Ryan Malone, Founder and CEO of SmartBug Media, an inbound marketing agency, HubSpot Diamond Partner, and winner of more than 100 awards, founded his company on this premise: That clients would be best served by providing them with marketing strategists who had in-the-trenches P&L, product launch, skin-in-the-game experience and an understanding of the impacts of wrong decisions.
Ryan started his career leading marketing teams for publicly traded and early-stage technology companies. He saw agencies that threw any available talent at the strategic function – using interns, copywriters, and graphic designers to develop marketing plans, then blaming poor performance on his company’s failure to provide the correct inputs for the marketing agencies’ “whiz-bang” strategic processes.
Ryan wanted to build his agency with the best veteran marketers he could find. But, how could he do that in Orange County, CA, where local talent would be limited to those who would be willing to drive in community that ranks first nationally in stressful (nightmarish) commutes?
Ryan decided to hire the best-fit marketers for his agency, regardless of location, and to put his strategists front row with clients, instead of interjecting “account managers” into the company-client relationship. Today, his company has almost 60 employees, all completely remote . . .located in 25 states and 2 provinces. He warns that the idea that companies will save money by hiring remote employees is a misconception – the cost savings of not having physical facilities is more than offset by the added costs of building a strong team and company culture.
Every year, SmartBug brings all the employees and their families together at a top West Coast resort for a training, team-building, quality-time event, SmartBugaplooza. Ryan believes the quality of talent he has been able to acquire through hiring remote is a strategic advantage – but, focusing on culture is critical to making the long distance relationships work.
Another practice that Ryan has found to be effective is that he interviews prospective new employees ahead of need (SmartBug is always hiring) and queues up candidates with scheduled onboarding. Again, his hiring field is not local . . . it’s all of North America . . .and having potential hires “ready” means he is not forced into making potentially risky “emergency hires.” Ryan also explains why it is important to establish corporate policies when a company is small.
Ryan talked about growing his agency and covered some of what is in this interview in more depth when he presented “Building a Remote Agency at Scale: The Big Decisions You Will Face and Must Conquer” at Hubspot’s Inbound 2018 conference.
ROB: Welcome to the Marketing Agency Leadership Podcast. I’m your host, Rob Kischuk, and I am joined today by Ryan Malone, Founder and CEO of SmartBug Media based in Orange County, California, but also 100% remote. Welcome to the podcast, Ryan.
RYAN: Hey, thanks for having us.
ROB: Great to have you on. Why don’t you start off by telling us a little bit about SmartBug Media and what makes SmartBug great?
RYAN: Thanks. SmartBug is a word-intelligent inbound marketing agency. We have about 60 people; we are completely remote. We focus almost exclusively on digital marketing, lead generation, sales enablement – everything from the product requirements being released and product marketing’s role in a business all the way to a sales-qualified lead and all the channels in between, and we layer those on top of different marketing automation platforms.
One of the things I think that makes us different and great is we learned a long time ago that as a marketer – and my background is in network security consulting at Deloitte and then a few early stage venture-backed companies in marketing leadership roles – as a marketer, you’re putting a lot of trust and, in some cases, your career in the agencies that you hire. So, you need to be able to get an agency that can easily plug into your company with veteran people that have walked in your shoes.
As an agency, we’ve done a really good job at skipping the trend to hire interns and, in some cases, the T-shaped marketer that doesn’t really fit the client, and really focus on hiring veteran marketers that can align with our client strategy, apply SmartBug’s delivery process to it, and yield results that are appropriate for that company the vast majority of the time.
ROB: Really interesting. When you started, did you think that you would always be remote? Or was that something that emerged naturally along the way? Did you have a thesis around that, or was it just kind of how it emerged?
RYAN: Thesis is probably strong. We started doing remote about 10 years ago, far before remote was cool, and it seems like it’s the fancy trend now. We did that for a couple reasons. At the time I was running marketing for a network security company, and I knew that I was going to leave and I was going to start SmartBug. I called some friends that were also in the technology space.
I noticed that when we hired agencies, if the agency did well, it was some whiz-bang process that they usually tried to trademark, and if they did poorly, it was somehow our fault for not giving them the input that they needed for that system. But when you really looked at the people doing the work, it was interns and graphic designers and out-of-work copywriters and people that had no business doing strategic marketing because they should’ve been doing what they were classically trained and good at.
So I asked the contacts that I had if there was an interest for them to hire an agency that – I know this sounds kind of cliché, but kind of “by marketing, for marketing,” where the agency was filled with strategists who had managed P&Ls and launched products and understood, more importantly, the implications of being wrong, because oftentimes agencies don’t – they’re more focused on the creative than what the creative does.
