that? Would as the provider of those services come in and say, here’s the first things we’re going to do and then we’re going to do this and then we’re going to do this. I’d just love to hear how that would work for the small business who maybe has never hired to see anything.

Todd (12:05): Yeah, so the difference is most people are very familiar with that CPA relationship and their role traditionally and typically is compliance. So it’s compliance with IRS tax regulation or generally accepted accounting practices gap.

John (12:20): I call it the rear view mirror. Here’s what

Todd (12:22): Happens. And it is, yeah, right. So a CFO is going to be focused on what we refer to as managerial accounting, which is how do we make money? What things make us more money or less money, protection of assets, planning for cash, really empowering management to make better financial decisions. And that is a different subset of accounting. I think a lot of people think of accountants and they think of their CPA, but half the accounting population is managerial accountants. So really it’s adding that element of, if I was in your shoes as the owner, what financial data and reporting would I want to see in order to make better financial decisions? And that’s really what being ACFO is all about, looking forward using history to look forward and plan for wherever that organization is trying to go.

John (13:16): What do you say to the, because I run across this a lot of times. I mean, in some ways this is financial strategy and I do marketing strategy all the time, and a lot of business owners are like, I don’t need stretch, I just need more customers. And I’m sure you run across sometimes people that would have that similar view of, I just send out invoices, my customers pay, I pay my bills. What do I need to be analyzing that I’m missing here?

Todd (13:40): Well, as businesses grow, they get more complicated. And so we have a lot of experience with companies who have called us after the fact. Let’s say they went from 5 million in revenue to 10 million in revenue or whatever the leap is,

John (13:52): But

Todd (13:53): They made the same or less money for all of that revenue growth or profitability did not grow in step. And it’s because we have a mentality versus a health and growth mentality. So there’s not a lot of value in growing quickly if you’re not going to do that in a healthy way. And in fact it can be much more risky now you have more activity, more employees, more inventory, more dollars tied up, and you’re not generating the same return on those dollars.

John (14:23): Talk about the small business owner relationship with profit. I sometimes find it to be sort of odd. I mean that it’s a bad thing or that it’s not focused on at all. It’s like that’s the money left over after everything else happened. How do you take a proactive, or maybe you agree with that approach, but how do you take a proactive approach to showing people, no, you should be showing 2015 whatever percent profit, and that’s by focusing on that is how you make it happen.

Todd (14:52): So we spend a lot of time talking about what is an appropriate hurdle in terms of percentage, and we can do it either way depending on the situation. Many companies, small companies today are what we call a pass-through entity at S-Corp or an LLC. So we look at that profitability number and we think, oh, well 5%, that’s not so bad, but 5% you still have to pay taxes.

John (15:15): You still

Todd (15:15): Have to do capital reinvestment to keep your machinery or your equipment, your office equipment up to snuff, and then any kind of growth investment, and that eats up your 5% and then some. So there’s definitely a focus on becoming healthy, as I alluded to in the other question first, and then focusing on growth. And I’ve had many clients over the years who have been doing record sales and still not making any money, and they just keep saying, well, maybe next year, next year we just need to grow a little bit more, but we’ve been in business for 20 years and we’re still not generating that return. And when you think of it as a return,

John (15:53): It

Todd (15:54): Puts it in context of, if I took this money and I put it in the stock market, what’s the return I would get versus I have it tied up in this company,

John (16:01): I invested my life and the return is not much. I tell you where I see a lot of businesses and I don’t get into finance at all, but marketing certainly does touch that and the ability to grow, which a lot of people come to us for. And that’s the idea of understanding labor and productivity costs when somebody particularly as fulfilling a service as a business, do you have any advice on how you should be, I see a lot of people that’s payroll as opposed to measuring some sort of unit of productivity. I know we could go down a really deep rabbit hole here, but what are some just basic advice and guidelines for that?

Todd (16:40): So I would say we tend to look at things in a variable cost environment for assessing profitability at a gross profit level, let’s say in the service industry. So if we do more sales, then we would expect to make more dollars of income, but a similar percentage.

John (16:58): And

Todd (16:58): When we see that percentage going down or going up, well, either way it should trigger some questions. And the ways that you can measure that are through it really depends on the type of specific business, but staff utilization is one, what open capacity do we have amongst the staff? What’s the sales pipeline look like? But I think paying attention to that contribution margin or gross margin on a monthly basis is the first step in sort of deciding are we hitting the numbers that we’re supposed to? And that begs the question of what’s supposed to, we need to have a budget or a forecast or a plan that says if we hit the numbers, we are expected to in sales. Here’s the gross profit or gross margin we’re expecting. And if we don’t have that, then we’re just being swept around by the wind.

John (17:47): If somebody wanted to hire, and it’s all relative, I’m sure, but let’s say it’s that million to $5 million business that really is just starting to realize, I kind of need some help here, and they wanted to hire somebody like you, a fractional CMO, what’s the typical engagement look like? And again, maybe there’s a range, but just for somebody who’s listening that might, what could they expect in terms of the engagement to look like, the engagement to cost, the weekly monthly meetings, what does a typical engagement look like?

