Jeremy Weisz 12:43
What are some of those changes needed? You mentioned at the 1 million mark to get beyond that sacrificing salary? I mean, you have to I guess take a leap and hire, hire more experienced people. And what are some of the changes needed from the 2 million to break through to get to through the 2 million mark.
Felix Velarde 13:11
So it’s really interesting, because one of the changes that happens when you’re a million revenue is — that’s the point at which you realize you need to professionalize your account management. Okay, if you’re that kind of agency, so I’m not talking about sort of software as a service or things like that, I’m talking about agencies that have a blind Services function. So at a certain point around the million mark, you realize that you need a professional account manager. And but you can’t afford a client services director. Because the client services director is going to cost you 200 grand, right? You can afford to sacrifice some of your salary and your dividends and so on.
And so you can pay for it. I don’t know an account director, maybe you poach an account director who’s on their way up. Yeah, he’s got a really great reputation. They want their next move up and you can persuade them to come to you drop in salary, but this is their route to becoming client service. The problem that you’ve got there is that what the benefit is, you can afford them and they will come to you and they will work with you and they will professionalize your help professionalizing the problem that comes with that is they’ve never been a client services director. So they can’t take you through the next stage. Right.
So the million that you break through the million by hiring the account director, and they take you to 2 million, at which point you need a group account director or client services director type be able to professionalize you even further, and when I say even further, I mean, I don’t mean organically and incrementally I mean to change everything. Because the client is gonna give you a million dollars of budget expects completely different stuff. From the one who’s phoning you up and asking you questions about how does SEO work, right? The million-dollar client knows you know, and wants to know what the dashboard is gonna look like, right, and whether you can report to their board. When you get up to the 10 million, they don’t even want that, right.
They want to know how much you’ve added to their share price. And it changes at each of these major steps. So by the time you get to your kind of two and a half million, there’s suddenly you need to re professionalize and get even more senior people in, and then that again, there’s suddenly you’ve got to pay more money, and you’ve got to find that money somehow. So that kind of leaps of faith. But at the same time, the other transformations that you need to do will translations if you like, if you need to start understanding what your workflows are, like, not just having a team where everybody mics in for each other, you now need to departmentalized and you need to have cross-department briefs and you need tracking for results and so on.
And then by the time you get to being a $3 million agency, you start needing ROI dashboards and things like that, and you need reporting lines and middle management and so on each of these transformations is hugely disruptive, unless it’s done perfectly. And so the program is there to do the translations in a risk-free way.
Jeremy Weisz 16:33
There’s a couple of things that stick out. illiquidity talk about that, I kind of categorize them into key hires. And also you talked about expectation of clients, and the expectation of clients changes with some of those stages. Talk about key hires. So you mentioned, obviously getting the account manager up to Client Services Manager, what are some of the other key hires that need to be put in place for these phases.
Felix Velarde 17:01
So I’m not going to talk about job title system peculiar to each type of agency, and there are million types of agency and the only different thing, but there’s a certain point, and it usually happens that the second inflection point, so the two and a half million points. Sometimes we come across agencies who joined the program, and there are 4 million, and they still have this problem. The problem is, they’ve still got people in their team who are C-players. What I mean by C-players are the disaffected, the people who say no, who sort of sneak off early, or they gripe and they whinge while they’re outside having a cigarette, and they influence other people to be disaffected, right, or disgruntled employees, they’re the people that can’t be bothered, and they don’t put in the effort.
And you wouldn’t ask them to make a cup of their round of coffee, because they just won’t be and it will be a pain, right? We all know that these people exist. And unfortunately, we carry these people. And one of the things that I found really bizarre is that by and large, those are the people who are in charge of culture, right? We’re the ones who say, they’re the ones you said, they’re the ones who put themselves in a position where they organize the Friday evening drinks after work, right? Or the softball game, or whatever it is. And yeah, these are the toxic people in your culture.
Now, the good thing, the massive revelation that I had, probably three years into two years into my career was I’ve watched a bunch of these people that I’ve finally gotten rid of, you get rid of them after like two years, and you sort of harmonize and you say, well, we can’t get rid of them, because they’re in charge of leading client number one, or they’re in charge of drinks on Friday. So we of course, we can’t get rid of right? And eventually, you find yourself somehow luckily getting rid of them. And you watch them going from being the person that you hate seeing in the office, the one who brings everybody down, you can they move to the next company, and suddenly they become a superstar. And you think, is it me? Am I just a really crap manager?
