How Pilothouse Scaled to 170+ Employees in Under 3 Years

All right, welcome back to Agency Journey. This is Gray MacKenzie from Zen Pilot. I am your host for the day, but the person you actually want to listen to is my guest. I've got Andrew Stern on with me, who is a partner and COO at Pilothouse, which is an awesome agency. And you'll be able to tell where they're located or where they're headquartered here in just a second. Once I. Once I welcome Andrew aboard, but they're friends from up north. Andrew, welcome to the podcast.

Yeah, thank you so much, Gray. Yeah, really happy to be having a chat with you and sharing whatever I can.

So we've been doing a little series here on the podcast, trying to talk to the top agencies who are running on EOs and have gone through that implementation process or in that implementation process. And it's been funny as we've been having those conversations. Some people are super pure play EOs. Like, we do everything down to, you know, if it was in the book that's happening here, people have taken it and modified it more. So we'll dig into all that. But as we're starting out, can you. I'd like to have you share two different stories. The first one is just like, how did you wind up at Pilot House and what does your role look like today? The second one is, who is. What is Pilot House? Who do you serve?

Yeah, great. So, you know, I've personally been in marketing for over around 15 years. I started out as a media buyer way back in the day. That's quite unique to Victoria, where I'm located and where Palados is located. We have a number of companies here that were kind of big in the affiliate marketing space and served as, I guess, like a university for marketing for a lot of folks around here. But with that, essentially, that's kind of arbitraging traffic with offers that are paid per conversion. A great learning ground to get your hands on performance marketing in the truest spirit of things. And so that's where I started. But from there, I went into running media, buying teams, consulting, even working within brands themselves, and then on the training and education side of things when it comes to marketing. And all of that has kind of led me to where I am today in the agency world, which is kind of one of the last places I thought I'd end up. But it really is a great place to take all those learnings and experiences and kind of build something truly, truly great. So, yeah.

Yeah, that's awesome. I think, you know, so many of the people who are now kind of the marketing icons and most well known faces out there had their roots in affiliate marketing. And before there was Tim Ferriss known for, he was running affiliate sites or selling, you know, supplements over the Internet.

Exactly.

And so I think there's a, there's a real commonality there and Pilothouse is in the D2C space too. So walk us through what you all do and what the team looks like at Pilot House.

Yeah, for sure. So Pilot house started in 2019, but there's been a group of us kind of working together longer than that. Palados has four partners who for the most part all come from a very similar background on the affiliate side. And the way Pilotos was really born was an answer to maybe what's wrong with a lot of traditional agencies. So we at the time, quite a unique model and approach. We wanted to focus solely on performance and solely on growth and the way we did that was through true, true alignment. So you know, get rid of a percent of, of you know, ad spend or rev and like really focus on, you know, return on ad spend or profitability and all those metrics that true, you know, business owners and brands at the end of the day that's what their goals are as well. So yeah, unique business model the time. I think a lot of people are doing that now in the agency space. Just have to. But with that approach, you know, I'd say it allowed us to kind of maybe punch a little higher in terms of weight class when we were going through those pitches and our, you know, original portfolio of clients and you know, I shouldn't say clients, we really consider people partners because we are partnering with them in exactly, you know, what they're looking for. And the model is about alignment and a lot of alignment through incentives through you know, from the client partner to the agency and, and even just as importantly or even more importantly like the, the team. So we kind of have that win, win, win structure that, that kind of gives us an edge.

So that's fascinating. I think we should talk about that. But before that, what's the team size today?

So today we're at about 170 people, right? Yeah. Which you know, to put that in perspective and I guess 2020, everyone you know, looks to the start of COVID as a good kind of marker in time. And we were 15 people I think at that time locally in Victoria. And from there, you know, now we're, we have people all around the globe and at 170 it's pretty, pretty wild to think about that.

