Episode #8 - Our job is to make other people happy, and it's addictive!

Behind the Screens #2: Reflections on the highs and lows of running an agency.

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Nic:
Hello, and welcome to the Tough Cookies Podcast. Tonight we are going to record the special series called Behind The Screens. That’s a weekly sit down with Nathalie where we reflect about our week. I’m your host, Nic and with me is Nat. How are you?

Nathalie:
I’m okay, thank you. Hello.

Nic:
Hello. How was your week?

Nathalie:
Pretty good. Pretty productive. I managed to get a lot done. I caught up with two of the start-up founders that I’m mentoring at the moment. Reese, who I’ve known for probably 18 months now, as well as Rachel, who I started to mentor through the Back Her Business program about a month ago, a couple of months ago. They’re both doing really well and actually they’ve managed to carry on through the storm and just do their own… Carry on with our plan with a bit of amendments on the way, but they’re both doing well and yeah, pretty good. How about you?

Nic:
Yeah, pretty good. If for any reason you’re listening to this episode in 2022, the storm currently is the COVID-19. We somehow live in a world where we lock down and all businesses shuts. So that’s what Nat meant by the storm. So Back Her Business that’s the Bristol initiative, isn’t it?

Nathalie:
It’s the SETsquared initiative in coordination with NatWest. So yeah, it’s a few female startup founders who are at the very, very early stage. And they’ve been matched to mentors depending on the skills they were looking for. So I’m helping Rachel with setting up the business and the foundations, the business plan, the figures. We’re creating her first employee, that kind of thing.

Nic:
There’s something really nice about mentoring. Yeah. I really like that. That ongoing relationship with someone and seeing them at the very beginning, early stages of the business and growing. My week was I think pretty productive. A lot of writing. We are writing about three discovery documents at the moment and they take an awfully long time to write those ones. And one of them is pretty complex. I had an interesting call that week and I think that’s going to be a theme of the podcast today. And just to give a bit of context about what happened, I had this call from a lead. They have a pretty complex project, and it’s the very first time I speak to this person. They explained to me the project, what they want to do. They showed me like a couple of competitors and kind of like where they want to go.

And it’s a relatively complex project. And as is usually I try to get an idea of their budget, try to see what kind of bracket they situate themselves and what is their budget, not just for the development, but also for the marketing and the rest. And basically weirdly the guy really doesn’t want to give any kind of budget, but he says we have a decent budget and so on. So it comes a time when he asks me, how much do you think it is. I give like a finger in the air kind of estimation. And I can’t remember, so I’m going to say like a couple of probably wrong numbers, but I would say it’s something finger in the air that was probably going to be anything between 80 to a 100K kind of thing.

He all of a sudden he becomes extremely cross and he was quoted something like anything between eight and 10K by somebody else, and therefore we were just like charlatan kind of thing. And the project was like heavily complex. It was a seriously, seriously big project. I have no idea how somebody… Sometime you find yourself in situations where, I don’t know, you say 50. Somebody else said 45 and you can understand, there’s a kind of like match in the middle here. But for that one, the gap was so vast that I didn’t know what to say.

And then after being cross and angry for so long. He said, “But you know what you’re talking about, can you match the other offer?” It’s like, “No. If we’re talking about the same project, no, we can’t match this offer.” And he hung up on me, which was really bizarre. So quite happy in the end. Like we haven’t continued with that one, but it made me think about the value that you can provide. And there’s a value obviously in the service you provide and the idea of running a service business. But how do you quantify that? How do you qualify that? I don’t know.

Nathalie:
It’s the fun of working for other people and for other business people, I guess. So it’s all in the relationship. And I think if the relationship does start on the right foot, then it’s just the wrong one. And I mean, providing a service is always a bit tricky, because there’s another part isn’t it? You have your business to run and then you have whatever you’re building, in our case apps. But there’s also the client and everything needs to work together. And if one of the things doesn’t work, what are the… You know, it’s your business. If you don’t make enough margins, or if the app suffers in quality because of that, or if the client’s not happy, then it can’t be a happy trio. And I think getting that happy trio is the tricky bit there.

Nic:
There’s almost like… I would like to add a fourth one, which makes it not a trio. Called your-

Nathalie:
Quartet.

