Agency Profitability and Time Tracking with Ross Beyeler

Hey everybody. So my name is Macgill. I'm co-founder of Rize and really excited to be here today with Ross Beyeler. He's been an agency leader for years, been through acquisitions. He's ran lots of work on the operations side, but kind of worn every hat there that exists in the agency world. And yeah, we're really excited to chat today. Ross, do you want to add anything, introduce yourself?

Yeah. Thanks, Macgill. Happy to chat. I kind of consider myself like many folks an accidental agency owner. It wasn't necessarily the thing I expected coming out of college 20 years ago, but it was a path that I've kind of stuck to for the last almost two decades. And it's been great. I think this particular moment is a very unique one. In the last 6 to 12 months, the amount of disruption that AI has brought — it feels like a whole new career now. The game is shifting very quickly. But I think it's also exciting. There's going to be a lot of opportunities. We saw this with the rise of web 2.0 in the early 2000s, the rise of e-commerce, the rise of mobile. Each one of these technological waves have brought abundant opportunity for agency owners. This one just happens to be way more disruptive and happening so fast.

It's crazy. So do you mind maybe giving a little more detail on your journey? I think that will be really informative for listeners.

Yeah. So I grew up in Massachusetts, went to undergrad at Babson College just outside of Boston. It's a very entrepreneurial focused school and so like many of my classmates I got that entrepreneurial bug kind of day one. In my sophomore year, me and a couple buddies were interested in building an e-commerce platform for artists. Like many first-time entrepreneurs, didn't know what we were doing but found a way to raise some money, dropped out of school, went full-time with the venture and made absolutely every mistake you possibly could. We went from the beginning of 2008 with some money in our pocket being like 'we're going to be the next billionaires' — by the end of the year we had lost our whole team, we were getting sued by the development shop we had outsourced to, the IRS was coming after us because we screwed up our stock issuance, and then the world economy collapsed because it was fall 2008.

I found myself the day before Thanksgiving in my parents' basement with this failed company being like 'what am I going to do next?' Looking at tens of thousands of dollars of debt. I went back to school, started doing whatever freelance work I could to pay off that debt. By the time I graduated, I had enough clients to keep doing it full-time. Started figuring out that if I hired someone for design, someone for development, someone for project management, I don't have to do as much of the work. And then all of a sudden I found myself with an agency called Growth Spark.

Found a little niche in WordPress which back in 2008-2010 was established but not as big as it is now. Did that until 2010 when we had our first Shopify experience — and this is when Shopify was barely a platform. But we launched a pretty decent site in like a week and we were like 'this is crazy, normally a WordPress build would take us a month at least.'

Then 2012, we happened to be perfectly positioned. We were Boston based, had WordPress and Shopify experience, and a retailer in Boston called Johnny Cupcakes was looking to do this massive redesign. They wanted someone with experience in both platforms. It was one of the biggest, most custom Shopify builds that had been launched. That put us on the map with Shopify and we pivoted our entire agency to just doing e-commerce.

That helped us grow until about 2018 when Isaiah, my business partner running Trellis — another Boston area e-commerce agency focused on Magento — he and I saw an opportunity to pair up. We were doing more design and Shopify, they were doing more dev and Magento. We looked at it and were like '1 plus 1 equals 3 in this situation.' So we merged. I took on the role of COO. We were probably around 30-35 people after the merger, then scaled up to 90 at our peak and settled around 75, about 10 million in revenue.

Then in 2024, we had an opportunity to exit. We were acquired by a firm called Zab — now probably 350 people, more B2B focused e-commerce agency. I took on the role of VP of business intelligence, leading systems, hardware, security, some aspects of AI, analytics. Was there for about a year and a half and then just left at the end of March. Been gardening since, thinking about the next move.

Wow. That's such a journey and I have so many areas I want to chat about. Maybe we'll start at the earliest one — taking that bet on Shopify when Shopify was early. I think that's relevant now because with this paradigm shift there are so many new platforms and opportunities for agencies to have that first mover advantage. How did you pick Shopify and when did you feel like 'okay we should double down on this'?

