Hiring agencies is a hack (But only if you ask them this first…)

I’m a big believer in hiring agencies. And no, it’s not just because I run one.

For me, hiring agencies has been a major hack that accelerates growth. 

Think about it. When you hire an agency, you get a whole team. They already have optimized processes that you can learn and benefit from (even steal). You also have the flexibility to scale services up or down without all the headaches that come with hiring another team member.

So even though agencies get a bad rap sometimes, I think they’re a good idea for most businesses to get specialized services and expert assistance.

But I had an experience recently that changed the way I look at vetting agencies, and it even made me appreciate a few things about my own agency. 

I learned a BIG (expensive) lesson.

Recently, I was moving from one agency to another, and it was a nightmare. We were totally NOT a fit for this agency. But unfortunately, this didn’t become clear to me until the onboarding process when they gave me a bunch of homework that didn’t really align.

So I told them, “I think we made a mistake. I'm not the right fit client for you guys. And that's okay. Let's cancel the contract.”

This agency, which is a pretty big agency, told me that they work for everyone. And that’s when I realized…

The most important question you can ask when you’re hiring an agency is: Who is NOT your customer?

If the agency can’t answer that question or tells you everyone is their customer, then they’re not a good agency because it means they’re not clear on who they serve and who they cannot serve.

Ultimately, an agency that tries to serve everyone will serve no one well.

So as you’re vetting potential agencies—whether it be for PR, content marketing, or development (like DevSquad)—find out who the agency does NOT serve to determine whether or not they’re a good fit for your business.

Here’s an example of a client that is NOT a good fit for DevSquad.

If you were to ask my team or ask me during a sales call who is NOT our client, I can give you multiple examples of companies we had to decline because they weren’t a good fit. 

One of the main reasons we disqualify customers is when they want to build a two-sided marketplace. Why? Because it's very hard to build and requires a lot of investment. And many times when people come to us, I can see they’re NOT ready to build that kind of product.

They don't have the capability to lose a lot of money and to raise a lot of money—both of which are vital when building a two-sided marketplace like Airbnb. It’s just too complex.

We have created a few two-sided marketplaces in the past, but we have always gone deep with the client to make sure they are ready for the challenges this kind of product presents. We’ll ask questions like: 

• How much money have you raised? 
• How much money do you have to invest? 
• How much do you think this is going to cost?
• What do you think about Product-Market-Fit?

We actually have a customer right now that’s launching a two-sided marketplace. But they are one of the exceptions. The client has had multiple exits and has raised millions of dollars to start. (In other words, this wasn’t his first rodeo.)

And he knows he’s going to have to keep raising millions and millions of dollars because the product is going to lose money for potentially 10+ years. Most people are not ready for that!

If you look at a two-sided marketplace like Uber, it lost money for nearly 10 years. (From 2014 to Q1 2023, Uber lost $31.5 billion.) And Airbnb, which was founded in 2008, didn’t have its first profitable year until 2022. 

So that’s why we don’t usually take on customers that want this type of product. Though we can certainly build it, we would be doing them a disservice if they’re not a seasoned entrepreneur that’s actually ready to run this type of business and handle the challenges.

And here’s our favorite type of client to work with.

At DevSquad, we typically focus on building B2B SaaS products for industry experts who have experienced and fully understand the challenge they want to solve. For example, an accounting expert building a SaaS that helps other accountants get their jobs done faster and easier.

Done right, vertical B2B SaaS products are highly profitable. When you address the needs of a specific industry, you can drive higher retention rates, long-lasting customer relationships, and stable recurring revenue.

Ask these follow-up questions when vetting an agency.

When you’re on the sales call and getting to know the agency and what they offer, ask them:

• What types of clients do you specialize in serving? Who do you enjoy working with most?
• Who are the last few types of customers you chose NOT to work with and why?
• Can you give me some examples of projects that were NOT a good fit for your agency?

TL;DR: Hiring agencies is a major growth hack for Rebel Founders. 

But when vetting agencies, you need to ask two questions: 

1) Who is NOT your customer? 

2) What types of clients or projects do you enjoy working on most? 

This helps make sure they’re a good fit for you.

To your rebel journey,

Phil Alves

P.S. I’d love to hear from you! Hit reply and tell me your agency horror story or share your favorite question to ask when you’re vetting an agency.