Nic:
Yeah. Quartet. The fourth one is the team as well. Like you still, as you run an agency, basically, you’re nothing without your team and you have to keep them happy, you have to keep them engaged, and at the same time do valuable work and yeah. Running an agency is fun…ish.

Nathalie:
The team is an interesting one because obviously when you start an agency and you start a service based business, you as the founder, you’re passionate about it and something, you understand something you really want to do, and therefore you probably do well. However, I found that finding the right team members and actually finding people who understand what you’re trying to do in all aspects, and actually as passionate to provide a good service as you are, is sometimes quite tricky as well. It’s not just about doing the work. It’s about doing it for the client, and it doesn’t mean that the client is allowed to ask for anything, but it’s the relationship. And I think, yeah, everyone in the team has to understand the relationship and really make sure that they do everything they can and they’re proud of their work. And they do provide that service and that level of service that you’re expecting from them.

Nic:
I think that’s why we’ve always been so big into this idea of ownership of projects from the team member. I’m trying to recreate what I think is the weirdness of running an agency where it’s like, yes, it’s extremely difficult and you’re running a service business and there’s plenty of things that are extremely wrong about it from a business level. But on the other hand, you have something that is extremely addictive, which is making somebody else happy. And that to me is what makes it in Cookies today and, and giving ownership of project to team members, hopefully they will… Like instead of the client passing it to us, that they are happy, they will pass it to the team members and it will inflict this kind of looking for the next happiness client kind of thing.

And it kind of worked for like most people. Once they get it, once they get the hit of, okay, we did a good job and the person on the other hand is happy, they understand it, they get it, but they need to have this first piece of happiness in order to get what we’re trying to do, I think.

Nathalie:
Yeah. And we’re a small team so we have the luxury of actually involving everyone, not all the time, but involving the developers in the client meetings. And everyone gets to know each other and it feels like little teams for each project. It’s not just a client and a project manager who talk together and then somewhere a developer does the work. They all… Yeah. It’s like a little team. We have a few developers, a project manager, the client, and together they make something great. But yeah, we need everyone in that team for it to work. And it’s true, it’s the enabling the founders to really have a product that then they can then take to market and get customers. You also celebrate their success, which makes it even better. Because their success is your success somehow.

And for those clients who really recognise what you do and actually just are happy with the service that you provide. They will do whatever they can to also help you get there. So it’s the partnership. It’s not just a client provider relationship in our case anyway.

Nic:
Yeah. And yeah, I don’t see how any good project can be run without having everybody forming one team. It’s the way I see any kind of good project is, it’s not the client and us is like, we are together and we’re trying to do… I know it sounds very cheesy and it probably is, but this idea of like we are getting together and we are in the same boat. And at the end of the day, we have these long lasting relationship with clients. And what makes it extremely important is that they make money, because if they made money, we continue to make money. And like that’s for me is like the life cycle of a business here so, yeah.

On the other hand, running a service based business is filled with problems. I mean the big one, I guess, the most difficult one is you can’t grow margins. You can’t grow revenue without growing your head count. And I know that it’s something where you constantly have to take risk. And I don’t know that this is the route of entrepreneurship is like, you have to be somehow comfortable with taking some risks, but it feels like if you want to grow an agency, you’re constantly almost on the verge of like… It’s one risk after another, basically.

Nathalie:
It’s pretty true from other businesses, I think. It’s just the one that we know. There are the risks that we don’t have, like carrying stock, for example. We have people providing a service and it’s true that the team being at the centre of everything, one, we need to make sure that they are the right team for the projects and for us and two, yes, we can’t… I mean, we charge on a day rate and it’s basically code being done. So each developer has a day rate and you know, the more developers we have, then the more we can charge per day. I guess it’s part of the game, but it’s true, unlike a SaaS business, for example, we know we won’t be able to grow as quickly because it just means growing the team, and the head counts, as you said. So yeah, it’s part of the game, but it’s also something, I guess, if you’re not passionate about it, then I can’t see how you can do it in the long run, because it is quite tiring, but that’s true of all businesses, I believe.

Nic:
Yeah. And I mean, there is the passion of what we do, which is the development]. I mean, that’s most of my background, that’s my tech roots is creating things, but there is now that second passion that is growing, which is actually running a business. I mean, for the past first years of the business. So, Cookies is nine years old and we are going on our 10 years for next year. And for the first few years we kind of took it very like… Kind of growing by accident, almost. Like we were going one client after another, and then more work was coming in. And then we hired one person and hired another, and we’re very slow with our growth. And it was a decision that we were making. Like, we were also raising young kids at the time and-

Nathalie:
We still are.