I knew that I was going to leave, I’d just gotten married, and I was trying to figure out, how do I quickly get the best talent that I possibly can? I live in Orange County, California, which to drive 10 miles during rush hour is usually a monster to do. So I knew that if I hired a local, if I started a local shop, I would be limited in the talent that I got based on who was willing to hop in the car for an hour, and that did not work for me because I came from the startup world and I was expecting to grow at those types of rates.
If you combine that with the fact that I’d just gotten married, I wanted to have kids – I also didn’t want to be the guy who never saw his kids, and I didn’t want to be the CEO who never went to the office because that’s the bad example. So we figured that we could create a company that allowed us to quickly add talent, that allowed the people that worked here to work with people that they had deep intellectual respect for because we were hiring from a far larger hiring pool, and that you had the mental space and the flexibility to do the things that matter in life.
Because the truth is, you and I are not going to remember this phone call when we’re older. You’re going to remember what you do with your family this weekend, what you do with your girls. So that’s really important, and if we can create that space for people to create those life memories and still provide a really challenging career, then we feel like we have a very defensible position.
ROB: For sure. I think that there are certain people who like that flexibility of being remote, and I imagine it also helps you escape some of the cost curve of hiring skilled people in Orange County and the broader LA Metro. Do you think some of that flexibility for you and for your employees is part of what helped you skip that intern trend, where you’re just trying to execute something a little bit cheaper?
RYAN: No, I think – it’s interesting, I gave a talk at Inbound this year, at HubSpot’s big conference in Boston, and one of the points that I made was that if you try to create a remote company because you think you’re going to save money, you’ve just made a big mistake. Where you may save money on the fact that you don’t have an office space, or maybe compensation is slightly different at one place or another, you have to make up for a very intentional focus on culture.
Actually, every year we have this event called SmartBugapalooza (which by the name, you can basically tell how old I am) where we bring our whole company and their families out to usually a 5-star resort on the West Coast so that they can spend quality time with each other. Any savings that you would’ve made during the course of the year by not having office space, we’ve spent far more than that ensuring that people are well-trained and that they get along and that they have this outlet where they can spend time together and things like that.
So, I think the cost benefit of it is probably short-sighted. I think the talent acquisition piece is really where the strategic advantage of the model is.
ROB: For sure. The idea of having a funded trip to a 5-star resort once a year also seems like a pretty nice deal. It’s a paid vacation that doesn’t count as vacation. It counts as work.
RYAN: Yeah, we usually do one day of work and three days of fun.
ROB: That’s awesome. Where was that this last year?
RYAN: Last year we did it at The Montage in Deer Valley, which is up in Park City. We’ve done it at Pelican Hill in Newport Beach, we’ve done it at Napa Valley. We have some young employees too, so we had to mix in a trip to Vegas one year.
So, we try to create an experience for people that they otherwise may not do because ultimately our company is based on the fact that we have really smart people who care, and we want to make sure that they recognize that we care and that their significant others understand what we’re about. They always see their significant other through a video screen or on a telephone call, and they don’t get the kind of casual Happy Hour/Christmas party type stuff that you would see if you had an in-person office. It’s super important that they understand what we’re about, so that’s one of the reasons that we do it as well.
ROB: That sounds like a great way to make that virtual job real to the family as well, because it probably almost seems – I know when I’m working at home, my wife thinks it seems almost like a fake job, right? [laughs] It’s just a bunch of people online and money comes in, and its’ kind of a strange world for people who grew up in a more physical time.
One thing you alluded to a little bit earlier was the fit that you see between marketing agencies who have sat in the shoes of their clients before, who understand – I think a criticism that is often leveled at agencies is they don’t have skin in the game. They get a budget and they spend it, and they spend it whether it works or not. It’s really hard to align an agency agreement to be contingent on results.
What are some things you think that agencies who haven’t been in the shoes and haven’t had skin in the game before are missing when serving a client that has to feed their staff based on whether they succeed or not?
RYAN: I think one of the drawbacks of living on – and this isn’t a bash against inexperienced people, because everybody is at some point in their life. You just choose as a business owner where you want to make your bets.
We’ve always felt that marketing is not an exact science. There’s some art, and there’s a lot more science now than there used to be, and if you’re smart you’re going to fail a lot and you’re going to win a lot because of those failures.
If I’m looking at somebody that’s got some marketing chops for a company or if I would recommend to another agency, when you hire somebody who’s a marketing strategist for you and that person has the experience of walking into a board meeting and explaining what happened to some budget and why it didn’t work, you don’t want to be in that position ever again.
