Jesse Cunningham Responds to Alex Hormozi on AI and Agencies

0:00In this video, let's talk about a recent Hormozi video at acquisition.com talking to this guy to the left. Now, every once in a while, you may recognize someone Alex Hormozi is talking to here, right? This guy right here, he owns this SEO agency called Hook Agency, which specializes in a very particular market. He specializes in the roof and niche. Now, some interesting things we're going to talk about in this video is that, you know, we'll do commentary, right? We're going to listen to Alex. Okay, so you got seven million here.

0:28So the goals of this of Tim Brown is specific. He wants to grow the agency. How do I do that? It's kind of cool. But on top of that, something he doesn't talk about, which I know just recently happened is he started an actual roofing company, which is really interesting because what we can do is we can dig into his website and figure out what has he been doing. Think about it. If you own a seven or eight million dollar agency called Hook Agency and you help hundreds of other roofing companies, you probably are pretty darn good at SEO, AIO, all these

0:59different things. So what we're going to do is look at Ahrefs and see what he's been up to. But let's just start the video. Let's come back here and listen. SEO websites and PPC to roofing, HVAC and home services company companies. We do seven million in revenue. I would like to do 14 and sell for 20, my company for 20. And the kind of the thing holding me back right now, I think is margin. I'm at like 13% EBITDA. And then I think it's trying to figure out how to capitalize on market risk with AI coming up. So we did

1:34a recent video on Hermosi's talks before and everyone seems concerned about AI, even the guys, even the agency owners who use AI to build websites, to do SEO, to do all the things are concerned about it too. Very interesting stuff. You were answering some of that. Yeah, I think are you guys already doing like LLM SEO? I'm building that service out right now. Yeah, because that's I mean, it's absurd. I think I think I saw this this morning like GPT is 500 million users weekly. That's really hard to comprehend everyone.

2:09That's a lot. It's a lot a lot. That's more than like social media platforms. It's a lot. So what Alex is talking about is the adoption of LLMs of chat GPT. So many people are starting to use chat GPT more and more. So he's encouraging this guy Tim Brown to start giving a service away for AI SEO, which is LLM SEO, GEO, whatever you want to call it. Basically, make your website show up on these different LLM platforms.

2:39And it's making recommendations for commerce. And I'm sure they will monetize it in the whatever future. But yeah, I mean, that to me, that's like, what's my future proving thing? That's probably like thing one. Thing two is we have to give a really good finance arm or no? I have a fractional CFO and then my wife runs money. I'll say no. Not as a not as a slight just because in the business that you're in, typically, it's more ops heavy. And so you have to be more financially disciplined in that business than you can get away with in let's say a course business, right? That being said, what's, which

3:17turn right now? What's your price point? Turn is 5% a month. Okay. And what's your price? Price point is like, average is like 5000 a month. So coming over to his agency website, you can see they have different offerings, silver, gold, platinum and enterprise. And he's saying somewhere around that 5000 a mark is where they are. So what they do with my understanding of the company, I've talked to one of their sales reps once before, is they offer websites, they offer SEO, and they offer pay per click, right? And as he said, recently, in the video, they're going to fold in an LLM SEO service. So 5000 a month is the average. It's pretty high. For SMBs,

4:00you said 5%? Yeah. Okay. And then you're currently doing, you said 7 million? Yeah. Okay, so you got 7 million here. And then how many units are you selling a month? Like 10. So you're going down right now. Or I just have the wrong number on the how many? Okay, we're going, we're going up. No, no, no, no, actually, sorry, I did the math wrong. Yeah, that's on me. Yeah. So you're pacing right now, 12 million in terms of your run rate, right now. So you want to get to 14, you can change nothing and get to 12.

4:41So I think we just need to make sure that the additional 5 million that's going to come is going to drop the bottom line. So do you have operating capacity right now in order to scale the business? We're building. So this part of the conversation, it gets interested. And remember, we're going to listen to this talk. And I'm going to show you like behind the scenes, how another SEO would look at his new website, which is going to be very revealing. But the next part of this conversation is uber interesting about dropping it will increase in his bottom line near shore.

5:11So that's going to allow us to do that, I think. And so we're at our first five employees, we're trying to add like 10 more in the next like three months with near shore. Yeah. And I hate to keep interrupting the guys talking, but they're talking about near shore, shore in near shoring, right? Basically hiring someone and say Mexico for a fraction of the price of someone in the US where they are. And they have like a same, I guess, language, there's no language barrier, right? Therefore, his operating expenses would go down. And then Alex Hermosi has something to say

5:43about that. I think so. I'll give you the 12 months ago answer. And then I'll give you the today answer. So the 12 months ago answer is yeah, I would probably near shore almost the whole team. And then that would that would give you the margin back that you need. If everyone's curious what this is, this is how you calculate the hypothetical max of a business based on its sales velocity and LTV, which is what I was trying to get to with you, but you had a zero. So there's no point.