Nic:
We still are, but the last one was a surprise. But we were in a position in our life where the business was there. It was supporting our needs. It was like a very tight, small unit or group of friends working together. And it stayed like that for quite some time. It was functioning, it was profitable. It was a really nice small business. But then I remember about two years ago, we realised that what we had in our hand was almost like a vehicle to make change and like creating wealth for other people, not just for us. Paying wages, being able to take somebody that is not today a developer and then transforming into these like awesome, super mid or senior developer now kind of thing, and training people. Getting people into the ropes of creating products, the way we want to see those product being created. And that’s now the second passion almost. The development side is one thing and I still love development to bits. That’s my bit.

Which is completely new and like it’s everyday out of comfort zone is this idea of we are now growing a business. We are not just running it. We are not just making by kind of thing. We are now growing a business. We are looking for the next 10 members of the team kind of thing, where before even the idea… I will always remember the first time we had to hire our first employee. It took us about like three months or something like that to just make sure, are we going to be able to pay the bills and whatever, whatever. And now it’s like, okay, we have a head on like the next 10 kind of thing.

And that’s the most interesting challenge at the moment is this idea of how can we grow while at the same time… Because I am a bit risk averse sometime. And how can we grow, and while at the same time, not taking too many risks and making sure that we’re not taking too many risks, not just for us, but also for the existing teams and making sure that everybody like continues to be happy. It is the challenge that we have today.

Nathalie:
Yeah. But it’s a good challenge. And I guess it’s just a mindset. Well, not just, but it is a mindset as in what you want to achieve. And when we, as you said, decided to grow quicker or just to actually push the growth a couple of years ago, we knew that it would be between three and five years of really hard work and actually doing more than we were doing, because as you said we had a nice little business, we were comfortable and we were profitable. We had a nice team. Obviously we were doing the work and sort of working hard, doing the work, but not, yeah, we added this extra job on top of it, which was now we need to grow it. As far as I’m concerned, I think a couple of years ago, it’s not that I was bored, but I think it was just too samey for me. And I needed an extra challenge.

Our second child was nearly sort of preschool nearly going to school. And then yeah, the third one wasn’t there yet. So yeah, but I just needed this extra work challenge of now I want this business to be bigger, better, and to have bigger, better clients and to have more clients, to be able to somehow spread what we do and the way we do it to more people. And so that more people could benefit from it and also hire more people and train them, because I find it really rewarding to be able to hire someone who really wants to do a job, but hasn’t had the opportunity yet, because I don’t know, they haven’t got the right degree because they haven’t got the right connections because whatever reason it is, and actually give them that chance, we’ve had quite a few developers in the past whose first proper sort of commercial experience was with us.

And we’ve been able to see their potential, and train them from their very first job. And some of them are still with us and it’s great to see all of that, and to be able to do that is very rewarding. And then on the other side, I do love numbers and spreadsheet, and that’s another challenge where you need to look, I mean, you can’t shy away from numbers, if you’re trying to grow business, it’s the basis of it. It’s all about profits and head counts and understanding what you’re spending, where you’re spending it and what it should look like. So, yeah, it was a bit of both, which I still enjoy as the team and the finances, which are both key to growing the business, and we still, today, my main priority is really.

Nic:
So, I mean, one thing I’ve realised probably only a few years ago is, well, you always look out to other people like the ones that are a couple of years ahead of you, the ones that are a bit more successful, the ones that have more of a headcount, fancier offices, whatever that is. You always look out, not for jealousy, but more like, okay, our next step is this kind of things.

Nathalie:
It gives you guidance, somehow. I think it sort of shows you the way in some way.

Nic:
Yeah. And one thing that has started to happen in the past two years is actually… Because for a long time, I was the face of the business things, and still somehow, even if I’m only the pretty face, I’m not the one running the show, Natalie is. But the thing is I’ve had people coming to see me in the office and being like, look like we were just starting this agency. Like, it’s just the two of us and we want to grow. And like, we’ve been looking at you guys for like past couple of years, whatever that is, or like, we have four. And then, we’re just four friends that have created this agency together and we about to hire our first hire. And all of a sudden, when you find yourself giving advice to people that were… We were in the same position couple of years back, and we’re probably reaching to these other agencies and having chats with them about like, “Oh, where do we go next?”

