What a Normal Person Thinks of Your Creative Firm

When people from other industries learn about what goes on inside your firm, are they awe-struck in a good or bad way? Blair and David come up with a list of things that are unique to the creative firm biz and how they’ve seen outsiders react to them.

Sketchnote by Emily Mills

Transcript

Blair Enns: David, we were pretty snarky in a recent episode, but I think you and I had a lot of fun where we did Creative Bullshit Bingo. Do you want to go there again?

David Baker: I wasn't sure what people would think of that. I think they enjoyed it. They saw themselves, they were properly shamed, and that's one of my goals in life is to shame people.

Blair: That's why we're here.

David: I thought it worked pretty well. We got some comments that we were a little wound up, a little too snarky. That surprises me. Do people think of me as some boring academic or something-- what? Like, I don't have a personality. Where does that come from?

Blair: I don't know. Well, let's keep drawing that personality out of you. Let's do this again. The topic today is, is it normal people think when they see inside your firm?

David: What normal people think when they see inside a creative firm?

Blair: What muggles think.

David: Implying, of course. What ordinary people who aren't as weird as you think when they look inside your firm?

Blair: What's the impetus for this?

David: It was a backdoor realization. I was working on an acquisition project and I remember being struck by all of the things that an external investment bank type person bought about the firm. They were just flabbergasted like, "What are you guys doing in this industry? This is crazy." They were just taken aback by so many things wondering and they were looking at it from a financial perspective, obviously. They couldn't understand why anybody would get excited about this field. I don't share that perspective at all. I love this field, but I certainly understand why they felt that way. That's what got me thinking about it.

Blair: Do you own any stock in like WPP or Omnicom or IP2? It's a laughable idea, isn't it? Unless you sold the firm to them, why would you buy that stock?

David: We're laughing-- This industry is completely dear to our hearts and sneering at the idea of investing in it. That is funny.

Blair: We haven't been fired yet, so let's keep going. What normal people think when they're looking inside your firm and when you sent me this topic, I was laughing because I recall my first job in the creative firm biz, working for an ad agency. Being in it, for maybe a year or so, and explaining to my friends like how we did things. They would look at me like I was from Mars. In new business, in particular, we'll get to that because it's on the list. I would say, "No, no, you don't understand." It's just like, "It's the way it's done." They would go, "Yes, it sounds stupid."

[laughter]

David: When you have all these people, just like you around you every day, you just accepted as normal until you step outside the city and you realize that people live in different ways.

Blair: To be clear, this isn't all us dunking on creative firms, like taking these cheap shots because there's some things about your firm that are just absolutely marvelous and wonderful, like many things. When outsiders come in and look at it, they're all struck by some of the things that they see. It's a two-sided coin here and we'll try to be somewhat even-handed.

David: We'll see how successful we are down. Why don't you take the first one?

Blair: We have a list here. You sent me a list of a bunch of points. In 60 seconds, I dumped a whole bunch there.

David: I just laugh my ass of when I was reading the ones that you added.

Blair: I want you to start with this one. This looks like a really fun place to work. I had it something in parenthesis, but that's it. They walk in, they're used to working in a bank or a manufacturing plant or whatever, and they walk into your firm and it's like, wow.

David: I got to be careful how I talk about this. I don't want to get any in trouble, but I've seen this play out in terms of certain kinds of employees. Let's say you still have somebody at the front desk. This is pre 2020. You have something at the front desk or maybe somebody answering phones or doing office stuff and you don't want to overpay for this. You reach out to some older folks in their 50s and 60s and you have no problem convincing them to work at a fairly moderate pay rate because it is such a cool place.

You attract some of these older folks who aren't even from the industry and they're just blown away every day. They love coming to work because people like to be there, it's fun, there's great colors, there's freedom, there's stuff to do, there's snacks everywhere, you ordered lunch in for everybody, and there's all these other things. It is a really fun place. It genuinely is. We're not making fun of this. This is like a benefit. The people who don't understand this field, they're thinking, "Man, I want to be a part of this too. This looks fun."

Blair: I remember being 24, I think, and going to work for a multinational ad agency and going into the big national head office. It was like everybody's like my age and up, but it was like a college dorm. It was just so vibrant. I think we get used to that fairly quickly. As you say, somebody else comes in and goes. It's just completely enamored by it. The proof is you can pay them less enamored.

David: What are some examples? I'll give you one example. I have a client where cannabis is legitimately smoking at any point in the office, at any point of the day.

