Solving Meta Ad Creative, eCom Monopolies, and Agency Partnerships

[00:00:00] Taylor Holiday: What if you didn't need to spend money to find out? Yes. Right. So like the big debate, and you've even talked a lot about this content, is what is the right testing methodology?

Yeah. Right. And so there's this debate about how much money you need to spend in the structure and blah, blah, blah. And so the question is, what if the LLMs could actually analyze. Ads in the way that creative strategists pretend they can, which is creative strategists pretend like they can tell you which ads works.

They cannot. All of them are full of shit, including you if you ever say that. Yeah. But

[00:00:23] Andrew Faris: this is why we've never, we don't make that content. Right. Right. So,

[00:00:25] Taylor Holiday: so,

but the question is, what if you could actually validate that you could have an LLM assess your creative prior to it and then recommend which to upload and not

[00:00:34] Andrew Faris: Yeah.

[00:00:35] Taylor Holiday: There's something really interesting about that has an idea. Well, this is

[00:00:38] Andrew Faris: essentially my manual bid theory, which is that like, it's, it's a little bit more expensive than what you're saying, but not a lot more expensive. 'cause the whole idea is that engagement metrics predict conversion metrics.

That's right. That's right. And that, that actually engagement metrics pile up really fast. That's right. Impress impression. Impression counts are, yeah. Right. We're do it on A-C-P-M-A thousand impressions, so you can get 403 second views for $12. So when your ad only spends 40 bucks, it's like, actually it has a lot of information about how it's

[00:01:01] Taylor Holiday: thousands and thousands of That's right.

[00:01:02] Andrew Faris: So, yeah. So. So, yeah, so I think there's a, there's a, a thing there where like, I do think engagement reliably does this at, at least at a probabilistic level.

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[00:02:09] Andrew Faris: Do you wanna just start right in on my equity deal with Patrick?

[00:02:12] Taylor Holiday: Yeah. How is this not done yet? What are you guys doing?

We're fine. Why can't we just get on the call and work this out? Because there's too, 'cause there's too many to do. We talk about this like three episodes now.

[00:02:22] Andrew Faris: Well, okay. So we're almost there. I mean, it, it is one of our rocks 'cause we're doing us. Okay. Nice. So one of our rocks to get for gosh to get this done through the before the quarter.

Mm-hmm. So it's definitely happening. Okay. Patrick, my business partner soon. Yep. COO. Yep. We've just been calling, we've just been calling each other business partners 'cause it's happening. Like, it's just, it is happening. Okay, here's the question. You've been advising us. Thank you for your help.

[00:02:46] Taylor Holiday: Like three Marco Polos. It's been helpful.

[00:02:48] Andrew Faris: I mean, nobody I know has thought more about how equity actually plays out. Yeah, that's right. In

[00:02:52] Taylor Holiday: this kind of setting, for sure.

[00:02:53] Andrew Faris: Yeah. Right. And so your advice has been extremely helpful and it's really underrated how much that matters. Like I think just like,

[00:02:58] Taylor Holiday: no, it's something you wanna get right?

[00:02:59] Andrew Faris: You get this right. Exactly. I've watched you get it wrong so many times. Exactly. I just don't wanna follow your footsteps. So, okay. So, so okay, but here, here's actually the thing that I wanna ask really specifically. 'cause I actually haven't talked to you. I talked to Patrick this morning. Okay. And I was saying like, okay, what do we need to do to keep moving this ball forward?

And and he said, well, the one thing that came up in my conversations with Taylor, 'cause both of us are asking you for advice, okay? Yeah. Yeah. And I, what I, what I asked you to do to frame it was don't think about loyalty to mirror to Patrick. Think about loyalty to AF growth. Like, imagine you're an equity holder in AF growth.

What do you think is best for the business? As you can see it. Okay. And you know, originally we had talked about sort of, I would own two thirds of the business. Patrick would own about a third of the business. That's the way we had looked at it. Yeah. And, but you told Patrick you think it should be closer to 50 50?

Is that what he said? That's what he said. Okay. But you could say whatever it actually is. So what is it? Is it 49 51? What do, what do you think is actually best for us? Because this is the thing I think is interesting. Our equity split may be a curiosity to people, but I'm actually really curious to unpack your thinking about why you say the things you're saying about it.

[00:03:59] Taylor Holiday: Well there's a few reasons. So I get the sense that when you talk about Patrick, you talk about him and you've used the word business partner. Not that he owns a part of your business. I think these are different things. And I think that the closer you are to. Equal in it, the more truly the partnership is.

So that's just like a, a little bit of a philosophical, should

[00:04:25] Andrew Faris: I say. So lemme say something about that first. Okay. Yep. One of the things that we were first sorting out in this was we don't, we think, we think our skill sets are really complimentary. Okay. So when Patrick brought this up on the call today, what I said was, I think we maybe hedged the initial equity conversation a little bit around the idea that, yes, he was joining my thing as opposed to it was gonna be our thing and he was gonna have a really big part of my thing.

Mm-hmm. Right? But what I told him today was, I just don't really see it that way anymore. Right. I, and so, so I said, he said like, are you open to the idea that's closer to 50 50? And I said, yes, because that's how I, in my mind, I think of it as like that how two headed I experience you

[00:05:00] Taylor Holiday: talking about it. A

[00:05:01] Andrew Faris: two-headed monster.

Well, I'm actually glad to hear that. 'cause that's, that's really what I feel. Is that like there is this thing that Patrick brings to the table that I do not bring, and the business is unscalable without that thing. Right. So it's like I, it, it doesn't exist without Patrick as, as a future thing that it could become.

Right. So anyway, so to to your point about the equity reflecting the actual relationship, I don't

[00:05:21] Taylor Holiday: think that's true by the way that you say that. You, like you're very differential in that. But I think you would figure out lots of things without him. I think. I think it's the question of like how much valuable, how, how much more valuable do you think he can make it?

How much faster? Yeah. 'Cause but, but regardless, like I think that you should maintain control over certain decisions which I think is what the 51 49 represents. And you can define what those things are. I think they should be a pretty small subset of things that wouldn't require both of you, but there should be some things.

And then the ultimate protection for me is the buyback, right? Like that to me is actually the most important thing, which is the way you hedge the idea of whether or not you're actually complimentary is that to get, for him to get to a place where that 49% is fully vested in owned, like. There should just be a way for you to get your company back in the event that you guys are wrong for whatever reason.

And I think if you do that, then there's pretty little risk to the partnership because in the event that you don't exercise the buyback, it's because you've realized the value. And so in that sense, it's like the splits don't really matter other than what they sort of represents symbolically, because the buyback actually represents the hedge against the value creation.

Getting to a level that would warrant it being a good partnership because the second it's not, you buy 'em back out and you shut the partnership down and that's only cost you whatever the cost of the buyback is. So I think that's where I look at it and go like, Hey, you guys are creating a symbolic partnership that's governed by this buyback, right?

That actually is about the value creation. And so. Like the amount matters. I know like Patrick, he had, he, like, when he initially messaged me and I'm, I'm assuming we're okay to share. Yeah, yeah,

[00:06:50] Both: yeah, yeah.

[00:06:51] Taylor Holiday: He was like, I don't think you're right on value. And I'm like, well, I don't think the value is the thing that you guys should get hung up on.

Yeah.

Because I think to try to value the entity today would be the wrong exercise for what you're trying to create in this partnership. Yeah. In my opinion.

[00:07:04] Andrew Faris: Oh, well. So I think that's right. Partly like you, you can't do like a TTM EBITDA value on this. I don't think so. And I, I think for multiple reasons.

Like it's just, it's just not a bank loan. You know? Like, it's not like, and it's, and it's not, and it's not like a public market thing. So I think. There's a, a bunch of questions around that that I think are, are helpful

[00:07:23] Taylor Holiday: and what I even said to him is like, if you don't think Andrew, the person, yeah, yes, this is worth this much money, then what are you even doing?

That's right. Yeah. Like, then, then I think you are making a horrific bet. See the in this in total. Yeah. Like, like if you think the distinction and value Andrew's value to you for what you guys are going to do is the difference between 1.7 and $1.1 million, then you are, you're in the wrong endeavor.

Yes.

Like it should be so obviously worth that amount of money that we're talking about in this distinction for what you guys think you're gonna go make together. Otherwise, like, get outta here. 'cause this is, this is not trying to buy a stock to make 12% return. That's right. Whether base underlying cost, price really matters.

Yes. Like the, the, the distinction between 1.3 and 1.6 in terms of the total value creation in the future should be, I don't, inconsequential don't,

[00:08:05] Andrew Faris: those numbers are fake. I, I know. I'm just fake. Yeah. I'm just saying that like,

[00:08:09] Taylor Holiday: I don't feel like that's the right. Assessment that like, oh, you're worried about whether you're gonna make 12% or 22% in the long run.

Yeah. Now again, a part of this is like your guys' conversation of what is the end game? Because if the end game was sell in 12 months, well then the underlying cost of today really matters. Yes.

Yeah.

But if, if you're saying, look, we're trying to build a $50 million thing, well then, like the underlying entry point today probably matters less, you know?

So, so this is

[00:08:33] Andrew Faris: the reason I think it's an interesting conversation worthy of like podcast time. Mm-hmm. Is because what, like, one of the things I think that you're really good at doing, and I think I've, I've learned from watching these conversations play out at CTC and, and sort of the things that we've been in together and various ways is like the way that the way that equity.

Essentially ought to be aligned to reality, basically. Right, right. Which is like, like, like, okay, so what is, what is the actual partnership like and what are you actually trying to accomplish? And what is the, what is the value of the person and what is the, you know, and like it's not, it's not what do you want

[00:09:06] Taylor Holiday: your employees to think of?

Each of each of you.

[00:09:08] Andrew Faris: That's right.

[00:09:09] Taylor Holiday: Like how do you want them to be perceived hierarchically? Like, like yes. What kind of authority do you want to grant each of you? Like, there's lots of things that it communicates.

[00:09:15] Andrew Faris: So I think, I think all those things are good. I don't want to get too hung up on some of the things.

I think you brought up a lot of good stuff there and it make makes sense. So, so you think the idea of like a, a closer to a 50 50 split is a bigger reflection of the reality of the partnership.

[00:09:28] Taylor Holiday: The other big concern I have is just he's rich.

[00:09:32] Andrew Faris: Yeah.

