You're Killing Your Business By Only Marketing to Existing Customers

Sean Weisbrot: Brook Shepherd is the CEO and managing partner of Mason Interactive at Performance Marketing agency based in New York that helps brands to grow to 40 million and beyond. He works with schools and D two C brands. We talked about a number of things, like how he looks at potential clients, how he thinks the tariffs will affect the D two C brand's ability to thrive. And much, much more. So if you're interested in sales and growth and a little bit of politics and global economics, then this is a fantastic episode for you. Let's get to it. What makes you so passionate about growing brands?

Brook Shepard: There's nothing more exciting than being part of a successful journey alongside an entrepreneur that can be a serial entrepreneur. They can be, uh, a first time entrepreneur, but realizing the satisfaction of realizing that you are part of growing something. Is deeply gratifying.

Sean Weisbrot: Why is it that you prefer to help other brands grow rather than focus on growing your own brand? Obviously I know your company is something you're working on growing, but it's it's different.

Brook Shepard: Yeah. I don't see them as different. I mean, we have a, I have a $30 million I. Self-funded agency completely bootstrapped in a low margin services business. We can charge a little more than someone can charge doing it internally, but not a lot more or would go outta business. Our profit margins are constrained. Um, and I, I take great satisfaction in having built the company to this point, and I, I often. Find a point of friction sometimes with, with prospects when they're, when they say something along the not, and I don't have friction with you, but it's a good question. Someone will say like, well, I've grown the, A company. What have you done? Well, I've grown a company too. Um, it's just, I sell time and people and the, and the process and not a widget. Although that could change. And one day I may decide to start a direct to consumer brand because I have plenty of ideas.

Sean Weisbrot: Why are you still doing this company? Surely you could sell it to a large PE firm and walk away with. A significant amount of that.

Brook Shepard: Yes. And I have those conversations. I still enjoy it. I'm 49 years old. I think about by the time I'm 55, being able to not work 12 or 14 hour days, six days a week, um, and focus more on some other things. But the truth is I enjoy it. I enjoy the people I meet. I enjoy how fast paced the industry is, and I enjoy learning new things.

Sean Weisbrot: I had actually stopped doing the podcast last August after four years, and in January of 2025. I was so bored of not talking to other business owners all the time that I decided to do the podcast again, because it brings me this kind of satisfaction that I need to be able to just ask people questions and learn from them and be curious that I, I can't do because in. Portugal where I live, a lot of my friends work for other people. So in my offline life, I don't really have access to many business owners, maybe two or three in Portugal. And my other entrepreneur friends that I'm really close with live in other countries. And so the podcast is really my way to be able to kind of scratch that itch, if you will. Uh, so I, I definitely understand why you're continuing to do it. Um. I think helping people is a very interesting thing to do because everyone is different. Everyone has different ideas and different ways of living and doing, and that is exciting for me to see why people are different. Um, how do you navigate your clients' differences of opinions?

Brook Shepard: Um, I have a, I have a stock answer for that. I don't know if it's a good answer, but my answer to that is it's not my job to do what a client asks. It's my job to give my client my best advice based on billions of dollars of assets under management and 16 years of doing this and hundreds of brands. It's my job to give them my best advice and, and then do what they ask. So navigating it for me is simple. If a client says, I want to go up, I wanna increase revenue by 40% this year, and I can say, great. Why? How fast do you outside? Client says, I want to go up. We say, great. I can take the stairs, you can take the elevator. I've got a jet in the back. If you wanna get there very quickly, let's talk about how quickly you wanna get there and why you get there. And then ultimately you do what Ask. Um, unless it's really, really wrong and then it's not a good fit and you, and you mutually part ways. So there's not a lot of conflict about that. It's more like they all have their own way of, of doing it, and it's my job to apply the best practices I've seen to help them in the best way I can.

