The Agency Price Arbitrage Model
Build a service business by owning the spread between what talent costs and what the client will pay.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 88%
Bloom states this as the fundamental of any agency business: you are creating price arbitrage, charging a client five or ten grand for something that costs you two. In his ghostwriting agency the concrete numbers were writers at $1,000 to $2,500 a month depending on output, billed to startups and successful founders at $5,000. The unlock was supply — after running a Maven cohort with Julian Shapiro on audience building, half of which was how to write threads for Twitter, he had a pool of roughly 400 trained students to draw freelance writers from. He was, in his own framing, simply the connector between two points, and the client pays for that connection. The business scaled to roughly six figures a month gross with very high margins. His stated fix for the service-business headache is to recruit an exceptional operator and give them real upside — around 15% in the LinkedIn spin-off he was setting up.
Origin
Clients from his $5,000-a-month advisory came back in early-to-mid 2021 saying they had no one who could actually write the content and did not want to build a content team, so Bloom matched them to writers from his own course cohort.
Core principles
- 01The margin is the spread, not the hour
- 02Own a proprietary talent supply so your cost side is cheap and reliable
- 03You are being paid to be the connector between two points
- 04Charge on the client's perceived value, not on your input cost
- 05Hire an operator with real equity upside before the headaches compound
How to run it
- 1
Find the demand the client refuses to staff
Bloom's clients told him directly: the biggest struggle is that we do not have people who can write this content, and we do not want to build a content team when we are focused on product and engineering. That refusal is the opening.
Pro tip Existing advisory or consulting clients will tell you the gap unprompted. Listen for 'we do not want to hire for this'.
- 2
Build the cheap supply side
Create or capture a pool of trained talent. Bloom's came from the Maven course he ran with Julian Shapiro — roughly 400 students who had already learned the principles of writing for Twitter and knew how to execute.
Pro tip Teaching the skill first is a way to manufacture your own supply side rather than competing for freelancers on the open market.
- 3
Set the spread deliberately
Pay talent what the market bears — Bloom cites $1,000 to $2,500 a month depending on output — and charge the client on their perceived value, around $5,000. The gap is the business.
Watch out If the spread is thin, every client problem eats the profit. Bloom's rule of thumb is charging five or ten for something that costs you two.
- 4
Price against the client's alternative, not your cost
A startup or brand comparing you to hiring a content team, and a founder who has just made a lot of money, will both pay five grand. The same delivery can be sold at very different prices depending on who is buying.
Pro tip Bloom notes he never once had a VC client despite the press narrative — his clients were tech founders and ordinary operating founders.
- 5
Install an operator before you burn out
Bloom's answer to the service-business objection is direct: hire a great operator if you want to own a percentage without the headaches. In his LinkedIn spin-off, the plan was to hire someone exceptional and give them around 15% of the upside.
Watch out Skipping this is why most agency owners end up hating their own business.
In the wild
In early-to-mid 2021, advisory clients asked Bloom for writers. He had just finished a Maven course with Julian Shapiro on audience building, half of which taught thread writing, leaving him with roughly 400 trained students. He connected freelance writers from that pool to the startups, paying roughly $1,000 to $2,500 a month and billing around $5,000.
→ The agency scaled to roughly six figures a month in gross revenue with super high margins, entirely on the spread.
Bloom and a few friends were starting a separate agency focused purely on LinkedIn growth, treating it as the next open arbitrage window. Rather than run it himself, the plan was to recruit an exceptional operator and hand them roughly 15% of the upside.
→ Ownership without the service-business headaches, with the operator's incentive tied directly to growth.
Common mistakes
Pricing off your own cost instead of the client's alternative
Cost-plus pricing collapses the spread to a wage. The client is comparing you to hiring a whole content team, and prices accordingly — anchor there.
Starting with no supply side
Without a proprietary talent pool you are bidding for the same freelancers as everyone else, which pushes your cost up and your spread toward zero. Bloom's 400-student cohort was the actual moat.
Owning the agency and operating it yourself
Bloom says he has talked himself out of starting an agency roughly twenty times, always with 'do not go in the service business'. The version that works is owning a percentage with a killer operator running it.
Is it for you?
Best for
Operators with distribution or a trained talent pool who want cash-generating, high-margin revenue fast
Not ideal for
People who want a product business with no client management, or who cannot stomach service-business headaches
From the transcript
“the kind of fundamental of any agency business for anyone that's starting one is effectively that you're like creating price Arbitrage where you're like charging…”
“you can pay a thousand to 2500 bucks a month maybe depending on the output and you can easily charge you know a startup or…”
“what you have to do is hire a great operator if you want to be the like owner of some percentage of it and not…”
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