[00:09:33] Taylor Holiday: This is like one of my fundamental concerns. 'cause he sold supply.

Yeah. Yeah. And again, I don't know how Rich Patrick is. I've never asked him for his bank statements. That's right. But like, I'm genuinely concerned that he's going to tap out in the event that things are not providing the long term upside or his family creates. He starts to see a cost to his family where the benefit doesn't map.

So you're concerned about that For me,

[00:09:55] Andrew Faris: essentially, that eventually he would go like, I'm, I no longer need to do this.

[00:09:59] Taylor Holiday: Yeah. So it's gotta be really worth it to him. Yeah. And so maybe it is at a third. I like I the difference between 33 and 49 is probably less consequential. Yeah. I think it matters somewhat.

So I see

[00:10:09] Andrew Faris: You want him to put more in now more? I, I want him because you want, you want him really pot committed because

[00:10:15] Taylor Holiday: I think the two of you together fully committed as assets. Like I think you guys will deliver value to each other. And I, I would, my biggest concern is that it doesn't matter enough to him.

[00:10:23] Andrew Faris: Yeah. Yeah.

[00:10:24] Taylor Holiday: Because I also think he's developed all sorts of like philosophical principles about work life balance and other things that concern me. Yeah. So I, well we, that's, that's like a concern I would have about both of you in some ways. Right. We

[00:10:34] Andrew Faris: we're actually, that's actually part of the reason why I like parting with him is 'cause we are so aligned on that stuff.

Yeah. Like we, we, we have so much shared vision that I don't think we're gonna get to a point where he and I are like, Hey, you're not pulling your weight here around these things. Because, because we don't Yeah. Because we are not necessarily trying to create the largest outcome possible. And, and again, this is the thing I think you've been really good on.

I remember a long time ago you said like you didn't want. CTC at a different fa phase of CTCs business. Yeah. This is no longer true, I think of CTC, but you, you didn't want to use the word like, we're gonna be the best at something. Yeah, yeah. Right. Because it would cost too much. Yeah. Right. The logic was when you watch Kobe Bryant say he wants to be the best, right.

He means I'm gonna shoot 2000 free throws every day. Yeah. It's

[00:11:16] Taylor Holiday: gonna, I'm gonna sacrifice everything else in my life for the achievement of that idea.

[00:11:20] Andrew Faris: Correct. Yeah. I heard a crazy story about him in a meeting with some people where he almost kicked somebody outta the meeting. 'cause they were talking the way that Patrick and I talked, you know, that was like post playing career.

Yeah, yeah. Anyway when he was like investing potentially, and he was like, you should just leave this meeting. You're not, yeah. You don't need to be part of this. So anyway, but, but yes, and I think. That's what I mean when I say like we're not trying to create the largest outcome possible is I recognize that we are not, yeah, we are not doing that.

But because we're aligned on that, I feel good about it anyway. I think so you're, so you the 50 50 thing that's interesting. So it's partly about perception within the company and all those kinds of things, but also partly about you want him to be part committed because you're concerned about Yeah, I want, I'm,

[00:11:58] Taylor Holiday: it's a relationship and I just think that the 13% value, like again.

I just go for both of you. If you don't think he can create, like, to me, I do. I do. I have no problem with it. Then just go. Yeah. I just go like, what are, what are either of you giving up here? Nothing. I, well, some money he's putting money in to buy it. That's right. So he's, that's actually the

[00:12:13] Andrew Faris: biggest thing is he has to be, I think that's the biggest cost in the whole thing, is like he has to be willing to buy more, which means more dollars to me now.

Yes. Yeah. And that's actually my concern for him is sort of like, I, I don't, I don't know how much money he has exactly. Either. Right. That's the thing. I want it to hurt. Yeah. I

[00:12:27] Taylor Holiday: want, I want him to be at risk. Yeah. Candidly, like, that's another part of it too, is that like, I don't want it to be like a nominal amount of money that's like, oh, if we lost it.

Like whatever. Yeah. You know? I don't want it to be that

[00:12:38] Andrew Faris: way. I think that's, I think that's, I think there's,

[00:12:40] Taylor Holiday: I think that the equity, like this is one of the things, like the, the risk is is a, is important as the upside, like Yes. That you need carrot and stick. You need both. Yeah. And if there's no, if the stick is like whatever, then it becomes easier to walk away from.

[00:12:54] Andrew Faris: And I'll say, like for me, the idea of having less of the equity. As a percentage. It also makes me think, okay, I actually have to work a little harder for the total thing to be bigger because I got a smaller percentage of the total thing, which is what I

[00:13:08] Taylor Holiday: would want if I were him too. That's right. Yeah.

And I think what

[00:13:10] Andrew Faris: I'm saying is I think that aligns our incentives nicely. Yeah, yeah. Yeah. I really, I mean, what I told Patrick also about this was like, definitely talk to Taylor like I want. I want Taylor's input on this. Yeah. Like I, I think again, if you sort of position yourself as loyal to the business Yeah.

Then it's like, well, what do you think is best for the business? And all the things you're describing reflect that to me, which is this, this thing, this is one of those things I, I think I have less developed opinions on and feel like the only concern I would have

[00:13:33] Taylor Holiday: is if you guys are gonna bring in someone else.

And, and so that's, that's actually the

[00:13:37] Andrew Faris: one concern I have too. Yeah.

[00:13:38] Taylor Holiday: Yeah. So that, the only reason, and almost for sure we will

[00:13:39] Andrew Faris: do something like that at some point. And so that's like the concern I have. Like whether it's a employee pool or something, well then I

[00:13:45] Taylor Holiday: would be careful then I probably wouldn't go all the way to 51 49 because I just would never want you to find yourself in a position where someone else could kick you outta the company.

So, yeah, like, so I do think that if you both agree like, Hey, we're gonna do a 20% employee pool at some time, or we're gonna, do we, we think that there could be a world where there's a third partner who does X, Y, Z, or we wanna do an acquisition, whatever it might be, that would lead to a position where suddenly Patrick plus person new could affect you negatively.

That's the only thing. What if I need to be

[00:14:12] Andrew Faris: able to do that?

[00:14:13] Taylor Holiday: What if they need to be able to do that? Yeah. What if I do such a

[00:14:16] Andrew Faris: bad job that Patrick at some point needs to, I think you're, you're being

[00:14:19] Taylor Holiday: altruistic here in a way that I think you should be more selfish. That's just my personal opinion. Yeah. I think you should be allowed to mess up your own company and keep it.

Yeah.

[00:14:27] Andrew Faris: Well, I mean that's part of what I'm saying is, is it my own company or do I, or is my partnership with Patrick at a point where it's not really my own company anymore? Yeah. I don't dunno. You know, and to where like, actually, like what we need is for Patrick and I to be able to be united against sort of anybody else at, at an equity level.

Yeah. Again, like position yourself as sort of, I mean, I know you're confident in me. You've expressed that a lot of times. So like, so, so maybe you do view it as like, no, I want you, I would never, if I'm a shareholder in this thing, I want you to maintain control. I would

[00:14:52] Taylor Holiday: never give up control. Yeah.

There'd be no scenario where I would see the position that someone could remove the thing from me. Mm-hmm. If I were you.

[00:15:00] Andrew Faris: Yeah. Yeah. Okay.

[00:15:02] Taylor Holiday: Yeah. Or I would like so narrowly define the parameters under which that could occur. Like. That if you truly like screwed up people's lives or embezzled money or something like, fine.

Yeah. But otherwise, like, I don't think that should be

[00:15:15] Andrew Faris: Yeah.

[00:15:16] Taylor Holiday: A possibility.

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I.

[00:16:14] Andrew Faris: Yeah. Okay. I mean, one of the things that I have thought about in all this is like in the sort of risk reduction thing, I'm, I've tried to play out the, the trade off between wisdom about. Looking down what you're doing there, which is like you're looking down the, the, into the future and saying, this, this kind of thing could happen.

Make sure you protect it. This kind thing could happen. Make sure you protect it. I think that's really important and really why is part of why I like really appreciate your advice on this stuff. There's another part of me though that has said, even with Patrick, like we sort of did this assessment in the beginning.

We literally did actual, literal assessments at points to try to, to figure out the best we could. And at some point I gotta the point where it's like, I don't think I can increase my confidence in this decision any more than we're at right now. And the reality is it could go back. Like, I mean, I think that's just one of the things I've sort of gone to in my mind is like, at some point, yeah, I don't know.

The partnership could go bad and, and we'll, we'll have to deal with that when it happens and, you know, and so I don't, I don't wanna let that be a excuse to not think carefully. Yeah. But I also am trying to be clear right about the idea that like, in any, any way we arrange this, it could go badly and and hopefully it won't, but like, who knows what the future is like, you know?

Yep. So, okay. Thanks. Good

[00:17:22] Both: luck.

[00:17:22] Andrew Faris: Super helpful. We'll keep you updated. Okay. You wanna do collective balance sheet? I don't know, is there anything, is there anything non business, should we stick with businessy things?

[00:17:33] Taylor Holiday: You got, we could keep one of, so I, I'm having a conversation with, I don't know if I should say this yet, but a former colleague of ours that is.

Getting into the game too.

[00:17:42] Andrew Faris: Yes. Okay. I know who you're talking about. Two of them Uhhuh. I, I know both of them who you're talking about.

[00:17:46] Taylor Holiday: And so I was just thinking about oh, actually

[00:17:48] Andrew Faris: maybe one of them on this list. I didn't know one of them. I did, yeah. Is it the freak? One of '

[00:17:52] Taylor Holiday: em is public about it already?

One of s not.

[00:17:53] Andrew Faris: Okay. Okay, great. Alright.

[00:17:54] Taylor Holiday: And so we're gonna have a conversation tomorrow and I've been like talking through it and I just keep thinking to myself how sad it is that these things are all gonna end up like bludgeoning each other. That like that there's just this, like when I read person three on that list, Uhhuh content, I'm like, you are just saying all the things we did together.

And now you're just saying it through your own voice and like, there's variations, but it's like, man, is there, is this really, the way is like, I think about this with TL and Uhhuh, it's just like, is is photocopy repeat the actual maximum value creation for individuals and. It makes me sad that it may be the case.

I don't think you're being

[00:18:37] Andrew Faris: clear enough. I not about the I'm No, no, no, no. Not about the people, about the concept. Like you're saying, there's a kind of, are you saying that what you want is that people who have been in your ecosystem to go create new and interesting things as opposed to Yes.