Todd (18:18): So in any engagement, there’s a little heavier lifting on the front end for companies

John (18:22): That don’t have, you’ve got to find all the varied bodies,

Todd (18:25): So that may take two months to six months depending. And then we go into what internally we refer to as more of a maintenance mode where we’re producing financial statements, we’re sitting down with the leadership team and going through ’em. We are tracking against the budget and making the necessary adjustments for cash planning, profit, et cetera. We tend to view engagements in two, four buckets, really one or two days a week or one or two days a month. And so at that size that you described under 5 million, the first three to six months might be once a week, and then after that it might be twice a month, possibly even once a month. But the key to the relationship and the value is having the CFO regularly engaged so that they understand what makes this business tick and can use their experience and analytical ability to help make those better financial decisions. And if you’re just checking in once a quarter or once every six months, really you’re looking only at numbers and not operations and what’s actually happening in the business. So for us, we like to have some kind of a regular cadence so that we can add that value of knowing what’s going to make, move the needle for that company.

John (19:41): Well, Todd, this was awesome. Hopefully some people, at least, obviously we didn’t have enough time to dig too deep, but at least got some ideas on maybe what they’re not doing that have frightened them enough. So I appreciate you stopping by the podcast, but you want to invite people where they might connect and find out about the Michigan CFO Associates?

Todd (20:01): Yeah, sure. The website’s Michigancfo.com, and we were talking about segregation of duties earlier. We have a free worksheet if anybody wants it. You can just Google Michigan CFO segregation of duties and it’ll pop right up. I don’t know the exact URL, but that’s a free tool for embezzlement and embezzlement planning.

John (20:21): Great. Well, if you think about it, when we get off this and you want to send me the URL, we’ll put it in our show notes too to make it easier for people to find. So again, appreciate you stopping by and hopefully we’ll run into you one of these days out there on the road. Todd,

John Jantsch (00:08): Hello, and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch. My guest today is Julia McCoy. She is the president of Content at Scale, where she is leading big initiatives for one of the fastest growing AI content writing tools for SEO Marketers on the Planet. She’s an eight time author and built a writing agency express writers to $5 million in revenue and over 100 on staff. She’s named one of the top 10 content marketers to Follow in 2023, and is best known for teaching powerful content strategies that bring real business revenue and growth, and now how to use AI to 10 x your blog and content authority, volume and traffic. So welcome, Julia.

Julia McCoy (00:56): Thank you, John. That was quite an introduction. I love it.

John Jantsch (00:59): Well, I don’t know, I just read what you gave me came from Diana, so it came from somewhere. Hey, so I mentioned Express Writers. We used to work together at Express Writers, and you sold that business got out of the content. Well, not totally out of the content game, but out of that business now you’re back in it in a different way, aren’t you?

Julia McCoy (01:17): Yes, in a completely different way. I can’t believe how much some days I pinch myself.

John Jantsch (01:23): So back in your former life, you had humans completely in charge of writing the content, and I think I actually even found a video clip of you on stage talking about how AI was evil for writing. I think I found that. So what happened?

Julia McCoy (01:44): This is the question, the million dollar question. Yes. So as you do too, I live in a very real world where if we can’t use something ourselves, we better not recommend it. If it doesn’t save time, if it actually doesn’t help us, then we’re looked at as trusted resources. So when Chat G Boutique came out last fall, didn’t do realtime research, it didn’t quote or find facts, it didn’t actually write with intelligence and depth and all of that is part of my process. It’s critical to the process of writing good content. So I was like, Ooh. And that’s where you found that clip of me on Digital Marketer Stage After Chat, GPT came out saying, AI is garbage. So yes, I was actually saying that, and then in January I was researching all the AI tools. I’m like, well, let’s see if somebody’s going to build it, the AI tool stack that could replace me as a writer.

(02:33): So as I was researching tools, I found one and I was like, whoa. What I was looking at was my entire workflow developed by somebody who obviously knew the SEO content workflow, and it was the tool on our work at T scale. So it had all this done inside the app, real-time research, a hundred percent original content. It’s telling you exactly where it’s sourcing every fact from, there’s a list of resources, a list of links, and then there’s an SEO optimization grade score right there in the app. So everything that I needed in one place, and it’s writing really good content all there in five minutes, a 2000 word piece. So I’m like, okay, this looks like the one. And I definitely was tough on the founder. I ask all these founders questions. I was doing this all last year, and I’m like, what are your thoughts on inaccurate content?

(03:24): Are you building any kind of barrier here? What’s your protocol for this? And he had good answers for everything they had thought through all of it. So I’m like, okay, well, I better go join the dark side before it swallows up my job. I kid you not. So I pitched a marketing plan, signed on as the VP of marketing a day a couple days later, and then in three months I just pitched the founder, can you just make me the president of the company because I was doing so much? And he said, yes, he’s a great person to work with Justin McGill. And now I’m a partner in the company. I actually sold Content Hacker, my consultancy to the company this August. So it’s been a wild ride. And this company just passed 2000 users. So it is in the clouds with growth right now. But what I love is it’s functional. It’s something that we can actually use that gives us original content and it doesn’t share the input of the user with other users, which is another big concern in ai.