Blair: We have those clients too.

David: What other industries do that? I can't see a law firm or an engineering firms, especially engineering firms that build bridges. This is great. What a great industry.

Blair: I remember an early client, 2003, I think, going into their office and a very creative shop that had won multiple awards. They had this two-story office in this beautiful brick building. It was the first kind independently owned. Just really cool agency. I'd been in where you walk in. It feels like a restaurant because there's this big espresso bar. I was like, "Wow, this does not feel like a place to work." They had this spiral staircase going up to the second floor. Underneath the staircase, all the awards they won, they threw them in a pile.

It was this massive pile of awards. It's like, "Yes, here's another award. Throw it on the pile." I was just struck by the cheekiness of that move. You don't see that in a law firm.

David: No, you don't.

Blair: The next thing you have on your list here is they sure pay people a lot of money.

David: Now, the people who get paid a lot of money don't feel it's a lot of money, but the labor choices made are distinct. You are hiring for very specific expertise, cultural fit, often political leaning or at least philosophical leaning, if not political. People who weren't really educated for this, they sort of landed in it, but they have many choices. They're self-starters, they're articulate. They can go somewhere else. The percentage of our total revenue that we pay for people is out of balance. I'm not saying it's wrong or we should fix it.

I'm just saying it doesn't fit other industries. Outside financial advisors, look at this and say, "Wow, you all spend a lot of money on people."

Blair: I was surprised to see that on the list because I think we just get used to it, but as you point out, it's not everybody. I remember being in one of my earliest agency jobs, hearing about a creative director, making a million dollars a year in a paid salary position. Now that was a big agency, but the idea that a creative director would get a salary, maybe it was half a million. I don't remember. It was a number that my jaw just dropped for like, drawing pictures.

Now, people listening to this, they're thinking I need a raise, but in some firms like the senior creative people, and I don't just mean people in the creative department, those senior positions make a lot of money and sometimes even the lower positions. When you talk about this, I think of the-- I forget who was the author of this model, the Bundled or Unbundled Corporation and there's a Harvard business review article on this a few years ago. It's a really effective model for thinking about what type of business you're in and spinning off infrastructure products that you might develop.

We've alluded to this before, but in this unbundled corporation model, you have basically three different businesses that often should be spun off from each other. The three main types of businesses are a brand or they refer to it as a CRM or Customer Relationship Model. You build this brand like Calvin Klein, you build the Calvin Klein brand. You put that brand on things. You sell a bunch of things. You don't actually own many things. You can just effectively license that brand. Another one is infrastructure where you build equipment or like a hydroelectric plant or software as a form of infrastructure.

Then the other one is an innovation business. Most agencies and creative firms are innovation businesses. Some of the hallmarks of an innovation business are the people are really, really important. You handpick really talented, high quality creative people, and you have to cuddle them and pay them well. Because they're creative people and they need to be cuddled, things like culture become really, really important. A lot more important than it would be in an infrastructure or a brand business. This model is high quality, creative cuddled people. You have to make sure the environment suits them or else they're going to leave and go somewhere else.

David: In an Amazon warehouse, the culture just has to be good enough, but that's just not the equation we're talking about in the firms you're speaking of. There's not much big IP that you can license and sell. We're creating little pieces of IP with each client and then giving it to them. There's not much in the way of process. What is there left expect for a lot of really smart people trying to solve client problems. You could see how we would get to the point where we spend quite a bit of money on people.

I'm not saying we're spending too much. I'm just saying an outsider. A normal person says, "Whoa, you guys spent a lot of money on people."

Blair: There's an exception to that.

David: What's that?

Blair: The next item on your list?

David: Except for the president right here.

Blair: President, he or she doesn't make as much money as I thought they would.

David: Do they have another business they run and that they do this part-time? I've heard that multiple times. They are surprised at that. The gap between what the happy people make and what the principal makes is not a very big delta in our industry. Now, there's exceptions to that, obviously, but it's not a very big delta compared to other industries. That surprises people. Again, we're not coming whether it's right or wrong, we're just talking about what surprises people on the outside.

Blair: Next on your list is you have this idea of where's the recurring revenue. What do you mean it's project by project?

David: I know this comes up. This is the first question I've got to answer when I'm managing an M&A deal. Somebody who doesn't understand this industry, that's the first thing they always say, "What are your recurring revenue arrangements? You sign a contract with a client and how long is that contract?" There's this long pause and it says, "It's project by project." The fact that that surprises you means you haven't been around this industry that much. Even though it's project by project, we've been doing project by project for 14 years and we haven't had a problem since.