What am I doing wrong, right? And you beat yourself up. And I did this for quite a long time. And then I realized eventually that actually, I just know what they just don’t share my values, my values as a founder, our team’s values, as a leadership team, as an agency team. And what you find is that the people that you get on best with your business partner, your spouse, your best client, right, your favorite fact they share your personal values, and I don’t mean values like with the customer always comes first. Not the crap that you see on people’s websites. You’re the stuff that comes from in there, right? Your heart. And those are the people that you want around you. And if you really think about who’s in your team, the A-players are the ones who share your values.
They’re enthusiastic, they love coming into work, you love working with them, they’ll go the extra mile clients love working with their partners, they’ve you’re, you know that they share your values, and the C-players, and the ones who don’t. And so the first time you realize that actually, not everybody on your team shares your values. And you start thinking, okay, should I do something about this? And everybody, by the way, in your team knows who the C-players are, in exactly the same way that everybody on your team knows who the A players are, but every you know who your C-players are, you’re listening to this you’re getting, you’re saying, yeah, that’s Mike and Sally and Daljit, you know who it is right? Get rid of them now. They will be happier, you will be happier, they’ll have the opportunity to shine and be in a place somewhere that they do fit.
And your team will suddenly think, oh, my goodness, this place is becoming more coherent. This place is becoming more fun. And no, it’s not acceptable to badmouth people behind our back and it is not acceptable to say no to stuff. It’s not acceptable to whinge and gripe and moan about this latest client, right? And when you get rid of people, and people start being enthusiastic, and they say, oh, I can guarantee this will happen. I guarantee this will happen. The day after you get rid of your C players, you will get two or three people coming up to you saying, John, I have no idea why you didn’t do that six months ago, or a year ago. Sally, why didn’t you do that ages ago, it happens every single time. For me, it was like this amazing revelation. I got people coming out of the woodwork saying Felix God, why didn’t you do that nine months ago, when we were starting to tell you that they were not happy? And it’s like, okay, all right, listen.
Jeremy Weisz 22:17
You mentioned C players, and some people think of work, but you’re really talking in terms of cultural fit, the person could do amazing work. And from a culture standpoint, what was you? You had some revelations? What was it just sometimes hard to believe that they would go off? Is someone some other company’s values, like talking behind people’s back? Or like, why would they thrive somewhere else?
Felix Velarde 22:45
It’s not the talking behind people’s back. That’s a symptom. It’s a symptom of not being in the right place. Right. And no, my values, my values are on integrity and inclusiveness. I’ve been an anti-racism campaigner since I was 13. I balance every single board that I ever take over or ever work on, so that it’s gender balance. Those are my values right? Now, somebody else’s values money to be. It’s all about the money, right? Or just get results that might break down to, I’ve got family comes first, it beats everything else, right. Other people might say, honesty above everything. Right. Now I find a client that they’ve not recently, but one of our very few failures. On The 2Y3X Programme, we had a client who was a bit iffy, let’s say. And eventually, one day, I caught him in alarm. So I fired him because I don’t need to work with people like that right.
Now, other people don’t mind that. And that’s fine, too. It takes all sorts, right? I can’t expect everybody to share my values. And actually, we all keep each other in balance, you need left and right, you need front and back. You need progressives, and you need conservatives, because it kind of it keeps the Wilder excesses at bay. And no matter how much I might think that my worldview is perfect, and the world should be like that. The reality is it probably works better, because it isn’t. So if there’s a company over there, where this person who wishes and gripes and mines and just says, oh, I don’t like the work we’re doing, I think it’s rubbish. And that’d be happier over there where they think the work is great. And I don’t like the work because there’ll be a client for them.
That’s funny. So I don’t have any problem with that. I don’t have a problem with different personalities and so on. I want a mixed crew of multicultural weirdos but that’s just me, right? You might want something completely different the next person might want somebody. You know, a bunch of people who’ve all come from McKinsey and they’ve got a degree from Wharton, that’s fine too, in a funny, peculiar kind of way, and they can have it. Which means I don’t have to.
