In the spirit of Thanksgiving, I’d like to express my gratitude for all the hardships and setbacks that being in this business has presented me over the years. They’ve made me tougher, more humble, a bit savvier, a bit smarter, and ever more optimistic. I remain optimistic and energized because of the wonderful people of Barrel who work closely with me to navigate all the hardships and setbacks that come our way all while sharing a great deal of laughs, learning a ton, and getting things done. Many thanks to these special human beings.
About Agency Journey: This is a monthly series detailing the happenings at my agency Barrel, founded in 2006. You can find previous episodes here.
Black+Decker Website Launch
We launched a Shopify Plus e-commerce website for Black+Decker. This was one of two very time-sensitive and high touch projects that we had to get right in Q4 (the other being PDP, which launched last month). Thankfully, our team members pulled through and we were able to deliver. It’s been a great partnership with the folks at Stanley Black & Decker, and we’re excited to continue expanding on the Black+Decker website as well as other initiatives on the horizon.
Delays on the New Business Front & Learning From Lost Deals
I mentioned in September that we would need to sign at least 4 new client projects to finish the year strong and set ourselves up well for Q1 2023. We signed and kicked off 1 new engagement in October. We have verbal commitments from three more clients on a few sizable projects, but the contract process has been dragging on and it’s unlikely we’ll get too much going before the end of the year. Technically, we’ll most likely achieve the goal of 4 new client projects signed in Q4, but they’ll come a lot later than we had hoped for.
We were also notified that we lost out on a couple of deals. On one deal, we were told that a couple other competing agencies were a lot better at showing the ways they could flex on layout and design on Shopify and that they were able to showcase clients with much higher revenues. On another deal, where we’re actually working with the client already to do some site maintenance, we were told that our way of working and pricing was too much for the client’s needs and that they would be seeking a smaller team as a partner instead.
It always sucks to lose, especially on deals where we’ve put in a lot of time and effort, but the learnings from both deals were valuable. We’ll need to hone in on how we can better showcase our Shopify expertise so that there’s no doubt in prospects’ minds that we can do whatever we want in terms of e-commerce experience design. We’ll also need to better prep our team on how to talk about our experience when it comes to the size of clients we’ve worked with–there are effective ways to answer this in ways that assure prospects that we’ve indeed worked with scaled-up businesses.
In the case of the client who told us that we were too big and expensive for them, I believe this was the result of their initial experience with our site maintenance engagement. They had some urgent needs and engaged us to make fixes to their existing site with the understanding that we would eventually take on the website redesign project. However, there were flags from the start as we accommodated their ask for a modified site maintenance plan with less hours (vs. our standard packages) only to quickly burn through all the hours and require a change order for more. This left a bad taste in their mouth as they questioned why things took so long. On our end, we could’ve done a better job of auditing their setup and code to raise flags that even small changes could take longer due to the way things were built. We also ended up comping a number of hours as well, so it was a lose-lose situation where the client didn’t feel great working with us while we ate extra cost. Overall, this was a failure on our part to better qualify the client during the business development process. Their ask for a modified maintenance plan should’ve been a dealbreaker, but we overlooked this for various reasons, one being that people were excited about working with the brand (celebrity founder, retail distribution, popular category), a factor that, throughout the history of Barrel, has often led to poor financial decisions.
New Barrel Holdings Website
When we first launched Barrel Holdings a year ago, we quickly threw up a landing page with hardly any information. Since then, there’s been a good deal of action as we launched Vaulted Oak and BX Studio. As 2022 comes to a close and we look ahead to next year, we decided to give Barrel Holdings website an update with some more information. I quickly wireframed a new landing page with copy in Figma and Barrel’s Chief Experience Officer Lucas was able to build it out on Webflow right away. Check out the updated site here.
We also put up a new Barrel Holdings page on LinkedIn and rolled out some official titles. I’ve assumed the title of Chairman, Sei-Wook is Vice Chairman, and both Lucas and Barrel Chief Technology Officer Wes, are Founding Partners in the Barrel Holdings entity. We’ve got some big plans for Barrel Holdings next year and beyond. We’re excited to try new approaches, learn a bunch of new things, and build something we can be proud of.
One thing you’ll note on the website is that we’ve folded in AgencyDocs into the Barrel Holdings mix. AgencyDocs is our resource for agency owners looking for templates and deliverables to help them run their agency business. Right now, AgencyDocs operates as more of a side hustle and generates negligible revenue. My friend Chuck Blake helps to write the weekly newsletter and manage much of the marketing and website updates. We’re looking to make some significant investments and upgrades to the brand, the products, and the overall offering in the coming months, so look for this to become an additional property that has growth potential in our ecosystem.
