Well, it’s the new year.
That means it’s time to think back and reflect on the last 12 months. It’s time to figure out what I learned, what I got right, and how I screwed up (again).
But first: It’s time to eat crow.
Yes, I failed miserably at keeping our site and our blog updated.
There are a lot of things I could say about that, like how we were so busy with growing the company that I just didn’t have time to keep up with everything. Or I could bring up the whole “cobbler’s children” analogy to imply that our paid work was taking up all of my time and energy.
But here’s the truth.
Growing a company is stressful.
The last year has been a truly crazy ride. The agency has seen a tremendous amount of growth and change.
But, I’ve also undergone a lot of growth and change as a person, an entrepreneur, and a leader.
In this post, I want to share some of my business learnings from 2018. But I also want to share some of my personal growth.
I feel like a lot of the stuff you read online about growing a business is rose-tinted and, frankly, bullshit. Everyone wants to put a positive spin on their efforts and make it seem like they’re building the next rocket ship. But I think the reality is usually a lot more turbulent. Not only is building a company rarely a perfect straight line, but the ups and downs that you experience along the way also have a personal toll.
Anyone who’s gone through the process knows how it goes. You have high days when you’re on top of the world. And you have low days where you feel like nothing is going right and you’re convinced that this whole crazy thing you’ve been building is surely going to come crashing down in a fiery ball of wreckage.
So here’s what I want to do.
I’m going to start this post by recapping our first two years in business. For those who may not have been following our journey from the beginning, I’ll give you a brief overview of what’s happened in the last 12 months.
Then I’m going to dig in a bit to the personal side of the journey and my experience as an entrepreneur.
Buckle up—here we go.
Agency Growth Year 1: 0 to $40k MRR
The year 2017 was the first year for Optimist.
Like most companies starting out, it was a year of firsts. Our first clients, our first revenue, our first wins–and our first mistakes. We grew a lot as a company, and as a team. We solidified our operations and tried to lock down a process that we could repeat and scale.
Our team started from literally zero.
The whole point was to get people on our site, reading our work, and hopefully interested in hiring us.
In other words, “inbound marketing.”
We grew pretty steadily throughout 2017 and brought in about $100k MRR in pipeline. We closed a good chunk of that business and ended the year just over $40k MRR.
That put us on track for a run rate of about $500k for this year (which we achieved!)
Throughout this initial growth, things seemed to run fairly smoothly. While we certainly had a few hiccups along the way, there were not any major hurdles or breakdowns in our process.
I documented a lot of our journey last year in the Agency Journal.
Our vision has been to build a flat team structure with ultimate autonomy.
Everyone knew their role. They did their work, met their deadlines, and we were generally successful at both growing the business and delivering results for our clients.
But, by the end of year one, some of the cracks did start to show.
What I’ve come to realize in 2018 is that the business we built last year had to fundamentally change to get to the next level. The ethos and the model was solid–we could do work and deliver it. But, the organization needed to be reinforced.
This became apparent almost immediately in 2018.
It became one of my main focuses for the rest of the year. Figuring out how we could grow our operation and reinforce it in a way that would allow the work to scale without interruption–that was our primary challenge in year two.
Agency Growth Year 2: $500k to $1MM ARR
In the last year, we have doubled our recurring revenue.
We’ve gone from about $40k/mo at the end of 2017 to just under $70k as of December 2018, but projected revenue of over $80k for January. That puts us on track for a $1MM run rate next year.
Let me just take a second here to recognize this achievement.
Our team has accomplished something truly amazing. To start with $0 revenue and 0 clients and turn it into a $1MM business—with no budget, no investment, and a lean crew of freelancers—in just 2 years is absolutely crazy.
When I planted that flag and set a goal to build a $1MM agency, I honestly had no idea if or when we’d ever turn this fledgling enterprise into a company of this magnitude.
But we did it.
That’s truly amazing and it excites me to think of what we’ve accomplished and what else we can achieve as a team.
Of course, you rarely learn the best lessons from just looking at your successes, though. And while 2018 was a year of achievement and growth, it was also fraught with challenges that we had to overcome in order to get there.
We ran right into operational troubles to kick off 2018.
It quickly became apparent that a lot of the stuff that was fine for managing 5 or 6 clients was not going to scale to accommodate 10, 12, or 20.
