The Financial Fallacy of a Services Business

•October 4, 2011 • 2 Comments

In my years in the PR agency business, it’s become clear that people within services businesses are seen as money-hungry sharks. Certainly some of the time, this is true. But, now that I run my own company I am enthralled by just how often I can hear in someone’s voice that they are sure I am out to get as much money from them as possible – or that I am concerned about how much money I will lose if we no longer work together. While I can completely understand the base reason behind this, I think there is a core financial fallacy at play when it comes to services businesses and the people who run them.

For example, if I owned a hardware company selling widgets, there is no question I would want to sell a lot of those bad boys in order to make my business a success. However, most people understand the risks, rewards and business needs associated with “selling more” of these widgets. If my supplier of widget components is out of stock and cannot get me enough, I risk pissing off customers who want more when I can’t make them. If my widget manufacturing team is overwhelmed by the workload and I cannot hire enough talented/experienced widget makers in time for future orders, having a backlog will only serve to frustrate my team and make me risk excellent but burnt out staff making a run for the door. If I know the people buying a certain widget don’t need as many as they think they need, and I sell them more widgets anyway, there is a strong chance I will alienate that buyer and never get their business again.

All of these real business concerns come into play for a widget maker – and, while people seem to ignore it, they are as much a concern for a service business owner, like me. For us, widgets are team time (any services firm that preaches they are not selling you time broken down by expertise level is full of it, follow on post to come on that later).

Just as the widget maker plans for a month/quarter/year – allocating resources, determining profit/loss targets, balancing supply and demand – so do the leaders of services businesses. If I don’t manage time and bandwidth closely, I will burn out the amazing people who work with me – leave a string of unhappy clients who feel like they got screwed – or both. Short term gain of a little more budget from a client is meaningless when you look at these bigger issues.

Which leads me to my next point: short term thinking is part and parcel with the assumption that services businesses are just sitting around waiting for you to send a little money our way. Calling me a few days before the end of the month and assuming we’ll have a team ready to jump in and get started a week later doesn’t work. Services businesses aren’t like gas stations, you can’t just pull up and fill the tank whenever you like. If I happen to have the resources and passion needed to help you, well, you are in luck. If not, you are left scrambling to find a company that has the time to do the job. And, when you are working last minute like that, you end up needing to work with whoever has a ton of time. That’s like taking a table at the only empty restaurant on the block when all the rest have lines out the door – the food’s gonna suck.

So why is it that a vast majority of customers make the assumption that we must be sitting around twiddling our thumbs, waiting for their business? And why do people who are making these decisions think they can flip the switch and we will spring to life like little PR bots who are otherwise dormant? And, how do we get them to stop?

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You lean on me, I’ll lean on you…or not?

•March 24, 2011 • Leave a Comment
Julia Stemerman in Napa

Julia Stemerman in Napa

This is a guest post by the lovely and talented, Julia Stemerman.

“I get by with a little help from my friends.” We all know this quote and I found it to be especially true as I decided to move halfway across the world for two years. In October 2008, when I left for Barcelona, I didn’t know anyone. But not knowing anyone added to the adventure that was ahead of me and I knew I would find my way. And I certainly did, meeting people from all over the world, becoming great friends with Spaniards, Brits and even a crazy Australian. Those friends helped get me through that adjustment and I couldn’t be more grateful for my experiences. Now that I’m back in the professional world, working with all types of partners and media, I ask myself, who are my “friends” in the professional sense?

Let’s first explore the idea of a team. With so many startups around, including Inner Circle Labs, the idea of team is more important than ever. Steve Jobs, Bill Gates or any mega successful business person who was once part of startups had to rely on a team to get things done. We all know there is no “I” in team. And, as part of a team, you spend so many hours with the same people that it’s inevitable you become “friends” on some level. Maybe you don’t go out together on the weekends or share your darkest secrets, but spending forty plus hours a week side-by-side with the same group of people inevitably leads to some sort of relationship. Through successes and failures, you have each other’s backs. You grow together, you learn together, you laugh together, you have tough times together. Often times, if you weren’t thrown together on a particular team, you may not have thought to even talk to that particular person, let alone develop a relationship.

