How Richard Rubenstein Built a Successful Productized Service Business

Richard Rubenstein has quite a diverse background. Although he’s been running a digital agency for several years, his previous entrepreneurial experience includes an online magazine, superyacht crew training, a smoothie bar, a jazz bar, a wine label, and more.

In this interview, Richard shares how he started and grew Kadima Digital Marketing and Design, a productized service business. In this competitive landscape, Richard’s team has grown to ten full-time members in less than five years.

Tell us about yourself and your business.

For the past 24 years, I’ve ventured into entrepreneurship with businesses rooted in the principle of addressing a need—essentially, spotting a gap and bridging it. This journey began from simple conversations with people, where I’d identify problems and conjure up business solutions, moving between product and service-based ventures.

One of my earliest ventures was launching an online magazine in the early 2000s, which quickly became the city’s favorite. My path then led me to the internship sector in Cape Town, South Africa. The idea sprouted from a chat with some interns who were dissatisfied with their coordinator, prompting us to step in. With no industry knowledge, we dived in headfirst, rapidly learning the ropes. We managed everything for the interns—placements, accommodations, social engagements, transport, and more, providing a comprehensive six-month experience.

My next chapter was creating the ‘Uber’ for superyacht crew training, offering course management and sales for young adults aspiring to work on luxury yachts worldwide. Following that, I delved into the bar industry, running a jazz bar, a smoothie bar, and even launching a wine label, alongside exploring various other business avenues. While not all ventures were successful, each taught me valuable lessons and resilience.

The past five years have seen me establishing Kadema Digital Marketing, a digital marketing agency that operates as an outsourced marketing department for companies. With a simple monthly retainer, we offer all-inclusive services without any upselling or hidden costs, embodying the efficiency and comprehensiveness of an in-house marketing team from an agency perspective.

How does your business make money?

We provide services, offering a universal marketing department solution that caters to any type of business. We primarily collaborate with startups, SaaS (Software as a Service) products, and e-commerce ventures.

Essentially, we function as an integral marketing team that seamlessly integrates with our clients’ operations. This ensures that companies benefit from the expertise of around six specialists dedicated to their projects without any reservations.

Our revenue model is based on a retainer system, positioning our offerings as Marketing as a Service (MaaS). This allows us to operate as an outsourced office, delivering comprehensive marketing support.

Recently, we’ve expanded our services to include Design as a Service, a new addition aimed at enhancing our creative capabilities. This extension provides our clients with unlimited design options, maintaining the same principle of offering boundless, high-quality service within a fixed structure.

What was your inspiration for starting the business?

I recognized the complexities businesses face from the outset. Having been on both sides of the table—hiring agencies or tackling marketing tasks myself—I had a clear vision of what companies truly needed. This dual perspective was invaluable; it equipped me with firsthand insights and highlighted the common disconnect between what businesses think they need and what they require to grow.

When establishing the agency, I needed to engage in conversations to dive deep into understanding the challenges faced by potential clients. This approach allowed me to tailor our services, ultimately shaping us into a Marketing as a Service (MaaS) agency.

Often, clients approached us with a desire for tangible outcomes like more sales, leads, or app downloads. However, they would mistakenly narrow their focus to specific tactics, such as email marketing or PPC (Pay-Per-Click) campaign management.

It became evident that what they really needed was a multifaceted strategy to enhance brand loyalty, recognition, and awareness, and to effectively convert users and viewers into loyal customers. This involves a mix of solutions that work together to fill the marketing funnel at various stages, incorporating value additions, authoritative content, and consistent engagement.

This underscores a common oversight among new business owners: the underestimation of a comprehensive marketing strategy’s role in product success. They often concentrate solely on their product, overlooking the broader, strategic marketing needs that truly drive a business forward.

How and when did you launch the business?

I launched toward the end of 2019, right after getting married. The initial launch was modest, centered around a website that served as our digital storefront.

From there, I leaned into my personal and professional networks, reaching out to friends, family, and connections. This network was a group of people I had either supported in the past, collaborated with, or observed as they started their own ventures. Many were embarking on their business journeys or holding significant positions with established companies.

These relationships were instrumental in setting things in motion and providing a solid foundation.

How much money did you invest to start the business?

Fortunately, starting my business didn’t require a big investment. It all began with a simple website that, admittedly, was quite basic at its inception. The services were outlined, but the venture essentially kicked off even before the website was fully complete.

