Episode 34:

Gareth Kay is a strategist by trade. He’s co-founder of Chapter, a creative business partner dedicated to solving the wicked problems facing pioneering businesses. Prior to setting up Chapter, Gareth was Chief Strategy Officer and Partner at Goodby, Silverstein and Partners and the Head of Planning at Modernista! In his decade in the US, Gareth has led strategy on brands including Google, Cisco, TD Ameritrade, the NBA, General Motors, the Bill and Melinda Gates Foundation. and (RED).

 

What you’ll learn about in this episode:

  • Gareth’s decision to venture off and start Chapter
  • What makes Chapter truly unique
  • How to build a business model and hire employees when the work you do is very diverse
  • Becoming a client’s partner through absolute transparency
  • How to generate new business when you’re in the project based business
  • Creating ideas and solutions vs creating “stuff”
  • How Chapter develops and retains its staff
  • The importance of transparency with your employees
  • How Gareth’s perspective has changed since making the jump into ownership
  • Things agencies can do to move away from widget sales to selling ideas and problem solving

 

The Golden Nugget:

“The biggest mistake is to try to have every skill set under your roof.” – @garethk Click To Tweet

 

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Speaker 1:

If you’re going to take the risk of running an agency, shouldn’t you get the benefits too? Welcome to Build a Better Agency, where we show you how to build an agency that can scale and grow with better clients, invested employees, and best of all, more money to the bottom line. Bringing his 25 plus years of expertise as both an agency owner and agency consultant to you, please welcome your host, Drew McClellan.

Drew McLellan:

Hey, everybody Drew McClellan here. Welcome to another episode of Build a Better Agency. Every week we try and bring you a guest who can give you a different perspective on your shop and how you can do things better, and I have no doubt that today’s guest is going to do that. So many of you have heard of or know Gareth Kay. He’s a strategist by trade. He’s the co-founder of Chapter, a creative business partner dedicated to solving the wicked problems facing pioneering businesses. So one of the things we’re going to talk about is how agencies are evolving and what a wicked problem it is. Prior to setting up Chapter, he was the chief strategy officer and partner at Goodby, and head of planning at Modernista. In his decade in the US he has led strategies on brands including Google, Cisco, TD Ameritrade, the NBA, and lots of others. So Gareth, welcome to the show. Thanks for joining us.

Gareth Kay:

Hi drew, thank you so much for having me. It’s a pleasure to have a chat.

Drew McLellan:

So you’ve existed in big ecosystems in agency life, and now you have ventured off and started your own. What prompted that decision?

Gareth Kay:

I think it was in many ways, Drew, a long time coming. I was very lucky to have worked at some great ad agencies with some absolutely amazing people who are far better and bright than me, and really help bring me on in the industry. But I think I got to the point towards the end of my time at Goodby, Silverstein where I began to really question whether we were giving the clients the type of advice they needed to drive their business forward, and whether we were doing the type of work that was actually valuable to human beings out there in the real world to change their behavior. And I guess my just observation, it’s not rocket science, was when you work in an ad agency or a digital agency or an innovation agency or a consultancy, unfortunately, the the output you make tends to determine the advice you give to clients.

So if you’re an ad agency, you tend to see, as much as you try not to, you tend to see the world being full of advertising sized holes. You think that way. Most importantly, you have a machine that has a muscle memory that’s really, really good at making a certain type of thing. And you have clients as well, who tend to come to you for a certain type of thing they want to buy from you. And I just increasingly began to think, are we in all conscience doing the best thing for our clients to solve the problem that lies at the heart of what’s holding their business back? And as much as I loved my time at Goodby, and frankly, I think I realized what I faced, to use marketing parlance, wasn’t a brand issue, it was a category issue.

And I began to realize I need to maybe try and start a different type of company that in many ways collided together lots of different types of creative organizations to try and build something a little bit different and a little bit new. And that was, I think, the bet myself and Neil Robinson and Brandon, whom my partners here, took to leave good agency lives and try and start a different type of creative company.

Drew McLellan:

So when someone says to you is Chapter an agency, how do you differentiate the work that you do from what most people would define as agency work?

Gareth Kay:

Well, I think a lot of a time it’s not so much a word agency. I think the word agency does have some issues to it, but I think it’s the prefix you put in front of the word agency, where you define yourselves by the type of output you are making, whether it’s a branding agency or a design agency or an ad agency. You are very much beginning to define your business by the outputs, and a very narrow specialization. And I think that what we talked to our clients about is really being a creative business partner, being a company that’s really obsessed about solving the real fundamental business problem by whatever means are necessary. So as a result of that, the type of work we do, and the type of advice we give is deliberately diverse, because there’s so many problems that are intrinsically different that clients face, and they require different solutions.