Now, what about relationships with media? I think I speak for most people in the public relations business when I say that these relationships, even friendships in some cases, are hit and miss. But, I will say, us PR people don’t always have ulterior motives. We are just people doing our jobs, as are media. When we tell someone we like an article they wrote, we’re not necessarily kissing up. When we say we enjoy the content on an editor’s site, we’re not always brown nosing. When we schedule a coffee date with a reporter, we’re not going to secretly push a partner’s agenda. But, I’m afraid the perception is that PR people are usually doing these things for just those less than appealing reasons.

Truth be told, PR can offer a lot of value to media and media can offer a lot of value to us. So, why does it sometimes feel like media have the upper hand? They suggest we develop relationships and at times, when we try to develop those relationships, we are either ignored or given the brush off. While this type of situation occurs across many industries and is simply the nature of the beast, I’ve found that the “friendships” I’ve built with media ultimately lead to less wasted time, more honesty and more trust. A lean on me and I’ll lean on you relationship should be looked at as mutually beneficial. We want to be as successful – just as media do – so we need to quit the love/hate relationship and embrace each other more.

At Inner Circl Labs, we only work with partners we are passionate about. And that’s great. Would I be “friends” with everyone who I work with? No, but am I amicable, professional and supportive of everyone I work with? Absolutely. At the end of the day, we are an extended team and via that extended team we develop relationships.

I’m a quality over quantity type of person. I don’t need to have a million friends to make my world go round. But, it’s nice to see that some of those relationships have developed professionally because, after all, all work and no play isn’t very fun!

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Don’t Trade Up

•February 16, 2011 • 13 Comments

There is a common practice in the world of service providers – the idea of “trading up.” Basically, work with a smaller fish at a lower budget to get the skills and then trade up to a bigger fish with more money. From the looks of things, it sounds like the best possible way to grow a business but people should really give it more thought before they are blinded by the extra zeros.

 The first thing to consider is how much you love working with the starter client. Do the folks involved enjoy the work? Is the creative energy flowing? Is amazing stuff happening for both businesses involved based on the relationship? Is it profitable all around? Many PR firms (and I’m sure other service firms fall into the same trap) ignore these questions when the seemingly greener pastures of a larger account or bigger name company come along. They set parameters around “minimum budgets” that are not logical and are only based on anecdotal data or ego – not hard facts. And, worst of all, they don’t talk to the team working on the business day-in and day-out about what they should do next. Most often, they make a unilateral decision and opt to end a relationship with what could be an amazing partner for a little more dough.

This is, as they say, jumping out of the frying pan and into the fire. Beyond not knowing how this new partner will be to work with – and understanding if their expectations are in line with reality – these larger budgeted clients usually tend to be the most over-serviced and therefore the least profitable. This leads to a team of overworked employees who hate their job, hate their client and hate you for putting them in the position.

Here’s a quick list of things you should do/questions you should ask before you decide to jump ship on a long time partner and trade up for a bigger fish:

  1. Look at their profit/loss margin over the course of the relationship – how many times have you over-serviced them without being able to recoup the money at another time? Talk to your finance people – has the relationship been a profitable one, regardless of the size of the budget?
  2. Look back at the results of working together. Do you have amazing, award-winning work to show for your partnership thus far? Has the work with this partner gotten your team thinking more broadly and building relationships in your ecosystem that they would not have otherwise?
  3. Talk to the team – every single one of them individually to avoid group think – about their experience with the current partner. Have them give you both quantifiable and anecdotal feedback. Get them to give you a 1-10 rating on how much they want to keep working with the current partner. Then, at a different time so they don’t know you are comparing the ratings, get the same 1-10 on the bigger fish.
  4. Think about the way the current partner works with your company. Are they grateful when you do good work or give it extra effort? Do they understand what you do and see the value you bring? Are they committed to the process and willing to put in the time to make the overall relationship a success?
  5. Think about the actual people – not just the company and the work. Would you want to grab a beer with the folks from the current partner company on the weekend without charging them by the hour?

