Top Challenges for Digital Agencies and How to Overcome Them

Jamie Nau: All right. Well, Carl is obviously ready for today's show, and I know we are as well, so very excited. For today's podcast, we’re bringing back our good friend, Carl Smith from the Bureau, so Carl, welcome to the show.

Carl Smith: Thank you, sir. It's always good to be back. Jamie and Jody, or J and J, that's what we're calling it now.

Jamie Nau: And, as Carl said, Jody’s here as well. So welcome, Jody. 

Jody Grunden: Thanks, guys. Looking forward to this. 

Jamie Nau: All right. So Carl came to us and said, I really want to be in the podcast again. And it took us about 15 minutes to figure out what episode he wanted to talk about.  

Carl Smith: I tried to delete the calendar invite, and it was scheduled. That’s on you, Jamie.

Jamie Nau: My bad, my bad. Okay. We always want Carl on the show because he's entertaining and has great topics. And we said, “what's new in the industry right now, Carl?” 

So why don't you talk about what you brought up to us and what are the trends that you're seeing a lot of right now?

Carl: I think one of the big things that's going on, specifically for people running shops, is they’re at a point where they're just kind of exhausted. You know, everybody has been dealing with trying to get the right talent on the team. Everybody's trying to deal with the increase in work that's coming through and the demands.

And a lot of people are starting to put back on their producer gloves. So, you saw a lot of agency owners who were actually in there doing the work. They may be in a 30 or 40 person shop, but there's so much work that they find themselves doing that. What was interesting was in December at Owner Camp in Palm Springs, a lot of people were talking more about the recruiting retention stuff.

They were still trying to get people in, but then almost two months later, when we had the second Owner Camp in Palm Springs, people were talking about stepping back now. It was different people but similar types of shops. And there was this shift from, ‘I can make this work to almost I've got to get out of here for a little while.’

And I think a big part of it was, they were focused on ‘how do I build a team that can run things so that I can actually take a week or two off?’ 

So I think this is the interesting shift that's happening right now. And then also, you see a lot of people who are owners that I've had conversations with where they're starting not to recognize their shops because going remote has definitely changed their culture.

And so, I guess if I were to just sum it up, some people are kind of falling out of love with why they started this; you know? So all your clients are going to close shop. Sorry, fellas. 

Jamie Nau: Yeah, that's not good news. I was at that first Owners Camp in Palm Springs. And there was one individual there, when we went around and did the intros, who talked about that and talked about he'd done exactly what you're talking about.

I can’t remember how many hours he said he was working a week, but he's like, ‘yeah, I'm not really putting that many hours in a week. I'm pretty relaxed. Things are going really well. The shop kind of operates on its own. And, throughout the week, I felt like I was sitting next to Mick Jagger.

Everybody wanted to talk to this guy. Everybody was sitting next to him; every meal, he had 20 people around him because he had done what a lot of them wanted to do. So even though it wasn't a hot topic at the first Owners Camp, the fact that he was there and had done it successfully made him like a celebrity among everybody.

The amount of questions he got and the amount of times he was referenced throughout the week was like, ‘hey, I want to get what he has.’ You know? So, I do think it was a little bit there in that first camp as well. 

Carl Smith: Yeah. I would totally agree. And a lot of that was, he had found the right people to put in place to take care of stuff. Right? And, I mean, you can look at Rob at Sparkbox, he's done that to where he was working 15-hour weeks or something like that.

Every time he says that, the air goes out of the room. I'm like; read the room, dude.’ Nobody wants to hear that. But, it's funny to me, especially with what you're saying right now, Jamie. That feels like kind of who I was at the early Camps. I was the guy who had a different model. I was the guy whose shop was running itself.

I was all those kinds of things, and it worked so great until it didn't. That's one of those things that it'll be curious to see in the long haul. Because the other thing is, and this has happened more and more, I think this could be the sucker punch for people who have made that transition from building that team so they can step back.

Putting on the gloves themselves and doing the work. A lot of people are losing their number twos. I've seen this happen over the last, I guess, six months where somebody thought they had everything stable and the only thing that number two person was waiting on was for things to be okay for them to leave.

Jody Grunden: Oh, wow. 