Replicating

[00:18:52] Taylor Holiday: in, in some ways, yes. I want to, I want them and you to recognize that the reason we won and the thing that we did was compelling was because of original thought and that unique value proposition in the world matters. And that finding the way in which you differentiate yourself from everything forever is important.

Yes. And this goes to this. So, so the, the quote I put up there, I'm gonna tie this to the first point, was this, your idea that you talk about all the time that it's never been a better time in e-commerce and the collective balance sheet.

Yeah.

And more and more I've just come to have this like almost Peter Teal to, you know, maybe speak of the antichrist here or whatever your, it may, but is that like the goal is monopoly, the goal is not perfect competition.

The goal is to create a monopoly and how do you do that? And, and I, I think a lot about that in the context of a service business, which is like the most competitive, like lowest barrier to entry. Anyone can grab a mic and create a podcast world, like how do you actually create a unique value proposition in the world?

And so I think about all those people on the list and that, that's like my challenge to them. And that's why I think, like, I've always been like compelled by the idea that you think you can solve creative. So this is what it's like the thing that I couldn't do. Yes. You're not going out and saying do forecasting and like you do, talk about that, but that's not, I don't feel like you're like just

[00:20:10] Andrew Faris: that's, that's table stakes

[00:20:11] Taylor Holiday: by Exactly.

You're not just, we have to do it to be responsible to clients. You think you can solve something novel and I actually. I, I have a deeper appreciation for that pursuit in the world.

[00:20:20] Andrew Faris: Yeah. Well, and when I, so you're definitely right. Yeah. And this is very conscious, like I I, when I assess the agency landscape in D two C Yep.

What I think is there is essentially no chance for not only us, but for anyone to compete with you on that

[00:20:34] Taylor Holiday: idea.

[00:20:35] Andrew Faris: On the on, on the profit machine.

[00:20:36] Taylor Holiday: Right. On our own ideas.

[00:20:37] Andrew Faris: And it's because you have too big of a head start and too much money now.

[00:20:40] Taylor Holiday: Yep.

[00:20:40] Andrew Faris: You have too. You. There's just no world in which I can do this.

And what I'm concerned about is that even on the stuff that I think I can beat you on Yep. That actually you're, you still are just too resourced.

[00:20:50] Both: Right.

[00:20:51] Andrew Faris: That like I you just, it's just like the Dodgers and the brewers that we're gonna see. It's just like the brewers are really analytically good and smart as a team.

They do a great job with player development. They're bridging development's. Awesome. The Dodgers just have too much money.

[00:21:01] Both: Yeah.

[00:21:02] Andrew Faris: They just, they just, they're just too, so they not only are good at all the same things, but they can afford better players. That's right. And so it's just gonna be really hard for the brewers to compete.

As I say this, probably by the time this goes out, the brewers will have come back in, won four out of six. But the, but yes. And so, so what I, my, I actively assess this and say you aren't good at creative, right? CTCI would never send somebody to CTC to say, go get the creative that is gonna unlock your ad account and win and create scale there in part.

'cause you would never sell them that. Right. And so it would be, it would be disingenuous, right. So what I have thought is maybe Patrick and I can create the best creative shop combined with the best media buying and financial stuff. Sure. In D two C to where maybe if our, maybe if our, maybe if we can 80, 20, the other things in the financial part of the business to where it's good enough.

Yeah. We can then get to a point where it's like, okay, our creative's gonna be so good that we are going to solve this way of doing winning in creative. Because it will be different than what you could do. And maybe it's something that I can do and maybe not, but well, so that's the bet. That's the bet.

[00:22:00] Taylor Holiday: Like if I were right now going and I was sort of walking into the agency landscape to compete, the, the game I would play would be like, revenue is the goal. You know, like you want to occupy this contrarian position that is actually the place where you can develop, like not every, the key is to make sure not everyone agrees with you.

Right. You want allowed opposition. That's one of the other important things is that you want to come out and create this sense by which. There are a lot of people to disagree, but then there are this, there's your tribe, there's this small cohort of people that deeply and intimately agree with you.

And then best case scenario is, you're right, right? Like, so that's how you really win, right? Is you have this contrarian idea, then you end up being right about it. That's another Peter Teal, right? But, but, but I, I see this all the time where I watch a bunch of people go, oh, we're gonna like occupy the like profitability and marketing and finance and forecasting.

Yeah. And I just go. Okay, you're gonna win some like exhaust of this, like the, the yeah. You sawdust of this industry or whatever. But, but you're missing, and I, I think the people that came from CT C in particular, my challenge to you is not to go like, what did we learn about specifically how to be a growth strategist?

It's what did you learn about understanding how CTC positioned itself in the world all the time. Yes. Which

[00:23:11] Andrew Faris: is actually always the thing that CTC was best at. Yes. Right.

[00:23:14] Taylor Holiday: Was to find an edge an angle. Do you think it's possible for them?

[00:23:17] Andrew Faris: Aren't you just better at that than everybody else?

[00:23:18] Taylor Holiday: I think, but I think that's what people don't understand about what my skill really is, is, is, is to find that thing.

Yeah. And to, and to occupy it obsessively.

[00:23:26] Andrew Faris: And not only are you that, but you are so willing to be contrarian. That's right.

[00:23:30] Taylor Holiday: And to be, and to be argumentative and friction. Yeah. And like some of that is, is where people really don't wanna occupy that kind of character. Yeah. They don't like it.

[00:23:37] Andrew Faris: But

[00:23:37] Taylor Holiday: the, I think the person on the list, like the, the the first person Uhhuh, I think she can't Oh, she could do great.

And I, so I think she's gonna be highly effective at this. And, and it's the thing I want her to lean into. Yeah. Is. Hey, people really respect your voice and you do this good job of say, and like, it even makes me feel threatened sometimes where you're like, I'm in this big business. This is really how it works.

That's, and you're like, Ooh, okay. That's good.

[00:23:59] Andrew Faris: I was gonna say, that would be the place I would carve. That's right. Yeah. Right. And so, can I just say that? Come on. I don't know,

[00:24:03] Taylor Holiday: I, I just wanna be careful.

[00:24:06] Andrew Faris: Yeah.

[00:24:06] Taylor Holiday: But yeah, I think, I think she's gonna do a good job of that. And that's like, my message to her is like,

[00:24:10] Andrew Faris: go do that.

Be that,

[00:24:11] Taylor Holiday: be a monopoly here. Yeah. Go monopolize a position that no one else can occupy. Yeah. What can you say that no one else can say? Yeah.

[00:24:17] Andrew Faris: You know? Yeah. And I, I think that's right. I I, yeah, I, I'll tell you actually, one of the messages that somebody ought to do for this is the the why you should raise money and go big and D two C the revenue one.

That's right. Exactly. So, I, I actually think supplements in particular is the place where this is. Well, so

[00:24:29] Taylor Holiday: this is a good parlay into the Jordan Menard thing. Yeah. Which, so this, this natural CAC and like spend infinity dollars thing. Yes. Which I think is insane in many ways. Yeah. Yeah. But, but I, I, I spoke after Jordan at Commerce Roundtable and his, his talk people were laughing 'cause they were so like.

Different. Yeah. Contrast to one another. But I actually think he's making a way for himself amongst the subset of people with a message that people go, wait a second. That doesn't apply to everybody. And they wanna argue it. Yeah. But it's, it's got edge. It's, it's pointed Yeah. In a way that he's very good at that.

Right.

[00:24:58] Andrew Faris: I'm gonna have him on the podcast soon to talk about it. And I also think, I also think he's on something very important for meta.

[00:25:03] Taylor Holiday: Yeah.

[00:25:03] Andrew Faris: I don't, I don't think all the implications are right. But I recorded a podcast about this. I know.

[00:25:06] Taylor Holiday: I listened to it. That's why I wrote it down. Yeah. Because I was like, the natural CAC framing I think is like insane, but, well, I

[00:25:11] Andrew Faris: think the, the phrase is wrong.

Yeah. But I just used it 'cause he used it. Right. But because it's not natural. I think it's a marketplace cac. That's right. That's,

[00:25:18] Taylor Holiday: that's the phrase. You're a market taker.

[00:25:20] Andrew Faris: Yes, you're not a market maker, but the point being that there's this, there's this thing that happens in meta ads, right, that I think is very important for people to understand you and you guys, you guys model this, and I referenced this in my episode, that you guys actually model this specifically, right?

This marginal frontier idea and these trade offs, which is that the relationship between spend and efficiency is non-linear. So you'll get a whole bunch more spend at a slightly lower efficiency. That's right. Or, or sometimes. Or sometimes your spend will drop off drastically at a slightly higher efficiency.

And where those trade offs are, and what it reflects is that all of these brands have the same economic characteristics and are going for the same customer. And so the example I use is supplements where it's like they all have roughly 65 points of margin landed to the customer, right? They all have it.

They all have that by the time they do all their discounting and all that stuff, right? By the time they do all the pricing, they all have that margin landed to the customer. They all have through the roof, LTV, similar AOVs. If it's the same customer, they're all going after the, the rich people who want health and wellness products.

And that means that in an auction system, there are, there are, there are cliffs over and over again of CAC where it's like, if you bid $1 more than this person, you're gonna win every auction. Yep. For every timeline. And that's what the, that's what, that's what quote unquote natural CAC is. Now, I I do think it's important to always clarify that it's possible that a big tech company is putting the thumb on the scale somewhere in here.

Exactly. We should never count that out. Exactly. So

[00:26:37] Taylor Holiday: I

[00:26:37] Andrew Faris: think it's the exact, but I think it's a

[00:26:38] Taylor Holiday: marketplace means occurring in nature. Like it's the actual ex exact opposite. It's a synthetic market. Yes. That's like dynamic relative to pricing every day. That's right. And so, so, because this is why bid caps are so important, I think it, it goes back to this idea that, like on Saturday, that market is different than, Friday is different than Thursday.

That's right. For the volume at that price. That's right. Right. And so I, I do think though that the, the general principle that. I think Jordan gets at, which is that like your goal is to be able to be the person that can spend the most Yes. Is true. And why supplements work so well. Yeah. It's, it's funny 'cause even I think it creates capitalization as a leverage point That's right.

Against your competition if you're smart about the calculation on the LTV side and things like that. So the,

[00:27:15] Andrew Faris: and, and if you look at some of the really huge supplement brands, it's exactly what they did, right? AG one raised all the money. Gros, like, yeah, Gros raised a bunch of money. You know, seed raised a whole bunch of money.

