 Good afternoon, everyone, we're really humbled that you are taking time out of your Drupalcon schedule to attend this one. Just continuing along the lines of what Michael was asking, a quick straw poll. How many are sole practitioners? Maybe just have one person consultancy? How many, maybe one to ten employees? Ten to twenty-five? Ten to twenty-five, okay, and twenty-five or higher, fifty more or more, okay, great. That helps give some context. There's a few more open seats up here if anyone wants to come in. And just so everyone knows, they are trying to record the session, so even though we probably don't need the mic, they are asking us to use it. So if you see Michael and I passing the mic or coming behind the podium, that's why. So, all right, well why don't we go ahead and get started. The title of the session is Understanding the Critical Metrics for Your Drupal Business. This is the least favorite part of the presentation because we're forced to talk about ourselves. But I think one of the unique differentiators for Michael and I presenting the session is that we're active owner operators in Drupal-centric agencies. So I know a lot of times when you're given advice, it's from the author of a book or a consultant who may not be actively involved in the day-to-day operations of a Drupal business. So we do want to give you some framework around the lens that we're looking at some of the issues through. So for media current, we're a bit of a hybrid. The majority of our team is distributed across 23 states. We hire all U.S.-based W-2 full-time employees. We have an operations team that's based in Atlanta. I am a co-founder and partner, have been involved with the Drupal community since 2007. This is my ninth DrupalCon North America and it's always great to be able to share and give back. I was also very active for a long time in the regional Drupal community in the Southeast and it was a primary organizer for Drupal Camp Atlanta. If anyone would like to talk shop the rest of the week or have us go more in-depth about a particular topic, we'd be more than happy to do that. I'm really passionate about sales and marketing and just open-source software and culture and those types of topics. And hopefully we'll have enough time in the end for Q&A. We really want to listen to, again, continuing to what Michael was saying, covering what you want to hear in terms of subject matter. So we have a ton of data points and content that we're going to be covering with you today and I'm going to let Michael kind of segue over, introduce himself and continue. We do have like four or five single seats up front here if you guys want to find a seat, but I'm Michael Silverman. I think this presentation kind of grew out of the fact that Dave says he's happy to talk and share about this stuff. We've been doing this for years. So I think the idea here was, okay, some of the stuff that I think we figured out are the right metrics for a business. Let's try and share them. So myself, I've got about 30 years in business. I started Duo in 2009, so I've been doing that business for just going on 17 years now just seemingly like a long time. And we went all Drupal as a company in 2009. I've probably been coming to Drupal Cons. I think this is probably my sixth. So I found a Duo 99. So Duo, we're about 25 people in Chicago. Unlike Dave, we basically had everybody coming into the office every day. Duo's been changing because we now have an investment and an affiliate with a firm in India. So we're sort of going to a hybrid model, and I can talk about that a little bit. But just from where this is coming from is Duo's been about that size, 25 to 35 people over the last decade or so. You're about double that size. About 65, I feel. You're distributed where we have everyone coming into the office. But otherwise, we're pretty much all Drupal focused. So these are the areas that we wanted to cover. So we tried to pick out a number of different items that we thought were key areas to focus on as business people. We're going to be giving them somewhat short shrift because we're only spending five minutes or so on each one. But let's go and do it. So I'm starting out by really saying that before you figure out how well you're doing, you need to figure out if you know where you're going. So you've got to know where you're going and then keep your eyes on the dashboard. And that's what a lot of this is about, is knowing what your goal is. So what is the goal of the business? Are you looking to grow the business? I wasn't really looking to grow Duo much larger than it became when I started the company for various reasons. You probably were looking for a fair amount of growth and haven't probably grown, I mean, you're five years younger than us and twice our size. So knowing where you want to end up is really the key point to start. And there's so many good books, business books that we'll be recommending, some of them today, Good to Great by Jim Collins is one of these sort of books that everybody reads. It's a great book. It has a lot of good things to cover. And there's so many great books that what I got into was this by Vern Harnish, Mastering the Rockefeller Habits. So what Vern Harnish did is he kind of took all the best practices from all of the latest business books of the last 10, 15 years and put them into kind of an operating system for a small business. And he called it the Rockefeller Habits. And one of the outcomes of this structure is that you have something called a one-page plan. It's actually two sides of a page. But the one-page plan is going to start out by what are the core values and the purpose of the company. And you notice here where it says targets three to five years. So it's asking you to look out three to five, maybe seven, maybe 10, kind of depends on where you are in your career, of where do you want to be? Where do you want to be when you grow up? Where are you heading to? And then you break that down to, okay, where do I need to be three years out? Where do I need to be one year out? And then where do I need to be every quarter? So that's how this operating system works. There's a couple different ways to look at these