Sean Weisbrot: How have you had to change yourself to continue being able to exist in your role as the. The owner of this company,

Brook Shepard: one is that I didn't used to need to have salespeople because I could do all the sales. And what we found is we grew bigger and I grew older, was that I don't always resonate. Um, as a proud Gen Xer, I might not resonate with a millennial the way I would hope, and they might not resonate with me. So part of the way to do that is to have a bigger team around you that can support you and be self-aware, hopefully of my own gaps and my own. My own, in my knowledge. I try to be aware and then surround myself with people that can fill those gaps and hopefully I can help them fill their gaps as well. So, so just being aware of what I'm, of, what I'm doing, and who I am and what my failings are, which I, I think a lot about. The other part is, it's just very dynamic when I started doing this. Online advertising really meant search keywords on Google, ask Js, Yahoo, Bing, seven search dog pile, lycos. It was all search. Um, and then social came into play. And that didn't really work super well in the first two or three years that it existed. And having to learn those tasks and, and to understand that the, the processes I followed 16 or 20 years ago. Don't work now because of automations and realizing that new things have to unlock. It used to be that if you were a more sophisticated bidding person, if you knew how to game the algorithms in Google better than the next person, you could be successful. That's not the case anymore, and if I were still clinging onto that, I would've been out of business a long time ago. So analyzing what works in myself and analyzing what works in the business, surrounding myself with people that hopefully fill the gaps I have, and then adapting to the data that we see in the market is the, is the most important thing.

Sean Weisbrot: You said something really important. That if you continue to do the things that you used to do, you'd be outta business. How has, uh, tariffs affected your business in terms of getting clients, keeping clients or helping clients continue their growth path?

Brook Shepard: On Friday, I was talking to a client from the uk. They were in New York. And we were talking and they were saying that they were thinking about pulling out of the United States. I wouldn't be surprised if more people said that. I think what's different now as compared to 2020 is a few things as to help clients navigate it. Right? This week of 2020, the world was bedlam. We were all locked at home. At least I was in New York and we were all doom scrolling and something like 40% of our business evaporated overnight. Sean, when I, when I started the company, I made a dream list of clients I wanted to work with, and one of them was a shirting company. I made in America, manufactured America shirting company. And we worked with that client and then this is, which worked in the 20 18, 19 20, and in 2020 they said, we're giving up. We don't want to go direct to consumer anymore. We want to go to, uh, we, we just wanted to survive. So we can support the haberdasheries that got us here and, and, uh, come out the other side of this. They did not, they, they ended up, they ended up having to sell the business. Um, so, so what we learned in 2020 was, which was much more the, the, the big difference between 2020 with COVID and now is that we actually have more certainty now. And I, I'm trying not to be political in this answer, but, um. Everyone's got the same tariffs, so we all know what's happening, whether we like it or not, whether it's gonna be good or not. Those are separate issues. But we're all operate, all the clients are operating under the same conditions, whereas, whereas in 2020, no one knew what was going to happen. What did happen in 2020 and I, and how do I help clients get through it? I talked to 'em about this in 2020. What happened was a lot of people, not just our clients, pulled out of the market. That reduced competition in a supply and demand environment on the advertising platforms. So there was less. There was less people buying advertising. And then alongside that, there were more impressions in market because everyone was at home and before any. PP loans came in or any, any other loans came in or government assistance. So the people that stayed in market got more impressions at a lower cost per impression, and they weren't able to succeed. Now, it took stomach to do that, but we have clients that grew 80% that year. 90% that year. Almost doubled that year because they were able to have this stomach to stay in it and, and weather the fact that we're gonna come out of this. Okay. And they got more eyeballs for. I've been talking to clients about that over the last two or three weeks. I don't know if that's always the answer they wanna hear, but that's, that's my reality is we're all in this together. Everyone's got the same, uh, the same tariffs applied to them basically. I know it's different for different countries, but basically we, we all know what's happening and we have history to say that. People are gonna pull out and advertising should get cheaper.

Sean Weisbrot: I would love for advertising to get cheaper because trying to advertise to Americans is incredibly expensive, almost prohibitively for some people, depending on, you know, what they're trying to promote. What do you look for in a potential client? What, what's something? That they say or do when they come to you, that tells you immediately that this is someone who could be successful. And I guess this question is meant to be answered for someone who's looking to grow their own business.