So a lot of what we do, frankly, exists at the collision between product innovation and brand communication. One observation we made was there has been a false wall put that we believe between the worlds of product and the worlds of brand, both inside client organizations, but also inside the kind of companies that serve clients and offer of them marketing services. And we felt that there was a job that exists where colliding those two worlds together to actually solve the problem by what the business demands and what people need rather than perhaps a muscle memory or a specific type of output is just a much better offering for clients, is much more fun, frankly, to work in. It doesn’t mean you have to build something different in terms of a structure of the agency, but I think it’s something that just creates something that’s far more valuable to businesses.

Drew McLellan:

So one of the questions I suspect agency owners have as they’re listening to you is how do you build the business model for that? How do you know who to hire and how do you know how to charge for that kind of work?

Gareth Kay:

Okay, so we’re 18 months in, so it’s all an experiment at the moment, but here’s what we’ve learned so far. I think the first thing we’ve learned is to… When you are hiring people, really hire people who are very diverse in their background, their experience, and their thinking. So we haven’t just hired advertising people, for example. We’ve hired people who worked on the client side, we’ve hired people who worked more in, I guess, a digital space and advertising space. It’s just that real mixture of people’s experiences. Just letting them see problems differently. Secondly, with the type of person you hire, you have to look for people who are very curious, they are to use a horrible cliche, T-shaped in nature. So they got really good deep skills in one particular specialization, but real interest in other areas.

So we really expect, for example, our strategists to be able to think creatively and not just write very smart briefs and PowerPoints, but actually be able to come up with good initial creative ideas of what the theme might be what the solution suggests. We also expect designers and creative folks to be able to be good strategic contributors, and they’ll be able to think strategically. So you got to look for people who have that very T-shape model. And then I think the other thing we realized was the biggest mistake you can make is to try and have all the skill sets and all the resource under your one roof and have that control of ownership that the closed agency system tends to build where.

Certainly at Goodby, and AKQA, and at Weiden, which is our alma maters of the partners, and we love those places, but one of the issues I think there is they try and do everything under the roof and have all the talent inside the agency. One, because it’s how you make money is by selling people’s time. But secondly, I think there’s a bit of ego and pride that exists in terms of we want to literally have our thumbprints on absolutely everything we do. And we made the decision that if we’re going to really deliver best in class solutions across very diverse outputs, we had to have an open networks model where we would actually partner with people to bring the best in class skill sets for very specific tasks.

So it just means we had to build up what we jokingly call a Rebel Alliance of really awesome partners, as well of being video production, motion graphics, user experience, whatever, that we can bring in depending on the project to build a team of awesomely deep skill sets to solve that problem. So part of it’s about the people you hire, part of it’s about, I guess, a structural thing, which is about being open rather than closed. So that’s the structure piece. I think in terms of the pricing, it’s a decision you make as a company, how you want to charge. And I don’t think we got to necessarily the final answer on this yet, but we made some very simple decisions early on, one of which was we were not going to sell people’s time. So there’s no time sheets that exist inside the organization.

We ask clients to do one or two things, one which is either to pay for what we believe is the perceived value of the work, and then we use some of the tools like mirror pricing, for example, where we try and talk about what we believe the value of the project we’re working on can bring to the business. But secondly, if we’re not going into that model, and not all clients are open to that, and I understand why, because there’s a degree of, I think, uncertainty around that model. It’s quite hard to go and actually go, “This is absolutely going to go and deliver this value.”

The other thing we look to doing, frankly, is a fixed pricing model. So as an agency, we tend to work on a sprint basis. That’s one of the big things we’ve taken, I guess, from being in the Bay Area and being heavily influenced by product development inside Silicon Valley, and actually really build a team that’s based around sprints and how much sprints essentially cost per week, depending on the team we’re putting together for them. And then you work out how many sprints we think we’re going to go and need to be able to go and build the deliverables. So it’s still a model that’s paid to a degree on the cost of human capital, but I think it’s one that’s a little bit fairer than just doing a normal FTE model, which is the predominant way of pricing, certainly, in the companies I’ve worked at in the past.

Drew McLellan:

And from your client’s perspective, how transparent are you guys with all of this in terms of A, kind of still a big experiment, B, we’re pulling in a lot of partners from the outside, depending on the work we’re doing, and C, this is our billing. How do you have those conversations?