John Jantsch (04:20): Yeah. So you just mentioned one, but in comparing the actual, let’s strip away all the other features that are part of the process in comparing the actual finished written product, so to speak, to what you would get with a similar prompt, say in chat GPT, how do you tell people, well, here’s why ours is better, or here’s why this process is better. Essentially using some of the same technology.

Julia McCoy (04:49): So chat, GPT is one LLM, and what you get, you get. So it’s predicting and detecting and it’s just one pattern. So oftentimes what happens is in that prediction detection, in that occurrence, you’re getting data that’s completely false. So it could say, John Jantz is the creator of the hot air balloon technique, and it could really go off the lines just because I think that sounds amazing actually. But it fabricates the facts. And so there’s no barrier there. And what ours does, it’s a stack of three LMSs plus a realtime semantic search crawler that goes and gets faxed the minute you hit write post and it’s current. That’s from the web real time. So that’s built into the technology. It’s much different than say somebody that’s remarketing chat, GBT as an API call because there’s a lot of those, but it’s just got other technology built in that actually makes it robust, something that produces useful content.

John Jantsch (05:49): So even when I would hire a good writer to write, say blog post a human being to write a blog post that was hopefully got lots of guidance, lots of research wrote the post and submitted, I always still felt like it was only 80% there for my own use because there were tone things, there were things that context things that there’s no way that person could know. Where would you say we are, and you can dispute my numbers, but where would you say we are with AI written content in that regard, especially using what you feel like is a better process?

Julia McCoy (06:26): Well, I completely agree. In 10 years of hiring writers, I feel like even the best writer got to 80% because of that client and their particular tone. I remember writing for some of your clients, they were tough. They had a specific style that kind of lived in their head. So here’s the crazy part, and I’ll tell you goosebumps here, and this is why I’m working in ai. I think that AI is actually better at that part than a human ever will be because we can feed this language model existing content that we’ve written that we love,

(07:00): And then that model uses ai, artificial intelligence to actually learn how to write and speak like us. And so what we’re seeing in these training models, which we’re building our own way to do this at Continent Scale, is pretty, I would say close anywhere from 90 to 95% accuracy to that specific user style. Once it’s trained on their style to a point where you can’t tell if I’m writing it or if AI is writing it. If I’m using our tool to write a blog for Content Hacker, it’s gotten that good. Now, it’s a little scary. I won’t lie, to open it up and read a blog hook that reads as good as the hooks. I spent nine years learning how to write, but AI is,

John Jantsch (07:46): So what you’re saying is that it could write run on sentences for me.

Julia McCoy (07:50): If that is your style,

John Jantsch (07:53): Ask any editor that is edited by writing. That’s my style. So if somebody is a marketer who has been on a content team, should they be thinking, I need to develop different skills, or I need to focus on different skills, I’m never going to have to write metadata again. So what would you tell somebody coming, especially somebody coming up that wants to be in that, do they need to have a different point of view about what content even is as far as their input?

Julia McCoy (08:23): A hundred percent. That’s a great question. Yeah. IBM did a study this fall and they found out of 22,000 workers, 1.4 billion, there’s a prediction made out of that 1.4 billion people will have to reskill in the next three years. That’s how much AI will shift our work. So in content, what I’m seeing is we’re going to have to step into the role of what we call AIO, which is artificial intelligence optimization. So you basically take the AI and you sit in the driver’s seat as the skilled writer, as the skilled marketer, and you drive that machine. You tell it what to do, you guide it with the topics, the research, and maybe that’s something you do for your clients as well. But if we are not using AI in our process, we absolutely risk going under because it’s just sometimes 25 times cheaper. I saw it in one specific use case, and you actually get better content sometimes. So we have to adapt. It’s adapt or die a hundred percent. And this is me a snobby writer. So I came over to what is unquote the dark sign, but we have to rescale and change how we work.

John Jantsch (09:31): Well, one of the things that I’ve been saying for a long time, content was king. Remember that statement, then it really became air, it couldn’t even exist, right? Well, I’ve been telling people for the last five years that I think content’s the voice of strategy, and a lot of people are still waking up on Monday and saying, what should I write for my blog posts this week? How do we get people to think in terms of really the overarching place of content in their strategy for their business?

Julia McCoy (09:57): Yes, I think it’s education. It’s like what you’re doing on this podcast, sharing with them behind what drives content, what’s actually the reason we should use it. I was just talking to a social media influencer today who sold 500,000 in courses, and she’s like, it’s 2023, and I’m still battling with the business owner doesn’t know they need a website, really. We’re still there. So it’s really up to us to educate and share that whole world, I think, and we just need to add AI to it. How do you reduce your workload of content creation by up to 80%? Because you can do that with ai, but we have to educate them so that they’re just not opening the AI generating content. And then, well, why isn’t this working? Because you need a strategy. You need a website. You need all your foundations first in order for that content to work

John Jantsch (10:49): Well. I do think that’s one of the temptations with a tool like this, it’s so fast that you can say, oh, I’ll just go gin up some content today. But how do you step back? How do you advise? So I agree with you education, but if you were educating me, how would you advise that I step back and look at content as like for the entire year, what the overall structure should be? Because the one blog post that I might create is obviously one little tiny tactic of that, but how do I think about content that’s actually going to help me achieve my business objectives?