That filter and that lens that you look through when you’re making your next marketing campaign decisions have a lot more reality, and I think a lot more – “fear” is probably a strong word, but you definitely understand the implications of being wrong to the business because you’ve been in the business.
I think a lot of lifetime agency folks are so focused on the fact that the release of this creative entity is the win, because that’s what gets an award or that’s what the creative team has been working for. But that’s really just a means to an end, and the end is ultimately, at the end of the day, how much revenue you’re generating for a client. Anything less than that are just either forward-looking KPIs or stuff that doesn’t matter.
So we try to get people, and I advise other agencies to find people, who’ve done that before because they’re going to be more of a peer to your client, and they’re going to be a filter between what sounds like a good idea but might be a gimmick and what’s actually a practical idea but may not necessarily be as sexy.
ROB: Indeed, indeed. You mentioned in your background that you had been on the brand side for a while, on the technology company side of marketing. What was it that made you consider starting an agency, and how long had that idea been germinating before you decided to embrace it?
RYAN: The thing that really did it for me – I worked, the last job before I started SmartBug – I mean, real quick background. I finished at Deloitte and I went back to a company named Seagate, which you probably know as being a big disk drive manufacturer. We worked in the State of Protection division and I ran a product marketing team there. We sold that company.
I went and I was number eight at a startup that did network storage, and we were a licensing model a lot like Dolby. We partnered with some of the big networking companies to provide storage options. Then we raised some money and some stuff like that. And then my final position before I started SmartBug was to run marketing for a network security software company.
What I noticed all the time along is that there was this gap. I never felt like I had an ally at the agency who was a peer. I felt like the partner came in, who I created some affinity with, they sold the product, and I got handed an account manager. The account manager’s job at an agency – which we eliminated a long time ago – is really to run interference between the client and the smart strategist that you really want to talk to, because they’re the most expensive person at the agency. So that was fundamentally an annoying thing because you always want to work with a peer, because you trust them.
Then we worked on a project at my last company where, I don’t know if they were understaffed or whatever, but the people that we worked with had never actually written a marketing plan before. And they were the ones that were doing our marketing plan.
That’s when I called some friends, and at that time, at that company, I was just sick of working at a company. I felt like I had this idea, and I felt like if I could create this environment for people, like I mentioned earlier, that that was my way of giving back to the world. If I could, in a tiny, tiny way, enable people to have a nice career and create these cool life memories that they were going to remember when they were older, that was my position in the whole karma circle that I would do that.
So, when that person showed up who’d never written a marketing plan, it made me realize that there’s a much better way to do it, and I started kicking the tires on a different model.
ROB: Interesting. Pulling off of that, most agencies I think start with a strong sole practitioner or a couple of strong sole practitioners who really do have that client-facing empathy. As you mentioned, as they scale, it’s hard to scale, and you add account managers or other layers to handle some of that day-to-day.
How have you thought about scaling this idea of having somebody who’s strong, client-facing, with that mind and empathy and the understanding of what’s at stake and the skin in the game with the client?
RYAN: One of the things that we do really differently is we’re kind of like the anti-agency. I read all the agency books and I listened to a lot of agency podcasts, and we just decided to do it a lot differently.
Since my background is in high volume product development at Seagate and technology marketing at those other companies and consulting at Deloitte, we tried to structure ourselves more as a startup than an agency. In the way that we do our recruiting to the way that we deliver services, we try to structure it more in a startup.
Let me give you an example. One of the things that we have when we structure our teams is a strategist is paired up with a consultant. The strategist is the CEO of usually like five accounts – which is really low for agencies, right? Your classic account manager/account director role, they usually have far more. But the strategist usually has five accounts, plus or minus. Their job is to create the strategy and work with the consultant who works with all the specialists on our team to deliver it.
Because we have that strategist in place, they have a direct line to the client, which means that we don’t need an account manager. We have won so many deals simply by the fact that we don’t have an account manager role, because everybody has the same scars on their back that we do, which is the account manager parachutes in at the right time to make sure things are great, and they’re incentivized on upsells, and everybody knows that.
But then when they really need a question, the account manager tries to answer it, but they don’t need always have the skill to answer the question that they have, so it takes longer than it does to just pick up the phone and call your team.
We structured it as if you were hiring a “director of digital marketing” (and I’ve got air quotes up). It just happens to be that that director of digital marketing has a team behind them that’s got a variety of different skills. So, if you need to call us, you call us. If we need to appear at a meeting, then treat us like an employee.