Jeremy Weisz 22:55
No, that makes sense. And I could see that because we’re one company, maybe they’re really, their culture and the values is growth. And another one’s is more balance. If someone comes in wanting balance in their life, whatever, and they’re in this growth company, they’re not going to be happy. And it becomes a symptom of not the culture there.
Felix Velarde 25:35
Yeah, completely. I mean, if you think about Jim Collins, right, and his get the right people on the bus. I think that it’s not just about whether people share your values, it’s about whether they share your vision and your dream, or at least the direction of it. So for me, this has really interesting conversation the other day, somebody said to me, you’re all about scaling, what if you don’t want to scan them, so that’s fine. If you don’t want to scale, then don’t read my book, because it’s not going to have very much in it for you. Do you want to triple your revenue or triple your value, you want to sell at some point through millions read the book, because it’s great, and it’ll tell you how to do it, or join 2Y3X.
And we’ll do it with you employee. But if you don’t want to scale, then that’s perfectly acceptable. I’ve got nothing against people who don’t want to scale in the same way, I’ve got nothing against people who want to work in, you know, enormous companies, to each to their own. But I do want to make sure that everybody in the companies that I work with, wants to be on the journey of scaling. Because if they don’t want to be on their journey, they’re going to be unhappy pretty quickly. If they’re unhappy, they’re in the wrong place. And I want everybody around me to be happy. And if they’re in the wrong place, by being with me, I want them to be somewhere else where they will be happy. Yeah, as a leader, I think that’s really, really important.
Jeremy Weisz 27:07
So Felix someone’s listening to this. And like, like you said, they immediately identify, I know exactly who he’s talking about in my company, right? Yeah. But all these things creep up like, well, they’re in charge of this client, they do this, how to replace some. What’s your approach on letting someone go like knowing you need to do it? And then actually doing it.
Felix Velarde 27:34
Make the decision today, do it tomorrow. Unless you made the decision in the morning, in which case, do it in the afternoon? This is gonna do it anyway. Right? The sooner it happens, the sooner they can be happy. Somewhere where they will be happier, the sooner your team will be happy to this as simple as that. It’s when when’s the best time to plant a tree? Right? 20 years ago, when’s the second best? Today? When’s the best time to buy a computer yesterday? Or tomorrow? Just do it.
Jeremy Weisz 28:10
So let’s say someone listens is great. I’m gonna do it. And maybe they haven’t had those tough conversations before. Maybe they are awkward at them. What are some ways that you actually approach and handle the actual conversation itself?
Felix Velarde 28:29
Well, I mean, bearing in mind, I don’t manage companies myself anymore and handle them for quite a long time. As a leader, my approach has always been straightforward. Honesty, it’s, I don’t think you’re a fit. I think you’ll be happier elsewhere. I will give you all of the help. Do you want me to introduce you to a bunch of recruiters and headhunters? Because I truly believe that the people who aren’t happy where they are, will be happy somewhere else. And if they will be happy somewhere else, they’re not bad people. And I should help them get where they want to go. Now that gives me a great reputation that gives me a reputation with those people with their next employer. And with the headhunters, it’s a win-win. And I’m a huge believer in karma. I think what goes around comes around, especially in business and I think if you approach it business in a humane way, then business will treat you reasonably well to in return somehow.
Jeremy Weisz 29:39
Talk about Scale at Speed for a second, how to triple the size of your business and build a superstar team. What made you feel the need to write the second edition what’s in the second edition? That’s so important that you add it you spent the time and energy to come up with it.
Felix Velarde 30:00
Here’s something funny, right? I’m just gonna show you. This is the first edition, if you can see that, right? This is the second edition. Second Edition is smaller and, to my mind easier to read. It’s actually slightly longer as a book. The differences are primarily around the US market. So I wrote the first edition in, what was it, 2021. And it was published by Hachette Worldwide, which was enormously satisfying for the ego. And obviously, you can get it on Audible. And it’s read by Roger Davis, who’s amazing, he’s got this lovely British accent that you can speed up 2X, and still hear every single word is amazing. And then Kindle and all the rest of it, Apple and Kobo and all that. And that book took me more or less three and a half, four years to write. So it was a long process.
