#227 Entrepreneurial Leap from Wall Street to DigiCom: A Conversation with Hemant Varshney

0:00:02 - Mehmet
Hello and welcome back to a new episode of the City of Show with Mehmet. Today I'm very pleased to have Mehmet with me on the show. Mehmet joining me from New York. Mehmet, the way I like to do it is I let my guests introduce themselves, because I believe this is the best way to do it. So the stage is yours. 

0:00:18 - Hemant
Thank you, mehmet. Everybody welcome to the show. I am excited to be here and chat ideas, innovations, insights with Mehmet. My name is Hemant Varshney. I'm the CEO and founder of DigiCom. Digicom is a growth marketing agency where we predominantly work with venture-backed startups and our goal is to help them grow through digital channels. 

0:00:45 - Mehmet
Great. Thank you very much for being here, mehmet Like. My first natural question would be what attracted you to the field of marketing and what attracted you also to work with startups, mehmet Sure. 

0:01:01 - Hemant
I think that's a great question. What got me into marketing? So this might sound funny, but watching YouTube videos maybe like 15, 16 years ago, I watched, I was basically given a project and I built a website. Then I started running ads and the way I started learning about ads was through YouTube. I watched some content creators back then learn how to navigate the platforms. And what I specifically love about marketing because it is a very wide field. A lot of different strategies and disciplines fall into marketing. I personally like the science of marketing, the data and why I say that is again. 

With running those first AdWords campaigns I learned how to one-set everything up. Maybe it wasn't the most optimal way at the time, but then when I saw the data coming in, the cost, the clicks and then eventually the leads and how those leads turned into conversions, that fascinated me. And then from there it started to build on to the campaigns that I was working on and for AdWords and Google was so much cheaper at the time and for a $500 budget we had closed three or four pretty big clients and within four to five months that was like 500, 600k in contracts. So it was pretty big, and this is for a fashion manufacturing company, so that's why those contracts are big. And then I just kind of fell in love. 

I went to school for finance and I worked on Wall Street. I worked at American Express and over time even though I worked in on Wall Street and at American Express, it was always with the focus on marketing and over time my goal was always to go out and build my own business and for that I needed to learn much more about startups and eventually I ended up at a startup because my goal was to learn about startups and so kind of took a risk and took a jump and got to the startup. Eventually I ended up building a team of 32. There. I worked with a lot of other startups, I started learning about venture, I started learning about product development, marketing and how all of it comes together. And then from there, with my skill set, I kind of jumped ship to build DigiCom. 

0:03:56 - Mehmet
That's great story, I would say Hemant. Now you mentioned a couple of things about the Google AdWords and so on. So how, nowadays, the landscape have changed since when you started it, and what are you seeing? I would say the better. Or, let's say, because you are in startup also, you need something fast as well. So what are you seeing, or where are you seeing the fast, I would say, affordable channels for startups to start exploring nowadays? 

0:04:33 - Hemant
Sure, for clients that are typically starting off and, depending on their product or service, we like to recommend running on Google, facebook and then, depending on the type, if it's a D2C company, maybe you want to get on Amazon. Any of those three platforms are great to start off and the reason why is because you can trust the data, and when I say that is when you're running Facebook campaigns and you're focusing on conversions. The Facebook algorithm does a really good job of finding real users that are on the platform to drive traffic for you to understand click-through rate, conversion rate, cpms, your cost to acquire. And then, similarly with Google, there's usually high intent right when someone's searching for. 

Even if it's like pizza near me, there's intent to purchase. So the data from there it's. It's usually very rich. You know there's a lot of bot traffic. That goes on. But what I've, what I've found Through running different analysis, is time. On site bounce rate, you know a number of pages visited from these sources tend to be much higher than other sources. So you can take this, the learnings from these platforms, and then start to apply them to other ad platforms which maybe don't have the best traffic or don't have the best intent of traffic. But you can build a base strategy and then move that over into other platforms. 

0:06:14 - Mehmet
That's, that's logical, I would say so. You know, let me be a little bit kind of the devil advocate here. 

