How Building Software Helps and Hinders Agency Growth w/ Dan Sharp

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Dan Sharp is the Director of Screaming Frog, a search engine marketing agency that, in addition to providing SEO & PPC services, has built software that has been used by 100,000’s of companies including Apple, Google, Amazon and Disney. In this episode, we talk about the pros and cons of having a hybrid software and service based agency, and how software can be used to generate agency leads.

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Transcription

You’re listening to the 10X Your Agency Podcast Your Agency podcast where every Wednesday for the next 12 weeks you’ll be learning strategies on how
to scale up your agency and grow your client base from successful agency owners who’ve been there, done it and built a highly successful agency.

You’ll learn how they attract clients, what their biggest causes of client churn were and what their challenges were at different stages of building their agency.
My name is Marcus Taylor and I’ll be your host.

Marcus: Hey guys welcome to Episode 7 of the 10x Your Agency Podcast. Today I’m joined by a good friend of mine called Dan Sharp who’s the founder of Screaming Frog.

Screaming Frog are perhaps best known for their software-the Screaming Frog SEO spider- which is used by hundreds of thousands of companies like Disney, Apple,
Google and many many more. So we are going to be talking to Dan about how he’s grown the agency as well as the software and how he balances the team between the
two different sides of business, some of the benefits of having the relationship of having both software and an agency as well as also some of the drawbacks.
So Dan it’s a huge pleasure having you here on the show, how’s it going?

Dan: Hey, Marcus. Yeah not too bad. Thanks, thanks for inviting me on.

Marcus: Before we jump in, I was just wondering can you maybe share with us a little bit about what is Screaming Frog and perhaps what is it that makes you different to other agencies out there?

Dan: Yes, absolutely. First of all, Screaming Frog is an agency which I don’t necessarily think a lot of people realise because obviously they call our software Screaming Frog and you know our software is the SEO spider. So I think there’s probably a little bit of confusion there just because our software has been popular over the years. But we are based in Henley in the U.K. I think there’s 32 of us now. We’ve been going for about six years. I guess what makes us different is that we do have the software side as well as the agency. When I say software, we have the SEO spider, which everybody calls Screaming Frog and then more recently we’ve developed a log file analyser as well and came out middle of this year.

Marcus: Got it and what kind of services do you specialise in with Screaming Frog?

Dan: Very much search, so SEO predominantly. We do a little bit of PPC, CRO and analytics consultancy stuff like that.

Marcus: So the software that you’ve developed, the Screaming Frog SEO spider it’s been used by hundreds of thousands of companies. We use it; we’ve been using it for a couple of years now. Companies like Apple, Google, Amazon, Disney all use it. It’s been a huge success. I was wondering what impact has having the software side of the business had on the agency side of the business?

Dan: That’s an interesting question because I think it’s been positive but also kind of negative in a way as well. I definitely think that it’s helped build brand awareness, everybody’s heard of us. And it’s definitely helped us win some SEO consulting business of the back of having the software there’s in-house SEOs who’ve used our tool, found it useful and then realised that we also offer some consulting and come to us for general SEO projects. However, on the other side, I think conversely, the tool has been so popular that a lot of people just don’t realise that we are an agency as well and just think that we build software. You could say that we’ve probably been overlooked sometimes as well so it’s a difficult one. In reality we’re an agency and we built the software for ourselves to use in our own consultancy and then we it just transpired that we ended up releasing it publicly.

Marcus: And is there anything that you do to drive–any sort of active things that you are doing to drive people from the software to the agency or vice-versa?

Dan: Not specifically. I mean it’s all on the same website so if you visit the website, you’ll see our software and you’ll also see our services but we don’t
necessarily do anything special. We’ll probably come onto this a little bit later but we are not overly promotional or anything along those lines we don’t say, Oh
we also offer consulting or anything like that. We haven’t built anything into the app. We don’t even go as far as, and lots of companies do this; we don’t collect
user’s details, email addresses. You can just download the software for free to call up to 500 URLs and we don’t require anything from you whatsoever. You know a lot
of people would take an email address and then spam usually afterwards. We don’t do that [laughs].

