00:00:05:11 - 00:00:08:22 Unknown Welcome to the podcast. 00:00:09:00 - 00:00:28:12 Unknown And everybody, welcome back to the hearts. I'm your host DJ with my usual suspect, Grant Chapman. How's it going everybody? We're currently in season three right now of the podcast. If you guys haven't listened to season two, we had 42 different episodes of founders and product leaders all across the country. But today I'm super excited to introduce Justin Sirotkin. 00:00:28:13 - 00:00:35:17 Unknown Hopefully, I pronounce that right. The founder and CEO of Octo. Welcome to the show! 00:00:35:19 - 00:00:50:19 Unknown I was super excited to have you on the show, Justin. Honestly, we ate into a little bit of the podcast time because you and Grant were already going back and forth on what it means to be an agency and a consultancy, and you guys are basically speaking the exact same language. For those who are less familiar with who you are, what you do. 00:00:50:20 - 00:00:56:00 Unknown We'd love to get a quick overview of who you are and what Octo does. 00:00:56:02 - 00:01:37:01 Unknown I. 00:01:37:03 - 00:03:57:06 Unknown That's awesome. And I understand your background. You originally were industrial design, right? You did that for quite some time. 00:03:57:08 - 00:04:08:15 Unknown Who is it again? Okay. 00:04:08:17 - 00:04:25:06 Unknown Justin, one of the things I was so excited about when it came to this conversation was just hearing you and Grant get to go back and forth on all things agency. So I'm excited to dive into that. But maybe Grant, you could share a little bit on your side that origin story of one project leading to what is the actual company? 00:04:25:07 - 00:04:41:20 Unknown You have a similar story there. Ironically enough, we were in the same boat, so we had drew with my co-founder. I had dropped out of college to join a grid energy storage company, so think battery packs in parallel. And we were children employees 4 or 5 and six with other buddy Tony. And this was, you know, we were going to change the world. 00:04:41:20 - 00:04:58:12 Unknown This is before power walls existed and all that stuff. And that founder, you know, promptly ran out of money. So we were kind of sort of back to school, but someone on the internet had reached out. Hey, we saw that you built these electric go karts in college for fun. Would you do that for money? And drew and I looked at each other and build electric racecars for money. 00:04:58:13 - 00:05:12:19 Unknown Like hell yeah. Let's do this. The only wrinkle in that was we were young and dumb. We didn't know what venture capital was, so we didn't know how to start a company. Like, well, we'll start selling our souls to anyone willing to pay us money for engineering and pour that money back in to start this go kart company. 00:05:12:20 - 00:05:27:16 Unknown And it worked. We ended up consulting enough to build the prototypes and get going. And, you know, 3 or 4 years later, we were selling and building go karts. But we are making more money consulting every year in the PNL. I'm like, you know what, maybe go karts are too early. We can just go do practice full time. 00:05:27:16 - 00:06:12:20 Unknown And we came Glassboro in 2015. So total accident, you know, go Kart company started out of my mom's basement. And, you know, fast forward now we got a building full of really smart people and they don't let me design anything anymore. So it's wild how you accidentally trip into these, you know, fun experiences running a consultancy or product development firm or agency. 00:06:12:22 - 00:06:40:01 Unknown I love that. 00:06:40:03 - 00:06:52:02 Unknown We'll figure it out. We're one step away from unlocking the, you know, the up into the right curve. 00:06:52:04 - 00:07:18:05 Unknown What's interesting is it kept you your consultancy, kept you from going bankrupt. Right. If this what everyone in entrepreneurship doesn't understand is there are two kinds of entrepreneurship. There is, you know, crazy high risk startup venture backed must scale ten every year forever as a product company or software company or crazy new idea. And then there's like running a profitable bootstrap company that just turns over money and grows organically and has no one in it. 00:07:18:05 - 00:07:33:01 Unknown But you write from an investor or capital standpoint, like sell what you're good at, compound that find other people that are really good at that and pay them a salary and they trade their labor, right. That's what we always show up. I buy people annually and I day trade them monthly. Like this is this is what a consultancy actually is. 00:07:33:02 - 00:08:41:23 Unknown And the real talent isn't actually what you, Justin and I do in design or in engineering or in product are real talent. And the real value of an agency is how do you recruit the right team and give them the right structure and environment and motivation? Because that's, I think, how you make a good agency. 