This week on the Sales Hacker podcast, we speak with Matt Rizzetta, founder of North 6th Agency, which is a communications and PR firm based in New York City.
Matt launched his business from his proverbial garage while his wife was pregnant with their first child. Years later, he’s got a thriving business that is not venture capital backed. He’s one of the small and medium-sized business owners of the world trying to build a huge business.
If you missed episode 120, check it out here: From SpecOps to RevOps: What Soldiering Can Teach Us About Selling with Matt Rizzetta
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Show Agenda and Timestamps
- Show Introduction [00:06]
- Who is Matt Rizzetta and what is North 6th Agency [2:00]
- Key lessons for getting your entrepreneurial venture off the ground [5:26]
- How to pass the org chart alignment test [10:27]
- When should a company associate with a marketing agency [12:19]
- How to get better at sales [21:37]
- Pros and cons of build a company with equity investors [27:34]
- Sam’s Corner [39:17]
Show Introduction (~300 words) [00:06]
Sam Jacobs: Hey, everybody. It’s Sam Jacobs. Welcome to the Sales Hacker podcast. Today we’ve got on the show, Matt Rizzetta. Matt is a friend of mine, but he’s also the founder of North 6th Agency, which is a communications and PR firm based in New York City. Revenue Collective is actually a client of theirs. Matt talks about starting a business from his proverbial garage. His wife was pregnant with their first child, and he went out on a limb to try his hand at entrepreneurship. Years later, he’s got a thriving business but one that is not venture capital backed. He’s one of the small and medium-sized business owners of the world trying to build a huge business like we all are, and I think it’s a really interesting conversation. It’s always just great to talk to people that just go out there and take the risk and put themselves out there and build something big and have that ambition. So I love hearing from those folks and he’s a great guest.
Now, before we get there, we want to thank our sponsor. Sponsor for the month of June is a company called Outreach. Outreach revolutionizes customer engagement by moving away from siloed conversations to a streamline and customer-centric journey, leveraging the next generation of artificial intelligence. The platform allows sales reps to deliver consistent, relevant, and responsible communication for each prospect, every time, enabling personalization at scale, previously unthinkable. Outreach produces incredible industry leading events like their Unleash Conference and their city-by-city Unleashed Summit Series road shows which will resume once people are allowed to take road shows again, along with top notch, thought leadership content. Check them out at www.outreach.io.
Now, without further ado, let’s listen to this interview with Matt Rizzetta.
Who is Matt Rizzetta and what is North 6th Agency [2:00]
Sam Jacobs: Hey, everybody. It’s Sam Jacobs. Welcome to the Sales Hacker podcast. Today we’re excited to have on the show, Matt Rizzetta. Matt is the founder and CEO of North 6th Agency (N6A), a leading brand communications agency based in New York City. Under Rizzetta’s leadership, N6A has been ranked as one of the 50 most powerful agencies in the United States by the Observer, PRWeek’s Best Places to Work and the Top Company Cultures in America by Entrepreneur magazine. Rizzetta serves on the boards of Marketing EDGE and Iona College and resides in Westchester County, New York with his wife and three daughters. Matt, welcome to the show.
Matt Rizzetta: Sam, great to be here. Hope you’re doing well.
Sam Jacobs: I’m doing well. What we’re going to be talking about is, of course, entrepreneurship since you started on North 6th. You will talk about the origin story, but you started it when you were a young guy and you can walk us through that transformation and that journey. But for those that don’t know what it is, I just read a little bit of the description, but give us a description of how you would define North 6th Agency.
Matt Rizzetta: We’re an outcomes focused PR firm, Sam. What we do is we align what we call credibility assets, which when you think about it are, historically when you think of a PR firm, their role in helping brands is getting credibility assets. What we do is we take those credibility assets and we align them with specific business outcomes that brands are looking to achieve. So we specialize in six outcome categories: revenue, recruiting, capital raise, M&A, IPO and competitive outcomes, and we work with customers across about 20 different verticals. We have just under 50 employees, headquartered here in New York City.