Gareth Kay:

Well, I think the biggest thing we’ve learned is just to be really honest and transparent with our clients because end of the day, it’s that model of being partners with them, not vendors. And I think one of the biggest things we’re very, very clear with our clients is when you buy into Chapter, you’re not just buying the people in the room. You’re buying this network of talent that we can bring to bear on the problem you’re going to solve. And we are very open to our clients about who the partners are we’re going to work with and why we’re choosing them. We don’t try and white label them. We believe there’s real value in talking to our clients about we’re building this constellation of stellar talent for you.

And the amazing thing in doing that is so obvious, is you have partners who are really excited to work with you because they’re not being passed off as essentially white labeled freelance talents. They’re having their brand built at the same time. So I think that’s been a really positive thing. And all the clients we’ve worked with have been very, very open to that. In terms of experimentation and being very honest about where we are in our life, I think we attract a certain type of client. That notion we have of pioneering companies is one that isn’t about a size of client or a type of clients, but a mindset of clients, and clients who’ve got a degree of bravery, and who know that they have a problem, but don’t quite know how to address it, are very open, I think, to working with us because they see it as being, I guess, fellow pioneers and provocateur trying to get into a better and different solution. And I think that’s just a really important thing in terms of getting the fit of your clients right with the company.

And in terms of pricing, we’re incredibly open about our pricing structure. We are very clear about whether we’re going to work. We have a discussion up front about how do we feel on value based pricing versus more of a fixed price approach. But we explain to clients the reasons why we offer the model that we do. We think there’s huge upside to basically focus on the output we’re delivering as being the driver of price rather than the hours it may take to do it, because we feel there’s an incentive that when you talk about the hours it’s going to take, the tendency on the agency side can be to have as many senior expensive people working as long as possible on a problem to go and drive the biggest price and profit for the company.

We talk about we want to be nimble and lean and agile, and our pricing reflects that, and frankly gives the client a reward of us not trying to over staff a solution and actually deliver a lean and nimble team, but also incentivizes us as an agency to actually work fast and work smart because if we can deliver it quicker and cleverer and with perhaps lower intensity of efforts, then that means we have an upside in terms of profitability, which I think is a fair thing to do. So it’s about having an open conversation with clients. And I think one of the things, Drew, that I think was important to us enable to build this model was to make a decision very early on that we didn’t want to be an agency of record for our clients. We didn’t want to be someone who came in and said, “What we want to do with you is sign a multiyear multi-million dollar retainer.”

We actually want to come in and actually have our scope very tightly defined around a specific problem and solving that problem. Of course, we hope that we’re going to get other engages with those clients based on the quality of work we did for that project, but being a deliberately project driven approach. I think just allows us to have a much more honest conversation with clients, and frankly have clients who are prepared to take a chance on a young company who are very much a work in progress and a bit of an experiment, but not taking a long term, very, very expensive risk in working with us.

Drew McLellan:

And while you guys are sort of in your startup mode, you certainly all have a pedigree that would make a client have a lot more confidence in working with you. It’s not like you’re 20 year old kids who’ve never done this before. You guys have all worked for some pretty impressive agencies on some pretty impressive brands. So I’m sure that helps.

Gareth Kay:

It helps hugely, Drew. I mean, certainly the best bit of advice we got when we started the company was Gary Briggs, who was my old Google client and now a CMO of Facebook has just been an incredibly generous man of his time and counsel to us when we started up and giving advice at looking at what we were doing from a client’s perspective. And the thing he kept saying to us was, “Don’t forget who you guys are individually. That’s what clients are going to buy at the beginning.” And he was absolutely right. In the beginning they were our reputations and our pedigree.

I think the nicest thing for us as a company, I have to say, though, was I think about March or April of this year when we did our first new business meeting, where we only showed work made by Chapter. And there was no mentions of past clients, sizzle reels of past work. It was all based around the work that the team here has done as Chapter. And that was a wonderful moment where you can actually begin to go, “We’re actually building something as a company now where there’s hopefully credibility and capability being demonstrated in the world we’ve made.”

Drew McLellan:

Yeah, I think you’re right. I think now all of those talents have them together and you’ve mixed up a different recipe and I’m sure it’s nice to be able to lean on that, although I’m sure still people are relieved at the skill level and the experience level that you guys bring.

Gareth Kay:

I think you’re right. I think you’re right. And I think that’s what clients buy. They buy the people, they buy the chemistry, they buy the experience, and they buy the skills set. I think the often forgotten thing about the agency businesses is that’s what clients are buying.

Drew McLellan:

So you mentioned that you guys are purposely choosing not to be a agency of record, and as you know, I think a lot of clients are walking away from that model anyway, but there are a lot of agency owners who still hunger for that because of the consistency. So any agency that is going to be project based by nature has to always have their new business machine churning. So how are you guys generating opportunities for yourself?