6:04But you sell 10 units a month, 5k, 5% churn. So 100 k LTV times 10 is million bucks a month. So 12 million is your where you will be projected to your current. So the name of the game often with Hermosi when people talk to them is exit value, right? And they're doing like some magic math right now to find exit values. Well, yeah, seven. So you've got 5 million that's going to come if you change jack shit about the business. So you're going to have 5 million more in revenue that's going to come in. And what we need to do is make sure that one more of the existing revenue

6:36drops the bottom line and for sure, the additional revenue drops the bottom line. What does it cost to deliver on a customer? We have 50% gross margin. Yeah, that's probably why. So now this is one of the most wild parts of the conversation. I've watched this once before. So you said 50% gross margins, right? Listen to what Alex has to say about that. If I run service businesses, my rule of thumb is always 80. So I just don't start. Yeah, I know that's what you said. I feel like that's a little crazy in our business, but I would love that. I would just challenge that.

7:09Just because like I'll say this. So he said 50% to me, right? In my experience, like that's great. And then Alex comes back and says, no, no, no, your operator needs to be at like your gross profit. Your margin should be at 80%. Therefore, if I sell a thing for $1,000, 800 of it should be considered gross profit, which is wild. But here's what Alex says about it. Industry averages, you can completely throw out because American averages are overweight, divorce twice, going to die at like 70. So like, why would I give a fuck with the averages for an industry?

7:45Like most people suck at everything is concluding their business. And so why would I, like, why would I measure myself against that benchmark? It just like it, all it does is anchor me to lower standards. So there's no reason why you shouldn't have an agency that runs 50% margins. Zero. You're also an SEO and you're niched down. There's tons of SEO agencies that run 50% plus net margins.

8:05And with AI and nearshoring, there's for fuck's sake, for sure you can run better margins than that. And so I say that just because I want to break this belief in being a little bit crude, but the nearshore is the 12 months ago answer. The today answer is you need to become an AIG. Because I'll bet you that 80% today of what you guys do is automatable. Not tomorrow, like today 80%. So that that's what's most exciting about all this to me is that he said, back in the day, 12 back in the day, 12 months ago, yeah, hire people near shore, you'll drop

8:40your cost to deliver the goods for your SEO clients. But nowadays, it's even better. You can use AI to do it, right? AI and Alex had a point of like, we want to be elite people, we don't want to be mediocre people. So comparing yourself to the mediocre. But the AI stuff, and this is what we teach at the Rank Expand Academy is where it's at. You can be a solo agency owner, and you can serve as 50 clients. Whereas a year ago, you might have been able to service five. Therefore, you can have like a lean and mean type of agency, a micro agency and make tons, tons of money to know what

9:13you do AI can do. I think I've been thinking of that as a threat. But I think I'm just trying to, you know, oh, why they capitalize on market risk, help think a little bit. I'm trying to flip that in my head to definitely do not think of this as a risk. Yeah, think of it as a risk for everybody else. Because you're coming. Yeah. Be the big the wild to me. So so we did a video. I did a video before this one talking about a guy who does micro websites, you got to check out that video.

9:37He does 20 million a year, whereas Tim Brown does around I think he said seven or eight. But this the dude, the guy also said I'm scared of AI. Now, now mind you, he builds websites, he's scared that other people will use AI to just build websites for themselves. But Alex is saying, look, you have like the best tool in the world AI, just leverage it to lower your cost of goods.

9:56And you're off to the races. Not the sheep. Like for real. Because like, I mean, what's the other options? Like, imagine like, from from heaven, there was this tool that they were like, hey, I can 10x the productivity of your entire staff and the rest of your competition aren't going to do it because they're lazy. Would you be like, I want that? It's available. Yeah, we're incorporating a bunch of things. But I think I'm like 1000 hours in on tragic tea right now. I don't know if I'm really using it as like, no, yes, you have to be doing it. You have to be you have to get up

10:31to speed on agents. You have to speed on unlike make.com. And how you can basically do kind of like 2.0. Like what Zapier automations used to be is what kind of the new make.com type automations like all the I can I can it's such an ops heavy business. And it's so tech oriented that almost everything that your team does right now minus account management can pretty much be done by AI. So you have a big opportunity. If you wanted to sell for 20, you could get to 12 with 6 million in operating in margin. And then you could sell for 20 for sure. So like the business you have

