[Top Agency Series] The Art of Growing Your Agency: Insights From Felix Velarde of 2Y3X

Felix Velarde is the Founder and CEO of The 2Y3X Programme, a marketing firm designed to help agencies triple in size in two years. He is a seasoned entrepreneur and a pioneering figure in the digital marketing industry, with a career spanning over several decades. He founded one of the first web design agencies in the United Kingdom and grew it into a highly successful enterprise.

Felix is recognized for his strategic leadership and expertise in scaling agencies rapidly through The 2Y3X Programme. As an anti-racism campaigner and advocate for inclusivity, he values integrity and balance within the workplace. He is also the author of Scale at Speed, a book aimed at helping businesses triple their revenue and build superstar teams.

Here’s a glimpse of what you’ll learn:

• [3:58] The origins of The 2Y3X Programme and its goals
• [6:07] How to break through revenue ceilings
• [12:43] The critical hiring shifts needed for an agency to transition from one growth phase to the next
• [17:01] Recognizing and addressing the issue of C-players in your team
• [27:07] How to handle the tough conversation of letting an employee go
• [30:00] How the second edition of Scale at Speed features adaptations for the US market
• [36:20] The due diligence factors for acquiring an agency
• [41:56] The importance of cultural fit during an M&A transition
• [47:31] The ideal revenue level for agencies considering The 2Y3X Programme
• [54:41] The transformative impact of hiring A-players and trusting their expertise
• [58:14] Unearthing the a-ha moments that shift business momentum

In this episode…

As an agency owner, have you wondered why you’ve hit obstacles you can’t seem to surpass? What does it take to push through those barriers?

Felix Velarde, the Founder of The 2Y3X Programme, faced similar frustrations during his career as an agency founder and CEO. His quest for solutions led him to develop a two-year program designed to triple an agency’s revenue while preparing it for maximum sale value. Felix discusses how agencies must undergo significant changes at specific revenue points and why investing in experienced talent is crucial to breaking through growth plateaus. He also highlights the importance of professionalizing functions and establishing proper workflows as agencies aim toward attracting larger clients.

In this episode of the Inspired Insider Podcast with Dr. Jeremy Weisz, Felix Velarde discusses how his experiences scaling agencies and mastering growth transitions led him to found The 2Y3X Programme. He shares insights into the predictable phases that agencies go through, outlines the key transformations required at each stage, and the critical organizational shifts that need to be implemented.

Resources mentioned in this episode:

• Felix Velarde on LinkedIn
• The 2Y3X Programme
• Scale at Speed: How to Triple the Size of Your Business and Build a Superstar Team by Felix Velarde

Special Mention(s):

• Second Bite Podcast

Related episode(s):

• “[Top Agency Series] Most Valuable Advice When Selling Your Agency With Todd Taskey of Potomac Business Capital” on the Inspired Insider Podcast
• “[Sweet Process Series] How to Save Hundreds of Hours a Month Using Top Productivity Tools with Adi Klevit of Business Success Consulting Group” on the Inspired Insider Podcast
• “[Top Agency Series] Navigating a Merger and Becoming an End-to-End Digital Partner With Kevin Hourigan of Spinutech” on the Inspired Insider Podcast

Quotable Moments:

• “Nobody teaches you how to run an agency well, you shouldn’t have to do the whole thing by trial and error.”
• “That transformation… It’s about the shift, the mindset shift, process shift.”
• “Succession team is really critical for the buyer because the buyer is looking for ways to de-risk their purchase.”
• “You didn’t start your agency to have a new boss.”
• “Culture is everything.”
• “You become the bottleneck if you’re still at the top delegating down.”
• “The best way of empowering and motivating people is to get them to create the plan with you.”

Episode Transcript

Intro 0:01 

You are listening to Inspired Insider with your host, Dr. Jeremy Weisz.

Jeremy Weisz 0:22 

Dr. Jeremy Weisz here founder of inspiredinsider.com where I talk with inspirational entrepreneurs and leaders today is no different. I have Felix Velarde and Felix, I always like to point out before I formally introduce you other episodes, people should check out the podcast. Big thank you to Todd Taskey for introducing us Todd has the Second Bite Podcast. And you know Todd, but he basically helps agencies, pairs them with private equity and help sell agencies and he says second bite because sometimes they sell more on the second bite than they do on the first you have a lot of experience in M&A. So we’re gonna talk about that and what your experience has been. So that’s a really good one.