Gareth Kay:

That’s a good question. We’re not as good at this, Drew, as we should be, and I think that’s probably one of our biggest learnings starting the company has been trying to better understand the new business pipeline. I think we’ve had a couple of learnings. One is it takes much, much longer than you think it’s going to get from initial conversation to having a signed piece of paper for a project. And that shouldn’t have surprised us, but it did surprise us, at how long that can take. In terms of how we’re feeding the machine, certainly initially we were very lucky to have, I think, some friends and family, I guess, not really family, but people who are really tighter than friends, who wanted to give us a chance to work with us.

We were very lucky that JD Swartz who runs the creative group at Salesforce worked with Neil at AKQA, really respected Neil, and they have a habit of bringing in relatively young companies to work at Salesforce, but around specific projects. So our first thing was, was working with Salesforce. We had, I think, a bunch of those where friends reached out to us to see how he would work. But really what’s been happening, I think, over the last, I don’t know, year or so, it’s been a word of mouth thing that’s begun to happen where thankfully, I think, some of the clients who we’ve done work for have begun to recommend us to their network of friends and peers. And slowly but surely word is getting out about the company.

And that’s led to some really awesome engagements, but there’s no doubt that the first thing we did and we still do is just harvest our LinkedIn profiles really heavily, and just see what people are up to. So either past clients or friends of clients that we worked in the past going into a new role, we will try and reach out and have a conversation. Because we’ve certainly found that we probably have the best chance of having an offering that’s right for a client when they’re often either going into a new role themselves, or they’re at a company that’s going through a significant moment of change. And that’s really been our biggest things in terms of new business, is really looking for… Almost identifying moments of opportunity rather than necessarily people or brands.

I think very much our ranking order for working out who to reach out to as gone moments of opportunity, then people, then the brand itself. And I think unfortunately, still a lot of new business efforts tend to focus the other way round and look at the brand first and go, “I really want to work on this brand or work on this vertical category.” I just think there’s an interesting model, which is just looking more for moments of opportunity, which is hard work. You’ve got to go and keep your eye on the ball and be aware of what’s going on in the world. But I think it’s actually a much better quality of conversation than just going after a bunch of people you know or have friends you know, or going after the brands you perhaps think you’d like to work on.

Drew McLellan:

Yeah. I think the referral model works for a while and then sooner or later you got to sort of put a new business machine in place. But I think you guys… A, your reputation, B, I know the media follows you and pays some attention to what you do. So that also helps, right?

Gareth Kay:

Yeah, it does. I mean, certainly our personal profiles have helped that way. We have not put into place that new business machine. I think we’re luckily at the scale where we don’t really have to be too concerned about that right at this moment. But we know it’s something coming and we know it’s a really difficult thing to get into place. And frankly, I think one of the things we’re struggling with, I’m sure many other agency owners go through this, is do you begin to think about bringing on your own new business lead inside the organization? Certainly my hunch is that is absolutely the wrong thing for us to go and do, because in many ways it’s investments inside a discipline that should really be a cross people discipline inside the organization. And in many ways it’s a big responsibility of the founders, as opposed to bringing in a specific new business person who is there to make it rain as they say. I’ve never been convinced about the efficacy and return of investments that that discipline brings to an agency. That is my personal bias.

Drew McLellan:

Well, my experience in working with 250 or so agencies a year is that the new business guy or woman rarely pays for themselves, let alone brings profit to the agency. It’s a very rare individual. And without a doubt, in every case, the best salesperson for an agency is one of the principles. So I think your hunch is right. So as you’ve lived in agencies and as I have certainly been around them for, gosh, 30 years now, we certainly have seen the commoditization of agency work. And I think one of the challenges for agencies is a lot of the magic in the stuff that agencies make has really been with freelancers and computers and all of that, it makes it harder to create real value around making this stuff, which is I think why you guys have made the shift into really being a solver of these wicked problems. Talk to me about your stance on selling ideas and solutions versus stuff. Because it sounds like you designers and other people who can implement and make stuff on staff and, you talked about partnering with folks that make stuff. How do you balance all that?

Gareth Kay:

Okay. So yeah, I think it’s been remarkable commoditization where agencies by and large were, it’s a horrible phrase, but selling widgets. So they were selling bits of output, and that’s just got increasingly commoditized. And you look at all the pressures. Just take a look at ad agencies at the moment. They gain squeeze at every which way they can from production companies to digital agencies to PR agencies to content agencies, are really like pushing down the pricing that they can command on the average cost of making a X length video, for example. I think what we wanted to look at doing was to really build a model where we were looking at having that more upstream, consultative approach, where we really looking at architecting against a fundamental problem for a client, but at the same time, not just falling into the trapper quote unquote selling PowerPoints, but actually being able to architect to make solutions.