I wrote that the original book I wrote, for me, the young mean, I wrote that for the, the entrepreneur, the agency owner, who were agency leader, who hadn’t had a long career of being groomed to be an agency leader, and wanted to know, what the processes and frameworks were to be able to make these leaps, and to maximize the value for exit and to empower people largely. So that was the original thesis. Now, I then 2Y3X GRU. And this book actually, is the full manual for The 2Y3X Programs, what’s it absolutely everything soup to nuts. But after it came out what I and I started working more and more in the in the States. And with more US clients, I realized that there are some fundamental differences in American agency market. In Europe, for example, if you have an agency that’s doing 3 million in revenue, almost by definition, 80 plus percent of your clients are multinational brands. Right?
You’re doing 3 million, you’ve got Unilever, Procter and Gamble, General Motors, a whole bunch of famous brands that you see in the supermarkets and all that kind of stuff. In the States, you can have a $3 million agency where all of your clients are paying you a grand month, and all of your clients are local and let nail salons. Right. And that’s perfectly normal that is a very different way of thinking about business. And so I started coming across these agencies in the US and finding agencies, again, in Europe, to start an agency, most agencies are started by either a creative or a suit, where clients said, if you were to leave your toxic agency, I’d come with you. Right.
So they started by creatives or suits, you have no idea what they’re doing when it comes to running a business. But they think that they can produce good work for the client and the client is given them budget and faith. And so that’s how the vast majority of agencies have started in Europe. And so they’re all creatively driven or client service driven. They’re not business-driven. And in the US, they’re more business-driven. So you’ll get agencies where it’s somebody has had a plumbing supplies firm, made some money and bought an agency, because they quite enjoyed working for an agency with an agency when they were doing the plumbing supplies, firms advertising, right.
And so it’s a different kind of mindset is much more entrepreneurial. And so the second edition of the book is more geared towards that kind of American entrepreneurial mindset. Because when we started working with American companies and putting those American agencies through The 2Y3X Programme, we discovered, to our surprise, that they would thrive just as well, in fact, better than the European-style agencies that had been coming through the program for years and years and years before that.
Jeremy Weisz 34:46
So in the second edition, is it more geared towards that?
Felix Velarde 34:52
Well, kind of I mean, they give you one of the differences just as an illustration, in the UK, which is arguably the one of the most creatively sophisticated markets in the world for in advertising and creativity, digital creativity, the multiples are pretty high, if you get to a million of EBITDA, then you can expect to get at least eight times EBITDA, as your sale price. In the States, the first agency that I bought in the States was doing three and a half million dollars of EBIT, and we bought it for a multiple of four. And that was kind of like, wow, this is very different.
So, the difference in multiples is because in the UK, there are a small number of agencies, and they’re all working for international brands. And so if you want those brands in your portfolio, then you’ve got to pay top dollar, whereas in the States, there are vast numbers of agencies that you can buy, and therefore the price is lower. So that’s very much addressed in the new edition, which comes out May 7, as you said.
Jeremy Weisz 34:59
You obviously have a lot of experience, Felix, in M&A. What are some of the factors that you look at, when you’re buying an agency?
Felix Velarde 36:20
Well, the same time as everybody else looks at actually. So unfortunately, nothing revelatory. But if I’m acquiring an agency, I will do the same kind of basic due diligence as every single other buyer from the network. So it’s public WPP, publicists, and so on Omnicom. And they will look at exactly the same things as I will look at and I’m buying agencies that are smaller than the network’s will buy or stack. Well, people like that will back. So when I’m looking for an agency, and I’m looking at an agency, the basics are you differentiated from your competitors? Specialization? Are you really, really, really good at what you do? Is if you’re just the same as everybody else, then I might buy you from bulk. And I’m not going to buy you because you fill a gap in my strategically diverse portfolio, financial rigor. Do you do your accounts properly? Right?
I trust your numbers? What else? Stability, is your growth rates steady? Is it predictable, because I’m not buying your previous growth, I’m buying next year’s growth and the year after and the year after that. Succession. This is absolutely critical when you leave as the founder and CEO of your agency, when you leave, who’s running the business? And the reason I asked that is because certainly, in my experience, and there’s a statistic in Europe, which is 60% of founders who sell their agency don’t survive the earnout. And the reason for that is, you didn’t start your agency to have a new boss. So as I acquire you, or you get acquired by, you know, whoever it is geometry, or whatever it was that well, they come along, they buy your agency, and suddenly, you’ve got to report to somebody.