Great question. There were probably three real aspects. One, the technology was fun, capable, and interesting enough where working on it felt easy — Liquid was a cool theming language, you could build apps. It gave you this quick feedback loop. Second, the community was really strong. People were open to sharing ideas, tutorials, themes. And third, Shopify did an exceptional job with their partner program. They went all in on building the partnership — marketing, sales, operational support, training. From 2012 through honestly 2020 was just an incredible run as an agency partner. Those three combinations — fun platform, strong community, partner resources — it felt like an unlimited gold mine.

Getting into the merger — that's a big bet. What made you feel confident? What were some of the challenges especially on the operations side?

I looked at it through two lenses. From a personal perspective, I had been doing agency-related work for about a decade. I enjoyed the client-facing side, strategy, selling, but was becoming more interested in the operating side — data, building systems, processes. I was the only partner at GrowSpark and there's a lot of stress being a solo founder. I needed to figure out if I should bring in a partner or find one through a merger.

The other side is agency economics. Until AI, agencies have traditionally been a non-scalable business in the sense that your costs grow in proportion to your revenue. True scale is when revenue can exceed your cost growth rate. There's really two situations that work: you're really small — three to five people, everyone's best in class, zero overhead. Or you've built up a management layer and redundancies where you're not doing deliverable work but generating considerable cash flow. There's a gap between five and fifty that is extremely uncomfortable and very hard to make profitable. We were about 12 people, they were about 25, and coming together allowed us to take that leap.

Is that duality still relevant in the new world? It feels like margin, billing, agency size — everything is up in the air right now.

100%. That's why I explicitly called out 'until recently.' The old model of billing people's time is dead. You can't say 'we'll make more money by having more people, therefore more hours to bill more revenue.' Clients don't need hours — they don't even necessarily need deliverables. They need outcomes. As you shift from outputs to outcomes, the man-hours don't need to be the driving factor, especially when AI is driving production.

I think the structure of most agencies is going to shift. You'll see expansion in roles around go-to-market and internal AI management and governance. You can't have everyone doing cowboy AI style. You need centralized model usage, agents, protocols. Having people involved in determining that is going to be a key advantage for agencies.

It's so fascinating. When you think about outcomes — hours are input now, but tokens are essentially another form of input. You have to think about work execution happening in both ways. It's almost philosophical — what is work?

What were the challenges from the operating side of merging two completely different entities?

Anytime you do a merger and acquisition, there's always that integration period. You want to make it as short and painless as possible, but inevitably it takes twice as long and hurts twice as much. Cultural differences, systems differences, process differences. Sometimes agency A has the better model, sometimes B, sometimes you need to come up with C. I've been through three pretty sizable integrations.

The things I've learned: number one, having someone whose entire job during that period is owning the facilitation of the integration. Number two, having more conservative and realistic expectations — 90 days is a minimum, probably more like 6 months. Number three, frequent cadence checks — management gets together once a week to talk about integration. And fourth, making sure you have really good feedback loops from the folks in the field. They're going to know whether things are actually working. Management might look at a spreadsheet and say 'we're 90% integrated' and the PMs are like 'dude, no one knows what's going on.'

What quantitative metrics were you looking at during the integration to make sure things were progressing?

I generally think of the business as people, process, and platforms. On the people side: where are we in any reorg, capability and training gaps, uniform performance evaluation, compensation salary bands, leveling standardization. Each of those you can find a metric — some binary, some more fluid like certification completion percentages.

On the process side, you're really trying to ensure you're using the same processes. Getting alignment, making sure processes are defined, documented, distributed, and that you have mechanisms to determine whether you're adhering to them. On the platform side, do we have system redundancies, overlap, need to consolidate? SaaS spend was a meaningful percentage of revenue. Especially as multiple agencies come together with big multi-year contracts, you really need to keep an eye on that otherwise costs can get out of control.

We see this internally too — it's SaaS and now it's also tokens. We keep getting hit with bills we didn't see coming.

Yeah, everyone says SaaS is going to go away and we'll operate so much more leanly. Well, maybe, but depending on what's happening on the AI side.

You've worked as a freelancer, your own agency, small, medium, large. What are the dynamics that really change? And where do you think the industry is going? Some people think every company is going to become an agency, or everyone's going to be a freelancer.