Julia McCoy (11:23): Yeah, so first of all, you want to think about your goals. If your goals are traffic recurring revenue, then it’s your website. It’s the blog, because that is the only evergreen traffic stream other than above Instagram, TikTok. Those are not evergreen. So it’s always going to be the website in the blog. That’s your sustainable engine. So if you know, okay, I want evergreen traffic, then it’s, well, how do I get there? And then you’re going to break down a strategy of quantity and quality because you can’t have good results without quantity. You do need, the idea is topical authority. You need to build topical authority on your website and answer every question that someone would have on that topic. So if you’re talking about marketing, well, that’s a huge area, and you can literally write hundreds of posts. Now, you can use AI to do that so much faster to get more traffic out around that topic. As long as you’re doing keyword research, you’re finding the right keywords to talk about. You’re doing topical research, you’re looking into your topics, you’re making sure you’re not writing on the same thing twice and you’re not cannibalizing those topics. So the strategy there is going to be just as important as the content creation.

John Jantsch (12:33): Let’s talk a little bit, and again, I’ve actually demoed the tool, and so I’ve seen how it does this, but let’s talk a little bit about content structure. So I have found that just writing 300 or 3000 words on a topic is not enough to really make it without the right structure. So I mean, we can go back to writing 1 0 1 on that, right? But I’m obviously outlining with subtopics and all that. I mean, that’s just basic writing. How does the AI employ that kind of structure? And then also things like internal linking structures as part of the overall SEO picture or AI optimization picture that you’re talking about.

Julia McCoy (13:14): Yes, yes, you’re right. It’s not just enough to fill a word count. It really has to be the structures. That’s your headers, that’s your subheaders, and it’s the actual structure of the piece as it relates to the topic. That’s FAQ schema markup at the end. Are you covering all the outlying questions that somebody would have on that topic in that piece? So as you structure this piece, you want to think about all of that. Links is also critical. If you’re linking to a study, make sure it’s a high quality source, whether it’s like a.gov link or an actual IBM Capterra study. Make sure it’s an authoritative study. And then with internal linking, that’s critical. You want to map out your website in your content itself and send people out to related pieces of content. And what’s interesting about content scale in particular is it’s built to do all of that inside of the editor. So it’s formatting everything. It’s even doing interactive click to tweets, automating that inside of your blog, which you can turn on or off depending on what features you have. But those are things you want to think about in the content piece. So it’s not just, God forbid you’re publishing an essay, you need the structure and you need the links.

John Jantsch (14:27): I think you can make a case in terms of Google’s view structure. Is every business important as the overall topic itself? I think talk a little bit. Formats content is primarily a text format. Is that correct?

Julia McCoy (14:41): Continent scale

John Jantsch (14:43): At scale, not in demand at scale. Sorry. We’ve had a lot of podcasts today. So one of the things that we have actually found and we do with particular types of business owners is we find it’s a lot easier to get them to record 12 five minute videos in a month and then repurpose the transcripts of that in various formats. If I came to you and said, that’s what I’ve got, how would you advise a marketer then to use your tool to make the most of that?

Julia McCoy (15:13): Yes, I love that. And I think that video audio, just speaking, does come so naturally to especially the experienced business owner that really knows their stuff, which is a large part of your audience. So in our tool, in the input section we have, and it’s all secure, so none of this data actually goes out to any other user. It doesn’t build LLM, it doesn’t go into any of that. So in this input section, we have a place where you can upload a video as your input. And in that video, you could be talking about, oh, here’s the top three reasons to include TikTok in your marketing strategy. And then you talk for five minutes. So that can become a full blog that’s original written to rank and Google for that keyword. And RAI does all of it based on that five minute video, and all you do is upload it.

John Jantsch (16:01): Awesome. Well tell people, do you have a special offer for me today? Did you come with one of those? I’ll tell people how they could try this tool out and maybe give a little advice on, because I do think on a new tool, it’s really easy to jump in and go, let’s make it do this, because that’s pretty obvious. How would you tell somebody that if they’re going to get started with the tool, that they ought to think about it, approach it, give it a good thorough test?

Julia McCoy (16:27): Yes. Well, I always recommend if you have a writer and that’s the team member that’s producing a lot of content, or maybe it’s an SEO or a content manager, give them the tool. You want to put the tool in the hands of the person who’s actually producing content. So if it’s not, you give it to your writer. But if you’re the one producing content and maybe you have no time, this is the perfect solution. Because like we just said, you can upload a video or that could be an audio file even that you’re uploading, and it’s turning it into not just a transcript, but we’re talking a fully formatted 3000 word blog with all the embedded things ready to go with some optimization from you, human editing, we always recommend that. Look through it, make it your own, but ready to go to the top of Google. So to get started, why don’t we do this, John, after this call right away before this podcast publishes, I’m going to make this link live. So let’s draw consummate scale.ai/duct tape.