Takeaways from Breaking Down Our Finances
Sei-Wook and I have been poring over our finances and various records over the past month to gain deeper insights into our business. We created more comprehensive and detailed categorizations, revisited and re-labled every single invoice from 2021 and 2022, and generated various reports to see how things have changed and what trends have emerged. Here are a few highlights (with the caveat that this excludes figures from parts of November and all of December 2022):
- Retainer revenue – contracts that have a monthly or quarterly recurring agreement to them – grew by nearly 13% even though we split out a good chunk contracts to Vaulted Oak at the end of Q3 last year. This is a promising trend because we’ve been working to strengthen our existing client relationships through better client service and reliable delivery. When we dug deeper, we saw that retainers related specifically to managing Shopify websites grew by 111% year-over-year, which was a great sign.
- Full-on start-to-finish website projects, for both brand new sites and redesigns, decreased by 34%. We landed over a million dollars less in these types of projects in 2022 than we did in 2021 but surprisingly, we landed 20% more in start-to-finish Webflow projects.
- Paid marketing revenue decreased by 57% and CRM/email marketing revenue decreased by 78%. This is no surprise as we slimmed down our services offering to focus primarily on web. The bigger impact was on the cost side where we slimmed down on headcount on the CRM/email marketing side. Paid marketing, which we’ve continued to mostly subcontract, has scaled down proportionally on the expense side as we’ve stopped pursuing new paid marketing engagements. We continue to do email marketing work for select clients and may ramp up efforts to do more in 2023.
- Shopify-related work remained flat in terms of revenue but was a greater percentage of our total work in 2022, going from 42.4% of work in 2021 to over 50%. Our WordPress-related work fell by 35% while our Webflow-related work increased by nearly 38%. The Webflow number, taken together with BX Studio’s first year revenue projections, means we did well over $1 million in Webflow-related projects in 2022 under the Barrel Holdings umbrella.
- Design-only work, which includes user experience strategy and user interface design work, grew by over 37% in 2022. This is another area that we’d love to keep pushing to grow because it allows us to work with brands who may not be on Shopify and/or have their own engineering teams to implement designs.
We did the same on the expense side, diving deep especially into our freelancer/contractor costs, which, in some periods got to rival our payroll costs. The biggest and most obvious takeaway here was that when we scoped well, and managed projects tightly on budget and on schedule, our freelancer costs decreased dramatically. This was especially apparent with software engineering and project management costs. In 2021 and early 2022, we had many projects that went haywire for various reasons, leading to countless delays and rework of poorly executed websites. At the same time, we still needed to take on new work to stay afloat, so resources were spread thin, forcing us to spend out-of-pocket on overbudget projects to get them to the finish line. Do this enough times and it’ll kill a business. We cleaned up our act earlier this year and the freelancer costs have been a lot lower since as we’ve been able to lean on our full-time team for most of the work while doing projects profitably.
While time-consuming, the deep-dive into our finances has been a worthwhile effort. This first time is always the hardest, but now that we’ve established the reports we want to see and the ways we want things tracked, it’ll be much more automatic going forward. There’s definitely a degree of confidence that develops when you’re able to closely scrutinize every aspect of the business and understand the moving parts. It’s too bad we’ve neglected doing this for so long, but like most things, better late than never. Also, it’s a great lesson to apply to the rest of our Barrel Holdings businesses.
Top of Mind
Leveling Up Performance & Making Fearless Decisions
In All or Nothing: Arsenal, a documentary series on Amazon Prime Video that covers the Arsenal Football Club of north London over the course of the 2021 season, there’s a situation where the team’s manager Mikel Arteta makes the tough decision to indefinitely suspend the club’s superstar and captain Pierre-Emerick Aubameyang. Apparently, Aubameyang had a history of being late to this club obligations and a missed flight back from France was the final straw. Arteta, intent on establishing and protecting a culture of discipline at Arsenal, ultimately decides that Aubameyang’s days with the club are over. And with that, he makes what is widely viewed as an unpopular and unwise decision–to drop the club’s most dynamic and best recognized player.
It was fascinating to watch this scenario play out because when I think back on my career as a manager, I’ve failed countless times to make the gutsy move that Arteta did while knowing deep down that it was right thing to do. I was always gripped by fear–fear that we would lose irreplaceable talent, fear that the employees would be upset, fear that I’d be criticize for making the mistake. And yet, the same story would usually play out: the person who should’ve been gone eventually does get fired or, feeling extra pressure from management, eventually resigns, but not before the entire company having endured a cloud of uncertainty and discontent on all sides.
