Working in Pods, Nurturing Talent, and Scaling a Full-Service Agency with Jesse Resnick

All right, welcome back to Agency Journey. I'm your host, Gray MacKenzie from Zenpilot. And this week I've got the pleasure of bringing on Jesse Reznik, who's the founder and CEO of EI Digital. Jesse, welcome to the podcast.

Hey, thanks, Gray. Appreciate it.

I'm super excited to dig in. You and I met, we were talking project management tools a couple weeks ago, and you got a super cool story of building a really impressive agency. So maybe by way of context here, let's give people a snapshot of the agency first and then I want to dig into kind of your story of how we got here and some of the key pieces along the journey.

Sure, yeah, sounds good. Well, first off, thanks for having me on. I really enjoyed our chat. It was a little like impromptu and then led to a longer discussion. And you were really clicked in the whole way, so I really enjoyed that. So a quick background on the agency. We're been around now for 13, coming on 14 years. EI Digital is a full service, creative digital agency, and we've really built the agency organically over those 13 years. Started literally out of my apartment with my business partner Walter, and grew it from there. I think our. Once we got to four employees, we said, okay, we got to move out of my apartment into a real office. Got our first office, signed a one year lease from there, signed a two year lease, and by the second half of that two year lease, we had fully outgrown that office, had to find subtenants, move into a bigger office, and it's kind of been a growth journey, you know, like that.

Yeah. Were you guys full service from the start?

So the, the, the foundation of kind of, I would say our philosophy has always been strategy and great user experience.

Right.

And we use user experience pretty broadly to mean, you know, I come from working. You know, before starting this, I was a, a creative director at LBi, which became a Digitas LBi. And you know, the thing that always frustrated me the most was that I'd be in strategic conversations. I'd be leading business development or idea creation for something. But really the model often at a bigger agency is then the work gets passed down the chain to be executed. And I really care about the ideas and I care equally about the execution. So for us, it was pulling everything through the line so that the question, were we full service? From the beginning, the vision was always full service, and we would approach that based on the work that we had, you know, at the time or the needs. But, you know, it was primarily creative and technology A lot of web and brand from the beginning. And then we added in our digital marketing team. We added in, you know, CRM and other components to kind of round out the full service nature. But creative and technology were always at the center, right?

That makes sense.

What?

Hearing this story of coming from an agency and like you fit into one of the three main archetypes of agency owners. Like either your ex agency and we're like, no, there's a better way, I can do this differently. Or you're an accidental agency owner, just, you know, typically creative, who, you know, did enough freelance stuff and there was enough demand, they decided to hang up their shingle or like the anti agency you come from running marketing or something in house and you're like, no, all these agencies suck. I can do this a better way. What were the things you were most unprepared for in making the jump from being at a much larger agency to you and Walter hanging up your shingle?

Well, it's interesting. So if I go through a super accelerated version the last 25 years of my life, I sort of fit in between maybe two of those archetypes, right? Because I first started, I was obsessed when I was, you know, 19, 20, 21, just obsessed with the early interactive web. So from 2000 to 2002, all I did all day long was spend time building Flash websites, building Flash games, because everything you could do was in Flash, right? And I, my family, I have a lot of family in film and television and you know, always had a kind of creative bent to my work and I've always had an entrepreneurial streak. So I started a Flash studio in about 2001, 2002 and it was super organic. And I actually worked at the Apple Store right when they opened Apple retail. And I would just get clients because I ended up teaching in the theater in Apple, Soho. And I said, hey, I want to teach a class on web design. And I basically teach a four part series on web design. People would come to that class and I'd be like, ah, can you just make my website for me instead of me doing it? And I would just get clients that way. And I, you know, referrals and things like that. And my biggest client through a referral ended up being a startup agency called Special Ops Media. And I didn't know it at the time, but I did one freelance project with them. I did two, I did about 20, and it turns out I was doing about 90% of all of their creative and technology work. And I sat down with the CEO and he Said why don't you just come in and run our creative and technology department? And I said, huh? Why don't I? So we essentially merged what was Resnec Media into Special Ops Media. And I was the first employee of the creative department there. And there was me and freelancers that grew to 25 people overall. Company is 75. I ran a satellite office out of Dumbo and that was a seven year journey. And that agency grew really fast. We did a lot of work in film and television with spirits brands. We work with Dell and they sold the agency started their earn out in 08. That closed in 2000, sorry 2010. And in 2010 they merged LBi had purchased it which was had no US footprint at the time. They bought Special Ops media icon Nicholson, which was an iconic original digital agency out of New York and an agency called Syra. They mashed us all together and became LBi US. And through that journey I really never had an aspiration to be global, big agency guy. And you know, there was a short honeymoon period but you know, I always knew I wanted to go back to being entrepreneurial and kind of having a smaller studio. I've always believed small groups of highly skilled, highly motivated, well communicating people can just achieve more than you can at a large organization. And you have folks like Google and others who do a great job creating small teams inside of large organizations. But that was always my ambition. And when they merged everybody together, I was actually laid off as part of that merger which was great for me. And one of the brilliant things is actually I made it within two days of the Obama stimulus bill getting the extension to the original Obama stimulus. So thanks Obama. I got my health care paid for for 18 months. So that was my booster pack to basically starting this agency. And when I got laid off, I knew immediately I was going to do something. I knew I didn't want to do it alone. And I just work came across my desk, took on one and two, three projects and then eventually met my business partner. We said hey, do you want to go for it? And the rest is kind of history.

