Manage episode 314226347 series 1499414
Scott Harkey had a rocky start in the agency business, having to keep other jobs while he tried to get his agency, OH Partners, off the ground. It took time, but he built his reputation and now runs a stable of agencies, as he says. Scott talks about how the first years of agency growth are always difficult and why new agency owners should give themselves a long runway to get their business off the ground. He also reflects on the mistakes he made and why he should have focused on strategic growth and talks with optimism about the future of the agency business, where he sees tons of opportunities for independent agencies that are starting out as well as opportunities to rebuild trust with clients, which is at an all-time low.3 Golden Nuggets
- Getting your agency off the ground. For Scott, the biggest challenge to getting over the million-dollar mark was gaining the experience he needed to project the confidence that would actually lead him to land jobs. “You almost have to earn confidence in this business,” he explains, “because people are smart and they smell your bullshit.” He advises people who want to make as an entrepreneur to give themselves a long runway until that plane finally gets off the ground. It’s very difficult, as he acknowledges, it will take time and you will need to become an expert on your client’s business before you can confidently say that you know exactly how to do a great job for them.
- Stop wasting time on bad pitches. After working hard to getting his agency off the ground and past the million-dollar mark, what would Scott do differently? For starters, he wishes he had been more strategic about growth. He is sure he wasted too much money on bad pitches and that he should have considered that the agency didn’t have the capabilities for that yet. “I should have only pitched what we had business pitching or key relationships that I had,” he says looking back. Another regret was holding on to unprofitable accounts. We’re all guilty of this, low-dollar pain in the ass clients that you didn't let go quick enough. “If I had done both of those things. I would probably be at 50 million in fees right now,” he adds.
- Hope for the future. With client dissatisfaction rates in the industry at 80%, Scott believes this is something we should all take seriously and try to work on. The good thing is, this industry tends to thrive during difficult times. There’s real opportunity to see eye to eye now that clients increasingly have more in common with agencies and can learn from each other. So there’s reason to be optimistic, he says, at a time when bad practitioners are getting weeded out of the industry and people who are doing things the right way have a ton of opportunity. “Especially for independent agency owners,” he insists. It is a good time for small agencies that want to do the work and build their reputation.
Jason: [00:00:00] What's up, agency owners? Jason Swenk here, and I have an amazing guest who's grown a really big agency well over the eight-figure mark. And we're going to talk about his path to starting the agency, to growing it, to scaling it. So let's go ahead and get into the show.
Hey, Scott. Welcome to the show.
Scott: [00:00:24] What up? Thanks for having me.
Jason: [00:00:25] Yeah, man. Excited to have you on. So tell us who you are and what do you guys do?
Scott: [00:00:30] My name's Scott Harkey, I run a stable of agencies. You know, anything from a film company to a research company, to a digital social agency. And been doing it about 13 years. We have 170 ish employees corporately based in Phoenix but also have an office in Las Vegas.
So, uh, I do a lot of clients within entertainment, casinos, hotels. And then, you know, other stuff, CPG, healthcare. Faking it till we make it, uh, until they keep hiring us.
Jason: [00:01:02] We all do that.
Scott: [00:01:03] …continue to hire us for 13 years and then sometimes we get fired too, but that's okay.
Jason: [00:01:08] That's awesome. How did you start the agency?
Scott: [00:01:12] Funny story. So I started the agency with my second cousin once removed. He was in the agency business. I was selling radio. His dad, my uncle was in the agency, great uncle, was in the agency business for twenty-five years. And, uh, I wanted to be in the agency business and literally like, no one would hire me because they thought I was a radio sales guy or a billboard sales guy.
So he and I talked and he just lost his biggest client and his partner left. And he had one other small client that I think produced like $8,000 in revenue, it was the Arabian Horse Show. And, uh, he filed the paperwork next day and we started an agency in his kitchen table and worked out of his little condo in Scottsdale with the two cats.
So I had a lot of motivation to get more clients so we could have an office and I wasn't in the condo with cats.
Jason: [00:02:04] There's nothing wrong with cats. I mean…
Scott: [00:02:07] Yeah, I love cats. It was fine, but like you have like a meeting and you have to, like, this was before like meeting for coffee was like, cool. We had to like fake it to like the, okay, you want to meet for coffee? Because they couldn't come to our office. It was embarrassing.
Jason: [00:02:19] Oh yeah, the cats would jump on them?
