7 Years of Agency Operating Lessons (Part 2)

Today we are going to talk about part 2. This is a multi-part series in terms of we're talking about 7 years of operating lessons from my ad agency, Single Grain. So these are really any operating lessons for any type of business. But in this context, I'm talking about Single Grain. Again, this is the company that I paid $2 out of pocket for and negotiated a good deal. It was a distressed asset and it was my first M&A type of deal. Actually, technically it would be my second one because my other one would be a couple of thousand dollars from when I was about 25 years old or so. So the first lesson lesson I have on this one is around— I talked a little bit about obsessing over culture, but what ties in with culture? Core values. Core values matter a lot. And I learned that, you know, if you don't have core values set, it's hard to drive alignment when you're hiring people, right? So when you're hiring people, you should be hiring and firing based off of core values. So one of our core values is growth, and I'll just name all of our core values actually. Growth, which is really important to me. And by the way, a lot of the core values come from the leader or the founder. So growth is really important, long-term vision, integrity, accountability, and creativity. You know, from there, it's what we do is we do a belt meeting every single week and people talk about their personal wins and then their professional wins as well. And then we nominate someone for the belt. We have this WWE belt and we nominate them based on certain core values. And so that way the core values are constantly reinforced every single week because you need to find ways to reinforce it. We also try to reinforce it. Um, you know, we have a rewards program called Bonusly, which you can give people rewards. They can buy like Amazon gift cards and things like that. And we also have an employee engagement tool called 15Five, but it's constantly reinforcing core values and it's also holding people accountable too. One of our core values is accountability. So if you're not hitting deadlines, you're showing up to meetings late, and you're just, you're basically not being accountable, well, you know, the idea here is that you, whoever, your boss should be calling you out on it and holding you accountable. And you should be open to being held accountable. And if you're not, And you're getting defensive about it, then hey, you know what? Even though you can do a good job, you're doing a good job. Develop in terms of development. You're not doing a good job. You're performing well, but you're not open to you know being a part of our core values, and you're not open to doing things how we do them. That's fine. You know, you can definitely go somewhere else, and you know we'll help you work through that transition. We last the the first part we talked about how important it is to you know not just fire people but have a mindful transition process. So core values super super super important, and there's a lot of you know people. Pay a lot of lip service to it, but I think once you define them, it makes things a lot easier. And I think at the very beginning, you know, it might be founder-driven, but as you get some people, you will kind of survey around and then get a bunch of, you know, see what the kind of what the signal is. People put in a lot of different words, and often they're saying a lot of the same things. And, you know, from there, you can just get with your leadership team or whoever it is exactly, and then you can kind of, you know, just try to distill it down to ideally 3, you know, maybe max 6 words. And those are your core values, and you're just constantly reevaluating. You know what? Maybe every couple years or so, like you know, do these core values still fit? But everything kind of centers around that. The other thing I'll say, the second part is having an operating system. So you know, you can have your internal operating system for yourself. So for me, like I have my Mondays, I like to make my Mondays all meetings, right? So one-on-one meetings, all the traction meetings that we do, and I'll talk about that in a second. And you want to have an operating system for yourself, but then an operating system for your company. So we operate on the traction. Methodology, also known as the Entrepreneur's Operating System. There's also Scaling Up, which is by Verne Harnish, the founder of EO, which I'll probably talk about in a little bit as well. But you have Scaling Up, you have Traction, and these are just frameworks to use. Like, these— Traction is basically, for us, it's a 90-minute meeting, and then, you know, it starts with 5 minutes, you know, kind of 5 minutes of small talk. And I used to think the small talk was BS, but being able to build that relationship and, and Go a little deeper with people and follow up on what they said, what they did over the weekend and all that. That is important and that goes a long way because especially right now, you know, we're a remote-first type of organization. So you have to find little points that, little points of interaction that you can kind of double down on. You know, second part of traction would be what we talk about a scorecard, right? We'll look at, you know, how things are going over time. We'll look at, we'll check our to-dos. We have customer, employee, vendor headlines. And then we'll also— Look at the how we're doing in terms of our objectives and key results. So they're called rocks typically, but we've actually taken the OKR method from Measure What Matters from John Doerr, and we spend about 60 minutes IDS-ing. So that's identify, discuss, and solve. And then we rate the meeting at the end 1 through 10. And this is just a cadence that we follow over and over. And so we're able to each week it sets, it starts the meeting off strong or the week strong. And we talk about core issues. Sometimes there's debate, sometimes it gets really uncomfortable. So whoever's sitting in the room better get comfortable with being uncomfortable. And oftentimes what you're gonna find is the people in the room, sometimes you have to swap some people in and out because some people might not be a fit to be in that meeting anymore. And a lot of confidential stuff happens in those meetings as well. And what I would recommend is you start rolling this type of meeting out to separate teams on your company as well so they can discuss issues that they have. So for us, you know, we have a— one of our teams is the paid media team and they have a traction meeting, but it's truncated to 60 minutes instead of 90. So you can make the decision there. Do you want to cut it down a little bit? Whatever. We found that, you know, the 90 minutes especially on the, you know, lead team meeting to talk about kind of hairy things. It takes, you know, 90 minutes or so, kind of the bigger ticket items. So, you know, having a company operating system and having your personal operating system goes a long way. And then, you know, peer groups, who can you hang out with? And so I'll