In our first year, we had built a house of cards.
Everything worked and we had a lot of success. But it wasn’t a sustainable operation that could bear the weight and process required to grow to the next level. Our lean approach needed to be reinforced—we needed redundancy, process, and documentation.
Year two was about going back to the foundation.
We really had to reevaluate everything we were doing and think about how it would hold up at scale. Every small detail became a potential hurdle or a future crisis waiting to happen.
Because of this, we struggled to grow during the first quarter of 2018. There was just a lot of stuff that fell through the cracks while we ran around trying to put out fires.
Really, we didn’t have time or bandwidth to close any new deals—and we were still in the process of overhauling our lead generation strategy, too.
So Q1 of the year was mostly a bust. I actually wrote an article about that last year.
Then, we had an influx of leads that landed at the start of Q2. Because we had so many pending deals and only so much capacity for growth, I decided to put our own marketing efforts on pause. That’s part of the reason we stopped publishing new content half-way through the year—we went dark as we geared up for big jump in clients and revenue.
But there’s a saying about the best-laid plans.
After a flurry of calls, proposals, and follow-ups, most of the deals that entered our pipeline at the start of the year ended up falling through. Budget changes, buy-in problems, and lack of clarity around company strategy seemed to be common themes. Leads would pop in, push to move forward, and then disappear into the ether. It was frustrating to say the least.
Meanwhile, our monthly revenue remained mostly flat through June.
It was a weird and tumultuous start to our year.
Luckily, we’ve seen things shift during the last half of 2018.
More leads came in. Most of them moved forward. We revamped our onboarding process. Our revenue has doubled–mostly in the last 6 months.
I replaced myself (kinda)
In the second half of the year, we also brought on Paul. He’s the firm’s second principal, responsible for business development and managing client engagements. Basically, he’s the second version of me. But, while I focus a lot on client and firm strategy, I’ve asked him to take over day-to-day operations, planning, and execution elements.
This was an important step as I recognized that my capacity to manage clients and grow the business would become a severe bottleneck.
It’s realistic to manage 6-10 client engagements at a time. But, beyond that, it’s a bit of a stretch.
So, having two principals should allow us to scale Optimist beyond our current load and take on 16-20 clients at a time.
Our team structure is evolving
We also made some big changes in terms of our team and structure. The basic roles have stayed largely the same, but the way that we’ve organized across clients has become a bit more streamlined. We’ve tried to tear down some of the silos between clients and create more redundancy for creative work.
To do this, we’ve introduced teams of writers and designers for many of our clients, allowing more flex in workload and creating redundancy if someone’s falling behind, out sick, or needs to offload some work.
The other major change that we made to our structure is decoupling the strategy and promotions teams from each individual client.
Our original structure worked something like this:
For each client, we would assign a team of 5 to run the content marketing program.
But, the part of our team that was stretched the thinnest was definitely promotion. We started the year with one person—shout out to Katy—who ran all of our content promotion, outreach, and link building.
While Katy is amazing, it wasn’t realistic to ask her to continue to do the entire job for all of our clients.
What we learned is that it’s more effective and efficient to build a specialized promotion and outreach “layer” — a team that is tasked with handling promotion and outreach efforts across all clients.
So, now, when we enter into an engagement, it looks a bit more like this:
We still try to maintain a generally “flat” structure without traditional agency hierarchy. We don’t have any senior roles or an art director/creative director kind of dynamic. Our team generally has open communications with our clients through channels like Slack and Asana. But, we’ve created a bit more specialization between creative and promotion.
This gives each team more autonomy, too.
Prateek–our content strategist and manager–is still the bedrock of every client engagement. He handles both the project and task management that keeps this whole thing together and takes high-level content ideas and turns them into actual, strategic plans that the team can execute.
He creates a general project brief for every piece of content that we create (which includes both creative direction and promotion ideas/strategy) and hands it off to the rest of the team. Both sides (creative and promotion) are able to use their expertise to iterate on the original vision.
If we create an infographic that was slated to be pitched to journalists, the promotion team may see the final product and decide that it’s a better fit for company blogs or a social channel like Reddit. That’s fine because once the content moves into promotion, it’s up to that team to figure out the best strategy.