That ends up being really scalable because to the extent that we need more strategists to support our growth, it’s really easy just to add another pod of people, train them up, and let them loose. We have historically tried to – your question should be, “Okay great, so what do you do when you can’t find people?” We’re always recruiting, to the point where we’ve almost got a short waiting list of strategy consultant people to join the company.
Since we’re already recruiting, we can basically say, “Hey look, we’re growing at this pace. You were number two on the list. The next time we’re going to have an opening is probably 6 weeks or so. If you can hold tight, you don’t have to go through the interview process; you’re already done. We just need 6 weeks.”
That’s one of the ways that we structure it that I think is different than agencies, but I think it also allows us to think from a more scalable perspective.
ROB: When in the growth of the company did you start to have – I think it takes a little bit of confidence to spend the time hiring ahead, or at least having those interviews ahead. Was there a particular point in terms of number of people or progress in the business where you felt confident that you would need that next strategist and you could start having conversations ahead of time?
RYAN: When we hit about 15 people – we’ve actually never made an outbound sales call. We eat our own dog food in the sense that we don’t do any prospecting. We’ll probably grow about 60% this year, depending on the final numbers, and it’s the 19th of December, so plus or minus a couple basis points.
When we were about 15 people, I was harvesting these leads and doing the selling, and what I noticed was that it was really hard to hand off clients to the rest of our team – and I think every agency goes through this. The buyer wants to work with the owner because they’re the ones that they connected with in the beginning.
At that point we had to say, all right, we have a really solid lead flow. I think we’re pretty confident that we can add clients at a certain pace. The next thing we need to do is go and hire two strong client people and just be upfront during the sales process that, “I’m selling, but I’m not the one that’s going to be doing the work.” That was really the catalyst that let me get out of the way and let some strong client people come in and start to build out a real client services program. That was I think probably the turning point there.
ROB: Very good. I think one advantage when people have a local office – or at least, a perceived advantage – is when you’re hiring, you know where you’re hiring. There’s a pond that you fish in for talent. How do you think about hiring when your footprint is – is it national or is it global? And do you have the advantage where it’s a lot of referrals, or do you have a different strategy for recruiting on that national footprint?
RYAN: I think the fact that you’re recruiting nationally – let me back up. The first answer to your question about hiring locally and you know the pond, that’s great, but you also have to make concessions. Orange County is decent sized, there’s a lot of traffic, but there’s not all that many people. Everybody’s battling for the same talent.
You either need to say, “I got lucky and I got somebody that I needed” or “I’m going to make a concession and get somebody that I don’t think is quite right, but you know what? I really need a body here.” That happens a ton in office-based agencies, at least from the owners that I’ve spoken to who are considering our model. So that’s the first part.
The second part is I think when you’re fishing nationally, what you end up then doing is – that’s where that comment about building yourself like a startup makes sense, because you have to have a startup-centric recruiting function here, which is what we went and did.
For our last strategist role that we hired, we got 600 and some odd resumes, and a lot of those end up being ones that aren’t the best things. But there’s also a significant number of people that will fuel our recruiting for the next two or three hires. That whole “Where do I find people and how do I get referrals?” and all that stuff isn’t as much of an issue for us because we have such a big hiring pool. Our pool right now is in North America, so U.S. and Canada.
ROB: Got it. Where is the most unique place that somebody lives who currently works with you?
RYAN: Probably the most unique is one of our developers lives in Halifax, Nova Scotia. If you were to map his address in Google, it’s an empty field.
ROB: [laughs] So this might be the most expensive plane ticket to the annual SmartBugapalooza.
RYAN: Yeah, he hates it because it’s kind of like a 24-hour journey for him. But we have two people in Canada. The rest are in the U.S. Of the 59 people we have, we’ve got people in 29 or 30 states.
ROB: Wow, pretty broad range. That’s amazing. You’ve already shared some pretty good lessons along the way; what other things are there maybe that you’ve learned while building SmartBug that you might do differently next time, if you were starting from scratch?
RYAN: I think the first thing is – when I gave that talk at Inbound, I told agencies, build your systems first.
Agencies are interesting. I think there’s three sources. There’s the very creative, design-heavy person who goes out and builds an agency, but they come from the creative side. There’s a person like me who comes from the business side and creates an agency that way, and then you add on the creative elements to it. There are some people that create agencies, the third kind, where maybe for whatever reason their tenure at their last company ended and they decided to be an agency because there’s a low barrier to entry.
One of the things that I always recommend to people is, regardless of which path you take, you’d better build your processes while you’re small. You want to be able to focus 100% of your energy on scaling and on growth, and the last thing you want to have to do is to take a pause in the middle of your growth to go rewrite an operating manual.
