Episode 65: He Built a High 7-Figure Agency With Zero MRR. And Your Gross Margins Are Probably Wrong.
Episode 65 | Behind the Agency Podcast with Sam Shepler, Founder of StorySnap
"An ounce of positioning is worth a pound of ad spend."
Prefer the highlights? Key takeaways and summary below.
TL;DR -- Key Takeaways
Sam Shepler built a high 7-figure agency portfolio almost entirely on project-based revenue. MRR is a billing mechanism, not a growth strategy. If you want predictability, solve that with marketing.
Almost no agency P&L has correct gross margins. Sam says he has literally never seen one. The most common error: W-2 employees who deliver the service get classified as OpEx instead of COGS, making margins look better than they are.
50% gross margin is the floor before you should spend on marketing at all. Sam targets 60%. At that level, you can afford to invest 10% or more of revenue in sales and marketing and still pay yourself well.
"An ounce of positioning is worth a pound of ad spend." Tactics do not solve a strategy problem. Most agencies try to get deep on channels before they have a clear position and message.
Sam got out of sales by Year 2. The formula: productize your service, hire a salesperson, and create a forcing function (his was a two-week honeymoon in Thailand). The business closed deals without him.
The right relationship to founder-led sales is "option, not requirement." Getting out completely leaves money on the table. The goal is optionality.
StorySnap is actively acquiring and incubating agencies. They prefer rough diamonds over polished ones -- and they look for: specialty, accurate financials, founder independence, low client concentration, and real gross margins.
Does this sound familiar?
You have heard the MRR advice a hundred times. Everyone says recurring revenue is the goal. Build retainers, reduce churn, create predictability. So you have tried -- maybe a maintenance plan here, a monthly reporting package there -- and the result has been more work, more client friction, and no meaningful improvement in how your pipeline feels.
Meanwhile, your books show a healthy net margin. Your CPA is satisfied. But when you look at what it actually costs to deliver your work versus what you charge, the numbers do not quite add up. You have never been sure whether the problem is pricing or something else.
Sam Shepler built Testimonial Hero, StorySnap, and Productype into a high 7-figure portfolio almost entirely on project-based revenue. No monthly retainers. No MRR worship. And he has looked at enough agency P&Ls to say, with confidence, that the margin problem is almost universal -- and almost nobody is calculating it correctly.
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Meet the Guest
Sam Shepler is the founder of StorySnap, a video agency portfolio that includes Testimonial Hero and Productype. He built Testimonial Hero to high 7 figures on a project-first model, got himself out of sales by Year 2, and is now actively acquiring and incubating agencies through StorySnap. He has a sharp perspective on agency financial health, the MRR myth, and what makes an agency worth buying.
LinkedIn: linkedin.com/in/samshepler Visit: storysnap.com
Episode Summary
1. The MRR myth
Sam is not anti-revenue. He is anti-confusion about what revenue structure actually solves.
His agency sells packages. He hopes clients buy three or four of them over three or four years. That is recurring revenue -- just not monthly. The distinction matters because monthly retainers, for a lot of service types, mean forcing clients to commit to something they do not need on that cadence. "Sometimes it's better to just embrace reality and not force that."
The real problem MRR is supposed to solve is predictability. Sam's argument: predictability is a marketing problem, not a billing problem. If you want to know what next quarter looks like, build a marketing engine that tells you. Do not restructure your pricing model to give yourself a false sense of stability.
"If you want predictability, solve that with marketing. Not your billing mechanism."
2. Why your gross margins are almost certainly wrong
Sam has reviewed a lot of agency P&Ls. He says he has never seen one with accurate gross margins. The reason is accounting conventions designed for tax reporting, not business management.
Most agency books are kept by a CPA optimizing for net margin at year-end. For tax purposes, that is the right number. For running a business, it is the wrong number. Gross margin is what tells you whether your unit economics work.
The most common error: agency owners put their W-2 delivery employees under operating expenses rather than cost of goods sold. Anything related to delivering the service belongs in COGS -- internal labor, freelancers, contractors, and relevant software subscriptions (Adobe Creative Suite is COGS for a video agency, not overhead).
"I look at a lot of agency P&Ls, and almost none of them -- and I can actually say like none of them -- have correct gross margins."
Sam's minimum threshold: 50% gross margin. His target: 60%. At a 50% margin on a $10,000 project, your delivery cost should not exceed $5,000. That includes all in-house labor allocated to that project.