Carl Smith: I’ve probably had a half dozen conversations with either the person who left or the person who stayed, the owner, and every time it was almost like ‘I've been here so long. I didn't want to just take off. I wanted to make sure that everybody was okay, and I wanted a chance to talk to people, but I've got to figure out something for myself.’

Great resignation, great realization–we're all probably tired of hearing and saying it, but I think that's what a lot of this was; you know? So, unfortunately, as an owner, we're chained to the damn thing. 

Jamie Nau: It happens at all levels. 

Jody Grunden: This was definitely a strange, strange time for sure. We still continue to get the rank and file, or just simply looking for different things to do. You know, ‘I don't want to be an accountant anymore. I will be a bartender.’ 

It's a bizarre thing. And, with the owners, they're not used to that happening. Now they're jumping in and solving problems where they wouldn’t have had to do that before because of the bizarro world that's going on right now. And. It's tough. 

Carl Smith: Another thing that I've seen happening on a much smaller scale,  or with fewer people, there are people starting to spin up second companies. 

I don't know if you've seen any of this, but it's like, ‘I'm going to spin up a maintenance-only company. I'm going to spin up a strategy-only company. 

They're taking one aspect of what they've done, probably the one they liked the most or they think they can handle given the talent they have, and spinning it up kind of next to their shop. This, to me, is kind of fun. 

I had something like this I wanted to do. I never got around to it, but I think there is something where maybe owners identify themselves with the company they created so much. 

Jody, I'm sure that you really identify with Summit. If Summit is having a really bad month then you probably feel it differently than Jamie. Who's just like, ‘ah, no big deal. I'll go somewhere else.’

It’s almost like building a second boat. I don't like this boat anymore. I'm going to build a second one, and we'll see what happens. I don't think they're doing it that way on purpose. I just think they fell out of love. Right? 

The biggest one to me though, and this one kind of surprised me because I always felt that we had a great remote culture, but when somebody says, ‘I used to cook lunch for everybody once a month. We would go out and have coffee or we would this, or we would that.’ And they've lost that. And you sense they feel like they've lost a part of themselves. 

Jody Grunden: It's kind of like they developed a lifestyle culture and then they grew out of it into more of a corporate culture. Not because they didn't really want the lifestyle, but in order to grow and to give people bonuses and benefits and keep top employees and everything, you kind of have to grow with it. 

But in some ways, they lost the fun stuff that they really enjoy. They let that kind of stuff just go by the wayside for profits. And, profits are great, and you want to have certain profits, but you want to make sure that you're working with them and keep your culture at the same pace as you grow. 

Because I really truly think a 10-person shop can have the same culture as a hundred-person shop, if it's done right. And it's grown right. But it's got to be intentional. You can’t just take the gloves off and forget about it because it will change with, as people are added and subtracted from the team.

Carl Smith: Especially when you look at it, from my view what I always saw historically was, you saw shops get to a certain size and you would lose some of your people that had been with you for like 10 years. Right? I've talked about this far, but, those people would be like, ‘this isn't what I signed up for. I'm going to take off.

But the owners are like, ‘this might be an opportunity because that was a person who has been here for a while. We were doing things a certain way because of that individual or they ran it that way. So maybe we can find a different way to do it.’ 

But now when you're losing people that have been with you for a long time, who have been with you in intermediate amount of time and who were there for two weeks and then boomeranged back to their old job.

It's like, now you're getting shot at all over. And so where does culture take root? It's like the culture is now about replacing. And, now anything that you try to do can feel like forced fun if you're making people do it on zoom. So there is just a tremendous … It's hard. I think let's just say it's really hard to run a shop right now.

Jamie Nau: I think what makes it hard too is, it's not like one decision turns the tide, right? So it's not like you say, ‘ okay, when that one person left, that was the changing point. It's a lot of little things. It's a lot of death by a thousand cuts. It's like, okay, four years ago, we were exactly what I wanted to be.

Now we're twice the size, and I don't know half the people at this company and we're doing product, or we're delivering services, which isn't exactly what I want to be delivering as 90% of our business instead of 10% of the business like it was four years ago. 

And so like again, I've had that talk with owners so many times where I almost feel bad for them because they're like, I just want to go back to where we were four years ago and it's like, we can make some steps here, but it's going to be hard. It's not going to be easy to pull off.

