Scott had the pleasure of sitting down with author Carlos Hidalgo to discuss his new book, The UnAmerican Dream. The book talks about Carlos’ “journey to entrepreneurial triumph, and the simultaneous path to rock bottom.”
Carlos describes the book as being more than just business, but a book for those that want to reassess personal and professional relationships in today’s always connected, always ‘too busy’ world.
When asked who the book was written for, Carlos stated, “I wrote it from the perspective of an entrepreneur and a business owner and a professional. But it’s really a book to say, stop. What is the frenzy for and reassess your personal and professional relationships and define success on your terms.”
In the interview clip, Scott and Carlos talk about his journey from being on the cusp of a divorce and hitting rock bottom, to his inspiration for the book when a LinkedIn post about why he was leaving his first agency helped him realize he wasn’t alone in his desire to get back to his true self. Carlos also talks very candidly about asking his wife to write a chapter in the book, sharing her story of the impact his ‘unhinged business pursuit’ had on their family.
Last year, our first full year in business, our marketing services firm delivered seven-figure revenue and was able to return 40% of the initial investment back to our investors. This was done despite having no full-time staff, no overhead, no products and no footprint.
How’s that for lean?
We’re built on a talent management platform. Or, said differently, we use a collection of non-traditional workers: people like stay-at-home parents, semi-retired executives, freelancers and side-giggers who work to get something done and not to “punch a clock.”
It’s now been close to two years operating in this environment, and we’ve learned a thing or two about being agile and lean.
Make no mistake, it’s very difficult, but also very rewarding.
If you’re trying to create a lean organization, or transitioning to it, here are some things to consider:
1. Check yourself before you wreck yourself. Operating lean and agile by definition means removing much of the structure that has traditionally slowed the organization. You will find yourself getting caught in the trap of wanting to add back those things you are comfortable with. You need to become comfortable with the discomfort. find a way to inspect the decisions you’ve made to stay true to the mission.
2. Rent, don’t buy. Better yet, get it for free. The only asset we own is the computer I’m using to write this post. We are the poster children for SaaS. Our online version of QuickBooks back-ends into our accounting firm (we have no finance department, obviously). We operate the business on G-Suite (we have no IT), use Asana for project management (internal and external), Slack for communication, MailChimp (free version) for our monthly newsletter, and our site sits on WordPress (also free, and we bartered services for hosting).
I have two virtual assistants, one live and the other automated (free). Additionally, we are constantly on the lookout for new or better (cheaper) tools. Never sit still.
3. Opt for aggressive, active management. The flexibility of an agile organization is only valuable if you actively manage it. We manage project probability almost religiously. As we watch costs come in, we may merge workstreams, focus on producing outputs faster, shift hours and resources to other projects, etc
If we are engaged in a project using agile design, we use a very disciplined project management approach and proactively run a resource ahead of the delivery schedule. Anything we view coming down the workstream that is anticipated to be out of scope, we bring up during our weekly meeting. Just like the cheer, you have to “be aggressive…b-e-a-g-g-r-e-s-s-i-v-e.”
4. Find someone to make you do what you hate. For me, one of the best things we’ve done is to contract with someone tasked to make me focus on the things I don’t like to do or think about.
For example, my natural state is to “go do,” so taking the time to document how we do things is not usually going to happen, even though I know it’s valuable.
By having someone force me (literally) to get it out of my head and down on paper, we are able to create standard operating procedures that allow for automation, outsourcing, and/or creating self-directed how-tos, guides and videos.
Find a way to address your weaknesses. Don’t ignore them — they will come back to bite you.
Don’t get me wrong, there are a whole host of things that we haven’t learned or addressed yet. We still need to build a pipeline, create a steady flow of opportunity, find a way to scale the business, etc. The business is on a path for more steady growth, but almost everyday I have to keep myself from slipping back into old habits and routines.
It’s not easy being lean…
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Could you provide our readers with a brief introduction to Carbon Design?
We address a set of business problems that clients have historically pursued through relationships with management consulting firms or marketing agencies.
What’s different is the way we approach these problems. Rather than starting with the assumption that we have just the right IP, just the right methodology, or just the right team, we start with the assumption that none of that might be the case. That leads to a different business model, and very different client experiences – from beginning to end.