So and you know, sometimes I hear people talking you know that you should not be spending large budgets on these kinds of ads because you know and you mentioned the data by the, which is important but what some people are saying is that, yes, there is a lot of data like you know, yeah, you can run the ad, but you end up with a lot of you know like kind of junk data. Or, let's say, you know, like people who are maybe clicking on your ad, just you know, but they I don't have the intent that you talk about. So so now, how important you know, in your opinion? First, like, is this true? And second thing, if it is true, what are some of the you know, I would say, the Homework that they need to do in order to avoid being trapped in such situation? I mean, from a Start-up team perspective. 

0:07:25 - Hemant
Sure. So one thing we do is we audit a lot of accounts Before we take on new business. We audit our the potential partners account because we want to understand if we are able to hit their goals, because all of our partners have gold. The goal, especially in 2023, is profitability. It's not growth at all costs anymore, you know, in like a few years ago it was, and so we audit these accounts and oftentimes we will find that the Previous consultant or maybe agency or the partner that is in house, they're running something called traffic campaigns. 

There are different types of algorithms that are leveraged in each of each of the platforms. There's traffic which essentially is going out to find people that are Most likely to click on an ad, and that doesn't mean click through to your landing page. That means click on an ad so like the ad, leave a comment to the profile page, send a message. Any of these other button clicks, the algorithm will focus on people to you know, essentially Find these users, and so let's say there are a hundred users right at any given time. Maybe there's 5 or 15%, like, say, 5 to 15% of users, depending on the type of product you have, that are in market to purchase Right. So click campaign, we are just sending ads. So all 100 people and they should, that is not all. A hundred people are qualified to purchase, and so the important thing to do is, when you're setting up these campaigns is you're setting up a conversion campaign and the conversion campaign what what you're doing is? You have to have your pixel setup, you know. You have to have your tracking setup, any API setup, and Then what these ad platforms will start to do is okay, of the hundred people we know, based on the signal intents that we've seen with other users, say, it's 15 percent, so 15 people are in market. Let's only serve ads to these 15 people that are in there, much more likely to purchase, and the difference in performance. 

It's pretty drastic now to go target the 15 people. It might, it's gonna cost more, right? Maybe we go from a dollar a click to three dollars a click. I, however, on traffic campaigns, we might have seen over a two-week period, zero conversions, maybe one conversions, but now that we've shifted our focus to purchases or leads or whatever it is that the KPI the startup is going after, now that we've shifted towards that conversion campaign, we're seeing three purchases, four purchases. 

We're seeing revenue come back in and over time, our goal is to bring down that cost to acquire customers. So a lot of that is testing, understanding what messaging is working. What type of creative is working. Do these users convert on Instagram? Do they convert on Facebook? Process of elimination, what we like to call trim out the fat we remove all of the attributes that don't need to conversion. Eventually we'll end up with campaigns and understandings of these styles of creative work. Maybe it's red background with the use of luxury and a picture of the product in the center, targeting on Instagram, and then also a video works. And that's how we start to leverage the data to yield more and more conversions at a cheaper cost. 

0:11:22 - Mehmet
That's amazing. So I can understand from you. The basic for you is data, and I like this because I come from a technical background and nothing can. Of course, you need to do your own testings first, but of course, the data will validate later on. So I can see you put a lot of effort on analyzing the data, which is amazing. Now, by nature, startups, but they are B2B, b2c, whatever space they are even B2C, I would say. They aim for rapid growth and they become more demanding. So how do you manage this scalability between these startups coming for more results and maybe they have more products now or more services, without compromising on the quality? How do you manage this? 

0:12:19 - Hemant
Sure. So towards the end of each month or beginning of the subsequent month, we're asking our partners this month what is very important for you? Do you need growth? Do you need efficiency? Typically, in most circumstances, if you're going from a $6,000 budget to $100,000 budget, you're going to get one or the other. It's very difficult to maintain an if like efficiency, cpa, and then scale more than double, and in this instance, I'm just talking more than 10x. So that is the first question. 