I think Armor raised money. Like, and, and it's because there's, what everybody realized right about D two C is that it actually doesn't function like software unless you're a supplement business, right? Where it kind of does, where it's like all the cost is the upfront getting your stuff in this case out to people initially.

Yep. But the, but the LTV timelines are so good that in fact like the value realization over time and the margin is good enough. So maybe not quite software scale, but like there's, there's like a very similar dynamic here and what I think. If I was gonna make a bet on the future of D two C, one of the things I would say is that like that segment just gets eaten by brands who realize the natural CAC thing and, and they all go raise a bunch of money and they just out muscle all the bootstrapping health and wellness brands.

So all the people are just like starting this and what I would do if I was doing public content. So back to your point is I would, I would tell everybody go do that.

[00:28:09] Taylor Holiday: The other space I see it. So, we work with a number of brands that are hardware plus software and I don't know if you saw like interesting Aura just raised at like an $11 billion.

I did see that. Like this is very clearly Yep. Part of the future of all of this is that like the ability to pay, get someone to pay for a hardware at a slight loss and aggressive acquisition and have this long tail of value, never ending subscription at 99% margin. Yeah. Is like such a leverage point in this game that you, when you, because the thing about the distinction between competing in a Google SERP ecosystem, is that what you just said, which is that like everybody has the same economics as you.

Is true, but in meta that's actually not true. The point is, is that the hardware businesses are competing against the sub businesses for the same user.

Yeah.

Feed. Yeah. Right. So you actually get blasted outta that arena by the auras, by the ag ones, buy the whatever because they can afford to pay the 30 5-year-old woman's Instagram feed way more.

But they're not bidding on your Google SERP for protein powder.

[00:29:03] Andrew Faris: But this is another, that's right. This is another point that I've I made is like people sort of see this dynamic, the market equilibrium at the level of Google search ads. Yeah. Everybody understands this is happening. The example I gave is like, I remember talking to some injury attorneys Yes.

Where they pay like $150, 200 a click. Right. The reason they pay that much for the click is 'cause the click is worth that much. 'em, that's right. And so, and they, so the value just gets competed away for search. And that just is, there's just a limitation to the number of, to the volume. And that's that.

Right. And I mean, I've literally talked to these people like $200 a click, a hundred a click, the so, but but I think in that respect, meta actually functions more like that than people realize. And that's what the marketplace CAC is. Now what you're saying is also true, which is that that's, that's

[00:29:39] Taylor Holiday: right.

This is where I disagree. Well,

[00:29:40] Andrew Faris: no, well, what, what I just mean is like, people think it's different because it's demand generation versus demand capture, so to speak. But what I mean is there's a way in which the click has a value that it, that it gets competed down. And what you're saying is right, the way it, the way it stops functioning like Google is that, is that somebody can make that click worth a lot more than everybody else going for the same click.

Yeah,

[00:30:00] Taylor Holiday: exactly. Yeah. So whereas the injury attorneys all have roughly the same value, that's value realization's potential. That's right. That's right. Like, you're not gonna get injury attorneys suddenly bidding on, you know, leggings. Yes. Like, you're not gonna compete in that way where. Crap. You're like, oh, the injury attorney's paying so much for the leggings, click.

'cause it's worth so much to them. But on the meta environment you do, like, that's the same person in theory, whether it's exactly leggings and injury. The point is, is there's a broader competition for that feed. And so I do think this is why I'm like, dude, there are some brands that you just, you, you have no chance because you just don't realize enough value to win the paid advertising game.

Yeah. Like,

[00:30:33] Andrew Faris: and you're not capitalized for it. That's

[00:30:34] Taylor Holiday: right. It's just like, so, and even if you were like, your LTV sucks. That's right. So like, this business has no chance to go into this like knife fight and win because you ha you just don't capture enough value Yeah. To get scale.

[00:30:47] Andrew Faris: Yeah. Or yeah. Or at least not like that.

Like the, the, the, the way you'd have to do it is a much slower, more deliberate thing with, with, you know, sales channel expansion and things like that. But you're not gonna get at D two C the way that, like, the way that brain. Yeah. Or you'd have

[00:30:58] Taylor Holiday: to just have so much demand on the front end for your thing versus everything else that's like.

You'd have to capture this trend or moment or product that was, the conversion rate was so high that you could bid so much. That's right.

[00:31:07] Andrew Faris: And I, I think brands need to assess that more clearly. They need to understand who they are in that. So I have a client right now who just came on, I think it's fine for me to say this.

She's Birdie. Yep. Richie Michiko out on the podcast since deleted because he wants the internet. Oh, really? Yeah, there were some things there. Anyway, he'll come back at some point. But great dude, and what, you know, he took over this print and one of the things they tried to go hardware plus software, it didn't work.

All kinds of problems. Anyway, one of the things that he has said about that business since is like, he thinks it's a great business at like low mid eight figures. Right. Spinning off a bunch of cash as opposed to, and, and, but there's something that's really right about his calculation, whatever you think of his involvement in that business.

Yeah. The, the calculation he's making that's correct is. The way that business is currently constituted is simply not set up to go scale to the moon and those kind of things. Instead, it's like you just have to either accept that it's this business or fundamentally change something else about it. To, to move it.

Yeah. But you can't pretend you can't let it be a low LTV customer acquisition business and then expect it to get to a hundred million dollars. Like,

[00:32:02] Taylor Holiday: I don't think you can expect it to sit at eight figures and just stand there and protect it. I think it's dead.

[00:32:05] Andrew Faris: Yeah, that's possible.

[00:32:07] Taylor Holiday: Because, because the, the dis the difference is, is that in that environment, if there's somebody who sells a similar product who's willing to take less margin.

You just get competed down and there's no barrier to entry to making the product. Yeah,

[00:32:18] Andrew Faris: it's the kalo problem, right? Exactly. Yeah.

[00:32:20] Taylor Holiday: So it's like you, we could not have said, oh, you know what we do wanna do with kalo, keep it a nice $10 million business. Yeah. It would've all been competed down to nothing. We would've made no money on silicone wedding rings.

Yeah. So that's the challenge. You had

[00:32:31] Andrew Faris: to do something else in the business to expand it or something. The only time

[00:32:33] Taylor Holiday: you see this where you see these businesses that are static, like I like, is an example where. I, I met once met with this brand who sold like restaurant hoods. Okay. So think of it as like really complex manufacturing.

And they were like, there have been two businesses in this space for 30 years. Yeah, that's right. And we just compete with each other.

[00:32:49] Andrew Faris: Right.

[00:32:50] Taylor Holiday: And nobody else enters the space. There's no competition. It's hard to manufacture. There's market's not that big. Well this like

[00:32:55] Andrew Faris: Bobby, Bobby, Bobby, the, the, um Right.

There's

[00:32:57] Taylor Holiday: some moat to the protect the dynamics of the market that make it so that your profits don't get taken

[00:33:02] Andrew Faris: away. Yeah. Bobby, for Bobby it was regulation basically. That's right. It was so hard to get into the game for Baby Formula, where it was like, and that's exactly what they said. There were two, two brands in there for forever.

Yep. And they didn't like either of 'em. They thought they could do it, but it was like this huge, difficult thing to get into that. Yeah. So

[00:33:16] Taylor Holiday: in those spaces you could say like, oh, like even in that industry, when I met with them, they're like, look, we kind of almost have this mutual agreement. We don't bid on them, they don't bid on us.

We both take our market share and we all make a bunch of money every year. And that's kind of it. Yeah. You know, like, yeah. And so like, but it's so rare to have that actually be the market dynamic for your product category.

[00:33:33] Andrew Faris: Yeah. That's what I mean. That's that's no longer even real competition. That's what it's called.

A a duopoly. Yeah. Well, it's that, yeah. There's another word for a cartel, basically. Yeah, exactly. That's, that's the market where you, where you control price and you're like, exactly. So, hey, while we're on the subject CT, people say this about CTCA lot about the coaching tree. Yep. So why does CTC have such a great alumni list?

[00:33:54] Taylor Holiday: Well, I, I think we have a Twitter famous list. Is part of it? Is that like, I think that one of the things, so it's not real. Well, I think, I think there are a lot of talented people that have worked at CTC, if you like, held us up against Mute six or Wpromote or Power Digital and compared our alumni and what their actual job listings were.

Now, I don't know. I don't, yeah, I guess that's right. Yeah. I don't really know. It's not like. The mlb where we can be like there. Well, that's a,

[00:34:16] Andrew Faris: that's a fair answer to the question. The answer to the question might be, you invested a lot in Twitter, so it looks that way.

[00:34:20] Taylor Holiday: Exactly. I think that's part of it. Is that what people realized was that the way to get reputation, they watched me get reputation and so they all went like, oh, this is how you become known.

And so a bunch of people replicated that. So I think if you go down the list, the people who, when they refer to that list, they don't actually refer to the people who I think maybe are the most talented necessarily. They've play, they, they make that list the most famous people. Yeah. It's like you and Nick and you know, like, so I think not

[00:34:45] Andrew Faris: the most talented people.

No, I'm just saying. I'm kidding. I'm kidding. Relax.

[00:34:50] Taylor Holiday: Yeah, it's fine. But, but I, so I don't, I don't know. I think what we have is like ambitious people who have built a personal brand and reputation. There's been a number of those folks. But I, so, and I think we fostered a place where people learned a certain set of skills around like problem solving, ambition, and communication.

And like put those things to use in a way that probably disproportionately rises to the surface.

[00:35:11] Andrew Faris: Do you think. Here's my question about that. Do you think it's, that's primarily drafting, or do you think that's primarily development? What I mean is do you think you attracted the kinds of people who were drawn to that in the first place?

Or do you think that those kinds of problem solving skills, desire to be sort of famous, whatever the, do you think that those were developed at CTC? I think that obviously it's gonna be some of a both and, but like yeah,

[00:35:34] Taylor Holiday: I think you get a personal network effect that reflects your character and, and attributes primarily in your company.

And so I think you got a lot of people that like exhibited traits like me because those were the people that were attracted to me. Yes. And that wanted to be around me. And so what you get, and that's why I go like the Twitter thing. Like, like I just think that what you get is a bunch of people that were productive in similar ways that I'm productive.

Yeah.