Now, there are obviously are more monthly recurring revenue arrangements now than there used to be, but not many of those are making much money. Those are average or below average firms in terms of financial profitability. An outsider again says, "Whoa, this is so weird. You mean your clients aren't locked in to three-year contracts with you."

Blair: I'm immediately discounting the multiple.

David: Yes, exactly.

Blair: The prices just dropped.

David: Even if the client is locked in for three years, none of them are really locked in in three years. They've got a Legal Department, it was 58 attorneys. Are you going to fight with that? No, you're just going to slap them with some two-month penalty and then you're going to move on, but this is the really big one that outsiders, they had no idea this industry was like that.

Blair: I want to pick one that I've added to the list if I may and I alluded to this and it's like, "Hold on, you do what to get new clients?"

David: You read that the first time you thought you might start a training organization.

Blair: You give it all away for free and this is me explaining to friends of mine. "Hey, I got the card game or whatever we're doing that. I got to go home because I got to work on this thing tonight for this. I've had this pitch in the morning." "What do you mean you have this pitch and what's that?" "It's like we have to go in and present to a potential client." "Oh, it's a sales call." "No, no, no, no, no, it's not a sales call. It's more complicated than that." "Look, what do you do?"

"I have to do this deck. What I have to like explain the strategy and then we show some creative ideas." "You actually have like do the work before they--?" "Yes." You don't understand. That's just like how it works. Everybody does this. I'm thinking, "Yes, you don't get it. I can't explain it to you." At 3:00 in the morning, it's like, "You know maybe there's something to their point of view on this topic."

David: Maybe my drunk card plain table member didn't know what they're talking about. The only other people that do that consistently are architects.

Blair: Yes, they're even worse than us.

David: You do what to get your clients? You need to do a YouTube spoof of that. That's a pretty funny one.

Blair: I think there are a couple of that have been done on related topics. If we can find them, we'll post them in the show notes. You've got on the list here. They have their own dialect.

David: I don't want to pick on the ones we've already talked a lot about, but you've pointed out many times that positioning is not a word that is widely used outside of this field. It's more business strategy. Principal, a principal is someone who anybody else would call a president or a CEO or an owner, but at an architectural firm or a creative firm, it's called a principal. The IRS actually defines that in the US is anybody who owns 20% or more.

We throw the term around all the time and we call people principals instead of whatever that head title is or we call somebody principal who owns nothing in the firms. That's just a weird dialect.

Blair: That might be us. I probably got that term from you years back and maybe it's just you and me using it.

David: No, I don't think it's just us. This is a trick I've been playing on you. You're actually the only person that uses it.

Blair: It's like, "Don't tell Blair, but this is a stupid word."

David: Just see if he misspells it all the time too. Another one is producer. When you say producer to a normal person, they think, "Oh, okay, this is somebody who actually does all the work in a movie," not an executive producer that gets the glory or a line producer that does all the labor and running around like a nut. A producer, that's what a producer is. In the digital field, a producer is what you call a project manager and that strikes them as odd too.

It's interesting just to explain like what you were just doing around the card to put this, explain what you do and the dialect to people and see if it resonates with them immediately and producer doesn't. It does in the industry, but not outside it.

Blair: Here's a really interesting one. What do they do? I can't tell from their website. Then I added. They're in the solutions and results business.

[laughter]

Blair: I tweeted something a little snarky this morning I said, "If prominent on your website is a statement that says a logo is not a brand, then you are targeting people that don't already know that, and they're not going to be great clients, but we make those statements all the time. We're in the solutions business." I did a survey of all the other firms out there. I found out they were not in the solutions business. They tried it and it didn't work for them. It was too satisfying.

Now, they are not in the solutions business. That should have been on Creative Bullshit Bingo solutions and results. Maybe that'll be in the second episode.

David: You've got to explain this one about the creative director because I thought that was hilarious. There's got to be a story behind this.

Blair: How come nobody makes eye contact with the creative director?

David: What does this mean?

Blair: This isn't universal, but I've been in some firms where it's like, "Okay, yes, don't upset Betty or Carl," or whoever it is. Back to the expensive, highly cuddled person. In many families, there's the person with the problem. It can be health problem, it could be alcoholism, it can be manic depression, it can be whatever. I don't mean to make light of this, but families learn to be super keened into a person, not all families, but if there's any level of dysfunction that arises from usually some health challenge, it can be mental health, it can be physical, it can be emotional, it can be whatever.

