Growth Hacking Can Be the Difference Between Life and Death

Have you ever come across a beloved brand, maybe one that you've used for years, and wondered how they aren't taking advantage of their great reputation? They seem to be falling down a well of mediocrity, and you can't help but feel they are missing out on huge opportunities. If only someone would come in and turn things around!

As it turns out, there is a term for this process: growth hacking. This is the process of quickly scaling a company, usually by leveraging new marketing avenues, technology, or social media. In the case of a distressed company, growth hacking can be the difference between life and death.

Now, it certainly isn't going to work for everything. I know I've watched plenty of brands pour money into new avenues to try and save themselves, only to fail miserably. But it can work in the right situation.

Back at the end of 2021, I had Zac Litwack on the Success Story podcast. He knows everything there is to know about acquiring and scaling a distressed asset. 

His venture firm, Savage Ventures, had invested in a small side-gig blog called OutKick and within a year, built it up to seven-figure-per-month revenue and sold it to Fox for a massive exit. Remember the old American Songwriter magazines? Yeah, they acquired and saved that brand too, taking it into the digital age. 

My conversation with Zac was illuminating because it wasn't an investment strategy I'd ever really given much thought to. 

For people who might find this kind of thing interesting, he was open with how he targets assets and the strategies you need to follow to take something to the next level. 

You don’t become a success in this kind of industry overnight. As Zac would tell it, you need to fail first. 

“I did that startup, I did another startup, another startup, and another startup. I failed miserably.”

That was a true education for Zac on what not to do but it also gave him an idea of how many startups were out there having trouble. It honed his skills as a digital marketer, something that he hadn’t worked on much during the early part of his career spent in the music industry. 

By the time he had finally found some success, building a healthcare platform to a few million dollars in revenue, he was thirsty for something else. He didn’t want to keep selling a single product. He wanted to be able to work on different things all the time - thus, Savage Ventures.

One of the questions I needed an answer to was how he decides which companies to target. Is there a Yellowpages for distressed assets? While a big part of his success is his neverending work ethic, he was willing to share some tips for people who want to follow in his footsteps.

Zac readily admitted that a huge factor in his early success was timing. Finding a business at the right time is crucial, and having the foresight to know the opportunity is coming. 

"You need timing. You can be the best market and you can have the best f---ing product, but you need timing."

This was never more true than with OutKick. Because Clay Travis, the creator of the brand, was already producing conservative-leaning content that blended sports with politics, 2020 couldn't have been a more perfect opportunity to scale it up. 

There was this audience that was just waiting for a brand like OutKick to come along and speak to them, and Zac pumped in the money to make it available to them. 

Everything started for Zac with American Songwriter, and it wasn't something that he chased for years. The timing was right for the original owner to sell, and he wasn't looking for a substantial investment. 

"Okay this is a match with our skillsets, and this company is owned by an older gentleman that was ready to retire. His number was pretty low - like he didn't want that much money to retire." 

You might be thinking the same thing I was - okay, but finding someone who wants to retire and give you a brand must be pretty difficult to find. Zac explained another example though, Total Frat Move. 

This wasn't a legacy company that had been around forever, but just like Zac was tired of working in the healthcare space, the owners of TFM were tired too. The company had been declining a bit, and the owners had moved onto a different stage in their lives. 

The point he was trying to make here is that you don't chase down a company that is going to cost you a lot to acquire. Just find these opportunities where people are maybe a little bit burned out, or they're ready to move on to something else. It'll make the negotiation process a whole lot easier, and limit your investment risk. 

The other practical tip that Zac keyed in on was how little of his money he would have to risk. Because he felt so strongly that he could get these businesses moving in the right direction (and quickly), he would only put in as much money as he needed to get the business to where it could start generating revenue. 

"We agreed to invest up to X dollars, but scaled the company so quickly that we ended up investing only like 30 grand or something. The company was so profitable out of the gate that we didn't need to invest very much," he explained, talking about OutKick. 

Zac's strategy is all about de-risking the investment, and this is a huge part of how he's able to do that. If you're only putting in as much money as you need to get the business to a point where it can start generating revenue, your downside is limited. 

Total Frat Move wasn't innovating anymore but there was a loyal base of people who were still following them and consuming their content. This is what Zac calls "brand affinity." 

In other words, find a company with passionate customers, but poor management. These are the companies that Zac believes have the most potential because they already have a customer base that is invested in the brand. They just need someone to come in and take it to the next level. 

"You're doing a holistic review of their monetization options, different channels, and then you're finding new ways or new avenues to explore."

That's how he approaches any potential target. Is there a new avenue that they have yet to explore? Are there new ways to monetize their existing customer base? 

To him it is simple, and the way he explained it to me, it does sound easy. "I always develop these high-level monetization hypotheses before I drill into the channels. So for Total Frat Move - we could probably do merch because we've got millions of very engaged Instagram followers. The previous owners never did merch."

The point is to have a playbook for growth before you even approach the target. You need to know what you're going to do with the asset before you acquire it so that your risk is minimized. 

So what happens next? You've found an asset that you believe in, you've put in the work to acquire it, and now it's time to grow the company. 

He had a few steps to follow here too. 

If there's one thing that Zac wanted listeners to take away from our interview, it was to go out and test a lot of different things. You won't have any idea what is going to work until you start putting it in front of customers. 

"Just go out and start testing. You've literally wasted months writing the strategy doc but you don't know what your strategy needs to be. You don't know that until you go to market, start running experiments and start getting some feedback. That data is going to inform your strategy."

That's how he ended up finding out about the sports betting integration for OutKick, the lever that ended up exploding their revenue. If he hadn't been willing to put something in front of his audience and see what worked, he never would have known. 

Once you find something that does resonate with your audience, it's time to lean in and push your chips to the middle.

"You test all of these different things and you find one that is clearly working. Quadruple it. 10x down on it. Literally, just focus on that and scale it."

It can be tempting to try and do a million different things at once, especially if they are all promising. But when you're trying to limit your risk and exit quickly, it's best to focus on what is already working. 

When I asked if this was something someone could do as a side hustle - invest in distressed companies and help them grow, Zac almost laughed. No, he says, it's a full-time gig. When I followed up by asking what kind of skills would someone need, he again gave me a few key points.

The biggest thing you need to be successful in this space is a deep understanding of digital marketing. If you can't drive traffic and convert it into paying customers, you're not going to be able to move the needle on a company's growth. It doesn't necessarily need to be you, but someone in the senior partnership needs to be a rockstar marketer that can sell anything to anyone. 

If you're a marketer, then find a partner with a strong network and a knack for finding good deals. This is the person who will be your eyes and ears, looking for companies that are in distress and might be ripe for acquisition. 

He even shouted out another company, MicroAcquire, which is a marketplace for buying and selling small companies. If you're looking to get into this space, that's a good place to start your search. 

There’s a lot more to dissect in my conversation with Zac, including things like how to balance being an operator and a VC, the importance of an exit strategy, and keeping your core team together. 

To check out the full interview, head on over to the Success Story YouTube page. While you’re there, you can check out the hundreds of other interviews with impressive entrepreneurs, and see how many tips overlap between industries. 

For now, that’s it! I’ll be back next week with another interesting guest.