So a lot of our conversations with clients, a lot our engagements start off with initially working out actually, what is a problem we need to go out and solve? And I think as as an industry, we’ve been pretty bad at actually really understanding what is the fundamental problem we need to address and solve. I think far too often we take the client’s brief at face value. I think far too often that client’s brief has ended up being diluted down to a game of telephone that goes on inside the client organization where the CEO or founder’s imperative gets transformed into a marketing objective by the marketing director, then gets transferred into a communications objective by the head of advertising or the VP for advertising, gets transformed then into a certain brief by the supplier. And I think that’s a really dangerous model.

So we found that a lot of… I think our best engagements and where we generated the best value for our clients and the engagement has come from spending really serious time in working through what is the fundamental problem facing the business. You have to look at that obviously through two lenses, one, which is understanding how that company makes money, but secondly, looking at the human user journey and understanding where the pain points are that need to be eradicated, where the barriers are that need be taken away, where the opportunities are to go and delight users.

And I think looking at the world through those two lenses and actually spending the time to really tightly define the absolute fundamental problem we need to address is the most important thing we do for our clients, in many ways has been the thing that I think has set us up for success. So I think it’s not so much about is it ideas versus the things you make, the widgets you make? I think a lot of the value we get is actually from just actually doing the problem definition piece up front and making sure we’re solving the real problem rather than basically becoming producers of a very expensive bandaid for symptoms.

Drew McLellan:

Yeah. It’s interesting. So I think one of the challenges you’ve solved, and I’m anxious to hear how you’ve done that, is a lot of agencies struggle… Clients are used to and comfortable buying something tangible, and they can associate a price value with that and all that. But it sounds like you’ve solved the problem of helping clients understand that there’s value in that discovery and defining of what we’re trying to actually do and getting paid for that. What does that conversation look like?

Gareth Kay:

Well, I’m not sure it’s so much about conversation, Drew. I think it’s more about perhaps the type of clients we work with. We turn away quite a lot of new business leads here, which frankly, sometimes you wonder and are we crazy doing this, but I think it’s done for a good reason, which is when the client comes to us with a brief, which essentially is, “I need an advertising campaign,” or, “I need a social media campaign,” or, “I need a new website,” we really worry about whether that’s going to the right kind of client for us, because it gets the point where they feel they know what the solution is, and it’s almost like they’re giving you the paint by numbers picture, please now go and paint this for us, which immediately puts you into a commoditized trap. The kind of briefs react really well to are clients that come to us and go, “Look, things aren’t right at the moment. We know we need to change, but we don’t know how we need to change.”

And those are the kind of briefs you excited about, because immediately they’re predisposed towards, “Let’s go and work through what the problem is we need to go and solve and address.” So I think it’s less about, in many ways the conversation we have. I think it’s about really making sure that the clients you choose to work with and the projects you choose to work on are the right ones, where there is just that willingness to understand that we need to go and address the issue first before we get to going, “Here’s the solution, let’s go and make it.” And that to us is just fundamentally what we want to go and do as a company is really have that fundamental moment of change on our client organization rather than just getting to the maintenance business. So that just means… It becomes, I guess, in many ways, a filter for the type of projects and clients we take on.

Drew McLellan:

So you talked a little bit about hiring the right staff. And I’m sure you’re… Well, especially out in the Bay Area, you guys must be experiencing the same thing everybody else is in the country, which is the shortage of great employees.

Gareth Kay:

Totally, totally.

Drew McLellan:

So how are you continuing to develop the people you have so they keep getting better? What does that look like for you? And how are you creating an environment and a culture that hedges the bet that they’ll stick around?

Gareth Kay:

Okay, great question. There’s no doubt that talent is the biggest single issue of this industry at the moment, and it’s certainly the truth here. I think what we’re trying to do in terms of developing staff and frankly helping them keep them here is we’re, in many ways, pushing them outside their comfort zone and trying to give them new challenges, new problems, quite often a sense of, “I don’t quite know how to do this,” in every project they work on. And I think one of the great things about being project based is that there’s a stream of very different problems that’s going to hit someone’s desk and someone’s time over the course of six months or a year. And that, we found, is… If you’re looking for people who are innately curious, want to grow, want to feel challenged, that in and of itself is both brilliant training, but also a great retention policy because it’s really about are people working things out in many ways for themselves and trying to provide that environment where it feels safe and comfortable and there’s counsel and advice, and there’s a permission to fail.