You just know from the outside. When you come in, you realize, "Oh, everybody's like completely got half of their radar tuned to this person to see if they're okay to see what mood they're in and if they're okay, then I can be okay." If they're not okay, everybody's on edge. I worked in a firm like that, where it wasn't the creative director. It was actually the managing director. I worked in a firm like that, where it was a little bit of the creative director. It's like, "Is the creative director drunk yet?" Because things will smooth out once the creative directors drunk?

Sometimes what comes with it is this just odd temperament. There are these things that the firm ends up having to put up with because the package that elect the good stuff is so good, but people are just like, "Oh, did not know." "Hey, can you run this past?" "Now's not a good time." It's not always the creative director, but it's more likely to be the creative director than somebody else.

David: If you think of an actor or actress that has a reputation for being really tough on set, but they're so good, you just put up with it. It's that same thing. It is the creative director or somebody who is so good that you tolerate some asshole from time to time, which is something we've talked quite a bit about. The other one is the research director or the strategist. Now, this is the only field, the only role that's different from country to country. Research and strategy, people are usually more research-driven in Western Europe and Canada.

In the US and Australia, they are more consulting cowboys. They come up with ideas and then they go look for secondary research to support them. That's a wild overstatement, but there is some truth to it when I did some research on this. The very best researchers and strategists are often not all that great with people. You have a meeting the next day and you go to them and say, "Hey, you know what, Fred? You look great in that green collared shirt you have. You should wear that again." By the way, these are the four things that will probably come up.

Let's not pursued this one. Let's just let it sit. We'll not talk about that one then. You go to the meeting the next day and everything is great and you walk out of the conference room and you just wipe your forehead and relief that the strategy director performed well. You take Fred and you put him back in his office and you keep sliding food under the door until the next meeting. People don't get that who look in the firm from the outside. There's like, "Why are you embarrassed about your research director?"

They're often very dogmatic and they're driven by just the truth. That's more important to them than how the truth is presented. This isn't always true, obviously, but it's just an interesting thing to think about.

Blair: That might be a future episode. What's this line? I think you put something I added to it. You added to it. I think you own this statement. I've always loved dogs, cappuccinos, and foosball. I should get to know one of these creatures. What do you mean by that?

David: Is there a website out there that doesn't have a dog on it anymore? How do cats feel about this? Cats are not represented properly nor other animals, but I love dogs. I've got dogs. I'd have had to lock my dog up.

Blair: It just occurs to me. There are people listening to this who have no idea what we're talking about. What's the deal with dogs?

David: They're always listed on the team and they always have some cute title, director of welcoming new clients or something.

Blair: It used to be like the office dog. Now there are multiple dogs in the office. I once had a coworker bring her Rottweiler named Fancy. She would bring Fancy to the office. I was out of town and then I came back. I discovered that Fancy had eaten my fax machine. This is back in the day. Fancy had laid down for a nap in my office and then got startled and ran and got tangled in the cords, pulled this thing down on top of her and she just attacked it. It's like, "What the--? What happened to my fax machine?" Some people go, "What's a fax machine?"

David: That's funny. Here's a serious one that I think we're probably generally ahead of cultural signals, but also may be a bit obsessed, I don't know. There's a lot more at public attention, paid to politics, DEI issues, culture, mission, vision, values, all of those things are really valuable on their own, but they're more prominent in our positioning statements. They're more prominent in how we present ourselves and outsiders who don't come from this creative space. Almost think we're advocacy firms sometimes because of how front and center that is when that's not really the business that we're in primarily, but it's something that matters to us a lot.

Blair: That's interesting, isn't it? I've just gotten used to it that we're more likely than the average business to put our values out there, front and center. It's more likely that those values are politically progressive values and ideas. I wonder if your values aren't. You see a more conservative firm, politically conservative. Do they put their values out there on their website?

David: No, they just don't talk about them. The ones who talk about them are the ones that are more progressive talking about the US here for a minute, even in the South, most of the firms are urban, so they are more progressive than folks in smaller towns or you even see some of the focus that affirm might have is restated. I'm working with a firm right now and they used to call it shooting sports. Not hunting, even though it really was hunting, but it's shooting sports to make it sound better and now it's outdoor enthusiasts.