give you an example. When I was 27 or so, when I first came into the company or when I took over the company, I didn't know what I didn't know. And so, what I ended up doing was I joined a group called Entrepreneurs Organization. There's a lot of these groups, right? There's Vistage, Entrepreneurs Organization, there's YPO, which I'm now a part of. And you can even make your own peer group. Let's say you're just starting out right now or you're just starting to grow. There's EO Accelerator, that's for, you know, people doing sub-$1 million in revenue. But there's a lot of like-minded people that you should be hanging out with that are doing cool things that are motivating you. And oftentimes they'll share things that you just don't know about. So for example, At 27, I didn't know what a master cash flow forecast document was that showed me 10 weeks of cash out. And there's just a lot of things that I learned a lot through osmosis by, you know, my forum buddies. And I was with the same forum for 7 years. And, you know, we met every month. And, you know, people were, a lot of them, I mean, I think the closest age gap to me was about maybe 2 years older than me or so. And people were like, you know, In their 35, 45, 50 or so. You know, one person was approaching 60, I believe. And yeah, I mean, at the time I was 27, so I was the youngest in the group. And as I got older, I ended up when the group ended, I was the 3rd youngest. So, you know, 2 younger people came in after me. But I learned a lot. And, you know, again, you don't know what you don't know. And what ends up happening in these types of peer groups is you will share your challenge and everyone goes around the table sharing experiences and they don't give you advice because You know, if they give you advice and you don't take it, they're gonna resent you. And if you take their advice and it fails, though, you're gonna resent them, right? So it's known as gestalt. So this happens in— anyway, point is there's a lot of these different types of peer groups, and it definitely helped me, you know, keep me sane. And it's kind of like group therapy as well. You know, when you join— when I joined the new— when I joined a company and, you know, you ask questions and someone might respond, well, that's how it's always been done. And I think that's probably one of the most, most defeating lines that someone can tell you. And I think that's really unproductive because that's how it's always been done, but things change. There's always new information. So I think the key thing here is that, you know, you might have strong views, but, but hold them loosely, right? So, and that goes for you, that goes for everyone on your team, because if you're presented with new information that says you should probably change it and you don't change it, that ultimately is your fault, right? So being flexible in that respect will, will take you, will take you a long way. The final thing I'll say on this one is, I fundamentally, when I came into the agency, when I took it over, the entire objective here was to use the agency, build a great company, build a great culture, but then also use the cash flows there to help fund and grow and buy other businesses that tie in with the marketing audience that I have. And that's continued to grow over the years. And so, you know, a good example of this would be, and I recommend people check out the Leveling Up podcast, check out my podcast with Andrew Wilkinson. He's done a great thing with Meta Lab and Tiny Capital. Meta Lab was his design firm. He takes the profits from that and he uses it to buy other companies with Tiny Capital. But even beyond that, I think the agency itself can be an incredible business. It can be a very strong business if we can convert it into a pay-for-performance, like an affiliate type of business, right? That's where you can generate economies of scale. Because generally, when I think about, you know, agencies, the big holding companies, all they do is they hire other agencies and And there's a lot of redundancies, it's really slow, and sure, you're playing the M&A game, but, you know, where do you go beyond that? And so, I haven't really been impressed with the super big holding companies, and I've seen really efficient companies. I have a buddy, you know, his company does $26 million a year, he only has 10 employees. I've seen another company, $500 million a year with 300 employees. And so, that's the model that works, and I fundamentally have always believed as a marketer, That if you're good, you are going to be compensated based on performance and incentives are aligned and you are treated as a partner and you're not seen as a vendor, right? And that's how I've always treated agencies in the past. No matter what they've, they might've said they wanted to be a partner, but you know, I've always seen them as a vendor. And when I talk with my other founder buddies, you know, the secret here is, you know, when you think about agencies, they're, you know, at least, you know, when I talked to my founder friends, hey, you know what? We'd like to hire them for a little bit, get, get what we can. And then we just like to fire them, right? We want them to set things up and then fire them. And it's kind of become a running joke. So I want to be, you know, I want to have a company that's respected and it's really the performance companies that are respected. And, you know, we have control of the funnel and we can do what we want to do. And we're not beholden to playing this business development game where, you know, it's more about, you know, meeting people in person all the time and it's wining and dining all the time. It's— those things are important, you know, I think there's a little bit of that. But I think it's more focused on bringing results, growing the businesses, and providing, you know, helping those businesses make a bigger impact on the world. So I think the traditional agency model is broken. And, you know, what we've worked towards is this performance model. And look, you know, I look at the other things that, the other projects that I work on. And, you know, whether it's the podcast Marketing School, whether it's the software company, whether it's running education products, all the other stuff I've done in the past has economies of scale. So, you know, It's about having the right business model. And I think fundamentally, if you're going to try to do an agency, you should try to figure out a model that works well, that scales well, where you're not selling time for money. And that's what I think. So if you enjoyed this, if you want to start, grow, start or grow your consulting type business, agency service type business, just go to singlegrain.com/call and you can actually book a call with a strategy person on our team to help you grow your agency. Okay. So that's the The first part. And well, if you're not interested in that, just please rate, review, and subscribe to this podcast. It helps us grow. If you're coming from YouTube, let us know in the comments what you think, and we will see you tomorrow.