If we're looking for growth, we like to use something called like a stepping stair approach, where we will increase budgets, we will be testing new audience, maybe new distribution strategies, maybe new ad platforms, and we will sacrifice efficiency because we need to learn at a larger scale. And so we go from 6k or let's just use 10k to 20k. Okay, how much did CPA go up? 10%, 15%, okay. We go back to the client. Hey, we're at 10% 15% higher. We were eliminating these specific insights that we found that are yielding higher CPAs. We can run at 20k and get back to our efficiencies that we were at prior, or do you need to continue scaling? Sometimes the clients are like no, we need to continue scaling because we need to show much higher revenue. So let's say we go from 20k all the way up to 80k and those CPAs went up another 15%, but the amount of revenue they're bringing in is much, much higher. Now we're at 80K. The client's like okay, we've shown our investors we can grow. Yes, cpas have increased. We've lost them efficiencies. This month can we bring efficiencies back to where they were? And so our goal let's say that original efficiency target is $10 and our CPAs jumped up to 15 the first time and then they jumped up to, like, say, 14 the next time. 

The goal is to get back to 10. We're able to come down to 11. Because as you continue to scale, sometimes you hit a point of diminishing returns. You can drive a lot more volume, but your costs might just be higher at this higher run rate. So we get back to 11, right, so we're still 10% higher than the original CPA target. 

The thing is that at $80,000, the client is now generating so much more revenue and, based on specific ROAS targets, maybe we've increased their AOV. So people are buying two products or three different products instead of one, and so ROAS while CPA is at 11, their ROAS might have gone from two to like 2.4, which means they're just making more money, net, net. And so a lot of the journey as we're scaling and ensuring we have quality, a lot of it is understanding what your client needs and talking to them as you're scaling through. We have dashboards our clients are looking at to understand their business efficiency metrics. As we're scaling, we're meeting with our client once, twice, maybe even three times a week to go over some of the changes we're making. So it's very much like a lockstep you know what we're doing and we know what you're doing growth together. Our clients are gonna allow us to scale to like 10X or 15X if they're not making money. 

0:16:27 - Mehmet
That makes sense to me Now, but while you were talking and I see the energy it's very obvious you love what you do, which I like when I see people passionate about it. Maybe it's a little bit a strange question, but it just came to. It popped into my head. Of course, as an agency, you work with different clients and whenever you get a request, you need to understand but what are the type of startups that actually you know you get so excited about and you say, yes, this is the kind of client that I want to work with, sure? 

0:17:10 - Hemant
For me personally, I love okay, this is gonna be a funny answer but clients that are in travel. I love to travel. I'm not a better in food. I would say I'm a foodie, have to make sure I'm going to the gym constantly or working out so I'm not putting on pounds. But, yes, definitely a foodie. 

And then other clients that are solving for in like an actual issue, as in we're not just selling products to sell products. So like, maybe a cosmetic brands right, that is helping children and I know this is funny when I say cosmetics and children but there might be, or there are young kids out there where they're seeing, like mom putting on makeup, oh, I wanna wear makeup too. And so like, what type of brands are providing makeup kits that are healthy for kids, right? So? And there's a partner we're working with that specifically focuses on moms and babies and all of their products are paraben free. It's healthy. They're Sephora brand. 

Now, on the flip side, there are other partners where it's like de-stigmatizing menopause, right, Helping women through their menopause journey, because it's not spoken about enough in creating a product line which it's not just, it's not medication, you don't have to go to a doctor. They're products that are healthy, that can help people Like. Companies like that are changing our world, for what I think is the better, because they're creating products that are helping people over some like duplicated product that you can sell on Amazon and it's just, it's more innovative, and those partners also excite me very much. 

0:19:25 - Mehmet
That's great to hear also as well. Like also what I noticed, heman is also, you have kind of passion for making sure the profitability of your customer, which is great. Now, from your own experience, like what are, I would say, some of the approaches that you can, or hints you can, share with? You know, not only startups like even maybe small businesses, to keep a healthy, as we call it, profit and loss, p&l, while maintaining this growth. 

0:20:06 - Hemant
Yeah, okay. So first it starts with understanding your product margins. I think that there are a lot of startups out there that have a loose idea of product margins. Right, so you're taking your MSRP price, you're adding in cost of goods, you're adding in operational costs, you're adding in any other costs. If you're paying for shipping, what is shipping? Okay, after you deduct those costs, if there are no other costs, what is leftover? That's your margin on the product. 