Sam Jacobs: Awesome. We’re going to learn more about it, but that sounds fantastic, and 50 employees, Let’s talk about the origin story. When did you found North 6th?
Matt Rizzetta: It was late 2009. It was right before my 27th birthday. I’m sitting there in a diner in Yonkers, New York, just quit my job and my wife was about seven months pregnant. I basically was sitting there in a diner and I told her, “Look, I quit my job, I’m starting a PR firm, but I’m only going to do it if I have your blessing.” And of course being the great wife that she is, she said, “Matt, I trust you.” I don’t know why she said that, but away we went. We started the firm out of my basement back then, no money, no clients, no paying clients, I should say. Like they say, the rest is history.
Sam Jacobs: Confirming you quit before and then you said, “Honey, I’m going to start this thing,” but you’d already quit, so you were effectively unemployed so she didn’t have that many choices before she gave you her blessing. Is that accurate?
Matt Rizzetta: It was all part of the plan, Sam. If she said no, then it was going to be like, “Well, guess what? I don’t have a job anyway.”
Sam Jacobs: What prompted you? Where were you working before?
Matt Rizzetta: I got my start at Sony BMG, out of school. This was in 2005 after I graduated. And then I worked my way through the agency ranks. I was at a financial PR firm before starting N6A, and just like most entrepreneurs, especially being young back then, I was pretty naive and stubborn and I thought that I could just do it better. That’s what brought me to start the firm.
Key lessons to get your entrepreneurial venture off the ground [5:26]
Sam Jacobs: Tell us about the first couple of years and how was it being 26, pregnant wife, the whole bit? And what are the key lessons that you learned getting this thing off the ground?
Matt Rizzetta: The biggest lesson I learned is that you should always be in your survival mode days. Back then, when you’re first starting a business, Sam, I mean, I’m sure you can empathize and appreciate this yourself on many levels, you’re really just in survival mode. I mean, you have no reputation of consequence, you’re trying to convince clients to join your no name company or your no name firm, you’re trying to recruit talent to come work at your no name firm. Really it’s just all about survival. Every day is just a fight to survive, and that’s what I learned in our formative days and months. Also, the backdrop wasn’t the easiest in what to start a business. We were still in a recession. It was very difficult to start a business to begin with.
So it was really just a fight for survival, and that’s one thing I think I’ve carried with me and I try to encourage our employees. You should always treat it like it’s survival mode. I mean, it’s almost 11 years later now and I still wake up with, in many cases, the same fear and the same anxieties that I had when I first started the firm. Obviously you want that to manifest itself in a healthy way so that it’s not counterproductive or toxic, but I think there’s a lot of valuable lessons you can learn when you’re in survival mode that you can take with you throughout your whole career, and that can help you.
Sam Jacobs: What are some lessons from survival mode, and maybe what’s something that you would do differently if you knew then what you know now and you could go back 11 years, if anything?
Matt Rizzetta: There’s so many lessons, Sam, and most of these lessons obviously I learned through mistakes, of course, just like most entrepreneurs, but I think one lesson is never get complacent. You never want to feel like you’ve arrived in your career or on your business journey. I think it’s important to stay humble, stay grounded.
We’re headquartered in SoHo. This was well before COVID, by the way. You had all these stores in SoHo that were boarded up because they couldn’t afford the rent, they got whacked out by their competitors or whatever it might have been for whatever reason, and every day, literally on my walk into the office is just a reminder that every day in business is a blessing and you can’t get complacent. You can’t take it for granted. Even though obviously from a planning perspective you want to plan long term, you want to plan quarter to quarter, year to year, multi-year, whatever, I think that you still need to remind yourself that on a daily basis, every day in business is a blessing and never take it for granted.
Sam Jacobs: That makes a lot of sense. Would you do anything different, knowing what you know now?
Matt Rizzetta: I would do so many things differently. Most of the mistakes I’ve made, Sam, in my career, I say, you have to do with people. Specifically, one of four categories of mistakes have to do with people I hired, people I didn’t hire, people I fired and people I didn’t fire. So when I look back at the mistakes I’ve made, not just earlier in my career but over the past, almost 11 years since we started N6A, I would say somewhere between 90% and 95% of the mistakes I made had to do with one of those four categories, obviously with people being the common thread.