And you’ve got to report in ways that you know, when I got bought by antibodies in low worldwide, they used to fly me to New York once a month to present a spreadsheet that I simply didn’t understand to a bunch of people who did not know what I was doing, because I had blue hair, and they didn’t understand digital, but they were from advertising. So they would call and it was this culture clash from hell, right? You don’t want a boss, if you run an agency, you didn’t start it. So you’re gonna have any boss. So the succession team is really critical for the buyer, because the buyer is looking for ways to de-risk their purchase. And the reason that they’re looking for to de-risk it is not because they’re worried about the million or two that they’re spending on buying you.
They’re worried about the fact that you are worth 10 million, or 20 million in future value. And they don’t want to risk the 10 or 20 million, not the 2 billion that they spent in cash on, changing your life. They’re worried about the 10 or 20 million that is going to change their shareholders lives. So they want to de-risk everything. So six, they assume that you’re going to leave that you’re going to take her out and you’re going to run away, screaming at someone who’s the succession team. And the succession team is not just your senior management team. They’re the people who will drive the future of your business, then again, that’s one of the core things that 2Y3X in the scanner speed book addressed is how to build that succession team, how to empower it so that you can leave or you can do M&A, or you can start your green startup or whatever it is that you really want to do.
Bigger succession is so, so important. What else client concentration, if I am looking at your agency, from the point of view of buying it, or somebody’s looking at your agency, and 40% of your revenue comes from one client, what happens if that client has a complete, you know, just bolt from the blue and decides to buy right sizes, times up, new CEO. CEO comes in with their own agency, they want bigger, fresher things you’re out, nothing you can do about it, you’re amazing relationship has gone out the window, now that 40% of your revenue, suddenly means that I paid over the odds for your business. massively over the odds, you’ve got, more or less start again, from halfway up the ladder again, right? I don’t want to be stuck with that.
So I need to see a very good broad spread of clients where none of them is the strategic risk. So those are principal things, those are the things that you’d be crazy to ignore, if you are acquiring or selling your agency. And, as I say, I sold a bunch of my own agency, and then I helped a bunch of other agencies sell. And I became very good at fixing all of those discount factors. And in fact, that became the original pieces of the program.
Jeremy Weisz 41:56
On the selling and buying side, Felix, what have you learned now the transaction is done? What have you learned from the transition? Some of the lessons whether you bought or are you salt that people should be thinking about?
Felix Velarde 42:16
If you’re the founder, and the CEO, again, culture matters. Right? Set aside yourself. For a second just as this this the you know, the perfect listener is sitting there thinking Mike, two years’ time, I’m going to some agency in a triple my value before we go there, because obviously we’re going to join The 2Y3X Programme because it’s not stupid, but I’m gonna think altruistically, right? I sell my agency, what’s going to happen? Well, the first thing that is going to happen is there is going to be a bigger company and a bunch of sister companies around me that are going to be my new family. Right and I have been on my own so far. Suddenly, I’m going to have this family and I’m going to have to get on with this family, whether I like it or not. Right, that can be the in-laws.
And they’re going to be the distaff end of the family. And they’ve begun that agency over there, that’s now my sister agency that desperately wants to make friends with me is doing stuff that I don’t like, because I believe in CRO or whatever it is, I don’t believe in, you’re gonna have to get on with a whole bunch of people that is not you, the founder, who’s gonna have to get on with all these people who’s your people, to your team. So now, if you’ve identified your C players, from a culture, mismatch point of view, and you’ve got rid of them, and you know what your culture is, you know what your team’s values are, personal values are, and you’ve got coherent culture, and it’s great and you’ll love working with each other, you would be foolish not to consider culture first, when it comes to the deal that you do, right? Unless you’re the sort of person who says give me $6 million and I’ll walk, and I don’t care. Right?
If you’re that kind of person, well, you know, I can’t help. I can’t help you and I can’t help your team. Unfortunately, your team is going to be left high and dry, because that one’s got to get on with it. So thinking altruistically, I would be thinking, okay, will my team fit the culture of the acquirer and the acquirers other acquisitions, the other agencies in the group? Because culture is everything right? Culture is, oh, my goodness, I can’t tell you how important values and culture. So that’s number one. Second thing, secondary consideration is as a founder, will you fit the culture will you get on with your new boss, because no matter how much they say, I know we’re all equals and you’ll be on the operational board and blah, blah, blah, blah, you have a boss and you are going to be reporting to the finance director, who you are, who’s going to treat you like an employee. Right?