And so you tend to, you tend to attract that. And so like you get, you end up with this like. Thing, which is your sphere. 'cause so much of your hiring early on is personal relationship, right? Yes. Yeah. Like it's degrees out from who you are. And so I think in a lot of ways, every company is going to reflect closely the person whose network was most overpopulating the place.

Yeah.

And so I think that's like a, a, a function of my community and people and like, the kinds of people that would want to be around us because

[00:36:25] Andrew Faris: people I think have asked the question 'cause they want to have the same thing. Like when, when people bring this up, they say like, well what is it about CTC that does that?

And essentially trying to ask the question like, can I create that too? Or something like

[00:36:37] Taylor Holiday: that. Well, so the thing I, the thing I would say is like, sort of like dating, which is like, be the kind of person you want to attract.

Yeah.

Right? So it's like, if you wanna be around smart people who lead well and are in great shape, then like, be that.

Yeah. And you'll attract that. You know? And so I think in some ways I, like, I don't, this may be sounding narcissistic. I don't know. I'm trying to make it sound less that like I did some thought. Well, I, I'll do that for you. It was like, oh, these are this, this is the community of people we had. It was like I had a good community of people that were smart and capable and whatever.

[00:37:06] Andrew Faris: So you are magnetic. Yeah. And part of that is literally algorithmic. Yeah. Right, right. You, you've created content that generated a following that made people interested. Yeah. Some of that is because of the things that we talked about, which is your argumentative Yes. And that that's sneaky magnetic. Yes.

Because what it creates is, is interest and awareness. Yes.

[00:37:21] Taylor Holiday: And I get that a lot of times I get young, smart people that wanna argue with me. Yeah. That even in our company, I notice that. Yeah. It's like almost like you wanna come spar in the arena and find out, do I have it? You know, like, and so there's, there's an element of that that I think, especially now as I've gotten a little older, I've noticed that like, I get young, smart people that it's like, I gotta go see, you know, see if I can hack it, you know?

So I, I think there is, there is a piece of that for sure.

[00:37:42] Andrew Faris: I I think that's, yeah, I mean that's part of it is it attracts sort of those kinds of people. But, but also, like I said, literally that creates algorithmic reach, right? Like when you, when you argue. So, so there's that, but then. I, I always say like, I think the most underrated thing about you is that is that you are nicer than people think.

Yeah. Like, and I think

[00:38:01] Taylor Holiday: high character and integrity. I think one I agree I look about on the group of people is that we just have a bunch of good humans. They're good people. I agree. They love their wives. They're good parents. They like are honest and I think our, our, our network, like even, you know, they old Aaron Adorn do walking in and going, who are all these people?

Yes. Like, and, and what it is is it's that it's there's high levels of character Yeah. That have always been around.

[00:38:18] Andrew Faris: And that's because of you. Also, that's magnetic too, that people get around that they realize, you know, oh, there's something here about the, the. Flavor of the place, right? That is not the same as when you think of like Wall Street or something where it's like a bunch of argumentative, opinionated people, but they're all just at each other's throats.

That's like my impression of it, you know? Right.

[00:38:36] Taylor Holiday: Like, you never, like, we're never out at night and all of a sudden someone's passing around cocaine. Like, and you end up in those kinds of circumstances, actually. And

[00:38:42] Andrew Faris: also they're not all undercutting each other and trying to take each other's legs out.

[00:38:44] Taylor Holiday: That's right. And so I think what, what, what you all of a sudden you go like, oh, I'd like to be a part of this. This is like uplifting these people, uplift each other in a way that, so I, I do think that a lot of that is a byproduct. And, and

[00:38:54] Andrew Faris: yeah, it's like, and that's

[00:38:55] Taylor Holiday: not just me, it's Josh, it's Ian, it's Jordan.

Totally. Even like, they're, they're all that kind of personality. Totally. That early on, like. Jordan especially is like very charismatic. Yeah. Right. Where people want to be around him.

Yeah.

And so I think there was a lot of that that like attracted other people. And I think you're like that. I think Shire's like that.

Yeah. Yeah. There's just a bunch of people that I think are gonna go on and replicate that because they are that kind of person themselves.

[00:39:16] Andrew Faris: It's like the parenting thing, you know, that I've thought about a lot that it's like so much of what happens with your kids is caught not taught. That's right. You know, and it's like you can, it was is like the most terrifying thing about parenting to me in the one respect.

'cause it's like, oh my this. Well maybe that's the

[00:39:29] Taylor Holiday: perfect metaphor for leadership. Yeah. Is that like you can design whatever system and recruiting process and hiring flow you want, but you're gonna like basically make people like you. Yeah. Yeah. And so maybe the most work you can do is figure out Yeah.

[00:39:40] Andrew Faris: Well there's an old professor who I liked a lot who actually. Like whose content I, I never took him. But anyway, he would say after a lot of years of teaching college students the thing he sort of came to realize that most people won't remember almost anything you say, but they'll remember what you're excited about.

Yeah, that's right. So, so like, they'll, they'll maintain that. I think that's, that's right too. So, yeah. I think that's that's good there. I think, I think that's, that's enough about why that's worked well. But actually one, one last question about, do we have anybody who's like LinkedIn famous?

I'm trying to think about how much this is the Twitter effect.

[00:40:09] Taylor Holiday: Nick.

[00:40:10] Andrew Faris: Nick. Yeah. But Nick, yeah. Yeah. But

[00:40:12] Taylor Holiday: not in our, not really in our world. Yeah. It's so much is the Twitter thing. Yeah, it really is. Yeah. So, so that is, that's, but there's a whole, there's a separate conversation here about it getting looked in.

Famous. What is it?

[00:40:22] Andrew Faris: What's a separate conversation? Go. It's a random show. Talk about whatever you want. So

[00:40:25] Taylor Holiday: I, I think that if I could go back again, I might, you would've built on LinkedIn. Well, I even think right now I might go really hard. I think it might be more valuable. In our world.

Yeah.

Like I think Twitter is ego, but like I think LinkedIn might be the money.

Like I think, I think you're gonna get paid a lot more money if you have a large following on LinkedIn than you will if you have a large following on Twitter.

[00:40:47] Andrew Faris: I paid a lot more money. In what respect?

[00:40:49] Taylor Holiday: B2B ad sponsorship. Okay. Yeah. Yeah. In our world. Yeah. Not if you're like, maybe So content

[00:40:54] Andrew Faris: creation you mean?

Yes. Yeah. I think that's probably true.

[00:40:57] Taylor Holiday: Like, and part of that is just like talking with Chase, who I think has done such an amazing job. Chase. Diamond. Yeah. Yeah. Have you ever talked to him about his business? No. He's like very quietly gone off into the world of like super LinkedIn influencer and is doing really, really well.

Good for him. And you talk to him about it and it's like one, it's like way less intensive too. It requires a very different kind of content workflow too, than Twitter, where Twitter I think requires so much of the like debating engagement and that kind of thing. Yeah. LinkedIn is not quite as much that.

But so, so I'm really fascinated by that arena. Yeah. It might, it might be a little late for it, but yeah, it's super interesting.

[00:41:28] Andrew Faris: Yeah. I think that. It could be. Right. Makes, makes sense. It's just hard for me to hear you say that you could have made money, more money somewhere else. Yeah, that's fair.

That's fair. Like, because you, because it worked out great for you. So Yeah, totally did. And bunch and a bunch of it might be less pod sponsor dollars, but I think you probably

[00:41:43] Taylor Holiday: That's fair. That's fair. And, and the thing maybe what's making me think a lot about it is trying to replace myself right now, like on the content side and figuring out

[00:41:50] Andrew Faris: where to do that,

[00:41:51] Taylor Holiday: where to do that.

And I think Twitter's, I think that's

[00:41:53] Andrew Faris: very interesting. Yeah, I think that's like, I would bet if I was you and I was making that bet right now, top of my head without thinking too hard about it, I would make those bets on YouTube and LinkedIn. Yeah, exactly. I would not, I would not make those bets on Twitter

[00:42:04] Taylor Holiday: because what you have to, the other thing about Twitter is that like I've given an unhealthy amount of my time and mind share to it that like you really, 'cause the thing about it is that it's so.

Time agnostic. Meaning it, it's like whenever the conversation happens is when it happens. Yeah. And that would be sometimes a random Sunday afternoon that I said something and all of a sudden it popped off and now I'm four hours of engaging in the hamster wheel that came. That sort of ask that of an employee is also really hard.

Yeah. Because it's so, it's so, and you probably

[00:42:30] Andrew Faris: kind of have to like it as part of it. Exactly. You know, you do. And it's, it's like, it's like it's part of the reason that I've stayed on X and continue to engage there is 'cause it's fun. Yes. I like it. Exactly. And, and I, and also I like the people there.

[00:42:39] Both: Yeah.

And if you don't have that, there's,

[00:42:41] Andrew Faris: there's an element that I think is really awesome about it, which is that like, like I always try to explain this to some of other friends, like, don't if people root for each other in this way, that's, that, that is sort of, under and around the conversation. So that like, when people are also arguing with each other, it's not just like when people talk, oh, Twitter's the worst, or whatever.

It's Right. They think about

[00:43:00] Taylor Holiday: conversations about Israel and Palestine. Exactly. It's just not like that. It's not that

[00:43:03] Andrew Faris: it's not, and people are actually really excited. I, I just remember like when you sold the, the. When CTC had its transaction. Right. It was like

[00:43:10] Taylor Holiday: how much positive. Yeah.

[00:43:11] Andrew Faris: Or when I think about Bill Alessandro, when his thing, it's like people, that's the collective balance sheet aspect.

It was like, people are like, that's a win for all of us. And we're excited. You know, we've been around that person and most, yeah. Most people I like, so, okay. Growth is the CEO's job. Yeah. Yeah. Okay. Is your phrase, I really like this phrase. Okay. I'm not disagreeing with it.

[00:43:29] Taylor Holiday: You could if you want to. Don't, we've better podcast.

I

[00:43:32] Andrew Faris: don't. So you kind of do, you kind of do. I don't, I think, I think it's possible that it it removes some responsibility from some other people Yep. To do some things that are good for businesses. So, so growth is the CEO's job is a phrase of yours that you've been using a lot. So before I ask you the, my, my one question about it, what do you mean by that?

[00:43:51] Taylor Holiday: That when I think about growth, the question is what are you growing? And I think what people mean is revenue or profit growth and, and in particular profit growth. And so if I think about profit growth specifically requires. Two types of inputs. It requires revenue creation, but it also is completely dependent on controlling the cost including the opex, including the marginal value of every unit you sell.