00:08:42:01 - 00:09:11:19 Unknown Was recovery time. You were already at the floor and things were going up to the right. 00:09:11:21 - 00:09:29:20 Unknown And we use PGP to keep everyone employed. Now my question is, what did your 21 look like? Because our 20 was little Rocky and then 21 was rocket ship. 00:09:29:22 - 00:09:43:02 Unknown Oh did you. Yeah. Did the excitement get too much and get over the skis? 00:09:43:04 - 00:09:48:07 Unknown Let's put your focus. 00:09:48:09 - 00:09:51:22 Unknown So. 00:09:51:23 - 00:10:11:17 Unknown Justin and Grant, unfortunately I'm not going to allow you guys to glaze over 2020 and those war stories. Sorry. We're going back to it because I'm sure it's a lot of pain. And so we don't want to talk about it. We will hear. One of the questions I have is, you know, Grant mentioned the second ago, but especially in a bootstrap business, like an agency, right, where it needs to be profitable, that's that's that cash flow. 00:10:11:17 - 00:10:32:22 Unknown That's how it exists going into 2020. The folks that made it out the other side are true. What I like to always kind of coined the term of like warriors, people who really made it through some difficult times, just either Grant or Justin or both would love to understand how did you emotionally make it through that experience? Because I think that's one of the things that could be good for someone listening who's also in the space of, you know, when things are up. 00:10:32:22 - 00:10:51:20 Unknown Okay, great. We all feel Dauphin's and it's fantastic, but how do you truly navigate when things are in a lull? And this is a case where it wasn't necessarily on the onus of you guys, it was just the outcome of what was happening in the world at the time. Oh man. I remember the abject panic. So I had gotten really sick, which we still don't know what it was, but I think it was Covid. 00:10:51:20 - 00:11:11:15 Unknown In March of 20, I'd been traveling internationally and got home and was out like basically unconscious in the bed for two and a half to three weeks. And I woke up to Covid having happened, like hadn't been in the office, had no idea what was going on. Like woke up and got like myself, put back the other and like called my partners like, hey guys, I'm finally like not having a fever over 103. 00:11:11:16 - 00:11:35:13 Unknown What are we doing? And like, oh, everyone's work from home. There's a global pandemic. Like, we thought you died, like, all this crazy stuff. I was like, oh, no, I'm alive. I just feel like death. But wait, everyone's worked from what is going on. And so I jumped in back into my business after the transition had happened very rapidly, and my next week was meeting with every single one of my clients, canceling every single one of the contracts that we had back to back to back to back. 00:11:35:13 - 00:11:48:13 Unknown Just cancel, cancel. And it was lucky that as an attorney. So I was raised that, you know, contracts or contracts and let's go fight them. And I don't have legal fees because I'll defend myself and figure this out. So I'm willing to go fight this. I just bullied up to all of our clinic. No, we're going to continue. 00:11:48:14 - 00:12:04:02 Unknown We're going to provide value. You're going to need this, I promise. And if they couldn't cancel, I didn't let them. And they fought me for it for about a couple of weeks in a row. PGP came out and it was the very first company to file in our bank that, like, allowed us to go do like first people in line. 00:12:04:02 - 00:12:30:11 Unknown How the docs done. Like I had my ducks trained, all of my startup clients how to file for PPV because they didn't have any help. So I'm up late at night on zoom training. People have all this paperwork and about a month later, you know, it was still kind of rocky. And we're like, all right, what we're going to do is all the leadership is going to go from full salary to zero salary, and everyone on the team is going to take a pay cut by half, because if we did this, I didn't have to fire anybody and I could keep everyone's benefits running. 00:12:30:12 - 00:12:46:18 Unknown We did the math. It was like 6 or 9 months. We ended up cash in the bank at half pay rate that we were going to keep benefits alive for everyone for 6 or 9 months. And this is a pandemic. You know, getting sick is the thing we all worried about. And we're like, let's keep healthcare running. And we had a virtual townhall team like, hey, this is what we're doing. 00:12:46:22 - 00:13:04:13 Unknown If none of you can afford to live this way, like you're gonna miss a mortgage payment, call them, let me know, we'll figure something out. And we had to have one pay period that was at half pay. By the time the next pay period rolled around, we were back to standard pay. And by that next, the third pay period in a row, we bonus everyone back for that half a paycheck we borrowed. 