When a lead comes in directly to me these days, I usually just loop in the appropriate agency by email and let them take it from there. Still, for a select few calls each week, I end up taking a call on my own first. These are usually opportunities where it’s not totally clear which agency would be the best fit.

I enjoy these calls because I can take the time to learn about the interested party, what challenges they’re looking to solve, and then gather enough context to confidently suggest a follow-up meeting with one or more of our agencies.

Through my LinkedIn posting, newsletter, and general networking, I’ll continue to draw inbound inquiries. If these can lead to one or two supplemental qualified leads for each of our agencies every month, that’s an added bonus.

The real work is in working closely with our agency CEOs to build out sustainable sales and marketing systems to reliably generate demand and close deals. That’s starting to take shape more and more, especially at Barrel and BX. We’re building up capacity across the other agencies as well.

About Agency Journey: This is a monthly series detailing the happenings at our Barrel Holdings agencies. You can find previous episodes here.

Highlights

Catalog Gets a New CEO

After a grueling month of interviews, negotiations, rejections, and reflections, we found our CEO for Catalog, the design agency we acquired last month.

We welcomed Fitch Li to the role this month. Fitch has a background in product marketing having worked at tech companies like Wix and Workrise. He also has agency experience as a strategist. Most recently, he worked as a hands-on consultant with some local small businesses, helping them stand up operations and improve customer service.

Fitch has moved quickly to assume sales responsibilities at Catalog, taking over from founder Win Lin. He’ll continue to ramp up and get familiar with the operations and all of Catalog’s clients.

It’s been a really interesting ride for me and Sei-Wook as we played interim operator roles within the business while searching for the CEO. We got to see firsthand the pros and cons of the Catalog business model. We also saw through some challenging decisions which helped to right-size the business and strengthen the P&L.

Now it’s up to Fitch, with our support, to really take the reins and grow the business.

Launching Prima Mode, Our Amazon Agency

We teamed up with Saniya Aggrawal to launch Prima Mode, a new agency with a focus on helping brands grow profitably on Amazon.

Saniya has extensive experience running brands at Amazon aggregators. We’re eager to leverage her expertise to develop a unique offering in the Amazon space.

The challenge for Prima Mode, similar to Bolster, is the cold start. While we have some warm leads coming via Barrel, many of the Barrel clients have incumbent Amazon agencies and switching costs are high. It’ll take time to build up a foundational roster of clients.

We’re honing in on a very impactful and free P&L audit offering as a way to jumpstart client acquisition. We’re designing our services in a way where it’s not necessary for a client to switch agencies but instead see Prima Mode as a supplemental resource.

Many Amazon agencies come from a PPC/paid media angle whereas we believe coming from a profitability analysis angle can provide different types of actionable insights. If you or anyone you know may be interested in the P&L audit, let me know.

Outlook for Barrel Improves

I’ve chronicled Barrel’s struggles in 2024. Replacing the revenue from having lost 3 out of our top 5 clients has been an uphill battle. The long sales cycles have not helped.

However, the team has held to the belief that focusing on the inputs and continuing to deliver value to clients would eventually get things back on track.

A couple of months into Lucas’s tenure as CEO, we’re starting to see signs of shifting momentum. A well-known CPG food company green-lit work across a number of their brands over the next several months, a sizable contract for us. We also signed a 6-month retainer with a beauty company and will also ink a deal with a jewelry company very shortly.

Add to this an active pipeline of over 20 new logo opportunities (likely to close 4-6 of these based on historical conversion rates) and a handful of significant projects with existing clients – we’re looking at a quick come-up from a very rough period.

Barrel’s totals for 2024 won’t look great as we weathered a handful of months with low revs from the client churn, but the momentum going into 2025 is something to be optimistic about.

Best of all, the team is really honing in on its service delivery model (All Access, no hours, expanded capabilities) and shifting conversations with clients to be about results and value vs. hours and tasks.

Top of Mind

Getting Clear on the Barrel Holdings Growth Strategy

We currently have six agencies in the Barrel Holdings portfolio:

• Barrel was the original agency that we started with.
• Vaulted Oak was a carve out of web support & maintenance contracts and our first separate agency business outside of Barrel.
• BX Studio you could argue was a kind of carve out, being initially supported by Webflow leads coming into Barrel as well as Barrel’s existing relationship with Webflow.
• Bolster was a truly net-new startup agency and hence a very, very cold start.
• Catalog was our first acquisition, coming with its own deal flow and revenue base.
• Prima Mode, like Bolster, is a startup agency that we’re building from the ground up.