Those things, generally marketers have no control over. So, in particular, if you mean profit growth, it is fundamentally true that the only person that has oversight of both sides of the p and l is the CEO. If you mean revenue growth, which I think some people might, I also contend that how much revenue I can create is completely dependent on how much inventory I have, which is a decision that most marketers don't make.

So I, I just, I, I think that this is a much more cohesive effort than people would like to represent by calling one person the head of growth, who's like a, a, a sub position to the CMO and lateral to like four other people responsible for the inputs.

[00:44:59] Andrew Faris: So I think that is. That last part is the reason that, it's an interesting question because everything you said in the beginning of that answer is sort of obviously true.

Yeah. You know, but it's, it's not that interesting, you know, it's like, of course the, somebody else has to be in charge of how much inventory you can buy. But I think you mean the phrase more pejoratively than that? You mean it you mean you're, you have a, you have a, a, a, a, an interlocutor in your head.

When you say growth is CEO's job, you mean growth is a CEO's job as opposed to this person's job who everybody else thinks is this person's job. That's right. And you use the phrase head of growth a second ago. Yes. So say more about that. Which is like, in particular,

[00:45:36] Taylor Holiday: I think that what got created in our industry is we took a phrase which was very common in the world.

Digital marketing manager, whose job was to allocate the media budget and generate a return. And we took, we wiped that role away and we called it growth because the primary lever of growth inside of a business was paid media. And so it started by just swapping those titles to make them sound cooler and pay people more money.

Now what happened was people, when people took that job, they actually accepted a level of responsibility that they couldn't deliver on. Yeah. And so it became a like a, just a. You'd hear about all the time people going, it's so hard to hire for this is impossible. Or there was like massive turnover in the role.

I watched a bunch of people leave CTC to go accept these roles Yeah. And get wiped out very quickly. Yeah. Right. And it's because you're accepting an outcome that you don't have authority over. Yeah. And, and so what happens in that case and when that term gets encapsulated into one person, it's the same reason I hate the phrase chief brand officer, I don't like the idea that these collective efforts are the responsibility of a single individual that like, I think is very dangerous and makes it really hard to actually deliver that thing.

You

[00:46:39] Andrew Faris: mean like a profit engineer?

[00:46:41] Taylor Holiday: Profit engineer. Okay. But they're engineers job, like just all like a whole bunch of different things combined into one person's job. What's the phrase? Engineer me. What does it mean?

[00:46:50] Andrew Faris: I dunno. Somebody makes something.

[00:46:51] Taylor Holiday: Yeah, yeah. Oh, exactly. Who builder operates a system.

[00:46:53] Andrew Faris: Yeah. Yeah, sure. Yeah.

[00:46:54] Taylor Holiday: So our job, and in fact very clearly stated, is not an expectation that that number goes up. So like, I act, the reason why I wanna stop being called a growth agency Yeah. Is 'cause I don't actually think that we have the capacity all the time Yeah. To do that.

[00:47:10] Andrew Faris: You're saying, you're saying somebody's hiring you for a job.

You got for they, they're trying to get you to make a promise that you don't feel comfortable making.

[00:47:16] Taylor Holiday: That's right. And, and so what I want us to sell as a system

[00:47:19] Andrew Faris: Yeah. And

[00:47:20] Taylor Holiday: the outcome of the system is dependent on all of the inputs to the system.

Yeah.

Which I don't control. If you make bad product at a bad margin and you had a production, like we're dealing with this with a customer right now where they are so tariff affected that they've now raised their product to a price that nobody wants it.

Yeah.

And I can't UGC this problem will. That's right. Yeah. Like, I don't know, I don't know how else to make it such that there is demand for your thing. And if you want to keep whacking the meta hammer, okay, I will do this with you till we both die.

[00:47:52] Andrew Faris: Yeah,

[00:47:52] Taylor Holiday: fine. But I just look at it and I go, this is, this is not gonna work.

Not gonna work. And

[00:47:56] Andrew Faris: so this is the thing I like a lot about your phrase, and this is why it's not a true disagreement because. As I've watched different brands, like what I, my sort of realization recently is just that like expectation setting for what your company is capable of given its current state.

Yeah. And then the way to manipulate the company if you, if you wanna change the expectations, you have to manipulate the company in different ways. Yes. This is where like I I think what you're saying is right, which is like ultimately the CEO has to make that decision and, and the, the phrase is good and this is where like, you know, I try wherever I can to make content about all kinds of other things besides ads.

The really fascinating thing is that ads wins all always, and it's because somebody, I think is, it's also why, like, I, I'm starting to think about this idea that like we would all say the idea that you should get rich quick or that you could get rich quick is almost certainly a lie.

[00:48:44] Both: Yep.

[00:48:45] Andrew Faris: You know, anytime somebody's selling you that they're selling you something that you probably shouldn't buy a priori, you should have a baseline.

Your prior should be, that's probably wrong. Yep. Right. And like, and so, and so there's something about that that I think is, is super right about what you're saying. I think the the, and I and I, I don't wanna like go too fast past that towards a potential disagreement. 'cause I, I think it's really important.

Yep. Like, and so this is where I, you know, try to make content about like, here's how to hammer your supply chain and here's this, here's how this person capitalized differently. Or here's how this person thought about product development and pricing and, you know, all of these things that are these elements that are way outside the growth agency's Yep.

Concerns.

[00:49:25] Taylor Holiday: But you think you can make things grow.

[00:49:27] Andrew Faris: Well, I, I don't know. I mean, this is the counter argument to my bed about creative, but I, I, there's another group of thinkers I see in our space mm-hmm. Who just hammer ads

[00:49:41] Taylor Holiday: CEOs.

[00:49:42] Andrew Faris: No.

[00:49:43] Taylor Holiday: Oh yeah. The person that you like to reference in this story, to be very clear.

Oh, I guess, I guess that's, he's the CE Well, Zach, you Yes.

[00:49:50] Andrew Faris: Yeah. I think that's probably, I guess that's true. He is a ceo. O it's

[00:49:53] Taylor Holiday: not sort of true. It's definitively true.

[00:49:55] Andrew Faris: He is, he is a CEO. Zach. Zach stuck, I think is really good at this. Jordan I think is really good at this. I think he's a CEO as well, I'm not really sure about is relationship, but his business, and I actually don't know.

I mean, I don't see the p and l, so this could just be wrong. Right, right. Like I, but my, but, but I also see a bunch of other people who have seemed to have done a really good job of this somewhere in this ecosystem. And in fact, it gets sort of something you have mentioned before, which is like Alex Oz's point about just sort of number of actions against the thing.

Yep. And, and this is like the sort of like make more ads idea and some of that kinda stuff. So I, I, I think there's, and I'm, I'm, I'm undecided about this point. Okay. So I'm, I'm trying to say this with some hesitation, but there's this part of me that's like. Is it just a lie if, if people are being believing a lie or believing a thing that meta ads will make them rich fast, or something like that, right?

That's like get rich quick promise. Right? Is it just a lie that better creative sells more products to people? You know what I mean? Like that you can actually maintain CAC and scale more. Do you think that's just wrong? I think should everybody quit doing that?

[00:50:56] Taylor Holiday: So it goes back to the like genetic attribute versus outcome thing.

So let's take Driveline, one of our favorite training facilities in the world.

[00:51:03] Andrew Faris: Favorite companies in the world. Yeah. People we love.

[00:51:05] Taylor Holiday: If you go to drive one mm-hmm. And get the best training in the world, I have an answer to this question. Go ahead. Your upper bound of outcome after training there would be what?

[00:51:14] Andrew Faris: So I mo capped when I was there, I threw in my underwear. I could pull the video for that. I have it not gonna do that. 72.6 at age 38. That was my fastball velocity. So let's say you spent the next year. Well, so I asked them exactly this question precisely to assess the thing that you wanted. Yeah.

What I said was, I, I think I was age 38 when I did it. I'm 41 now. I said if I, if I trained your program exactly as you did it, what do you think you could get me to Velocity wise, right. And the first answer I got was they thought I could touch 90.

[00:51:45] Both: Yeah.

[00:51:45] Andrew Faris: Which is, which was shocking to me. Yeah. I was like, whoa, I gotta do this.

And then a future answer said, mm. Maybe low eighties, if it goes great. Mid eighties. Yeah. Right. I'm old. Right? Like athletic. It would make you

[00:51:56] Taylor Holiday: great in the men's league on a Sunday. I'd be amazing. But would not get you to the big ones. It

[00:52:00] Andrew Faris: would not.

[00:52:00] Taylor Holiday: So I think that my, the point is that the underlying genetic attributes represent the ceiling potential.

Did

[00:52:07] Andrew Faris: you notice that I kept the 70, the 0.6 in there, because I want every half a mile an hour of velocity for sure. So the underlying, underlying genetic

[00:52:14] Taylor Holiday: attributes of the thing represent the ceiling of the potential t. So does making a lot of creative for some brands unlock massive scale. Yes. Because they have amazing LTV and great gross margin and they came up with a novel solution in the world, like when we created Kalo Rings and it didn't exist.

Yeah. And the margin was amazing. Like, it, like was our ad creative really that amazing? No, we don't, it was not reflect on it. But if we had produced 10 times the amount creative, could we have gone further? Probably if we were smarter, we could've just gone further. We didn't even need to do all that. So I just think that the answer of the impact of the tactic is relative to so many other inputs that matter.

A great lesson I'm learning in this is like I, so I'm trying all this time for youth coaching, right? Like, and so I coach like 11 year olds. Okay, well do you know what's happening to 11 year olds?

[00:52:55] Andrew Faris: I don't.

[00:52:55] Taylor Holiday: Boys. What happens around that time?

[00:52:56] Andrew Faris: Oh, they start to stink and they start to grow, which is called puberty.

[00:52:59] Taylor Holiday: So I have watched, so we use blast motion. I track these kids bat speeds.

[00:53:04] Andrew Faris: Mm-hmm.

[00:53:04] Taylor Holiday: And we do all the driveline drills and we train them. And I watched some kids make progress. I have this one kid right now. That when I started with him on my team last year, he was like mid-range. He could probably swing the bat like 41, 42 miles an hour.