Sam Jacobs: Have you developed a process to answer that question of should you hire, should you fire? How do you evaluate talent? Is it a soft kind of heuristic, like just a point of view that you have and it’s based in your intuition, or have you built out a series of questions and a process for evaluating whether this is somebody that you want to work with?
Matt Rizzetta: I’m probably a little bit unconventional in terms of how I approach hiring people and making people decisions. Again, most of these had to do with lessons that I learned the hard way, but I’m a very big believer in EQ. I think that, especially nowadays, you’re looking at COVID and the environment we’re operating in. You want people who are going to be in the trenches with you, who feel that you’re in the trenches with them, arm in arm, hand in hand, getting through this thing together. I’ve been very blessed. I mean, the people that I have in my inner circle, and for the most part, everyone in our company is all hands on deck, pulling in the same direction. I think that has to do with a little bit more rigor and discipline we’ve brought to our hiring process with an eye toward EQ.
Once we get past the box checkers; do you have the right resume? Do you have the right experience? Are you qualified for the job? Those are sort of box checkers in my mind. Once you get past the box checkers, I think the rubber meets the road when you start asking questions that really get to the heart of the EQ and the culture fit of anyone you’re hiring. When you’re in times of adversity, frankly like everybody is right now, I think that EQ is the most important thing you could have or ask for in a coworker.
How to pass the org chart alignment test [10:27]
Sam Jacobs: Makes a lot of sense. You said great teams must pass the org chart alignment test. Tell us what that means. Walk us through that.
Matt Rizzetta: Sam, you can’t assume anything. So if you’re my direct report, obviously you’re getting sort of a head start on a lot of the intelligence and decision making just because you’re part of the CEO direct report team. If you’re a part of the junior staff, you might not be privy to that same information at all the time. So I think it’s important that you make no assumptions and you need to be incredibly transparent in your communication nowadays, particularly in this virtual workforce if you’re in corporate leadership.
So one thing we did is we developed what we call the org chart alignment test, and we’ll look at that about once or twice a quarter where we’ll literally study the org chart and we’ll say, “Is the person at the highest or the most senior rank in the org chart as aligned with the company’s vision, goals, objectives as the person who is the lowest on the org chart, presumably an entry level person, even an intern sometimes?”
If the answer to that question is yes, I think usually that means we’ve done something right, we’ve communicated in a way that’s transparent where everyone in the company understands our goal and our vision and are pulling in the same direction. If the answer is no, it’s just a yellow flag and that triggers us as a management team to reevaluate our communication processes, to study where the breakdown might have occurred and to fix it. So that’s the org chart alignment test, the theory being that if your most senior person and your most junior person in the organization are equally as aligned on your vision and goals, you’re doing something right.
When should a company associate with a marketing agency [12:19]
Sam Jacobs: When should a company have an agency associated with their marketing arm and with their communications arm and when shouldn’t they? Are there times when it’s not a good fit and times when it’s a great fit from your perspective?
Matt Rizzetta: There’s a lot of nuances I think that go into that question. I would say generally speaking, and certainly not a sales pitch by any means, but our whole model at N6A is really built to align PR with business outcomes. So with that in mind, if you’re a brand and you have a specific business outcome or objective you’re looking to achieve, our thesis is that you can achieve it through PR. It just needs to be smart PR that’s done properly and that’s done in alignment with whatever that objective is. I think the challenge would be if you’re a brand and you’re confused over what your objectives are, where you might think you’re looking to recruit certain talent, and in reality, you’re looking to get revenue or you’re looking to get a certain type of revenue, but it wasn’t the revenue that you told the agency you had in mind.
So my whole thing and our model at N6A is built on making sure we’re in full alignment with the client’s business outcomes. As long as you have clear business outcomes that are communicated to the agency, I think it’s always the right time.