Carl: I'm going to get back to what you said, Jody. If you have a 10-person company or a hundred-person company, it may be the same culture for the owner. They may feel the same way. They may have the same experiences. It is definitely not for those individuals though, because that's the other thing that starts to deteriorate a little bit; you can onboard an employee into a company, but if you don't onboard them into the team, that's a totally different thing. 

And I remember, especially when Engine was going through fast growth, I've heard about people having it happen right now, it used to be, you would see somebody in the hallway, you didn't know, and they had just started and you might get to talk, but it was just kind of weird that you didn't know.

Now, you just see a name show up in slack. You're like, why is that? This is a private project. Why is that person here? Because things shift so fast now, I think that really is disruptive. And then, the concept of intrinsic/extrinsic in terms of how you're being taken care of, I think probably people get a little worried about that too. 

‘Well, where's all this money coming from that we're hiring all these people, and they told me I had to wait on my raise.’

So there's a lot that happens when you suddenly have all these new faces. 

Jody Grunden: Yeah. Plus, with the way that we've kind of transitioned into the remote world, you've got all these companies that were completely brick and mortar really were kind of a hundred percent against it for the longest time, and then they were forced into it. 

Now, they're trying to embrace it, and they don't know really how yet; they haven't figured it out, or they really haven't done video chats. They haven't done their retreats and all that kind of stuff that you really need to have because, like you mentioned, the people that are popping in every, once in a while you have to actually physically meet them at some point. 

Carl Smith: If you don't meet somebody in person, you have no concept of that human. You don't think about, ‘I don't want to let Jamie down because we had that laugh over a beer when we were in Colorado together.’ Right? Instead it's like, ‘I don't know who this guy is,’ and you shut your laptop and you move along. 

The word on the street is there's a lot of opportunity for people right now. So that's the thing. We did the Salary Survey. And you were there, Jody, in Orlando when we went through it. Developers: increase of 32% in their salary from the beginning of the pandemic to now 

I had somebody I was hiring at one point and they said,’ I just need like $300,000 a year. It's not a lot … blah, blah, blah.’ And I remember looking at him saying ‘will you hire me? I’d like to make that much.’

It's just one of those things–people's expectations.

Owners are unemployable. That's the one thing about the ecosystem that I think keeps shops in play is that owners are not employable. Can you imagine, Jody, if you went and tried to work somewhere?

Jody Grunden: No; that'd be tough. It has to be the right situation for sure.

Carl Smith: For them. Jamie knows what I'm saying. It's the same for me. I'd be questioning everything. And, occasionally, I would cry and crawl under my desk. It's like, nobody needs that. 

That’s the other part of it; owners know this is it. I'm curious from your perspective, have you seen any shops that purposefully just got small and tactical that just said, ‘we're not going to try to do this “everything for everybody.” We're going to shrink a little.’ 

Jamie Nau: I'd say from my personal experiences, I've seen a lot more companies talk about it than actually do it.

Carl Smith: It's hard to say no to the work, right? 

Jamie Nau: Yes, it’s hard to say  now to the work and it’s hard to say no to the lifestyle and the revenue. It's like, ‘okay, we're a $10 million shop and yes, we could go back to our roots and just do one thing and be a $4 million shop and have half as many people.’

But, there are people involved; there are projects involved in. It's hard to say no to the work. And, so again, I've had that conversation a number of times, but probably only really seen people take a step in that direction once or twice. And so I think it's a very hard step to take. I don't know if you agree with that, Jody, but that's what I've seen from my experience. 

Jody Grunden: I think you're right. They talk about it, and they vision it. It's kind of like the dreamland. What it was like when I was single, that type of thing, now I'm married for 30 years. What it was like way back then, they forget about all the issues they had when they were single. 

It wasn't roses back then. No, it was tough. It was tough to do. You're looking at the next paycheck. All the different issues that you had when you were single that you don't have right now when you're married. I think it's the same thing with those folks; they forget. Time heals, all wounds and they forget why they didn't like it when it was back. All they remember is the good stuff.

Carl Smith: Okay. So, there's so much here. I think part of it is when you're running, especially a web shop, you get to that point where there's something that you never thought you'd really be able to manage or take on and you want it.

