In 2016, I bought an e-commerce company with what I thought was a pretty obvious growth opportunity: SEO.

There was only one issue. I’d never done SEO.

So I started learning. I read about it. I took online courses. I learned how search worked, what we were trying to accomplish, and what I should expect to see if the work was actually producing results.

Then I hired someone else to do it.

That first hire was terrible.

I spent somewhere around $25,000 before moving on. I hired another team. Eventually, I landed on a third team that I worked with successfully for years, and together we built one of the strongest sites in our segment.

The expensive part of that story was the $25,000. The valuable part was realizing that I knew enough to stop spending it.

I never became the guy doing keyword research or building backlinks every day. That wasn’t where I could create the most value as the owner. But I’d learned enough to recognize whether the people I hired were creating value.

That distinction matters a lot more than I understood when I started buying companies.

You Need a Different Kind of Competence

There are really 3 levels of competence an owner can develop around a function:

• Execution competence: You can personally perform the work.
• Management competence: You understand the work well enough to define the outcome, evaluate performance, allocate resources and decide whether you have the right person doing it.
• Strategic competence: You understand how the function creates value for the company and where it needs to go next.

 

 

Those aren’t terms I used when I was learning SEO. They’re simply a useful way to describe what I’ve experienced across multiple businesses.

An owner can’t realistically develop execution competence across sales, finance, marketing, operations, HR, technology and every other function inside a company. That would defeat the purpose of building an organization.

But handing over a function you understand nothing about creates another problem.

How do you know whether the person is any good?

That question sounds almost embarrassingly obvious until you’re the owner writing the checks.

The specialist usually knows more about the specialty than you do. That’s why you hired them. They can also give you 15 perfectly plausible explanations for why results haven’t appeared yet:

Maybe the market changed.
Maybe the campaign needs more time.
Maybe the previous agency left a mess.
Maybe Google changed something.
Maybe sales isn’t following up correctly.

Some of those explanations will be true.

You need enough knowledge to tell the difference.

There’s research behind the broader principle. A study using U.S. and British workplace data found that a supervisor’s technical competence was strongly associated with employee job satisfaction, contributing to a broader body of work on “expert leaders.” That doesn’t mean the boss should be the best technician in the department. It does suggest that domain knowledge and management aren’t entirely separable.The New Owner Starts With an Information Disadvantage

This becomes especially important immediately after an acquisition.

I think there’s a temptation for a first-time buyer to close the deal on Friday and become the CEO on Monday.

Now they’re working on strategy. Partnerships. Capital allocation. Big customers. They want to elevate themselves out of the weeds because that feels like what an owner is supposed to do.

I’ve never experienced ownership that way.

When I buy a company, I want to understand how the sausage gets made. I want to see the little cogs in the wheel. I need to know how sales becomes production, how production becomes delivery, where cash gets tied up, who actually knows what’s happening, and which numbers tell me whether the machine is working.

Remember what you’re walking into as a buyer: an organization where almost everyone may initially understand their piece of the business better than you do.

That’s a huge information disadvantage.

 

 

Delegating too quickly can preserve it.

When I bought my first company, I’d never managed an organization with more than 45 employees. Fortunately, I inherited an HR manager. I didn’t need to recreate her expertise. I could rely on what already existed inside the business while developing enough understanding to lead the organization.

That’s one of the great advantages of acquisition. You’re buying capabilities along with cash flow.

Your job is to figure out which capabilities you can safely rely on and which ones you need to understand more deeply yourself.

 

Decide What Goes in Your Forever Pouch

I have a concept I call the “forever pouch.”

When I encounter a skill I don’t have, I ask whether learning it will continue paying me back as an owner.

Some knowledge compounds.

Understanding financial statements certainly does. So does evaluating sales performance. Hiring. Managing people. Understanding operating systems. Knowing how customer acquisition works.

Other knowledge is highly specialized and may have limited value beyond a particular company.

I’d ask 4 questions before deciding how deeply to learn a function:

 

• How important is this capability to the economics of the business? If organic search drives a huge percentage of an e-commerce company’s growth, SEO deserves more of the owner’s attention than a minor acquisition channel.
• Will I use this knowledge repeatedly? A capability that improves my judgment across multiple companies belongs deeper in my forever pouch.
• What does competent talent cost? Before deciding to hire, I want to know the market rate. A $150,000 specialist creates a different decision than a function I can outsource inexpensively.
• What expertise am I already buying? If capable people are already inside the company, I want to learn from them before rebuilding the function around myself.

This is where buyers sometimes confuse delegation with leverage.

Delegation creates leverage when you can define what you want, give someone capable the authority to produce it, and evaluate whether it happened.

Otherwise, you’ve created dependence.

 

Learn Enough to Know What Good Looks Like

That brings me back to the $25,000.

I could fire that first SEO team because I had some idea what good was supposed to look like.

Before handing off an important function, I want to be able to answer some basic questions:

 

• What outcome am I paying for?
• What indicators should move before the ultimate result appears?
• How long should that reasonably take?
• What resources does this person need?
• What would mediocre performance look like?
• At what point would I replace them?
• How does their work flow through the rest of the P&L?

 

 

I don’t need the specialist’s answers to all of those questions.

I need my own.

There’s an interesting management tension here. Research on delegation and information asymmetry has examined precisely this problem: the person receiving authority often possesses information the person delegating doesn’t, creating a tradeoff between access to expertise and loss of control.

In a small business, you feel that tension constantly because there often isn’t another layer of management between you and the specialist.

You’re the layer.

 

You Don’t Have to Learn Everything at Once

The obvious problem is time.

You just bought a company. You’ve got sales, marketing, finance, HR, production, technology and customers all demanding attention. You can’t spend 6 months becoming competent in each one before you delegate anything.

So don’t.

I like 90-day learning cycles.

Pick the department or capability that represents the biggest risk or opportunity. Spend enough time inside it to understand:

 

• how it works
• what drives the economics
• who’s good
• what the important metrics are
• where your visibility is weak

Then move to the next one.

Over time, something interesting happens. You’re still delegating more and more of the company, but you’re doing it from a progressively stronger position.

That’s what eventually happened with SEO.

I never became an SEO professional. I just became an owner who understood SEO well enough to hire professionals, recognize when one wasn’t delivering, and eventually find people who were.

Don’t strive to be the best person at every job – learn about the important functions enough to recognize the person who is.

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