Sam Jacobs: Fair enough. What do you think, to the point of clear business outcomes, maybe that’s the answer to the question, but what do you think the biggest misunderstanding or misperception is about PR that companies or brands need to understand before they embark on this journey with you?
Matt Rizzetta: I think the biggest misunderstanding or misconception is that PR is hard to quantify and it’s hard to understand ROI. At N6A, I mean, we really disagree with that. Our whole model is built on fighting for PR’s value along the same lines of any other component of the marketing stack, whether it’s paid media or social or advertising. You just need to have a proper discipline and rigor in place to make sure that you’re measuring the efficacy of PR. I believe that PR deserves an up-front-and-center place on a brand’s P&L. I think it just needs to be traced and measured properly in alignment with some sort of business outcome. I think that historically PR has been treated as a nice to have but not a need to have. Our argument is that it’s just as much an asset on the P&L as a liability. It just needs to be measured properly.
Sam Jacobs: That makes a lot of sense. You talked about how you started North 6th in a bad economic environment. We’re in a bad economic environment now. Tell us how you’ve applied those lessons or just sort of how your business has responded to COVID in the situation?
Matt Rizzetta: I can go on and on about this topic, Sam. I would say a few things. I would never be able to manage in this environment 10 years ago. I mean, thank God that we are entering this… at least in our sake at N6A and in my sake as a manager and as a leader, a business leader, thank God we’re going through this 10 years or 11 years into our journey, because I just wouldn’t have been able to go through it 10 years ago. I wouldn’t have had the business experience, the life experience, frankly. A lot of the mistakes I’ve made in my journey over the past 10 years I think are really helping me and helping our business as we get through this environment. So that’s kind of the first thing I would say.
The other thing I think that’s important is every business is different. Every business is nuanced. There’s no one-size-fits-all approach. There’s no precedent in COVID, so you’re kind of writing the book as you go along. There’s no book you can just take off the shelf and say, “Yes, this is the way I have to manage in this environment.” But I think the biggest learning for me and for our team, our management team here at N6A in COVID has been, you just need to get out of the mindset that… you need to get out of the pre-COVID management mindset. You’re not managing in pre-COVID, you’re managing during COVID. So your priorities have to change, what’s important to you has to change, and that needs to manifest itself in the way you run your business, the way you communicate with your staff.
You need to put your money where your mouth is. I mean, we ran our business as a services business for 10 years, obviously with an eye toward the P&L as you should, in some cases. In COVID, that’s changed and your mindset, I believe, in a services environment needs to shift away from profits and more to preservation, to helping protect people. There’s a lot of anxiety and stresses that your employees are feeling in this environment. As a leadership team, I think it’s on you to make sure you’re managing the business with those in mind. I think that you need to compress time in COVID in a way that you never had to pre-COVID.
So those have been some of our lessons, but I think overall, Sam, the most important takeaway for me has been, as a manager, you’re not managing in a normal environment, so you need to adjust and you need to get out of that mindset. Every day you wake up, you need to tell yourself and remind yourself, hey, this is not 2010. It’s not 2015. It’s not 2019. It’s literally post COVID 2020 and the rules have changed.
Sam Jacobs: Tell us what you mean by compressed time. Does that mean shortening decision-making cycles or does that mean communicating to the team more regularly?
Matt Rizzetta: It means all of the above. In our cases, time is your most precious resource and asset, frankly, especially in a services business, right? So we don’t have the luxury of spending 2X or 3X the amount of time to get 1X the output. So that has to manifest itself in every way we run our operation. So the way we communicate with our staff, certainly you can’t make any assumptions, you can’t take anything for granted, you can’t assume that your employees understand the message that was delivered the way that it would have been delivered five or six months ago because, God forbid, there was a disconnect or a miscommunication, it’s going to slow you down, and in this environment, if you get slowed down, it’s going to set you back.