Wow, that is cool. So yeah, you really were like the accidental agency, like kind of moving into it.

Yeah, it was a bit, bit of.

Both through the, through kind of the exit stage and then into.

And that that exposure to the earnout and the deal structure of kind of growing an agency was incredibly educational for me and incredibly valuable in my career journey because I effectively ran a P and L at Special Ops Media and got to be part of seeing the inner workings of the earnout of the structure. I wasn't at the deal table, but I was part of the execution of that.

Right, that's amazing. So what you just said about kind of small teams over big teams as like a preference for delivering great work, how does that create a cap on how big you want EI Digital to be? Or is that just shaped how you structure the team and break up?

Yeah, I would say the latter. It's shaped how I like to approach work. And we, we run, you know, our account teams are essentially set up as, you know, little working groups or pods. We actually color code them. So there's the green team, the blue team, etc. And you know, so our account teams are those small working groups and then we have departments of resources, whether it's creative technology folks or digital marketing kind of deep T skill sets. And those account teams work closely with those. And we are very, we look at our client work and we mirror what the client needs versus mirroring our own structure. Right. So it scales pretty well actually because we keep that small structure and it just requires a kind of consistency to be kept amongst those smaller groups.

Yeah, that makes sense. You mentioned something about kind of the intersection of, I want to say you said brand and performance marketing.

Yeah, Tell me more about this is saying I'm big. So the way I look at, if I look at the marketing landscape right now, you know, if you were to kind of draw a, just two macro circles, you would look at it through brand and a performance lens.

Right.

And generally marketers are looking at their marketing spend, looking at their P and L, looking at their, you know, activities through one of those two lenses. And they're very different.

Right.

Brand is all about the emotional connection, it's a long term strategy and performance is all about conversion. Now selling more and both are really valuable.

Right.

And in a lot of ways I would think of, you know, the brand side more in advertising classic sense and the performance side more in a marketing, digital marketing sense.

Right.

Again, depending on who you're talking to, you know, terms can mean different things. These two things are meeting in the middle as far as I'm concerned because the shifts in privacy shifts in, you know, kind of cookies. You're seeing brand marketers understand that they can start to bring more data into their brand marketing to understand performance of brand. And I think the performance people are starting to understand, well, short term performance based work can only take you so far. And you know, there's the, I think it was New York Times or Wall Street Journal article on Airbnb from a couple of years ago where Airbnb was like, we don't do performance, we're 100% brand.

Right.

And that kind of sent some shockwaves through my world of people going, yeah, wait, is it performance or is it brand? And, and I thought that was actually an awesome discussion that, that really kicked off because it's not one or the other and it's definitely contextual on the specific client, but that intersection of brand and performance that exists now and is for me the future of brand marketing.

