 And I'm ready for this to be a thing of the past, so let's get started. My name is Chris Free. I run a shop called Chromatic. And to begin, I wish this talk, well, I don't really wish this talk was more than 25 minutes, but what I'm going to cover 25 minutes is not a lot of time. So starting a digital agency is a really huge topic. And so I've taken my sort of all the experience I've had in the last 10 years running Chromatic and sort of whittled it down into the advice and the, this is like the Cliff Notes version of the talk I'd like to give someday. I will say before I get started that running a shop is really hard, but running a shop is really awesome. And this is where I pause and drink some water and try not to faint. So if you're here, presumably you're curious about starting your own shop, or maybe you already have started your own shop and you want to take it to the next level. So whatever your reason, I hope this talk helps you along your way. So let's talk a little bit about my journey to get to where I'm standing before you today. Back in 2008, I was two years into my professional web development career. I was working for an advertising agency outside Chicago, and I was sort of hand coding microsites for larger brands. My manager, Andy, is in the audience here. Hi, Andy. Sorry for the things I'm about to say. No, Andy was actually really great, and he was a good mentor for me. Everyone else at the agency didn't really have a good sense of what the internet could be or what web developers could be. Traditionally, they were a print agency, so thereby I was underpaid, I was underappreciated, and on top of that I was full of righteous ambition. I was also incredibly naive. By Halloween of that same year, I sort of had enough of being paid only $30,000 and not really anybody really understanding what it was that I could bring to the agency. So I decided I was going to strike out on my own and join a newly minted agency that I'd been freelancing for called Chromatic. At this time Chromatic, we had a really shitty logo. It wasn't this one, and it was basically two guys I went to college with who were doing professional web development. So I quit my job at the advertising agency, and I moved in with my in-laws, who would later become my in-laws, and I started working full-time for Chromatic. I'd saved up two months, take-home pay, or roughly $1,600 and thought that, oh, this is plenty of padding. I can build a company. Well, I'm here to tell you those first few years were really rough. We were fixed bidding projects, basically taking any website or any digital project that would come our way and saying yes, and we were getting killed financially. We were going way over budget, and we were agreeing to really poorly scope projects. The bottom line is we were not prepared to run an agency. We were not prepared to run projects effectively, and certainly not profitably. There were months, many consecutive, where I didn't take home a single dollar. So it's not all doom and gloom. Fast forward to today, roughly 10 years, and I now own 33% of Chromatic. We have 15 employees distributed across the United States and Europe, and we work on some of the biggest Drupal sites on the planet, and beyond that, we have actual profit. We have revenues in the millions of dollars. So what lessons did I learn in those 10 years? To start, the first lessons have to do with money. Obviously, money is fundamental to running any business. Digital agencies are no different, and there's much to consider with regards to money. But what I want to talk about today can be distilled down into sort of three categories, making money, taking money, and borrowing money. So let's start with making money. Like I said, in the beginning, we really didn't know how we were going to make money, and we certainly didn't know how we were going to attract clients. This is called business development. I didn't know shit about business development when I got started. I probably had never even heard that term. At that time, I knew that I could code websites. I could do Drupal. I didn't know that I needed to be a marketer, and that I needed to market my skills, and I needed to effectively speak to potential clients to get them to give me their dollars up front before building a project. So my advice, let's start there. There are many ways you can handle your business development. SEO, SEM, cold calling, outbound email if you're a douche, public speaking. But here are a few things or two things that have really been beneficial to us, and the first is just doing great work. We sort of fell backwards into this. We were looking at the folks like Lollabot who were doing really great work and just trying to emulate what they were doing. By doing so, it made us better, and our reputation started to catch on, and it preceded us, and it helped us close deals. So doing really good work is your best business development. And beyond that, networking. Networking has worked really well for us, and even today I would say that probably 80% of all of our business comes from people we already know, comes from the network we've built over the last 10 years. We get plenty of requests through the website to do work from people we've never met before. We close almost none of those deals. It's through people we've met, people we've collaborated with, people who've gotten to know us personally. So networking, network, network. This is going to be really important as you start to build your agency. So pricing. I talked a little bit about that early on. We really struggled with making any money, and in part because we didn't know how to price things. We were fixed bidding, and fixed bidding can be really tough. Even after 10 years, fixed bid is really tough. We do some fixed bid, but even if you're really good at managing projects and managing clients and managing scope, fixed bid is really tough. I'm not suggesting that timing materials is sort of a magic bullet, but when we switched to timing materials, we started to make money. We started to make real money. And we started to be able to grow our agency because of it. I think the most important thing with regards to pricing though, and this took me way