Brook Shepard: The biggest thing that is, to me, an indicator of the ability to be successful is not revenue targets. 'cause everyone's got revenue targets. Um, they might be made up, they might be plotted on a, on a graph that goes up into the right indefinitely. But not everyone has, has specific goals around. This is how many new customers I want this year. If I'm talking to a prospect revenue. $700,000 a year brand, and I wanna get to be a $5 million brand by 2030. That's a, that's, or 2029. That's a typical thing that, um, if they can tell me how many of those are gonna come from, how many of, how much of that revenue is going to come from. New customers as opposed to existing customers. I know I'm dealing with a sophisticated person who's thought about this a lot and w is probably gonna have a leg up in the competition. They, their supply chains might not be organized. They might have a bad product market fit. I, I, I can't judge those things. Um, but, but if they could tell me how many, what percentage of the revenue they want to have come from new customers versus existing customers. I know I'm dealing with someone who's pretty sophisticated and pretty smart and has a really good chance to succeed.

Sean Weisbrot: Do you think people are thinking about expense management right now? Or if they're, if they are, what are they doing right? What are they doing wrong if they're not thinking about it? Why?

Brook Shepard: I think they have to be, because all the products are going to be costing a whole lot more, um, today than they were a month ago. So I think they're definitely thinking about it. My pitch for that is that my fees haven't gone up. So if everything else in your, in your ecosystem now costs 30% more because you're importing from China, well, congratulations. I don't cost. Um, and we have a whole business model around not really raising fees for clients and, and making sure that we can maintain continuity for our client. We have clients that are paying us the same right now that were paying us six years ago. Um, and it's because the way we manage the business. So yeah, I think everyone's looking at, at managing finances right now, but we try to be part of these solution and not the problem.

Sean Weisbrot: Were you aware that. Earlier today, the US increased the tariffs by another a hundred percent on China.

Brook Shepard: There's challenges all the time. I started this business in 2008, 2020 was a, was a serious issue. The other thing that's, 'cause I mentioned earlier, I, I think I mentioned that about half of our clients are GTC companies and about half of our clients were schools. And I, I will die on the hill. That, that is a benefit for our, for our customers, that about 60 clients and half of them are G two C and half of them are schools because they, they can learn from one another. And I was in Chicago last week talking to a bunch of clients and trying to talk about how they can learn from one another. Um, but it's interesting 'cause one of the schools I was talking to has made a serious effort in the last six years to bolster a. Say what it is, but a certain degree they sell, which is for whatever reason demographically no longer interesting to Americans. And the way they've done that is invest in overseas, um, in overseas enrollment. So they've got people coming from around the world to fill their, their fairly niche, uh, good career outcome, uh, career, uh, college program that they're selling. And that's drying up. And they're aware that it's drying up because at this school, at least as of last week, uh, Stu, their applications from overseas were down. They, the good news is they're aware of it and they're working on it. Right. They're not pretending it's not happening. They're, they're, they're not going to be. Oh, it'll be fine. Like, I'll, I'll talk to a college that's, uh, I'll talk to without giving it, I'll talk to a land grant college in. And I'll say, okay, well do you wanna, you called me like, can we talk about a plan to fix it? And they'll say, ultimately, no, I'm not gonna try to fix it because I believe the government won't let us go out business. That's crazy. Of course the government's gonna let you go out business, especially in the current environment. Yeah. The government doesn't care. So, so I, so I think that that the first thing is to acknowledge it, but lemme ask you, why do you think, you think it's, what do you think a third of startups a quarter? Like what is your guess about who's tariff?

Sean Weisbrot: Hey, just gimme 10 seconds of your time. I really appreciate you listening to the episode so far, and I hope you're loving it. And if you are, I would love to ask you to subscribe to the channel because what we do is a lot of we're, and every week we you a new guest and a new story, and what we do requires so much love. So that we can bring you something amazing and every week we're trying really hard to get better guests that have better stories and improve our ability to tell their stories. So your subscription lets the algorithm know that what we're doing is fantastic and no commitment. It's free to do. And if you don't like what we're doing later on, you can always unsubscribe. And either way, we would love a, like if you don't feel like subscribing at this time. Thank you very much and we'll take you back to the show. It's clear to me, or at least my belief, that an American tech company that's selling a software won't have a sales tax applied for someone overseas buying that thing. Um, so I think tech companies, software companies will be fine. What I have started to see. People in Europe, for example, say, I don't think I wanna work with American startups anymore. I think I'm gonna find Chinese. Uh, I think I'm gonna find European companies that are doing the same thing. The quality of service may not be so great. The ability may not be so great, but I'm gonna promote European stuff and I don't blame them. These D two C brands, these physical products are far more, uh, in danger of being screwed, but. What's shocking to me is not only has Trump completely misread China, but he's also completely misread how what he's saying and doing is actually giving China the, the ability to become the only superpower in the