Can you help bring this to life? Like you're working with a client, you've worked with a lot of spirits come. I mean, you've got a wide array of kind of backgrounds. But in my mind, like the first thing that pops to mind is a lot of this brand stuff is kind of the backbone and creates a lot of the assets that we can use in our performance marketing campaigns. But what does this look like or like, how does this play out in a client engagement?

So I think it's a mixture. You know, if you look at it through a classical paid lens, right. You're targeting either, you know, kind of for views and you know, large scale distribution and awareness, or you're targeting for performance.

Right.

Or conversion. I think these two things are blending in every, you know, think about it super broadly. Every touch point that a brand has, whether that's at POS in an advertising context, through an experiential lens, you know, through your social channels, through your owned website, every one of those is a deeper chance to engage with that consumer. And the more you're working to collect, you know, responsible first party data in email and you know, a sign up and then zero party data, where you're learning more and more about that consumer, your understanding, if you're doing your job well as a brand marketer, you have this beautiful, emotional, engaging commercial. They should, some percentage of people should want to go deeper. And if they're not, you're doing something wrong.

Right, right.

And so that's where the performance side of that brand comes in. And when you're looking at metrics, and it's what I'd say, reverse the funnel, right? Don't look at your. How many clicks did I get? What were my total impressions? What were my things? Put those as your last metrics that you look at. In fact, how many, you know, there's only three points of conversion. You're either getting an actual conversion through a sale, you're getting a point of data from the consumer, or you're getting an engagement.

Right.

And I prioritize them in that order. So if you're a brand marketer, maybe you don't have, maybe you're distributed through, you know, distribution channels. You don't actually have a point of sale like a spirits brand often doesn't. But we could talk about how in a modern context they can but. Or you know, we work with Pepsi and Mountain Dew, you know, Mountain Dew doesn't. Although we have sold direct to consumer a few times, most of the distributions through supermarket, etc. But you can collect data. So we run for example donation hq, which is their loyalty program and fan community and some percentage of people from everything we do are going to end up signing up for that and you know, remain engaged with us or they're going to click through from, you know, really crazy brand spot and they're going to click through, you know, again, where brand marketers fail at this. How many times have you watched a video, you know, through an ad gone, oh, that's cool, let me click on it. You land on a landing page and what do you see on the landing page? The exact same video you just watched. It's like a complete disconnect from what the actual consumer experience is. So again this, this blending of brand and performance is really taking the best of the data side of performance marketing and blending it with the best of the emotional side of, you know, brand marketing.

Yep, that makes a lot of sense. Can we talk a little bit about some of the clients that you've worked with and the types of clients, like what is, what does an ideal client look like and kind of how have you found your niche or kind of what that, what that best fit client looks like.

Sure. I mean we have worked with, you know, from Allergan, the big medical aesthetics, you know, the makers of Botox, Juvederm, et cetera, you know, Proximo Spirits, which is Jose Cuervo, Bushmills, Whiskey Strands Distillery, bunch of other brands, PepsiCo's a Klein Tavares. And I think where we've really found success is, you know, we love to work with, you know, larger to mid size brands, but we've worked with startups as well. You know, all the way from we worked with a SPAC last year on a brand project. You know, we've worked with all sorts of ad tech startups when that market was really hot. And you know, for us we've always said we want to be working with clients where we can make a meaningful impact and we're not out there just looking for the Sexiest clients. Although it's always fun to have a little, you know, fun or sexiness to your client, spirits certainly does that. You know, you know, Mountain Dew has been really fun. But also, you know, we've done financial services and we worked, you know, last year we did a big branding and digital project for a company who was trying to pivot into carbon credits and they work in the metals space. And I won't get into all the specifics. Heavy B2B, kind of financially oriented company, absolutely fascinating to work on. And, you know, so we really run the gamut in terms of the verticals that we work in. But I would say our secret sauce would be our ability to really connect strategy and goals through all consumer touch points or through all B2B touch points.

Right.