But just that motivation of, “We’re going to give you a real range of challenges that are going to make you feel uncomfortable, that’s going to push you,” is something that plays really well with the type of staff we’re trying to hire here. So that’s just one thing I think that really helps. Probably the single biggest thing, I think, that we do to really attract and retain staff. I think the other thing, and it’s, I think, an abuse phrase in many times, is being really clear about the company values. Quite often company values become some kind of game of adjective soup about being nice and collaborating and all those types of very good, but just fairly bland types of values.

What we try to do is really put a tight filter on defining values as the things we value in the people we hire. It’s the kind of things that help us make decisions about who to hire, who to fire, unfortunately, sometimes, and also how we review and reward people over the course of a year. And just being really crystal clear around those values and having them expressed to the staff consistently, not just through words and some kinda document, but most importantly in the behavior they see inside the work-

Drew McLellan:

Decisions you make.

Gareth Kay:

Decisions you make, yeah. Particularly from the founders. And I think far too often the set of words that exist inside an agency, and then the decisions that you see happen are often at complete odds with one another. It’s that thing, isn’t that old Bill Bernbach-ism of a principal isn’t a principal until it costs you money. And I think sometimes if you’re really going to go and get people to go, “Oh my God, they really mean this,” it’s when you’re making a tough decision around a project, whether you take it on or… We had a really interesting new business project that came our way. I don’t know, I guess three or four months ago, and very impressive people, great pedigrees doing a startup in a pretty awesome nascent space and had a a good conversation with them, felt it was going very positively. It was a relatively good size project for us in terms of fee.

And having a conversation with a client, you begin to see some signs of, “Are they going to be the right partner for us or not?” And there was a moment when essentially they asked us, “We think you guys are great, but obviously we haven’t seen any work,” so could you come back tomorrow with some concepts. We kind of sat there in the room and went, “Well, one, we told you very clearly we don’t pitch and we don’t show strategic or creative work in advance of working with you.” But secondly, even if we did, the thought that we’ll come back tomorrow with anything that makes any sense-

Drew McLellan:

And you’re going to be wowed by it in 12 hours.

Gareth Kay:

Yeah, it’s crazy. So not only does it suggest really bad things about the way you’re going to want to work with us over an engagement, but also what it means for our people was just a no go. So we had what should be on the face of it, quite a tough thing, which is obviously a good chunk of revenue, it’s in a really interesting category. They could be a really powerful, great brand, a really big success story, versus they’re kind of betraying some fundamental beliefs and values of the organization, and what should be a difficult organization became very… Sorry, a difficult decision became remarkably simple. You just go, “No, we can’t do this. It’s not right for us as a company. It doesn’t match our values.”

And you come back and talk to the folks who work here about that, and I think they begin to realize that things we do actually really do mean something to us and the values we hold are held very dearly because we made a decision to walk away from a great opportunity. And that I think is that the most important thing, those defining acts of behavior, the rituals that bring value to life, they’re really, really important. I don’t think agencies spend very much time thinking through what those things are, or making sure that the things they do align absolutely 100% with their values.

Drew McLellan:

Well, and I think the other thing you did there was you were really clear in communicating that with them. So I think sometimes agency owners do make decisions that align with their values, but they feel for some reason that they shouldn’t share the details with their staff, and they lose the opportunity to demonstrate that they actually do live by the values that they espouse.

Gareth Kay:

Absolutely. Absolutely. I think that kinda belief of being very transparent and communicating… To a sense, sometimes you have to push stuff because you think you’re over communicating, but you’re not. And I think that’s really important. So it certainly helps in that we’re a relatively small company, we sit in an open plan office around big, long tables, we have lots of conversations that goes on day in, day out. But we also have stand up meetings at the start of the week and at the end of the week where we talk about the work that’s been done, the decisions we’ve made, the things we’re going to be doing over the course of the next week. That just means that everyone is absolutely understanding of what we’re doing and why we’re doing certain things. I think that’s really important and really valuable.

Drew McLellan:

So correct me if I’m wrong, but this is your first foray as an owner of an agency.

Gareth Kay:

It is. It is.

Drew McLellan:

So you you’ve held some pretty high leadership positions in some large agencies, but this is the first time that you have this sort of level of skin in the game. So what has surprised you about being the owner as opposed to being a leader in a company?