00:13:04:14 - 00:13:26:15 Unknown And like, now we're back on the rails. Let's go do this thing. And what that allowed us to do was three major topics for us. We had built this infinite trust and confidence within our team that, like the world, may be falling down around us, but this is the safe place that allowed our team to exude that over zoom calls to all of our clients, whether they're enterprise or startups, that, hey, it's going to be okay, we're going to get your stuff done. 00:13:26:15 - 00:13:40:04 Unknown While we're figuring out the world, we can still be engineering. The stuff you were counted on us for doesn't ship tomorrow. It ships in 6 or 12 months. Well, it'll all be figured out by then. Don't worry about it. Little did we know, it was not yet did we fully figured out. But we were able to do this confidence. 00:13:40:04 - 00:14:00:07 Unknown And what? The third tier that happened is. All of our enterprise clients who couldn't transition to work from home effectively or be effective all of a sudden needed help. And that's what caused 21 to be an absolute rocket ship for us, as they're all trying navigate work from home. We were, you know, fully prepped for it because we're just the tech company and have laptops and VPN work. 00:14:00:09 - 00:15:14:08 Unknown So we took this cratering, you know, bad idea or a bad thing that happened to us, used it to build rapport and trust and then just ran with it. 00:15:14:10 - 00:15:20:09 Unknown Right. 00:15:20:11 - 00:15:40:06 Unknown That compound interest is a hell of a drug. I think that was worth the discount. 00:15:40:07 - 00:16:25:12 Unknown If you were raising money at that time, you actually are in a great spot, right? Because now you can pitch from zoom, you know? 00:16:25:14 - 00:17:06:03 Unknown That was all remote. 00:17:06:05 - 00:17:16:00 Unknown What a good year to launch a cycling. 00:17:16:02 - 00:17:47:23 Unknown Impossible time to buy cycling product made in China even harder. 00:17:48:01 - 00:18:13:19 Unknown Wow. 00:18:13:21 - 00:18:20:12 Unknown No, no boats available like in the ocean. Like all the containers were booked. 00:18:20:14 - 00:18:41:10 Unknown Oh, that was fun. 00:18:41:12 - 00:19:16:16 Unknown Who zoomed to the manufacturing engineer who is zoomed to the technician who's actually in front of the tool, and he's the only guy allowed in front of that tool. 00:19:16:18 - 00:19:20:17 Unknown That's crazy. 00:19:20:18 - 00:20:13:01 Unknown Wow. 00:20:13:03 - 00:20:15:21 Unknown Right. 00:20:15:23 - 00:20:32:22 Unknown It's crazy how we got started. I have no idea how drew and I got clients when we started. We were children, like, legitimately not graduated from college at children, and people hired us to help them develop their products. And like, thank you for everyone that did, you know, condolences for those of you that trust us when we were children. 00:20:32:22 - 00:21:10:08 Unknown But we got lucky early on and had some really cool successes and that springboard us into being able to be trusted cause we had ship product for client and again, we go karts ourselves. We shipped a product. It just was one quantity, one of one. Yeah. 00:21:10:10 - 00:21:27:09 Unknown One in the the fun part is consultant or an agency adjustment and see if you get this we always get asked one more thing. You know the Apple fame is one more thing. And every early client call it's like hey can you guys do insert one more thing here for us? It's like, can you build our pitch deck? 00:21:27:09 - 00:21:47:18 Unknown Can you do branding for it? Like, we're not a branding firm, but we industrial designers and their creative and like, yeah, we'll bang it out. And I think that's the magic that makes agencies really good. Anything past 4 or 5 years, then once once you make it past that five year and you've launched a couple of products for clients and you've been through the ringer and had a couple of projects die in a fire. 00:21:47:20 - 00:22:25:10 Unknown Right? I think that's the other half of the learning, just like you and I were like, oh, you have to have shipped it and have to have done it. You also have to have written something all the way to the ground, because those bruises are the ones that make you not make the mistake again. 00:22:25:12 - 00:22:46:08 Unknown Or put yourself out there. I think that's the right way to put it. 00:22:46:10 - 00:23:10:21 Unknown And I'd say like a graph that is going down into the right just slightly is better than the risk of a graph going down in the right rapidly. Right. Like you'll have a team that is slowly burning through all of their capital and making very little progress, and like just boiling the frog in the bad way. And they will do that nine times out of ten corporate, rather than get the dice, go to Vegas and roll them and say, let's see if we can make something really magic here and make it wonderful. 