So one other example or manifestation of that is when we worked with Allergan, we helped them with the full relaunch of their loyalty program. Now, Allegan is a house of brands, not a branded house. Nobody knows, you know, consumer side what Allergan is and their customer is doctors, hcps, right? And they wanted to have a consumer facing program. It used to be called Brilliant Distinctions and it looked not great, slightly outdated. And we worked with them and we had to create the connective tissue between all of the disparate Allergan brands which span skin Medica on one side, which is a, you know, like skin suitable sort of, you know, pharmacy grade skin care all the way to Botox, which is a black box, you know, regulated drug that has to be administered from a doctor. And we had to create connective tissue between all of these things. And what we did, went through a whole branding naming process, looked at all the touch points and the journey, the unlock ended up being. It's always the simplest thing, right. We named it Ally with a accent over the E, which was the first four letters of Allergan. And so we literally took the first four letters of Allergan and named their program. But we gave it a personality and we let each brand shine through that program and kind of become its own. And that's a platform that exists and, you know, lives on through this day. So I think it's our, you know, that secret sauce exists in us. Our ability to kind of create that connective tissue through multiple channels, multiple types of brands, et cetera. The other thing I'll say is we've tended to, and I don't know why this is, but have a lot of success in regulated or complex markets.

Right.

Whether that's spirits, you know, you know, pharma or financial services even. I put the ad tech in there because it's very complex algorithms that we're needing to explain. We've always enjoyed kind of more complex environments.

Yeah. Get a couple operations questions jotted down. And the first one is kind of teed right off of kind of a wide variety. You've got some areas where you've spent a lot of time working with clients, but you've got a pretty diverse set of industries and business types are presented there. So the first operational question is, how are you assigning new clients to specific pods? Sometimes that's by specialization, sometimes just capacity. But what does that look like for you?

Yeah, so it's changed over the years, and we've approached it differently at different times. Right now we have basically one pod that is always set up to intake new business. And so they're at, let's say, 60% capacity as a unit. And so what's always been difficult is if you run everybody at 100% or 90% capacity, you're basically just needing to hire in to every piece of new work you get, which, when you're very small, works fine. And we would stay very close to that business. But right now, what we do is we keep one pod effectively lower in capacity. They partner with our business development team and myself in winning new business, and then it creates a really smooth onboarding for that client. There are instances, like you say, if we're working with a, you know, super specialized client, let's say it's a pharmacied client or, you know, medical esthetics, something like that, we will sometimes hire in a specialist to work on that, to be attached to that work, you know, but most of the time, you know, it goes into the pod that has, you know, intentional capacity. Right.

I guess a neat approach. Obviously, the challenge with that for most teams is what is the handoff then from the onboarding pod to someone else. But if you've got that intentionally, that deals with a lot of the capacity issues and the challenges that a lot of teams run into. How do you streamline that onboard? I guess the transition of like kind of post onboarding to now you're getting handoff.

Yeah, it's always a journey. I mean, myself and my business partner, Walter, still play a pretty big role. Often if we're onboarding a bigger client, we often play that continuity piece still. And it's something that I really enjoy. Like I said at the beginning, kind of making things. Sure. Things go from idea through execution to me is vital.

Right.

A great idea Poorly executed is nothing or could even be harmful. And even a medium idea, really well executed has value.

Right.

It is all about the execution. And in the boardroom setting, you know, of marketers and advertisers and brand that can get lost, right. Sometimes you're working to the cmo, you're working to the boss, you're working to, not to the consumer. And so we're always trying to orient people to, I mean those things matter tremendously. Those are the decision makers. But to really be effective, we need to be making an impact with the end consumer, whoever that is. It's a B2B context, it's still a person. If it's a consumer context, it's that individual. And trying to bring it as one to one as possible.

Yeah, one question I've got a handful of questions that I jotted down from some folks who asked. So one is acquisition but wanting to know on both sides, so where do most clients or where does most of the deal flow come from? And then on the flip side, kind of the second part of this question is how do you approach hiring and recruiting and retaining talent? Which is kind of two totally separate questions.

New client acquisition is the million dollar question for everybody, right? And I will say through my career and certainly through running this agency, I've been very fortunate, I would say and credit to, I'll take a little credit, credit to my partner, credit to the whole team who works here. We've done a really good job of retaining clients through the years. Really trying to focus on building deep relationship executing at a high level, listening. And we've been very fortunate to grow organically like that. So client leaves, one place, goes to another, brings us along. And you know, I have a decent network and deals have organically rolled across my desk.

Right.