So everything from the way you’re communicating with staff, obviously the nature of this podcast is focused on sales, so I think the way we’re approaching our pipeline, our funnel, the way we’re prospecting, the way we’re talking to prospects needs to be with a time-compressed mindset and you just don’t have the luxury of wasting time, so everything needs to be done, things that you were doing in 60 minutes, in this environment, you got to figure out a way to do them in 30 minutes, and by the way, do that in a way that doesn’t compromise quality, which makes it even more challenging. But I think the businesses that are really winning in this environment are the ones that are doing that. They’re figuring out a way to get 1X, 2X the outputs in 50% of the time.
Sam Jacobs: You’ve mentioned that sales is a perfect blend of creativity, empathy, intellect, and discipline. You’ve got so much experience as a sales person because every founder and every entrepreneur is a sales person. You had to sell people to join the company. You have to sell clients to partner with North 6th. You have to sell all of your constituents that this is a great company to work for and a great agency to partner with. So give us your perspective on sales.
Matt Rizzetta:the reason I love sales, and that’s what you were alluding to earlier, is that I believe sales is the perfect blend of art and science. I think that really strong sales people, I think really strong sales organizations understand that sales is equally as much art as it is science, and usually, at least in my experience, really most salespeople or sales teams are very strong at one of those two things. They’re either very strong at the art piece where they’ve developed really good messaging, they know how to connect with customers or prospects from an EQ perspective, they’re very good with relationships. All of those in my mind sort of go in that art bucket.
But science to me is just as important in your journey to become a great sales professional, and science is discipline. Science is studying the data, studying the analytics, learning from your losses. We had 10 pitches over the past month. We won six of them. Let’s look at the four we lost. Let’s slice it by industry. Let’s slice it by budget. Why did we lose them? How can we get better next time? Let’s improve incrementally. That’s where the science piece I think fits in. To me, that’s why I love sales, because I think you have to be equally as strong at both of those skill sets in order to perfect your trade. If you’re good at one, that’s great, but it’s not going to make the cut, frankly, and you’re not going to reach your potential.
How to get better at sales [21:37]
Sam Jacobs: How do you get better in sales? What are your principles for improvement? What are the principles you have for professional development within North 6th?
Matt Rizzetta: Well, the first thing is we make time as a team to study our losses. That might sound like common sense, but you’d be shocked, at least in our experience, how many companies, how many teams, how many professionals fail to do that just because the weeks and the months and the days and the minutes, frankly, they pass you by and you sort of forget to study your losses, but our greatest improvements in sales and the revenue function have come because we’ve disciplined ourselves to study our losses, literally to the tune of one to two hours a week where we’ll sit around in a room as a management team and say, “What did we lose this week? Why did we lose it? How did we lose it?” We’ll study the analytics so that the next time around, if we lost prospect A for a financial reason, the next time there’s a prospect that looks and feels like prospect day, we’re not going to lose them for a financial reason, and then you see there’s incremental improvement.
Over time, you’re not going to become a perfect sales professional overnight. Heck, we’ve been in this thing 11 years and we’re far from perfect, but I think studying losses and improving incrementally because of that, to me, is the lifeblood of all progress when it comes to sales professionals.
Sam Jacobs: What are some of the insights that you’ve gained from studying those losses? Particularly, how has COVID impacted it?
Matt Rizzetta: Yeah, now that’s a great point. I think you nailed it. We’ve been able to categorize a lot of our losses with a persona mindset. For the most part, I mean, there’s always exceptions, but for the most part, there’s really five or six personas after we lose a deal or lose a prospect that we can categorize the loss under. So it just makes us smarter for the next time around. So if we’re pitching business to your company, Sam, and we lose your account for whatever reason, we can sort of put you in the persona of one of those six categories, and then the next time around there’s somebody that… although Sam, nobody is truly like you. You’re one of a kind.
Sam Jacobs: I’m sure.
Matt Rizzetta: But the next time we have somebody who runs a business that looks and feels like Sam’s business, we can put them in the persona of the category we previously lost and we can learn from that. So why did we lose Sam last time around? We lost him for budget reasons, or he didn’t connect with the account team, or because Matt said something really dumb that pissed him off, or whatever the reason was. So the next time around there’s a prospect that fits into your bucket that looks and feels like Sam, we’re not going to make that same mistake twice, and incrementally that’s led to our biggest improvements.