Yeah, that's it's such quick growth. And I, yeah, I think there's a pattern with some agencies who grow that quickly. But I want to talk about what else is influence that you mentioned. Hit or four partners who are all, you know, we had some relationship before and we've had Dean Dutro from Worth E Commerce who was acquired by SmartPug Media, somewhat similar story. I met Ryan, two partners who'd been working together kind of loosely and then built an agency and scaled to 50 people in three years or whatever. They structured with Nick Shackelford and Chase diamond and some of the guys there, Chase has been on the podcast and there's some similarity there. So that's one thing that is a commonality. I think it's worth pointing out for people that sometimes we put so much pressure on ourselves as entrepreneurs when we're running comparisons like oh my goodness, these guys want to 54 people to 170 people in three years or four years or whatever it is. And there are some, there's a commonality there when you bring people together who have some influence, have some meaningful experience under their belt. And if you're looking for a partner, that's something that we should probably be looking for. But obviously it's not just four people who had a network who all of a sudden magically went to 170 people and gotten right. And certainly a lot of things that you've tried and didn't work and then addressed it in that time. But why is it the model and the network that you guys had, what's led to that kind of growth?

Yeah, it's a great question. I mean it's certainly a number of things. Our CEO Dave Steele, you know, really at the start was integral in this vision. He essentially wanted something, wanted a place for growth minded people to build something. And I'm not talking about just the four partners. From the very start, our kind of culture evolved where we looked to bring on entrepreneurs, we looked to bring on growth minded folks that just have this spirit of winning and sharing in those wins. And I think that's just carried on throughout the history of Pilot House and that like the, the belief is that we can't lose and everyone believes that. So we just keep growing and in, in that, in that sense, you know, like it. So there's no other direction than growth.

Yeah. Talking TO teams like Jump450 or Hawk Media about how they're running incentive structures for their teams, it sounds like it's something that you guys have also implemented where there's a percent of Revenue. So clients are paying. It sounds like if I'm hearing you right, clients are paying, you know, a percentage of performance. There may be a retainer fee. You know, I'm sure there's a mixed model there. There's probably a mixed model there around compensation. But then also teams who are supporting those clients are earning a percentage of that revenue coming through as well. Feel free to clear up anything in terms of like, hey, how does it. What are the general mechanics?

Yeah, I can, I can explain it just like quickly, you know, quite simply, we, our model started out with, you know, a retainer that covered salaries of the teams, the team that you had pretty much in totality. And then we would build a performance incentive originally, like I mentioned, based on roas return on ad spend. And that was when Facebook, and I'm speaking about Facebook or meta first, because that's where our roots started. We do a lot more than that these days. But when their reporting was as good as it was, that was quite an easy thing for us all to align on. And we would take that percentage of roas and then a portion of it would go to the team directly. And in that way the partners, the client partners would kind of, only if they were doing well, we would share in that win. If they weren't, it was just covering team cost. And that was kind of the other way. We were positioned as an internal marketing team to your, to your brand. And I can speak more to that as well.

Yeah, so I think that is actually maybe let's, let's stay on that for a second because then I went into a couple other questions. So walk us through what that looks like.

Yeah. So essentially one of our tools is Slack that we've kind of used right from the start. But we, we have our clients in Slack, which is not unique, but the way that we interact with our clients, you know, might be unique in the sense that we're communicating to them in like a real time basis. It's not, you know, solely based on weekly updates and, you know, meetings and things like that. It is more of a collaborative partnership where, where we're there 24 hours a day. You know, we are being completely transparent with our, you know, with our challenges, with the opportunities that we see and the wins that we're seeing. And they just see it right behind the scenes kind of thing. Very little communication happens behind the closed curtains, which I think is know, again, my mother. One of our advantages.

Yeah. By the way, since you brought up tools. Slack, insured slack. I was talking with somebody the other Day about. They're super afraid of bringing clients into Slack and what can happen. I was like, no rules. The benefits are, it's all shared. In our case, that's how we're managing customer support and pretty much every agency. It's like 92% of our clients totally, they're already on it. They're on paid Slack instances. We use Slack Connect. Everyone can keep a copy of the conversation when we're done working together. It integrates well with Qlik if it all works together. One tool recommendation is a relatively new tool. It's called Dispatch. I think the domain is Dispatch. Do. Do you use Superhuman? Have you ever looked at Superhuman for email?