What am I missing, y’all? What other things should people consider before they trade up?

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The Labs are open for testing

•June 23, 2010 • 9 Comments

Inner Circle Labs was founded in January 2010 but it became a real place on Tuesday June 15th when all the allen wrench duties, unloading of U-Haul trucks full of chairs and whiteboard hanging was completed and the WiFi was turned on.

Starting a company is an exciting, risky, rewarding, stressful experience – I like to call it the bipolar rollercoaster. One day you feel like you couldn’t possibly imagine doing anything else, the next you feel like you’ve made a mistake of epic proportions. All in all, it evens out to a jumble of energy that you need to channel as effectively as possible (I’ll do a post when I have some specific tips on channeling said energy…).

Actually turning an empty space into your company’s headquarters is an entirely different challenge but with some of the same emotional ups and downs. You begin with a vision and then start the endless list making (OK, I’ll admit, this might not be as big of a point for others, I love a good list). Lists of furniture you need and a corresponding schematic (I like the back of a napkin layout drawing, my COO prefers Visio) – lists of equipment, tech and otherwise and a corresponding list of monthly costs of maintenance and fees – list of some of the things that make a workplace comfy, cozy and fun. Sometimes the process seems endless but that is broken up by those moments of “wow, we’re almost done” – usually followed by a “we forgot what?”

Some of the most interesting insights on what we needed to keep in mind came from friends, colleagues and the Inner Circle Labs team. “With the labs name you could probably use some beakers.” – “Maybe we could get organic fruit delivered?” – “Well, since there’s a server rack, we should get a bunch of servers?” – We’ll need Splenda, lots of Splenda” – “Don’t forget to get a champagne recorker.” – and the list goes on.

We got some great advice and some weird ideas too but it was helpful to hear from different types about what would make the first incarnation of the Labs amazing. We wanted to make it a great place to be and a welcoming environment for guests. Of course, planning things so we had room to grow was a big part of it but we also wanted to make it a fun place to co-work or hang out. We know that the creative energy of people not in our immediate ICL family would do us some good (thanks @thekenyeung for being our first co-work guest, please come again!). So we have tables, a conference room and extra desks ready, come what may. If you’re near the Transamerica Pyramid in SF’s Financial District, stop by and say hi!

A big part of what people need to visit and work, and one of my biggest surprises in this whole process, came in the form of chairs. Chairs are a pretty major part of the expense of setting up a workplace. And you don’t want to skimp on desk chairs or you risk everyone on your team needing major chiropractor care in the years that follow. You also shouldn’t wait until the last minute to think about chairs – in fact, you might want to think about them first. It takes quite a bit of time to get the chairs you want and, the more time pressure you are under the more you are going to pay to get seating. Chairs are to an office what the dress is to a wedding… We went with A Better Source in San Mateo for all our chair needs. So, even though they are slightly used, we got high quality chairs at a discounted price.

We also saved funds by getting the majority of the other office furniture from IKEA. I have permanent allen wrench injuries but it was worth it (IKEA has a service where someone will come build the furniture for you but where’s the fun in that?). Less than $10,000 spent and we have a legit looking office to call home. Some pictures are below. We’ll have an office warming/company launch party sometime soon but come by and visit before then if you can. And, if you need any advice on putting together your first office by yourself and on-the-cheap, I’m happy to offer tips.