John Jantsch (17:23): And

Julia McCoy (17:23): What we’re going to do is make that a referral link for John, give you guys 20% in additional free credits. And then John gets all those. Everyone who signs up will be under his network. So that’s a great way to keep this to your audience, but 20% and additional free credits when you sign up with that link content scale.ai/duct tape. And the best way to get started is think about who’s going to use this. Secondly, just jump in. There’s really no better way to do it. And we have a guided tool tip tutorial series that will take you through every single step when you sign up. So it’ll highlight where to start with a tool tip, what to do. So you’ll be guided through pretty deeply there.

John Jantsch (18:06): Awesome. Well, Julia, it was great catching up with you. I appreciate you taking a moment to draw by the Duct Tape Marketing Podcast. We’ll have that link in the show notes as well. Anywhere else you want to have people connect with you and learn more about what you’re up to.

Julia McCoy (18:19): Sure. Yeah. Well, this was great to chat because something we mentioned before we hit record was we haven’t chatted since I ran a human writing agency.

John Jantsch (18:27): That’s right.

Julia McCoy (18:28): So different. I love

John Jantsch (18:29): It. Yeah. Awesome. Well, again,

Julia McCoy (18:31): Yes. Well, we can also connect on LinkedIn. I’m there, Julie McCoy.

John Jantsch (18:35): Awesome. I again, appreciate you stopping. Bye-Bye. And hopefully we’ll run into you one of these days out there on the road.

Speaker 1 (00:13): John Jantsch (00:08): Hello, and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch, and my guest today is Peter Caputa. He’s the CEO of Databox. He’s a former VP of sales at HubSpot, and currently specializes in helping companies grow by implementing sales and marketing excellence. This company, databox, is a business analytics software company that helps companies monitor, report, predict, and improve their entire company’s performance in one’s spot. So Pete, welcome to the show.

Peter Caputa (00:38): Thanks, John. Appreciate the intro and great to be here.

Speaker 1 (00:13): John Jantsch (00:41): I just described your business, but let’s just take the non-marketing speak and just say, what does Databox do?

Peter Caputa (00:50): Yeah, well, I think the biggest problem that we solve for companies is that their performance data is all over the place. So marketing is the worst where you have website analytics like Google Analytics, maybe HubSpot, you have SEO data from SEMrush, hres Search Console. You have social data ads, data, et cetera, and everywhere. And so what we did is we built integrations with all those tools, recreated the visualizations and the charts and the metrics that you’re used to seeing so that you can click and basically have all that data in one spot, view it, set goals against it, forecast performance on it, benchmark it against similar companies, et cetera, et cetera.

Speaker 1 (00:13): John Jantsch (01:32): So before we get more into that, I want to go backwards a little bit in your entrepreneurial journey. You were an early HubSpot person. In fact, when Brian and Dharmesh were actually creating it and wrote the book Inbound Marketing, that’s when Duct Tape Marketing was really around and I had a lot of conversations with them early on. I should have gotten on the partner train. That’s one of my big regrets in life. A whole lot of people were pitching cr mish kind of things at the time, and I missed that opportunity, but to still have done a lot with HubSpot over the years. But talk a little bit about being in that early start company and now that is public, and I know you’ve got a lot of opinions about what’s going on there, but I’m curious just kind of what it was like to start in that small of a company that really blew up.

Peter Caputa (02:18): Yeah, a hell of an experience had no idea. At the time when I was joining, I was running a startup of my own and making a living but not going anywhere. And I did that for several years, about six years. So when I joined HubSpot, it was like, ooh, a steady paycheck and other people that seem really smart and doing digital marketing, which is what my startup was. So it was a step up from what I was doing. When I look back, it was actually quite risky. I was 15th employee, I remember the hundred person party, the hundred customer party. I remember we went and grabbed beer and pizza and celebrated that. We had a hundred customers paying, it’s two 50 a month, so do the math. That’s hundred grand annual revenue. So really risky startups that I joined, but obviously it turned out quite well.

(03:05): And then I stayed there for nine years. I was the first person to go from individual contributor sales rep to manager, director, and MVP. And so I grew a big team there. I started the agency partner program that you passed on and built that up. And that became about, and now is about 40% of HubSpot’s revenue. I always stayed there until that team was counter million in annualized revenue, which was around 2016. And so HubSpot, since then’s going crazy, I think as a company, they’re doing 2.2 billion in annual revenue and 40% of that, or roughly, I don’t think they shut publicly that often, but about 40% of that is coming in through partners. So it’s a billion dollar business at this point. So quite an experience.

Speaker 1 (00:13): John Jantsch (03:51): And I know you didn’t get on here to talk about HubSpot, but I have one more question to dive into. I’m good. That partner program is a lot of agencies who you work with still today. That’s really your target today. And I work with a number of HubSpot agencies and I’m hearing some grumbling that they got to a point where they said, oh, I know you were with us a long time, but we’re doing something different. And here’s the new program. I’m hearing some grumbling that happens when companies grow. And I know you’re still a big fan of HubSpot, but I’m curious how you feel like that move has really turned out for them.