Doesn’t mean that you’re not going to change things on the way, but you definitely want to get stuff out of your head as you go, because when that one turning point client comes in and you want to jump on them, and then you say, “Oh my God, this person, I have to go train them and nothing’s documented, it’s all in my head,” that’s really bad.
So I would recommend – that’s one of the things that we learned early, but I wish we would’ve done it very, very early.
The second thing that I think I probably would’ve done? In the beginning, my first hire was a developer – the guy in Halifax, actually. The second hire was in client services. I think if I were to do it again, my first hire would’ve been in-house PR. You have a chance then, from the beginning of your existence, to totally craft your message and your position in the market that oftentimes agencies don’t spend the time on doing once they get a significant amount of client work.
That position, it’s like wine, right? The longer that you focus on that position, the better it’s going to taste to the market. So, the earlier you start, the better.
ROB: Interesting. I haven’t heard that answer before on the in-house PR, but I can definitely – especially, you have a double need to be seen in the market and to have that brand because you’re hiring and you’re taking on customers with a very broad footprint. I can imagine the stronger the brand is, the more it helps both of those activities over time, whereas for some people it helps probably the client acquisition more than the hiring.
RYAN: Yeah, I think so. It’s interesting; say you’ve got a small agency of five people and you really want to put the pedal down a little bit, and you want to go hire that ringer, they’re going to go do their homework.
If they do their homework and they find out that you’re on 20 podcasts and you have some videos and you’ve guest-blogged and you’ve done all of these PR-related functions, they’re going to look at you as a thought leader and, from a risk mitigation perspective, are going to say, “You know what? That’s a company that is actually out there in the market, making their statement. It’s probably worth it to me.”
At the same time, that same due diligence happens when anybody customer buys you, right? They’re going to want to know, am I buying somebody that’s a boutique shop that really knows what they’re doing, or am I buying somebody that – it’s really easy to throw up a shingle and create a website that looks like everybody else. What am I getting?
So, if they go do that same due diligence and they find those same PR elements out there, I think it helps mitigate the risk from them. So that’s why, if I were to do it again, I would start crafting that brand from a PR perspective from the very beginning.
ROB: Excellent. That first point is also very salient, the system’s first piece. If you are taking off in an airplane, you don’t want to be building it while you’re going up or figuring out how to make a parachute while you’re on your way down.
RYAN: [laughs] Unless you’re really fast, yeah.
ROB: For sure. Ryan, what is coming up for SmartBug or perhaps the broader marketing industry that you are excited about?
RYAN: There’s two things. From a technology standpoint, which is the stuff that really excites me, this whole idea of integrations and all of these open systems – I mean, everybody’s seen that MarTech chart where there’s 3,000 companies and all that kind of stuff. But if you think about it, it used to be 5-6 years ago you had a system and everything was analog and manual.
Now there are so many interesting tools that can talk to each other, with the right skill, if you have it at the agency, that it’s kind of like when you were a kid and you wanted to create the Death Star and you grabbed a bunch of Legos, and it was pretty much up to you. They could fit in any different way that you wanted them to, and the sky’s the limit in terms of your creativity.
I think that the agencies that are doing that pretty well in the next few years are going to be able to create these really, really unique solutions for clients that will differentiate them and will also create some stickiness with the clients.
From a business perspective, I’m really excited that the market’s starting to catch up to us in terms of their demand for really skilled people. As people start to acquire marketing automation tools and they start to get more comfortable with technology, they’re starting to invest bigger dollars in things. So, they want to make sure that they’re working with people who’ve walked in their shoes before.
That seems to be a far more prevalent place of alignment with prospects than it was 5 years ago, so it’s pretty neat that we made this bet that seems like it’s paid off pretty well, and now the market’s starting to catch up.
ROB: For sure. I think you were able to distill some things – there’s benefits to being on both sides of the table, right? On the agency side you have this broader perspective that you see across many clients, but on the client side, as you were, you get a certain depth. I think it can help you see the future a little bit better. I’m glad that has been trending pretty well for you.
Ryan, when people want to find you and find SmartBug, where should they find you?
ROB: That’s fantastic. Thank you also for sharing some of your learnings out at Inbound. I know people get a lot out of those talks, and quite often there’s a lot of transparency there that people aren’t always willing to share when they’re speaking. Is that video maybe up in the post-conference materials if somebody was at Inbound but missed it?
RYAN: It should be. If not, the deck is for sure. They videotaped some of them, and then some of them they didn’t.
ROB: Fantastic. Great to meet you, Ryan. Thank you for sharing the SmartBug journey. It has been a pleasure.
RYAN: My pleasure. Thanks for having us.
ROB: Take care.
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