Exactly a year ago, I wrote about our work around Barrel’s CPG positioning:

This past month was filled with various activities that we believe will pay off in the long run. One angle we are pursuing is to position Barrel as an expert firm that helps CPG food and beverage brands get the most out of their website, not only via their direct-to-consumer e-commerce, but by generating greater brand awareness, building direct relationships with customers, and driving traffic to their other channels (in-store retail, Amazon, restaurants, etc.).

I mentioned our stretch goal of adding 10 new CPG clients in 2024 (mission accomplished) and becoming more visible in the CPG ecosystem. Barrel CEO Lucas Ballasy has been doing a tremendous job of sticking to this strategy. Not only are we continuing to get a steady stream of CPG client opportunities, we’ve expanded our network of relationships and partners in the space. By the time you read this, Lucas will have been to Expo West, the leading trade show in the natural, organic, and healthy lifestyle industry. He’s moderating an event with our client Sweet Loren’s on CPG partnerships. He’s also got a full slate of meetings with existing clients and potential new ones.

A year ago, we didn’t know how successful our positioning move could be, but we decided to go all in and remain steadfast even when it felt like the opportunities were slim and the budgets weren’t that great.

Our Amazon agency Prima Mode is in the early stages of niching down on a health & beauty focus. Prima Mode co-founder & CEO Saniya Aggarwal will also be at Expo West. Like Barrel the year before, it’s too early to tell if the positioning will be successful, but we’re going to give it our best shot in terms of going all in and engaging in the activities that, 3-9 months from now, may pay off in the form of opportunities, partnerships, and referrals.

About Agency Journey: This is a monthly series detailing the happenings at Barrel Holdings, a portfolio of agency businesses. You can find previous episodes here.

Highlights

SuperFriendly Launch

In November 2022, I came across a blog post written by Dan Mall and shared it in my newsletter with some thoughts:

​superfriEnd: I’m shutting SuperFriendly down by Dan Mall (blog post)​
​Dan Mall is a well-known figure in the web design space and in recent years has been doing product design / design systems work for well-known brands via his studio SuperFriendly. After 10+ years, he announced that he was shutting down the business.

I don’t know Dan personally, but reading his blog post, my guess is that SuperFriendly’s model (headcount light, project-based freelancer teams) and scale didn’t lend itself to an exit by acquisition. I’d be curious to know if there was interest from anyone in buying the brand – I could see value in the SuperFriendly brand name, maybe even having Dan stay on in an advisory/consultant/new biz referrer basis for a short period as the new owner built out the biz or replaced an existing, less valuable name.

This approach – finding studio/agency owners who’re looking to wind down their businesses but are perhaps open to selling assets like their brand name and book of business – is something I’ve been scouting for as we explore new opportunities for Barrel Holdings. It’s hard work to stand up a new business with a new name that nobody knows. Sometimes, you can save many months or even years by investing in an existing brand with a great reputation.

In October 2024, I wrote to Dan asking if he’d be open to selling the SuperFriendly name. He wrote me back right away saying he was interested. We got on a call. Some weeks later, we met up for dinner in NYC. Some more calls followed.

Barrel Holdings would buy SuperFriendly and bring on new leadership. Dan would stay involved as a board member and shareholder, helping drive leads to the business through his relationships and his Design System University.

We recruited Jon Sukarangsan, former Global Executive Director at BASIC/DEPT to come on as CEO. Dan, Jon, myself, and Sei-Wook met up in-person the last week of February to spend time together, hash out details, get more historical context about SuperFriendly, and plan the launch of the reboot.

It’s been a really fun and interesting process. I’m very excited to see how this plays out. I know there will be a degree of difficult in starting this business essentially from scratch, but at the same time, we’ve got some assets and relationships which gives this agency a leg up.

I like SuperFriendly’s fit in the Barrel Holdings agency. My guess is that its client roster will be more akin to Barrel (mid-market, some global brands, a few emerging brands) vs. our smaller agencies that have more small to medium business (SMB) clients. SuperFriendly’s past clients were household names like Nike, Eventbrite, Pfizer, and United. I also like the design systems / product design offering with a more consultative approach vs. a deliverables-focused on like Catalog. It’s a good contrast that allows SuperFriendly to cater to orgs that need some higher level change management help vs. purely executional support.

This deal is a great example of the types of things we want to do with Barrel Holdings: bring excellent people like Dan and Jon together, invest resources into a new business venture, and strengthen the overall portfolio.