Reflecting on the makeup of our portfolio, Sei-Wook and I have been discussing how we want to grow. We’ve come to some conclusions that will guide our decisions:

• Carve outs and acquisitions are a much easier place to begin an agency – the presence of an existing client base is incredibly valuable as well as existing talent and/or processes to deliver the work.
• Starting an agency from scratch is hard work and takes time. The benefit is that you have a clean slate to set things up in ideal ways, but you’re also racing against the clock to book enough new business early on.

We’re still very excited about the prospect of all our agencies, including Bolster and Prima Mode, which are in much earlier stages of the agency growth journey. As we look ahead, Sei-Wook and I want to focus our attention on acquisitions.

We’ve been talking through with our business coach on how best to define our acquisition strategy. It’s still a work in progress, but we’re getting close to honing in on where we want to play at least over the next few years. We’ve outlined some characteristics of the type of companies we want to buy:

• Sub-$3 million revenue agency businesses with some kind of financial challenges; most likely a business doing less than 10% EBITDA or even at breakeven/losing money. Minimum revenue would be $500k.
• Preference for agencies focused on design/UX, web development, CRO, and digital marketing (SEO, paid media, influencer)
• Owner or owners are open to moving on and not interested in running the business long-term.
• Some degree of organic lead volume (even a few a month), strong case studies/work portfolio, and effectiveness in delivering work to clients.

Using these guardrails will focus the way we source and engage with prospective sellers. We’re emboldened by our Catalog experience and want to repeat the process.

Our bet is that many of these agencies will not be sought out by buyers because of the operational headaches that come with trying to turn around a low margin business. We want to lean into the fact that these “headaches” are the types of challenges we’d like to take on and use that as a competitive advantage.

The plan:

1. Become systematic in sourcing, buying, and turning around struggling small agencies
2. Reinvest excess cash flow from these improved businesses to fund new acquisitions
3. Over time, as our cash position and access to funding improves, move upstream to target larger financially challenged agencies or agencies with higher margins/better qualities

What’s the limit? We believe there’s a world in which we can have a portfolio of 20, 30, or even 50 agency businesses. We also believe there will be opportunities for consolidation among the agencies we acquire. Some agencies may run standalone for a time while others may be tucked in or merged with an existing agency in our portfolio.

And while we execute this inorganic growth plan, we will support all the agencies with their organic growth, through new business and expansion of existing client accounts.

So, that’s the plan.

If you have an agency that fits the profile mentioned above, hop on over to the Barrel Holdings website and get in touch with us.

Shared Quotes

“If you want something badly enough, you can find a way. You can create it out of nothing. And before you know it, there it is. But wanting something isn’t enough. If you’re going to pursue difficult goals, you’re inevitably going to fall short sometimes. It’s one of the costs of ambition.” (Stephen A. Schwarzman, What It Takes)

Apt quote to keep in mind as we begin our journey of really building up Barrel Holdings. Schwarzman’s story of building up Blackstone from nothing is quite remarkable.

“Customers do not care about the amount of time spent on their work—or effort. They do, however, care about the duration of that work. Duration is the number of days or weeks that a project will take to complete. It is the window of time in which the result must be achieved. Effort is the actual amount of work, usually expressed in resource hours. A task can have a duration of 8 hours; however, the effort could be only 15 minutes. Alternatively, a task with duration of 8 hours could also have 24 hours of effort. Project management is more concerned about duration than effort.” (Ronald J. Baker , Implementing Value Pricing)

I love the distinction between effort and duration. When it comes to pricing, clients are often more sensitive to duration vs. the effort involved and that’s a point of leverage when negotiating price.

“Even if the firm does a stellar job in creating value for customers, there no doubt will be instances where the customer does not understand the value. This places the onus on the firm to communicate to the customer the full value of what it is delivering. Understand that most customers do not have an incentive to collect data on the value you are providing, since they purchase relatively infrequently. Your firm, on the other hand, sells frequently; therefore, you should make communicating your unique value a core competency among your professionals. Certainly the marketing function is the main way to communicate to your chosen customers.” (Ronald J. Baker , Implementing Value Pricing)

There is so much more to be done on this end, especially when it comes to services like branding, design, and web development. Value is quantified more easily with services like paid marketing and SEO, but there are definitely ways to define, demonstrate, educate, measure (however indirectly), and educate clients on the value of the services we’re currently offering.