11:03right now, with no real changes in terms of pricing and sales motion and anything like that can get you there. Like we just have to improve the operational flow within the business to get you the exit you want. Like this is and this is exactly what PE firms do. So private equity firms would come and gobble up a company like Hook Agency, right? And they would cut personnel potentially and they would incorporate AI and other things that don't cost a lot of money but are still effective. They'll bundle a bunch of things together and sell it as a package for a way

11:32higher multiple. That's the name of the game. And that's why Alex keeps harping on lowering or increasing your margins, lowering your cost of goods. Because I just think that's what, you know, he's accustomed to on these big exits. Huge money there. So what we're going to do now, so we got to listen to this talk. We're going to look at Hook Agency. And by the way, I think Hook Agency is great. So like for the record, I'm not bashing anyone here. I think it's great. I think it's a great company. And Tim no doubt is legit. If you watch his other videos, he has a YouTube

12:02channel talking to roofers. He's legit. This guy owns a legit agency but it's kind of fun to listen to him open up a bit with Hormozi. And then we also get to go to Facebook and look around at his roofing company. Because listen, he just opened a roofing company. And if he knows, you know, 100 plus roofing companies and exactly how to do SEO, PPC, all these things for them, you'd imagine we can look under the hood and figure out what he's doing to kind of backwards engineer this thing. Now this next part of the video will be a little technical but realize if

12:33you have questions or you want to be part of a community that does these type of things, check out the Rank Expand Academy. So if you come to the classroom, there's tons of things you can learn with AI. I mean, namely, scaling microsites is probably the most popular. So what we do is instead of building one website for a client, right? You build a website for a roofing client.

12:52We will build 15 for a client because we figured out a way to use AI to drum up microsites to get as many leads in a local area to dominate a local area really, really quick, right? And they're very, very affordable. A microsite isn't necessarily a small website. It's just a little amount of work because AI, kind of like what Alex or Mosey was talking about, like use AI to do big things for less money. Pretty simple, right? And then if you're a beginner, listen, we have pass to a thousand, make your first a thousand dollars with AI gear up. One of the most exciting things in the gear up

13:21phase is this one right here. I just did a video on an SEO research assistant. It's using chat GBT plus raw data, API data to have a really strong tool for a fraction of what it used to cost. But let's get into Ahrefs, which is an SEO tool. And if you're not familiar with SEO, that's search engine optimization, which means that you're trying to rank your website on Google faster, easier, better than before, right? So what this tells us is he kind of started this. It looks like maybe end of year 2025, right? We can see this and this is the traffic chart. So I'm going

13:55to come over to organic search last two years. Let's do last six months because this is where it kind of started right around here. And then we're spiking up. We have 70 traffic. It's not like you don't expect a website to be crushing it within six months. Like, listen, it's been around for four months. You're not expecting it, but you get to see the strategy, which is kind of fun. So let's come over here to referring domains. Now this is where it gets interesting because I was looking around and I noticed a few things and I saw a Facebook post about this anyways. You can

14:25see here that he is linking his agency, hook agency to his new roofing business. So just stick with me. He has an agency, a big agency, right? And he just started a legitimate roofing business where they are going to put shingles on people's roofs to keep it as simple as possible. Like here it is and we, I'm not logged into Facebook, but you go to Facebook and kind of see how their market in there, right? Very interesting. But he took his agency, right? And he did an internal link. So if I come over here, click here, we can see, all right, blog, construction company names.

14:58We can say, okay, here's the interesting one. We have hookagency.com slash blog slash best roofing companies, Minneapolis, 2026. This was started in October, presumably around the same time that he started the other website. This is one of the first things I'd imagine he would have done. If I click here, where does this go? Nowhere. That's a telephone website. That's interesting. This one here, okay, North Face is not his company. So he put it in a listicle and put it as number two. Now this is a strategy I'd imagine. Like you can say, here's the 10 best roofing companies in Minneapolis and he just wants the link, right? So his anchor tag, right? The owl roofing. So is

15:37roofing. It's just CC, blue and underlined roofing. So if I click here, actually, you know what? That goes to roofing marketing. That's interesting. Let's see if there's a link to the website though. Same thing right there, right here. Here it is, website. So what I might have done different is maybe have like best is a tricky word nowadays. You can get in trouble, not in trouble, but the algorithm seems to be catching on to best roofing company in XYZ is kind of sketchy because SEOs like myself have kind of used that too much, right? So make it more natural. Maybe the roofing team

16:11as a hyperlink, this internal roofing hyperlink, and I know we're technical right now, might have been automated when they built that blog rather. They're pretty darn interested. So coming back here, is there any other interest in backlinks that they were using to boost their website? So when you first create a website, you want your website to be strong because if it's strong, it dominates all mine. You can get more leads, you can make more money. It's really that simple.