Gareth Kay:

Oh my lord. I mean, in many ways you almost want to say everything surprised me. It’s a completely different feeling because you have the… I guess, on the most absolutely obvious level, on one side, you have utter control and responsibility, so you cannot blame anyone else, you can make your own destiny. That’s awesomely liberating. On the other side, it’s really scary because there’s nowhere else to look for for advice. You make success, you make your failures. I think the thing that surprised me the most, I think there’s probably a couple of things. Firstly, the amazing generosity of people inside the community when we started up was just amazing. We had a close friend of mine, Darrell Whitelaw who runs a great digital company called Siberia, he gave us desks inside his office for an indefinite period of time, free of charge, which just was an absolute godsend to get us going.

We had people giving us advice about their business models, about what worked for them, what didn’t work for them. We had folks offering to help us out doing work at either dramatically reduced if not free of charge rates. It just was amazing. The contribution from, I guess, the creative community was staggering and awe inspiring, and we really want to pay that back to the next group of people that are going to go off and start companies. But also I think was just remarkable trust from clients. I think what surprised us, to be quite frank, is we weren’t surprised at working with a bunch of startups early on, because that’s how most young startup, creative companies work. They tend to work with smaller startup like companies. And that’s only amplified by being in Silicon Valley.

I think what’s amazed and surprised us is there is a hunger from bigger organizations to work with smaller companies, because I think it helps in many ways reconnect or connect in some cases with what makes startups successful, which is agility, nimbleness, and most importantly of all, speed. And I think that’s been a big surprise to us is really big organizations who have chosen to work with us after only being in business for 18 months, that we just didn’t think we’d be working with now, and having really good positive engagements with. And that’s just been an awesome thing.

And then I think finally the most surprising and humbling thing is being people who’ve had really good jobs in other companies, be they client side or agency side choosing to take a chance of you. And I think they’re taking a chance of us, and I think the history of clients as well, is because we’ve tried to build something that’s is differentiated, but actually feels unlike a lot of the other agencies and startups in the area. But also is not just differentiated for the sake of being different, is trying to really address, I think, an emerging client need. And that’s been, again, just something that’s been surprising and humbling, and to be honest, there’s been some tough days, Drew, as you’ll know, and listeners of this who are owners know. It’s a roller coaster ride. There’s some days that are as black as anything, with some days of absolute awesomeness. But I think that the thing that stuck with me is just being… I’ve ever regretted this decision to be an owner and start something at any moment, even in the most difficult of days and [inaudible 00:41:06] situations, it’s gone great.

Drew McLellan:

Yeah, I think it’s one of those things that even on the worst days, it’s better than the best of jobs.

Gareth Kay:

Completely agree. Completely agree. You have to learn and I’ve had to learn to be able to, I guess, mitigate the extremes, highs and lows.

Drew McLellan:

Ride the waves.

Gareth Kay:

Yeah, ride the waves, for my own sanity, and most importantly of all, for the folks who work with you and for you, because if they begin to see nervousness or concern or panic in your face, and it’s not so much what you say, but how you are acting and behaving, they feed off it and they begin to get concerns. And I think it’s just that thing of being able to internalize a roller coaster and ride the waves, as you said.

Drew McLellan:

So as agency owners are listening to us and they’re nodding their head and agreeing that they too want to move away from being the widget sales folks, which a lot of agencies, that’s been the model, to really selling ideas in problem solving, how would you recommend that an agency that’s been more traditional in structure, how would you recommend that they begin that evolution? What are some things that they could do to make themselves A, better skilled at that, but B, more attractive to those kind of clients?

Gareth Kay:

I guess I touched on some of the things we talked about, but here’d be my advice. The first thing would be to really ensure, whether you are being paid for it initially by clients or not, to spend the time and working out what the real problem is you need to solve. Because if you can spend some time doing that and get to a really good ,crisp definition, you’re going to start making more diverse, more interesting stuff that’s going to be much more valuable to your clients. So I think that’s one thing.

I think the second thing is make sure you have the right type of relationship with your clients, by which I mean it’s very tempting to always look at walking through a door of the CMO inside a client organization, and that’s often a good door to go through, but I think increasingly CMOs, and it’s not meant to be a dig at them, it’s just a reality of the world I see at the moment, is that increasing becoming chief communication officers and in charge of making ads and bits of content, and they’re increasingly divested from perhaps product and certainly the overall experience that exists between a brand and a human being in the real world.

So I think trying to find the right door to walk through in the organization is really important. My point is sometimes it’s not the CMO door. Sometimes it’s good to go in through… Obviously a founder or CEO door is amazing because you can then have the opportunity to really affect the business by whatever means necessary, but often going through product or going through UX, we found to be really good doors to go through and just opens up different opportunities and a different world to work in. So I think that’s worth thinking about.

