Greg Isenberg: Turning 300k Followers into an 8 Figure HoldCo

Safwaan Kay (0:00)

Greg Isenberg used his 300,000 twist followers to start an agency.

Greg Isenberg (0:04)

We created a business case around what is the McKinsey for Community look like?

Safwaan Kay (0:09)

Now, his agency is a cash-flowing engine that allows him to incubate and invest in multiple businesses for his personal holding company. In this video, we cover how he uses audience to start an agency, the first thing you should do when you start a PhD, and how he works on so many different things without getting distracted.

Greg Isenberg (0:26)

If you're thinking about starting a personal holding company, the first thing that you need to figure out is what's your thesis. So for us, our thesis is community-based products outperform non-community-based products. We define community-based products as either the community itself is the product, or the community enhances the product. So we play in that world, and that's our thesis.

And then we structure three business units, the fund, the studio, where we incubate our own ideas, and the agency, which provides cash flow to some of the other business units. But what I've never really spoken about is we actually started off as just the studio. One of the opportunities that we saw in the product studio with this thesis, community-based products outperform non-community-based products, is that they're locked in a de facto agency for this space.

And we created like a business case around what is like the McKinsey for Community look like.

Safwaan Kay (1:22)

So what does McKinsey for these community-based products look like? What does that mean?

Greg Isenberg (1:27)

So we come into companies, mostly Fortune 500, but also high-gross startups. We work with some of the largest companies in the world.

We come in and they have communities and they're all looking to supercharge their community. So imagine like your Fortnite. So Epic Games was one of our clients and they're trying to think about how can we supercharge our communities on Fortnite? How do we make it feel more like a social experience? How do we increase retention? How do we increase engagement?

And we're a product design firm that comes up with big ideas to help drive that.

Safwaan Kay (2:03)

Why did you decide to do a product design agency? We've been talking a little bit about what types of things you could do to generate cash flow. So you could have an agency, you could perhaps buy a SaaS company or even incubate your own. And if you chose to sell this SaaS company later on, it sells for higher multiples. Why did you choose to go the agency routes versus something else? That provided cash flow.

Greg Isenberg (2:26)

The two biggest issues with agencies are process and sales. So sales because you're always hunting for business if you're running an agency. But we had that sorted because of me as a creator basically.

And process because how do you deliver projects on time and on budget? One of the reasons why when you look at agency EBITDA numbers or percentages, while you see a lot of them only make 5 to 15% or even a lot of them lose money is because they're either fighting for business or they have idle workers on the process side. We ended up starting our own agency versus buying an agency because I had had experience running agencies before. So I knew the process piece and the sales piece was because again, I was a creator.

SPEAKER_3 (3:21)

How important do you think it is to start with a cashflow generating business for your personal holding company?

Greg Isenberg (3:28)

I think it's really important because when we started this holding company, I'd got out and looked to raise 5 to 10 million dollars and I had two offers, one for 5 and one for 10, from great VCs too, and I was this close to taking it.

And I didn't take it because my previous company had been acquired by WeWork and I had seen what happens when you raise venture capital and it goes wrong. I was turned off by venture capital and for me at least, I was like, I don't want to think about venture capital on the holding company level, on the top co-level. Granted, I think we can incubate stuff, put it outside of the business, spin it out and then raise venture. That's something separate, but at the hold co-level, I was like, I don't want to raise venture capital. Because of that, because of I was allergic to venture capital, basically, it was imperative for me. I was like, I need the oxygen.

SPEAKER_3 (4:36)

What are you using the cash for today?

Greg Isenberg (4:39)

We're using the cash to invest and acquire other community-based businesses.