Another one. Felix is with Adi Klevit her agency. She is a done for you for SOPs for companies. So she goes into a company helps them with the sexiest thing that they have, which is to make sure all their SOPs are buttoned up so it helps streamline onboarding and of staff of clients and everything like that, so that we geeked out on operational things. Our favorite productivity software does a really good episode. And Kevin Hourigan of Spinutech ad agency since 1995.

Now you predate Kevin, I won’t age you too much, but 90-95 and he talks about just the business landscape, the internet landscape, the agency landscape, dating back to 1995. So check that one out as well. This episode is brought to you by Rise25. Rise25 we help businesses give to and connect to their dream relationships and partnerships. How do we do that? We do that by helping you run your podcasts are an easy button for a company to launch and run a podcast and we do the strategy, which is the most important the accountability and the full execution.

So Felix, we call ourselves the magic elves that run in the background and make it look easy for the hosts so they can create amazing content and create amazing relationships and most important focus on running their business. For me, the number one thing in my life is relationships. I’m always looking at ways to give to my best relationships. And I’ve found no better way over the past decade to profile the people and companies I most admire and share with the world what they’re working on. So if you have questions about that, you should definitely think about podcasting. Go to rise25.com, or email us at [email protected].

I’m excited to introduce Felix Velarde. He’s founder of The 2Y3X Programme, you could check it out at 2y3x.com. They’ve helped scale 40-plus agencies. It doesn’t include his own agencies, by the way. He was the founder of one of the first digital agencies in 1994 predates Kevin even have to tell him that Felix and his second agent actually became the digital arm of Lowe, he founded over six agencies, two agency groups, he’s acquired over 17 agencies sold six of his own helped another over six sell, lots of experience. And you can check out his book, I’ve listened to it. It’s fantastic on Audible Scale at Speed: How To Triple The Size of Your Business and Build a Superstar Team. Actually, the second edition is coming out now. So by the time he listened to it, it’s already out. So Felix, thanks for joining me.

Felix Velarde 3:34 

My pleasure, Jeremy, how are you?

Jeremy Weisz 3:36 

I am fantastic. And we’ll dig into the book a little bit. And what was in the second edition, what made you write a second edition, but I just want to start off with talk about 2Y3X a little bit and what you do. And if you’re listening to the audio, there is a video component. So we’re going to pull up his site. So talk about 2Y3X.

Felix Velarde 3:58 

So 2Y3X was born out of my own frustrations, as an agency founder, as he said, I founded a whole bunch of agencies. And I wasn’t very good at it at the beginning, mainly because I had no idea what I was doing. And nobody teaches you how to run an agency. Nobody teaches you how to run businesses well. And my ego was too big to listen to anybody else. And so by the time I was halfway through my group, my agency founder career, which was probably 10 years into my career, I’d already started three agencies, and I had made every mistake that you can possibly make running agencies, some of them repeatedly, which is a bit dumb.

I just thought that there’s got to be a better way of learning how to run an agency because the agency has been around for 170 years, in more or less the same format? And surely we wouldn’t, we shouldn’t have to do the whole thing by trial and error over and over and over again. And so when I finished my agency career, and I was trying to think, well, what do I do next? And how do I get back? And, you know, the journey that you go through as a former founder and a serial CEO, and I’ve been an agency Group CEO, and I thought, you know what, why don’t we pull something together that helps agencies beat the growing pains and get through the sort of the standard agency growth problems with feast and famine that hitting your head against the ceiling over and over again?

How do you get yourself out of the weeds? How do you empower people? How do you create a succession team? And above all, how do you create value so that you can eventually sell? And so that’s where that’s how 2Y3X was born. And 2Y3X does what it says on the tin, it’s a two-year program, and it will triple your value. At least, they can triple your revenue, at least. And we back it with guarantees and so on. But it’s really about how do you empower the next generation of talent in your agency in your business, so that they can take the responsibility off you. So you can focus on more strategic things like an opening up in New York or coming to the UK or writing a book or mentoring other people, or even going into the M&A space, which is somewhere that I am now even more heavily involved with these days?