He can now swing at like 58, almost 60, and he's at the top. Geez. And you know what happened? He w he started getting bigger. The drill didn't, like the drill was great and certainly helped and like contributes to some Yeah. Realization of the value, but he's just gotten big. Yeah. And strong.

[00:53:31] Both: Yeah.

[00:53:31] Taylor Holiday: And so I think about it sort of like that tactics are, they're they're bound maximizers Yeah.

Is what I would call them. But the bound, like what is the bound is defined by other inputs. Yeah.

[00:53:43] Andrew Faris: Yeah. I think that's that. I think that seems like a reasonable analogy. What about what about your example that you've used a lot of times of loop earplugs. Yeah. Where you, I think you have talked about them as if they're like the greatest advertisers in the world and they've built a system that's like amazing.

I think they, yeah. Like they're bound maximizers. They, they, they took, but that, but the thing is that's a pretty big bound.

[00:54:02] Taylor Holiday: It is. It is. It's a really big value. And that's without question and that's without, how good is the underlying attributes of the product? I think one of the things that maybe I underestimate is they like, it's like kalo in that massive gross margin.

Yeah.

So you're talking like, I thought it wasn't that great. You said No, no, no. Like not in terms of pure dollars, but in percentage you're talking like 90%. Okay. I didn't realize that. I thought that was lower percentage of margin. Terrible. LTV. Yeah. But all of a sudden, and this is maybe what now? This is a question of whether you can create this or whether this was like latent in the market, which is all these use cases.

Yeah. So Yeah, yeah, yeah. They, they started as like rave going TIC people. Yeah. But they found like tam, but then you went like, oh, parents of kids that are noise sensitive, motorcyclists, all these things. Now were those like. What's they call it like problem unaware or like problem aware solution, unaware markets that they unlocked, which is what great advertising should do.

Yes. But does every product have the potential to do that? No. Like, I don't think so. Now your job should be to make sure you explore as many potential avenues as possible. And I think that's what bound maximizing is about is like how many use cases are there for the silicone wedding ring? We came up with a lot of 'em, firefighters, police officers, military people who work as chefs, like we musicians.

We learned drummers. I didn't know that when we started. Like

yeah.

But then all of a sudden we discovered like, oh, you playing the drums with your ring sucks. Like, so you find these things that actually now the question of like, was that 'cause I didn't know that Tam existed or was it 'cause the Tam truly didn't exist.

Yeah. Well I think it's, eh, it's a little philosophical. Yeah. But probably that I didn't know it existed. Yeah, yeah, yeah. The problem was there.

[00:55:29] Andrew Faris: We have this framework I've talked about a lot, right? Explore versus expand. Yeah. For our creative, the idea is everybody who has ever run a Facebook ads account understands that you.

You have this conversation, you open it up, you say, what ads are working? How do we make more like that? We call that expand. Okay. That's our idea. We're trying to get away. We, in fact, we are totally away from just change the hook or whatever, right? We're trying to think about how do we create net new ads while maintaining a message that we believe resonates with a certain audience?

To use the example you just used, if we were doing KLO for drummers, we would find, we would try to find a new way. I mean, that's a really hard one 'cause Kayla's such a simple product, but we, we would try to find a new way to say the same thing or find a different age drummer or something like that, whatever, to, to kind of create diversity, while at the same time maintaining a message and the theory, the hypothesis underneath that is the notion.

That you probably didn't make your best drummer ad on your first shot, and so you could probably reach further into whatever that relative tam is that you just described, right? Drummers and kalo rings by making better ads for those people. Okay. That's the idea. And we put a fair amount of effort into that and we sort of built our creative co-writer in, you know, AI tool in, into being able to do that first.

But what you just described as something different than that, which we would put in our explore bucket, which is essentially go find a new message for a new audience that still communicates, that still represents represents the overlap of customer desire and product value, right? That's think about our

[00:56:45] Taylor Holiday: experience with Raun is another great example.

Yes,

[00:56:47] Andrew Faris: absolutely. There's, there's a whole bunch of different people who are using it for all kinds of reasons from somebody who's sitting on the couch and just wants a massage to like a CrossFit athlete to a baseball player or whatever, right? So, okay, so, so you go find new ones of these and the more your product naturally lends to those, et cetera, we would put that in the explore bucket and say, this is finding new messages.

If you go to health and wellness products, supplements or something like that, it might be your gut health product really helps your skin, hair and nails over here. Over here. It also helps your brain function or something like that. Right? Okay. Those are really different outcomes and and so you can try to speak to both and open up new audiences.

So, so in the story you just gave Yep. About Loop, what they figured out was there were actually a bunch of little mini tams within their big tams, right? Here's the, here's the reason I say all that. I am starting to think that the core effort, especially in light of what Meta Ads is today, and what it's great at today, is that basically the moment you hit a winner within a certain tam, you should move on.

Like, I'm kind of wondering if we should be like 95% explore, like essentially the way to, to unlock the most scale in an account is to overwhelmingly say we found meta is so good at reaching the right person. That if you have any ad that has reached some level of scale, you're not gonna beat it. It's like, it's good the meta's, it's good enough, the, like, the, the, the, the sort of distinct attributes of those ads are too small in their differences.

And so what you ought to do instead is go to the next and go to the next one. I'm not totally convinced of that yet, but it's, it's an idea I'm starting to play with. So

[00:58:11] Taylor Holiday: this, this is, to me, when I think about like redesign, one of the like pieces of content I have a dream of creating today is like the redesign of the modern marketing org.

And like doing a bunch of content on this because, and I think there's an idea here. Is right that I watch brands struggle with. So I'll give you an example of two different cases of the way they did this idea and one that worked and one that didn't. So we worked with Travis Matthew for a long time, obviously historically a men's polo business that was like the primary business, and it's called Travis Matthew.

It's named after a man, right? And they wanted to expand into women's, okay. The way that they expanded into women's was same people, same budgets, same KPIs, launched the women's. Guess what happened? The second it was stock didn't work that well. They just took that budget, went back to the men's because there was no incentive to work through the problem for that group of people.

Interesting. Their job was to get the best result in the ad count. And people kept hammering on like, oh, what's your, like the monthly income? And yeah. And so you would just leave the new thing alone all the time because it was never gonna be the most efficient thing right away. Juxtaposed that with our friend Alejandro.

Mm-hmm. At moba. Mm-hmm. Who builds separate growth teams for each product line. Yeah. And says you don't get to use the men's team. Yeah. You're like a product manager. You have to solve women's genes. Yeah. That's. So you're fired. Funny if you don't solve women's. So I'm, I'm having this exact

[00:59:33] Andrew Faris: conversation with a client and there's a question of like resource allocation relative to size.

'cause we're so overwhelmed by exactly this problem. There's too many possibilities. Yes. And so we go all over the place and everybody's getting burned out and they're like, oh, we're, we're chasing down this funnel over here and this funnel, whatever it is. And so that's like the other possibility is that you say like you've got an internal product person.

Yep. Whose job is, and you basically just don't grow faster than you can produce those teams. That's right. So you just say like, each, each team does this. Then the creative is could do that. And this, this does go to growth as the CEO's job then because it becomes like, well

[01:00:01] Taylor Holiday: that's why I think it's a system design problem.

Yes. Exactly. Yeah. And so even in an explorer exploit team, like imagine you build that as your internal org, is that there's one group that's like, we've found a thing that's winning your job is to maximize. Yes. Now you guys over here don't talk about that ever. Your entire job is go explore new unlocks opportunities.

That would be an

[01:00:19] Andrew Faris: interesting way for us to organize our teams. Yeah,

[01:00:20] Taylor Holiday: exactly. So I think that these kinds of ideas Yeah. About system design are often an incentive. Design is another thing that I think about why growth happens is that I watch the behavior of every organization Yeah. Come down to the incentives designed by the people in it.

And so incentive design is again, a fundamentally CEO's job. It's like the behavior of everybody, including us as your partner, is a function of the financial incentive you've created for us. And so that's another big piece of what I think about c growth as the CEO's job, is that growth is an incentive problem.

The CEO usually just gets the set, the compensation methodology.

[01:00:49] Andrew Faris: What I see your mind doing there is the same thing it did with the profit system where it's like, or, or whatever that you guys use, you know, for it's like, which is like, you just go think through how the system creates the outcome you want.

What are all of the elements of the system's and now how do I keep designing system and tooling that's right to, to create this problem. This is how I think I'm gonna beat you on creative. Yeah. Is that, I'm just gonna think harder about it. Agree. And this is how I think you'll end up potentially beating me instead is that you will, you'll just be able to outsource the thought process.

But, so lemme give you Yeah, but my, my, my mentality is. I'm gonna think about creative, the way that you've thought about profit systems and where I'm sure there are things that you used to believe that you now think are wrong. That's right. But that you sort of get as many tests into the market as you can.

You keep learning from the data, and then you keep redesigning and re-engineering the system to, to do this. And you get down to, to brass tacks on everything you can. The example I always use with you guys is, is that you're, you are forecasting down to the level of campaign per day. Yep. That is, you know, in your creative demand model is another good example of this.

That is the kind of thing that I, I have in mind where it's like, can we do that with creative? Yeah. Can we actually say, okay, I mean, can we have a, a playbook for explore that is different than expand? We already have that, but like that goes down to every possible thing. What about category? What about, I mean, just like detail, detail, detail into oblivion basically.

I'll give you

[01:02:02] Taylor Holiday: an example of one of the evolution, the ones that I've come to believe that I think will be a way in which like this idea of like consolidating all the rules into one person. I think that there is almost always, always, always an incentive conflict between a channel specific media buyer and drug strategist for sure.

That you cannot actually design the right incentive to get them to behave according to it, where their behavior is actually impactful to the end goal and they know what to do every day. And I actually think that you have to give the controls of the channel upstream Yeah. In order to make it work. So that's like an example.

We have banged our head against the wall of media buyer incentives forever. Yeah. And, and so it's an example, the creative one I like. So if we could set the system thing aside, the head of growth, can we stop that one for a second? Talk about creative. Sure. How much time do we have?

[01:02:45] Andrew Faris: We have like just a few minutes.

I'm sweating. Yeah. Yeah. We, we should leave in a few minutes. The, I do have one last question that I wanna ask you too.

[01:02:51] Taylor Holiday: Okay. Okay. So let me do the it's, it is short. It'll, my last question will be short. Do creative and then I'll you question, I just saw this today, so. This kind of overlaps with ai. So I've been thinking a lot about like, so one of the challenges with our creative system is that like everything we're doing right now is about like helping people to answer questions about how much the efficiency expectations.