By decoupling these specialties, we have a more dynamic process.
People are able to focus on their role and hone their expertise without having to worry about making waves in other parts of the process.
So, as we close out 2018, I reflect back on a year of growth for the firm–we’ve accomplished a ton. We’ve overcome some obstacles and some moments of crisis where things felt like they might truly be falling apart.
Because of this, I feel like we’ve forged a much more resilient team.
As a leader, I’ve also become more resilient. I’ve learned to deal with the stresses and the ups and downs. I’ve learned to cope with the reality that clients will come through our door and sometimes they’ll leave, too. That’s okay. As long as the scoreboard shows that we have more coming than going, we’re doing something right.
We can’t be the right fit for every client. And no matter how much we try to meet their needs or expectations, if there’s a misalignment, it will show its face eventually.
Coming to terms with this has helped me grow as a person. I’ve changed and matured in ways that I didn’t really expect. This year has been an important journey for me.
My Personal Journey Building Optimist
If I’m being honest, year two has proven to be much more difficult for me personally than year one.
First, there’s the increased pressure of running a growing business. There’s also the added stress of juggling more client work, managing a bigger team, and bringing on more people who depend on our success to pay their bills.
This was also the year that I fully made the leap into entrepreneurship. Last year, I padded my income with freelance work and treated Optimist more as a part-time effort because that was all it really required.
This year, it’s become a full-time gig and then some. I’ve found myself struggling to find time to focus on the business rather than working in it to some capacity.
I spent most of the second half of 2018 feeling some level of stressed, depressed, and anxious.
In a word, it was overwhelming.
It’s not that things weren’t going well. The numbers speak for themselves. Even ignoring our relatively flat revenue for the first half of the year, there were no major catastrophes and our revenue never saw a major dip.
But even when things go well on the surface—even when our company is growing and gaining new clients—there’s a lot of stress and anxiety that goes into just keeping the wheels on. Every new client brings new challenges. Every new team member means evaluating our onboarding process and trying to transfer more and more incumbent knowledge.
As the company grows, so does the risk.
Being an entrepreneur, this becomes a constant balancing act. Risk versus reward is the calculus that you do over and over again, trying to figure out how to spend your time and money, where to place your bets, and what it will mean for the future of the company.
You want to be flexible, but not erratic.
You want to be focused, but not obdurate.
It can feel a bit like threading a needle in the dark.
But, all the while, you need to think beyond just what’s going on in your head. When you’re building a company, you can’t just throw your hands in the air and walk away if things get hard. You’ve got to tough it out–make it work.
That turns out to be a bit of scary proposition.
When you hear people talk about bearing the weight of a company on their shoulders, this is what that actually means. It means that as the company grows, it gains mass. It’s harder to change. There’s more responsibility to your customers, to your team, and to anyone else who comes to depend on you and your business.
And, as an entrepreneur, you need to be prepared to bear that burden. No matter what you do, much of the weight will come to rest squarely on your shoulders.
If you get tired or bored or burnt out, everyone else suffers.
If you fail, they lose.
It can feel a bit suffocating.
I have no problem admitting that as a human being, I feel that pressure acutely. I feel anxious and depressed. I feel stressed. Sometimes I take it out on the wrong people. Sometimes I let a stressful interaction spill into the rest of my life.
As a person, an entrepreneur, and a leader, these are things that I grapple with.
There’s no easy solution to stress and anxiety.
The best way I’ve found to deal with the mounting pressure is to remain grounded in what matters. Resist the urge to push away the rest of life, bury yourself in work, and stress about every project, deadline, and dollar.
While this may feel like the way to dig yourself out of a tough situation, I’ve found that it just creates more stress, more anxiety–even dread.
This is not the kind of existence that I want as an entrepreneur.
There’s a reason why I left the startup world with investors and board members breathing down my neck. I want to build a company that’s successful without being overbearing. I want controlled, manageable growth. I want a team that has fun and enjoys their work without insane deadlines or expectations.
Yes, there will be stressful times. Things will not be perfect and rosy.
But, we can be thoughtful about our decisions and shape the company in a way that trends toward sustainable, reasonable work and not growth at all costs. We can take time to put our people and ourselves first before maximizing revenue or profits.