Peter Caputa (04:27): So HubSpot, the HubSpot execs are used to me being bluntly honest. I was bluntly honest as an employee, so I’m happy to continue with that reputation. But yeah, so they definitely made a bunch of changes. I think the net of it is it went from HubSpot teaching a business model to follow to more of a partner program where you’re reselling technology. And I don’t think a company with a hundred or however many customers they have, I think is way over a hundred thousand, can continue to be a business. They chose not to continue to be a business model advisor to agencies,

Speaker 1 (00:13): John Jantsch (05:04): Which

Peter Caputa (05:04): Is the way the program started. We were helping these agencies improve their cashflow by switching away from project work to retainers, inbound marketing retainers. And I think that time has passed. HubSpot doesn’t even really talk about inbound marketing that much. They talk about the CRM. And so HubSpot I think recently has made painful for some, but necessary changes for both their business as well as I think for the partners. And what’s happening now, from my observations and talking to lots of partners is that more HubSpot is really bringing partners into deals and leveraging them for service sales, assistances and service so that HubSpot doesn’t need to continue to build a massive services team and can rely on agencies to do the very customized personalized work to make ACRM and a market automation and the services platform work. So I think it’s the right move for HubSpot to change it where they have a smaller number of partners that they’re referring or bringing into deals where they can really control for the quality.

(06:08): And those partners are big enough and capitalized enough to be able to offer a breadth of services that help the customer implement the entire HubSpot product suite. So I think they’re making necessary changes, but yes, it’s painful. I think for the smaller agencies who don’t get those referrals, they also change the commission program. So the commission starts to expire, especially for those smaller firms that don’t keep up with selling new licenses. Definitely. I think what we’ll see, my prediction would be that there’s a little bit of a rationalization. There’s fewer small partners, more big partners, maybe more specialized partners who specialize either in a type of service or a niche market that can bring expertise that HubSpot doesn’t have internally. But again, these are things that happen in a maturing partner program. Yeah,

Speaker 1 (00:13): John Jantsch (06:53): And it’s a proven model. I mean, it’s a Salesforce kind of model I bringing partners in many software before Salesforce. Yes, exactly. Yeah. So let’s go back to data. You started to describe what you’ve done with databox. I’m curious, there are a lot of other tools out there that claim that same space. Agency analytics, for example, is one that comes to mind. How do you tell people, here’s what we’re trying to do that’s different?

Peter Caputa (07:15): Yeah, the most unique thing that we do is that we turn data into KPIs. They’ll provide a level of flexibility in terms of what data metrics somebody wants to show and how they’re going to show it and how they’re going to visualize it. And it really enables a custom reporting platform. So I think when we’re comparing to companies like Agency Analytics, I think the flexibility of our system is really good When you’re comparing us to companies more like business intelligence tools, where we are strong is our native integrations. So turning the data that gets pulled from APIs, from sale, HubSpot or Google Analytics or whatever, and translating that for the user into the metric that they’re used to seeing. So sessions by referral source sessions, by organic sessions, by paid

(08:04): All the way down to the keyword level or the ad level, we recreate that. So it’s point click in choosing making choices and dropdowns as opposed to what many BI tools do is like, okay, I get your data into a warehouse. And then once you do that, learn how to write SQL or use this thing and look at all your data and then extract the right metric. So what that net that allows is somebody who’s not extremely technical to get in and get set up relatively quickly with the metrics that matter from the different tools that they have.

Speaker 1 (00:13): John Jantsch (08:33): What has always irritated me with some of the tools in that similar space is the data’s there in real time, but there isn’t a real handy way to go, well, let’s look at last quarter and compare. Have we grown? Have things changed? It’s like, nope, here’s today’s data. And I always find that sort of irritating with a lot of the tools,

Peter Caputa (08:53): Some of, I think the lower end tools where they are easy to set up, but it’s because they’ve coded it exactly the way they’ve coded it. And so there is that lack of flexibility. We actually spent two years doing a project we internally called custom date ranges that allowed the user to just change it to any date range in the past ranges month to date, whatever date range you could want on the fly as they’re looking at the dashboards. Believe it or not, it was an extremely complicated problem to solve and

Speaker 1 (00:13): John Jantsch (09:24): That’s why it exists, right?

Peter Caputa (09:26): And that’s why there’s lots of tools that don’t bother. And when we did it, it really just caught us up almost with what the native tools provide. And so it was a big project that we didn’t frankly get a lot of return because it’s kind of table stakes, I think.

Speaker 1 (00:13): John Jantsch (09:42): So how big, I know the answer to this, but I’m going to tee it up for you anyway. How big does a company need to be? Because a lot of times people think about data and data warehouses and BI tools, we’re talking enterprise stuff, but how big does a company need to be to where this type of implementation makes sense?

Peter Caputa (10:00): So we have a very inexpensive starting price point, I think, don’t quote me, I think it’s $59 a month, I should know that, but so we have a very low starting price point. So we have lots of small businesses that use us. Our sweet spot of customers that stick with us for a long time and use the product in the way that we kind of intended it is that 11 to 250 employee mark.