Clients can bring us in as early as they want – especially, when the nature of the challenge is still up in the air. Since we draw on a broad set of experiences, but don’t have anything we need to sell, we’re a trustworthy helper to facilitate problem formulation and solution ideation.
Then, if execution is needed, we can look into our network of freelancers, boutique firms, side-giggers, and design a delivery model that works for that particular solution.
So what exactly does Carbon Design do?
We’re definitely a thinking partner. Our approach is to help our clients look at problems from a more varied set of perspectives. And we do frequently provide a spectrum of marketing services from go-to market strategy and brand development to creative asset development. But, because we got rid of the burden of staff cost and the overhead of a traditional agency or consulting firm, we can offer clients agility and good value, and still run a profitable business.
How does your approach differ from any of the “Let us find a specialist for you” platforms?
If you need an uber, it probably doesn’t matter all that much who’s driving. If you need help with innovation, it absolutely does. So we’re not a platform – or at least not in the sense of some sort of algorithm-driven matching of supply and demand.
We execute projects and provide the right people and the right fit for the task. We can do that because I personally know every one of our specialists and know them quite well. I know what they can do, what they’re great at, and what areas they’re not suited for.
Look: Assembling a skilled team for a tight-focus and probably time-critical job isn’t something an algorithm can do well, any more than it’s something that can be solved by a large agency putting people with “free time” (an odd term for someone who’s time is billed—and marked up—by the hour) on a job simply because they’re “available.”
We get to know the client as well as the client’s problem. Then we bring in the people we know will be best-suited to the job.
What are people saying about their experience with Carbon Design?
Here are three verbatims I recall that might be helpful in painting that picture:
“You guys ask the right questions.”
“ I hired you because this problem wasn’t ready for me to give to my agency.”
“Thank you, we learned a lot.”
Generally the feedback usually falls in two camps. The first, is related to our operational flexibility – a kind of “Ocean’s 11” approach to building executional teams. And the other has to do with our mental flexibility – we’re seen as creative thinkers who bring out that same quality in our clients.
A few patterns are emerging: We tend to be championed by people well-placed in the sales and marketing organization, but we find ourselves speaking with CEOs, more often than we expected. .
Our clients know they have an issue. It’s why it hasn’t been solved that starts our journey. In our experience the obvious problems are typically an iceberg with a large amount of complexity under the surface. Our focus is to get inside the heads of organizations and audiences, to understand the WHY, not only of the problem, we’re brought in to solve, but also the WHY of the resistance.
We tend to connect with people who don’t shy away from complicated challenges, and who appreciate the role of experimentation as a method of learning about them.
And – we seem to be on a streak of connecting with people that are trying to do things that are genuinely new.
What are some of the key challenges you are helping clients solve?
In healthcare, we’re working with an organization to develop more effective means of reaching and influencing high-risk patients.
With one of the world’s leading environmental design and engineering firms, we’re helping to invent an entirely new category in housing (and all the infrastructure related to housing).
For the food service industry we’re working to redefine and re-educate the industry and its customer — on the sources of outbreaks in restaurants.
In the software as a service space, we’re helping an exciting machine-learning brand develop their brand positioning and go-to-market strategy.
I will say that in all these cases, it was our work in helping with understanding the root cause of the problem itself that was critical in the outcomes obtained in execution. .
What are your plans for the future?
We want to give talented people a chance to change they way they work.
Obviously we want to continue to grow as a business, but one of requirements we placed upon ourselves when we created Carbon Design, was that we would walk the same walk that we talk.
So our growth plans and our growth curve with luck—will be as natural and sustainable and as liberated as our approach to our talent. Don’t look for us to have vast, shiny office spaces and expensive back-office staffs any time soon. Or ever.
Do look for us to scale up as opportunity (appropriate opportunity) presents itself. We’re already a global operation that does things better.
Industrial Revolution. Digital Revolution. Work Revolution.
Clients have complained about it for decades. Agencies have been wrestling trying to find a new model for years, but yet it still exists. Partly because they know that abandoning it will require them to move to fixed fees, and most likely fixed timelines, and that is more risk than they can, or want, to stomach.
