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Like a Hawke

It’s no secret that some of the most influential innovations are born out of recognizing a problem or inadequacy in a market and then solving it. This is exactly what Erik Huberman did when he started Hawke Media. Erik’s intrigue, however, is that he did it at a very young age after he’d already started three other companies. He has the laser sharp focus, impressive business acumen, and overall wisdom of someone well beyond his years. Hawke Media has continued on a steady path of growth, placing Erik time and time again on prestigious lists and granting him numerous awards. He treats his team like equals and has created encouraging work environment. We spent some time getting to know Erik and it was inspirational, to say the least. 

Boye: Hey guys, I’ve got Erik Huberman here, CEO of Hawke Media. How are you doing? 

Erik: I’m good. How are you doing?  

Boye: I’m doing well. So, Erik, You have built an amazing organization where you are creating an interesting marketing model for companies and individuals. Can you break that down a little? 

Erik: Hawke Media is an outsourced CMO and marketing team to companies. We go into a business, look at what they’re doing in marketing as well as what’s missing, and put together a plan highlighting the expertise and holes they need to fill. Everything we do is a-la-carte and month to month. The idea is that we can spin up a team of experts cheaper than it would be to bring them in-house and more efficient than hiring an agency. This includes experts like Facebook marketers, email marketers, web designers, etc. as well as outsourced CMO’s. 

Boye: And how did you get into this? What inspired you to build a business like this? 

Erik: Over the past ten years I’ve had three commerce companies. One in music, and two in fashion. I sold the two fashion companies and about 5 ½  years ago I was advising and consulting for a lot of brands. I saw that it was really hard for them to execute on the advice I was giving them on the marketing side. It’s not a great ecosystem because you either hire in-house or hire an agency. The problem with hiring in-house is it’s generally not cost effective if you can find and attract the talent. And even if you solve those two problems the detriment of trying to operate all in-house is a vacuum effect where you don’t have insight as to what’s going on in the market after about six months. This really catches up to brands and hurts them. So, that’s why agencies exist. The problem is that 99% of agencies have no idea what they’re doing because they are not built by people who build businesses – they’re built by people who can sell services. The few agencies that are any good tend to get really expensive and want long contracts with high minimums, which makes them hard to work with. So, the conclusion of the market is that if you’re not a sexy startup or a company ready to spend millions of dollars you don’t get access to good marketing talent. That just didn’t make sense to me. 

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Boye: It sounds like you’re a serial entrepreneur. 

Erik: To some extent, yeah.

Boye: Did you raise any money for Hawke Media? 

Erik: Nope, we’re completely bootstrapped. No debt, no outside investments. We’ve kept the company. It’s me and my COO, my partner. 

Boye: Wow. I feel like several years ago the trend was to raise a ton of money and then utilize the Facebook or Snapchat model where you get a ton of users and figure it out later. Now, it seems like entrepreneurs are more focused on actually creating real businesses. You’re almost setting that trend. 

Erik: I don’t know if I would say I set the trend. I’d love to think that but I’m also not that conceited! But, I do agree with the trend in general. There was a line I heard from a VC when I was first starting Hawke, “Take any money you can when you can get it. Just keep raising, raising, raising, raising.” And, that’s insane. My dad is actually an entrepreneur and he used to tell me, “Money is expensive.” At the time I was like, ‘I don’t even know what that means.’ Now I get it. 

Boye: Yeah. 

Erik: Let’s say you build a $50 million company, bootstrapped. If you sold it, you’d have $50 million. If you build a $50 million company and you raised $25 million, you don’t walk away with very much at all.  Don’t get me wrong, that money might have helped you get to 50, and that’s why there’s always a balance.

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Erik: We actually have a private equity fund focused on looking for e-commerce companies that have completely over raised. They thought they were going to be a $1 billion or $2 billion dollar company, and they’re like a $50 million company. We see this all the time. They’ve raised $20 million to get to $7 million in revenue. Good luck. You can’t get out from that. Now, you’re stuck. And what often ends up happening is not necessarily a problem with the product or company; it’s that when you have that kind of money, you throw money at problems you don’t necessarily fix problems. Problems are really expensive at scale. If you had bootstrapped it might have taken you a little longer, but you would have been able to fix a bunch of those issues, so that by the time you got to be a $10 million business you’re not burning $20 million. It’s crazy to see what happens sometimes. Even Dollar Shave Club, in the year they sold, they burnt $100 million more than they made. Michael Dubin came out great, but he also owned 9% of the company when he left. It’s a different game than what I’m interested in. 