different operating systems, but they basically say begin with the end in mind. And many other books talk about this, understand where you want to go. So both Dave and I have recently also had sort of exits or the ability to sort of exit from the company or in the process. And that's also part of what you need to consider at this point if that is a goal for you. So Rockefeller Habits is a great book on this. There's a guy that worked with Vern on Rockefeller Habits and wrote his own book called Traction. I kind of like the Traction book as well. It's a little bit more of a storyline, but it's really the same ideas, the same kind of one page plan and focus. And then another tool that you might want to do is join a group like Vistage or EO. EO is the Entrepreneurs' Organization, but if you can get together with a group of CEOs or business people within your area, usually these groups are 8 to 10 people and you sort of share best practices with each other, it helps to reinforce a lot of the things that are coming out of these books. So we wanted to purposely start out with culture because both Michael and I believe that culture is truly the only competitive, sustainable advantage any of us in this room have. So a very popular topic lately in the business world. How many are familiar with Simon Sinek? So yeah, maybe 25%. So Simon Sinek has done one of the top five I think now most popular TED talks in the world. So for some of you this is going to be reinforcement, for most of you it will be new. So Simon Sinek in this TED talk talks about a theory called the Golden Circle and he says that most companies can tell you what they do. So if I asked many of you in the room what you do, you could tell me that you do development, you do design, you do strategy. Most companies can also articulate how they do it. So many of us on a website probably have that same flywheel diagram that shows we do discovery and a defined phase and then design and it looks pretty similar. Where companies really struggle is telling you why they do what they do. What's the purpose of the company? What makes you tick? What makes your employees want to come and work for you? And Sinek has some great metaphorical references. One that I really love is many of us have heard the story of the Wright brothers. And Wright brothers originally from Ohio, I think they moved to Kitty Hawk, North Carolina. They were tinkers, they were engineers. But Sinek says they really had this idea that they could revolutionize the way that we thought about the transportation industry. But what he says is that a lot of people didn't know is that in parallel to the Wright brothers was the government funding a pretty elite team of Harvard engineers with unlimited funding, unlimited resources, and they had all of the, again, resources, budget at their disposal to work on a project that was very similar to the Wright brothers. And Sinek says we all know kind of how the story ends. The Wright brothers are, I've seen it disputed a little bit lately, but are generally credited for getting the first plane off the ground and revolutionizing the way that we think about transportation. The guys at Harvard, the team at Harvard was collecting a paycheck. They really didn't know the purpose of what it is that they were working on. So why am I telling you that? I think when you analogize that to your own agency or to open source software, it's pretty darn exciting to think when Michael and I were first starting 2007, 2009, how few people had even heard of open source software. Only about 20% of organizations in the world even use a CMS. So we have the ability, we feel like, at media current to really revolutionize the way people think about software and the open web. And that's pretty exciting to think about the impact that our work has on organizations. So the recommendation, the takeaway is make sure you have a mission and a purpose at your agency and you're able to articulate that to your employees. That's one of the first things that we do at media current from day one forward. So again, this is us looking at things through the prism of a distributed team model. But in terms of suggestions on how do you strengthen your culture, these are some things that we do. I'd highly encourage you to do an end of the year survey. For us, we've been doing it three years and it's great to get a sampling of seeing where from the employee's eyes we're improving or maybe where we're dropping off. We do for our leadership team, quarterly KPIs. Every week at media current during our staff meeting, we do a knowledge share. So we'll pick somebody's favorite topic. It could be about a module that they learned. It could be about financial planning, but we're really trying to share knowledge across the company every week. We have a 24 by 7 anonymous suggestion box. That's so easy to implement. It's a simple Google template but really surprised how many organizations don't do it. Some of our best ideas have come from employees that have given us some good thoughts through the suggestion box. We do organized team building events. We schedule a lot of one-on-one meetings. Try to find out what is the morale of the company. I know there's tools that you can do that, but for us, it's not a substitute for actually being able to have good communication and one-on-one time with our team. We do an annual company retreat being virtual, again, being primarily distributed. We feel it's really important to get everyone together in the same room at least once a year. We have a $2,500 continuing education stipend. One of the core parts of media current's culture is making sure that we are helping our team professionally grow and develop. What we have heard from a lot of other, some other agencies or companies is they'll say they encourage professional development and growth, but they don't always put their money where their mouth is. They don't sort of, if they're asked to, if they asked a manager to attend a conference or a Drupal camp, they might be given pushback or resistance. We encourage continuing learning. That's a big part of our culture. We use Slack for communication as our primary communication tool. We feel