The reason the number matters: you cannot invest in sales and marketing if your margins do not support it. Most agencies spend a few thousand dollars a month on marketing and wonder why it is not working. Sam's answer is that they have not even started yet.
3. Positioning before everything else
Sam runs multiple specialized agencies. StorySnap is a video agency. Testimonial Hero is focused on customer testimonial content. Productype sits in a different category entirely. Each has a specific lane.
When David asked about sales and marketing channels, Sam said the channel question was secondary. "An ounce of positioning is worth a pound of ad spend." Tactics applied to a weak or generic position produce weak results regardless of execution quality.
For paid advertising, Sam's portfolio uses LinkedIn and Google. Google provides intent but no firmographic targeting -- you can get leads from companies that are too small, too large, or just wrong fit. LinkedIn provides firmographic targeting (company size, title, industry) but no buying intent. You want both. LinkedIn even allows you to upload your own account list to ensure better targeting when the platform's native data falls short.
But all of that is a second-order question. "Nothing's gonna work if you are trying to appeal to everyone and your message is super broad."
4. Getting out of founder-led sales
Sam hired his first salesperson in 2019. Then, in January 2020, he went on his honeymoon in Thailand for two weeks. He told his new salesperson he probably would not close anything while Sam was gone.
He closed deals.
"I was like, great, I'm just gonna stop showing up for sales calls as much as possible now."
Sam calls this the forcing function approach. You could do it through a vacation, a planned absence, or a deliberate role transition. The point is creating a situation where the business has to operate without you in sales before you feel ready. Waiting until you feel ready often means waiting forever.
Productization makes this work. The more you package your service, the less the sale depends on the founder's ability to contextualize a custom engagement. A clearly defined offering is easier for a salesperson to represent, easier for a prospect to evaluate, and easier to repeat.
He also notes that getting out of sales entirely has a cost. "The pinnacle of leadership is never required but always helpful." If you disappear from sales completely, you will leave revenue on the table. The goal is optionality: be available when it matters, without being required for every deal.
"You want the option, not the requirement."
5. What makes an agency worth acquiring
Sam and StorySnap are actively looking at agency acquisitions and incubations. He is candid about what they look for -- and what they prefer.
They like rough diamonds. Agencies that are slightly distressed, need a turnaround, or have the bones of a good business without the financial or marketing infrastructure are interesting targets. "The more we can see an opportunity where the bones are good, the more excited we are." A perfect agency usually does not want to sell, and if it does, the price reflects that.
What they look for in any acquisition:
Specialization. Does the agency have a clear niche and a defined service? Generalists are harder to grow.
Accurate financials. Most agencies they look at do not have them. That is expected. But books that are so wrong they require a complete rebuild slow everything down.
Low founder dependency. The less the business requires the founder to operate, the more it is worth and the easier the transition is.
Client concentration. If most revenue comes from three clients, losing one damages the business materially. That is a significant risk flag.
Gross margins at minimum threshold. Sam's floor is 30% gross margin as a starting point for an acquisition. If the margins are so low that reaching even that level requires ripping and replacing the entire business model, the deal may not be worth pursuing.
6. The holdco model
StorySnap operates as a holding company with a centralized model. Separate P&Ls for each business unit, shared resources behind the scenes. Different brands in market, one operational layer.
Sam describes the businesses as different storefronts with a shared back of house. No duplicate CRMs. Shared operational infrastructure. The president oversees all the companies and reports to Sam, rather than running individual CEOs for each entity -- a deliberate choice to reduce complexity while the portfolio is still in high-7-figure territory.
Incubation is equally important to acquisition in his model. StorySnap could not close deals on Productype through acquisition, so they built it themselves. Sam actively invites freelancers and early-stage agency owners in the video space to reach out about becoming part of the portfolio.
Notable Quotes
"If you want predictability, solve that with marketing. Not your billing mechanism."
"I look at a lot of agency P&Ls, and literally none of them have correct gross margins."
"An ounce of positioning is worth a pound of ad spend."
"The pinnacle of leadership is to never be required but always be helpful."
"We love rough diamonds. The bones are good, but there are things we can bring to the table."
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Learn More / Get in Touch
Visit --> storysnap.com
LinkedIn --> linkedin.com/in/samshepler
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