Boye: Yeah. Do you feel that this sort of idea is having an impact on either the LA, NY, or SF venture ecosystems? 

Erik: I don’t know. I don’t think it’s had a large effect. To be real, people are always going to want money and there will always be people trying to get into the next Google or Facebook. I think what you’re going to see is that it’s going to be harder to get into good deals. I think you’re going to start seeing a lot of very solvent companies that don’t take on as much capital because they don’t need it, which also means that these big returns aren’t going to be as widespread for VC’s. FabFitFun is a great example of this in terms of local. They raised $6 million and then got the company to over a billion dollar valuation before raising again. Thankfully, that was our first investment. 

Boye: You invested in FabFitFun? 

Erik: Yeah, we were a seed investor. 

Boye: It sounds like you’re batting a good average, so far!

Erik: Yeah, we’ve made twelve investments. All have been positive, which is apparently a crazy thing to do in venture. So, it’s been fun.

“If you’re not a sexy startup or a company ready to spend millions of dollars, you don’t get access to good marketing talent. That just didn’t make sense to me.”

– Erik Huberman on why he started Hawke Media.

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Boye: Let’s go back to when you first started Hawke. Can you talk about how having no initial  investment influenced the process of really being calculated in your revenues and margins, and reinvesting that into your business? 

Erik: We aren’t perfect all the time. We’ll over spend, lose money, and be pissed off about it. We’ll underspend and stress our people out because we didn’t hire enough people. We’re not perfect, but being bootstrapped has forced us to have unit economics. It’s forced us to look at how to build a business in a way that isn’t just throwing money at it. At this point, the only thing that causes me stress is my own desire to push the limits and grow. From a personal standpoint, we made enough money in the first year that my lifestyle is good. From a professional standpoint, the business is sustainable. Now, it comes down to how we grow, build, and keep building. There are times when not having outside capital limits what we can do, but if we didn’t have those limits we may take risks that we shouldn’t take, and end up hurting the company. 

Boye: Would you raise now?  

Erik: No, but we went through a couple discussions mid last year. The guys from TaskUs, another LA company, are buddies of mine and they just sold half the company for 250 million. They have a very valid rule which is, “Don’t be an asshole.” So, if someone comes in and says, “Here’s tens of millions of dollars for an insane valuation and we just want to be a part of it.” Then yeah, you talk about it. But, if they’re trying to throw market multiples at you and you’re on a huge growth trajectory, outpacing every other company in your industry, it’s not interesting. 

Boye: For sure. A large amount of money for half ownership doesn’t sound so bad. 

Erik: Correct. 

Boye: If you can still maintain the culture and the trajectory, they’re kind of just taking the edge off a little bit and becoming a new partner. 

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Erik: Yeah. There are a couple of reasons to do it. One is we could speed up our growth. We have something here that we think could go global, so if I raised a bunch of money I could hire people all over. But, there’s a huge risk in going that fast, so I don’t know if it’s responsible. Number two, you just alluded to it, from a logical perspective, I don’t know what happens to my business in 10 years or even in 5 years. We don’t know what the market does. We don’t know what innovations may come out that will disrupt us.

Boye: Yeah. 

Erik: So, taking money off the table and getting some liquidity can always be interesting. At the same time, I have a lot of friends who have sold and a lot of friends who have stuck with it for 10 or 20 years. The friends who are sticking with it generally are happier. They have something to do. They’ve built something. Generally, if you’re doing the right thing, your business will continue to grow. Liquidity is great and all, but there’s a huge thing with founders that’s the, “Now what?” 

Boye: Yeah.

Erik: If I sold the company right now, or sold half the company there’s nothing I would go out and buy. I’d invest that money into some conservative assets to know I have a nest egg. 

Boye: Yeah. So, I guess to that point, what makes you tick? Why do you do what you do? What makes you fulfilled?

Erik: I love growing things. It is just really fun. I don’t know where it came from, I’m just inherently addicted to the idea of building and growing. The times when I’m pissed off is when we have to slow down because of cash flow, or when I have to hold off on things. That drives me nuts. My job is to push the limits and continue to grow the business, while also growing other companies and brands.

