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Agency Owners: How to Outsource Your Digital Marketing Like A Pro & Have Stable, Cost-Effective Profits That Last

In conversations with Ryan Kelly

For this episode of Ecoffee with Experts, Matt hosted Ryan Kelly, Founder and CEO of Pear Analytics. Ryan shares his first-hand experiences and strategy to build a sustainable and profitable digital marketing agency. Watch now for some great insights.

Don’t just give your employees work and say, have fun. Give them specific tasks to do and tell them about the outcomes you are looking for. Give them goals and milestones..

Ryan Kelly
Founder and CEO of Pear Analytics
Hello everyone. Welcome to Ecoffee with Experts. I'm your host, Matt Fraser. And on today's episode, I have Ryan Kelly with me. Ryan has been doing Digital and Web Marketing since 2003 when Google was only five years old and not a publicly-traded company, and things like Twitter and Facebook didn't even exist. So he started Pear Analytics in 2008 to help businesses measure their marketing results using advanced analytics techniques and help drive more traffic to their websites. He grew up watching Larry Bird and the Celtics, but he's an avid spurs fan. At six foot six inches tall, Ryan dreamed of professional basketball but chose engineering school instead. He got to play ball with former NBA star Marcus Camby while at the University of Massachusetts. Ryan, thank you very much. Welcome to the show.

Thanks for having me, man.

Ryan, you have a unique thing you've discovered in your business regarding running your agency, outsourcing, and some strategic tips and cost-effective strategies to run a profitable agency. First, what made you start outsourcing instead of hiring internal employees?

It was probably a combination of many things. And maybe I can put it in context for you and go back in time. When I started the business, it was me in my home office, and that was it. I had come out of an agency where I was a partner before this one, and I thought it would be better if I did my own thing. The first few years are pretty rough. I would have some clients, and then there would be two or three months when I didn’t have anything. But eventually, I got this thing going. We started doing all kinds of cool stuff- building software, SEO tools, website analyzers, and all kinds of different stuff. But in terms of the services we provided, we grew. The agency probably has had as many as 15 to 20 people. It’s not huge. It’s a mid-sized agency, but it’s just enough to have problems. We have problems hiring, with production, and whatever you can think of. So I had what I thought was a brilliant idea, to go and teach Digital Marketing at the University here in San Antonio, and maybe when we hire people, they’ll have a head start on what I’m doing here. Because we would hire folks who would claim to have Marketing backgrounds and experience, but they’ve never really been in digital. They don’t know what SEO is. They don’t know how to manage paid search campaigns and these kinds of things. So my idea was to teach at the University and poach the kids from the classes I’m teaching to intern with us, and the best ones will stay on and work for us full time. It worked for a bit, but I found that San Antonio is a different market. I don’t know much about Texas, but San Antonio is the smallest of the four main cities. I would say it’s a good place to raise a family, but it’s not the Eco center of technology like Austin or the center of oil and gas like Houston. It’s very different here. Many young people do not like to stay in San Antonio. They would come here to study and go to school but would leave because they were more attracted to go to Austin. So that was our problem. We would have people come in, train them, get everything in, and they’re like, I’m going to Austin. Well, back then, we never had remote working, so everything was at the office. The stigma of agencies was that everybody had these swanky offices with ping pong tables and bridgeable snacks. Those were the things you needed to attract talent. But then COVID changed everything, and even leading up to COVID; we had a lot of difficulties hiring people with the skills they said they had. So we changed our hiring process dramatically. We had an eight-step process that took three months to hire one person. It was very intense. My part of the process was at the very end. I would do a skills assessment. We would get on a Zoom call like this, and I would have them walk me through, say, Google Analytics or Google ads platform, and I would say, set up a campaign for me. Some people didn’t know how to navigate the system yet said they were Google Ads experts. So this was the problem. I wanted to hire experts. We went through this whole period of hiring junior people and thought we would train them. Well, that didn’t work because they would leave. So then I was like, let me hire experts. Let me hire these tenured veterans because they’re more solid in their footing, and they’re not going to up and leave in two years. So we just had a lot of issues.

What were the challenges?