Sam Jacobs: That’s fantastic. You’ve mentioned you think, and I’d love to hear your take on this, you think the concept of under promising and over delivering is something you completely disagree with. Why is that? I’d love to hear your perspective here.
Matt Rizzetta: I’ve gotten some criticism over that one, but I remember before I started N6A, I was working for another firm and I was the rainmaker, at least in some respects, for the practice that I was supervising. I remember the notion was whenever, and my direct reports, the people I reported to would always tell me with clients and with prospects, never over promise and under deliver. Always under promise and over deliver. The first part of that is, of course, that’s true, never over promise and under deliver. The biggest mistakes I’ve made, and I’ve been guilty of it like any of us have, and especially in my earlier days, have been when I’ve over promised and we’ve under delivered. That’s a guaranteed recipe for failure, right?
But I also think this notion of under promising and over delivering is inherently dishonest. It creates a lack of trust between the prospect and the service provider before you even enter the relationship. I always say don’t over promise and under deliver. Don’t under promise and over deliver. Promise and deliver. Just tell the prospect what you believe you can do, and then deliver it. Deliver the product you said you were going to deliver. Deliver the results you said you were going to deliver. That’s a guaranteed recipe for success. It builds a level of trust, inherent trust, two-way trust between you and your prospect, and then frankly, it shows the prospect that you back up what you said you were going to deliver.
Sam Jacobs: That’s obviously a good recipe. It all depends on whether you can accurately predict what you can deliver. If you have any hesitation, then you probably need to air on making sure that at least you deliver exactly what you promise, right?
Matt Rizzetta: I agree with that. I think what the whole under promising, over delivering has to do with you got to believe in yourself and you got to stand by your product. If you’re intentionally telling a prospect that you are going to deliver something that you believe is below your standards, to me, that’s just as dishonest, inherently dishonest as over promising. So I just never really subscribe to that. I’ve learned the hard way. I mean, I’ve learned through 10, 11 years of doing this that the best thing you can possibly do is just tell the prospect what you believe you can deliver, and after 10 or 11 years of doing this, we have a track record, we have kind of a predictive analytic system. So we sort of know, going into any engagement, for the most part within 10% degree of accuracy, what we can deliver. And then just, most importantly, once you say it, you gotta do it. Back it up.
Pros and cons of build a company with equity investors [27:34]
Sam Jacobs: Damn straight. When you think about your business exactly like my business, and the caveat is always for now for both of us, but for now you haven’t raised any money, you don’t have anybody to answer to but yourself. When you think about the benefits and disadvantages of your strategy to go to market, which is that you’re doing it exclusively on customer revenue and probably your own savings and maybe a line of credit from the bank, but there’s no equity investors other than yourself that you have to answer to, what are the pros and cons of that approach? Because so many folks that are listening are working at venture capital or private equity backed companies or public companies, all of whom have many, many shareholders to answer to besides simply the person that founded the company. Tell us what you think about that approach and how you’ve made that determination, because I’m sure given the growth that you’ve experienced, you’ve had financing options over the course of the last 11 years.
Matt Rizzetta: That’s a great question, Sam. So a few things on that. Number one is obviously, and you can appreciate this too, I think the freedoms and independence of being a bootstrapped self-funded entrepreneur, founder entrepreneur are incredible and I wouldn’t trade them for anything in the world. I really mean that. The thing that I’ve learned though through the years is even if you don’t have a board to report to or shareholders to report to or investors, I do believe that you should run your business as a bootstrapped founder and entrepreneur as if you do. I think a lot of the disciplines that come into the mix when you have boards and you have shareholders to report to are important. I think there’s a system of checks and balances. I think there’s a rigor and a discipline that you can benefit from as a bootstrapped entrepreneur when you sort of treat the business as if there is a board.
