Advanced SearchExchanging ideas. Left to Right: braddy (Brad), bitter (Bruce) & kawasaki (Guy Kawasaki)
GoFlamesGo and I (bitter) first ambushed Guy Kawasaki during a speech at the Banff Venture Forum. After several attempts and small talk with Guy, GoFlamesGo discovered they shared a love for hockey, he bought Guy's skates and a friendship was born. It may not have been obvious to Guy, but our attendance and intentions were pre-meditated. GoFlamesGo hung off him like a cheap suit, chauffeured him to the Calgary International Airport just to get an hour of his time and introduce iStockphoto.
The Art of the Start is the time-tested, battle-hardened guide for anyone starting anything. We decided to put it to the test and specifically ask Guy to apply his knowledge to the graphic design industry.
Some designers think it's nauseating for potential clients to be solicited by an agency. Do you think it's bad form for an agency to approach potential clients to solicit their business? What is the best way for an agency to get new work?
You're kidding, right? You have to sit by the side of a river a very long time before a roast duck will fly into your mouth. Read my lips: everybody has to sell. Consumer companies, tech companies, ministers, authors, artists, teachers, environmentalists... everyone has to sell something. Designers are supposed to wait for business to knock on their door? I hope they have rich parents.
In recent years, smaller firms have cast a wide net, offering many different services such as advertising, photography and web hosting. Do you think this positioning approach is effective for a small firm?
Nope, not at all. A firm should do one thing really well. Hell, I don't think iStockPhoto can sell $1.50 and $75.00 pictures no more than McDonald's can sell $3 burgers and $30 steaks. One should be so lucky as to do one thing well. Saying you do several things well is hallucination.
Designers sometimes partner with technology companies and pitch jointly on RFPs. Do you think this approach leaves the potential client feeling doubt about their project being delivered on time and error free? What is the likelihood of being chosen for a project when all of the services aren't all "in-house"?
This would depend on the type of RFP. I would make the case that if the RFP truly requires partnering, then either the RFP is inappropriate or the firm is biting off more than it can chew. Frankly, I hate partnering. I think it's a BS word for trying to cover flaws with smoke and mirrors.
In the Art of the Start, you talk about being a mensch. (A yiddish term for a person who is ethical, decent, and admirable). Does karmic purity guarantee new business? Should an agency attempt to perform at least one project for a non-profit per year? Are there different levels of Menschdom that we can practice?
Karmic purity doesn't guarantee new business. Frankly, if you were doing good deeds in order to derive new business, you would hardly be pure. You should do these good deeds for the sheer joy of making the world a better place and their intrinsic value. I don't believe there are levels of Menschdom. You either are or you aren't.
Does a design agency need a business plan? Could you recommend some resources for creating a business plan for those who have never created one before?
Every organization needs a business plan. Don't get me wrong, not for the sake of having a magnificent document, but for the process of getting everyone communicating and thrashing out details. The process is as important as the end result. Good source? Well, I do cover the topic in The Art of the Start.
To "make meaning" is to create a product or service that makes the world a better place. 37Signals has created critical theory for designers such as enormicom.com. Do you think we can make meaning by offering critical thought? How else can we make meaning as designers?
What can agencies do to generate business?
Glad you asked. When we ran The Art of the Start cover contest, I got a lot of hate mail: "You're asking poor, starving artists to do spec work," "AIGA guidelines specifically say we shouldn't enter contests like this," "You're trying to get lots of designs for no money."
Blah blah blah...so lots of people didn't enter. Now consider this: the winner got a $1000 camera, a four-figure fee, and exposure as the cover designer of a book that became a BusinessWeek and Wall Street Journal bestseller. Even the "losers" got to put their designs on the back of my dust jacket and on my web site. When you click on a design on my web site, I provide contact information as a lead generation device.
The lesson is this: This is business. Get out there and sell. Press flesh. Get exposure. Market yourself. Take chances. Sure, sometimes you'll get taken advantage of, but it sure beats waiting by the side of the river for that roast duck.
How many business plans does Garage review in a year? How many are funded?
300-400 per year. We make about 10 investments per year.
You've talked about investors looking for “the next big thing”. Do you think agencies stand any chance of getting funded by VC money, or should they be looking for an angel investors?
It would be very hard for an agency to get venture capital. The venture capital game is to fund a company that will achieve sales revenues, hopefully, of $50-100 million/year in five to seven years. Not many agencies can credibly claim the ability to get to this level. Venture capital simply isn't appropriate for most agencies.
In the agency / service industry, profit margins tend to hover around 7-15%. At this rate, there won't be much ROI for angels. What advice do you have for agencies in regards to maximizing profitability and taking care of angels?
One shouldn't think of angels as easy targets who will settle for less than venture capitalists. Both angels and venture capitalists invest in order to make money. To make money, you need a liquidity event. What liquidity event can most agencies envision? An IPO seems unlikely. Liquidity would have to be an acquisition, but how many agencies get acquired per year?
Agencies are simply a different game: creating a cool firm where people make a fine living and have a good lifestyle. This simply isn't the venture capital or angel game. If you have a rich aunt or uncle who wants to give you a start, fine, take the money. But don't promise your aunt or uncle that they are investing in the next Google.
Why do you like iStockphoto?
I like iStockphoto because I like companies that help "the rest of us." This goes back to my Apple heritage. I like that you help photographers who are trying to break into the profession and that you help designers and companies that can't do $10,000/day photo shoots. iStockphoto is a democratization play.
Links:
Guy Kawasaki
Art of Start: Cover Contest
Garage Technology Ventures
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