that it's also important to be able to have private discussion groups. Maybe you have a book club or a certain movie interest, and we have private Slack channels that people can join for that. One of the suggestions that we got recently was we don't feel like we have enough visibility into what's going on at media current. We'd love to hear more announcements, and we also incorporated doing public praise for employees that are doing an above and beyond effort. That's something we recently implemented. We archive all of those company announcements every week. We also do once a month at a minimum for people who have, for employees who are in a state with multiple employees, we will formally set up a co-working day for them to just be able to get out of their house, break the monotony, break the routine. These are some of the things that we do at media current. I mentioned Simon Sinek, highly encouraged. It's a seven or eight-minute talk. It was pretty real eye-opening for me when I first saw it a year or two, and it's a really, really good speech. The other that has had a lot of influence on me personally as well as, I think Michael has read the book as well, is Daniel Pink and Drive. I'll share one quick story out of Drive that Daniel Pink's basic theory is very aligned with Simon Sinek. He says that employees generally aren't motivated by money. He gives a really neat example of a restaurant, and the restaurant was a franchise. They looked at two line cooks, two cooks who performed pretty much the exact same duties and responsibilities and had about the same amount of experience. They made two subtle differences. They paid one of the line cooks 30% more, 20 to 30%, I forget the exact increment. They paid him more, and then the other cook, they'd made a subtle change to the back of the restaurant. They set up a TV monitor, and they set up a camera system for different tables within the restaurant, and he could see people eating his food that he was preparing in the back of the restaurant. Daniel Pink says, guess who has higher retention in the restaurant that implemented that simple strategy, and it's about purpose, right? The line cook was able to see the results of what he was doing, and the person who was making more money was more likely to turn over, so great books. That's a couple of recommended resources on culture. Yeah, culture really is important. It's really one of the key differentiators, especially as we're all sort of chasing the same talent pool. So it's something that you definitely want to focus on, and I think there's different things that you need to do if you're a distributed organization versus local. Now, if you're going to keep operating, though, you need to have gross profit. So one of the first metrics that I'm covering is really gross profit. Just briefly to mention something about financial statements, I'm really looking at the profit and loss or the income statement. You might do these on an accrual basis. You might do these on a cash basis. Depending on the structure of your business, you might essentially just be doing cash financials, because that is what you need to pay taxes against, but you really should be looking at accrual, which is sort of your operating financials within a month, and that's where many of these metrics are going to be coming from. The gross profit target that I think you really need to hit, especially with all on-shore resources, is going to be about 50%. And when I talk about gross profit, I just want to be very clear. I think that a lot of times these metrics get passed around, but you need to know exactly how people are calculating these metrics. So when I talk about gross profit, what you want to do is you want to take your net operating revenue. So if you've got a lot of pass-through revenue, let's just say you're doing a lot of SEO work and Google advertising, so you're collecting money from your clients and giving it to Google. Obviously that is revenue, but I'm not counting that revenue. So I have total revenue here on the top of 120,000, which might be the total revenue. Take away that pass-through revenue, where you're really just not providing a whole lot of added service there. And that means that your actual revenue for services provided would be, say, $100,000. 100% cost of services would be the variable cost of providing those services. So the people, all the costs that are involved primarily for organizations like us, it would be people that are used to provide those services. Most of your accounting systems can manage this for you, and you can look at it project by project in person by person, but overall as an aggregate, you don't really want your variable costs to exceed 50% of your revenue if you want to be profitable. So pass-through cost is money that you're kind of collecting from your customer and paying to a vendor and not really adding value. So the example I used was buying Google AdWords for people. If they're, say, giving you $5,000 a month and you're spending that on Google, okay, the consulting services to figure out which AdWords to buy would fall into your consulting revenue. But the pass-through money, like, you know, we spend $5,000 on Google and we collected $5,000 for that from the customer, that would be the pass-through cost. So I'm really looking at your operating cost, 50% gross margin for any services that you're providing. And don't fool yourself with those pass-through costs. Sometimes it makes you think you're a bigger business than you are, and you might not make the right decisions because of that. What I'm showing here is that if you've got 50% margin, operating costs usually shouldn't exceed 30%. So you've got a chance of hitting 20% gross, which is a nice target to shoot for. So segwaying over to sales. Again, this could be an entire session on itself, and we're going to try to give you a brain dump on just some key pointers. So tools that we use, I know, slap my hand, we don't use sugar, we do use sales force as our CRM. We use something called a gecko board as a software. I'll show you a screenshot later of what a gecko board looks like. For proposals, we still use Google templates for estimates in