Brook Shepard: world. That is the position of the Yeah, that's the position of the Economist newspaper as that, as that's what's happening and that's, that's their view of, of what's happening. Yes.

Sean Weisbrot: I haven't read The Economist. That's just my own experience and knowledge of the world and. It's, it's hilarious. 'cause a few years ago I was of the impression that China was gonna be really screwed because Biden, you know, Trump started the trade war. Biden was pushing the trade war even farther, and then Trump came back in and was gonna make it a lot worse for China. But by pulling out of the World Health Organization, the Paris Climate Accords, the World Trade Organization through these tariffs, um, not to mention bullying the hell out of all of your allies, uh. He's making it possible for Xi Jinping to take advantage of this, this vacuum by going, Hey guys, look at us. We're not gonna do any of that stuff to you. Come play. We'd love to talk to you. We'd love to have your money, and we'd love to invest more money of ours into your economies. Unfortunately, I. Xi Jinping doesn't play so nice, even though he makes it look that he does. By, I don't know how much you know about the, the way they operate, but basically they invest in physical infrastructure projects where they need to have a Chinese company and Chinese employees come in and do it. And they do it right. They do it for free. But in exchange for like access to your gems and your, your, you know, your lithium and oth other mines and, and taking control of your infrastructure basically in that regard. Um, and it basically in debts people to them, uh, which is kind of what happened to Sri Lanka and they've done it to dozens and dozens of countries and now they're gonna have the ability to do it to a hell of a lot more because the US is pulling out from the global environment. So I'm sure Xi Jinping is quietly going, this guy is such an idiot. I, I can't believe he's making it so easy for me to do what I've been wanting to do, which is to make the world a Chinese world. And all I can say to that is I'm so glad I speak Mandarin.

Brook Shepard: I have two sisters. One is a French citizen and has lived in France for many years. The other is a Swiss citizen and lived, has lived in, in Switzerland for many years. Um. So they're, they identify as European, they have European passports, European houses, European spouses, European businesses. And if I say to them, well, hold on. If I say something that I think is pretty innocuous, like, one of the things I don't like about what's going on in the current environment is that since World War II America, the United States has been the leader of the free world, whether that's through Overfunding, nato, or through, uh, be policies or. The United States has been in charge of the world order for the, since World War ii, and that's worked out pretty well for me, and I have a vested interest in keeping that going. I think that's a fairly reasonable thing to say, but, um, it, it does not go over well. When I'm talking to my European family, they're like, what do you mean? You've been in charge of the world order for the last, since World War I? Is it debatable? But, um, but the, the thing that gets me though, the, the most is. Makes, I almost said a phrase, what one of the things that makes the United States stand out is the quality of our education system at a higher level. So people come here from all over the world to go to Harvard and to go to and to go to wherever else. And if that goes away, because it's not our healthcare that they're coming for and it's not our natural parks they're coming for. And it's anyone who's been to Paris or London and taken the subway from the airport to downtown of those cities and tried to do that in New York and taken the AirTran JFK. It's like, it's forever. It's not a public infrastructure, it's not the quality of our, of our lower schools. It's, it's a business friendly environment with a really great, um, higher education system. And if we decide to turn our backs on the rest of the world and say that, okay, we don't really want you to come to our schools. Unless you think exactly what we think and if you don't, if you don't act the way we want, we're gonna deport you. That has to have a negative effect. As I'm seeing it happen in some of my clients, it has to have a negative effect on the world's perception of our education system, which is like our crown jewel and why people come here. And that to me is deeply worrying more than a lot of other things. Honestly, I can see some good in administration, not a, some. People come from all over the globe to better themselves here at our universities and say, no, we don't want 'em anymore. That to me, is very troubling. But I don't, I don't, I got a vote, I cast my vote, and I don't get another vote after that, and I don't get a say in it. So all I can do is adapt to it and help clients navigate the waters.