So that has been I think my biggest learning and it took me a long time to learn that. I mean, I remember going through five or six years in business and just being like, “Screw that. I don’t ever want a board. I don’t ever want investors. I report to one person only,” that whole thing, but we really started to scale as a business when we started to change that thinking. Even though we didn’t have a board and we didn’t have investors, we treated our business and our management operations and our rigor and our discipline as if we did. That’s when we really started to scale nicely.
The other thing that I think is important to your audience is this is a very intimate decision that only an entrepreneur can make. So I know my limitations as I think most entrepreneurs do, and I probably would not do so great reporting to boards, especially in this environment. I mean, we were in month five or six of COVID and I know for a fact if we had a board to report to, a lot of the decisions we’ve made as a management team, we wouldn’t have had the luxury of making some of those decisions if we had a board to report to. I think a lot of that just comes down to knowing yourself and knowing what your strengths are, knowing what kind of environment as an entrepreneur you can thrive in and which ones you can’t. Obviously there’s tons of positives of having a board and investors in terms of access to capital, growth capital, and the ability to scale and gaining outside perspectives that you don’t always get on the inside, but I think it’s a very intimate decision that only a founder can make.
Sam Jacobs: You mentioned that you only started to really grow when you started acting as if you did. Now, I would imagine one part of that is planning? Am I right in assuming that? How did you learn how to plan effectively? How do you think about financial planning and modeling? Give us some of your high level tips or your strategies there.
Matt Rizzetta: We started to really invest significantly, Sam, in our operating infrastructure about five or six years into the business, 2015, 2016. We had kind of dabbled in it and we had outsourced finance function and we had an outsourced HR function, but we really started to bring all those functions in-house and invest significantly in around 2015, 2016. For me, it was all about making a decision to move away from a lifestyle business and really invest in our company, N6A, with enterprise value in mind. In order to create any enterprise value of significance, especially if you’re a services business, you really need to look yourself in the mirror and say, “Am I prepared to make some of these investments, or do I just want to keep running it as a lifestyle business?”
By the way, there is absolutely nothing wrong with running a lifestyle business. There’s nothing wrong at all. In fact, a lot of me kind of wishes that I had those early survival days in the basement where that whole thing, but when we started to invest in, we hired a CFO, we hired a dedicated sales and marketing team. We hired a dedicated HR person. We hired an in-house recruiter. We started to make a concerted decision to invest in those functions about 2015, 2016. The best decision we ever made obviously as an entrepreneur, it comes at a cost. I mean, you’re consciously making a decision to deal with margin erosions and what not because you’re reinvesting in the business in the hopes that it’s going to pay off and you’re building value in the enterprise, not just value in yourself, but that’s really when it started to change.
That’s a long winded way of answering your question, but I think the disciplines that we’ve put in place for each one of those functions has really helped us a lot with finance. We’re a 50-person company, but we were on our finance function like we’re probably a 1000-person company. I mean, we have monthly financial reviews with our CFO. We’ll review cash flows. We’ll predict revenue. We’ll look at churn rates on the service side. I’ll meet with my chief of staff to understand aging and receivables and collections with certain checkpoints at different points of the month. So these are all things we’ve been doing for the past five or six years and I think that’s helped us in terms of operating discipline. Especially in this environment, if we didn’t have a lot of those disciplines in place, I don’t know if we would be standing here being able to say we survived five or six months in this environment to the extent that we did.
Sam Jacobs: Yeah. I’m delighted to hear it. We’re coming to the end of our time, but I have one last question. There’s this word that does get bandied about lifestyle business. When you say that, and I’m going to put words in your mouth and you can take them out, do you mean that running the business for cash flow generation, not necessarily for future growth and really running the business for the purposes of building up the business checking account so that maybe at the end of the year you pay yourself a big distribution versus having a target cash balance in the checking account or your access to liquid cash, and then using excess proceeds to invest and to continue to hire people and grow, et cetera, even potentially at the expense, again, using this word “lifestyle” at the expense of perhaps your own personal income? Is that what you mean when you say that?