Scott: [00:02:23] Yeah, it was like what? You're in a kitchen table. This is like a, you're like in an apartment, bro. Like, what’s going on?
Jason: [00:02:28] I remember my first address for Solar Velocity. It was 9 25 Canterbury Street, suite 250, because I was in apartment 250.
Scott: [00:02:40] Exactly. Yeah. So we, we got an office after that. Like, you know, there was like bail bondsman and like some weird clientele. I was just happy to have an office. Like I didn't, I did not care. So, uh, it's funny to see like what we've come now. Like we're all have high-end tastes now in office and stuff. Like we've scrapped this out.
Jason: [00:02:59] Exactly. Let's talk about the different couple stages that you've probably gone through. So how long did it take you guys to get over the million mark? And what was the biggest challenge for getting over the million mark?
Scott: [00:03:10] Yeah. That's the hardest part, honestly. I think it took us… I mean, I, I remember like leaving radio and I was like pretty confident.
Like I was like, oh, I've got three or four clients I know are going to come with me. And none of them did. And I can remember, like my first client was like a personal injury attorney that I like had to like beg to hire us. And he would spend a lot of money in the market and he was, he was insane. But it probably took us three years to get over the million mark in fees.
It was so hard, dude. That's why I always tell people, like, when they're starting out, like give yourself a runway. Give yourself a long runway because it's not smart… And I think to make it an entrepreneurship, I think it's just the people that like have the longest amount of time to get this big plane up off the ground.
And then once you get off the ground, that's where people… You know, I think it's overstated, but like hockey stick growth and it can like go. But like getting that sucker off the ground is it's horrible. Like you need other jobs. Home hosts, you know, like I was still selling billboards like part-time. I had like some rental houses, like I was hustling. Anything I could get to like scrounge money just to like make sure that we had enough longevity to like, get this thing going.
Jason: [00:04:23] What were some of the different things that allowed the plane to take off?
Scott: [00:04:27] I think there's something inside of us that like, you almost have to earn confidence in this business. Because people are freaking smart and they smell your bullshit. And like, if you don't believe your own bullshit, like no one else is going to believe it.
So I think for me, it's about doing the work and failing enough times to where you know, like you're up, gonna bat. You're in a pitch or like, you know, a business so well, like, you know you're going to make somebody money. Like until you are sitting across from a client and you are so confident that you can drive a business outcome, then I don't think you're going to get any business.
And for me, that stupid personal injury attorney, like I knew everything about his business. I had studied everything. I knew how I was going to buy the media. I knew how the spots were going to be different. I knew everything I got and he knew it because I was, I literally told him that like, if we didn't improve his business, I would give all my fees back to him.
I was like, I had to beg this guy. And then the same thing happened when we won the Arizona Lottery account. It was a, it was a $55 million account in Phoenix in Arizona. And, uh, I studied the lottery business for two years before the pitch was up. Like I had lottery consultants. I literally have a master's degree in lottery business.
So when the pitch was up, I had talked to like every former marketing director. I talked to everyone, I looked at every form of pitch. And I think like in pitches, there's just a, there's a vibe of confidence that you've done the homework and that's when you're going to get business. And when you get business obviously that's when you start becoming profitable. You can't cut your way into profitability in the agency business.
It's about getting business and then keeping it. But initially, it's about gaining business. And I think you have to have like a real sense of confidence when you're going into a pitch like that.
Jason: [00:06:17] Yeah. I mean, we were talking kind of the pre-show it's kinda like, we think we do the best work. And I was like, we should all think that because if you know, you don't do the best. That's the problem. Like so many people come to me, they're like, Jason, how do you scale an agency? How do you grow? How'd you get to where you're, you're at?
I was like, we knew how to do something really well. And then we positioned that to the audience that we could do it really well for. And then that's how we were able to get the plane taking off and off the ground. But then it's kind of like, all right, now you've got the turbulence, right? The smack and the plane back down, or it's hitting the tarmac.
So what was the hardest part of scaling the agency for you to date?
Scott: [00:07:03] I think just in general, dealing with failures and. And I think in our business, the worst thing is perfectionism. And that's hard to say, right? Because in one hand, we're like, we need to do the best work. But on the other hand, I think perfectionism is a real disease in this business.