And I will say this year, right through Covid did very well actually. Clients lean more into us, right? We have a digital bent to our work, so made us the hot game in town. I would say 2023 has been the quietest deal flow year I've experienced in my career, 25 years. And the comfort I find in that is that every agency owner I know from big agencies through small, I know agencies who have shuttered their doors, I know agencies have been cut into a fourth. I literally yesterday got an email an agency somebody actually used to work with closely, probably 30, 40 person shop, they've decided they're closing up shop, right? And it's rough out there, man. And I think misery loves company. And it's certainly there's some solace and wow. We're not the only ones going through that. And we're very fortunate that a lot, you know, we have a strong base of clients and you know, but yeah, it's. So that is the million dollar question.

Right.

Where do new deals come from? In my experience, it's always been relationship first.

Right.

It's been networking relationship. We've tried to do partnerships, we've tried to. You know, I had a call with brand innovators earlier in this week. You know, I'm a bit of an old school business guy and really I don't like to spend over my skis.

Right, sure.

And so spending in advance of a deal has always been something I've been pretty skeptical of. And then I would say, you know, my new thing is trying to do more things like this and get on and get out there and network and be a little bit more visible in the market. I can tend to be a bit of a heads down executor and trying to flex a little bit more and get out there a little bit more. Right, right.

That's awesome. I think the, I mean, certainly referrals are always going to be the best channel. And then how can you, you augment. That is a question for a lot of people. But yeah, 100% to your point, if you can, if most of your growth can come from existing clients in a year like this, that's a, that's a huge place to be in.

Totally agree. I mean, and most of it come, you know, it's not just, you know, existing clients, but it's also a network.

Right.

Yeah. Knowing, staying in touch with people, you know, really that relationship side. You know, I, a former client of mine is now CMO over at Logitech. And you know, we haven't actually worked together on the critical path of a project in a number of years, but we still have lunch one or two times a year and genuinely enjoy each other's company and appreciate each other and talk about our families and relate to each other. And, you know, I think the genuine nature of that really makes a difference.

Right.

We're not just staying in touch because I want to be sent the next project or I'm looking for a specific, you know, handout.

How about on the recruiting side?

Yeah, recruiting. I mean, that's been a journey too culturally.

Right.

I mean, one of the things I think I've been very successful at my career is identifying talent. And I love working with smart people, you know, often earlier in their career, capable people who, you know, I have had a Good eye for understanding. Wow. You have some skills in this area and sometimes understanding people's skill sets better than they do and pushing them to be better.

Right.

So many people I've nurtured and worked with through the years have gone on to have awesome careers and you know, are now running departments or started their own agencies, etc. So, you know, that identification of talent, I will say, in a remote world and through the, you know, what was it? The great resignation.

Right.

As it was coined. I'd never seen a hiring environment like that either in my career.

Right.

Where entry level employees are asking for huge salaries and everybody. And we've seen a lot of that now cool off. We've seen it kind of settle down. I wouldn't say it's back to where it historically has been, but the employer to employee relationship isn't as skewed as it once was. Kind of at the peak of everybody was just like, everybody's hiring.

Right? Right.

It's. It's almost as if there was a massive stimulus and just too much cash in the system. Almost.

Strange, right?

Strange. Yeah, it's weird. That's funny.

Yeah, that makes a lot of sense. Another one somebody asked, what are the three to five main metrics you look at in your business every week?

It's amazing to me how many business agency owners I meet who run their books on a cash basis. And I've helped many understand accrual accounting and shift their whole mindset. But you know, macro accrual accounting is invaluable if you're trying to run a strong P and L and really understand. And for anybody, you know, who, hopefully you understand what that means if you don't, you know, accrual accounting is taking in the dollars as you earn them, not as they're deposited into your account.

Right.

So I'm hired to do a brand strategy. I'm hired for a website. I'm on a retainer. Every month I get that retainer or each bit of work I complete, I recognize my revenue against when I'm doing the work versus when the check is deposited and matching that up with your, you know, we're mostly based on W2 full time employees. We don't use a huge amount of freelancers, which is different than probably a lot of shops our size. But we're matching up utilization against those numbers. And we break. We essentially run each POD as a mini PNL and then we roll everything up. And I actually have my account directors do their own revenue allocations.