They weren’t experts in what they were doing. Everybody in Digital Marketing wants to be a Swiss army knife, and what I was looking for were the experts. I want someone who only does SEO all day long. He lives it. He breathes it. He knows everything about it. He hasn’t even been in the Google ads platform because all he does is that, or he’s like a GMB expert. Or on the flip side, it’s like there’s a person who knows the LinkedIn platform very well and can dive into Facebook. These are more B2B advertising experts.

Was it hard to attract those people and retain them because they're so good at what they do that they don't see the need to work for someone else? Because they can just get their clients? Or are those people out there who are experts but they're not entrepreneurial?

It’s a little of both. You have people who were claiming they were experts, and they weren’t. Then there were the people who were very good at it, and to your point, they were freelancing. They had their list of clients and their own thing going. But I found that they don’t like to run a business. They don’t want to do invoicing. They don’t want to be collecting the checks and all that. They always want to do the work. So my pitch was, we’ll be your whole back office, you just come to me, we’ll pay you very well. And we will let you have all those clients. You will get 80% of those clients, and we will give you a percentage of all the other new clients. So it was like having their own business inside of us. That was a tough pitch. It sounds great, but it’s not something they were ready to jump into. So that was a challenge, and then we slowly transitioned into remote working. People started leaving the company before COVID, 2019 or 2018. And I was like, Man, I don’t want to lose that person. Can you just stay? We don’t care. You are moving to Arizona, fine. You’re moving into New York, fine. We want to keep you on and work remotely. But the challenge is everything that comes with payroll and workers comp in different states and taxes; it’s a nightmare for a small company. So at the time, we didn’t want to manage all that. So then we said, well, let’s see if we can find people in Texas because there’s no state tax. We already have workers comp. It’s easy. States like New York and California are an absolute nightmare. I’m still getting notices from Texas or New York State about workers comp that haven’t paid in 2015. We haven’t had a person from New York since 2015. So seven years later, they’re still sending me things in the mail. So COVID hit, and then we went full remote. I got rid of my office space in January 2020, which is pretty much before the whole wave. Had that not been the case, we would have been stuck in a lease for three more years, and it would not have been not good. So hiring people remotely has its set of challenges. Some people are cut out for remote work, and others are not. We hired some people who could not do the remote game. They would not be on Slack for hours at a time. I’m not a micromanager. I’m like, here’s the stuff you have to do. We’ll check in with you and see how you’re going. If you have questions, ask. Stuff was not getting done, and you’re like, what’s happening here? Well, it turned out they had multiple employers. So they were working remotely, but they’re working for somebody else, maybe somebody else. They had like three jobs, and they’re juggling. So that was a problem. We got to this point where maybe we need to start outsourcing this stuff to people, and we can get a dedicated team. We could pay them like a fractional team. They go up, and they go down as we get to work. We started doing that and finding the right team was challenging. Not everybody knows how to do these things. I went to Upwork and started looking for people. We started finding, as I said earlier, we started by finding experts. So I had this thing where I needed help with Google Tag Manager. So I went on there, and I found a guy who that’s all he does. I’m the GTM expert. I can do regular expressions if you want, and I was like, great. I hired that guy, and he did a phenomenal job. Then I needed some guy to help me with video stuff. I needed intros and outros. He did a great job. Then we hired another guy who does core web vitals. So this is all the thing now. Getting your site speed into something reasonable because after the algorithm update, I think it was in June 2021, where they came up with the core web vitals and the page experience update. Some of my clients are like, Hey, what are we going to do about this? We’ve tested our site, and it kind of sucks on mobile. I found a guy in Ukraine, well take that back, I found one guy, and we use him on a couple of projects. He was kind of sketchy. Like he wanted access to everything immediately. I didn’t want to give him access to our hosting platform and all this stuff. He recommended we use Nitro Pack, which wasn’t a good tool. Then I found this other guy in Ukraine, and he was phenomenal. He was kind of cool. He told me a story about how he fled from Ukraine with his whole family and now lives in France. He did a phenomenal job. So I gave him four or five websites to do, and every single one of them went from an F score to an A. So we found him, and that’s what we’ve been doing. We find all these experts that only specialize in this one thing or one area, and we give them the project. Now we do have another team that we outsource SEO tasks, and we outsource paid search tasks. I tried to segment that by Let me have your Google expert. Let me have your Facebook expert. Let me have your LinkedIn expert. Because usually, what I find is that nobody knows all three of those. That’s our model; let’s find all the experts in these different things. What we don’t outsource are project management and strategy. All that’s kept in-house, and I see those guys as our execution arm. We make sure that they use our project management system. So even if I hire them through Upwork, they get access to our project management system. That’s where they keep their time. That’s where they give them tasks, and that’s where they get everything they need to do. For some people, we even give access to Slack to do that if we need to have more real-time communication on something.