And you can't be in this business if you have that, because nothing's going to be perfect and there's going to be tons of stuff broken. And so I would say every year there's like a new failure learning that I have, um, that we've seen. And it's always different. And so I think the hardest part of scaling an agency is not being prepared for like the new failure you're going to face that year.
But having some maybe general skills or maybe some personal development that will just allow like perseverance through the failures that come. Like this year for me, it's been, you know, agency turnover and the great resignation. Last year, it was a major partner, minority partner fight.
You know, the year before that it was a ton of client loss year before that it was like mid-level managers that I was trying to empower and get less hands off on certain things and working more on the business, not in the business. So it's like every year there's like something you want to… In the early stages, it was like just trying to literally get business, anything.
In some years it was… I think I lost in one year, like 60 pitches. Like why was I pitching 60 pieces of business? I don't know, but I lost 60 pieces of business. And I think like each year the learning from those failures, catapults, like to the next form of growth. And I think like, we all want like just a steady Eddy kind of growth, but this business is so volatile it typically is like this, but like the trend line is like this.
And I always notice like my worst prior ends up being my best year, the next year, right? Like it's preparing me for the next step that I think we need to get to. So I think that's the hardest thing is that you're like in an octagon and you don't know what punches are going to be thrown, but you know, you've got to like figure shit out and, and, and kinda like get counselors, get mentors, get coaches, listen to the industry.
And like figure out your move and your counter punch when those come through. I think that's the hardest part.
Jason: [00:09:22] Yeah. Well, yeah, I mean, it's like Mike Tyson says, you know, you never know how you're going to take a punch until you get hit.
Scott: [00:09:28] Yeah, for sure.
Jason: [00:09:28] And, you know, we get hit all the time. It's just…
Scott: [00:09:32] All the time. Well, people are smart in this business. Like theirs. I, I'm not sure there's a business where there's more smart people that I've ever worked with. Well, there's been clients' side or other industries or lawyers or doctors. I talked to really smart agency people and they blow me away. They're freaking smart.
And I think, um, and they’re planners, like, like a lot of us are, or will be, we want to have a plan. That's the business we're in, we plan for clients. And so just to your point, when you're in the fire front, you get punched, the plan’s out the window and you're scrapping. And I think, I think that can really rattle people. And I think just the tenacious kind of scrappy, kind of street fighter mentality people end up pushing through that and the perfectionism like, hey, I have my perfect plan and now I need a new plan.
And like the freak out people, like, you're not gonna, you know, this business isn't for you and you're not going to make it.
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Yeah, you know, I never… I'd always have a north star, but I would never have a plan, right? Like I'm the type of person that when I'm building something, I always have extra parts because I'm more efficient. That's how I like to look at it. And I look at the agency business for me, even the community that we've built over the past seven years, it's always excelled when chaos has happened everywhere else.
And the same thing, like what I was telling you on the pre-show. I'm like, I really don't have anything planned to ask you. It's more, just a conversation. I'm really better at that. If I have to plan it out, I'm kind of like, oh, what's the next question I'm answering? And I can't be in the mode now.
Now that's just me, but I think kind of the moral of the stories is you have to figure out what's the truth or what's the north star of where you think you want to go. And then you start bringing on the right people to help you with that and realizing, and I think you probably will say this too… You're not going to be able to do everything, like your agency has grown to the multiple eight figures of where it's at now is probably because you brought the right people in and you probably said, who do I need to bring in rather than how?
Am I stretching or is that right?
Scott: [00:12:32] Yeah, I think, you know, I think for me, like, certainly we've done like every two years, we'll do a branding workshop for ourselves and we'll reevaluate mission, vision values, and, um, what we're trying to do. And certainly that's been successful. But I think when I'm at my best, I know when our agency's at our best, it's, we're open to a reset every day, every month, every year.
And I think people think when you, when there's a reset, like you're starting over. And I think like a reset, like I remember we were playing like, you know, Nintendo I'm, I'm older, but like, you know, I used to play Nintendo.
Jason: [00:13:08] I was Atari.
Scott: [00:13:10] Yeah, ok. So you’re older than me. Nintendo there's a little reset button and you would get to a point in a game and you're just like, screw this. And you like hit the reset button. You just start over.
You don't start over, you know, where the little points in the game are that like trip you up and so you can get through. And I think for even my life personally, my business life, like when I'm okay with like a reset and knowing I'm not fully starting over because I have, I have a wealth of knowledge.