Catalog Bounces Back

In December, I noted that Catalog experienced its first negative cash flow month and that continued underperformance could lead to us shutting down the agency. I also wrote that the following would be “best-case” outcomes:

• We retain most of the clients from this month to the next
• We add a couple of new clients, who sign up for 3-month engagements
• We launch an outbound campaign that brings in additional deal flow
• We tighten our sales pitch (we’ve hired a sales consultant to work with Fitch) to win a higher % of deals
• We start to see a pipeline with at least a half dozen qualified opportunities take shape

January was a still cash flow negative but trending the right way. It lost less money. We started having more conversations and also extended existing clients. Fitch, working with sales coach Luke Maloney, started to close more deals.

January was also quite challenging because our design director, who had stayed on post-acquisition, suddenly quit without giving any notice. We had to scramble to find a replacement. We lucked out with an old contact of mine, a former agency owner turned product designer who was available to jump in right away. Fitch also did a nice job building out a roster of contractors to pitch in on projects.

We ended February with a profit. It was a solid month. We kept costs tight while retaining clients and signing a few new ones.

Unfortunately, our outbound efforts haven’t really paid off. The pipeline is slim. We’re reinvesting some of February’s profits to engage an outbound specialist to do cold outreach emails. Fitch, who had been doing most of the outbound himself, will be focusing more on re-engaging past clients as well as various referral partners (agencies, consultants, investors).

Until there’s a larger base of longer-term retainers plus a steady flow of new opportunities, our visibility of Catalog’s future will be month-to-month. Not an ideal situation, but we’ll continue to focus on the inputs, be smart in managing costs/margins, and see how things play out.

Top of Mind

We Haven’t Cracked the Lead Gen Problem

I was reflecting on the volume and flow of leads across all of our Barrel Holdings agencies, trying to understand why some agencies have been more successful than others in generating leads.

It all starts with Barrel. Nearly 19 years of being in business, the countless relationships made along the way, and the compounding of various marketing activities over the years–these all contribute to referrals, inbound requests, and chance meetings with new prospects. We’ve averaged around 300 inbound leads per year the past 3 years.

Vaulted Oak benefitted from being seeded with nearly two dozen existing Barrel relationships. These relationships transferred seamlessly and yielded more opportunities specifically for Vaulted Oak. Barrel’s existing agency relationships also benefitted Vaulted Oak.

BX Studio also got a boost when it launched. Barrel’s pre-existing relationship with Webflow helped generate some early demand. It’s also been the recipient of inbound leads that Barrel used to fulfill with WordPress websites – those now go mostly to BX. What’s been great with BX is that CEO Jacob Sussman and Director of Engagement Todd Griffin have expanded the lead sources, leaning into founder communities and agency partnerships to drive additional leads. Of all the agencies in our portfolio, BX consistently has the highest volume of leads.

We thought that Bolster would similarly draft off of Barrel’s deal flow, capturing any opportunities that required brand design. After a couple of early wins that led us to believe we were on our way, Bolster hit a wall and had trouble signing clients for multiple quarters. Part of it could be attributed to the fact that 2023 was a tough year for small brand design studios, but upon closer inspection, we saw that Barrel’s leads predominantly skewed towards web projects and very little of it related to branding.

Vaulted Oak and BX Studio, with their web focus, continued to benefit from Barrel’s deal flow, but Bolster’s opportunities were much more limited.

In hindsight, this turned out to be a blessing. We ended up coming up with a campaign to generate interest and deal flow. Our free “Omakase” brand design sprint allowed us to meet dozens of founders and connectors, which started to generate organic referrals. We also decided to go all-in on Framer, a website building platform, and initiated a relationship with the Framer team. Being a Framer partner has also generated consistent inbound leads.

Bolster’s deal flow still pales in comparison to BX and Barrel, but there is new business activity every single week. With some more proactive marketing (content, social media, newsletters, outbound, etc.), I think Bolster stands a good chance of building a sustainable lead gen machine.

Despite Bolster’s relative success, we haven’t been able to replicate it for Catalog and Prima Mode. With Catalog, the product design agency we acquired in mid-2024, it at least had a roster of past clients and referral relationships that have provided a handful of leads every month. Prima Mode, starting from scratch, has had to rely on Barrel for its initial opportunities, but these early conversations haven’t yielded as much.

Perhaps there are opportunities to tighten the co-selling motion so that for new Barrel opportunities, Prima Mode could be brought in earlier to pitch our Amazon services. Then again, I understand the argument against this: it’s hard enough to win just the web project, why complicate it by trying to force the Amazon scope as well, especially if the client never asked for it?

Prima Mode did win a client via Barrel at the start of the year – the client had worked with Barrel for a few months and shared their need for an Amazon partner. Barrel made the intro and Prima Mode was able to close. These situations are possible, it’s just happening at a pace that’s perhaps much slower than we had anticipated when we launched the agency.

So what then? How do we get more leads, especially for Catalog and Prima Mode?