00:23:10:22 - 00:23:44:04 Unknown It's what you get, all this mediocrity coming out of the large organizations and just I think that's why they hire people like you and I. 00:23:44:06 - 00:24:05:20 Unknown Sure. I would really agree. I think that one of the gentlemen I love to listen to is Roy Sutherland, and he speaks very directly to this exact point, which he always references the bees and the waggle dance, which is, you know, bees will go out and they'll go to the crop of flowers that always bearing the pollen. But every once in a while there's one B or a group of bees that can just go completely astray. 00:24:05:20 - 00:24:28:00 Unknown And they run the risk of maybe like not finding any pollen or dying because they went to the wrong direction. But once they found the new, better pollen, then they come back and they do a little waggle dance and then all the other bees understand, hey, this is the new source of pollen. And that same sort of concept where as the the larger the organization gets, the more the more adverse to risk less because they have the actual ability to fail. 00:24:28:00 - 00:24:47:16 Unknown But I think that the people in the roles, I think naturally kind of on the side of security. Right? You're much you're going to get fired much quicker if you make a decision that logically made sense and it didn't work, versus a completely left field decision that if it works out great, you're a superstar. But if it fails, you're going to get fired. 00:24:47:16 - 00:25:35:15 Unknown And so that's kind of the the I feel like we're a firm like glass Board or Octo comes in plays where we actually get to outsource this. So if they feel great. But I think regardless, that is actually the beauty of what I feel like. Agencies like both of what we have at Glass Port Octo are is that you need that big to go out and then come back and find the waggle dance, right? 00:25:35:17 - 00:25:50:07 Unknown I think this is so important to talk about. I know this wasn't on our list, but I think this topic is so important. So many early clients, I mean, both startups and enterprise clients are like, well, I'm so afraid that I'm going to be addicted to you and have to use you forever. Like, why would I ever use a consultancy I never have before? 00:25:50:10 - 00:26:08:05 Unknown This is the insert this product managers first time going out and getting outside help. And I was like, yes, there's the consultants adage, if there's not money to be made in solving this problem, there is absolutely money to be made prolonging the solution. But that actually isn't good for people like us. They never one thinks that consultants are just here to bleed money in the moment. 00:26:08:10 - 00:26:30:09 Unknown No, no, no, I want you to go to market with whatever we're working on right now is fast and as cheap as humanly possible, because I have way more area under the curve ability to make money off of you. If you love what we did so much that you can afford to launch. V2 v3 v5 years later. Justin, as you said earlier in the episode, you have clients you did favors for in 2020 that are paying dividends in 2026. 00:26:30:11 - 00:26:53:14 Unknown And that's what's important because in our work as agencies, I would love to get your opinion on this. My hardest job is sales, finding good talent and doing good engineering for our clients, like actually doing what we do as a company is fun and easy and unlimited supply. The most expensive thing for me is to get a great new client to spend enough time, effort, and energy building a relationship to build a new thing. 00:26:53:19 - 00:27:13:18 Unknown I won't jeopardize that for almost anything, just you echo that. 00:27:13:20 - 00:27:32:22 Unknown And it's like like for our industry. It is the cheap part because sales has no, no income, right? No one's paying that that cash flow. And you're having to make bets to go do this. And just I love your input on this for everyone listening as a customer, please take this into account. I only get, I don't know, 8 or 10 new clients a year. 00:27:33:02 - 00:28:00:20 Unknown Right. Like actual new logos and most of those don't turn into a big project. Those are like early stage stuff, and only a few of them turn into long term clients. So my data points every year for is what I'm doing in business development, in sales and networking, working or not. You and I are very patient guys. We have to wait like six or 9 or 10 months to go get an update at to see if an experiment we ran last year worked this year. 00:28:00:22 - 00:28:57:14 Unknown And and and. 00:28:57:16 - 00:29:36:04 Unknown I love that for you. 00:29:36:06 - 00:29:58:15 Unknown I will say that whenever I joined Glass Board coming out of the world of software and also just like selling physical doing go to market for a physical product, which was like a plug and play steam room company. We did some crazy stuff to sell those things, which was fun. And you joined a services company and you really start to understand the core fundamentals of how to actually do go to market for a services company is just different. 