Is it mainly through Upwork that you're finding these Contractors, like specialized skills?

We found some through other means, but mostly through Upwork.

Upwork? Yeah, it's pretty amazing. I used to be a member of whatever it was long ago; I can't remember. They've bought so many other companies and evolved into Upwork that I don't think I can even keep track of what they were before. So you said there were specific tasks you'd never outsource, a project management strategy. How do you pay them? For instance, do you pay them a flat fee to set up? Did you get a quote for them to do the Google Tag Manager setup based on the parameters of that particular project? Do you pay them by the hour and track their time, or do you do both?

It’s a little of both. The PageSpeed guys want a fixed fee. So he charges a fee per site, no matter how long it takes, and we budget that into our fees with our clients. But most everybody’s on an hourly basis. So we know with all of our clients how many hours we need to deliver in a month, and we split it up. We plan at the end of the month for the next month how many hours we’ll give to each client and what tasks they will do. So we create those tasks in the project management system and assign them to whoever’s going to do things.

Do you use the SOPs you've developed over the years or do they have SOPs that they sometimes consult with?

I rarely give them a task without them telling me exactly how it’s supposed to be done. I don’t leave it up to their creativity, so to speak, to who they think is right. Because I’ve tried that before, it doesn’t work. I’m not sliding them or anything, but I think the people we’re outsourcing to there are cultural things. It’s just like, they’re very good. If you tell them, I want these ten things done, and I want them done this way, they will knock it out of the park and do it under budget. But if you say, what are the ten things we should do to get this outcome? They’re not going to be able to do that.

Well, that's amazing. But if you tell them, that's amazing. Do you think it's helpful to create like, I don't know if you've gone this step, but recording what you want to do with your SOPs and monkey see monkey do?

I do. I create videos. I’ve got a whole library full of videos that tell them, for example, this is how I want you to do 301 redirects in WordPress, you’re going to plug in, you’re going to go here, you’re going to do this, you’re going to do that. And if we’re installing security stuff on a website, this is what I want you to do, and this is how I want you to do it. It’s repeatable. Because the next point has that same problem, I will pull that video and assign it to the guy who does that stuff for us. He doesn’t have to think; he does it.

That is so smart. And Michael Gerber, in his book, The myth revisited, talks about creating systems in your business and creating positions in your business and mapping out your entire organization structure and then creating the duties and responsibilities of each position. And if you're a startup, decide who's going to do each position, who's going to be the CEO because there can't be two, and then create training materials. So, in essence, that's what you've done. And instead of using in-house, which, let's be frank, most employees are expensive and hard to fire.

What happens when you have an employee who’s only at 60% capacity? The problem is that you stairstep your way. You’re hiring people in-house; it’s like, I got too much work. I’m at 110% capacity. So you need another employee, but as soon as you wait, they’re not busy at the time. So now you’re trying to figure out what this guy can do? So he’s not twiddling his thumbs the rest of the day because he only has three Facebook ad campaigns, and that’s the thing. That’s the beauty of outsourcing. I can spool up my Facebook guy for this campaign, and when it’s over, I spool down. And then I only pay him for the time he works.

What factors do you consider when choosing these people? What do you look for in them? Like, we talked about how, to be frank with you, there are people on Upwork who could make crap up; employees do it. So how do you filter out someone? Is it the number of reviews you look at, or do you ask for referrals from previous clients? I mean, Upwork, you can sort people out. Sorry, I have not been there for at least six months because I don't have a necessity to. So I find it interesting what you're talking about regarding that filtering process for figuring out who the real deal is?

