Big Fish, Little Pond - Part 1: Landing in the Boat
“We’re a big fish in their little pond.”
To be fair, it wasn’t exactly a secret.
Regardless, I suspect we weren’t supposed to overhear it. “We’re a big fish in their little pond.” A comment made by our primary contact at our Big Fish client to a colleague in the halls. Our client knew what this meant - that we would service them to the moon and back - and we certainly did.
Ironically enough our service level had little to do with the size of the fish, but more so about the complexity of the problem we’re trying to solve. Over the years we’ve come to realize that we’re really, really excited about solving complex problems that improve human lives through improving the systems that they operate in - whether that be as a client receiving better information, or an operator able to do their job more efficiently, or to create a better return on investment for the client.
In our Big Fish’s ecosystem there were multiple different ways that systems could be improved to better help their clients and their own internal staff to begin to operate better. Having an ecosystem where there were lots of solvable, complex problems served as a fertile playground for our people as we dived in to help this organization become more efficient and communicate with its clients more effectively.
We spent five years out of our sixteen years in business dedicated to solving this client’s problems. We knew having our business reliant on one large client presented unique challenges - such as what to do when that project ends - but we seemed to be powerless to do much about the changes going on in our organization.
In hindsight, some of the challenges we faced were necessary, some were avoidable and most should have been predicted. I was talking to a mutual B Corporation contact Greg Hemmings from Hemmings House and he told me a similar story of his organization and his Big Fish.
We chatted a bit and lamented the fact that these challenges are a well known issue amongst agencies (many agency death stories are comprised of losing the “Big Fish” and not being able to recover) and yet there’s no resources or advice able to help those going through it.
I believe the reason that this information isn’t in the ecosystem is for two reasons. The first being that it sounds like failure for the Big Fish project to end. Secondly, nobody wants to let the broader world know that they’re struggling. Afterall, sending a signal to the market that you just lost 70% of your revenue on short notice doesn’t scream “Do a new contract with us everything is fine!” … does it?
The good news is for both rTraction and Hemming House that we’re on the other side of this transition and, despite being a bit bruised, we’ve each found our own path to our core function and purpose with a greater clarity than we had in our agency before. The survival process focused both our agencies on what’s important to us, our clients and our other stakeholders.
We also believe that it’s more important to tell the story of these challenges in the hopes that we can help others to avoid the same mistakes than it is for us to worry about any personal embarrassment as being seen as failures. Anyone who has owned a business for any significant time knows that their success is built off a stack of failures - sharing this secret does not reduce the success that we do have. It just makes us real.
This post is Part 1 in a 3 part series on the agency lifecycle of having a large client. It’s a story told in many agencies. Part 1 focuses on the background and high level pattern of what it looks like to go through this process. Part 2 will focus on what could be done to differentiate your business during this time (noting that both Greg and I do not feel we succeeded here, but we have some ideas on what could be done in hindsight). Part 3 will focus on how to recover from the loss of that Big Fish - and ultimately somethings that you should do in your agency before you even get to the point of having the Big Fish land in your boat. We believe that had our agencies been set up differently to begin with we would not have had the same challenges later.
The Big Fish story is one of trade offs - one that need to be considered before casting your line and starting to fish.
First, the good things about having a Big Fish in your agency:
Sales becomes less “feast and famine” with some predictable revenue streams
Cashflow becomes a bit more predictable
People enjoy working for a ‘big name’ account
Complex problems engage smart people
Great brand recognition for sales / marketing efforts
Extra resources to do strategic planning
However, these things come with some trade offs:
Mission / Purpose drift - are you working on what they want or what you want?
Values fit - are you hiring for your values or the specialized needs of your clients?
Values fit - are the clients values aligned to yours?
The fish likely knows they are big, and may choose to exploit that to get what they want from the relationship (ours did not but I have heard horror stories)
The “Big Fish” client will eventually end its relationship with you - it may be 2 years, 5 years or 20 years - one day it will end.
The energy transfers from your agency to the client
That last point is the most critical thing I think it’s important to understand. In our Big Fish story we began working on their project in earnest in 2012. We ended at the end of 2017. If we look at a graph of revenue, Big Fish revenue, pre-existing revenue and P&L we see an interesting trend.
During the 2012 period our non Big Fish revenue dropped (labeled “Everything Else” above) - despite all of our efforts to the contrary. We absolutely knew we had to diversify our revenue but at the same time we failed to do so. The primary reason for this is that client took a lot of our energy. Not necessarily in a bad way - but with our efforts focused on their success we cannibalized our own ability to generate separate revenue opportunities. I find it somewhat fascinating that after 5 years we’ve returned back to the non-big fish revenue that we had when we started in 2012.