This CFO of the group is gonna treat you like some underling who has some reports stuff do, you have to get over that. And if you think you can get over that, then great, you’ve got half a chance. And if you don’t make sure you’ve got your succession team in place, then it takes I mean, the program gets a succession team in place within three months, right, fully baked, you’ve now got your future. But it takes a year to get them to the point where they’re really running the business and looking after the business’s future. So think about it early, think about it at least a year if not too, before you intend to sell. Because that succession team is going to carry your agency and your people and the value you’re going to make out of this, just in case you don’t survive the transition yourself. Right.
And speaking from experience, I had two deals that worked beautifully from a transition point of view. Most of my deals were car crashes. From my point of view, they’re great for the team. But I hated having a new boss. I had one boss who I loved. He was the CEO of a group. And he got ousted in a very nasty boardroom coup about 18 months into our relationship after we’ve been acquired. And I left almost instantly after that. And that was pretty horrible experience to, the other brilliant deal that I did with the last agency that I’d started that I sold. We sold it in the end of 2014. I left seven weeks after the deal was done. And that was just It was magic for everybody.
Everybody was so relieved. The new requires was heavily relieved, I was so relieved. And I planned it very, very carefully to make sure that that could happen and everybody was in on it. And it was fine. The acquirers were in on it too. But it was, we made it happen by putting in place the succession team, and the acquire and loving the succession team. And the succession team loving the acquirers group.
Jeremy Weisz 47:11
Yeah, you’ve experienced the spectrum, let’s say and what revenue love I don’t even know if it’s a revenue level per se. Does it make sense for someone to maybe if they qualify to join The 2Y3X Programme.
Felix Velarde 47:31
So 2Y3X, the sweet spot is, for somebody joining us 2 million to 5 million in revenue. We allow companies to join the main program from about 1.2 million I think it is the bottom level, we have a junior program for smaller agencies that need more general guidance, it’s much less expensive. It’s not much less time commitment for the main program. And basically, if you’re a million and a half, and you’re a dozen people or more, then that’s the entry point to the program. But as I say, the sweet spot for entry is anywhere between two and 5 million.
Jeremy Weisz 48:21
Felix I want to ask about momentum and what you do with momentum. But if you could quickly, I wanted to at least get one of your repeated mistakes for you to talk about for a second. Because oftentimes we learn the most from mistakes. If you were to think back on, it doesn’t have to be repeated necessarily. But one of the mistakes that you made that hopefully listening people can learn from you. So they don’t have to make him also.
Felix Velarde 48:56
I think one of the things that comes up time and again in the program is a every single agency that comes in and two things. Maybe three, okay, go on and on. And the couple of things that really, really important one is the feast and famine thing, which is just irritating. And that’s lurching from growth to shrinkage to growth to shrinkage. And that by and large comes from this pilot-induced oscillation which comes from saying, Oh, we’ve got loads of pitches on we can back off the lead generation progress process. And then we’ve want to lead to clients. We haven’t got time to pitch we’ve got to bed the clients in and then suddenly you’ve got a gap of three months of no new business and you think why have I got no new business in this because he switched off lead generation then you switched off pitching and so putting in place processes for that. And that’s usually down to the owner, Founder CEO leader being the only person pitching the pitching bottleneck.
And that sort of by spreading the load. The second thing is being in the weeds. I used to find myself getting drawn back into the weeds all the time. And the reality is, most founders know that they can solve most problems that come up most crises, right, I know that if somebody comes to me and says, oh, this is where that, or this line is left, or we’ve got this orphan crisis, or the several went down, or somebody ran away with somebody’s car, or whatever it is, right? I know what to do. Because I’m leader time. And I’m smart. And I’ve seen it before a bit. And if I haven’t, then I can find somebody, but I know what to do. I can solve it. And I can come everybody down. And then guess what, you become the solver in chief. And I remember thinking, realizing one day that the job of the agency managing director is basically bathrooms and phones.