The biggest criterion is price because I have a budget. So can I afford somebody beyond a certain dollar an hour rate? Once I sort the field, so to speak, down to that, then I’m looking at, I’m not looking too much at reviews, I’m looking at descriptions, like what do they specialize in? So I do a very specific search; I’ll search for, like, core web vitals expert. And you’ll get 30 profiles they mentioned; core web vitals pop up. So I’m reading their bio and want to see how detailed they get into that. Now, what I do is I’ll shortlist three or four of them right out of 100 in their search result. Out of those shortlisted folks, I started to dig into their profiles. I looked at their work history there, and then I looked at the review. I don’t put a whole lot of weight in reviews. And then, what you almost ultimately have to do is, let’s say I narrow it down to four people I like. So I’m going to have to pick one to try. I have to give him something to try. So that’s one way to do that. And I’ll give them our website to start with because if they start, I can reverse it. I can go to a previous backup. So I’ll let them start and play around. I use my website as a sandbox, so I’ll introduce them to clients if they do well.

Okay. Gosh, that is so smart, or even creating a fake website. A fake local website, a local plumber website that they can play, right? Acme plumbing, not that domain name would be available. But you get what I'm saying, 123 plumbing or 123. You know what I'm saying for them to see if they know what they're doing.

And then Upwork has a thing like if you post a job, and you want to invite people to be hired for the job, you can invoke a questionnaire. So you can get like four or five questions they have to answer. And that matters a lot; how they answer the question is important. So I hired a developer to work on some tools we’re building. And one of the things that we’re doing is pulling data out of SEM rush. And we need a caching mechanism. So one of the questions is, how would you build a caching mechanism? What are the things we need to be worried about? And then, sure enough, you get people to respond, oh, yeah, I’ve done caching mechanisms. These are easy. And that’s all they said versus the other guy who goes into this long rant about how caching works. And this is what I’ve done. This is what I’ve seen. I’m like, Okay, this guy knows what he’s talking about. So you can ask the questions and see what the responses are. A lot of guys are on; they apply to every single job. So the way Upwork works on the Freelancer side is they will recommend jobs for them to apply to, and they’re applying to everything anyway.

Yeah, they're putting out as many fishing lines as possible to catch something.

So they’re not answering the question in much detail.

Okay. Have you ever had a bad experience with a contractor like that, and if so, what happened?

Yes, and what I did is I just undid all their work. So I removed all their access to everything and moved on. So I had another guy come in and fix it. But, as I was saying earlier, you have to experiment with Upwork. You have to do the best job to narrow down who you think will be the best fit. I had those four people off to the side; I always keep the three just in case the one I picked doesn’t work out. So if I give him the project and he fails, I go to the next guy. So, for example, the guy I have doing GTM stuff is really good but so slow. He takes like two weeks to respond to stuff. So I’m like, Alright, let me go to the second guy on my list and give him something for GTM work, you know. So that’s how I do it.

That makes sense. And how has this benefited your business?

Well, I don’t have to deal with employees. I can tell you stories about employees for days. We had someone steal money from us. We had someone who I guarantee wasn’t doing any work during the day. Then they dared to file a worker’s comp claim against us nine months later. We terminated the relationship for cause, which in Texas, you can do. So the person files a worker’s comp thing nine months later. So, of course, we have all our documentation and send it to TWC. Sorry, no charges. We’ve fought and won probably five or six workers comp claims because we’ve terminated people for that cause like they just don’t know they’re incompetent. And so I’m not dealing with that. Like it’s really hard to manage employees when you’re less than 10 or 15 people. So we have a core team. One of them’s my business partner, and then we’re all family pretty much, I mean, we’re not, but we are. And that’s why we’re together forever.

So, less stress from dealing with the employee.

I can go on vacation. All of us are going on vacation to Cabo in July. And our outsourcing is going to be handling everything while we’re gone.

Yeah. Are you even going to have to do anything?

No. We’ll be on standby in case there’s an emergency. But yeah, that’s pretty rare.

I don't like employees.

They’re hard. You can’t hide at Pear Analytics. If you want to just kind of skate through, collect a paycheck and do the bare minimum to get by, you can do that at another company but not here. So the spotlights are on you like you have to perform. So we have core values and stuff here, and there are things we don’t tolerate. You know, lack of drive, lack of accountability. That’s a huge thing we’ve seen, and I don’t know if it’s a generational thing, but anyone under 30 has a complete lack of accountability.

Don't get me started. With all respect. I'm not going to go there because I could.

We can do another whole podcast on just that one, I think.