Right.

So they're in charge of great. I worked with Bush Mills, I worked with Allergan. I did this amount of work. This is the amount of revenue I'm recognizing. And I've always played a game with myself and this is sort of how I'm built. Even when it was just me and Walter, I think about departments and I think about reporting to a board, right. So I'm the founder and CEO here. I don't have a board. I still act as if I do. So I'm always telling financial stories. I'm always prepared to explain the numbers. I'm trying to balance my months and my quarters and if they don't match, it bugs the shit out of me. And I work to kind of balance that story. So again, I'm sort of long winded answer. But the metrics I look at are macro metrics of kind of, you know, month over month, you know, P and L metrics. Right. Gross revenue, net revenue. Super important to distinguish between the two Y. Our operating stays pretty flat. Our you know, salaries stay pretty flat. And then looking, you know, we, we measure everything against ebitda, right. So everything is what, you know, is the, the EBITDA of it. At the end of the day, you know, I would turn down a million dollar project unless there was some strategic reason to take it. But I'll turn down a million dollar project that costs us a million dollars to do any day of the week for sure. Right. Not everybody would do that.

Right.

And sometimes there is an advantage to taking that on. But I'm pretty old school business guy looking to, you know, run a sustainable and sound business and you know, we play our numbers pretty conservative and that comes out of my pocket.

Right.

We also pay ourselves last always.

Yeah, that's awesome. What is your number one tip for agency operators?

Number one tip? I mean the accrual thing would be a big one. I would say maybe a number one tip would be to disarticulate your identity from the work. And that is a hard one for a lot of entrepreneurs and a lot of people in general. But I think is really, really important to do. And if I can give a second one, especially if you're earlier in your professional career, would be to not pull out as much money as you can, but also to make sure you're earning money.

Right.

I've seen people go one of two ways. You kind of have the person who's like, oh shit, I made some money like I'm going to Vegas.

Right.

I literally know that guy. And on the other side I've seen people just Work their faces off and not earn money and make sure you're, you know, why you're doing it. You know, it's not all about the money and it shouldn't be, but if you're running a for profit enterprise, make sure you're getting paid along the way. All of them.

Both, both of those are really Good. Yeah. Worked two years ago with a agency, did 3. 1 million in top line revenue. So 40 person firm, which is, you know, too many people for the revenue. But yeah, the, the EBITDA on it or the net margin was 1 1/2% and we're looking at it. I was like, this can't be right. Yeah, what are you doing if you're not running out of it?

I mean, I've seen that story. Moreover, I mean, another good lesson is, you know, pay your taxes.

Also true.

I know at least three agencies I can think of who didn't understand some of those fundamentals. And that's the problem. Right. You gave those three tracks at the beginning of the podcast and it, if you're that accidental agency owner and you're not an entrepreneur, maybe you're more of the artist side of it. You, you, you are passionate about the work, but you don't really love the business side. You don't like the numbers. You got to get into the numbers. Right. And you know, if you told me, you know, again, I've, I've been on, I, I was pretty early in my career when I got into this stuff, but if you told me before I was deep in my career that like I was a spreadsheet guy or that I loved numbers, I wouldn't. But there's so much creativity and there's so much to really get excited about, frankly, in understanding numbers and stories behind numbers. And I love financial stories. I just do.

Yeah.

And that's, you know, from listening to npr, kind of financial stories on that side, you know, I'm, I. Ray Dio's Principles is a book that I love. We actually just went through the exercise writing our own agency Principles, which I found hugely rewarding. But yeah, pay your taxes.

That's awesome. Much more I can ask you, Jesse. This has been awesome though. I appreciate you coming on and being willing to share on Agency Journey today. We'll make sure we link up your LinkedIn, the website, we'll get all that stuff on the, in the show, notes for this, anything else, or anywhere else you'd want to point people.

No. If anybody's listening to this and anything I've said has resonated with you. You find it valuable, feel free to reach out to me on LinkedIn. I'll try to get back to anybody who reaches out.

That's awesome. Jesse, thanks for coming on today. This has been awesome.

Yeah, great. Really enjoyed it, man. Have a great day.

Ra.