So that you can, you’re going to head towards selling your agency at the highest possible value. So that’s where it was born. And that was about eight, nine years ago, I guess. So yeah, that’s where it came from. And so I did that for a couple of years on my own. And then I started finding people wanting to do it with me. And yeah, it’s grown from there.

Jeremy Weisz 6:07 

We’ll talk about mistakes, maybe even some of the repeated mistakes that people can learn from, but I want to start with predictable growth phases. You talk about these predictable growth phases, one of the things you help with the program people to break through these growth plateaus. Can you talk a little about those predictable growth phases?

Felix Velarde 7:21 

Yeah, it’s really interesting. I was really, really good. When I started my own agencies, I was really, really good at getting to a million really, really fast. And that I found that very easy. And then I could get to a couple of million, two and a half million pretty quickly after that. So call it two, three years, and I’d be up at a couple of million, two and a half million. And then I get stuck. This is my early career was creating these agencies that would become groundbreaking agencies famous, they’d win all the awards. In fact, my second agency was the world’s most awarded digital agency; had an immediate, that was the one that became the digital Arm of Lowe worldwide.

I had these amazing agencies that did brilliant work, when all the awards they were the culture was amazing. And I could not break through this turned-a-half million revenue ceiling, I just couldn’t do it. And I’d fall back a bit. And then I take another run at it, and I hit my head. And after a while, that became pretty bruising. And so I found myself in a situation where my first two or three agencies, I sold them when they got to that bit, because I couldn’t break through this sort of kind of no concrete ceiling above my head. And I, in retrospect, I had a 20-year career and I had six agencies of my own and then eventually I had a group of 12 agencies. And I saw this happening time and time again, with founders, either my friends or my colleagues and my competitors, both go through the same thing, you get to either a million and stop, or you’d get to two and a half million in stop, or you get to three and a half 4 million and stop and get stuck. And it seemed to be this repeating pattern.

And what I realized eventually it took me ages right, you know how common sense always comes from somebody else? Right? It took me retrospect in hindsight, and several failures to realize that actually, what happens is that when you’re a million in revenue, you become perfect to deliver it or being a million agency, right? You become perfect at this, this size that you know how to manage and you want to win clients that are bigger, but clients are a bit more clever than you think they are. And clients actually want people who know how to deliver that to millions scale. Right? So you perfect yourself and you get better and better and better at being a million agency. The clients that you want. They want a 2 million agency. You ain’t very good at that. So in order to get to be a 2 million agents, you have to break stuff. Now, for me, I was very good at breaking through the million barrier, because for me it was I knew I had to hire somebody who was more expensive than I could really afford, who had more experience.

And so I’d hire them and I’d sacrifice my own salary for a year to get them in, and they would show us the ropes of being Timonin. Right, they would show us the SOPs and the processes and the workflows and the how to sell to people like that, and all of that kind of stuff. So they would track this up. And then we perfect this amazing 2 million agency, two and a half million agency. And we get better and better and better at being a 2 million agency, and we win clients that wanted the 2 million agency, and we’d be sitting there going, well, we want the bigger clients, but the bigger clients wouldn’t hire us.

Because guess what we’re assuming agency with all those 2 million we don’t have the sorts of things that a, a million dollar client, we don’t have the processes to be able to cope with million dollar client, we thought we did, the million dollar client knows that we don’t, right, because they’re not stupid. So it became this kind of this realization of oh, my goodness, we’ve actually, we’ve hit a barrier, not because we don’t know how to run a business, not because our work isn’t any good not because we’re not good at pitching because we’re great at pitching and selling is because we’re not set up for the size of clients that we really aspire to. And so that takes change.

And so that transformational change the transformation, you have to go from being a family unit, which is what you are until you’re a million to being this kind of inner circle analysis circle, and a cult arrangement that you are when you’re a $2 million, or pound or euro agency, and then turning it into a business, and that those transformations happen at predictable points. And bizarrely, the predictable points are in multiples of 12 people. So your first million you do with 12 people, but to be the perfect 2 million agency, you need to be 24 people. And then you can do two and a half million revenue, right? And to be a three and a half million, you need 36, and so on. So it became the inside for us. Oh, my goodness is about the transformation, you had to do the shift, the mindset shift, process shift and so on. Because that’s the barrier. That is the only barrier that really matters. Because everything else you’re capable, because you do the grunt work.

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