16:34But what I found, you're going to find other roofing companies around here, I think. Let's see if I can do on anything. Do we see anything right here? SK roofing and construction. Now, let's come here. We have, let's say here, we have this different company, SK, construction and remodeling on January 13th, five most common link points in a roofing system. Cool. So this is a different company. And mind you, their DR is 64. So to me, DR is domain rating, which is how strong a website is, right? DR out of 164 is very strong for a local business. Very, very strong. And somewhere

17:13in here, they are, they're linking to our roofing. Now, how did this happen? I don't know. Someone probably knows someone that's pretty cool. What is the anchor text right here? Estimating costs. So if I do control F, estimating costs, I don't see it. So Ahrefs is still, if I can come here, let's see if I can find it. No, I don't see it. Maybe it was taken down. But regardless, at one point in one time Ahrefs has shown that this website pointed to that website. So maybe if you are in an industry and you know other say painters in the area or garage door guys or gutter guys or

17:46roofing guys, you could say, hey, I'll give you a link. Can you give me a link back? So that's like reciprocating links. It may be against Google's TOS. It may not. It happens, right? It happens. And I think if we came down here, we can see more of that. But what I'm interested in now, and I'm not saying, I don't know how they got those links. This is all conjecture, right? I'm just figuring on things. But anyways, if we come back to the website itself, let's see how it looks.

18:12So Ahroofin, we have about us. We have services. So we list out in plain English, there are five services. Residential roofing, roof repair site, and storm damage commercial roofing. Solid, tight. You don't want a billion services for your website, right? Keep it tight. Keep it cohesive. That's really nice. What I'm curious about, you know, this is all nice. You can make a website with AI. And in a day that looks like this, and I'm not like downplaying this website.

18:37This is a beautiful website. I'm just saying AI is that strong nowadays. But what I want to know, I'm going to come up here to the URL. I'm going to do sitemap.xml. Maybe it has Yoast. It has rank math. So we have a nice page sitemap. Let's come down here. And this is what I'm looking for right here. Do you see these? This is the key. And no doubt, I was hoping, expecting he had this.

19:00These are called service location pages. So this is for sitemap. And does he have sitemap there? Yeah, boom, sitemap. So control click sitemap. This is the main page for sitemap right here. Al roofing. It's time for something new. And let's talk about sitemap. So Google knows that this company also does sitemap, right? You can make a lot of money here. But what you do is you force feed Google, you just kind of shove it down its mouth, that we do sitemap in this area, sitemap in White Bear Lake at Minnesota, right? And you have pages. If we come back here, here's all the pages.

19:33We do it for New Brighton, North Oaks, Mounds View, Minneapolis. The point is your website, when you and he's doing a great job, and you would expect he's doing a great job because he's done it for hundreds of other people, right? But the point is when you build a website, you need to force feed Google exactly what you want it to perceive about your company. Now shifting gears for a second, I typed into chat GPT. I said, who is the best roofing company in Minneapolis for roof replacement?

19:59And does it show Al? No, it doesn't show Al roofing yet. And I wouldn't expect it to because it is too soon. And that's the tricky part about having an agency. I own an agency, right? It's tricky to show results in some things in SEO and LLMs within four months, especially for a new website. It's asking too much, right? So these are long term plays. But when you become the top dog, such as I mean, I don't even know if they're the top dog in Google, but if you look here, Twin Cities contract and services, listen, the best type of lead for a

20:29business is an organic lead through Google, right? And nowadays, it could be argued that chat GPT leads are even stronger because the person has gone through the whole conversation over here and kind of trust, right? The trust I have with GPT is probably a higher trust than I have with Google. Therefore, if someone calls your business, and they kind of hashed you out through chat GPT, they probably are very close. They're ready to buy. So there you have it. I thought it was pretty cool that we got to see an actual agency owner come out and talk about his goals. So right on.

21:04And to be clear, I'm not I'm not saying anything outside of he's legit. This guy's legit. Tim Brown is legit. And it's cool that he came out and he talked about his goals. So everyone can see very, very cool. And I wish his new venture, Al Rufin, as much luck as possible, right? It could be a huge opportunity. You build this agency, right? You build this agency over here, you build a roofing company over here. Enterprise value is absolutely humongous if you do both of these things, right? Now, if you want to make money online with AI, whether or not you're a

21:35solopreneur, just you and you want to serve as clients, or you want to build your own assets and sell leads to clients, that's Rankin Rent, right? If you want to make money online, the Rank Expand Academy is for you. We have a weekly call. We have other things. It's a very vibrant community. It's broken down very, very simple. We can come back in here, community bills and wins. And you could see us talking here. We have, how many is it? 28 community calls each one last in an hour that you could come. It's a lot of knowledge. It will definitely be like a brain dump. You're going

22:04to get like a huge upload of information, but then you get to talk about it with other people as you grow and learn and make money here.