When you're in a leadership role at an agency, a lot has to do with organizational dynamics. More people means more complexity — more relationships, politics, opinions. Some people don't want that complexity and want to do 'the work.' Others enjoy influencing and coaching others. As any organization gets larger, your sphere of influence tends to get smaller. If you want high influence, a smaller to mid-size org might be better.

In terms of the future — I could see one world where AI makes the cost of go-to-market and production so low that you can run a single person business in a crazy niche and make a great living. That assumes enough people out there have money to buy your goods or services. You could also look at it and say every other week Anthropic is coming out with new agents replacing entire segments. Then there's five mega corps that have all the capabilities. It'll probably be somewhere in the middle. Some people like working as a freelancer, but it can be lonely. I think people overlook the social aspect of work.

You've been through massive technological changes — web 2.0, mobile. AI seems bigger. What tips do you have for agency owners to navigate this?

A couple things that worked in the past and are still working. One is having time to experiment. It doesn't matter how many articles you read — you gotta just build things and most of it's going to be throwaway junk and that's okay. The feedback cycle with AI is so quick — you have an idea, execute it, and see it in minutes or hours. A lot of the vibe coding stuff people build is never going to be used more than that 1 hour at 2 a.m. But that's part of the fun.

The other big thing is the community aspect. Finding other folks in the agency game who are in a similar state where you can share what's worked, what hasn't, resources. This can feel overwhelming and lonely if you're trying to figure it out on your own because it's moving so quickly.

I'd love to chat about the business model. You touched on billable hours going away. Any additional thoughts on how margins and profitability are going to change?

The pricing model debate has been going on forever — bill by the hour, fixed scope, retainer, outcomes-based. As AI comes in, it seems easier to move towards outcomes-based pricing. But you can't overlook that your cost of goods sold now is not just delivery labor but also delivery token usage. That adds complexity to your margin calculations.

The ideal world is everything outcomes-based. 'Hey client, you have a problem costing you a million dollars a year. I can solve it for half that cost.' But it requires immense financial transparency from the client, you truly understanding the problem's complexity, and a clear way of measuring impact. Sometimes you can do those numbers, but a lot of times it's murky. Getting the ROI calculations right can be hard.

That's something we're actually working on as well. Stay tuned. Alright, I've got some fill-in-the-blanks. AI is going to kill blank inside agencies.

AI is going to kill large delivery teams.

The biggest mistake agencies are making with AI is blank.

Not creating enough white space to just play with it.

I've heard that over and over in these interviews. It's so interesting. We're trying to do that internally too — just make time to mess around. It's hard because it's often throwaway, but that one out of ten changes your whole system.

In two years, agencies that don't do this will struggle.

Don't get good at problem definition. A lot of the value add for agencies is going to be the ability to go into a client and help them understand the problem. Everything is going to shift away from the complexity of creating solutions — AI is going to handle that. The human aspect is how you define the problem. Oftentimes the problem isn't what the client says. It's not 'our shipping costs are too high' — it's that the warehouse operations are off because the head of operations doesn't like the head of fulfillment. Getting good at understanding the underlying aspects of problems is going to be key.

The old agency model is breaking because...

Because there is this divide between established agencies that want to hold on to existing business models that have been very profitable in the past and those that are either earlier in their agency career or more willing to take risk who are defining new models that are going to be pretty disruptive for those entrenched players.

Amazing, man. Where can people find you?

LinkedIn is good. Just look me up, Ross Beyeler. Right now I'm spending meaningful time stepping back from having been in this game for 20 years, trying to figure out the next step. It might be joining an agency, starting a new one, or getting out entirely. What's been most helpful is reconnecting with folks in my network. We are a referral business, a connections business. 80+ percent of all my deals at Growspark came from referral. In the age of AI where things feel more disconnected and automated, it's even more important to spend time with people and cultivate relationships. Take inventory of the relationships you have and continue to cultivate those.

Amazing way to go out. Thank you so much, it was such an interesting chat. Really appreciate you taking the time.

This is great, Macgill. Thank you so much. Appreciate it.