Matt Rizzetta: That’s exactly what I mean, Sam. I can just tell you in my experience. We’ve been in business for 126 months, literally 126 months and we had 126 months going and counting of profitability. We never ran at a loss in any given month, and I was proud as hell about that. In the early days, that meant I got the opportunity to take some hard earned and I thought well-deserved distributions and all that sort of stuff that comes along with running your own business and being the sole owner in that business, but I think you really got as so far as through the tree’s mindset where you need to think through distribution sometimes and you need to think about the long term value. I call it the eulogy, kind of the legacy of the business. Sometimes that means take fewer distributions, but you’re investing in the future of the company.
So when I talk about a lifestyle business, at least in my kind of crazy mind back in the day, it was running a business to take distributions and to provide a great lifestyle for myself and my family, but what I was missing along the way was that I wasn’t reinvesting where there was any enterprise value of significance that was sustainable over the long term that would help us scale.
Sam Jacobs: Who do you think of as sort of key influences that you think we should be aware of?
Matt Rizzetta: I’ve been blessed, Sam, because I have so many incredible people in my inner circle and in my network that have all really helped pay it forward and put me in the position that I’m in and the company is in today, but nobody in my life has had more of an influence, frankly, than my grandparents. We named the company N6A, North 6th Agency after North 6th Avenue, which was the street to which they immigrated from Italy. My grandparents were just hardworking immigrants, made major sacrifices for future generations like my parents and myself. They never really spoke our language, but even without speaking our language, they taught me so much about values, about life, about what you can achieve if you put your mind to something. Our business really is nothing more than 10, 11 years of the values that they taught me when I was a young guy, young kid, and it’s really a dedication in many respects to them and the position that they’ve put me in.
Sam Jacobs: That’s a great answer. Matt, folks are out there listening and they probably want to get in touch with you. What’s your preferred method of communication?
Matt Rizzetta: Look me up on LinkedIn, Matt Rizzetta, N6A. I’m pretty responsive usually. Embrace the Pace, that’s our tagline. So if you don’t hear from me within six minutes, we’ll give you a 50% discount on your first retainer. Also, Sam, if it’s helpful for your audience, I just finished my second book, Embrace the Pace, which is the 100 most exhilarating lessons I’ve learned throughout my entrepreneurial journey over the first 10 years. It’s all just 100 lessons and nuggets kind of like we just discussed over the past 40 minutes or so. So your audience, so feel free to pick that up on Amazon. I think they’ll find some good lessons learned the hard way from my journey.
Sam Jacobs: Awesome. Embrace the Pace. We’ll check it out. Matt, thanks so much for being on the show. We’re going to talk to you on Friday for Friday Fundamentals, but it’s been a real pleasure. By the way, folks, I can attest to the six minute responsiveness. I have not encountered a more responsive person than Matt in my professional career.
Sam’s Corner [39:17]
Sam Jacobs: Hi, everybody. Sam Jacobs. This is Sam’s Corner. Another great conversation, this time with Matt Rizzetta. I’m always struck by the founding stories of some of these businesses, and Matt’s interest and his confidence in himself when he’s 26 years old, out of his basement, 2010, wife is pregnant. He just left his job, no income and just force of will. Force of will is what got him to where he is today, past 10 million in revenue and building and managing one of the very, very strong communications firms in New York City and in the country and the world. So I love that.
And then he mentioned making sure that the organization itself is aligned. I think that’s so important. I think it tends to start for me with putting the customer at the center of the conversation. A lot of people talk about that, not many people can adhere to it. Sometimes the fact of overly ambitious goals with other people’s money contaminates your ability to focus on the customer, and there’s a relationship between your financing strategy, your capital strategy, and your ability to take care of your customers. Because if you pursue venture capital as rocket fuel, you are pursuing a high growth strategy where the emphasis always inevitably lands on your business. One of the ways that you can ensure that you are focused on the customer is being profitable and having the opportunity and autonomy to make your own decisions and to grow, and what I think happens is that you still grow more quickly than you expect, and it’s all from obsession with the customer. So Matt feels strongly about organizational alignment, and so do I.
Don’t miss episode #122
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