Typically for a lot of brands, if your product margin is, or your cost of goods and operational, your expenses are 50% or less of MSRP. Right, so you're selling a product for 10 bucks, your all your costs make it in. If it's $5 or below, at a two row as you break even, and if it's below $5, $6, $4, at a two row as you're making one. And that is a very important thing to understand for a lot of partners, because you might have a product where on the first purchase, you break even, but you might have a high customer return rate where on future orders you're making money. The goal, from a digital point of view, is, at the very least, to break even, and that is very important. There are a lot of brands that might not know the math on. You know, if you're somebody that's leading any acquisition efforts, you should understand the math on your products, or understand what the overall expense margins are, so that you can create a target for the business to acquire a new customer. So that's, I think, the first and most important part when you're running the ads because, say, it costs you, you know. Same example your MSRP is 10 bucks and your costs are $8, so your margin is only two On running ads at a two row, as you're losing money on every order. So you know, and so that's the first part. 

The second part is understanding your attribution modeling. So what channels are you running? Right, you're running Facebook, you're running Google great, you're scaling here. You're at a two row, as okay, facebook and Google are driving all the traffic to your site. But what are we doing that is not on the paid side? Is email setup? Do we have an email capture? Are we sending email campaigns? Are you using your organic social you know accounts to build a following and send traffic back to your site? You know, do we have an SMS campaign in place? And there's a lot of things you can do offline that while new traffic is coming in from the paid sources. Your offline sources can also generate a lot of revenue for you and net net you can look at the entire business operation and that's we do custom attribution modeling to see. 

Okay, on platforms, we were at a two row as all of our new customers were breaking even for any retargeting campaigns or email, sms, organic that are coming in, since we're not paying for, you know, paying ad dollars to run media. Those are also generating sales for us. And now the business efficiency goes from just looking at the two, the two ad platforms we're running on in this example, at a two row as to the traffic that has been brought in in the last, like 14 days, is converting through the other channels. Your business row as goes from a two to maybe a three and a half to a four. And now you're you're a profitable company. How do you increase conversions in both? 

As as your budgets increase on the paid channels, we should see more conversions in the back end. And what are the goals in the back end? Like, if email drove 10 last month and we've increased our budget from 10,000 to 12,000, email should maybe do 15 this month. And if we're trailing behind at the halfway point of the month. We should be calling that out. Hey, email only drove four so far. Maybe we need more campaigns, maybe we need to do more testing, and so what this, this type of attribution modeling does for us? It allows us to goal set across the entire business, understand attribution overlap across the entire business and scale an entire business where everyone's goals are aligned to us. You know certain number or metric. 

0:25:13 - Mehmet
Yeah, yeah, makes sense and I love this because you don't need to be and this is a concept for me you don't be relying on one single or two sources only because, for any reason and I've seen a lot of stories, people crying, you know, facebook sometime can ban you yes, mainly Facebook or meta now. Yeah, so so makes sense. And, of course, like leveraging the organic growth also as well. And the other campaigns Now come up like from, from your experience, what are? Like I would say, this is a generic question. You know, maybe you can, on a high level, just tell me the difference between a B to B service slash, product versus a B to C. You know, from your, from your point of view, like how is this something you know you need to plan differently, or the concepts stay the same, the audience is different. Like what you can tell us about that? 

0:26:19 - Hemant
Sure, okay. So B2B is business to business. Maybe business to business it's a specific SaaS tool that a consumer family doesn't need to use, right Versus B2C, can you know? They're sure there can also be SaaS things to help, but maybe it's food or it's consumer packaged goods or it's pet products, or it's exercise or wellness. There's a lot of other categories. 

So when marketing for B2B, our approach is quite different because, generally speaking, with B2B your not in all cases, but you know over like, generalization is that the ticket prices or the MSRP of the services and products that are offered will be much higher and it's usually a continuous type of service than something that is D2C and again, not in all cases. 

But you know, just as a general, and while someone might at home might be looking for, say, like, a new TV or a new sound system or maybe a new fridge, the person that is at work is looking to purchase these B2B products or services that are solving issues for the business right. 