Sean Weisbrot: I live in Europe in a place where people are pretty open-minded, but even then, they still look at me and they're like. What the hell is your country doing? And I'm like, I live here. I don't consider myself American like sure, I, I can understand what America is doing like. I keep up with what's happening in the country, so I, I can explain to people from an American's point of view why things are happening, but I can also understand as someone who's lived half of my life outside of the US why the things that America is doing is so ridiculous. I think

Brook Shepard: about my own journey as an entrepreneur and, and running this business. I think about things that were cataclysmically difficult. Years. I think about my biggest client firing me, uh, by text message when I was in a family vacation with my wife and son on the way to Cape Cod. Or we go every year. I think about one of my key colleagues, a woman named Betty, who now runs internal marketing at Electronic Arts in California, quitting. Um, there's more of them, but, but I think about these huge things that come down or clients just not listening and saying, I haven't heard you for the six months. I think honestly as an entrepreneur, a. Um, might say, well, time to give up, or time to reevaluate or, or wallow in it a little bit. And I believe very strongly in just picking yourself up and just left foot, right foot, one foot in front of the other. Walk forward. Do what you can. Pick up the pieces and go. Doesn't mean you shouldn't self-evaluate, doesn't mean you shouldn't. Think about why that client fired you over. Text message doesn't wall. Four and I, this is probably the accurate number. If I have four candle brands in, in our, in our portfolio or three soap brands, which is probably right, they're all gonna pay the same tariffs. Um, they're, they're all gonna be paying the same, all of 'em are gonna have to raise their prices by the same amount. And the consumer, I mean, either they're gonna eat into their margins, which is. Consumers are gonna, or it could work out that President Trump, it works out like President Trump wants it to and things are renegotiated and things go back. That seems like a not impossibility, by the way, the idea that the administration would want have a win because I think, I think you and I might agree that the administration like. Of winning and losing, and I think it's very possible we'll get some concessions from Vietnam or concessions from, you mentioned Sri Lanka or wherever. They'll get some, they'll get some concessions and they'll hold a press release saying, look, it worked. We got our concessions and we won. The tariffs are backed down. I don't, I don't think that that's an impossibility in this, in this market, but it's affecting everyone the same way. It's not like it's just affecting, so companies and not affecting car companies affect everyone, so all. Keep trucking on, man.

Sean Weisbrot: What's something I haven't asked about that you feel like we would be missing out on if I hadn't asked?

Brook Shepard: New customers were important. Why? And I don't know that this is the cause, but it certainly correlates in the current interest rate environment. Private equity firms that run startups have demanded over the last three years what they call efficiency. And by efficiency they almost always mean higher return on investment, uh, higher return on ad spend, higher ROI, whatever the, the metric you're using is, they're almost always saying more of that. The way you do that. The way that gets done and businesses are, are catching on, um, the way, which is good. The way you do that is you focus on existing customers and you say, I wanna sell more suits to the person who's already bought a suit, or I wanna sell more soap to the person who's already bought soap for me in the past. That is the way. You get your most efficient return on ad spend. However, if we are spending money only on advertising to existing consumers, by definition we are not getting new consumers and our business will go into a death spiral and we'll efficient ourselves right outta business. And I have seen over the last three years. Many businesses, efficient themselves right out of existence and not have any understanding about why it was, I thought we were being so efficient. Our ROI was up over every month. It was up what happened? And they, they weren't listening to the, to the, to the signposts. So unlike my client that I mentioned, the school that's aware, the fact that they're having a problem with. Incremental enrollments from overseas. These people weren't aware in general, a bunch of them, of the fact that they were efficient themselves outta business. So ROI is great. You need to have an R OI focus for your business to run. And total revenue is great, but really focusing on how many new customers you need to get and realizing they're gonna cost more. Customer.