too long to realize is that don't sell yourself short. Build what you need to build to run a profitable business and to take home a reasonable salary. And the last thing I want to talk about with regards to making money is sort of figuring out your agency's why. What's your focus? If you establish this early on, it will be really beneficial to you. When we first got started, we were basically taking anybody that had green U.S. currency and had a digital project. So that meant Drupal builds, that meant expression engine builds, that meant microsites, that meant really terrible branding that I hope you never dig up on the internet archive. It wasn't until we started to narrow our focus on Drupal that we started to roll. We got really good at Drupal. We got really good at selling Drupal. And because we were focused on Drupal, people trusted us with their Drupal. Drupal is really complicated. So I'm here to suggest that identifying your focus can help you make money. So what does that mean? That can be by discipline, design, development, SEO, SEM. That can be by technology, Drupal, JavaScript, Headless, et cetera. Or maybe it's by vertical publishing, health care, or some mix of these, like Chromatic. All right, so let's talk a little bit about taking money. Where making money was really strategic, taking money is sort of tactical. So if you're starting a company, I had no idea what you would need to do to run a business. How do you even start a business? What does that mean? Well, you're going to have to figure out what your entity structure is going to be. Are you going to be an LLC, an S Corp, et cetera? I don't know anything about this stuff. I still don't know much about it. My partners know much more about it than I do. But if you're like me and don't know too much about it and how you want to structure things, I have some links at the end of the deck. Nerdwallet has a great quiz. SBA.gov has a ton of different business structures in the pros and cons. I will say that the hardest part with starting an entity, for me, at least was picking the name. Naming things is really hard. So in rapid fire, what else do you need to take money from clients? You're going to need an EIN, you're going to need a bank account. EIN, at least here in the States, is just a tax identification number. You're going to need a business banking account, probably checking and savings. What else are you going to need? You're going to need a billing, some billing software, some invoicing software. We use and love Harvest. You might also consider a merchant account. Maybe you want people to be able to pay you via credit card. This is fine, we did this for a long time. But you'd be surprised how many folks will pay you via direct deposit or via check if you just ask. Merchant account compliance is a pain in giving credit card companies a percentage of your profits is bullshit. So if you can get away with not doing it, don't. So what else with money? Borrowing money. If you're getting started, you might be thinking I need that Retina 5K display, I need that Herman Miller chair, I need to rent an office so I can entertain clients, have meetings and all that stuff. Don't borrow money, full stop. You don't need a bunch of capital to get rolling in this business. You need a laptop, you need an internet connection, some software and some hustle. You do not need to borrow money. Chromatic's been around for 10 years. We have have and have always been debt free and we have no plans to borrow any money. Though I wish I had borrowed some money when I was living with my in-laws. Maybe I've gotten out of there sooner. So don't borrow money. You might also be thinking I need a credit line to buy a hardware for my employees and that sort of thing. Chromatic didn't have a credit line until roughly 2015, 2016 and to date we've never used it. So if money is the first major consideration with regards to starting an agency. I would say that people are a close second and people are critical to your organization. I wish I'd realized this sooner. And my good friend, Jen Derry, she shared this quote with me recently and it sort of, it really resonated with me that you are the average of the five people you spend the most time with. And this is pretty obvious, at least in my personal life that I can make sense of that. But I hadn't really considered it in my professional life. And when I did I realized it was the people that I surrounded myself with intentionally that raised the level, the water level of my organization. So surround yourself with A plus human beings and talented people, sort of the people you want to be like and it's gonna make your organization better. They're gonna rub off on you and in turn they're gonna rub off on your organization. These people might turn into clients, they'll turn into employees and they'll turn into strategic partners. So network, network, network. This is getting back to that core business development tenant. And it's really interesting, Chromatix history is deeply rooted in this conference. You have some water. It was at Drupalcon Chicago where Dave Look, now partner and managing director. It was where we first started talking about joining forces. It was at Drupalcon Denver where I first recruited Gus Childs. And it was also at Drupalcon Denver where we hired Adam Zimmerman. Now these two, these last two that I just mentioned are our longest tenured employees. They're still with us today. They fundamentally shaped this company and we couldn't have done it without them. It was also at Drupalcon Denver where we first met Mark Dorson. Mark Dorson is now partner and technical director at Chromatix. After years and years of collaborating together and getting to know each other, sort of cultivating that relationship, at Drupalcon Austin over many beers, we talked about merging our two companies. And these things aren't accidental. These were carefully maintained relationships. These were the five or so people that I was surrounding myself with. So this is some of that A plus human beings I'm talking about. Surround yourself with these people. And they're going to become the people that build your organization. So when I'm talking about people, what I'm