Branditized
Eric Berman's first company, CollegeClub.com, was one of the original college social networks. It grew to about 400 employees and raised $75 million before the April 2000 stock crash derailed its planned IPO. Berman was 28 when it collapsed, and an attempted buyout out of bankruptcy also fell through. He started over with consulting.
In 2001, Berman approached Brian Tracy, whose internet business was struggling. He offered to do the work for no upfront pay and take a piece of the back end. Berman built out Tracy's online presence with a team of about 14 to 15 people. After more than a decade of that work, other gurus began asking him to do the same for them. Berman then turned that arrangement into Branditized, an agency that takes only a percentage of sales after costs and pays out a share to its partners.
Tracy was the first client, and the relationship became the template. Other gurus came to Branditized after seeing the results. Berman said clients were coming to the agency rather than the agency pitching them, because the offer was to do the work first and take a share only after success. Berman screened clients by modeling whether a partner could return about two to three times the roughly $30,000 to $50,000 per month the agency would invest in their brand.
The model drew clients who had nothing to lose. Berman admitted that picking winners was the hardest part: after about two and a half years of the model, the agency had some losing bets. Clients who were not a good fit or were difficult to work with were referred elsewhere.
Berman said 2015 revenue was about $4 million. Some figures were corrected during the interview, with the 2015 total first given as about $5 million. The agency had 28 employees and planned to grow to a maximum of about 75. Brian Tracy remained the client making the most money.
- •Taking a share of back-end sales instead of retainers removes the buyer's risk, so the offer sells itself and clients come inbound.
- •Berman's own history of a failed IPO and rebuilding from consulting gave him credibility with gurus who were trying to grow their brands.
- •A flagship relationship with Brian Tracy produced proof of results that other thought leaders could point to when they referred each other.
- •Investing salaried staff time into each client's brand aligns the agency's incentives with the client's success, which builds trust.
- 1.Offer to take a percentage of revenue generated from the client's sales instead of charging a retainer, so the client has nothing to lose.
- 2.Land one high-profile anchor client and deliver measurable results before pitching others in the same niche.
- 3.Model each prospective client's economics before accepting them, requiring the business plan to show a multiple of your investment within a set timeframe.
- 4.Refer poor-fit prospects elsewhere to protect team time and the quality of your client book.
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