#80: RareOne's Matthew Naffah on centralizing operations, not agency brands

What is the operational scale that you mention look like? I understand this concept of centralizing things.

Can you talk us-

Yeah

... through that?

You know, honestly, we found this as I was running Mighty Union is, as we continued to grow in revenue, what we found is that from an operational standpoint, as we grew, we had to continue to make investments in different areas.

So we needed to hire a CFO.

We needed to hire a head of HR.

And some of those things become really expensive when you're still a mid-size agency.

So even though our revenue was growing, our profit margins weren't growing at the pace of our revenue.

So our thought process there was really starting to think about how could we centralize some of these key areas of operation, including tools, and then scale it across a variety of different agencies.

So the agencies had that support they needed as they continued to grow, and allowed them to still grow in revenue, but knowing they had the operational support they needed as they hit certain milestones from a revenue standpoint.

So we kinda call it internally, we call it the Death Valley of independent agencies, and what we've seen there is, like, when an independent agency hits somewhere between $8 to $15 million, that tends to be the trigger point of, "Hey, we need to start investing in these key operational tools or people," and that's where we start to see the profit margin shrinking, but the revenue's still growing.

So, you know, our philosophy behind Rare One is, as a platform, we're providing those services.

We own the agencies 100%, so there's five partners, and all of them have contributed to the investment of those agencies.

But what we're doing there is building that operational platform that then scales into each agency that we own.