Before I start highlighting why the billable time model doesn’t work, let me tell you when it does — with a caveat. In my seven years working in this environment, I can say I have only seen the model work effectively for the client once. Here’s what it took to make it work.
The client had a pipeline of projects – the client went through a process of consolidating marketing budgets to move to a single agency retainer. They then identified enough projects to fill the agency capacity and smalls one off efforts to cover production gaps when the priority projects were delayed.
They put the basics in place – knowing that efficiency is essential for optimizing a retained relationship they had the foundational building blocks for developing campaigns. The client had their audiences defined, value proposition and messaging tested, and an approved media budget with CTAs. You want as much of your marketing dollars going to execution as possible. Don’t burn agency fees on the basics.
Quarterly reviews – they set clear priorities each quarter and conducted quarterly reviews. Learning what worked, what didn’t and why/how to improve in the next quarter. Typically, no month goes according to the plan so they had budgets rollover month to month and a defined point to reconcile fees.
Built in flexibility with “on demand” resources – a core client team was defined with “specialized” skills that were “on-demand,” not dedicated. They used contracts/freelancers on their team to pick up work that may come in “over the transom.”
Strong management of the relationship and retainer – they took an active role in managing the relationship with the agency, with a dedicated agency team that included ex-agency people. One person prioritized and managed the work internally before it went to the agency. That person was the central point of communication, consolidating feedback and restricted others from contacting the agency with requests or changes.
If this doesn’t sound like your organization, let me share with you what you’re up against and why the billable time model is not in your favor.
The production process – flexibility gives agencies problems once you’ve committed to a retained team and defined work. Think of it this way…let’s say you hire an organization to build a car. The company gives you a price to build it. Sticking to the production schedule the car will cost you exactly what you contracted. The problem in marketing is that few things go according to the production schedule. Issues with approvals and getting content or legal feedback within the defined time is often the exception rather than the rule. So, let’s say your car is making its way down the production line and it gets to the person who is handling the windshield install but the windshield isn’t there because the size and shape wasn’t approved. As a result, the entire production line is now slowed, or the car is taken off the line so other cars can progress. Either way, costs are now being incurred due to the delay. This is what happens when marketing assets are being created. A client doesn’t approve an image on time so when the agency production schedule has the image retoucher scheduled to work on the image, it’s not there. The image retoucher is then reassigned to other work and this task goes back into the scheduling pool, causing delays further down the line.
“Microspecialization” – perhaps you’ve noticed that your team has blossomed with “specialists.” For example, content development; long form, short form, digital, technical writers, etc. A good writer is a good writer, or at least one would think. If you are working with a large agency they will have the luxury of having broad skill sets in house or contracted. These “specialist” are assigned to work on multiple projects. Their time being divided among 5-7 or more projects during the week. Let’s go back to the production line analogy. The work is progressing down the line, now there are twice as many stops as in the past because of the microsegmentation of the work and skill sets needed to complete it. This means we have twice as many people to schedule, coordinate calendars and manage handoffs. Let’s say the main copywriter creates the campaign content that moves to the digital copywriter to chunk it up for the website. Then, it’s off to the short form writer for emails, and the technical writer for the sales sheet. You get the picture. Each step is a handoff, an opportunity or risk to come off of message, change the tone, or lose the intent, etc. All which result in burning more hours to fix.
Efficiency and creative – speed is the enemy of the good, not always, especially in a billable time model. Being more efficient is not necessarily aligned to a billable time model. There is no incentive (beyond due dates) to move work quickly or efficiently. If a creative is assigned to spend a half day working on a banner ad and can complete the task in a hour…“work expands to fill the time for its completion” as they say. Agency folks have to meet a certain threshold of billable time, similar to attorneys. This is not all bad. To be fair, you want to allow the creative team to have the time to well, be creative. Rushing the creative process can produce poor outputs but it is often times at odds with efficiency. More on this later…
Revenue recognition – for an agency to recognize revenue they have to have time billed against it. If you have a $100K a month retainer, for example, you will get a large team. It starts out with good intentions. Agencies will assess the work to be done and then assemble a team to do it, that’s how the pricing model is built. But the model is built in a vacuum based on previous client engagements. It allows agencies to assign and/or hire resources. Once the team is constructed and the real work begins, the team may or may not be aligned to capacity needed. However, it is aligned to the capacity needed to fill out timesheets to justify the fees.