My years of experience lent me a credible voice in the industry, making it a natural progression to discuss what I could offer. Having been involved in SEO for over a decade, I had the confidence and the track record to back up my claims. This made communicating my new venture to friends and family easy, even if my website wasn’t amazing.

What I did focus on, however, was reinvesting every penny earned back into the business. This approach allowed me to gradually expand our digital footprint, enhancing online assets and building up my profiles.

As the website took shape and the brand began to develop its identity, I ramped up our marketing efforts and started to assemble a team. This strategic move enabled us to delegate various tasks efficiently, accelerating our growth and capacity to serve our clients better.

How did you find your first few clients or customers?

My initial clients were friends and acquaintances involved in family businesses. Fortunately, these were substantial companies with extensive needs, enabling me to get retainer agreements. These arrangements weren’t just beneficial for financial stability; they allowed us to reinvest in marketing strategies, particularly in SEO, which inherently demands patience and time to bear fruit.

Because they trusted us, many of these clients committed to at least a year with us. This commitment wasn’t taken lightly. The significant size of these retainers provided the financial backbone needed to expand the team, delve deeper into marketing strategies, and focus on building our brand.

Tell us about your first year in business.

My strategy was to reinvest as much as possible back into the company. This approach meant drawing only a modest salary for myself, sufficient to cover basic costs, while prioritizing the establishment of a solid business foundation.

Additionally, I aimed to build a financial safety net to cushion against potential downturns, such as losing clients, ensuring we could continue attracting new clients and retaining our staff. From the outset, we were profitable, though the growth was gradual and steady, focusing on expanding our digital marketing services.

What strategies did you use to grow the business?

Navigating the growth of the business today presents a different set of challenges compared to just a few years ago. Now, five years into our journey, the landscape is crowded with agencies, freelancers, and companies that often prefer managing their marketing in-house.

This saturation means that establishing personal connections has become more crucial than ever for growth, surpassing even the importance of brand building and developing a distinct voice. The reason is simple: in an environment where everyone strives to be a “value influencer,” standing out based on content alone becomes increasingly difficult.

In such a congested space, where it feels like everyone considers themselves an industry leader, our focus has shifted towards nurturing personal relationships and becoming integral to a network of influential gatekeepers. These are individuals well-connected across various sectors, constantly engaging with new people and opportunities.

Our strategy leans heavily on human interaction, whether face-to-face networking or other forms of personal engagement, guided by the principle of the 80/20 rule: we aim to provide 80% value in hopes of receiving 20% in return.

This approach to building relationships and generously offering more than we ask for has been instrumental. It’s what sets us apart from our competitors. By prioritizing the human element and fostering meaningful connections, we’ve found a sustainable way to grow and maintain relevance in a highly competitive industry.

Tell us about your team.

Currently, our team consists of 10 dedicated members plus various contractors for special projects. Initially, our operations were markedly more remote and internationally dispersed. Over time, we’ve seen shifts in our team’s geographic makeup. There was a phase when we centralized our efforts in South Africa, focusing on building a locally based team. However, our approach has since evolved to embrace a more distributed model again, with a significant portion of our team still based in South Africa, complemented by members in Israel, Croatia, and Albania.

Each team member brings specialized skills to the table. Despite their varied backgrounds and niches, they all work full-time. A pivotal aspect of our work culture is ensuring that each team member enjoys the freedom of movement. We are committed to a remote-first environment, where being location-independent is not just encouraged but is an integral part of how we operate.

What are your future plans for the business?

As I’ve mentioned before, we have several facets to our business, each serving distinct needs within the digital marketing realm. Our primary website, kadimadigital.com, offers a variety of a la carte services catering to specific marketing needs.

Our core offering, Kadima Grow (kadimadigital.com/grow), embodies the all-in-one marketing department concept I’ve detailed, providing comprehensive support to our clients.

Recently, we’ve broadened our scope with the launch of kadimadesigns.com, a new venture that delivers unlimited design services for a fixed monthly fee. This service effectively acts as an on-demand design department for companies, offering a flexible and invaluable resource.

Looking ahead, we’re venturing into software development inspired by the consistent gaps and challenges we’ve encountered in the digital space through our two decades of experience. This move towards creating digital solutions aims to address specific problems within digital marketing, enhancing efficiency and effectiveness for our clients and the industry at large.