At the agency level, I know that Fitch and Saniya continue to do their part to generate more leads for Catalog and Prima Mode, respectively. They’re making sure existing clients are taken care of and nurtured into becoming referrers, they’re building relationships with other agencies and consultants, and they’re attending events where their ICPs hang out, steadily increasing their networks.

They’re already maxed out in terms of their lead gen activity. How can we help them more at the holdco level?

So far, Sei-Wook and I have leveraged our existing networks to generate supplemental leads. We’ve also helped arrange for an outbound specialists to run cold email campaigns. And then there’s the PE partnerships work we’re doing, although many of the opportunities there will most likely benefit Barrel, BX, and Bolster the most.

The other activities that come to mind are:

• Helping support on improving the public presence of Catalog and Prima Mode, getting help from Bolster to freshen up the brand design and to put up a more compelling website with better case studies.
• Helping put together a growth advisory board of connected individuals who may be able to drive leads. This would most likely be some kind of stipend plus commission structure. We’d be looking to also partner with social media-savvy folks who reach our ICPs.
• Bringing in content marketing and/or SEO specialists to help increase organic traffic and brand awareness – this is something Barrel has done relatively well over the years.

And of course, there’s one that would fully leverage our holdco model: engaging in some kind of M&A.

With M&A, the lead gen problem could be solved a few different ways:

• Catalog or Prima Mode could acquire an existing agency’s book of business, quickly absorbing a number of client relationships in a short period of time.
• They could also benefit from an existing team’s marketing motion and organic deal flow, especially if we’re able to retain the personnel responsible for lead gen.
• If we acquire a larger agency that has strong lead gen, Catalog or Prima Mode could be absorbed by that larger agency.
• An agency we acquire and keep as a standalone may have similar capabilities as Catalog or Prima Mode but target a slightly different ICP; in such a case, they can pass off leads that aren’t a good fit for them but potentially a better fit for either Catalog or Priam Mode

Social media is filled with claims from people who say they’ve cracked lead gen. I don’t doubt that they’ve experienced a degree of success through a particular tactic (e.g. posting on LinkedIn, running ads, sending gifts, etc.). The question is, how durable has that tactic been, and is it something that can reliably work across a half dozen, dozen, or two dozen different agencies?

Not too long ago, Sei-Wook and I spoke with a seller looking to exit their agency business. The seller grew what was initially a small freelance operation into a 12-person company in the span of less than a year. This person had cracked paid ads and reliably booked 50+ qualified leads per month. This lasted a few months until something changed and the number of leads dipped to a handful a month.

That brief run allowed the seller to grow their business significantly, but retention challenges made it clear that the agency needed to bring in new clients in order to grow. The seller invested significant dollars trying to recreate the paid ads magic but ultimately couldn’t do it. They decided to sell the agency while the financials still showed year-over-year growth.

We passed on the deal – our own valuation of the biz was less than half of the asking – but the scenario was a great reminder that sustainable lead gen is really hard to build. You can get some flashes in the pan, which I’d welcome any time, but creating a durable lead gen engine that isn’t beholden to a single tactic takes a great deal of time and active management.

Lead gen is hard. We’ve seen firsthand how some of our agencies have cracked parts of the puzzle while others continue to struggle. There’s no silver bullet; success comes from consistently experimenting, iterating, and investing across multiple tactics. Whether it’s strategic M&A, strengthening our co-selling motions, leaning into advisory relationships, or building out our organic marketing capabilities, our goal is to create lead gen engines that endure over time.

Shared Quotes

“The problem with the billable hour’s subsidy is it is based on internal costs, not external value, and is therefore disengaged from the true economic calculations of the buyer. If all customers were charged what they perceived as the value of the service, agreed upon up front, a strong argument can be made that no one customer is being subsidized at the expense of another.” (Ronald J. Baker , Implementing Value Pricing)

This concept comes up again and again in our discussions with agency leaders. Most of our agencies have shifted away from a billable hour model and focus on pricing for work up front. But even with that, there’s so much we can do with pricing, including being smarter with higher anchors and multiple options (see here).

“Changing strategy frequently is akin to planting a seedling and pulling it out of the ground every day to see if it is growing yet—you need to give a strategy time and nurturing before deciding that it is in need of revision. In the startup combat zone, we felt that instead of revisiting our strategy at the first sign of trouble, we would instead double down on our strategy commitment. The watchword was heads down execution, one foot in front of the other, addressing the details of the business as best we knew how.” (Frank Slootman, Tape Sucks)

I see this playing out across our agencies, whether it’s Barrel with CPG, BX with Webflow, Vaulted Oak with WordPress/Shopify support and maintenance, etc. There are constant temptations to expand our services offering, to venture into new tech stacks, or to target different types of clients. While we’ll explore new opportunities where it makes sense and run contained experiments, we’ve tried to remain steadfast with our core strategic decisions, letting them play out across multiple years.