We have a wealth of knowledge and agency and processes and clients, and, and we're just, we're just resetting, it's more like a digital campaign and like an optimization kind of, kind of piece to it. So I understand the north star and I agree, I think there should be a north star. But I, I also think kind of being willing to just reset things like everybody, hey, let's freaking reset real quick. Like, you know, what are we doing here?
And not be so, you know, not like die on the sword on some plan or some north star that you think is like, perfect. Like if we would've done what mirroring the industry would have said, we, we should have done, we would have no casinos and hotels clients. Like on our Vegas office, we'd like be doing CPG, you know? And now have like 60% of our businesses that, so I think just being open-minded to where the world and energy and your capabilities and your purpose, like is going to take you.
Jason: [00:14:31] Very cool. Now that we've talked about kind of getting the plane off the ground, let's talk about there's a lot of people listening, going alright, I'm in the multimillion-dollar mark, but I want to get over the eight-figure mark. For some odd reason. They want to do that because they think there's sunshine and rainbows over there.
But if you had to go back to yourself, when you were around the 3 million mark, what's a single thing that you would do in order to get to the eight-figure mark?
Scott: [00:14:59] It's a great question. I think I could, uh… I'm a wild card, I think I could have been a little bit more strategic on growth. I think I've wasted a ton of money on bad pitches.
I think I've convinced myself so many times that we can get a piece of business, which we couldn't. We had not, we didn't have the capabilities. We didn't have the experience. Didn't have the relationship. And I think I could have got to eight figures...
So that's like, okay. So like you're talking, like I get confused on the, I know that's kind of your terminology, but like I'm at like 5 million in fees and I'm trying to get to 10, right? How would I got there knowing what I know now?
Jason: [00:15:36] Yep.
Scott: [00:15:36] Yeah. I wasted money pitching. I should have only pitched what we had business pitching or key relationships that I had. And every time I can convince myself that we can get any pitch.
Jason: [00:15:47] Where you doing RFPs?
Scott: [00:15:49] Oh, yeah. Oh, hell yeah, I've done it all.
Jason: [00:15:53] You know what RFP stands for right?
Scott: [00:15:55] What?
Jason: [00:15:56] Requests for fucking punishment.
Scott: [00:16:00] Actually this digital agency we bought, Nomadic. They like, they laugh at me. They have so many brands within Fortune 1000 companies that came and talk about. Cause they’re like, they're like, here's the here's, it's 500 grand. You want us to do this, this and this or not? We don't report hours. We don't do RFPs, kind of blew my mind.
Jason: [00:16:17] That's how we were.
Scott: [00:16:19] It's smart. It's how it should be. Like people, you know, you need to build confidence with CMOs and people, you know, they… Just doing blank RFPs, rarely works. And even when you get them, you know, they're bad clients. Although I have had good success too. I mean, it's gotta be the right ones.
Like I pitched Monster and it costs me probably a million dollars. And then, you know, like everybody it's like, oh, you finished second. And I was just, I was devastated.
Jason: [00:16:44] A million dollars on a pitch. Wow. How much of a engagement would that have won you?
Scott: [00:16:51] Oh, man, it would have won me probably… three or maybe three to 5 million in fees.
I mean, I this business is like, uh, you know, we have a lot of casinos, you know, resorts is our client, Virgin’s our client.
Jason: [00:17:04] Put it all on black. You did it, you did it on that one.
Scott: [00:17:09] Exactly, bet on red. You know, but I do think… So I say that, but I do think you have to have some bets. You know, you have to have, if I wouldn't have made some, some crazy bets, like we wouldn't be where we're at. So it's hard to, but there's, you know, there's definitely some really crazy bets that I think if I would've taken back, especially early in our cycle. We weren't ready with the processes. We didn't have the talent capabilities. I think we could have got to that five to 10 million faster.
And then the second piece to that is I think I've held on to unprofitable accounts. That 80/20 rule always exists, right? You know, I've probably had three to five unprofitable, low-dollar pain in the ass clients that I didn't let go quick enough.
Jason: [00:17:51] Walk me through the mental on… Because I find that I'm guilty of it. We're all guilty of it. What was the turning point? What was the switch that you were like, dude, I'm losing too much money on this client. Get rid of them.
Scott: [00:18:03] I just think more data and awareness for internal operations, right? Like we had better systems to identify it more and you're not making biased decisions. You're making more data-driven decisions.
