Don’t be a cheapskate Founder

Nothing irks me more than someone who’s cheap.

And let me clarify; I’m NOT talking about negotiating the price of services or trying to get the best value for your money.

I’m talking Mr. Krabs level of cheap.

Not flushing the toilet when you poop because it saves water… kind of cheap.

Maybe that’s a bit of an extreme example.

Anyway,

The only thing a cheapskate cares about is who can complete the job at the lowest possible cost to the business.

Quality is always second or third in priority.

As a Founder or lead operator, you set the tone for your entire business. If you’re chief cheapskate, everyone under you will assume the same mindset. You build the DNA of your company.

Gary Vaynerchuck is the most notorious cheapo out there in my opinion. He’s intentional about it. He hires for positions at his marketing agency, Vayer Media, around  30% - 50% under market value. 

He does it because:

1. Gary Vaynerchuck is a well known personal brand in the business space. People want to work for him just because they watch his YouTube videos or social content.

2. He believes the ideal model for a marketing agency is to churn and burn ideas and concepts. The more people he hires, the more ideas and opportunities flow through his business on a quarterly basis.

So he hires employees on the cheap, the candidates eventually realize they’re severely underpaid, they leave or get fired, and the cycle continues.

(not to mention his office is in New York City, one of the highest cost of living areas in the USA)

This is one of the core reasons marketing agencies have a negative stigma.

A lot of agency owners are cheap. as. fuck. Common thread collective and Homestead media are great examples of this.

They follow the exact same model that Gary Vaynerchuck uses.

Because the Founders have a personal brand on the internet, they’re able to hire talent much cheaper than competition.

I don’t hold any ill will towards anyone mentioned within this email. But facts are facts.

Anyway… there are severe long-term consequences of being cheap.

You’ll never be as good as your competition.

Why?

Because if you genuinely care about scaling your business, you need Killers. A+ players. The kind of people who can 3x - 5x their output compared to a cheapo employee.

Are you going to have to pay more? Yes.

Are they going to demand more than just compensation? Likely.

Is it worth it? Not even a debate.

I’ve worked inside companies with each of the models shared above.

It’s a night and day difference when you can feel the “give a fuck” energy around you each day.

Not only does that one A+ team member have higher output in their role, but your other employees feed off their energy. There’s a new set standard. So you end up compounding productivity, and therefore value per dollar invested in salary.

For example… a Head of Growth generally demands $150k - $200k in the open market.

Gary Vaynerchuck would probably hire for somewhere in the $120k - $140k range.

An elite Founder or Operator that understands and believes in hiring top end talent will pay $250k - $350k + profit sharing and/or equity if they have to.

And that Head of Growth will usually have 3x - 5x the impact of the cheaper option.

So yeah, you pay more upfront. But you create a winning culture and you compound success.

Plus, it’s a hell of a lot more fun working with people who are really good at what they do.

Alright, nuff said.

Till next week,