really probably talking about is culture. And my friend Todd, CEO and co-founder at Four Kitchens, who couldn't be bothered to join the session, I realize. He talks about culture really well in this quote from a blog post a while ago. And he says that, company culture cannot be built or bought. Culture emerges from attention, interaction, and countless tiny moments every day. And what Todd is saying here is that culture is not accidental. It requires real care day in and day out. So if I'm suggesting that culture is so important to running your digital agency, what are the ways that you can materially shape your culture? I have a few things that have worked well for us. But like I said, this is sort of the Cliff Notes version of the talk I'd like to give. So keep that in mind. Core values, write them down, publish them on your website. You might think that what your company is all about and what you're all about as a human being is obvious in your day-to-day interactions with employees and clients. But going through the exercise of writing down your core values, it sort of makes them real and it shares them with the world. Beyond being a guiding light for you and your company, they will help others identify with you, be it potential clients or potential employees. That has a real impact. Your core values will also be a guiding light when you need to make our decisions and there will be many. And I can't stress enough how many people have come up to us and said, like, your core values, they made a difference when we were making a decision about either reaching out to you for work or about applying to work at your company. These things really matter. They also matter for the people that currently work for you. You're drawing a line in the sand that this is who we are and it's really important. You can also materially shape your culture via an employee handbook. And a good employee handbook, like core values, helps guide your people. It defines your policies and processes of everything that your business is and does. And as your company starts to grow, 1 to 2, 2 to 4, 4 to 8, more and more of how things work and how you want them done needs to get out of your head and into a handbook. I suggest you start it early and adjust it often. Like most things, we waited way too long to do this. I don't know how we survive without this document. And this can cover your core values and cultural things. It can also cover, like, how do you request time off, that sort of thing. These things really matter and make it easier for your folks to do things. Speaking of your folks, I think it's really important that you provide really good benefits. This is another great way to shape your culture. You can really steer what your culture and your organization is going to be like, but what are the benefits that you offer? So I suggest make them awesome and offer them as soon as possible. Beyond being sort of the right thing to do for your employees, they breed loyalty and they help keep those A-plus human beings I talked about close. Table stakes today with competition are really high. You've got to have good benefits to keep good people. So today Chromatic pays 100% over employees' healthcare, a percentage of their dependents. We have medical, dental, disability insurance, you name it. But more so, we just treat everyone like adults. And I think that has a really good impact. So your culture, good or bad, is going to have a major impact on your culture. All right, so if money and people are sort of the two biggest things I talked about today, that's sort of all companies are, right? Well, let me just go through a few things that I screwed up and make sure that you don't. So I'm going to call these details with the last few minutes remaining. Legal, you got to have contracts for all your work, like full stop. They protect you, they protect your business. And I hear my bit partner laughing because we're 90% of the way through a project right now and don't have a contract signed. So anyways, if you're just getting started and figuring out how to draw up contracts or if hiring an attorney sounds expensive, my friend Dan Maul is super friendly. He's actually open sourced his service agreement. And it's linked at the end of the deck, which I'll post online. It's a start. So make sure you have contracts. Also, with regards to legal, you can need an operating agreement and a buy-sell agreement. You will thank me when the day comes that you need these documents. Partner buyouts are painful and I have the scars to prove it. But even if you're the sole owner, you need an operating agreement. This is a document that's going to define what happens if something happens to you, what happens to your company, what happens to your clients, what happens to the money in the bank. You need to draw this up. Bench players, these aren't full-time employees at Chromatic, but they've been really beneficial and really critical as we've grown. So what I'm talking about are your attorneys, your accountants, your bookkeepers. If you can, find folks with expertise working with digital agencies. That's made a big difference for us. Also with regards to bench players, especially when you're getting started and you're trying to do project work, I suggest finding trusted contractors. Find some folks that can extend the capabilities of your organization and be force multipliers when you sign that first big deal. Have folks that you can tap to say, hey, we just signed a big deal with State Farm. We need to get together and run a new company. That's what happened with Chromatic. And don't forget these things. You're going to need some basic tools. You're probably going to want to track time. We use Harvest. We love it. You're going to need something to write proposals for sure. We also use Harvest, but also have a custom tool that we built. You're going to need some communication and project management software. We use Slack, email, GitHub. I'm sure most everyone in this room has that covered. And last three things, legal compliance. Wherever you're set up to run your business, make sure you're legally compliant. This can come back to bite you. As your projects grow, you're going to start dealing