You, the client – yep, you are complicit in this problem. To get the most out of your relationship (and money) you need to take an active part in managing and partnering. Consolidate feedback internally, force internal stakeholders to make decisions and tradeoffs. Stick to and/or set realistic timelines and expectations. Do your homework and have as much of the prep work done prior (more on this below) to selecting or working with an agency partner. You know that time is literally money (your money) so be active in finding ways to be more efficient. Agencies do their best work when there is clarity on goals/objectives and communication.
Here’s the funny thing — the billable time model doesn’t really work for agencies either. It restricts growth, creates rigidity, causes inefficiencies and counterproductive employee behavior. So why do they keep it? Because it protects them from you.
Marketing can be messy and managing clients can be challenging. You miss a deadline or change a deliverable, and here comes the change order. To abandon it would require discipline, analytic rigor, and STRONG client and project management skills, which few possess. The billable time model is the devil they know, but unfortunately, can’t kill.
In my last post, I talked about the extreme highs and lows of my first 30 days in business, even threating to jump on a plane and run away from it all. Well, 90 days later I’m still at it, with no plans of catching a plane anytime soon.
We now have financing, clients, and a corporate identity. Still plenty of work to do but the focus is now on building the pipeline and less on losing my house, our retirement, and so many other things that will go through your head late at night while second-guessing yourself.
Fortunately for my sanity, our building has a gym on the ground floor. It’s a great way to start the day or take a mid-day mental break to recharge (I highly encourage it). On the back wall, there are inspirational quotes to help keep you motivated. One, in particular, has had a certain relevance to me during this phase in my life;” Leap and the net will appear.”
Here are 6 new things I’ve learned since taking the leap:
Everything (and I mean everything) will take 30 to 60 days longer than expected – be it a loan, new project or client, even a business card order will take longer than anticipated (if you’re a novice). Add days to your expectations, push timelines out and start earlier than you planned. There are certain things out of your control and you may be less frustrated you if you keep this in mind…or maybe not.
Get half decent at everything – if you’re starting a business you are obviously knowledgeable, passionate and perhaps even an expert at something. Similarly, you’ll lack knowledge or depth in other areas. What I’ve learned is it is crucial to get a working level of knowledge on just about everything. You don’t have to be the “expert” but you have to have a base of knowledge to give direction to your advisors/experts (like attorneys, accounts, designers). Fortunately, there are plenty of good resource sites available (for example, com).
Trust your network – the “net” that will appear once you leapt will come from your network. You likely have more people in your circle that can, or will help you along your journey than you realize. One of my most trusted advisors turned out to be someone I’ve known socially for close to twenty years. It wasn’t until 60 days into this journey that I thought of him. You will be surprised by the support of friends, family and even acquaintances. If they can’t help you directly, there is a good chance they’ll know someone that can. Your network will be one of your most valuable assets, mine it.
Surprising financing options – depending on how your business is organized you may be able to take advantage of your 401K to fund the business or give yourself a line of credit. If you establish the business as a “C” corporation you can use your 401K as capital to buy a franchise or business or to fund it. There are some potential downsides to consider, so please consult a tax attorney or accountant before moving forward.
SEP IRA – speaking of 401K’s you may be deferring your 401K contributions like I am until the business is profitable. The Simplified Employee Pension (SEP) allows for a contribution of up to 25% of an employee’s pay up to $55,000 in 2018. As your business takes off your SEP gives you an opportunity to catch up on your retirement savings.
Payment terms of 60 days or longer – are pure evil for a startup. It’s absolutely ridiculous for a large corporation to expect a small business to float them for any period of time after a project has been completed. Cash flow is king and it’s also a killer for small businesses. As soon as we reach a certain level of success, we will actively avoid contracts with payment terms of that length. The learning, make sure you invoice your client as soon as the contract is signed! Billion dollar corporation, encourage procurement to develop new payment terms for small businesses. You can, and should, support the growth of new businesses. We may end up being your innovation incubator.
There is another quote on the wall I mentioned earlier. It’s by Eleanor Roosevelt and I find myself staring at frequently,
“Do One Thing Every Day that Scares You.”