Marcus: Got that. So a lot of agencies obviously strive to build tools on the side and software to generate passive recurring income to supplement the sometimes volatile nature of having consulting clients yet from what I’ve seen most agency typically fail with this because when you have these two options, you have billable hours that you can assign to client projects or you could work on a project that may or may not end up in generating results. Most agency owners typically focus on the billable hours side.

Dan: Yes.

Marcus: So I was wondering in the early days, how did you justify putting team members onto the software project before it even had any success. What was the thinking
around that?

Dan: To be honest there wasn’t really any thinking and it was actually a lot easier in the early days just because the software itself was being built when I was an SEO consultant going under the name Screaming Frog and it was being built in the evenings and weekends. So it wasn’t being built during billable or work hours. Historically I used to have a lot of fun with my previous agency when I was working as an SEO; used to work late in to the evenings doing affiliate stuff.
So I was quite used to working in the evenings and things like that anyway. My brother who’s a developer on the tool spent his own personal time building the
software which we never knew would work and it was only built for us anyway so there was not necessarily anything to lose or any personal time so it made it quite
easy really. And arguably it’s gotten harder as we’ve become a proper business in that the challenge has been sometimes taking ourselves away from developing the
SEO spider. For example, more recently we released a log file analyser. We had to take some of our developers of off the SEO spider from developing features for a
large user base to kind of develop this new tool. There’s a certain risk to that and it was quite hard to do but in the end it was well worth doing it and it’s helped
us develop more technical learnings that are going to be integrated into the spider at a later date but early stages it was easy.

Marcus: So you mentioned that Screaming Frog is currently around 32 people, I think?

Dan: Yes

Marcus: What’s the breakdown in terms of team size as to people that work on the software versus number of people that are predominantly focussed on the agency side?

Dan: Yes so we’ve got a fairly small in-house development team. So I would say there are around four or five people who work on the SEO spider fulltime. That doesn’t really include support just because we’ve got a fairly large user base to support user queries things like that. So the rest of the SEO team which probably is around about 25 people is kind of split out between the more technical SEO to deal with support.

Marcus: And they are also the ones doing the agency services as well.

Dan: Exactly that yes. So we’ve got a fairly small PPC team of a couple of people. Between 20 and 25 people who work on SEO projects, technical SEO consultancy. Of those 20 to 25 people we’ve got four designers and a front-end dev who work on creating content for clients who create a lot of visual content, so working on content, content marketing and link building campaigns too.

Marcus: And in terms of the revenue coming into the company what’s the approximate split of the percentage of revenue coming from the agency services versus directly from the software projects?

Dan: It’s pretty even actually except a lot of people probably don’t realise or haven’t realised that we are an agency weren’t necessarily expecting that but the agency side of the business is actually very profitable and does extremely well.

Marcus: Yes because my sort of assumption, having used Screaming Frog for a couple of years, so many companies are using it. I would almost have expected, wouldn’t
have been surprised if it was 80, 90% revenue. But that’s interesting that you know that shows just how big the agency portion is relative to the software.

Dan: Yes absolutely, that might not always be the case because obviously we’ve got a new piece of software now which is starting to perform well and we’ve made a
few price changes and things like this. So historically it’s been very even anyway.

Marcus: And in terms of the future do you see the scale in terms of growing Screaming Frog as a company, do you see that coming more from the agency side or the
software or still keeping it at that kind of 50-50ish?

Dan: It’s so hard to say. I mean we are just working on growth—

Marcus: Push up all the numbers?

Dan: on both sides, yes it makes sense. We’ve got really talented and great team on the SEO side of the business and the agency side of the business. We are
actually doing a lot more paid search, paid social as well these days and things like that. So they are both growing. It’s been positive on both sides really.

