19 Years of Not F&^#king Up

19 Years of Not F&^#king Up

I started my first agency 19 years ago this month. My wife was seven months pregnant with our first kid and when I walked into the room and told her: “Honey, I’m quitting my job to start an agency!” She responded, without missing a beat, “That’s fine – just don’t F&$k up.” (Whether or not I F&$ked up over the ensuing 19 years is open to interpretation…but what a woman!)

But I’m not here to talk about me or my kid or my wife (that’s for Facebook…where we’re all perfect). I’m here to reflect on starting a business in 1999 vs. starting one today. First, let me set the stage: in 1999 the Patriots had yet to win a Super Bowl, the Red Sox were in their 81st year of World Series futility, nobody had yet heard of a “hanging chad” and the dot.com bubble was fully inflated. (Oh, and airplanes were going to fall out of the sky at midnight Jan. 1 due to the Y2K problem.)

There was a lot of drudgery involved with starting an agency back then – you had to put everything together yourself. First, you needed an office – and there was no such thing as “co-working space” like today, so you had to sign a long-term lease on empty office space based on a best guess of how big you’d be in five years. And, due to the office-space shortage (thank you, dot.com bubble), landlords had the leverage to make you sign a personal guarantee on your lease – so if your business went under, they could come after your house and any other assets they could sink their fangs into (that was a blast when the dot.com bubble imploded in 2001 and half our revenue evaporated in about 48 hours, but I digress).

Having gambled your family’s financial future on a lease with a personal guarantee, the next step was to acquire all the things that make an office an office: furniture, phones (wired, no less), computers, copier, fax, pens, pads, paper towels, toilet paper, coffee, coffee makers, coffee filters, coffee cups, coffee stirrers, and on and on it goes.

And, there was no cloud computing, so you also had to buy and install all your applications (on every blasted PC), subscribe to all your relevant magazines (and there were a LOT of them back then), figure out how to make a local-area-network work and, last but not least, buy the Good Book of the PR industry: the approximately 37-pound paper-based Bacon’s Media Directory (which, come to think of it, also necessitated the purchase of a book case).

Fast forward to today, and starting an agency is about as different from 1999 as Tom Brady is from Drew Bledsoe. Let’s start with office space – instead of signing a Draconian long-term lease for empty space that you may never fill (or fill too fast), today you can just pay month-to-month in a co-working space for a fully outfitted and scalable office where your every need is taken care of…by the landlord! Furniture, IT infrastructure, maintenance, Kleenex, all-you-can-drink coffee and oddly flavored seltzers…all you do is walk into the place and you’ve got everything you need. Likewise, business applications and resources have gotten way easier – all you have to do is subscribe to a few cloud services and you have access to the same infrastructure as the largest agencies in the world, with no need for internal IT personnel or management. And if you do F&$k up and your business goes down the drain, you can just walk away at the end of the month – no leases to break, furniture to sell or lawyers to dodge.

Like the Sox and the Patriots, the agency start-up game looks nothing like it did in 1999. The risk and investment required in today’s pay-as-you-go world is a fraction of what it was back then, and the operational-headache quotient has been virtually eliminated. All in, you can start a fully functioning agency today in about 48 hours with a credit card.

This actually shifts the competitive landscape, because virtually anyone can put the infrastructure in place for an agency – not just the well-heeled or well-financed. This means that, more than ever, differentiation is achieved through things like quality of work, depth and breadth of skills, industry reputation, etc., rather than the ability to set up a fancy office and wine and dine prospective clients.

Best of all, if you’re good at what you do, today’s pay-as-you go economy makes it a lot harder to F&$k up than in 1999. Maybe that’s why when I told the wife about my latest agency venture, she just looked up and said, “Sounds good honey. Have fun.”

What a woman!



When “I don’t need” becomes “I don’t want”

“I know I need a reliable commuter car…but man, I want that Jaguar!”

Say that to any used car dealer and you’ll be driving off in the Jag. This is the fundamental struggle we humans face – balancing what we want with what we need. What we want is often what we don’t need, but that car dealer is going to put you in the Jag anyway because it’s more dollars and an easier sale. Wants are emotional, needs are rational: We all know who wins that battle.

And this is what’s wrong with the agency business. For too long, agencies have sold to people’s wants rather than their needs. I got my first glimpse of this many years ago after joining my first agency and sitting through a new business pitch. The “aha moment” came when the pitch leader played a Nightline clip featuring one of our clients. The one slight problem was…the client on Nightline made portable defibrillators (which were brand new at the time), and the prospective client made application development tools and was never getting on Nightline (shy of some sort of executive scandal).

I suspect the prospective client knew this at some level, but they saw that clip and said, “I want that!” and signed on the dotted line for a fat retainer. They drove off in the Jag instead of holding out for that sensible commuter car: a boring yet effective program focused on application development outlets. After paying for a predictably fruitless major-media campaign for several months, they terminated. They were sold what they didn’t need, which predictably became something they didn’t want.

The traditional agency model, which dates back to World War I, is built on selling clients what they want (or convincing them that what you’re selling is what they want). They want big splashy ads and high-priced media relations campaigns…but do they really need those things? Some companies do, but many more don’t. And most companies may need them at some point, but then they don’t need them a few months later due to changes in the business. But, the WWI model locks them into long-term retainers for a stove-piped set of services. And if you want another set of services, it’ll cost you more. And if you want to get out of it all together, you’re stuck for another quarter or more due to the contract’s exit clause. (Incidentally, any exit clause that’s more than 60 days is a sign the agency has no confidence in its ability to satisfy clients, but I digress.)

Few companies really need this model of doing business – but with a slick set of Nightline clips, agencies do a great job at making them want it. Today, we see agencies cling to this model, even though the world has changed considerably since World War I. Today’s economy is all about on-demand everything. People expect to be able to throttle services up and down based on their immediate needs – and yet many agencies are still selling those Nightline clips and sticking clients with long-term, static service modules that inevitably fall out of sync with client needs.

It will be interesting to see how agencies evolve in the next five years. I’ll venture a guess that those adapting to the on-demand world will do well, while the Nightline hucksters drive their Jags straight into I-don’t-wantville.