Yeah, I pretty much have that one nailed. Talk to you again in 6 months. #buildingcarbondesign
This is the view from my standup desk. On some days, I stare out the window at Regan National and fantasize about flying off to an exotic location as a result of the wide success of the new business. On other days, I think about getting on a plane and running away from it all. That pretty sums up my first 30 days. Ping-ponging between extreme highs and lows, and never feeling like I’m going fast enough.
In my last post, I used the analogy of running up a hill, here are some of the things I’ve learned in the early part of this journey.
Commute – Now that I no longer paid parking I’m now a mass transit user. My commute to the office used to be an hour via the backroads. It’s now a 40 minute (on most days) Metro ride. Have to say, I don’t miss driving, in fact, getting back in the car holds no appeal at all. On the rare occasion I need to drive to work I tap my Parking Panda app and park in the garage across the street for half the listed daily rate.
Office – For three years I was a mentor at the startup incubator 1776. Now I’m a member. Settling in I’ve been surprised by the other entrepreneurs in resident. Or in other words, I’m not the only old guy among the twenty-somethings. In fact, there may be the same amount or more of us. It’s also not all startups. Accenture Digital is here, and a major health network and venture capitalist from Israel.
Tools – holy cow, there are so many low or no cost tools available it’s hard to cover them all. Here are a few that you might want to check out. Try MeetUp which was recently acquire by WeWork for expanding your network, learning new skills, meeting like-minded folks. If you are a retail business try Alignable for building a referral network. No longer have someone to review your proposals sign up for Grammarly. How about an assistant to manage your schedule try Calendly. If you have remote employees you have to have Slack. You’ll need a domain, a website and email. I got everything from one provider, GoDaddy but there are other sites like Verisign and Web.com.
The team – you’ll need an account, lawyer and banker. In addition to family and friends! Some will be your guides, others your cheerleaders and on certain days, both.
Inspiration & Insight – by coincidence, I happen to be reading two books that have been very helpful in various ways. The first, Chaos Monkeys is about the startup environment in Silicon Valley. Great insight (and entertainment) regarding various funding methods, understanding investors, dealing with team members, and the long and bumpy startup road. If you’re doing anything in the Tech space this is a must-read. The second entitled Will It Make The Boat Go Faster is a business management book (goal setting, success drivers, overcoming challenges, taking risks, motivating teams, etc.) told through an inspiring story of a British Olympic rower’s quest for a Gold Medal at the 2000 games in Sydney. If you think the startup life is hard, try being an Olympic athlete. It helps keep things in perspective — this quote from the chapter on Risk has been particularly comforting…”The most conservative, boring person living the greyest of lives is taking as many risks as the adrenalin junky free climbing on a high rock race. The difference is the type of risks they are taking.”
The paperwork & process – if you’re thinking about venturing out on your own here are some of the forms, legal documents, and agreements you’ll need. If I only knew what I know now…
Memorandum of Understanding (MOU) – in my case I have an international investor so the first step for us was to get to the MOU which laid out the terms of our agreement including, ownership, investment commitment and the business model.
Certification of Formation – the next step was then registering the business. We registered the business as a Limited Liability Company (LLC). As part of this process, you will also need an LLC Operating Agreement form and Organization Meeting if registering as a Sole Member of the LLC.
Tax ID – now that the business is registered go to the IRS.gov site and get an EIN (Employer Identification Number) which is essential for setting up your bank account and tax purposes.
Business Bank Account Forms – if you’re registering as an LLC you will need 1) the Certification of Formation, the Operating Agreement and the IRS letter with your EIN
Register the Business in the State of Operation – my business is registered in Delaware but operates out of Virginia which required filling out an application for a Certification of Registration to Transact in Virginia. You will then receive an ID and DCN (Declaration Control Number) for tax purposes and a DCN number. Also, check with your county and/or city for additional registrations and tax liabilities.
Operating Agreement – this document turns the MOU into a legal agreement. It contains more detail relating to the management and operation of the company, (liabilities, tax obligations, ownership structure, dissolution, etc.) It’s also critical for unlocking investment in the organization.
Other Documents – you’ll need a W-9 and business insurance. Check with your homeowner or car insurance provider you may find they offer business insurance as well…mine did.
I’ll be back in 120 days to give you another update on #buildingcarbondesign.