This year, I’ve realized that this is what entrepreneurship is all about.
It’s the freedom to choose.
The trade-off of having the stress that comes with growing a company is that me and my team get to decide the type of company that we want to build. Much of that decision is based on my actions. That means I need to remind myself that I have the power to create the kind of work environment—and life—that I want for myself and my team.
So, as we now have a solid foundation built for our agency, our focus should be on protecting the integrity of what we’ve grown. It should be about shaping our experience in a way that leads to happiness and fulfills the mission of Optimist and our brand values.
That might mean turning down work or walking away from revenue. But that’s okay. That’s entrepreneurship—we have the freedom to choose.
In 2019, I’ll be looking for ways to apply what I’ve learned getting to this point.
Shaping My Role in 2019
If there’s one lesson that I’ve learned in 2018, it’s the importance of removing myself from the day-to-day operations of the business.
In the early days, I played a central role in managing, organizing, and overseeing all of our content production. I would routinely review content and provide feedback, edit articles, or art direct individual graphics.
My role now needs to be about replacing myself.
While I want to keep my pulse on everything we do, it’s just not feasible.
I’m a bottleneck.
My involvement in the day-to-day work slows down the team and actually hurts our ability to deliver good work on a timely and consistent basis.
So this points to two main lessons that I need to carry forward.
The first is trust.
I need to feel confident in our team. I need to trust fully that they will do the best work possible and deliver at a high level for our clients, even if I’m not there to look over their shoulder.
I think this can be a big hurdle for many entrepreneurs, especially ones who begin as a practitioner like myself. But, since day one, I have tried to find people capable of working without micromanagement or rigid structure.
Secondly, I need to get better at shaping my role.
Playing a million different positions and trying to wear every hat in the company is not a good long-term approach for me or Optimist. I need to define what my role will be and then actively work to replace myself elsewhere in the process.
When I’m thinking about how I want to spend my time, it’s really a two-part equation:
- Best use of my time/talents
- Company strategy
Of course, I want to play a role where I am best able to help the company succeed. I want to leverage my experience and expertise to direct our company strategy and put our clients in the best position possible.
But it’s not just about that. My role will also be dictated by the needs of the firm.
If we don’t have anyone else to handle part of the operation, then it falls on me by default.
So, in order to shape my role now and into the future, I need to think about what roles the company will need to fill and whether I want to take them on—or if I need to find another way to cover that part of the business.
It’s ultimately a strategic question about the future of Optimist.
Is our aim to build a large firm with 40, 50, or 100 clients? Then my role will need to be vastly different from what it is today. If I’m planning to remain as the leader of a company that large, then I can’t possibly be involved in the day-to-day work that’s taking place.
This means I’ll need to hire account managers and strategists who can fill my client-facing role while I focus my efforts on hiring, structure, and all of the other stuff that goes into the firm’s growth and success.
On other other hand, our company could grow to that level and I could remain in my current role, bringing in a CEO to run the company from on high.
The truth is that I’m not really aiming to relinquish my involvement in client work.
I want to create something where I get to wear different hats and flex different muscles—as a CEO, as a strategist, and even sometimes as a writer. (But never a designer!)
This does put a natural cap on our trajectory.
If my role remains client-facing and I manage strategy, then there are a lot of things I can’t do.
But, for now, that’s okay.
Our plans for Optimist are not to build a billion-dollar business. We want to focus on culture and grow a fun lifestyle company.
That means that with my co-principal Paul and our current structure, we can service a combined book of 16-20 clients.
Realistically, this represents approximately $1.5MM in annual billings.
Once we get to that point, we can think seriously about the next step.
For now I’m mostly interested in stabilizing and maintaining our current company. We have built an operation that works at this level and I think our focus should be on protecting that before we look at how to grow beyond it.
This means I don’t need to cede all of my day-to-day responsibilities or my involvement in client strategy and planning.
But, I do need to replace myself in a number of key roles:
- Project manager
- Data analyst
- Research/list building
- Sales and account management (for future clients)
Luckily, our team is largely autonomous.
Most day-to-day work requires very little time or effort on my part. And that’s how an agency of our size should work.
But I need to prioritize offloading my remaining roles as a strategic initiative for the coming year.