Yeah, we could. And I don't know if some of them might be watching this, and their attitudes are unbelievable. The work ethic of the generation under 30 is unbelievable. I thought it was just me, and thinking they're so entitled, it’s unbelievable. You have a hot one there with me because I have a high work ethic. So I just don't understand some people. Nobody owes you anything like work. So do your work or find a way to do work, or when life hands you lemons, make lemonade. This whole thing about the bragging about the great resignation? Well, they can do that because of a labor shortage. I don't know what the reasons are. But I'm sure if people start taking that attitude, they may be replaced by somebody else in another part of the world. And then you can have your great resignation and sit at home and wonder where and how you will get paid. If you want that attitude, start your own company and see how hard it is. Anyway. I didn't mean to go on a tangent there. My apologies. So what advice would you give to other agency owners considering outsourcing their Digital Marketing and going in this direction?

Well, there’s this other issue, and this hasn’t been an issue for us where clients want to know. I’ve had some clients ask us who’s doing the work? Because some companies don’t want their work to be outsourced to certain countries. Like they know the game, they don’t want to pay you $3,000 per month, so you can pay someone else $500 to do that work. Like they might as well just outsource it themselves.

When they think that they don't know anything about Digital Marketing. They have no idea if it's going to be done right. In Digital Marketing consulting, we get paid what we know. If a guy gets into some huge problem with his machine in the old patch, and a guy comes along, and everybody is trying to fix it, and it takes them 30 seconds to fix it, and he charges them $5000 to fix it, it is because he has all that knowledge and experience. That's how I feel we are, as Digital Marketers in some capacity. Do you want to know a strategy that will get you results? Then I'll give you one, and the proof is in the pudding regarding the results of leads, phone calls, sales, revenue, and all those things. But anyway, they don't want people to know they're outsourcing. So how do you deal with that complication or situation?

Either we won’t work with that client, or we say, look, it doesn’t matter who is working on the accounts, we do all the strategy, so you’ll only speak to us, my project manager or me. We are very involved in the projects. I am not super hands-off. I’m not selling someone $5000 per month of SEO work and then giving somebody in India $500 to do it, and then I just run to the bank with the $4,500 and on the beach the rest of the week. That’s not how we work. It’s not a hands-off relationship. That’s why there are certain things we won’t let them do. We won’t let them have client interaction. We don’t let them run client calls. That was the biggest problem with employees. So you hire them, and you put them in charge. So I hired this person and said you are in charge of these five accounts. You will have to do the client interaction, follow-ups, and work. Can you imagine the client saying he has four different Account Managers?

That must be frustrating.

What’s going on over there? I have to keep replacing people, so there is a different person every six months is what our business is. So they will get very frustrated because we keep changing Account Managers. With this model, the Account manager doesn’t change because we have an executive team, so it doesn’t matter if they change.

No, it doesn't because the business is built on a system.

Yes, so it doesn’t matter who was before.

And the SOEs and the SOPs.

There are a lot of advantages to the outsourcing method. First, what we pay per hour is not $2. We don’t allow slave labor. Instead, we are paying $40,000 to $60,000 per year.

Is this in US currency or their currency?

US.

That is darn good.

They are paid well. We have expectations. They use our systems. They don’t talk to clients, which is how we do it. So we hire experts for what they are good at. That is not true when one guy says they can do everything. That way, I can bring in the experts that I need for that project as I need them.

Do you think it is key? For instance, I am very sure you have a wide knowledge of Digital Marketing. Do you think it is important to have people interacting with your clients or strategies to have a wider understanding of Digital Marketing, the different channels, and how they all work together?

Yes, that’s what I did. I need to clone myself at some point if I want to grow what we have, but that is the key. So there has to be somebody in charge of this whole thing which is saying, here is how we will use SEO in conjunction with paid search and Marketing Automation to get you the lead generation you are looking for.

Yes, and there are not many people like that, are there?

No. Maybe I’m a unicorn or something. I can put these strategies together very quickly, and all that needs to be done is that we hand out and dive out the work to execute the strategy. If the strategy is not working, we will go to B1.2 or B2.0 and review the strategy. But 90% of Digital Marketing is execution. I found this stat, and I can’t remember where but have you heard that Digital Marketing is the number one industry for employee turnover?

I did not know that, but it does not surprise me.