So we have an analytics group that really, we nail this shit really well now. So it's not like, oh, this is a $500,000 client. No, this is a $72 an hour client, you know, and we only make money at $92. So you're, you know, $200,000 client, you make $250 an hour on they’re actually great.
So just having better awareness for that. And I think, I think agencies should go through this process monthly and really have their finger on the pulse. And most likely everyone has the 80/20 rule. I, every year I've done it, I've had it. And I think I was losing out on organic opportunities with my big clients that I'm holding on to shitty low dollar, low dollar amount clients and low dollar per hour clients. Um, that also were a pain in the ass and it was just killing us. And I was burning people out…
If I'd figured that out earlier, probably even more so than pitching bad business. I could've got to eight figures faster. But if I would have both those things dammit. Man. I, I probably would be at like 50 million in fees right now. Now that I think about it.
Jason: [00:19:15] Well, we had mastermind members all the time… they're always looking to scale faster. And one of them, we do this exercise quite often and we identified for one of the mastermind members there was a number of different clients that he needed a literally double the rights in order to make it profitable.
And so literally we came up with a game plan and we just said, hey, just chat with them, double the rates. If you lose half of them. Okay. And that's what we were fully expecting. He retained all of them and literally by just talking to them, he increased his MMR by 60K.
Scott: [00:19:51] What's MMR? I'm not used to that terminology.
Jason: [00:19:54] Monthly recurring revenue.
Scott: [00:19:55] Okay. Yeah. Yeah.
Jason: [00:19:57] So just doing nothing. So that turned out to be what, 700,000 extra a year. And if you just do that, like, I'm glad you walked us through all of that, because at the end of the day, it's about pricing.
Scott: [00:20:10] And we suck at pricing. We suck. I've learned a lot around. And just what you said. I agree with, like you just go to the clients and be like, dude, here's the… I'm getting crushed. Like I'm out. Or we got to change and either they go away or you get, you get the rate.
Jason: [00:20:25] Awesome. Well, Scott, this has all been amazing. Is there anything I didn't ask you that you think would benefit the audience?
Scott: [00:20:30] I, I do think that the industry is changing a lot right now. And like you said, I, I think that's when… That's our time to shine, honestly. I think this year, this has been my best year ever, you know, with all the chaos. But I do think that our client dissatisfaction rate in this industry is still at an all time high. I think it's in the 80 percentile.
Basically our clients say we suck as a, as an industry at serving their needs. I think we've got to solve that better. I think there is a real opportunity. And I, I think for the first time ever, we're seeing CMOs and VPs in marketing… We're seeing our clients and us have more in common than ever.
They all have agencies and we run agencies. So I think we can learn a lot from each other. And I think the new model is really trying to find gaps that they have, we certainly have. And being respected in the industry, I think it means a lot more. And it's really interesting, I think time for the business.
And I think the people that really run good agencies are doing things the right way have a ton of opportunity. Cause I, I think a lot of the, the bad practitioners are getting weeded out of the business. It's getting too hard for them to survive. So I would, I guess I would just leave the audience with like a sense of real optimism and encouragement.
And especially for independents, especially for independents, especially people grinding it out. The publics are, are so fucked right now. Good friends of mine run, run a lot of great agencies and some of our amazing agencies. And they're not going away. Let's not kid ourselves. But I think for the first time in our business, there's never been a better time to be an independent agency and to offer real solutions in a humble, cool vibe way to brand marketers.
And the playing field is probably more level than it's been in a long time. So that's, that's a lot of fun. That's what gets me really excited.
Jason: [00:22:22] Yeah. I interviewed someone and they're doing a lot of research and agencies fell… For trust levels, agencies fell between politicians and car used car salesmans. So let that all sink in guys.
It's, it's about building trust and reputation that, you know, it takes years to build, but seconds to knock down. Think about that.
So what's agency website people go and check you guys out?
Scott: [00:22:50] Yeah. So our, our main agency is ohpartners.com. A couple of our big sister agencies would be nomadic.com and a matteroffilms.com. And so you can see some of the additional agencies we have, but the main one is the ohpartners.com.
Jason: [00:23:06] Awesome. Well, Scott, thanks so much for coming on the show. And if you guys enjoyed this episode and you want to be around amazing agency owners that are constantly chatting about the industry, sharing what's working. Sharing what's not working. Be able to see the things that you're not able to see.