collaboration. Still find that it's a viable tool for that. So some suggestions. If there's one thing that you take away that's critical to sales, it should be around positioning. I'm going to go into a little bit more in depth in that in a second, but positioning is critical. If you're at the business summit the other day, I threw out a few acronyms, but one thing that we try to be cognizant of on every sales call is qualifying and learning about Bant. Bant is an acronym for budget, authority, need, timeline. So at any time that you talk to a prospect, you should be establishing what it is that their budget is, who's the authority or the decision maker to be able to approve the sale, what's the need, what's the pain point, what kind of problems are they trying to solve, and is there a time-bound element to the engagement to the initiative? Is this a must-have project or a nice-to-have, so Bant? Establishing MLOEs? Do you wonder those things, Dave, where if they can't give you the answers to the Bant, it's not really a prospect? Yeah, so budget is always the tough one, right? Because you're going to ask for budget, and then there's this back-and-forth and tug-of-war, nobody wants to give the first number. But the prospect's afraid if they give you a number, you're going to come in a dollar under it, right? So budget is probably the hardest one. I'm an advocate of trying to establish ranges, so if you come out and say, is it 100 to 200,000, is that the range that you have in mind? And try to bracket the best that you can. Establish MLOEs is minimum level of engagement. One of the big mistakes we made early on at Media Current is we were trying to be everything to everyone when it came to sales. We were going to user group meetings. We were well-intentioned. There was a small business who needed Drupal help, and they just weren't a good fit for the type of service offerings and the type of value that we could provide. So establishing that minimum level of engagement for us, it's a six-month term, and the minimum is 20 hours a month. I was surprised when I heard that from Dave because they're twice our size, and our minimum engagement is 10. So I was surprised that he'll come in and assume takeover of existing sites in the 20-hour a month. And 20 hours a month is what? That's like two-and-a-half man days in a month? So that's pretty small. What's your minimum? What's our minimum? You looked at it in a couple ways, right? So how to have a project minimum. We were probably 50, 60,000. I mean, I like to keep it above that, but also we do take in clients for, I'm going services and support. They were unhappy with it or something like that, and our minimum engagement started at 24 hours. So I was kind of surprised when he told me 20 hours a month. Exactly. So I want to illustrate the importance of positioning through the airline industry. Of all verticals, right? The airline industry. So positioning, I'm picking on United because Michael's from Chicago, but I literally could have chosen any probably airline to plug in here. And a lot of people will remember post 9-11, just the amount, I'm from Atlanta, busiest airport in the world, but always when I walk through the airport, how many airlines were going out of business, consolidating, merging, going bankrupt, it was a very tumultuous time in the 2000s for the airline industry. And a lot of consultants, pundits began to research. There was one airline though that stayed sustainable and was able to persevere through the airline industry. Only one. And it was Southwest Airlines. And they started to look at how it was Southwest different from Delta or United or all these other airlines. And they looked at United and United would serve every kind of destination. They would serve every kind of traveler, first class economy. They would offer every class of service. They would operate many different aircraft. And they were unprofitable for most of the past decade. I think they've recently emerged from bankruptcy and are doing better. But when you compare that, you contrast that to Southwest Airlines. If you've ever flown Southwest, you know they only go to well-travel destinations. They only serve one kind of traveler. They only offer one class of service. They only operate one kind of aircraft. So they became specialists at doing what they know. And they've been profitable again every year. When I compared that to the business model that we were trying to establish at Media Current, we've been tempted, like probably many of you, during peaks and valleys and times in sales, to become like United, right? Become more of a generalist. But we stayed down a path to singularly focus exclusively in Drupal. We want to offer, like Southwest and some of the other companies that are known for customer service, we want to offer a really high bar when it comes to customer service. Most successful organizations like Southwest aren't afraid to be a little different. Southwest commercials around baggage fees and constantly trying to think about different ways to improve or improvise. And we try to take that same approach and mentality at Media Current. And I'm proud to say we've been profitable for nine consecutive years, really from day one. We've had double digit percentage growth. So I'm sharing with you metrics that we actually use in our company, State of the Union. So again, part of what we were hoping you'd get out of this session, and we will share this in the end, is for you to be able to compare things like, how are we finding new business? Why were we selected for a project? How many new clients did we help adopt onto Drupal? So again, we'll share this in the end. We also look at, where are we seeing the most industry or vertical momentum? I think if you were at the Aquia Summit, they validated some of this. We're seeing a really big spike in higher ed. Our conversion rate, this surprises some people. There's only 26%. That is somebody who we decided to engage in a conversation with, and we didn't win the deal for whatever reason. One of the reasons we lose a lot of deals is because of the upper right. We require some kind of discovery typically, so we have a well-defined set of