I've heard of it, yeah, but not. No, not particularly.

It's just like, how can we turbocharge email productivity? Just a set of tooling built on top of your email client to run faster. We do this like the Superhuman for Slack. Like a whole bunch of.

Oh, cool.

It makes it really easy to kind of turn Slack. Hey, I've got all these client questions to answer how I'm able to use that, like turn into multiplayer mode where we can kind of assign stuff. It's almost like a ticketing thing built on top of Slack. Plus, you know, convenient ways to text news as their reminders or whatever else you want to do. But that's crazy simple. And you've got Slack and you've got ClickUp on the PM side. But if we steer away from the ClickUp. So the comp model and one thing that you said earlier was like, hey, we've got this. Since the beginning, we've hired really entrepreneurial people. Going from 4 to 15 with entrepreneurial people sounds not that crazy to me. Go into 170p people with. Hiring highly entrepreneurial people is a real big challenge in terms of building the sourcing pipelines. And how do you find an identify and screen the right candidates and then onboard people and filter out the folks where we got it wrong. What is. What have you put in place? Like, what's made that possible to keep the entrepreneurial spirit as you've gone through so much growth?

Yeah, great, great question. So, you know, I would say the funny part is probably up to, you know, 50 people. It had the execs or the partners were heavily involved with every single hire and maybe even beyond that. But essentially, you know, maybe this is where I can tie a little bit of EOs into the conversation. And that wasn't, you know, we didn't start with that framework or, or that system, but around that same Level, we, We did bring it in. Core values were established quite early on to, you know, circle around this idea of hiring entrepreneurs. And with that, we have used it in the recruitment process as a. As, you know, kind of a gauging tool to make sure that we're hiring for the right culture. Our recruitment process is roughly culture screen being the very first touch point after filtering out other folks. That culture screen was. Yeah, actually, now that I'm thinking about it, probably up to 100 people. That culture screen, funnily enough, was done by our CEO. You know, he just. It was so important, and it is so important to our agency, the people that are running it, helping us kind of build up what we're building. And so right away that would happen. The culture screen, then we would have a team screen where it wasn't structured per se, but essentially the individual's ranking and, you know, seniority from. From people who are new hires to management. They just want to get a feel of. Of how you fit in the culture, what your mindset's like, what questions you're asking, what curiosities are kind of directing that conversation. And then, you know, some sort of project. And then ultimately it used to be an end with an exec screen. And those are always a lot of.

Fun.

Partly just grilling people, but other part was just again, confirming that culture piece, which is so important. And these days we've kind of replicated something like that with our leadership team and a little more defined process and actual HR department and things like that. But, yeah, somehow it's been maintained. That being said, the other thing that has happened a lot is referrals internally. You know, we rely so heavily on people just living and talking this. This culture and just believing it in it. So much so that they want to bring people into it. They want, but they. They want to bring the best people because they know how much about yourself. It's certainly, you know, a huge part of our hiring.

That's awesome. You mentioned plugging in the entrepreneurial operating system or eos. Where did that happen in the journey?

Yeah, I'd say again, around that 40, 50 mark, people mark. You know, we at that point were still running like a startup. We were also this, in terms of timeline was maybe a month or so into Covid, and so we were working remotely and we just weren't really used to that. And I think we were doing a great job. But at that point, no one really knew what the timelines were. But what we did was lean into such a kind of anomaly, taking that DTC brands would be in a growth period with it. And I think a lot of agencies maybe stalled out a little bit or pulled back, whereas we kind of did the opposite. We just hired more and built our network, our pipeline and invested in that. So sorry, just got a little sidetracked there. But EOS was introduced to me through kind of a network of people in similar businesses as something to look into. At the time, I really had no clue what I was getting myself into. And it was something that the execs tried first. We weren't looking for this formal onboarding, this adoption that I think in hindsight obviously can be beneficial for a lot of organizations. We just said, hey, there's certain weaknesses that we're finding with our communication, our organizational goal setting. This could be a solution and let's just try it at the tops first. And so we went through about a quarter or two of that and just it revolutionized our discussion, our strategy, building our meetings, you know, and we just saw the value pretty much immediately and decided to start kind of pulling it into teams one by one. And that's kind of where it started.