Improving Team Dynamics
One of the interesting things about our business model is that we’re somewhere between a traditional agency and an outsourcing model.
While we have freelancers rather than full-time employees, that’s not the whole story.
The vision for Optimist has always been to create a “collective”—a group of people who all work together to serve our clients to the best of their abilities.
As we’ve grown larger in size, it’s become a bit more challenging to keep every team member fully engaged in client work without generating a lot of overhead.
It used to be easy to call a quick meeting and hop on to discuss a client’s strategy. But now that we have more than a dozen clients and around 16 freelancers, the overhead involved has ballooned.
Freelancers are hourly. So, any meeting with a full team costs us 5-8 hours of time (roughly $250-600).
So, this presents a challenge for us.
In 2019, we need to get smarter about how we plan and strategize around client work. We need to streamline the process without losing the collaboration that separates us from outsourced operations.
One way that we are doing that is by hosting periodic team retreats.
In September, we had our first one in San Diego.
It was a great opportunity to bring our remote team together. And it also allowed us a lot of time to brainstorm, discuss, and plan together—as a team.
As much as I am an outspoken advocate for remote and distributed working, I realize that there are some shortcomings with this model. Collaboration can be stifled without day-to-day interaction and the team can drift apart over time. One of the things we want to do is minimize that.
We are planning our next retreat for April or May.
Building in Time for Analysis
Next, we are rolling out structured, quarterly strategy sessions.
One advantage that comes with content marketing and SEO work is that it’s mostly about playing the long game. It’s actually detrimental to make too many changes to strategy without having time to see the results of work that’s already been done.
So we can take advantage of this by scheduling out client review and strategy every quarter.
In these discussions, we want to do both a tactical and strategic review of our work:
- Which content is working the best
- Where opportunities exist to improve growth
- How outreach/promotion tactics are driving traffic/links
- Any patterns or trends that we may be able to use to our advantage in the future
By baking these quarterly reviews into our process and our budget/pricing, we can reinforce the value that we provide to clients without sacrificing our margins or risking the long-term financial health of the company.
Solidifying Our Financial Position
Another big change in 2018 has been formalizing and professionalizing our financials.
I’ve always focused on trying to keep pretty clean books.
But I’m certainly not a professional CPA or finance manager. As we’ve grown, it’s become more obvious that we need to document and improve our financial strategy. So I’ve taken some steps this year to both strengthen our financial position as a firm and also solidify the way that we track and report on financials.
As part of formalizing our finances, I’ve begun paying myself a flat monthly salary—$7,500 per month.
This has been helpful for me, personally. As an entrepreneur, my finances can be a bit unpredictable. But now that we’re over some of the more tumultuous months, it’s pretty safe to set a fixed salary for myself.
As part of this, I also had to retool our team’s profit share program.
We carve out a percentage of our monthly profits that is distributed to every member of the team.
I changed the way that we calculate profit share by including my salary and our other monthly operating expenses before the final profit share amounts are calculated.
This, of course, reduces the “profit” that we’re reporting and therefore the share that gets paid out. But I also revised our profit share program to increase the profit payout scales and try to offset any downtick in payout for the team.
Here’s what our profit share table looks like:
Ultimately, my goal is to pay myself a fair and reasonable salary. We also need some cash reserves as our business is mostly about cash flow. Then I want to distribute the rest—or as much as possible—to the team.
In 2018, we paid out a total of nearly $35,000 in profit share to the team in addition to hourly rates.
This is one of the things that I’m most proud of.
When I started Optimist, I wanted to build a different kind of agency.
Part of my central thesis is that giving people ownership and buy-in will lead to better work and better client outcomes. One of the primary mechanisms for this is a generous profit share program. I want to reward everyone for helping our agency grow and deliver for our clients.
Now, to be fair, there’s no hard evidence that this is actually helping anything.
Maybe I’m just throwing away profit that I could keep in the bank.
But I try to keep my values first and foremost in my decisions.
My goal isn’t to extract every penny of profit from the business. It’s to build an awesome company that people love to work for—and love to work with.
One of the biggest lessons I’ve learned about entrepreneurship is that it’s almost never a science. There’s no guaranteed strategy to success. You’ve got to do what you think will work and then hope for the best.
If the last two years are any indication, I think we might be onto something.