2 Year Adverge Agency Update + 5 Lessons

Exactly 2 years ago I came up with the idea to build a marketing agency. It was during the Noorderzon festival in Groningen, while having drinks with an entrepreneur friend.?

The idea was to formulate a management team and build a big agency. I was envisioning the legal agency from the TV series Suits when thinking of our marketing agency.

So, where are we now? What have been the challenges? Are we on track?

Let's recap the path so far:

• 2022 august: came up with a rough idea
• 2022 september: created pitch deck
• 2022 october: talked with potential cofounders
• 2022 november: found 4 co-founders
• 2022 december: recruited our CEO Marieke
• 2023 march: founded Adverge
• 2023 april: 1st employee, Jaitse

At this point we had a CEO and a Google Ads specialist, but 0 clients. Money was burning quickly. This is where we started to ramp up our networking and marketing.

• 2023 Q4: 5 employees and reached break-even point
• 2024 july: 4 shareholders buy out 2 cofounders
• 2024 august: 1 new shareholder enters?
• 2024 october: 10th employee starts

So.. a lot happened. Here's some lessons I've learned as a co-founder of our agency.

Onto 5 lessons I've learned:

1. You can't rush new hires?

The quality of the work and the company culture depend on the people in the team. Especially the first people you hire determine what kind of team you're building.?

Unfortunately we screwed up quickly. Thinking back, maybe this was a good learning experience.?

Our second employee was a senior marketeer who had good reputation in our community. Maybe that's why we weren't as strict when signing him. Also we were unexperienced in what we should look for in candidates and the hiring process wasn't as optimized.

We had to let the guy go, which ended in a lot of legal nonsense and lawyers joining in.?

Not ideal when you're a CEO, one employee and being understaffed all of a sudden.

We've learned to hire people based on a pallet of skills. Someone can be an exceptional marketeer for instance, but if they have no sales skills, or don't fit in the team for whatever reason, it's best to move on.

Nowadays we have up to three rounds of interviews for candidates. All meetings are with different people from the team, so hiring decisions are made not by a single person.?

Candidates get checked on enthusiasm, skill, ambition, communication and professionalism.?

Hiring sometimes goes a bit slower than I'd like, stressing the agency a bit, but this is necessary for building a high quality team.?

2. Scaling too fast risks cash(flow)

Especially in an agency with <10 employees, the profit margins are generally low. The overhead is relatively high, processes aren't optimized to perfection and there's a lot of investments to be made.?

While you would like to hire new people based on 'there probably will be more work next month', the reality is that every new hire stresses the cashflow position.?

Ideally, we'd like to stay break-even and invest new profit immediately into a new hire. This isn't sound business practice, however. Our agency needs a buffer, and this buffer needs to grow as our team grows. Let's say two of our ten-person team fall ill, then we'd need to keep paying them, but also invest in people to take on the work. We can only do that if we have sufficient funds, which means we can't scale too aggressively.?

3. A strong, invested and trustworthy CEO is a must

We're SO blessed with our CEO Marieke. Even though she's a first time CEO and relatively young when she joined us at 28, she's killing it. If you want to hear the story of how she became our CEO, listen to ep 1 of her podcast.

When Marieke joined, we motivated her to also become a shareholder. Not only would this make her more part of the founding team, it also would mean she would be financially invested. This meant she would enjoy the fruits of her labor in terms of stock value, but this also meant a sign of commitment, which was reassuring for the other cofounders.

Marieke is learning fast, hiring help where needed and is very good in taking ideas from other cofounders and implementing them, which is the hard part.

When she joined, we basically said there's two main objectives in the first years: (1) doing sales and (2) building a company culture. These skills were what we're looking for when scouting our CEO and we fully trust Marieke in her approach to both objectives.?

4. Shareholders must be, and stay on the same page

When we started, I thought my pitch was quite clear. It contained big numbers. The goals contained large revenue, 100+ workforce and a big exit.?

However, along the way, when growth wasn't as fast as planned, some shareholders kinda 'forgot' what we're trying to do. Instead of forcing the growth we should be looking for, the consensus drifted towards 'maybe we should aim lower, grow slower, but steadier'.?

I wasn't necessarily annoyed with this, but I do remember holding a speech about what everyone signed up for and to try to look for solutions, instead of defaulting to 'it's just the way it is'.?

While we were on the same page after that, slowly but surely some shifts in agendas and opinions started to clash a bit.

In the last year we've held monthly shareholder meetings. What we failed to do is to check in with everyone regularly, to gauge if we're still all aligned in working towards the same goal. Also we should have keep checking if things have changes that might affect the way everyone looks at their role, their stake and the business.

Neglect these conversations for too long, somewhere along the line a discussion will happen, albeit less constructive and more destructive.?

This essentially is what happened in the last months. I won't go into detail in this e-mail, but basically we had a little game of share redistribution.

In the end, we decided to buy out two cofounders and to redistribute the shares among the four remaining shareholders. We also decided to invite a new shareholder, who has a massive relevant network and will be a welcome addition to the team.

From now on, we've decided to keep communication more open, so we won't have a bomb go off in the future.

5. Systemizing is key for growth

As a freelancer I get away with 'winging it' when it comes to a lot of things. I can sometimes not work on my marketing. Send invoices two weeks later. Not pay my salary for a month. Write proposals from scratch.

In an agency things are different. Especially when that agency needs to scale. You need rigid systems. Templates for work, templates for proposals, checklists and a lot of automation.?

I'm very grateful that Marieke is a good 'systemizer' and other cofounders are skilled in templating and automation.?

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