Marcus: What would you say are like the pros and cons of doing the agency work versus the software? You’ve obviously seen both business models and pros and cons.
What other things attract you to maybe software or the things that you like about the agency side?

Dan: Yes there’s pros and cons to both. It depends really on the person and how you like to work I guess. We still love consulting and we still like working
directly with clients and helping clients succeed and seeing the business improve and things like that. And you won’t necessarily see that obviously on the software
side. You get to hear about some things that has helped users to achieve and fix and things like that but you don’t see the wider impact that you might with a
client. I think personally they go hand in hand really well. It’s a question I’ve heard in the past where individuals said, When are you going to split it out, when
are you going to focus on software or whatever it might be? But I think they work really nicely together and the reason I say that is that I believe in the past
anyway. I’ve seen some companies who gave up consulting to purely work on software may have lost their edge a little bit sometimes. A little bit perspective working
with brands or smaller businesses that we do as well helps us to understand the point better. Consulting or working in the SEO trenches as it were keeps you pretty grounded and you get to understand what’s important to those who really use the software.

Marcus: You mentioned earlier that you haven’t really done any significant marketing around Screaming Frog as an Agency or Screaming Frog as the SEO spider. It’s kind of an interesting approach because obviously there’s other tools out there with tens of millions of easy money. They’re exhibiting at all of these conferences, spending tonnes of cash on running Ads yet you seem to be marching to a slightly different beat in terms of how you’re acquiring customers. And it’s
obviously working really really well. As we said, you’ve got hundreds and thousands of customers including some very very impressive brands so what’s the strategy
behind how you’re acquiring customers?

Dan: This is kind of a common theme really. It wasn’t really a strategy in place to start with [laughs]. We’ve never done any marketing. We’ve never had a sales person at Screaming Frog and I mean that on the software or agency side. We don’t have anybody who works in business development or anything along those lines. We don’t even give out free licenses to SEO influencers. So they talk about software like most other SEO tool companies do. The big SEOs in the industry, you go round and speak all of the events, hardly any of them, I think, pay for any of those tools. So I’d argue that sometimes their view view-point doesn’t always consider cost and value for money. Everybody has to pay for our software pretty much, just to make it fair. I guess the reason for that is that historically we’ve always, I think everybody the salesman a little bit and in the past when I’ve worked at previous agencies it can be a little bit difficult to control sales people. They don’t always bring in the right type of business from an agency perspective and things like that. From a company’s perspective, the closest that we’ve done to any kind of marketing is that we’ve sponsored SEO and that’s just because we love the event and the job that Kevin obviously does there. Plus we like being seen to match to make sense.

But you know seriously what we actually do to acquire these thousands of customers, what we did is we built a product that solved their problems. We release regular
updates, we really listen to our users and I mean really listen. So there’s been so much feedback from users over the years from the community we’ve really integrated that into our software. I’m just not sure whether everybody else does that. I think everybody says they do but I’m really not sure whether they do. And plus I do think we have earned the respect of fellow SEOs, people within the industry because we are doing the same job that they are. I remember Rand, I think we had chat one time Marcus, I think I mentioned this before, Rand once tweeted something along the lines the best way to sell is don’t sell anything just earn the respect of those who might buy or something along those lines. And we kind of have always taken that kind of approach. I tweet at Screaming Frog still; you know that’s almost like my personal account rather than the company. I talk about the SEO industry, how updates we see. We share Google Bot tests that we do internally. We try and be really helpful on Twitter and on support. We help with agencies and consultants who’ve absolutely tonnes of problems and technical issues that sometimes go outside the remit of the spider, I have to say. I think all of that stuff together has kind of really helped and given us a good rapport anyway.

Marcus: So you mentioned listening to users and taking that feedback as a means of putting ideas back in the top of the funnel when it comes to product development and refining the product. How do you approach that because I suppose unlike a lot of software as a service tools where you can install a tracking code or use live chat to speak directly to users the Screaming Frog SEO spider is a downloadable piece of software that sits on computers. So how do you go about gathering those user insights and listening and speaking directly with your users?