We mostly live here hence the name, the living room

My office and a place for cohorts to hang

Gotta love the purple chairs

A place to chill, think, brainstorm, and eat

Our COO got a free jukebox, we think he should share

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Inner Circle Labs WorkAway Week: What I Learned

•May 28, 2010 • 1 Comment

For the first time in our short company history, we did a WorkAway week. This is a program we hope to sponsor annually. The idea, bring the whole team and work/play somewhere remote for a week. We are just wrapping up a week in the North Shore of Oahu in Hawaii. This lovely house is equipped with wifi and everything a group would need to have a good time. When we planned the trip, I knew we would have fun but I was a little nervous about how much I’d need to watch over the team to make sure everyone was productive and actually getting work done.

I have been surprised at how productive we have been – I would even argue that we were as productive as we would have been at home, when it came to tactical work, and that we took more time than we usually allow ourselves to brainstorm, think of creative ideas and think of new ways to improve the company and our partner programs. These “softer” things are critical – but they are easy to push off when an urgent media request or business need come up. Somehow, being three hours behind California and having one of the world’s most beautiful beaches 15 steps away, did wonders to get our creative juices flowing.

Beyond being super-productive, we also got to know each other better. As one of our esteemed cohorts just said “I wasn’t sure if we’d all get along being together 24/7 for a week, and we did!” Working in startup mode is like being a family in many ways – you have you’re good and bad days, you love each other one day and want to run away the next – and we learned a lot about our Inner Circle family this week.

A few things I learned about company-sponsored remote work trips:

  • People put more value on this sort of thing that it costs you to do it (by my calculations, the team wouldn’t trade this trip for any less than 5x what it actually cost to make happen).
  • When it looks like it might be hard to get actual work done in the far-away place, trust your team, they want to have the same opportunity again (huge motivator) and they’ll surprise you with their focus and drive.
  • Plan some team outings/exercises but leave some time to be spontaneous – sure, our trip to the Polynesian Cultural Center was great, but the bacon-wrapped hot dog incident, the “would you rather” game and our sea turtle sighting will always be close to my heart.
  • Let everyone pitch in – circulating through iPods, dinner chefs and “what should we do tonight?” planners kept it interesting and helped us get to know each other even better.

A few things I might do differently next time:

  • Get a bigger house and bring some of our amazing partners.
  • Hold less “planned” meetings so we could spend more impromptu time.
  • In the weeks prior to the trip, set some team goals to accomplish during the trip (both on the work and leisure fronts).
  • Buy more fruit and less meat.
  • Put sunscreen on my shoulders even if I’m only going for a short one-on-one on the beach.

Either way, let me encourage you to take your team somewhere and go work together – our pals at CrowdFlower spent a week in Tahoe,  Expensify takes the team away for a month each year – we are planning to go for a week each year. If you can afford even a two or three day stint, it’s money well spent to motivate the team, create a stronger bond and get outside your work comfort zone. There’s no question that we will remember this week for a long time – and be better at what we do for it.

For your viewing pleasure, Emily Joffrion jumping off of the rock in Waimea Bay. http://www.youtube.com/watch?v=0H3bJ4R02z0 (P.S., her potty mouth makes a small showing at the end so watch out)

Update: Interesting read from another company with a remote work program, everyone’s doing it, man.

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Storytelling Lesson from a Winemaker

•April 20, 2010 • 5 Comments

Maybe I have been doing this for too long but it seems like every time I turn around I hear something totally non-related that instantly makes me think of the PR business. A recent example came up at a lovely tasting at White Cottage Ranch on Howell Mountain (@whitecottage on Twitter): artisan wine making.

 Michael, the assistant winemaker at White Cottage, told me about some of the nuances of making their delightful Howell Mountain wines and it got me to thinking about how PR pros could learn from winemakers. Winemakers, especially those with the best wine, go into the fields and drop (i.e. toss out) the less-than-great fruit multiple times a year. They are smart enough to know that not every grape should be made into wine and trashing the bad ones makes the good grapes better.

Think of these grapes as the stories your company tells – it’s certainly best to have a lot of options but it’s good to know which ones you should toss aside in order to focus on the best part of the crop. Learn to sample the stories, cull things down and create the best possible story pipeline.