So the goal for B2B is how to find users, regenerate leads for other sales teams with a qualified audience and, just like you had mentioned, and so the channels might not be exactly the same, right we might, instead of using a paid Facebook strategy. It might make more sense to come up with a strategy to geotarget users at a conference, when you have a booth set up, so when people are on their phones it's like, oh, come visit us at a booth. Or maybe the strategy is to use white papers where we can talk about the service and the product and how it's helped businesses in a specific vertical and what those returns are. Right, you know over. Hey, here's the product, here the benefits, here's what you need, why you need them to just make a purchase right then and there it just completely makes sense and I asked this question on purpose, so just for the audience to know. 

0:28:50 - Mehmet
Now, how about you? You know like you work with a lot of customers and I'm sure you see a lot of trends Now from technology perspective. If we want to focus because we are on the CTO show what are like some of the latest trends you are seeing from you know the requests you are getting from. From you know your clients and prospects. 

0:29:12 - Hemant
Sure, I mean, you know, running on new platforms, tiktok, of course. Tiktok has seen unbelievable growth. It is a great platform. The one thing for the audience is that when you're running TikTok we need a lot of creative. It's not like Facebook where you can build out an evergreen strategy. It's just the nature of TikTok. It's one creative probably, you know it can run you a week, it could run you a month, but then, once that creative is done, we need to have other creatives, you know, in our back pocket to continue testing. 

So it's very important to test there and that's from, I would say, a platform. You know point of view, what's where money is shifting. But then I think other things that are important is continuous automation, at least for us at DigiCom, and when I say automation I mean building out either databases or structures so that we can siphon through data and come to come to our understanding of data or learning of the KPIs and where to push certain campaigns and metrics so that we can improve. And automating tasks like that helps improve time and allows our team to spend more time on strategy over pulling data and insights. They're both important, but one saves us time so that we can focus on the strategy part. And then, of course, you know, ai has been the buzz of 2023. And what's interesting to me is, like you know, ai has always existed. Like algorithms are a set of rules that are executed on, and this has existed for quite some time now. Ai is consumer facing right. 

So, in marketing, how can you leverage chat GPT, for example? 

My take on it is use chat GPT. Throwing your ideas, get some ideas back, but if you're the expert and you're writing content, write content as the expert. Use it for your ideas, right, because chat GPT isn't the expert in your feeling might be in medicine, it might be in wellness, it like, you know a lot of business owners and maybe you don't like the business owner or the founder doesn't have the time, or the C level team, but there can be somebody on your team that has the time to kind of create these content pieces, which you're getting just high level ideas, and then it's like oh, this is a great idea, here's what we know about it and here's the passion and in writing it and here's the information we can provide right. So I? 

That's that's my general, I guess, advice in terms of leveraging AI at the moment. It'll change, you know it'll get better. But if you're the expert, you know, speak as the expert, lead as the expert and use the tools to come up with like ideas, and for that's great and you know, as we little bit you know, almost came to an end. 

0:32:34 - Mehmet
And here I want to touch on, you know, like, little bit, some of the you know lessons, or I would say wisdom that you can share with the audience who are maybe sitting today. They are about to start a business, or maybe they are about to graduate from college and they want to start their journey in the professional life. So you've done, you know like, honestly, it's a great job, you know, and great journey, I would say. You know what you have built. So what are the advices, what you can tell fellow entrepreneurs today? 

0:33:15 - Hemant
Okay, entrepreneurship is. It's not an easy road. It will be lonely at a lot of points and that's okay. My recommendation is test and learn, like you know. If you are going to go out there and you're like, hey, I have a hypothesis, this is the product that will sell, create, start, you know, create the product. Get feedback from people that are not just your friends and family. First get friends and family, but then go out and ask other people as you're building this product and the roadmap and what to do, and then look at your data. You have a hypothesis and you test the hypothesis to see if it works. If it doesn't work, it's okay, keep going, because you know that's how a lot of a lot of technologies built it's. It's created for one reason only for the founding team to figure out. All users are using it for this other reason, and then you know there's a big pivot. So, yeah, just I would say keep going, and you know if you're going to fail, fail fast, turn around, pivot and then keep going. 