requirements, and if the prospect is unwilling to do that, then we'll turn away the projects. We have about a 26% conversion rate. Yeah, that's a good question. The question was, did we set ourselves a target for conversion rates? We'd like it to be probably a third, 33%, but the higher, the better. I'll talk about conversions in the marketing segment, though, too. Recommended resources. I'm a big advocate. I like the Sandler methodology, the Sandler model. I will say it's going to be a little bit hit or miss. They are franchise. Some locations are much better than others. We'll reinforce. Good to great. Jim Collins' book. There's a consultant. Michael and I, Michael has talked a lot more to him than I have, but they're both sort of out of the same camp called Blair Ends, E-N-N-S. Blair is really big around how you win deals without ever answering an RFP, so he has a really great perspective that I found very intriguing. Steven Covey, seven-high habits of highly effective people, which a lot of people have probably heard of. There's a lot in this section to comment on. Blair, I'm smiling, because Blair talks a lot about positioning, too. If you guys could maybe come in in the back and we could shut the door, I'm hearing some noise from that other one. Just sneak up the sides or something here, come on in. So the positioning, one thing I'll say with the positioning is you definitely need to go narrow. It's really hard to do positioning because you're turning away business, and especially in the early years of business, you kind of want to take everything that you can get. But I think it is one of the most important things to draw a line in the sand on, and it does take a few years before it'll really take hold. So if you want to switch your positioning every few years, you're chasing a moving target. Blair did write this book, Win Without Pitching, and he's really against answering RFP, so I'm like, well, what if, you know, part of your positioning, you're going after, say, the higher ed market, where there's always RFPs, and he said, pick another market. So you've got to get the sales out there. Once you've got the sales out there, you've got to be able to staff right to support those sales. So that's the big utilization question, and to me, this is actually the key to sort of business and business profitability. It surprises me when I'm talking to prospects because, you know, it seems to oftentimes be all about the rates, you know, what's your blended rate or what are your rates versus other people's rates, but it's really sort of efficiency with how you get the work done that I think we all know as business owners that makes, you know, is really the most important thing. So utilization, I'm really talking about company-wide utilization. I've got a picture here of Dave Baker. He speaks a lot in this area, and if you're unfamiliar with him, I put up Recourses.com, which is his site. He's really smart. He's not very personable and not very friendly, but he's really smart, and he works with, you know, maybe 600, 700 different agencies, maybe 100 of them are, say, interactive agencies where we would fall, and then he compares metrics against best practices. So this is where the utilization is coming from, and, you know, we're looking for utilization on a company-wide level at 70% or higher, okay? Now, let me talk to you about company-wide level. You can look at, say, revenue per employee. This is another way to do it. It's just another way to give you an idea of what I'm talking about. So if you've got, say, a 10-person company and, say, you know, seven of those people are billable, okay? So that 10-person company, if it does 1.6 million, you divide the 1.6 million by the 10 people, not just the billable people, and get about 160,000 ahead. The numbers that I hear in this area are maybe 160 to 180 are what you really need to look for for every person in your company. So if it's much lower than that, you've got too many people in your company, and you probably have too much overhead, okay? With utilization, you know, a highly productive worker can maybe, can generate 1,700 billable hours in a year. That's about what both of us are getting out of highly productive workers if we're able to keep them busy. Some organizations I understand actually get about 2,000 hours a year billable, and maybe they're at the 85% level. This, I got this from one of, one of Dries's articles. I don't see, frankly, how they're able to do that unless people are just constantly working more than, you know, 40, 45 hours a week. So what you want to do is you want to take the total number of billable hours that you generate, billable hours, not internal projects, okay? Not cost overages that you'd in charge for, okay? Total number of billable hours for the time period. So let's say there's 1,700, you know, for a staff of, let's say a staff of 15 people, 12 of which are billable. So I take the 12 billable people times the 1,700 hours, get say 20,000 hours. Then you take the total number of employees and you're gonna multiply that by around 2,000 hours per employee. That's sort of the theoretical maximum. We use 19, 20, which is based on 40 hours a week and 48 weeks. So the denominator doesn't change. I don't change this number if somebody goes on vacation, all right? So I'm taking the numerator, which is the billable hours, divided by the denominator. I'm including every person in the company, and that's where you want to be above 70%. And I'll tell you, I spent about five years just trying to figure out utilization because everyone talks about it differently. You can calculate it differently and just stick with that and go with it. But it's really important to look at this number to see how you're staffing, if you want to be profitable. Yes, so for this example, we're looking at maybe a million, six company and something like that, so yes. You want at least 70% utilization when you're counting every person in the organization. You take every person in the organization, basically count 40 hours a week, kind of say 48 weeks. That's if you're 1960, then you take the billable hours, okay? For the people that billed, so it's probably less than everyone, but