We’re currently in the development phase of our first software product. While details are under wraps for now, anticipation is building. Upon release, we plan to share it through platforms like Product Hunt and Indie Hackers. This software is poised to be a pioneering solution in the industry, marking a significant milestone in Kadima’s journey. Stay tuned for what’s coming next—it’s an exciting time for us.

What was the turning point when you knew your business was successful?

There were a few key indicators. Firstly, the need to expand my team was a clear sign of progress.

Another pivotal moment was the high conversion rate during client meetings. At one point, I was converting about 90% of my prospects into clients. The majority of these interactions involved warm leads or referrals, which meant there was less need for hard selling. These potential clients arrived at the meetings with a clear need and, more often than not, were ready to take the next steps by the meeting’s end.

This readiness and eagerness to proceed signified the success and validation of my approach, affirming that we were on the right track.

What is the most important lesson you’ve learned growing the business?

One of the biggest lessons I’ve learned in growing my business is the critical importance of maintaining strong, positive relationships. This industry, like many others, is deeply rooted in human connections, highlighting the necessity of not burning bridges.

Upholding professionalism is essential, whether in interactions within our virtual office or when dealing with clients. Clients can fluctuate between extreme satisfaction and dissatisfaction, and it’s crucial to navigate these changes gracefully and maintain proper business etiquette.

The same principle applies to team dynamics. Everyone has their ups and downs, and it’s not always possible to fully grasp someone else’s perspective at any given moment. The key to sustaining a positive working environment lies in remaining composed and empathetic toward others’ situations.

Overall, the main lesson is the value of staying calm and collected, regardless of the circumstances. Reacting impulsively or damaging a relationship can have far-reaching negative consequences. Keeping a cool head and treating every interaction with respect can prevent potential fallout and preserve valuable connections.

What was the biggest challenge you had to overcome?

The biggest challenge has been donning multiple hats—overseeing hiring processes, engaging in business development, conducting sales calls, refining our marketing strategies, ensuring quality control, focusing on client retention, and actively seeking referrals.

This challenge was increased by the pressures of maintaining staff and meeting payroll obligations amidst a thinning client roster. The reality of running a service-based business, particularly an agency, is that it doesn’t materialize fully formed; it evolves and strengthens over time through sustained effort and nurturing. Keeping the business afloat and progressing during lean periods required a delicate blend of strategic planning, operational flexibility, and dedication to our core mission and team.

What advice do you have for other entrepreneurs?

My advice is simple: strive to stand out, to be audaciously different. Breaking the mold isn’t just about innovation for its own sake; it’s about ensuring that every aspect of what you offer—whether a service, a product, or support—delivers exceptional value.

What is your favorite quote?

The quote “Mediocrity should not be applauded” is a powerful statement, emphasizing the importance of striving for excellence and discouraging the celebration of mere adequacy.

Unfortunately, I’m not sure of the exact origin of this quote.

If you had to start from scratch, where would you begin?

If I had to start over, my strategy would be to hone in on a single niche from the get-go. Currently, our agency is a jack-of-all-trades in the marketing world, adept at handling everything from SEO, PPC, social media, email marketing, to various growth hacking tactics. However, reflecting on the journey, I see the value in mastering one specific area first.

Focusing on just one niche, say PPC, and immersing ourselves entirely in mastering all facets of advertising would be my approach. This concentration would allow us to excel and become authorities in that domain. Establishing a strong reputation in a singular niche offers a solid foundation for growth. It’s a strategy that not only accelerates recognition and trust but also simplifies the process of becoming known for exceptional expertise in that area.

Indeed, this was somewhat mirrored in our initial foray with SEO, which, despite being a slower growth path compared to PPC, helped us carve out a reputation as an SEO-focused team. This specialization facilitated partnerships with PPC agencies and collaborations with various suppliers and designers.

Operating as a niche service agency initially propelled us forward more swiftly, laying the groundwork for eventual expansion and the ability to upsell and diversify our services. This focused start, I believe, would have streamlined our path to becoming the full-service agency we are today, possibly even accelerating our growth and solidifying our market position earlier on.

What are your favorite books, blogs, podcasts, or YouTube channels?

Finding time for reading books, browsing blogs, or listening to podcasts doesn’t always fit into my schedule as much as I’d like. However, I do make an effort to stay updated and informed through other means. I’ve subscribed to summary websites and newsletters, such as Morning Brew, which offer condensed insights into the latest trends and topics.

When I manage to carve out some time, especially during long drives, I gravitate towards listening to notable figures like Naval Ravikant or Tim Ferriss.