You're like ‘oh, I want to say that I worked with Disney or I worked with [blank].’ And so ego kind of gets you into it.

I had a friend who runs a shop, a traditional agency, but the thing is, there’s over 400 people now. And when I knew him, I was referring work to him, and it was him and about probably six people that he worked with.

And I saw him a couple of months ago in line at a Dunkin Donuts. And he's like carrying all these boxes and he's like, ‘Carl, what's up?’ 

And I'm like, ‘nothing much. What's up with you?’ 

And he was like, ‘yeah, I'm going to be honest. I got a lot more stuff. And I might have more money. I'm not really sure, but it was nice when it was just six of us and we could go have a beer and decide to go home.

I was thinking ‘I've seen you on that boat. I've seen you in that lake house. I've seen you in all those things. So you chose, man; you equipped for it.’ 

I think you're right. I think for some people, like Parliament, that's probably an example. Parliament, how big have they gotten? They might have been in the teens. I think they've cut it back to where it's just Chris, and I think they've got maybe five people. Because are they a client? They're probably a client, right?

Jamie Nau: Yep.

Carl Smith: Yeah. And it seems like they're doing great.

Jamie Nau: Once you make the decision to do it, if you actually go down that road, I do think there is some happiness there, especially if it's about the work.

I think the people that have come to me and say, ‘I'm just tired of working for enterprises. I want to go back to work with startups’ … rr whatever the client base or the type of work. 

If that's the reason you're doing it, then I think you can get satisfied because if you catch yourself working in the wrong line of business, if it isn't what makes me happy, this is what makes my people happy, let's turn it around and let's do the right kind of work. 

Using parliament as an example, I think that if you do it for the work, it works out, as opposed to just, to Jody's point, trying to be single again; that's a harder thing than as opposed to, I want to go back to my passion.

Carl Smith: Just think about all the times you were rejected when you were single. It's like, ‘why do I think it's going to be better this time around?’

It wasn't good. A second date that was worthwhile lasted two years minimum. I could not date. I was like a relationship guy though, right? 

Jody Grunden: I was the same way.

Carl Smith: I think we're wired the same probably in our personal relationships like that, and in our work relationships. Right?

Everybody talks about being married to the business and that kind of crap. But I tell you, I wake up in the night more worried about the Bureau than I do about my kid.

My kid's fine. Let me go over there and see my kid. That company thing is out in the ether. It's not something I can really focus on and just see.

And especially for me, because I've got like almost 900 people over there chatting about stuff. I need to see what's going on from time to time.

Jody Grunden: That could go real wrong quickly. 

Carl Smith: You do have an idea, actually, probably.

I think this is really interesting; falling in love with how things were and not remembering some of those downsides, but the thing was, even with those downsides, I think there was more, we had a sense of control if it was real or not. Because it was smaller and manageable and we could see it all. And then once we get to this point, not only remote, but bigger teams, suddenly we can't see it.

And so we tell ourselves stories about what's going on or dangers that might not exist. And that's when we started talking about, ‘I can't look at it this anymore and I need to step back and have somebody else come in and look at it.’ 

Jody Grunden:  I think that's the control part of you know, entrepreneur, right? They want to control the outcome  all the time. I was that way for the longest time, and it takes a long time to really figure out how to give away that control so that the “Jamies of the world” can make mistakes and fail and me not having to have a heart attack because of it, or killing myself because of it.

Carl Smith: Jamie, you might want to call a suicide watch on this guy for me. ‘I don't have to kill myself because the way Jamie does his job,’ it pretty much what he said. 

Jody Grunden: But, it takes a different mindset for an entrepreneur to give up all that. The ones that do it really well seem to have no problem with it.

Like the Rob [Hars] of the world, where they give the control up and expect their team to come through with failure and success, both; they're in good with both. That's the key. You have to be good with both. And it's hard for a lot of entrepreneurs, especially when it’s their baby, to fail.

Jamie Nau: Well, the big part of it, too, I think, is that control aspect, right? When Jody has me make decisions, I don't make the decisions the same way he would. The decisions I make are different than him. But as long as they're the right direction, then he's fine with it. 

