The Brain-Money Balance

graph-of-shame Random

Ian Lurie Jan 6 2012

If I look at Portent’s growth over the last 16 years, we’ve had what my COO calls the Graph of Shame:

the graph of shame

The Graph of Shame

Some of that might be due to economic poop hitting the fan. And some of it is natural turnover. But the Graph of Shame is a dead giveaway that a business isn’t scaling as it should.

It’s not all doom and gloom

There are plenty of times we’ve avoided the grrrrr moments and the Graph.

Those times tend to be driven by new Portent-ites, not new clients. I love getting new clients, of course. But without great new talent here at Portent, we can’t keep those new clients happy, and they leave.

Why? I have a theory I’m going to call The Brain-Money Balance, which states:

Businesses grow in steps defined by talent, not fat contracts.

In an internet marketing agency, money follows talent. The reverse isn’t always true. So winning business in the hopes that you can then get the talent may lead to a cycle like this:

  1. Win big new contract.
  2. Get drunk.
  3. Sober up.
  4. Get to work.
  5. Get overwhelmed.
  6. Stop business development.
  7. Hire new people.
  8. Contract ends.
  9. Empty sales pipeline means zero new business.
  10. Business shrinks again.
  11. Get drunk.
  12. Sober up.
  13. Repeat until vomit

The Graph. Of. Shame.

If you have the team, though, then that great new client gets the star treatment from your team, not from you. And that means you have time to continue doing the things that help your company scale and win new accounts.

Services versus product companies

Before you all start writing ranty comments about startups and 2 guys in a garage: This brain-money balance is at its strongest in services-driven companies. That’s because you have no lead time, probably no investors, and no way to ‘pad’ demand while you go looking for geniuses.

That said, an awful lot of great product companies with great ideas have died because they couldn’t scale beyond their founders. I’ve seen it happen myself: The founder gets a bunch of money, hires a bunch of mediocre talent, does nothing to vet that talent, and within a year the company craters.

These companies didn’t fail for lack of great ideas. They failed because the people at the top neglected talent, or tolerated sub-par performance from their team.

Feed your company a balanced diet

You have to respect the brain-money balance. That’s the key to a scalable company. It’s part of the reason I brought on a partner, too: Steve frees me up to spend a lot more time working with the team and keeping us kicking ass.

So, feed your company a balanced diet: Smarts and money. Growth will follow.

tags : conversation marketing

4 Comments

  1. Hey Ian
    First off, apologies for not leaving my actual website address. Akismet seems to think I’m a spammer even though I always leave three paragraphs of comment related to the actual blog post – don’t get me started on spam commenters! Grrrrr!

    This is a very thought provoking piece as I am at the same stage myself. I suddenly have a whole bunch of clients that I cannot possibly service on my own. I do have a partner but he too is snowed under working on the technical side.

    As a relative newcomer to business, I find myself having to learn about accounts and management, as well as getting the clients and then doing the work. If only I could clone myself! I realised a couple of months ago that, if I was not going to make myself ill from working until all hours, I needed to start building a team.

    So I’m looking to expand. But it’s really hard to find the right staff- people who are as committed to the future of the core business as I am. I want to use local people rather than outsourcing for 50p to the third world but I do wonder if I am not shooting myself in the foot in an attempt to support my own countrymen who want to paid the same as me whilst they’re still learning. Your comment about mediocre talent had me sighing at my own naivety.

    I am having to rethink the whole plan and, rather than trying to train people to do things, go out to more established partners and pay the higher fees. But that’s when you get lead times and have to take your place in the queue so you have no control over when the client you have fought so hard to get actually receives the work.

    I guess I just have to keep searching and hope that, eventually, I can find people with the same passionate ethos of good efficient service and matching work ethic.

  2. A balancing act indeed. In spain where I am based, there is not really a lot of good search marketing talent, so I prefer to train them up. The problem is training new staff takes time and resources, there is a lag between taking them on and having them at a decent skill level.

  3. This is a good thing to keep in mind when you are measuring a the way a business is succeeding. Especially in the money making department. It’s never time to panick. Sometimes it works itself out. Just keep doing what works.

  4. I was European IT Manager some years ago at a big corporate who services the semiconductor industry – fascinating stuff.

    The semiconductor industry’s growth graph is *identical* to yours which is why it caught my eye and got this comment.

Comments are closed.