Among the Barrel partners, we’ve been talking a lot over the past year about these types of decisions, about leveling up performance as a team and strengthening our culture. Many of the factors that will allow for better performance and stronger culture will boil down to whether or not we can make tough decisions to remove those who aren’t aligned with our vision of excellence. At our team retreat in October, we defined excellence at Barrel as such: “Excellence is about continuous growth, taking ownership, and being proactive.” Those who aren’t up to these behaviors have no place in our organization, and that’s something we have to act on with vigilance.
Not too long ago, we let go of an employee who we felt was not aligned with our standard of performance and continually falling short of excellence. This was after several months of rationalizing and discussing whether or not we could turn things around with this person. Within days of this person’s dismissal, it was clear that their involvement had actually hurt many of our accounts and held our team back from making progress. What felt good was that we made the right decision and acted on it. What didn’t feel good was that there was certainly fear in making the decision sooner.
Moving forward, as we’ve sharpened our focus on who we want on our team and what we demand of each other, we’re emboldened to act proactively and have difficult conversations that can lead to team members getting back in sync with our expectations or transitioning out of the organization. Not everyone will agree or support some of these moves when they happen, but in the long run, I think the culture will benefit immensely and people will grow to trust each other more as they clearly see alignment in their level of commitment.
Related: read my blog post on Strong Company Culture vs. Weak Company Culture
Shared with Partners
“One of the skills we were taught was how to respond to a furious client. First, the instructors gave us the principles (don’t panic, give them time to vent their emotions, etc.), then we role-played the situation, and then we discussed it. Afterward, they gave us a videotape of the role play so we could see exactly what we had done. And we repeated the process again and again. It was a very labor-intensive way of providing the training, but it worked.” (Laszlo Bock, Work Rules!)
I remember thinking this was a great idea when I first read it, but like many great ideas in books, we never implemented it. Role-playing in general is something that I absolutely feel like we can do more frequently across all disciplines to help people learn and get better. The few times we did this for business development has been helpful, but because it takes extra effort to get into role-playing mode, it’s often hard to overcome that barrier and just do it. Perhaps we just need dedicated 30-min role-playing sessions every other week on the calendar, much like blocking time out for working out in advance will increase the chances you actually do it.
“So often the problem is in the system, not in the people. If you put good people in bad systems, you get bad results. You have to water the flowers you want to grow.” (Stephen R. Covey, The 7 Habits of Highly Effective People)
Even with what I wrote about around making fearless decisions around underperforming employees, I firmly believe that the system takes priority when trying to fix things. It’s only when you realize that, in the same system, some people absolutely thrive and others don’t that you can make a more informed decision. If everyone is failing, then it’s clear the system is faulty, but in cases where good people are doing great in the system, then it’s possible you have wrong people on board.
“I believe in the radius theory of business, where your ability to succeed is ultimately limited by the number of people between you and the decision. That’s because the farther from you the decision is made, the less you control the risk. History shows that businesses get buried when they don’t delegate enough—but also when they delegate too much.” (Sam Zell, Am I Being Too Subtle?)
I love this reminder because it’s a fine line between delegating too much and not delegating enough. There’s no clear answer in most cases, but you have to feel it out and depending on the state of the business, how things are going internally and externally, and what major decisions are at stake, your direct involvement could be necessary, irrelevant, or even detrimental – you have to think hard, try to gather the right information, and figure out how you want to play each situation. The key thing, I think, is to be engaged, aware, and ready to act if necessary versus defaulting to ignorance and/or fear.
“Trying is a victim concept. Notice how you feel when someone tells you that they are trying. You might ask, “Will you pay my loan back by next month?” and they say, “I’ll try.” Are you now counting on getting the money? No. Because “I’ll try” is code for “Don’t count on it.”” (Dusan Djukich , Straight-Line Leadership)
This is a powerful concept, and it’s made me more aware of using “try” in my language. Shifting one’s mindset from “trying” to “just doing” unlocks many productive behaviors. There’s no time wasted in worrying or procrastinating. There’s just action and results. Straight-Line Leadership is one of our book discussion picks when the Barrel partners meet up in Q1 2023 (see our past book discussion selections and the lessons we learned from them).
“One of the oldest sayings in business is “The customer is always right.” I think that’s become a bit outdated. I want to go on the offensive to create opportunities for our customers to feel that they are being heard even when they’re not right. To do so, I always actively encourage them—when I’m on my rounds, in our comment cards, and in letters or e-mail to us—to let us know if they feel something’s not right. When they do, I thank them.” (Danny Meyer, Setting the Table)
Soliciting feedback proactively is a fearless move and a great way to continually learn and evolve in the right way. It’s the way to achieve excellence.