with attorneys at other organizations. They're most certainly going to demand that you have errors in omissions insurance. Make sure you get that. It's not that expensive. And it'll be a leg up on others that you're competing against. And quarterly taxes. At least here in the States, there comes a time when you have to pay quarterly taxes. And the first time I learned about this, I was very late. And it was a very painful weekend. So make sure you know about quarterly taxes. So money, people, and details. That's what I wanted to cover today. It's sort of the Cliff Notes version, again, of the talk I'd really like to give. Obviously running a successful agency is really hard. Building a company is really hard. And if I had some of this information back in 2008, when I quit my job, when I walked into Andy's office and said, hey, I'm out of here, I probably wouldn't have lived with my in-laws for as long as I did. So if you're interested in picking my brain further, come on up and say hello or ask a question. I'd love to share more of what I know. Thanks for listening. I also like beers. Any questions? Shoot. I'll happily read back the questions if people don't want to get up to the mic. You said you have employees in different continents of different countries. How do you manage the culture and the fun part of benefits? I know you pay benefits, but the fun side of your culture when people are working remotely, how do you involve people? You know, I realized now I didn't mention, if you don't know chromatic, we're entirely remote. We do a number of different things, like fly everybody into Nashville and spend time together and go out to dinners and things like that. We also do a team retreat every year. This last year, we were in Vermont. We get everybody together, kind of do a state of the union and the company, and then just spend three, four days cooking food and imbibing a little bit. Those are two of the biggest ways for us. You know, we've got Slack, we're connected. We do Zoom calls for all our meetings. We want to see you. We want you to see us, that sort of thing. Coffee Zoom, Friday mornings, we have a Coffee Zoom. So it's sort of like, just join the Zoom. If you want to hang out, you're not in a meeting or anything else. We're all sitting here working, and it's just sort of an open video conference. We end up talking about comic books and weightlifting and all kinds of stuff. You get to know people just like, it's the water cooler, it's forced, but it's participation, if you want, sort of thing. Thanks so much. You're welcome. Thank you very much for sharing your experience. I'm curious if you can share some thoughts on when you're taking that first step, building a business, starting an agency. One idea is how do you find someone, and when someone who wants to get some work done from your agency. And then if you do, then the interpretation start. Can I deliver? Am I pricing right? Can you share some thoughts on that? You could start by being really young and dumb. If I knew then what I know now, I probably wouldn't have done it. I don't say that to discourage anyone else from doing it, but I'm a really conservative individual, despite the three-quarter sleeve tattoo. So I would say having some courage and betting on yourself is important. If you can do the work and somebody's like willing to pay you money, give it a shot. What's the worst that happens? So go for it, man. Cool, thank you. You're welcome. So I was wondering when you were first starting up, have you looked into doing staff augmentation work for other more established agencies? And if so, what's your thought on that? Did that turn out to be worthwhile, or is that something that you would prefer to not have done at all in the beginning? It definitely worked out. We were the little brother to an agency you might have heard of, Lullabot. It was sort of deliberate to sort of be small enough and good enough that a company like Lullabot would trust us with their overflow work. And in doing so, not only did we... We didn't have to focus so much on the biz dev. We got to focus on getting good. So we were starting to make money, that sort of thing. It was really beneficial for us until about now, when a company like Lullabot stopped seeing us as a friend and more of an enemy. We're probably frenemies now, but it's co-operative. If we had spent all those years where we were collaborating with other agencies, and we still do this, we probably would have been forced to learn a little bit more about biz dev and sort of building our own pipeline and learning to swim on our own a lot sooner. But I don't think it was really a mistake. It's just now that we're no longer the little brother, we're tall enough to play on the same playing field. The phone's not ringing that often any longer. So I don't think it was a mistake, but it's certainly a way that we got here. And as a follow-up question, now that you're well-established, would you also be open to working with other, let's say, you know, young agency that's trying to get off the ground and, you know, turn being the big brother now? Well, I would look like a real jerk if I said no right now, wouldn't I? Thank you. We'll say yes for now. Any other questions? God, it's over. Thank you, Jesus. Nice to meet you, dude. What's happening by your company? Yeah, so, you know, we started, just in May. Oh, sorry, not May. It's March of this year. Hey, you know what? Let's step outside. I think these guys have a solution, yes. If I run long, man, I'm sorry. No, you're time for great, man. You're time better than I am. Thank God. Now you're going to go drink a beer and relax, right? A beer? Yeah, let's call it a day. Yeah, I have a session, 10.45, Thursday morning. Oh, that's going to be fun one day. Poor guy. I know. My God, I'm so glad. I'm so happy. No, I run an agency as well. That's a negative. Yeah, well, yeah, yeah. That's good. That means I've tried it all right. What's the name of your agency? Celebrity Media. Oh, cool. Yeah, I've heard of you guys. Yeah, so we, uh, that's awesome. Yeah. What's the session you guys are on? Productizing your agency. So, really? Now that you've built an agency, how do you, how do you scratch that?