I found that stat, and I’m like, I’m so glad we are doing this outsourcing thing in the way that we model it because that’s what we have been dealing with for the last three years. Leading up to covid and all through covid was just employee turnover. And it’s not that we are a bad company, and it’s not that we don’t pay well. We are paying people seventy to ninety thousand dollars annually; at best, they are junior-level Marketers. That’s very expensive. Nobody wants to work for thirty or forty grand anymore. Everybody thinks they are worth sixty. So when we hire people, we have a payment scale, which I thought was well thought out. We would pay everyone a base. If you came in and said, “Hey, I think I’m worth seventy-five,” I would say, ” Okay, I will pay you fifty, but you have to earn the other twenty-five. I have to see what you can do. You will get the other twenty-five if you can do a b c d and e.” Well, it turned out that nine out of ten people wouldn’t get the twenty-five, so they’ll leave.

They probably didn't even deserve the fifty.

You can argue that, but the way I approached it was if you are the expert you say you are and you tell me you want to get paid seventy-five, I will give you the seventy-five, but we are going to do this together. I will not give you this money, and I do not know if you can deliver it. We had a high-bred salesperson payment with a commission approach with everybody. Maybe we had so much turnover because they couldn’t deliver when they left. They even get the bonuses and the payout that would come with the delivery. So they got frustrated and thought they were overworked or whatever the case was. Then they left. That was the challenge.

What are your thoughts on the future of outsourcing Digital Marketing versus hiring in-house staff for agencies and businesses? Do you think it is going to increase or decrease?

Increase. I think it is moving overseas. I think it is moving into those markets because Digital marketing is a bit of a commodity. It’s treated like a commodity. I know there are people out there who are experts, who know what they are doing as phenomenal agencies, and they do a great job. I had a client who had an employee about five years ago who was a phenomenal PPC guy; he went to Client Boost. Under disruptive advertising, they are probably in the top five in the country for PPC. So I think there will be agencies like that, able to retain top talent and pay them and deal with that. The pain point for small agencies like us is, as I said, between five and fifteen people; it’s just a nightmare for hiring and retaining employees. So I think for those of us who are in that narrow chasm, outsourcing is the best option for sustainability and profitability. If you don’t have a solid lead flow in your agency and you are not getting two to three new customers per month, then you probably shouldn’t be hiring full-time people because if you lose two or three clients, all of a sudden, you will have people sitting around doing nothing. And it will just eat away at your profit and increase your expenses. So when you outsource, no one is getting paid if you don’t have anything.

But then do you lose the talent regarding that particular contractor, seeing you let him go and he goes and finds other work so he's not available and you are trying to find someone else?

If he is part of a company that does outsourcing, you’re talking about it. I have a dedicated team. They don’t go away. I have the same guys, whether I have a little work or a lot of work.

Makes sense.

They get to know our business. They get to know our processes. They get to know our tools. If the outsourcing team constantly swaps guys in and out, we will have a problem. I need my outsourcing to be a dedicated team. I have a dedicated team at a different company that provides Amazon with some of the essential services for us. We pay them a fee, and I get a full-time team.

That's awesome. So what's the one big takeaway you want listeners to get from this episode?

If you are considering outsourcing or maybe you are skeptical about it, I would say start small. I would say start with something like a client you have, with a project you have. As I said, start with something like a Google Tag Manager implementation. Start with maybe a Facebook ad setup project. Like, just set up the ads for me. Or an existing Google ad campaign and say, hey can you run this for a month? You will only get what you put into it, so don’t just give them stuff and say, have fun. Give them specific things to do and the outcomes you are looking for. Give them goals and milestones. They are very good at that, but you have to tell them exactly what you want to be done and how you want it done.

Do you use video to do it? Which is a cool tip that you shared.

I have a whole library of videos.

That's awesome, Ryan. How can our listeners connect with you online?

Pear Analytics is our handle everywhere and can get us there on Twitter.

Where do they go if they want to connect with you?

They can email me at ryan@pearanalytics.com.

Are you on LinkedIn, Facebook, or Twitter?

They can reach me on LinkedIn.

They can search for you, Ryan Kelly? Is that your handle for everywhere?

On LinkedIn, it is.

Hey Ryan, I want to thank you so much for being on the show, and I think this will benefit all those who were listening. To run an agency like a pro and have stable cost-effective profits that last. Thanks so much for being on the show. It is a pleasure having you here.

Thanks, Matt.

Everybody, have a great day!

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