Speaker 1 (00:13): John Jantsch (10:25): We

Peter Caputa (10:25): Have many customers that are bigger as well, but there’s a smaller number of companies that are that bigger. So we have a lot of customers or big percentage of customers in that 11 to two 50. It’s generally whether they have ongoing marketing and advertising activities, they have salespeople or a shopping cart or subscription, and they have multiple people doing things that improve the performance of the business. And each of those people are using multiple tools. That’s when our product becomes valuable, especially for an owner. We have a persona we call Decision Maker Dave, and

Speaker 1 (00:13): John Jantsch (11:02): That

Peter Caputa (11:02): Is the person that usually signs up for our product and the person that logs into our product most frequently, they usually, they’ll delegate the setup of our product to their managers or maybe an analyst, but usually just their managers. And so it tends to be those small business owners that want that visibility into the performance of their entire company without bugging everybody. They want it real time. They want to be able to explore it themselves. They want to be able to track performance to goal this month of this quarter across the team.

Speaker 1 (00:13): John Jantsch (11:33): Hey, have you ever tried to hire freelancers and found that the quality of work was lacking? Or you got all the outsourcing excuses as to why the work didn’t get done on time? Well, DeskTeam360 has revolutionized the outsourcing game with their insourcing program that eliminates all those frustrations and excuses. You get unlimited graphic designs, website funnels, CRM, email automation integrations, automations, really anything that requires you to log into software. Imagine all the time and frustrations you can save from trying to get your tech work done properly. We use DeskTeam360 every day in our business, and so I’ve negotiated you a 10% deal. That’s right. Just go to a https://deskteam360.info, book a discovery call, and you’ll receive the special duct tape marketing 10% off because hey, your pal John always takes care of you. So that’s it. Go to https://deskteam360.info and book your call today. So one of the big words when we talk about anything today is prediction or predictive ai. That’s really what AI does. So increasingly we’re going to expect that kind of performance from everything, including our dashboards that we set up instead of them being rear view mirror. We want to see what’s ahead. How are you addressing that trend?

Peter Caputa (12:54): Yeah, so we have a bunch of things in play around AI and predictions and also really guidance for how to improve performance. But to answer your question very specifically, a standalone forecasting feature where once you can act to your data sources, you can select from different metrics that we would pull from there, and then it forecasts it automatically for you based on your historical performance. So that’s pretty new. It’s a standalone feature. We haven’t even integrated it with our custom dashboards yet, or custom reporting feature working on it. But yeah, it’s very much important piece of what we consider a set of features that are important for really managing the performance of the business. What we observe is that a lot of companies kind of just do reporting as a check the box activity. It’s like, yep, I sent you my results, go check it out. And it’s either good or bad. It’s almost like a report card that after you’ve taken your test.

(13:49): But in reality in business, we get to go and take the test again in a way where we can say, we got next month, we can change it up, we can do something different. We do more or less, we could try something completely new. So there’s a bunch of features. We’re building forecasting, benchmarking, which allows companies to compare to peers correlations, which automatically detect correlations between leading and legging indicators, which is a really difficult concept, I think, for a lot of marketers to grasp. And so we’re trying to make that easy. So important to understand the things you do today that will impact next month, next quarter. And so that’s just some of ’em. There’s a few others that we are working on. They’re in the works that we’ll launch this quarter and next quarter, but we think there’s an opportunity to help companies make decisions by giving them those types of functionalities that help them not just predict the future, but also think and think about what they could do to impact the future.

Speaker 1 (00:13): John Jantsch (14:45): So I do want to talk, you mentioned benchmarking and benchmark groups, which is kind of an educational that I know you do alongside this. I do want to get to that, but I want to ask about one more topic that drives me crazy and that’s attribution. I have people that join our fractional CMO program that have been following me for 10 years and I run an ad and they see it. Oh yeah, I remember John’s out there exactly 10 years later. So what are some ways that people can start thinking about attribution in a more effective way? I don’t think many of the tools do a very good

Peter Caputa (15:19): Job. No, I think if you’re only using Google Analytics or HubSpot, any automated website analytics tool, if that’s all you’re using, you’re seeing maybe 25 to 50% of what’s actually happening. Because if you write a book and it gets sold through Amazon, you don’t even know who that is, let alone whether they read it right? And I know you’ve written a bunch of books, you have a podcast. There’s no way to connect your podcast to your CRM to see, hey, they listen to 10 episodes and now they’re in our funnel. There’s so many things now that happen to actually be the more effective marketing tactics and channels that aren’t measurable by the tools that most companies use. Now you can measure how many downloads did I get on my podcast? You can measure how many.

(16:02): So often you get a report from Amazon, how many books were sold. And so you can see directionally whether that content is resonating with your audience, but you can’t connect it to the sales or sale that you got unless you ask. And so I think we’re back to 1990s marketing attribution, 1980s before the internet was around where when you called somebody’s business, they asked, oh, how’d you hear about us? And they said, word of mouth, A friend referred or Yellow Pages or saw you at a trade show two years ago, whatever it was. And so if we ask those questions on forms on our website, on our Zoom sales calls, then we can start to actually get a piece, a much better picture of which marketing is working.

Speaker 1 (00:13): John Jantsch (16:46): The problem is

Peter Caputa (16:47): Very few companies are doing that in any kind of structured way.