If I came in and said, ‘let's not do accounting anymore. Let's open a coffee shop.’ 

Then he might be like, ‘okay, Jamie, you're, you're making a mistake here.’ 

Jody Grunden: I wouldn’t have a problem with that. 

Carl Smith: I like it. 

Jamie Nau: That’s right. But, I think that's the ultimate goal; when you are stepping back is making sure that you trust your people to make the right decisions and you're listening to those decisions and you're not second guessing every step along the way.

Like, okay, ‘We want to get from point A to point Z. I really have a problem with step C, D and E.’ But what you should care about is step Z. 

Like, ‘okay, where are you going? And is that going to work?’ 

And I think that's the biggest thing that makes success work.

Jody Grunden: I think that we see that a lot with clients; if we, especially newer clients, as a CFO come on board and they expect us or have the unrealistic expectation that we're perfect

I wish that you could hire an employee that was ever perfect, but it's the same type of thing. And, the expectation is you have to have that trust. And you've got to build that trust pretty quickly with an employee you've got. Over time with somebody new, you don't have as much time to develop that trust, but yet you’ve got to develop that trust in order for them to know, yeah, they're going to make mistakes, just like you've made mistakes all your life.

They're not perfect; but again, it kind of gives you that ability to eventually give it up. Let them take over that marketing department or finance department or whatever department that might be and run it with just little oversight.

And I think that's the key to getting through all that. Right? 

That's how Rob does it, and that's how I do it. You simply have to give up control; but again, believe in your people and believe that they're going to do the right thing.

Carl Smith: Right. But over time, I think that's the part that people miss. Like, ‘oh, you know what, next week I'm going to do that.’ 

It's going to take years, maybe months. But, to me, it feels like, especially because of what you said, Jamie, owners have always done it a certain way, and we always think that's the way to do it.

And there are other things we tried that didn't work. And so, we’re convinced those things will never work. But the reality is, we couldn't make it. It doesn't mean somebody else can't. We failed when we took off in this direction. That doesn't mean somebody else will. We've had decades, in some of our cases, doing that and building up an understanding of what works and doesn't work for us.

So the idea that you tell somebody exactly how to do something. Like you ‘E-Myth’ it. Right? Like you make it so that you're just “making the burgers.” that doesn't work in this industry. 

People have to have an understanding, and if they don't feel like they're getting to make that decision and they're getting to fail, then they're going to blame you every time, because they're not going to be invested in it because you told them this is exactly how to do it.

I think this is really big. Owners want to step back, but I think they're also really afraid of somebody else seeing the hot mess in how they run it. I'm going to clean up the house before the cleaning crew gets here. You know, I don't want them to see that stain on the table. No, you hired them to come in and take care of the stains because you’re so busy at work. Or whatever it might be. 

But I think it's the same when we try to bring in somebody. ‘I just need about a week. I'm just going to clean up a few things.’ No, let them see the mess, so they can understand where it came from.

Jamie Nau: Well also, I think letting them see the mess makes sure you have the right person to right.

I know from the hiring I've done before. Sometimes, I'd like to take a couple more weeks on this client and get it cleaned up before I hand it off to the CFO that's taking it over. 

But then I'm like, ‘they can figure this out. They're a smart person.’ 

You can find out if that person's fit for the job because they're like, ‘Nope, this is too much of a mess. This is not what I want to touch.’

Or they dig in and they challenge it and really figure it out. And that's the type of people you want anyways, at least from my experience.

Carl Smith: Oh man. I'm so glad I don't run a shop anymore, fellas. It’s a horrible time to be running a shop. I'm so glad I just get to help people running them now.

I can't help but think there are a lot of owners out there who would just cut and run if they could. And you see a lot more, not as many mergers right now, people looking at acquisitions. Big C had that big announcement the other day. They've acquired the larger shop that was in their origin city in St. Pete/Tampa. 

I know a lot of people are coming to me. Dusty's looking at the resources, and I see a lot of people who were just starting to look at acquisition as a way, I guess, if everything's already in such a tumultuous state, like why not just merge some things together. See what happens. Cause at least we'll have enough people to do the work, right? 

Jamie Nau: Yes, it's definitely a challenging time. I think that like, like we said, I think we focused, at least on this podcast and at least our internal conversations, we focused on the lower levels. We focused on employees and the great resignation and everything like that.