But if we have listeners that are in that position, where either, because of COVID, they’re now thinking about starting an agency, starting to run their software development house or design house, or people that have already an agency, but they’re like anything between one and four people kind of thing what kind of advice would you give to those people?

Nathalie:
I don’t know. It’s interesting question. And for me, it’s the whole point, the whole reason why I started venturing, I think started Founders in the past year or so. I don’t know. The advice is quite tricky because it obviously depends on the situation. And for me, the two key things are one, sit down and have a look at your plan and your vision and what you want to do and how you want to do it and trust yourself on this because no matter what other people are doing, there’s no one that knows better what you want to achieve. And sometimes it’s really hard to sort of stay in your lanes, be like really strong on your opinions when you see that so and so are doing it this way, and so and so are doing this way. And you’re always tempted to say, “Oh, you know, they’re doing this way and they’re really successful. Maybe we should do it that way too.”

But no, because you know what you’re doing. And I think for us, we’ve had that… We’ve done that mistake a couple of times in the past nine years where we’ve tried to do something that wasn’t us, just because we thought we should, because someone else was doing it. And we’ve always come back to who we truly were, but it’s hard. It’s really hard.

And the other one is, I mean, you need to know your numbers inside out. I mean, you don’t have to be doing everything in your business. And there’s a lot of things that you can outsource, there’s a lot of things you can get advice on. However, as a basic, you need to know where the money goes, how the money is coming into the business, and really understand all of these basic numbers, your profit margins and all of that.

So then you can make informed decisions about when are you ready to hire, and how much risk can you take? And what’s the future going to look like. And I’m not talking, making plans for the next three to five years. Because that’s way too much in advance for such a young business. It’s making plans over the next three, six, 12 months. And that’s always really good at that point. I mean, I’m not even sure we were doing that at that point. So yeah, these would be my two bits of advice, vision being strong on the vision and being really quite knowledgeable on the figures.

Nic:
That’s interesting because I had, I guess, almost the same ones, but I’m coming from… Typically when you see an agency being created, it’s typically because the founders, and either both founders or at least one of the founder, has a strong passion in the field. So he’s a really strong, passionate developer, really, strong passionate designer, or they’re just like a group of designers, developers, and they have a passion about the craft or the thing that they’re selling. But then somehow what you see a lot is we’ve just said, people completely forgetting the whole business side of things.

Having a goal, having a vision about what you want to achieve. I think I’ve always had that in my head, even if I was using like another company as a guidance, it was like, I want to be… There’s this company in the States. And it’s like, I want to be this company, but in UK kind of thing. And that was kind of like my first guidance.

I think my advice would be to never underestimate the amount of time getting business in takes. This idea of, what’s it called, lead generation and business development and all that. Like it takes time to get business in. And not just any business, but to get the right businesses in. Like getting that luxury that we now have, which is about saying no to projects, and only selecting the ones that you really want to work on for whatever are the reasons in your tick boxes, that is really tricky to get into that kind of position.

I think there’s this exercise of the three tick boxes where, I mean, I know that some people select projects like that, where it’s like it’s either the project is going to make you rich, or the project is going to make you famous, or the project is going to make you feel good. And you can only take a project if you have at least two tick boxes ticked. So getting to that position, it requires a lot of work and you have to be ready to put yourself out there, and ready to work really hard to get into that position.

And the second advice is really about the numbers. That’s something that I’ve personally never looked at. I look at numbers from a very high level perspective, and I’m so glad that you actually look at those numbers and actually tell us like, okay, every month having a kind of report, and this is where we are, and this is what we’re going, and this is what we’re going to, and because of that, we can afford to hire like two more people. And therefore, like going into our yearly plan, because now we plan in like between one and three years increments. So this kind of like, this is the numbers, and this is what they mean. I think it’s the translation from, “Hey, this is what’s in the bank account, and this is what that means.” Because what’s in the bank account is not like a true reflection of your business, I guess.

Nathalie:
I’m glad you’ve learned that now. I’m really happy.