Speaker 1 (00:13): John Jantsch (16:51): Well, and I tell you too, you’d take that with a grain of salt too, because we have a lot of organizations we work with where we use that model, and people don’t remember where they heard, they just pick one.

Peter Caputa (17:02): Yeah, I think capturing on a form is tough. People are like, I’m just trying to get through this form. I want to book

Speaker 1 (00:13): John Jantsch (17:06): Call.

Peter Caputa (17:07): I just want the stupid ebook. Why am I asking? Catching this question. But when you get somebody in a sales conversation, they will usually like, oh yeah, I’ve been following you guys for this and listen to your podcast. You get a little more context. But then there’s a whole process of grabbing that data, organizing it, and then analyzing it, which requires human to

Speaker 1 (00:13): John Jantsch (17:26): Usually for fun. We’ll sometimes put, my great aunt told me about you as the first choice. And when we get a bunch of those, we know they’re just getting through the

Peter Caputa (17:34): Form. No, it’s important to have an open text field, I think, in those.

Speaker 1 (00:13): John Jantsch (17:38): So let’s go back to the benchmark groups a little bit. And again, I’m just going to open it up and you tell me what you’re doing with that and what you’ve seen and how somebody might be able to participate in that.

Peter Caputa (17:48): Sure. So it’s a free product. It’s available@benchmarks.databox.com. You can go there, sign up, get access to benchmarks from tens of thousands of companies who have opted in, and they’ve agreed to anonymously, I shouldn’t put that in quotes. They agreed to anonymously share their performance data in order to access a benchmark that allows them on a report to see here’s how we compare. And we’ve organized those companies once again and honestly by company size and industry and type of business, et cetera. So you can go in and see how does my Shopify performance metrics compare to other e-commerce companies with 50 or more employees or something like that, or how can I go and see how my HubSpot performance metrics compare to other companies that are SaaS companies? And so completely free, we’re on a mission to help companies just understand how they should be performing, because I think it’s really hard and confusing for most small businesses to figure that out. Not only is it hard for them to even know what metrics to track, it’s hard for them to know, is this good or bad? And so that’s what we’re trying to answer. Could

Speaker 1 (00:13): John Jantsch (18:59): Somebody, I was going to say, could somebody theoretically bring their own group? I want to benchmark my customers, something of that nature,

Peter Caputa (19:07): Especially

Speaker 1 (00:13): John Jantsch (19:08): B2b, obviously,

Peter Caputa (19:09): We’re coming up, we’re just short of about a hundred partnerships, which is what we call them, where other companies decided to say, I want to build a benchmark on my own. So we have an agency, for example, that only works with mental and behavioral health clinics, and they have 200 of those clinics as clients. And so what they did is created a group, they can add their clients to it or ask their clients to opt in. And then once that’s done, it automatically calculates the benchmark. And so now that agency is the owner of the only, I think, the only proprietary benchmark for behavioral mental health clinics that want to measure their Facebook ads, Google Ads, Google Analytics and Search console performance. And nationwide, they have nationwide coverage. So they can even see how is your performance in Texas compared to your performance in Pennsylvania. So they have this amazing data set that they now can go in and say to a client or prospect, like, you’re spending a lot more than the average and your results are less. Or you could probably afford to spend a little bit more to keep up with your peers. And if we were able to increase our reduce the CPC cost per click, maybe you can justify that, and that would ultimately yield them more results. So it allows them to go in and consult objectively through either a new prospect or client.

Speaker 1 (00:13): John Jantsch (20:27): Awesome. So it’s effectively bringing in, it’s very focused on advertising and kind of a core set of

Peter Caputa (20:34): Marketing. Social media. Yeah, CRM data. We have a lot of sales data, some finance data, although people are a little less likely to share that even though it’s anonymous. So it’s a lot more marketing and sales.

Speaker 1 (00:13): John Jantsch (20:47): Yeah. Awesome. Well, Pete, I appreciate you taking a few moments to come and chat with the listeners of the Duct Tape Marketing Podcast. You want to tell people where they can find you, maybe connect with you and certainly find out more about databox.

Peter Caputa (21:00): Sure. Yeah. So I’m very active on LinkedIn these days. So Peter Caputa on LinkedIn, there’s two of us, but one doesn’t post and I post almost daily, so I’m pretty easy to pick

Speaker 1 (00:13): John Jantsch (21:10): Up. And your Peter Caputa the fourth

Peter Caputa (21:13): As well? I’m fourth, yes. I’m the fourth. My great-grandfather father and my son are all Peter Caputa. So yeah. And there’s actually a Peter Caputa fourth. That’s what I meant. There’s another guy in Germany that’s the fourth, which is crazy.

Speaker 1 (00:13): John Jantsch (21:25): Oh funny.

Peter Caputa (21:27): And then Databox is just databox.com, just like if they see the video, they can see it on my hat here. But databox.com, just like it sounds

Speaker 1 (00:13): John Jantsch (21:35): Awesome. And we’ll have it in the show notes as well. So again, appreciate you stopping by and hopefully we’ll run into you one of these days out there on the road.