Another story is that the P&L increase from working with the Big Fish is basically a wash when taking into consideration the process to ‘disentangle’ those resources. One of the reasons the Big Fish contracts you is so that if they have to shed expenses suddenly that you bear the burden of this versus them. It is one of those things you don’t think about when times are good but it becomes readily apparent when your contract ends.
At the end of a 5 year journey our income statement and balance sheet looks pretty much identical to what it did in 2012. We still benefited greatly from the project, including advanced skillsets and, most importantly, a better sense of our identity and what our organization exists to do. Having lost that identify for a while we have now learned how important that is and have made steps to ensure it is protected in future client work.
Last, but not least, we had consistently tracked 20% average year over year growth since our inception. It’s a hypothetical question - but had we not taken on the Big Fish where would we be in 2018?
The graph above would seem to indicate that we may have, overall, lost momentum by engaging with a Big Fish client. It’s important to state that this isn’t a problem with the Big Fish or having a Big Fish client - more so a recognition of our failure in adapting and adjusting to grow our core business alongside servicing a great client.
In sharing our story we have found that many other organizations have had similar problems. But no one wants to talk about the failures because nobody likes to look like a failure. However, in the balance of things Greg and I thought it was more important to share our failures to help future business owners than to try to protect our own egos.
Overall our Big Fish story is a positive one - we simply wish we had some of the tips and insights that we’re going to share with you in the next two posts in the series. We hope it helps you to avoid some of the traps, pitfalls and pain that we went through so that your Big Fish experience works for you with less challenges.
I asked Greg, CEO of Hemmings House to share their Big Fish story.
"Hemmings House has been in business now for over a decade. We have been producing documentaries, television series, and commercial films for broadcasters and clients around the world. The exciting work was always the big TV documentaries that we would get licensed on CBC or IFC, or the TV series’ that we would produce for broadcaster like the W Network, Slice, OWN and Rush HD. But those exciting projects rarely brought us sustainable profit, despite their large budgets, and great press attention. The work that was sustainable, repeatable and profitable was the ‘grind’ work that could be mundane at times. This was the corporate work. We actually do enjoy producing corporate work for values-alligned clients, but it is often times less exciting and glitzy as a TV doc or series that will be aired in different countries around the world.
Three years ago we landed the biggest TV series we have ever produced. The budget was 2 Million dollars and was licensed to a few international broadcasters. The whole project would take about a year to produce and deliver, and we felt like we won the lottery when we inked the deal. The process of delivering a TV series to a broadcasters like these was a difficult one, but incredibly fulfilling. We learned alot about producing TV with larger budgets, teams, and scope. Our crew filmed all over North America for 5 months and the project kept us fiscally secure for the year.
We thought we finally made it as a legit global television production company. Maybe this was the opportunity to reduce our commercial work a bit and start focusing on more of our original content ideas...maybe we could start inspiring more positive social change with films that help change the hearts of people and the strength of communities! Maybe we wouldn’t have to hustle for small corporate jobs anymore…
Sadly, after the TV series was successfully delivered, the honeymoon phase was over and the exciting dust settled, we realized that we should never have taken the hustle foot off the sale pipeline pedal. It didn’t take long for us to realize that we didn’t have anything significant lined up to keep the machine operating after the series was delivered. Looking back, I think I was careless and perhaps a bit cocky to think that we didn’t need to put the effort into nurturing our solid, repeatable and profitable corporate clients.
Everything came to a point of crisis when for the first time in my professional career I told the team that they could go home because I wasn’t sure if we were going to make payroll. I lost a lot of trust that day. The ripples are still felt a few years later in fact. But we learned. We got thicker skin. We pulled up our socks and did the real work of filling the pipeline again. I, as the CEO, took an active role in business development and the whole leadership team jumped in on sales. We turned the ship around eventually and never actually had to miss payroll.
The story ends well. We closed 2017 as the best year of our history for both top and bottom line. We tightened our processes, we matured. But we almost didn’t make it, because of our Big, Shiny, Exciting and Tasty fish."
As you can see, both Hemmings House and rTraction had to adapt their market to how they behaved. So you if have a Big Fish - or are considering landing one - what should you do? Stay tuned to Part 2.
PS - If your agency has a “Big Fish” story and would like to add to this narrative, please email me at email@example.com and I will include your data/information either publicly or anonymously if you wish. Our suspicion is our stories are not the only ones like this out there!
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