Wow, that's awesome. Has it all been self implemented or did you wind up working with an implementer from the outside?

Completely self implemented. And you know, that's why it certainly isn't complete in the traditional sense. We've kind of cherry picked some of the principles and, you know, intertwined that with our kind of approach and culture.

What? Is there anything off the top of your head, Andrew, that is like, hey, we tried this, or we looked at this and we threw it out right away or we tweaked it?

Yeah, yeah, good question. I think that, you know, there's a few of the principles like Vision Track, Track Organizer. We've certainly gone through that process and that, that really helped us establish a few things like our core values, but we, we really haven't followed through with that. It's, it's not something that we kind of go through on a quarterly basis. Um, we've replaced that with, you know, another really kind of informal way of, of setting goals. But yeah, the bots.

Oh, sorry, you're reading my mind here. Which is, hey, if you're not doing that, are you using okrs or using another, you know, another framework for it? Yeah, but it sounds like you have something homegrown that's, that's working.

Yeah, essentially the, the, the thing that we've kind of started leaning towards recently and it's not like new to the organization, but it's kind of what we stumbled across. Hey, we're actually doing this. This is what it's called and that's Holacracy. We've kind of brought in some of those frameworks just very recently, like officially, but we've really always had this mindset.

Of.

Not having a hierarchical structure. We hire entrepreneurs, we hire self starters and people that just want to grow. And we basically try and empower them and provide them with tools and some guidance and frameworks for them to really achieve the objectives that they're. That do line up to our goals type thing. And so we've now gone through a bit of a process to get dynamic job descriptions across the board. You know, traditional roles and responsibilities and things like that haven't always felt the best for us and we didn't know why. So this is feeling a lot better. And then we built out a full set of rules of engagement that kind of provide a code of conduct for us, for our leaders and just team players to go out and achieve what we need to get done.

Yeah, that's amazing. Who is out there spreading the gospel of Holacracy in Canada? This is like the third company based out of Canada who's told me about this in the last month. And the first time I was like, like, maybe I can spell that word. I don't, like, I'm not that familiar with the principle and I did some.

Yeah, that's cool.

Is there somebody like, where. Do you remember where that idea came from?

Yeah, I. That's a tough question because it was, I think it was something we came across through TED Talk and that just spread like wildfire through, you know, our management layer. And we're just like, oh, you know, this is what we're doing. So we should actually, you know, invest some time and learn about the framework behind it. Try and take some of those principles and intertwine them with what we've already built. So. Yeah. No particular person other than. I wish I could remember them. Yeah, exactly. I believe it's the, you know, is the founder of that. Yeah.

Org or whatever. Cool. That's awesome. Well, so I want to make sure that we wrap up on time here, but you mentioned how important referrals were from a growth perspective in terms of scaling a team. How about from a business development perspective? I'm sure there's a bunch of referrals, but what are the main chan. I would imagine people hear your story and they say, my agency, I'm fighting to grow 25% a year and you get blown up. What are they doing that I'm not doing. From a sales perspective, what are the main pipelines for you?