And then I think the third thing is just a structural thing, which is making sure you hire people who are, again, that T-shaped thing. I know it’s a cliche, but I think it’s really important that the folks who work for you, are they really good at specific skill, but most importantly, are they curious about other skill sets? Because I think that’s allows you to have a much richer type of problem solver inside the agency. And you want to have people who are diverse in backgrounds, so different experiences, I think, bring a different perspective into the problem solving process. I mean, there’s a simple… I hope it’s not simplistic, but there’s a simple rule I can always hold in my mind, which is if you want to get to different ideas, you need to have different people working together in different ways. And I think that’s just a really simple rule of thumb that we always try and stick to.

And then I think ally to a different types of talents, I think, really think about how can you open up your agency to partnership with best in class partners, so you can go and build the best teams around specific projects rather than trying and do all the work yourself inside the agency. I’ve certainly heard on some of your earlier podcasts, Drew, that some folks have been preaching the same thing, which is find the people in your city who you can partner with, so that actually you’re going to go and build an offering for that clients that is far greater than an offering you can ever try and do inside your own four walls. And I think just that ability to be networked and to be open and to collaborate is going to be something that’s going to set up the companies that succeed over the next decade versus those who perhaps stagnate or fail. And I strongly strongly believe that.

Drew McLellan:

I think you’re right. I think it’s that mentality of there’s enough business for all of us, and I don’t diminish myself by acknowledging we can’t be everything to everyone, but what I actually do is I magnify the influence I have with and for my clients by being able to bring best of class partners into the party.

Gareth Kay:

Yes, totally agree. Totally agree.

Drew McLellan:

And I also think you come off as confident in your own abilities when you’re willing to let other people… Other foxes into the hen house, if you will. It reeks of confidence, and I think the other message it sends to clients is, “I could try and do this myself, and yep, I would get to keep all the money, but what’s in your best interest, client, is if I bring in this partner or that partner.” And I think it reinforces the idea that you’re in it for the right reasons.

Gareth Kay:

Agreed. Agreed. I think, Drew, the final thing I would add, sorry, to that list, the final thing I would add is just make sure you look for clients and make sure you look for projects where they’re not asking for a specific type of output, they’re looking for help, and they’re looking for advice, because those are the projects where they know they need to change, but don’t quite know how to do it, that you can genuinely begin to really provide high value to them and do very diverse, different, exciting work. So I think just a thing to watch out for is the type of engagement, the moment that the client is going through becomes, I think, super, super important in helping you set yourself up success.

Drew McLellan:

Yep, absolutely. Well, as I knew it would be, this has been an awesome conversation. I am really grateful that you made the time to share your insights with the listeners. Thank you so much for doing that.

Gareth Kay:

Thank you for having me. Thank you for having me. I hope there is at least something in there was useful for people listening.

Drew McLellan:

I’m sure it’s packed with useful things. I know that a lot of people are probably furiously taking notes. So Gareth, if folks want to keep track of you and your work and reach out to you, what is the best way for them to find you?

Gareth Kay:

Two ways to do it, I would suggest. One is Twitter. So @GarethK, so G-A-R-E-T-H-K, or @ChapterSF, which is the company Twitter handle, or you can reach out to an email, and it’s [email protected]

Drew McLellan:

And just for folks who are listening, it’s Kay, K-A-Y, not just the letter K.

Gareth Kay:

Just to letter K.

Drew McLellan:

Oh, it is just the letter K for Twitter, okay.

Gareth Kay:

Just to be really annoying and difficult, yes it is.

Drew McLellan:

That’s right. Thank you so much. Listeners, I know that this was both inspiring and hopefully the kick in the rear end you need to elevate your game and try and find those wicked problems your clients are having and solve them and earn that reputation and trust that happens when you really do help a client solve a business problem and change the trajectory of their business. So thanks for listening. Thanks for being with us again this week. As you know, I’ll be back next week with another great guest with another perspective on your business, so feel free to reach out in the meantime. You can get me at [email protected] Be sure you subscribe to the podcast so you don’t miss anything. And if you are liking what you hear, always grateful for ratings and reviews. So I will see you next week. Thanks.

Speaker 1:

That’s all for this episode of build a better agency. Be sure to visit agencymanagementinstitute.com to learn more about our work workshops and other ways we serve small to mid-sized agencies. While you’re there, sign up for our e-newsletter, grab our free e-book, and check out the blog. Growing a bigger, better agency that makes more money, attracts bigger clients, and doesn’t consume your life is possible, here on Build a Better Agency.