Dan: Yes so, historically users have always emailed us. We have a support page on the website, within the app itself we have buttons for support and feedback that allows users just to go to the webpage and submit a contact form with any suggestions and things like that. And then all of that goes into some software that we user called which is really cool. It’s just kind of a ticketing system. So we log all the requests and things like that. Anything that we think is a cool
idea, we then put it into something as simple as Google doc that we have with all of our ideas kind of get prioritised and we jot up the numbers of requests of some of things and we get a good idea of the popularity around new features. And sometimes it’s not always about new features; it’s also bugs in the software or small improvements that could be made or an adjustment to a configuration or something along those lines. Yes we just prioritise it based on feedback and obviously with a bit of steer from us in terms of what we think is the right direction to go in as well.

Marcus: What have been the challenges around that because I guess when you’ve got hundreds of thousands of people using the software and I can only imagine the sheer kind of frequency of support requests, feature requests, bugs, those kinds of things that are coming in. And you’ve mentioned there’s only four or five developers working on it, how do you go about making sure that you are working on the right things and ensuring that that kind of product road map doesn’t get too back-logged?

Dan: Yes, it can be difficult. As I say, we look at the numbers and then we discuss it internally. Essentially we build up the immediate roadmap for the next release and discuss which features which improvements should make the next release and then ultimately work towards that next release together as a team. So we’ve got a small team and you’re certainly right but what we do have, in terms of development, is we have a very experienced development team. And generally developers get to a certain level and they start managing people and coding less, things like that. But ours are very much coders and they are very hands on and it allows us to work very quickly. Sometimes you can have a big development team and actually it can make you slower. So we’ve been particularly careful with growing as a team of developers. And when’s the right time to hire and the right type of developers to hire whether you hire somebody more senior or whether you go for a graduate and show them the ropes and train them along the way.

Marcus: In terms of building up the agency side of Screaming Frog or I should just say Screaming Frog really, isn’t it?

Dan: Yes

Marcus: [laughs] So in terms of building up Screaming Frog as the agency what have been some of the biggest challenges that you’ve come across?

Dan: It’s been quite a few challenges along the way. The kind of usual stuff I guess from a personal perspective, having the time for everything can be quite difficult when you are running your own business spilling my time between each side of the business: the agency side and software, consulting, running the SEO team and working on the spider. I used to do all the support as well. I used to do all the support by myself and that was really hard work. I think what we learned was,
you’ve got to build the right team and you’ve got to build the right core at the start ideally. Get the right types of people at that early stage so you can get the foundation in correctly for growing essentially. But I think consulting is difficult to grow. I think there’s always challenges. You’ve got to make sure you’ve got
the right people, principles and processes in place. But it’s still always challenging because there’s always things outside your control. You can work with the best clients, you can run the best campaigns. It doesn’t always necessarily mean you can keep the clients because something might happen their end, people move or their
products or businesses might have problems and things like that. So it’s challenging certainly.

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Marcus: How old is Screaming Frog actually?

Dan: Six years.

Marcus: Six years. So from like the initial period where it was you still doing support for the software and building that up to where it is today, where you’ve got a quite large team 32 people and these three key different areas to the business, what would you say have been the toughest transition periods? Either in terms of growing the number of people, going from 10 to 20 or different phases of the company. What would you say have been the times or eras that were particularly tough?