00:29:58:15 - 00:30:21:23 Unknown It's different metrics. I think that the two metrics that are the biggest difference is one, the lead time, like you mentioned, but secondarily secondarily the LTV. Right. It's actually if you do a really good job, it's really, really high and it's consistent for the company for a very long time. And so what you give up in terms of your ability to go get, you know, insert X action here gets the Y outcome and then boom, that's a client. 00:30:21:23 - 00:30:43:06 Unknown That's what we all want. That math. That makes sense logically. Unfortunately in services it's a bit different. But the reason reason being is that LTV could very well be a client that's with you for eight years on insert some some level of spend. Right. And so what you give up in terms of volume, you're actually getting in terms of LTV, but there's so many nuances in between there. 00:30:43:06 - 00:31:08:10 Unknown And so that's one of the, the, the joy of my last year and some change has been understanding and dissecting what it means to go to market for a services company. And it sounds like you guys have done your very share work as well as like, yeah, when it comes to services, company, delivering the product and the outcome, obviously we need to be a lead at everything, but so much work actually just goes in to make sure you can get that mixed client that's not there for six months, there for six years, right. 00:31:08:11 - 00:31:52:20 Unknown There's a lot of advantage there. 00:31:52:22 - 00:32:24:18 Unknown The other. 00:32:24:20 - 00:32:28:01 Unknown Oh yeah. 00:32:28:03 - 00:32:44:23 Unknown I, I can't echo that harder. Like when drew and I were early like you didn't know how sales work. So anything that walked in the door, you had to kill to eat because you needed to eat. And I think it takes two things. It takes some maturity to cram your ego down into a trash can and be like, I'm not the expert at everything. 00:32:45:00 - 00:33:02:17 Unknown And two, it takes the the financial security of being able to say, like growing a firm big enough and having enough, like long term look at your business that you're not worried about staying alive next month or next quarter. You're like, oh no, what is best for me at 12 months from now? Will this client be good for me 12 months from now? 00:33:02:17 - 00:33:33:04 Unknown And when you can have that kind of a long term look at your business, you can say no with a healthy smile and say yes with honest eagerness. Not just I'm really glad you're signing on next week. 00:33:33:06 - 00:34:05:14 Unknown We could do it. There's probably someone better than us. 00:34:05:16 - 00:34:11:01 Unknown I had one experience with the cash buyer. It was hilarious. 00:34:11:03 - 00:34:13:20 Unknown It. 00:34:13:22 - 00:34:42:17 Unknown My mind was it was a money clip and just handed me the whole money clip and I was like, oh, like, where did this come up? Don't ask questions. 00:34:42:19 - 00:34:55:19 Unknown My favorite part of this whole story, like telling no and not doing the things you shouldn't be doing. Like sort of fact. Like when do you let client graduate? And that's like on our list, like to cover today? I think it's so important because it's so hard early on. You want to do everything for them and be it all things to all people. 00:34:55:19 - 00:35:11:13 Unknown But I've learned with like my startup clients, there are certain aspects of their products I have to make them do in house so that someone will buy their company, right? I can't actually be everything because otherwise they're going to due diligence and I'm going to show a table of due diligence. Oh are we are we getting him? I'm like, actually you're not. 00:35:11:17 - 00:35:37:01 Unknown And you have to draw these lines like product ownership needs to grow and stay with the company in the long run. Sustaining work needs to grow and stay with the startup in the long run, you know? 00:35:37:03 - 00:36:22:00 Unknown They're a sales shell and that's it. 00:36:22:02 - 00:36:35:14 Unknown And you're like, I would have loved to interviewed them for you. 00:36:35:16 - 00:36:52:07 Unknown We started recruiting. I don't know if you gone this far. We started recruiting for our startups. Like I will be the one reviewing the like, posting the job, getting the resumes in like do you and hang them off. And it's been some of our favorite like startup transitions of like I Charlie let me talk to him. So Charlie Armor, one of our favorite clients. 