the people that billed told them that up. And you can do this for a month, you can do this for a year. I'm using year numbers here, but it's a really critical number to watch. So next topic is recruiting and we, looking at the time, we want to make sure we cover all the subject matter. So some of this we make loss over, but definitely want to leave time in the end for questions. So recruiting tip, one of the, these are just again, suggestions, things that we leverage at media current. One of the bigger mistakes that we've seen newer agencies make, especially is they're looking for that silver bullet. They almost have that slot machine mentality when it comes to recruiting. What do I mean by that? If I post that one job on a Drupal job board or LinkedIn, I sit back with a catcher's mitt on and try to wait for resumes to come in. Stop doing that. Recruiting is, I don't have a secret honey hole. Michael doesn't, where we can go and tell you to find great talent that nobody else knows about. Recruiting is really just a concerted effort. If there's one thing I would say to focus on, it's incorporating and networking into your week to try to find great people. And for us, employee referrals have been the number one source for hiring the last four or five years. I get asked this a lot like, so what if we don't have the immediate sales to support a great person? Would you recommend hiring them even though you don't have the production to necessarily keep them at the capacity that you need? My recommendation will be yes. Don't bypass great people because you don't have the immediate need. You should try to align finding that person and rectifying and leveling off later if you have an opportunity to find somebody, hire them. Don't skip reference checking. Really surprised how people take for granted that every reference is gonna be good anyway. So I don't need to check references. We have a very formal reference checking process. We require at least one of the references to be a former manager or direct supervisor of the person. Of course, when we talk about recruiting, you have to do a lot less recruiting if you're able to retain great people and you have low turnover. The key for really retention for us is going back to what I said about professional growth and development. It's taking a vested interest in your team's success. And then we also, the first 90 days, I think first impressions are critical. We have a three day onboarding where everyone in the company comes to Atlanta. We then do a formal checkpoint at 45 days and we do another check in at 90 days. Again, we're wanting to make sure they're getting assimilated. They're getting effectively onboarded. Yeah, so that's coming up next. Yep, so tools quickly that we use. I'm not, we don't get any kickbacks, Michael and I, from these tools. This is just what we use. We like jazz, okay. I think the name used to be Resomator. We use disk for personality testing, operations people like sales. I'm in the process now of evaluating a tool for employee reviews called Perform Yard. This is a sample. The gentleman was asking what is the example of questions that we ask for the check in, so I know this is small print. Again, we're gonna send you the deck, but this is just an example of the template that we use to do the 45 day check in. Are you familiar with the company's business model? Do you know how to file PTO? Silly sounds, do you know who you report to? These are just questions that we want to validate during the check in. Recommended resources, it's about 10 year old book now, but top grading is one that I really like. And then this is an example chart of what a disk profile looks like. We could talk about that later. Are you using disk for everyone or just for sales? Just for operations, yeah, sales. Just for sales? And when he mentioned using your employees for recruiting, it's really the best source, we both pay a bounty on that. I think $1,000? Yep, we do do a referral bonus, ours is $1,000. So we're both paying $1,000 referral bonus. I actually went to $2,000 for referral bonuses for a bit. And then I realized that $1,000 was enough to make my point. I think with a number like that, it's not like people want the money so bad, but it kind of keeps the top of mind and they really think about people for recruiting. I also find the camps are kind of good for recruiting. Because the people that maybe come to the camps are maybe different than the people that will come to the cons. All right, labor efficiency is my next metric. So this is kind of a little bit more of an advanced metric, but we use it and I kind of like it. It sort of looks at utilization, but remember when I talked about utilization, I talked about it on a company level. And we're really looking at, say, one thing that that will tell us is if we have too much overhead relative to our number. So this idea of LER, Labor Efficiency Ratio, it comes from a guy named Greg Crabtree who wrote this book, Simple Numbers Straight Talk. And you're basically taking the revenue on an individual level and dividing it by their wages. So you don't have to figure in taxes or benefits. You're looking at individual productivity here by looking at somebody's cost on revenue that they're generating on the top and their cost on the bottom, okay? And then the big thing here is that you're really looking at this over time. So we would be looking at this, say, on a monthly basis. And just to give you an idea of how this number works, let's just say you've got a developer that you're paying $80,000 to and they're generating 267,000. This is, of course, annualized just so it may seem a little more familiar. You just take the 267 over the 80 and you're at 3.34. So that's what these LER numbers are gonna look like. It'll be 2, 3, 4, 1, something like that. So maybe an architect that costs more is generating a little bit more money, but they're costing more. So you can see how their LER is gonna be lower. So you might, it may be sort of your developers in a sense that have a higher LER, unless you're able to get, say, higher price points for higher priced employees. Somebody like myself who might bill very little is gonna have a