Boye: Yeah. 

Erik: Right now I’m working on acquiring two different companies, launching a venture fund, and building out some software for the company. We’ve made two acquisitions before, but now we’re looking into territory expansion to New York as well as some other cities around the country. I’m trying to do long term research into going international. Learning the ropes in Europe as well as Asia. That is really fun.

Boye: Yeah. 

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Erik: So, from a money perspective, it’s not why I do it. We look at money as two things: dependability and a scoreboard. 

Boye: Are you at liberty to say how you guys are doing financially? 

Erik: Yeah, we ended last year at 15. We should do about 24 this year. 

Boye: And it seems like a lot of your business is based on a really strong sales team?

Erik: Yep.

Boye: Is there any advice or learnings that you’re seeing from the sales world in general? Advice on how to secure clients? 

Erik: It’s two things. Our business is very simple in that sense. It’s how much new business can we bring in, and how well can we retain that business. It comes down to servicing companies properly and also being able to sell them on the value proposition. Sales, for us, isn’t that hard. Early on it was a little more difficult, but that’s when I was selling. The sales team wasn’t hugely material for us until about 3 ½ years in when I was like, ‘Ok, now we need to really ramp up the sales and I can’t be the salesperson anymore.’ But, for over 3 years it was 85% me. We had a few sales people, but I was still pulling most of the weight. For a while, it was just my knowledge and my credibility driving the sales, but now, as a business we have all that. People know they need marketing. When they come to us they need marketing, so it’s just can they afford us and do they believe we’re the best place to put their money? At this point, we’ve pretty much proven in an objective way that we’re the best place to put your money. There are not many other service marketing consultancies or marketing agencies that have the track record we do or the growth we do. My favorite discussion is, if you’re looking for someone to help you grow your business are you going to the company growing third fastest or the fastest? We have been the fastest growing marketing consultancy in the country, but sure go with the second fastest.

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Boye: And it seems like you guys are doing a lot of cool projects, which is awesome. I recently saw that you were talking about Flocke. Do you want to dive into that a little bit?  

Erik: Yeah, that’s actually a really fun turn in the evolution of our company. I’ve really pushed people like, ‘Hey, use this as your sandbox too.’ We have a lot of smart people. I push people to come talk to me about ideas and/or tell me when they think something is really stupid. I don’t think that everything we do is perfect, nor do I think it ever will be. My business partner literally wants to get “6 out of 10” tattooed. What that means is we’re always at a 6 out of 10. That is the nature of our business.

“We’re never perfect. We’re never even close to perfect, so let’s constantly look to improve. That mindset is super important.”

– Erik Huberman on perfection and improvment.

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So, Flocke HQ was the idea of two girls who work at the company. One is an email marketer and one is an influencer marketer. Both are kind of influencers in their own rights and have a following on social. They came to me a year ago and said, “Hey, why don’t we service influencers? It would need to be a different brand because influencers aren’t going to hire a marketing agency, but if we can create a type of management company that helps these influencers build their digital following, understand how to read it, understand analytics, build out their website, collect email addresses, and do all the things we do for brands, it would be great.” I was like, ‘Sure, but our minimum is $2K a month. The influencers aren’t going to pay us that.’ They said, “Yea, but there’s probably a way to build out the monetization on some things so that we can do it cheaper.” So, I said, ‘Yeah, sure. Go for it.’ That’s all I had to do with it other than a few check in conversations. A year later they launched the whole thing.  

Boye: Wow. 

Erik: They moved into Co-Founder positions. I’m looping them in with a bunch of partners I have and helping them build out some revenue. Once it gets to a certain point, once it turns into a business, they’re going to go run it. 

Boye: Yeah

Erik: That was super rewarding. It reminds me in a small way of what Google has done because there are a lot of people who invent within Google. If I can do the same thing, there is a fun future for us. 

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Boye: Are there any trends that you are seeing right now within the marketing and advertising space that you feel brands are going to start to adopt or that you are interested in accomplishing and tackling?