0:34:26 - Mehmet
Great advice, I would say. I also I'm believer in just going out try. I don't call it fail, I would say learn fast. So how about? Like you know, this is a traditional thing that I started with recently. Also, was there anything you wish that we have discussed or a certain question that you wished I have asked you, and feel free to answer it or add your notes on that. 

0:34:55 - Hemant
I think the questions that you asked me have been great and I hope that the answers I've provided are able to help entrepreneurs and you know folks on their startup journey or you know folks graduating from college kind of understand some of the landscape. I think you know, maybe, okay, maybe I have one. So if you're trying to learn something and you feel that you might not necessarily have the answers at the moment, that's okay. There are platforms like YouTube that got me started on this journey and there's a lot of free content out there. Yes, they're the reels that you're seeing, you know, on Instagram, and videos you're seeing on TikTok. But really, if you're looking to get into a field and get a better understanding of different fields or strategies or information, just do a quick YouTube search and watch a couple videos and, you know, see if things like interest you or if there's strategies you can leverage. 

0:36:10 - Mehmet
Great, great, great advice. I believe you know YouTube is a huge library. I would say, yeah, of course you need to do the right search, find the right content, but, yeah, it's the biggest university in the world, maybe Exactly you know, like a lot of things, even when just to add to your point Haman when I wanted to start this podcasting journey. Of course, like I come from technical background, I know you know the behind the scenes that they say from technical perspective, right, what I need to have. But of course, you know I needed to see how I can do and I'm still learning, by the way how I can do better audio, how I can do better video, how I can you know how I can enhance even my speaking, I would say, skill. So it's all like you know it's available on YouTube actually, if you search for it or like, for example, if you want to learn anything, as you said, like any topic, youtube is a very good place to start and of course, you can then later, if you want to advance, reach out to some cohort or you know something like Udemy and these kinds of platforms. So I 100% agree with you and funny enough because you just mentioned about Reels and Tiktok's one of the things that I do, I share you know. 

You know some teasers of the podcast there and people they said yeah, but people there they are not. You know, for such kind of you know serious, I said okay, that's okay. But for me, if even one person you know, let's say, of course, like I would be doing the same for this episode. And if one person like you know I'm sharing, I don't share myself speaking, I share my guests speaking. So if someone sees him and you know talking about something and he get benefit out of it, for me this is I'm happy and I'm not after. You know, like getting thousands of likes and you know, like it just for me if I can inspire one guy you know one person. 

That's more than enough for me, like I don't. I fulfilled my mission. Of course I wish to do more, but yeah, to your point, it's about you know being there generating the content and trying to give the good content and I really enjoyed, you know, the discussion today. I love the energy I can. You know, maybe we need to do, but I need on another podcast, not this one, because I am thinking about something not techy, because you mentioned traveling and food and you know this stuff. So I'm pretty, I'm pretty sure if we, if I decide to do another podcast around you know such lifestyle, you would be my first guest. I would say so. 

0:38:48 - Hemant
I would love to be on there, absolutely to be on there. 

0:38:52 - Mehmet
I'm already doing baby this one. So I need to figure out because I honestly I need to do something also about fun and fun, but with purpose. You know, like it's just an idea and you know the audience are maybe hearing this for the first time. So, guys, if you see me one day announcing another podcast, don't be surprised. Great thank you, hemant, very much for being on the show today. I really appreciate the time, as I said, and for the audience. 

They know by the time now that guys keep the feedback coming like and you know, don't only send compliments of course I love your compliments but send me ideas how we can enhance things. Send me ideas of you know, maybe some people you want me to reach out and you think that I should speak to them. Or if yourself you have a great idea, you have a, you are a startup founder, or maybe you know, like you have an experience and it doesn't have to be really related to tech, it's enough that we can inspire more people, more entrepreneurs. That's fine with me, like I'm having today Hemant with me and he's in the more digital marketing space and you know, you can be from any field. Like it's not closed. I would say for me reach out like I would love to talk to you, I would love to have this conversation and try to together inspire others. And you know, as I usually, I say thank you for tuning in and stay tuned for a new episode very soon. Thank you, bye, bye. 

Transcribed by https://podium.page