Yeah, it’s the broadband doesn’t work, we’ll move and you just say it, he’s always you, because there’s nobody else because that person, they’re not gonna do it, because they’re an account director. And that being drawn back into the weeds means that you can’t do strategic stuff, or you can’t do the important stuff. I used to love doing PR, right? I used to love going out being interviewed or being on stage or writing articles in Ad Age, and campaign and all the rest of it, right. Even, I remember being on telly once and you know, this loves that stuff, I was really, really good at it. And I’d write all these articles, and I make waves. And we were famous. And I remember I had three or four of the people on my team came to me and said, Felix, got to tell you some, you know how you’re really good at PR? Well, we found this agency, they believe in and they specialize in public relations.
And it’s new, this PR thing. And for 30 grand, we can pay them per year. And they will generate all the coverage that you generate this moment. And that will save you a third of your time. And you can therefore spend 50% more of your time pitching, because that’s the thing that only you can do. And I was like, yep, I’m really good at PR. They said, Yeah, but look at the cost. Right? You pitching currently makes us $2 million a year. If we could add another 50% to your pitching time, that would be we’d be making $3 million a year. And yet you’re not doing it because you’re doing a 30 grand the job because you enjoy it. And it’s okay. So don’t give up. Don’t be in the weeds, you need to find people who will take responsibility. And for me and ask the method for doing that is to build a growth lab team. Read Scale at Speed, go and build a growth lab team, do not delegate get them to take responsibility. Because delegation isn’t good enough, you’ve remained the bottleneck, if you were still at the top delegating down.
The only way to break this, you being the bottleneck. And the only way to get yourself out of the weeds is to trust people to take responsibility for themselves. And so you need a framework for that, whether it’s our framework or somebody else’s framework, there are frameworks out there that will empower people, when the second you empower people to know what relief it is the relief that it’s not down to you to fix the broken lady toilet, right, or to fix the broadband contract or when they’re clear about who’s being a bit assertive. It doesn’t have to be. And that would, that’s I, it took me years to come to that point.
Jeremy Weisz 50:11
It’s tough, because it’s something you like, I love that example that some of you liked is something you’re good at. And it’s also moved the needle for the business. But there are other things that move the needle for the business more and better and faster. And so it’s good. You had a team that would approach you on that and probably push back a little bit on you. Because there is a resistance factor of liking it good at it. And it’s leading to business. So from the outside, it’s like, yeah, keep doing that.
Felix Velarde 54:41
That comes from hiring A-players and trusting them to have good opinions and allowing them to enter their opinions. And I think at that point, I was just starting to trust people. And one of the big revelations that I had in my management career was that nobody’s looking to you for instruction. None of your team is coming to you for instruction. They’re coming to you for your permission. They’re coming to you, because they want your permission to solve it their way. And we can encourage that by saying, I don’t know what do you think? All right, let’s build Marriott’s famous seven most important words for the CEO. I don’t know what do you think it the beginning of infuriates people. And then after that people will take the mickey out of you for saying it. And then after that, they’ll start coming to you with solutions. And then suddenly, you’ve got new how a team. And that’s magic. And when you have a business like that, that’s just it’s wonderful to be part.
Jeremy Weisz 55:47
Felix, I don’t know if you have time for this. If you don’t, we’ll end it here. But I would love to hear what you do with momentum. If you have to go your next call, I totally get it.
Felix Velarde 56:01
Well, I mean, you talk about momentum, just because it’s one of our great case studies where we have, this is a typical agency, Alpha Centauri is exactly the same impure, these agencies come into the program, because they’re stuck at that two or 3 million mark, they don’t know how to break through the ceiling, because they’ve never been on the other side. And we’ve been on the other side of that ceiling, we know what the next phase is, and the phase after that, and the phase after that. And I think when you bite the bullet and you say you know what I could do with outside help. That’s a really, really important step, because you’re talking about really brilliant CEOs, brilliant CEOs. And they build their business from scratch by gritting their teeth.
And they get to a point where they recognize that they don’t know what it looks like on the other side of the next wall. And I love it when I have those conversations with agency founders who say, show me the other side, is the second year show me I’ll know what to do. And that’s great. And that’s what the program is all about is we bring people in and triple their revenue. I mean, in that particular case, we opened up in the states and did a million dollars of revenue in the first year. Right. And we service the business from London. And I agree in the States, there are tons of those kinds of case studies of agencies where they just need to be shown how to liberate their people, and how to empower their people and how to fix the discount factors, and how to do the kind of risk-free transformation that’s required. Because the second that they can see how to do it. The second is in their hands. They start scaling. I hate to say this easily, they start scaling and speed.