You can see how there's a reframing that takes place across largely the whole industry in the US and Canada, for sure, where we wear our outlook more publicly than they do in other countries. This isn't even as prevalent in the UK from what I can tell, but it's something that's a little bit unique primarily to the US how we wear our perspectives on politics and social issues more publicly than I think other branches of the professional service field does.

Blair: There are no shooting sports in the UK. It's just darts. Let's pick a couple more. You pick one, I'll pick one and I think that'll probably take us to the finish line here. What else do you like on this list?

David: About the idea of money, the role of money, we didn't talk about profitability issues, but we talked about what money the principal or president might take home and how much money we give to employees, valued team members and so on, but around financial opportunity. If they run an analysis and say, "Oh, okay, so you guys charge X amount per hour and you expect the average person to be this billable, okay, and you've got this many people, okay."

I multiply all those together and it doesn't quite measure up to what your income is. Like, what's happening here? Then you have to talk about, "Well, we're underpricing in some cases. Then sometimes clients, really great clients, they push scope and we don't beat them up over it." This is somebody that last week was negotiating to buy a store, a retail store. If you ran a retail store like that, you'd think this person was absolutely nuts. Let's take things off the shelf and let's pay for most of them, but not the rest of it.

They're just struck by how loose we are with our intellectual inventory and how we don't charge, how we give things away for free so much, like you were joking about in the pitching process as well, but you see that even after the client comes aboard, it's not a big deal to us. It's okay. We're not upset. We don't lose sleep over it. It's like we've accepted it. It's what the industry does. As long as we're making enough money, we're okay. To an outsider. It's a weird perspective.

Blair: It just occurs to me. I know you set this up at the top, but it's really just hit me that when I think about this topic, I think about friends that I have and have had when I worked in these firms and now advise them and explain how things work. Your perspective is really, you're doing a lot of M&A work these days, right?

David: Right. We have a buyer that doesn't know the industry in some cases.

Blair: Somebody who's bought other businesses and many, many other businesses. It's like they're applying their standard frameworks for understanding and valuing this business. These things come up. It's like, "What do you mean?" The last thing on the list, just on that note that I want to bring up here is how in the world do they do this without a marketing plan and consistent outbound? Where do clients come from?

David: I don't know what they do, but they really have a lot of clients and the clients seem to be happy too. How does this happen?

Blair: Is there anything else there about like, we need to be thinking about you wouldn't give this answer on behalf of the seller, your client, but often, the answer if I imagine the principal of that firm responding to that question to somebody who's thinking of buying it, "Where do your clients come from?" "Word of mouth."

David: We're good enough. We don't need other things.

Blair: If it's a PR firm and everybody knows you can't sell a PR firm, but if it's a PR firm, that's almost certainly going to be the answer. The implication is, well, we're really good at public relations ourselves, but we don't have to stoop to any form of marketing. It's word of mouth, but that's such a BS answer.

David: This outsiders, they often leave with the impression that we, as an industry, think that selling is dirty. Why do you all not want to do that? What's wrong with that Everybody else thinks it's just what you do to build your business. There's nothing wrong with it, but we shy away from it. It's like, "Oh, there's four principles. I drew the short straw. I guess I'm in charge of new business." I guess I need to get some training for it because I hate it. Maybe there's some secrets instead of really wanting to understand it deeply. It really does strike outsiders as odd that we don't want to touch the sales side too much.

Blair: I think because most of us are in the marketing business and we see marketing as a more noble pursuit to the same goal as selling, which is to drive a transaction. I think there's been some tough love in this episode, which I listened to this have come to expect from us. Also, it's great to hit some of the highlights and some of the things that make a creative firm really unique. It's been a while since you've imagined working in a bank or some other-- I was joked, "Well, you could be working in a bank." I have friends who work in banks.

I'm sure they're really fulfilled, but if you're used to working in a freaky creative firm, the idea of going to work in a place that's really institutional just the day to day might kill you, like the variety. What I like most about these firms is the people are just so interesting. They are so, so interesting.

David: Yes, they're so smart, they see such interesting connections, and they're so unexpected. They say things that just make me laugh, laugh, laugh. I feel so fortunate that I get to work with these people, but can we just agree they're a little weird? I'm a little weird too. I'm a little weirder than you are, but we're both a little weird.

Blair: I think everybody should just own the weirdness.

David: This has been fun. Thank you, Blair.

Blair: Thanks, David.