E09 w/ Jon Sturgeon: AI changed his agency's model. Should he grow or sell?

The episode begins with Jason Cohen introducing Mario Pachev, a founder of a multi-million dollar agency who has leveraged AI workflows to increase productivity tenfold. Mario reduced his team from 60 to 30 while still growing, thanks to internal AI innovations. Despite this success, he's at a strategic decision point, pondering whether to productize his AI solutions or scale his agency further to potentially sell it. Jason Cohen, leveraging his experience with startups and investments, joins co-host Jonathan Sturgeon for a deep analysis of Mario’s situation. They set the scene by identifying Mario’s agency as a WordPress shop helping private equity firms and question whether his current trajectory should be scaled or sold.

Mario shares his 18-year entrepreneurial journey, revealing his initial passion for engineering and open-source development. Over time, he became more pragmatic, focusing on making his business financially sustainable. Recently, Mario solved complex AI-related workflow challenges that allowed his team to operate more efficiently. His agency now helps large private equity firms organize their financial data post-acquisition. Despite reaching a profitable peak, Mario feels a ceiling is approaching, prompting him to consider growth strategies—either productizing his AI or selling the agency. He admits that his sales pipeline has slowed, and his sales team is minimal—one full-timer and two contractors—yet his revenue has been sustained.

Jason and Jonathan challenge Mario’s inclination toward productization, questioning whether his service offerings are truly repeatable and cookie-cutter due to the complexity and customization involved in revops and integrations for mid-market companies. Mario concedes that the type of work he does for larger corporations isn't easily standardized, which makes productization difficult, especially as these projects involve complex internal systems. They discuss whether automating or creating fixed-fee models is feasible and look at examples like their own companies, which rely on tailored, high-touch solutions. The conversation emphasizes that productization suits simpler, smaller business problems better and that Mario’s focus on enterprise, customized work, inherently resists standardization.

The hosts debate how AI is rapidly transforming the agency landscape, with many agencies under-investing in growth and efficiency. Jason argues that the industry is moving downmarket, with automation reducing the need for many traditional roles, but also creating new opportunities for smaller, specialized agencies. They discuss how AI has lowered barriers for small businesses, making DIY solutions more viable, which in turn challenges traditional agencies. Mario reflects on how industry expectations are rising, fueled by AI capabilities, which is increasing customer demands and churn. The panel explores whether agencies will shrink to tiny, highly specialized teams or evolve into complex, high-value niche players. They agree the industry must adapt through better positioning, automation, and targeting the right client segments.

Mario reveals his struggles with sales, noting his pipeline typically takes a year to close deals for larger companies, and his sales team is underperforming. Jason pushes back on this, emphasizing the need for high-volume, systematic outreach—like cold email—to generate leads, and suggests hiring a dedicated sales leader and SDRs to scale faster. The group discusses how inefficient outreach and poor positioning could be holding Mario back and suggests that employing automated, repeatable sales scripts and boosting outbound efforts could dramatically increase close rates. Experts highlight that relying solely on inbound or referrals is not enough in the AI era, urging Mario to build a robust, multi-channel, outbound sales machine that can deliver consistent results.

The conversation shifts to how Mario’s agency manages its team and utilization. Jason criticizes the practice of benching employees during slow seasons, arguing that higher utilization (aiming for around 80-90%) is key to profitability and growth. Mario explains his flexible resource model, with some team members on seasonal leave or internal projects, and admits his current utilization is around 67%. The hosts debate whether this cushion is necessary for client service continuity or a sign of inefficiency. Jason emphasizes hiring and managing a leaner, more focused team of specialists—such as a strong sales leader and a strategic operations executive—to vastly improve performance and morale. The episode clarifies that structured, high-utilization staffing aligned with predictable demand is critical in scaling a modern agency.

As the episode closes, the hosts discuss whether Mario should sell his agency or continue to grow it. Jason suggests that if Mario is not excited about the operational overhaul and sales expansion needed for growth, a strategic sale might be best—especially given the current valuation multiples. They mention Mario’s desire for a sales exit around six million dollars but note that current industry multiples and growth prospects make this challenging. They also explore alternative paths, such as spinning off AI assets or turning the business into a more automated, productized entity that can be sold in a shorter timeline. Ultimately, Jason and Jonathan point out that Mario’s motivation and excitement are crucial—without it, scaling or selling efficiently won't happen, and the best move might be to focus on building systems, removing key man risks, and planning a strategic exit or profit harvesting.