But I think this podcast was kind of a step back at the owners, the ones that are dealing with a lot of that. So I think that was really effective and a good conversation here. I'm gonna throw it over to both of you guys for one final thought and tip for people that might be feeling this way.

Let's turn on to that. So, Carl, if you had to talk to one person and have that conversation with them, what tip would you give to someone that's feeling like they need to step back? 

Carl Smith: What I would say is, you really need, and that this sounds like something that so many people talk about, you really need to north star it. Don't just say, ‘I want to step back from this.’ Figure out what you want to step toward, right?

It's not enough to get something out of your life. You have to put something else in it or else you're just going to run back. What is it you want to do next week instead? Or, how can you make tomorrow better by just spending a little bit of time at the end of today saying these three things feel valuable to me, right?

Give yourself little wins and celebrate them, but ultimately make sure you know where you're going to, not just what you're running from. 

Jamie Nau: Great. 

Jody Grunden: I second that a hundred percent. You said it really well. We always tell people that, if you never have that direction or the target you're going for, you're always going to go sideways. You're going to go this way all the time. But once you set the goal (‘Hey, I want to buy that car and here's what I'm going to do to get it. I want to buy a house. Here's what I'm going to do to get it. Or I want to be a $10 million firm or a $5 million firm, or whatever that is.) then you've developed that roadmap to get to that goal, people just tend to go that way [toward the goal]. 

And so if your goal is to downsize and you want to do that, don't just do it tomorrow. Figure out what your goal is and how you can do that strategically to get to where that is.

If you want to go sideways and flounder all the way, don't set goals. That's pretty easy to do; most people do that. So, if you want to set goals for when you want to eventually exit the company, you know, like you'd mentioned, set that goal. But I would even set it further than that.

So if you want to exit the company, what do you want to do afterwards? You know, what's that true drive? It can't just be exiting because  once you quit the company or you get out of the company, then what are you going to do? Are you going to do it again? You're going to start another company?

What's your goal there? If that goal is to open a flower shop or something like that, ‘How am I going to get there with the current company I’m at? What pace do I need to get there? At what point will I be able to sell it?

And then at that point, then ‘how am I going to get that?’ Or ‘how do I use those funds to open this flower shop’ or whatever that second goal might be. And I think that's the key because often, you get to the point where you say, ‘I've done everything. I'm 50 years old. It's time to sell and say goodbye. I'm going to have a couple million bucks in the bank. I'm happy.’ 

You're not going to be happy cause you're gonna be looking for the next thing to do. I can't even imagine the depression you'd feel once you've done that. You've succeeded at everything; it's gotta feel, there's gotta be that depression that you have. So I think setting that secondary goal is really important. 

Jamie Nau: I think back to all of that, too, I think the other part is, as the owner, you do have flexibility in the decisions you make, as well as what you do. You know, again, I think every owner feels like they need to be CEO. Ultimately, this might be a little crazy to say, but as the owner, you don't need to be the CEO.

You could hire a CEO, you could hire a president, and you could be a PM or you could be something that you really love doing. 

‘This is why I've done this for 35 years. I know this is a role I was most happy in. I'm going to do that role. I'm going to be in sales, and I'm going to let someone else be the CEO.’

Be part of those decisions and listen to what decisions are being made, but you don't have to be the decision maker if it’s not what makes you happy all the time . 

Carl Smith: Can I end with this one thing? Garrett Oliver, the brewmaster at Brooklyn brewery, I was lucky enough to see him speak.

And he said to this room full of entrepreneurial people, anybody can be a millionaire. There's just that thing you won't do. And I feel like that thing that some of us “won't do” is what we need to hold on to. That is a core value, right? We won't hurt somebody else. We won't do something like that.

So I think, Jody, I love your idea of that secondary goal or that extended-out goal and making sure that you're not setting yourself up to go against something that's a core value. So many of us are always looking on social media where we compare our insides to other people's outsides and wanting to get there. But would we really want to take that trip? 

Jamie Nau: Great great way to end this podcast. I appreciate both of you guys, and as always, Carl, it was fun. We'll let you get on here again, I guess, if you want to sometime.