Dan: I would say definitely the earlier stages particularly when you’re fairly small and you’re bringing in the core of the team. Particularly because where we are, we all struggle to find, on the agency side, find good people with experience essentially. We are far enough away from London where we can’t really attract necessarily anybody from London and yet we are kind of close enough that quite a few people seek to go to London to work as you probably know you are just down the road. We quite often hire grads and train them up. So that was definitely a challenging time in those early stages when you’re hiring graduates, you’re training them but at the same time there’s positives as well in that you can show them the right approach. Quite a few people that we did speak to probably had experience in the wrong type of SEO or things that we didn’t really want to do. But I’d definitely say that was the hardest stage where the team was growing, it was at an early stage.
I had to spend a lot of my time consulting with clients plus managing the team. Going to a lot of client meetings and things like that while still working on the
spider and then doing support in the evenings and during the day, there were times where I was working constantly. It’s a little bit easy now and that’s simply
because we have an awesome team who do a lot of those things and while there’s other challenges from having larger teams, and good relationships that you can get in
the team and things like that. I definitely think it’s made it easier being able to rely on other people and having people with their own ideas and they are far more
experienced anyway and talented these days.

Marcus: And you sort of trace it back to a moment, or a decision or a person that you hired that took you from that tough stage to completely changing the business to where it is today. Is that sort of an obvious thing or was it the combination of lots of little changes that got you there?

Dan: I think it’s probably a combination of things, to be honest, it probably is. I don’t think we’ve made really smart-ass. We’ve got a really good team, we’ve got a great head of SEO, our SEO manager’s fantastic. We’ve got some great SEO mangers as well. So that’s some really good highs. And we also brought on, one of the most significant things, was bringing on developers full-time rather than just working within the evenings and at weekends and things like that, making that transition to I’m doing this fulltime now and I’m really focusing on the software and that’s that.

Marcus: Okay Dan, what I want to go through nowÖI’ve got a couple of quick fire questions that I want to go through now. The first one is what is your number one book recommendation for other business owners?

Dan: Probably Purple Cow, Seth Godin. I thought that was pretty awesome. I need to read more though. I keep watching series and things instead of reading books.

Marcus: Favourite tool right now other than Screaming Frog?

Dan: I’d go with it’s similar to search metrics. I think they’ve been around longer. They’re based in Germany but there’s some really great data you can get from them on SEO visibility and keywords and lots of other stuff anyway and they are great guys too.

Marcus: What’s one piece of advice that you’d give to another agency owner who’s looking to go from six figures up to seven figures?

Dan: Yes I think it goes back to what I said earlier-learn to trust in your team definitely. Be happy with delegating and empowering them to help out, do the work otherwise you’ll have a bad time trying to do it all by yourself.

Marcus: What were some of the biggest causes or let’s say the one biggest cause of client churn in the early days of Screaming Frog?

Dan: I think probably taking on the wrong type of clients. That’s probably a similar one to a lot of agencies. But taking on clients that weren’t necessarily a great match but you went for anyway because you wanted to grow, you wanted to bring in the revenue and quite often they just don’t work out so trust our intuition at those early stages still.

Marcus: Short term over long term thinking?

Dan: Yes definitely.

Marcus: What’s next for Screaming Frog? What can we expect to see over the next couple of years?

Dan: Imminently we’ve got version seven of the SEO spider coming out. It’s pretty much cooked so that should be ready in the next couple of weeks. From the agency side, we’ve just made a couple of new hires, digital PR and front end development which is pretty exciting. So just carry on doing what we are doing really.

Marcus: Awesome and lots of exciting new stuff from the log file analyser by the look of things as well.

Dan: Yes absolutely. So we were really excited about realising the new piece of software, it seems to have gone down well. And there’ll be some more develop to that sometimes early next year too.

Marcus: With version 7 of the spider, what’s new in version 7?

Dan: I’m not sure I can give it away but just to be really boring but it’s some features that go alongside our new rendered crawling. So we render webpages and execute JavaScript dynamic content similar to how Google Bot do. So there’s a couple of features that work alongside that that help you visualise that essentially as well.

Marcus: Awesome. Cool all right Dan it’s been really really good. Really interesting stuff. If people want to learn a bit more about either screaming Frog the spider of log file analyser, what’s the best place for them to find you and learn more about that.

Dan: Just visit our website screamingfrog.co.uk.

Marcus: Awesome. All right Dan it’s been a huge pleasure and thanks for coming on.

Dan: Thanks Marcus.

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