Jeremy Weisz 58:14
For momentum, do you remember one of the big a-ha’s or takeaways for them?
Felix Velarde 58:20
I think with them, it was the realization that empowering the team would quadruple the bandwidth at the top. And I think one of the problems with that you have the many, many agencies have is that you’ve got a founder or a founding partnership, where they are the bottleneck. Literally, they’re the bottleneck to growth. And they’re handling the crises. They’re also handling the strategic stuff we’re trying to. And one of the things about the program is that it directly addresses that we recruit a team around the founders, who are a mix of junior and senior people, but all superstars within business. And you all know who your superstars are, right? And I say, who your five-star superstars, you know that.
So you bring those people into a team together and you co-create a plan of action for the next three years. And it’s a great process. We call it the strategy map. And that team takes responsibility. So you’re not having to delegate downwards. You are part of a team now of five or six people handling the 20 tasks that are required to make progress, rather than you being the bottleneck. And you being able to drive three or four or five big changes each year. And one of which by the way, is usually your new website, which is going to take 18 months anyway, despite the fact that our web design company or whatever it is, right. We all have the same problem. But it’s very rare that we can get more than a few big changes done as leaders on our own, because we’ve got to force the changes through, we’ve got to come up with all of the thinking, we’ve got to persuade everybody, then we’ve got to delegate them, we’ve got to monitor and monitor the delegation, then we’ve got unscrew the screw-ups, and then we’ve got to make sure it bedded in and something that takes a lot of your attention.
And as a leader, you may have bandwidth to do five of those things. But one of those five things is going to be taken up with client, number one who needs your attention, because your names above the door, and so on, right, and then slot number two is going to be taken up with ISIS, that’s just come on new block 10 new pitches on or you’ve lost a big client or whatever it is. So your bandwidth to deliver big changes in your business is very narrow. It’s very limited indeed, when you’ve got five or six people on a growth lab team, and each person is delivering one change every quarter, that’s 20 changes over the course of the year, not three or four.
And that’s what creates scaling is that the relentless grind through a plan of action to take you to some lofty, lofty goals, gets you to lofty goals, if you follow your plan, they can only work if you can empower motivate people. And it turns out, the best way of empowering motivating people is to get them to create the plan with you. Because then you’re not meeting resistance when you tell them what to do. You’re giving them permission to do the thing that they wanted to do. That makes life so much easier, then that’s the secret sauce of the program that we don’t tell anybody about.
Jeremy Weisz 1:01:44
And you’ve done the same for 2Y3X. You have a team of heavyweight facilitators that are very experienced in the agency world too.
Felix Velarde 1:01:53
Yeah, all of our program leads have been agency CEOs themselves, agency founders that will solve their agency were executed in one way or another. Some of them would run groups. They are super amazing people. Mo there on the left. She was head of consulting for Adobe, in Europe, Middle East and Africa. She was digital at Saatchi and Saatchi. She’s been on leadership teams that also served in all sorts of places. So, Simon in the middle there, he came through the program he actually was he was the COO of or managing director of an agency that joined The 2Y3X Programme to what the 2017 they completed the program.
They were bought right at the end of the program. The acquirer made him COO of their group and he grew their group from 31 million pounds, revenue to 80 million pounds revenue in four years. And then when he completed his exit from there, he came and joined us as a program lead and he’s now COO. So he’s come full circle and very flattering. So yeah, it’s a whole bunch of people here and in the States and in Europe and in the Middle East to have all run agencies and all brilliant people.
Jeremy Weisz 1:03:22
Felix I want to be the first one to thank you. Thanks for sharing your journey. I can keep listening to you go through all this stuff. So there’s just so many gems in here so, I’ll be re-listening to it. I hope if you’re listening to this, there’s a lot that we learn the second time around check out 2y3x.com to learn more check out Scale at Speed. The book. Felix thanks for joining me.
Felix Velarde 1:03:46
Thank you so much Jeremy — really enjoyed it.