Erik: The biggest one we’re seeing is advertising is getting way more expensive so companies are getting forced to be creative and figure out other ways to build. The seven year run of spending money on Facebook ads and making a return, arbitraging your own business and growing it like that, is dying quickly. You have to start doing other things to increase your conversion rates and increase your lifetime value of a customer so that you can counteract the increasing cost of advertising. The biggest trend we’re seeing, which we think is the right way to go, is creating content that targets your audience. FabFitFun is doing it and RedBull has done it, traditionally. It’s not necessarily selling your product, but it’s quality entertainment value content or informational content that attracts your core customers. Inherently, if you can engage your audience above and beyond just a purchase decision, they’re going to buy more. It increases your LTV and increases your conversion rate. Also, the cost of creating content doesn’t necessarily scale when the company scales, so it’s a nice lever as you grow your audience.  

Boye: That’s really interesting. Do you have any thoughts in general about AI, augmented reality, and all these buzzwords? 

Erik: Funny enough I’m about to speak on stage at Startup Grind about AI disruption. Marketers got a hold of the word AI about two years ago and it turned into a thing. But it’s going to take years for computers to gain the actual knowledge and then be optimized to the point where they can actually use it. The exponential computing power should be there by 2023, but it’s supposed to be around 2029 that we actually have artificial intelligence. That’s from Ray Kurzweil who runs AI Google. 

Boye: Oh, yeah. 

Erik: I actually think that is possible. It will be interesting to see what that computing power will extend to in the next few years, once we actually have it.  What we have right now is basic machine learning, and the problem with that is it’s still very miopic. It works very directly with ‘if & then’ statements. Remedial, robotic, and blue collar tasks like ordering at McDonald’s are starting to get replaced. Next it will be more logic driven tasks like bookkeeping, but it’s going to be a while before people, in general, are replaced. Thinking strategically, thinking creatively – that doesn’t come for a long time. If you’re working a job that requires intelligence, you’re fine. If you’re working a job that is “move this thing over here” you might get into trouble. 

“Running a business is solving problems for the rest of your life. Find a way to be okay with it.”

Erik Huberman’s advice to founders and aspiring entrepreneurs.

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Boye: Yeah. All good thoughts. Erik, we always ask our guests what’s one piece of advice that you would give our audience? They’re entrepreneurs and they’re trying to build something substantiale. What’s a piece of advice you’d give them? 

Erik: Stick with it. Be real with yourself. Make sure it’s sustainable on both a financial and emotional level. I talk to a ton of entrepreneurs, and I’m also pretty open about what’s going on with us. I’ve come to find out that you will go through some shit. Every business does. It happens all the time. My favorite thing to point out right now is that the biggest, most successful company in the world, Apple, is dealing with a lot of shit right now. Same thing with Facebook. Same thing with Amazon. It doesn’t go away. We used to have this mentality of, “Oh, if we just solve these problems it will be great.” No. Running a business is solving problems for the rest of your life. Find a way to be okay with it. And know that you have to find a way to have that balance because if you take it on emotionally you’re going to burn out. You have to find balance in it and enjoy it. Find a way to like solving problems and look at them as challenges. The other thing is just know that everything falls on you. Everyone doesn’t care as much as you. Everyone is going to do things slightly worse than you will. Even if you surround yourself with smart people and give them equity and try to do everything you can incentivize them you’re still the passionate founder. Know that you have to be to driver and you don’t get to take your foot off the gas. If you’re cool with all that, just try to enjoy it. 

Boye: I love that. One more question for you, where do you see Hawke Media in the next five years? 

Erik: We’ll probably be international at that point. We’re looking at opening in Europe and Asia. In the next 5-6 years we’ll probably be at around 1,000 people given the trajectory that we’re looking at. Our whole mission here is to bring good, affordable marketing talent to the world. A lot of people don’t have access to really solid marketing talent they can afford. 

So, we’re not slowing down. We’re trying to speed up and get out there as much as possible to help companies grow. We’ve helped over 1,500 companies grow in the past five years and we want that number to be a lot bigger.

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Boye: Wow. So, if anyone wanted to check out your services, where can they find you and learn more about who you are? 

Erik: Yeah, it’s hawkemedia.com and if you want to talk to me, I’m on every social channel @Erikhuberman. 

Boye: I love it. Erik, thanks so much for hopping in today. It was awesome to chat and I’m really excited about what you guys are doing.

Erik: Thank you as well, thank you for having me. 

@Erikhuberman 

@Hawkemedia 

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