Yeah. But it's not enough around like net new value creation. Yeah. And so, Eric Seaford put out this tweet today of this study. He's so smart. He's super fascinating. Did you read it?

[01:03:16] Andrew Faris: I did not, but I just like him so much. Okay.

[01:03:18] Taylor Holiday: So it's a study out of Cornell where they tried to see if an LLM could be predictive about ad performance prior to its launch.

Okay. So they do a study and they did it against the, the, the variable I don't like about the study is that. The comp was to human declared intent. So they took 9,300 people and they showed them ads and they had them pick which one they thought was most impactful to them. So it's a survey response more than an actual transaction.

[01:03:50] Andrew Faris: Okay. They, that's a, that's a really big problem, but keep going. I

[01:03:52] Taylor Holiday: agree. Yeah. But, but, and then they tried to see if they could get the human or the LLM to predict what the humans would say.

Yeah.

And they did. Yeah. They were able to make the LLM predict which ads humans would respond to.

Yeah.

So I look at that and go like, well, what if you just changed, rather than the survey response, you changed conversions.

Yes. Could you actually create an intermediary between the testing process? 'cause one of the biggest conversations that happens is creative testing. Yeah. And the problem with it as a theory, what if you just

[01:04:18] Both: didn't

[01:04:19] Andrew Faris: need to?

[01:04:19] Taylor Holiday: What if you didn't need to spend money to find out? Yes. Right. So like the big debate, and you've even talked a lot about this content, is what is the right testing methodology?

Yeah. Right. And so there's this debate about how much money you need to spend in the structure and blah, blah, blah. And so the question is, what if the LLMs could actually analyze. Ads in the way that creative strategists pretend they can, which is creative strategists pretend like they can tell you which ads works.

They cannot. All of them are full of shit, including you if you ever say that. Yeah. But

[01:04:42] Andrew Faris: this is why we've never, we don't make that content. Right. Right. So,

[01:04:44] Taylor Holiday: so, but the question is, what if you could actually validate that you could have an LLM assess your creative prior to it and then recommend which to upload and not

[01:04:54] Andrew Faris: Yeah.

[01:04:54] Taylor Holiday: There's something really interesting about that has an idea. Well, this is

[01:04:57] Andrew Faris: essentially my manual bid theory, which is that like, it's, it's a little bit more expensive than what you're saying, but not a lot more expensive. 'cause the whole idea is that engagement metrics predict conversion metrics.

That's right. That's right. And that, that actually engagement metrics pile up really fast. That's right. Impress impression. Impression counts are, yeah. Right. We're do it on A-C-P-M-A thousand impressions, so you can get 403 second views for $12. So when your ad only spends 40 bucks, it's like, actually it has a lot of information about how it's

[01:05:20] Taylor Holiday: thousands and thousands of That's right.

[01:05:22] Andrew Faris: So, yeah. So. So, yeah, so I think there's a, there's a, a thing there where like, I do think engagement reliably does this at, at least at a probabilistic level. Okay. Here's my last question for you, and it actually relates exactly to the question CPMs and stuff like this. One of people, one of the things people like to say a lot is that Facebook ads used to be so easy.

Yeah. Yeah. And now it's really, really hard. I mean, I, I see that piece of content twice a week. Oh man. Now in, in the days of rising CPMs and everything else, do you think Facebook ads was ever easy? Do you think it's actually relationship? It's harder now than it was

[01:05:50] Taylor Holiday: the price and the ECR was better.

[01:05:53] Andrew Faris: So, so you think that it was more advantageous?

Yes. Do you think that brands in general are spending more or less now than they used to

[01:06:00] Taylor Holiday: as a, like, aggregate,

[01:06:02] Andrew Faris: Individual, the average brand? Oh gosh. Average is tough. 'cause there may be maybe some more, it's hard to answer that question. I,

[01:06:08] Taylor Holiday: I think what, what I,

[01:06:09] Andrew Faris: because my, my count, my counterpoint is the same.

I'll just tell you too, why are there so many more big businesses now that are spending more on Facebook time? Yeah, yeah, that's part of it for sure time. But I mean, they also seem to be spending more money on digital platforms and maybe it's because they push out the value creation and some of those kinds of things.

But I look, just to air my point here, I just think it's wrong. I just think the idea that, yeah, I just think the idea that it used to be so easy is like, I think

[01:06:30] Taylor Holiday: has gone down

[01:06:31] Andrew Faris: for sure. Yeah. But

[01:06:32] Taylor Holiday: I think that's the simplest measure.

[01:06:34] Andrew Faris: Yeah. Is it though, because doesn't that just mean people have also gotten better at the other parts of business opportunity selection and I think it, and supply chain optimization, we just need nothing about that stuff then.

[01:06:42] Taylor Holiday: I just think though that like the idea that everybody like just spends to their optimal CAC level is, is like sort of not, probably not optimal. True. Right. Well, and, and I think that if you gave everybody, if they could take a better efficiency, they would, also true. So I don't think that I, I just think, well, I, I think that every category You don't think that everybody, if you could get, take, get a better efficiency would take it.

No, I think

[01:07:04] Andrew Faris: they would spend more.

[01:07:05] Taylor Holiday: No, no. But like if they could spend more, add a better efficiency,

[01:07:09] Andrew Faris: then they would, you won't spend constant, would you take a better efficiency? You would, but that you wouldn't hold, spend constant, you would spend more money.

[01:07:14] Taylor Holiday: But in the event that that curve could move up to yes, you would take more efficiency, but then immediately

[01:07:21] Andrew Faris: you would turn around and spend more money.

That's the reason they're spending the money now.

[01:07:24] Taylor Holiday: No, but I don't, so I don't, I don't know one, I don't think that was true then. Yeah. I think that's because we were too dumb. Well, no, no, but I actually think that we overdid it and so now we're Right. Sizing that behavior. Yeah. That behavioral, yeah. Like where there, there was a theory about the network effect of a business and the value capture long term.

That's, it goes back to that like that's that we had at one point where like some crazy amount of spend was net never profitable. Yeah. Right. That's like, that's like, that's like a behavioral pattern of overdue. I also think this is where like meta is really nefarious in their incentive is incentivizing you to do this.

I, I think this whole narrative around CPM. R and reach is like, it's a psyop, it is a fundamental psyop.

[01:08:00] Andrew Faris: I don't get it. I don't get it at all.

[01:08:02] Taylor Holiday: And, and so I think that there's this, like, this obsession with net new customer visits who cares, is like a total psyop. That it's all about just getting you to spend more money on upper funnel events that are like less value.

Like it's the inventory constraint problem where all of a sudden when the good inventory goes bad, I have to sell you more Yeah. Of something. Yeah. So I have to come up with why you should spend on it. Yeah. And the incentive for that is just so strong. It's

[01:08:23] Andrew Faris: so strong.

[01:08:24] Taylor Holiday: Yeah. I think it's

[01:08:25] Andrew Faris: theoretically a problem for very, very large brands who actually need to do that.

But I think the vast majority of brands in our space are not in that

[01:08:32] Taylor Holiday: world. Well see The, so I'll, I have a brand right now, it's a nine figure brand that we have run a thousand incrementality studies. We just did a, an entire portfolio wide holdout and basically found that the return, the return of the portfolio in total was like a 0.6.

Okay.

So

the question about this though, and this is what I watch happen, is that if they were to respond to that data, what it would mean. Top line decline.

Yes.

That would take years to get back to being a growth story.

Yeah.

And this is what, actually, this is the trap that I think meta actually puts everyone in, is that they actually make it so that if you want to get unhooked from this heroin

[01:09:09] Andrew Faris: Yeah.

[01:09:10] Taylor Holiday: Your only goal is to go, your only reality is to go backwards.

[01:09:13] Andrew Faris: Yeah.

[01:09:13] Taylor Holiday: And nobody, nobody

[01:09:15] Andrew Faris: wants to go

[01:09:15] Taylor Holiday: backwards. Wants to go backwards. Yeah. And, and sometimes

[01:09:17] Andrew Faris: it's actually organizationally difficult too. That's

[01:09:19] Taylor Holiday: right. And so like, because you, well, you, you have to like, it would lay people off. Yeah.

[01:09:22] Andrew Faris: You, you end up with too much inventory on hand for a while.

There's like cash challenges. So instead what ends

[01:09:26] Taylor Holiday: up happening is you get this direction where it's like, well just. Spend it to like the best, just get another, just get another hit. Yeah. Like, and so you're like, well, that's a 0.6. And you're like, well, that's better than a 0.4. So spend on the 0.6 and you're like, oh my God, what are we doing?

Yeah, but you're like, you have to produce growth. You're literally producing 60 cents of growth for a dollar. Yeah. Yeah. And you're just like, oh, how did we get here? Yeah. Well you're, it's 'cause you're so far out there and you wanted to grow so fast and you're so far out and you've outpaced, you just have the wrong mechanism

[01:09:51] Andrew Faris: at that point to keep trying to grow.

That's right. It's part of it is like you, you're just trying to push the meta thing forever. When I hear that, it's like, no, you do still need to grow your business. Well met it's digital media generally. Yeah. Yeah. But you do still need to grow your business. But the point is, it's, it, it stops at that point being the next, the next most efficient use of your dollar.

But it's really hard for people to think outside that when they build their whole business on it. That's right. We have to go. Yeah. There's a Dodger game to go to and we have to clean up some things. So, thanks. This was fun.

[01:10:14] Taylor Holiday: Yeah. Hopefully you guys, hopefully the audio's not bad. I think it's though, we, we didn't unwrap any baseball packs.

Good as always. These are random episodes. We generally get good feedback. The comments are awesome. I love, there's nothing I, I don't know if you feel this way. There's nothing better in my heart than a YouTube comment. It's like the best signal as a creator. I tell, I'll you, I can possibly tell me.

[01:10:32] Andrew Faris: I was at a conference recently and a few people came up to me and said that I, I haven't done a conference for a while.

People came up to me and said like, Hey, your content's been really helpful to me. Yeah, it is. Like, yeah, we make money on this. It's great. There's all kinds of financial incentive and I'm not gonna pretend that's not true. That's why we do it. It feels great when people say that. That's some regular person who built a business and we helped them.

It's amazing. So anyway, so, so your feedback's really helpful 'cause we actually care. Yep. So, yep. Cool. Thanks.