00:36:52:07 - 00:37:14:22 Unknown Actually in our first sales meeting, I told him I will take money from you for three months to tell you what you're doing is a bad idea, but I'll do it so no one else leases you for three years. In two months in, I realized that his business model checked out and this is all going to work. And fast forward five years later, you know I'm no longer doing the sustaining work on his product because I hired Tara in Hong Kong, who I work with another one of my clients, and she left there and, you know, in between jobs. 00:37:14:22 - 00:39:04:21 Unknown And I was like, I think you two should meet. I think she could do a great job here. And they're just doing awesome work. And you've jumped in and helped them and go to market and sales. Yeah. One of these things like never be afraid to tag in the right people, to grow the client's internal skills away from what you do because they will just grow and be better and come back around Boomerang when they're ready. 00:39:04:23 - 00:40:19:10 Unknown Bond through the low points of the Valley of Death. You trauma bond with your team, both the internal team and the client's team and the manufacturing team. 00:40:19:12 - 00:40:42:16 Unknown You know, just you know, we're going on hard mode all the way at every step of the game. 00:40:42:18 - 00:41:01:09 Unknown Something's going to go wrong. 00:41:01:11 - 00:41:05:21 Unknown And you are next. 00:41:05:23 - 00:41:29:03 Unknown Right? Because again, you fell on the sword because you know the blame was on you. That's the waggle dance. 00:41:29:05 - 00:41:56:16 Unknown It's going back to the personal relationship. The moment the personal relationship breaks down that you can't be heard. You should just get out of the client because, you know, it's kind of like whether the process of success or not, it's going to fail somewhere along the lines, because the personal relationship of being heard and hearing each other isn't there. 00:41:56:18 - 00:42:09:19 Unknown For the first time. You want to do it again, it's. 00:42:09:21 - 00:42:25:12 Unknown Partly why we exist, right? Quite literally, to be the bee that goes out and finds and works on the thing that might be a bit more risky, depending on the level. From the start of perspective, you guys are fueling the fire, bringing expertise they don't currently have the gift into us probably couldn't get to at the SMB level. 00:42:25:12 - 00:42:44:08 Unknown You're doing part of that, but more kind of getting them out of the gate even faster. And at the enterprise level, you're able to go take some risks on their behalf. And if it works out, great, and if it doesn't, as long as you have that personal relationship, it's important. As we wrap up, Justin, I've loved this. So we usually at the end of the at the end of the podcast, ask what would be your advice to hardware founders? 00:42:44:08 - 00:43:02:05 Unknown I think that I've heard nothing but advice for hardware founders, especially as a going to look look into it in agency and who who to trust and how to go about doing it, and what to expect from their side and see their lens. What would be your advice to someone who's going out to start an agency? You've done this a few times, you've lessons learned. 00:43:02:07 - 00:43:48:19 Unknown What would you tell somebody? What are the main things they should be focused on? 00:43:48:21 - 00:45:12:20 Unknown The client said, can you do this? One more thing you got good at? 00:45:12:22 - 00:45:31:23 Unknown I love it. Any closing thoughts on that, Grant? No, I, I love it. I think the the first point of like get specific in your thesis is really important the second time around. But I actually think it's impossible at first. I think you, I think you have to go drive by rail and figure out what you do, and you don't love to actually, like, make a thesis, because if you actually start with a thesis, that's just a guess. 00:45:32:02 - 00:45:42:11 Unknown You'll stick with it and never learn. I think you kind of have to go get burned a bunch. 00:45:42:13 - 00:46:17:09 Unknown You kind of knew what you wanted. Yeah. 00:46:17:11 - 00:46:31:08 Unknown Drive by rail at the beginning. And then you're right, you're mid 30s. You'll know exactly what you should and shouldn't be doing the right thing. And the networking one. I can't spring that from the rooftops any louder than you did, because it's the most important thing. Like you and I have a name for it. Brass build relationships at scale. 00:46:31:10 - 00:46:47:16 Unknown It is the only thing that matters when you're running a relationship based business. Absolutely. 00:46:47:18 - 00:47:03:14 Unknown Its feel good. Manager. It's vibe manager. Yeah. Be the be the guy who they give a call to. That's really ultimately what the name of the game is. Everybody. This is the hard tech podcast. I'm your host Andre Grant. Thanks for joining me as always. And Justin, it's been an absolute pleasure. Thank you so much.