very low LER. It's just the case. A project manager, our project managers bill at around 50%, or that's sort of their goal. So their LER is gonna be closer to one and a half than, say, two and a half. So it's an interesting way to look at an individual person. And then what we do is we look at that metric over time. So I'm saying that you want your LER to be above 2.5. Now, again, I'm not including people that are only a portion billable. I'm really looking at the billable people here. But it is important that you look at this over time because how billable someone can do does depend on the work that's in house. So certainly in any single period, there might be somebody whose LER drops because they don't have billable work to do, say, that month. They're spending a couple weeks on the bench. But when you look at it over time, okay, so you look at the LER over time per employee, you can see who is on the bench more and who isn't. Because what I find is that kind of what I call the best employees, they tend to sort of attract the work and it comes to them and they can stay highly billable. And then I think you also have to take into account cost, which is what this quotient comes in. And this comes in handy so we can really see who's driving sort of the profitability through for the business. It helps me when I'm looking at raises for individuals and makes me understand how to use my most expensive people. So next topic is on marketing. So just a few, again, tools and suggestions. We use at Media Current, Pardot, for marketing automation. So one of the big reasons we chose Pardot, in all honesty, was the geographic proximity. They were headquartered in Atlanta but we really like Pardot. Probably the single most important marketing metric for us is conversions. So while we generate a lot of content, we want to make sure that content that's generating the leads is actually converting to paying customers. So I would say make sure you become less focused on how much traffic your site's getting or how many Twitter followers you have. What's really important is how many of those people are you converting to, again, actual customers. So I mentioned Gekko board earlier. If you walked into Media Current's office, this would be on display. This is our actual monitor from, I guess, a few weeks ago. But we're tracking real time results of what kind of impact our content is having. This is just, again, from our company overview. I see agencies make a lot of mistakes around. They will tell their employees, their team that everybody should do sales. We don't believe that philosophically. We feel that sales is a very separate skill set from those who do engineering or marketing or different areas of the company. What we do believe, though, is that everyone at Media Current is a marketer. Everyone can be engaged in creating content that helps with leads. And we track everything related to that. So last year we blogged literally every two or three days, 126 blog posts. We published six ebooks. We did six things like video testimonials with customers. We drafted four case studies. We look at who are the most popular. So some of you who are on the development side, probably know Damian McKenna. He's probably one of the top 20 contributors to Drupal in the world. He was our top contributor last year at Media Current. We look at what kind of blog posts generate the most traffic. So for us, we have an employee who puts out a top 50 module list, a ton of exposure, a ton of visibility. We look at who's downloaded the most content. So those ebooks I mentioned, which ones are getting the most exposure. So some recommendations, Content Marketing Audit Institute, Contagious, Shameless Plug. Michael has written a book on community forums, capturing communities. So you can check out his book online as well on marketing. So we're both doing content marketing. I think that's important. And we're both using the data and the results from the content marketing to sort of do better marketing. So I think content marketing is definitely a good way to go. I just wanted to go back here on the top right there for you guys. Organic Search is 60% of where their traffic is coming from. And that's because of the content marketing that they're doing. And then they're moving them through the funnel to conversion. So if you're into this stuff, CMI Content Marketing Institute is a great place to learn more. They also put on an event called Content Marketing World. HubSpot is writing like five times a day about this stuff. Recurring revenue, though, as the marketing engine gets going, we talked about the importance of getting new sales. Keeping the sales that you have, keeping the clients that you have for many years is really key. And Jim Collins talks about this in good degrade. He talks about the flywheel. And as the flywheel gets moving, and for many of us, I think the flywheel is recurring revenue that comes from subscription services. In the early days of Duo, I used to put hosting into this category. And we used to do hosting for people, but it's really become relatively commoditized. But having service agreements that with clients, we try once a client finishes a project with us, we do try to get them involved with a service agreement where there's a set number of hours per month. And it pretty much just recurs and renews every quarter, every year. And the goal there, I think, is about to get about 40% of your revenue from recurring revenue, because that'll just about cover your nut then. So you really want to focus on that. Another goal you could have in mind is, say, a million dollars of recurring revenue. Okay, so that would be you're about a $2 million business if 40% to 1.8, whatever. So once you hit that goal, it really makes, it really changes the way I think you feel as far as security moving forward as far as the business continuity. So can't emphasize enough focusing on that. So client services, if you were at the Acquia event, something that they reinforced, I found interesting. And I wish I had, I could articulate this, but for whatever reason it seems like after about five years of being at an agency, maybe the 30, 40 employee mark, net new logo