Comment by pembrook | Hacker News Reader

Comment by pembrook | Hacker News Reader

This is what happens when a Twitter Saas bro reads a few viral tweets from Design twitter and now thinks they understand an entire segment of the economy.

First of all, virtually no agency counts revenue like a Saas company (as “MRR” and “churn”), since the contracts most agencies sign are by definition not recurring. While some do sell retainer agreements, in general, the whole point of hiring an agency is to avoid hiring in-house for a need that isn’t ongoing or core to your business.

Second, there’s quite literally tens of thousands of agencies/consultancies that are over $50k in monthly revenue. All the big professional services conglomerates are constantly acquiring them (Omnicom, WPP, Publicis, Deloitte, EY, Accenture, etc etc) This is not a plateau that exists and the cited numbers are all totally made up.

Again, while it might be trendy on Twitter right now for people to try to sell “productized services,” this represents a minuscule percentage of the agency business. And agencies will never have true Saas economics, no matter how much they’ll try to tell you they do to get viral tweets.

You can see it in his solution which is to acquire more and more clients. Big firms don't sell like a SaaS. It's high-touch, long cycles, highly competitive and pricing is almost always negotiated based on scope. We'd spend weeks doing competitive analysis, writing pitch decks and case studies, spend thousands on travel to do an in-person pitch with a squad of slick experts wherever their office was. It's a tough game and not one that's easy to break into if you don't have the right frame of mind.

You created a story in your head that he wasn’t telling and then argued against that.

Clearly states in the intro this agency is selling a 2k/month package. Typical in a marketing agency this is what you would do.

Places like EY and Deloitte didn’t start in 2019, their success stories probably can’t tell you much about conducting a small growing business today.

Whilst it’s fun to bash people on twitter for being techbros let’s not let that cloud our vision

I directly argued the core points of the article.

There is no magical 50K revenue plateau, nor is there a math formula that dictates anything about agencies (they aren't Saas, humans cannot be replicated at zero marginal cost). And there are tons of agencies over 50K monthly revenue (if you have 3-4+ employees, which literally tens of thousands of agencies do, you're likely over that number). The core of the article is wrong.

It is not typical in a marketing agency to sell a 2k/month package. That would only sound typical, if your entire knowledge of the professional services business comes from reading that DesignJoy guy's viral tweets. If you're repackaging human hours into tiny 2K/month slots, you're going to have a bad time if you aspire to be anything more than an overworked freelancer. That's not a business model that scales -- hence why a vast vast majority of agencies do not sell tiny "productized services" packages.

The reason? Its the worst of both worlds -- tiny ACV (in Saas parlance) with crazy high marginal cost. 99% of agencies go for high ACV with more bespoke project-based or AOR retainer agreements. It's a 500+ year old business, so things are the way they are for a reason.

And no, I'm not comparing to Deloitte. I was simply making the point that hundreds of agencies get acquired every year and rolled up into conglomerates like Deloitte. None of them do this Twitter-trendy productized services model.

It appears the author discovered what any professional services business-owner already knows. Then tried to "thought leader" the space with their 6 months of knowledge and bunch of fake-analytical charts.

I think the OP runs a productized lead gen service, so they may be (inaccurately?) generalizing from their own experiences.

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