This type of crop thinning makes better wine – and staying focused on the best ideas makes for a better PR program. It doesn’t mean you shouldn’t let some less-than-great stories grow in your vineyard, just know that when you go to put them to use, you should be smart about where you spend your time. Focus on the high-end Cab of a story vs. the two-buck Chuck.

And, know your crops – Michael shared some insight on Cabernet Sauvignon vs. Cabernet Franc. Winemakers know you can get great wine from a good Cabernet Sauvignon field on the first pass. Cabernet Franc however does what it wants to do. As Michael explained, it can be all head and you need to go out looking to “find the ass in it.” This can mean eight or nine passes through the fields to find the good stuff. Like a vineyard master, look to your crop of story ideas with a discerning eye. Learn how to tell when a certain story is going to be harder to make happen, waste cycles with no result or simply die on the vine based on a partner’s lack of media prowess or interest. And, begin to understand when the more intense, long-term effort is worth the work versus an exercise in futility.

It’s critical for PR success that you approach it like an art form, like winemaking. Don’t just churn stuff out. Build up a lot of options, swirl, taste, spit, and then decide what really works for your brand. Once you know, you can bottle and sell that. Unless your PR efforts are like making boxed wine, in which case, ignore this post.

Special Thanks to Marie Williams for her input, if you like the idea of singular focus, you should read her “Unlearning Multitasking” post on her amazing new blog.

Alternate Titles:

  • Your story is all head, I’m looking for the ass in it
  • Analogies are to wine tasting as… what was I saying?

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Ready to grow

•January 25, 2010 • 7 Comments

This is a call for people tired of the old and looking for something new in the marketing/communications/PR business. The industry is moving in a dangerous direction – commoditization, becoming an off-the-shelf item to be dissected and sold to the lowest bidder. For too long, PR has been the fireman who drops in to put out the fire or the traffic cop, controlling the flow of information with an imposing sign. It’s time for real change – it’s time for PR to become the conductor of the orchestra that guides the story of your team, company, product. It’s time for elegance, smarts, creativity and passion in telling these great stories, PR should be something layered over every part of a company.

Having this holistic infusion of PR in everything a company does isn’t a factor of what PR can do, it’s an indicator for a company that you really could do something great. If you look around and can’ t find the amazing things about your business that you need to shout from the rooftops, do a sick graph about or chat about over cocktails, no amount of good PR will help. You need to find your story. PR is communications – if done right, it will change your business. It is an important, tangible, real way to make a company grow across the board.

I just started my own business after 10 years on the agency side of PR – from a small, family-owned team to the largest agency in the world, I’ve seen my fair share of what this business is all about. And, I have learned so much, from so many smart people. In 2010, among the smartest people in this business and others I interact with, I am sensing a sea change – a desire to work together to find a new way to do things, a collaborative effort to bring the best ideas to light. In the PR community specifically, it’s refreshing to see so many people really push for strategy-driven metrics that make a difference to a business instead of getting mired in metrics-driven strategy that is short-sighted and lacking creative confidence.

Who knows if we should even call ourselves PR people – I know what I think it means but the issue is a semantic one. Do I want to do what so many people think PR does, not what I think it should mean? I mean, if you were all going to start calling Lobsters, “sea rats,” I might not like to eat them so much either.

Well, whether we decide to fix the business or just abandon ship and start something new, I’d like to be part of this change. Reach out to me if you want to create a new kind of PR company, an un-agency, where we can focus on doing what we love and be better because of it. Why not only work with partners whose products we truly have a passion for? When a company hires someone, they make sure the person will love what they’ll be doing. The PR agency business has primarily become a place where you’re made to feel lucky if you have real passion for even 30 percent of what you work on. I don’t think it needs to be that way – there are enough smart companies, doing amazing things. Why work with the highest bidder when you’ll need to spend a third of their budget just polishing the turd. There are diamonds in them there hills… who’s with me? Drop me an email at interested@innercirclelabs.com or tell me what you think @julzie on Twitter.

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