Yeah, so in the early days and still today, it's heavily been based on referrals. You know, our model centers around us doing great work and achieving success for our partners. And so with that, we have NPS scores right at the top, and people love to kind of just spread the word about what we do for them. So that is a huge piece of it. Another piece is actually dtc. We have a newsletter, Direct to Consumer Co, that we started about two years ago, really with the sole purpose originally of kind of value creation, which is. That's one of our core, core values, but value creation for our network. We are impressed and surprised and genuinely, you know, excited about the work that our teams are doing every single day. And, you know, whether sometimes they know it or not, they're leading edge a lot of the times in what they're doing. And it's just, I think Victoria and the affiliate networks and companies that, you know, I talked about, I kind of referred to originally, there's always been this culture of sharing and lifting each other up. There isn't that kind of competitive, secretive nature of things, like it's always kind of, we all can win, so why not just accelerate that? And so that newsletter was started in that vein. You know, we want to bring in knowledge, we want to share knowledge, and let's give it a try in a newsletter format. And so with that two years ago or more to today, we're up to over 150,000 subscribers of anyone touching marketing or direct to consumer e commerce brands. We have agencies and, you know, just, you know, a great network that's been built out through that. And with that, you know, the. The inbound referrals also continue to grow and grow and grow. We also do some outbound. We attend shows and things like that.

Yeah, that's amazing. I think. So I wanted to bring up, I'm glad that you mentioned it, the podcast and the newsletter site. So one of my favorite forms of marketing. So if you go to Direct to Consumer Co, you'll see we're recording this and there's 270 different episodes of the DTC show. The latest one, as I'm looking on here, is your neighbor in Victoria, Andrew Wilkinson, just built Tiny and a bunch of other things. And so that's a huge volume of work to go out there. But it's one of my favorite kinds of marketing where you're interviewing your best customers. You know, I'm just scrolling through the pages here and who are we pulling in? Like all these folks who are either allies so people can make referrals to you. You've got a handful of those. Really all of these could do that, but some who are also, you know, they're serving your market just with a different offer. But most or a lot of these are also just DTC brands and folks who are running that. And so it's, you know, there's some value that I'm sure some percentage of these folks have come through and said like, oh, that's interesting. This is fun talking to these guys. Like let's, you know, we need a new partner at some point in time. Let's, let's hire them directly. Probably the more impactful thing is you're highlighting them. They want to share that with their network. You know, you're just continuing to be seeing takeaway for folks listening is the folks who you associate with in your marketing. That's the level, the level of those folks is the level that you're perceived at as a brand. And so you're kind of getting into that network and creating a lot of leverage by marketing with your, you're pulling in your customers to market with you or you know, the people who should be who you want to be your customers to market with. Which is a really, really good move. And it's a commonality of a lot of the fastest growing brands out there too.

Absolutely. Yeah, yeah. I mean, yeah, it's a win, win situation. But like, like I said at the start, it's for us, it's centered around that value creation. It's just an immense learning experience. Are, you know, for the networks that subscribe to Direct to Consumer. But also internally, we just learned so many things from all these people that we're talking to, right?

Oh, yeah. The ability to take away. Oh, here's, here's what I mean. This is. And you guys have done it way faster. Word. About the same number of episodes into our show. But we've been doing it since 2015. You've only been doing it for a couple years, so you guys are pumping it out at a way higher volume. And so that rate of learning getting here. Cool. New ideas. Oh, this is cool. Pilot House has this incentive model. I wonder if that would work. Well, you know, you just get exposed to so many helpful ideas. So.

Absolutely. Yeah.

You bring in the good news and we'll cut you off. Go ahead.

No, I was just going to say Eric Dick, who is the CEO at Direct to Consumer, has just done a fantastic job accelerating us through that journey.

Yeah, that's awesome. Well, shout out to Eric, Shout out to you Andrew, for able to come on and share today. This has been super fun. If folks want to follow along. We already mentioned the Direct to Consumer co site. The other place that obviously we should point people to is Pilothouse Co, the website. Is there anyone anywhere else that we should ask folks to go connect with you or follow follow your story?

Those are definitely the two best places. You know, we're in the midst of updating our website, Pilot House, but you could follow me on LinkedIn if you so choose. But those are definitely the best places.

Awesome. We'll make sure that's in the show notes. This has been super fun. Andrew, thanks for coming on and joining us today on Agency Journey.

Yeah, great. Thank you so much. Really appreciate the opportunity to chat.