Nic:
Took about nine years, but anyway. Our accountant Barry says – I mean, I’m sure it’s not his phrase, but he says, “Profit is vanity and there is no-”

Nathalie:
Cashflow.

Nic:
…”cashflow is-”

Nathalie:
Vanity and profit is sanity.

Nic:
And profit is sanity. So, yeah, that’s a good one, that one. I’m tempted to say don’t do it as well. I mean, sometime I think you really need to be passionate about like all those things, and you need to be passionate about like people and humans, because you are going to be working with a lot of people, whether they’re like your clients, your teammates, and everything that evolves around you, they’re all going to be people.

And you have to like solving problems, not just tech problems or design problems, but human problems, human interactions problems. And oh, I don’t know. We did a bad job here. We need to actually step up and do what you have to do to make it better kind of thing, and understand the other people’s perspective and understand how they feel, why they feel like that. There’s a lot of psychology englobed into that.

Nathalie:
And also you work with different clients, so they all react different ways, and they all understand things different ways. And so you have to really be prepared to change your way sometimes. So it’s just amend them slightly, depending on who you’re dealing with, and what they’re going through. And we all have personal lives as well. So that’s another thing, they also have a business to run, but also a family and all of that. So yeah, you need to, as you said, sort of be able to talk to people and have quite a high level of empathy and make sure that you understand them and you can put yourself in their shoes to really…

It always goes back to trying to provide the best service that you can for them. I think that is the key, but it needs to be across everything and it’s not always easy, as you know everything else, but it’s overarching everything else.

Nic:
Yeah. But it’s easy to start. It’s easy to get started. I mean, the only thing, especially in our space, as you said earlier, like there’s no stock, there’s no whatever. Like you need to get a laptop, you have your own knowledge and you’re selling your time. It’s easy to get started, but it’s very difficult to like continue in the long run.

Nathalie:
Well getting starting, you can freelance. And I think that’s the… That’s why you started as a freelancer. And it’s easy enough because it’s just, you. You don’t have to manager other people around you, and you manage your clients obviously and talk to them, but it’s you and your laptop and your clients and your projects. Now taking the step to starting an agency, hiring employees and all of that, I think it was a big step for us and would be a big step for any freelancer. Not everyone wants to do that, because you go from a kind of a lifestyle business to something where you have a lot more responsibilities. Because all of a sudden you’ve got to pay people at the end of the month again, and you’re are responsible for these people’s jobs and you get more clients and bigger projects and therefor it all becomes a lot bigger and more daunting sometimes.

But at the same time, I find it a lot more rewarding because you know, you have more people involved and if you can solve other people’s problems. And if you are in that mindset of really trying to do the best you can for all of them, when it actually works and when they have success, then you know, when your client managed to finish a finance race successfully, or when they get to that level of customers they’re expecting, or when they’re opening a new branch somewhere, or, I mean, it’s all successes and we’ve celebrated all of this with them. It’s really being with them and behind them. I think it’s more effort, but it gives you back more as well.

Nic:
There’s this saying that goes, “There’s only three way to exit an agency. The first one is to sell your agency for a lot of money. The second one is that you’re going to die of a heart attack. And a third one is that you’re going to have a mental breakdown.”

Nathalie:
I’m voting for the third one currently, but don’t say it, don’t tell anyone.

Nic:
So I guess that’s going to be almost our close for this episode. What is on your next week? What’s on your plate for next week?

Nathalie:
What’s on my plate, a lot more project work. I’ve done the numbers, I need to now look at the yearly planning, because I haven’t had time to do it last week. So yeah, I think that’s pretty much it. I don’t know if there’s anything different for me this week. It’s the same old.

Nic:
Yeah. Kind of the same for me. Like still continuing to write those discovery documents. And I think we may have new projects starting next week as there’s going to be a big change where I’m probably going to be coding again until the new people join us. So yeah. Looking forward to next week. Hopefully we make a big dent in those ones and get them signed.

Nathalie:
Yep. Good.

Nic:
Right. Well thank you very much for listening everyone. If you want to contact us, you can email us at [email protected], or [email protected]. We’re going to be back next week with a new topic that I don’t think has been decided just yet.

Nathalie:
No, not yet.

Nic:
All right. Well, see you next week.

Nathalie:
See you next week. Bye.

Nic:
Bye.