growth and sales becomes much harder. You begin to pivot to more of a land and expand model. So you're trying to generate more business from your existing accounts because it becomes harder to attract newer customers. So some of the things that we do on the client services front, client health survey, we have a postmortem template. We'll have a welcome kit. So during the kickoff meeting, we'll make sure that there's a familiarity with the project team who's assigned to the client. So we're trying to build that strong partnership, relationship from day one with the welcome kit. And I'm gonna show you a screenshot of what that looks like for us. Suggestions, establish a formal cadence of touch points, creating credibility and trust by adding value. This is something that Acquia talked a lot about as well. Everyone's now is trying to become more full service, right? You can no longer land work in many cases if you're purely a hardcore Drupal development shop. Customers are demanding more. The buyer's becoming more sophisticated. And one thing at Media Current we try to emphasize is just, we should understand our customers' problems better than them. That's just a philosophy you could think about. And one thing we did, I mentioned this at the business summit a couple of years ago that added a lot of value, was hire a third party market research firm to gather unfiltered feedback. So a lot of times if you ask the customer in the middle of a project, hey, how's it going? They're not gonna give you that unfiltered feedback like they would if it was done by a third party. This is the welcome kit I mentioned just with our sort of table of contents. Again, we'll share our information where you can get the slides. Recommended resources, I think Michael and I are both fan of Zappos around customer service. If you've read any books or know anything about their culture, they have a lot of culture camps that they do, a lot of customer service workshops, so that would be one to look at. So finishing up with EBITDA, you gotta have earnings. And what are the earnings and what are you shooting for? So the earnings, EBITDA is earnings before interest, taxes, depreciation, and amateurization. So it's a standard accounting form, it's gonna be the bottom line, the net income on your income statement. You can add back the depreciation or amateurization. You do need to kind of normalize owner salary here. So it's hard to say what's normal for owner salary. What would you get paid if you were working elsewhere is one way you could answer the question. When I asked what owners should be paid, the numbers always seemed higher than I was ever able to take out of the company myself. But you really wanna look at profits. I used to think like, okay, we just wanna make sure we're profitable and certainly pay me a salary. The goal really is, you could hit 20%. I know Dave hits 20% profitability on an EBITDA basis. I don't wanna say regularly, but he has. Duo hasn't been quite that profitable. For us, 10% is like the minimum that we're comfortable with. We're probably more in the 10 to 15% range. It may be a little bit different because of the distributed model, or the local model. And then the valuation of your company is probably gonna be about five to eight times that EBITDA number. And they're gonna look at it over a few years. So again, if you're, let's just say making $50,000 a year, that's gonna value the business at probably about $300, $350,000. Okay, so they're gonna look at your profitability and any person that's interested in investing or acquiring is gonna be looking at your profitability over at least a three year period. Okay, so understand you can't have like good numbers one year, lousy numbers the next year, good numbers the next year. You gotta put together a few good years. They'll probably wait the most recent year heavier. But I'm saying this because again, you gotta think about where it is you're trying to do. If that's not part of your plan, then it may not be something that you need to focus on. So just, Michael and I both mentioned in the beginning, we've have both kind of climbed over a certain wall. We've been through some exit strategies and hear a lot of common questions. Like what size do we need to be to be attractive to a buyer? Should I use a broker if I'm interested in selling my company, my agency, what kind of terms should I expect? We wanna cover those questions. We're running up against it on time. Hopefully no one maybe will kick us out if you want us to expound on some of these questions, but the really one of the key thoughts we wanted to leave you with was just focus on what you can directly influence or control, right? Don't let selling your company be a distraction. You can't control who's gonna win the next presidential election. You can't control if the economy is gonna tank. There are things you can control like your attitude, your activity within the company and have an influence over things like your culture. So that's what you should really focus on and usually an exit is the byproduct of those things. Email is a really good way to reach us. If anyone would like these slides, all you have to do is email us. I don't know how it's gonna work with the, I guess they're gonna be posted in a few weeks, maybe on the website. But if you'd like a copy sooner. These are our emails. Email us, ask us questions more if you have them around exit strategy scenarios. One of the best things I found out about the Drupal community is because of open source and sharing. Many of the business owners are fairly friendly and many of us talk and we hear some different things and chat about what's working and what's not. Dave's always been very open to share. Is the next presenter here? Okay, so maybe we have any questions we could try to fit in? E-Bit up? So it's net income earnings before interest, taxes and amortization. So if you're borrowing money and hanging in trust, you can subtract. You can add that back to your bottom line because the idea is a third party. You may not need to do that. An amortization is just amortizing what our departments purchase is hard to do better. Thank you so much everyone, thank you.