Friends and colleagues had a singular reaction to Patrick Godfrey and Brian "Q" Quennell's decision in April to leave Hill, Holliday, Connors, Cosmopulos in San Francisco to start their own technology specialty shop.
"People thought we were insane," Godfrey said. But nine months later, Godfrey Q & Partners is claiming a modest profit.
By July, Godfrey Q had landed two clients —Sybase and Veritas—from their former employer, which had shuttered all but its media operation in the Bay Area. Combined with project work from three other clients, including Motorola's semiconductor group, the nine-person startup said it ended the year with $15-20 million in billings.
"We had a strong belief that [tech spending] was going to come back," said Godfrey, managing partner of client services. "We wanted to have our basic agency infrastructure in place for what was going to be. There were interesting opportunities coming online, and it was a very exciting time to do it."
Last year's listless economy did not inspire the word "exciting" too often in the ad business. Yet around the country, optimistic entrepreneurs decided the time was right to step out on their own. Some agencies were born of desperation, after the partners lost their jobs. Other execs saw a niche for small and lean operations or an opportunity for a better lifestyle. Most sacrificed a regular salary and the security offered by a conglomerate to the lure of acting as their own boss.
Godfrey and his partners went without a paycheck for three months, but, he says, "we own 100 percent of an agency."
Most of the startups are boutiques, generally consisting of a few partners and a staff of a half-dozen or so, and relying on freelancers for chores such as media and direct. They strive to attract tight-fisted marketers by working faster, more cheaply and more efficiently than the big agencies.
"Opening during a time when marketing budgets aren't what they used to be allowed us to position ourselves against other agencies and push for smarter, more creative ways to solve problems for less," noted Chad Rea, who founded 86 the onions in Venice, Calif., in April. A former copywriter at Pyro in Dallas, Mother in London and KesselsKramer in Amsterdam, Rea and his four colleagues at the youth and entertainment marketing shop have won projects from Virgin Records, iTKO Software and Ubi Soft Entertainment.
Some executives were motivated largely by a desire to be closer to family or to live in a market with a high quality of life, such as Portland, Maine, where former Fallon art directors Tom Riddle and Dan Bryant opened Make in September. "We had been chasing lots of jobs and moving around a lot," Riddle said of his family. "[We wanted] to try something different, and Maine was the place to do that."
Chris Steele, who with two partners started Steele+ in Atlanta after their previous employer, the Greeneffect unit of Interpublic Group's Adair-Greene, closed last summer, said he appreciates working closer to home and having the time to eat breakfast with his daughter each morning. That's not the only thing that has improved. "I've gotten back into advertising instead of worrying about stock prices and unrealistic budgets," said Steele.
Several executives admitted missteps in their first year. Godfrey said he and his team jumped into a pitch for Broadcom within weeks of opening and found themselves overextended personally and financially. Brian Burke, a former art director at TBWA\Chiat\Day in St. Louis who opened Burke/Weltner Advertising in Cincinnati a year ago, said he still questions an early decision to drop their first client—the business was not as easily replaced as they had hoped.
Personal and professional connections were especially important for startups in the gray economy. "It's really who you know, in terms of making things a little easier," Burke said.
To help win deals with Nike, Sony, NBC and Jeep, Rufus Frost, COO of sports-marketing firm Aura360 in Portland, Maine, called on contacts made at his last job, as a senior executive with Interpublic Group's Octagon Sports Marketing. His shop is also backed by Portland agency Via.
At 14-person agency Egg in Seattle, partners Marty McDonald and Mindee Nodvin found that along with winning business, operational issues proved a challenge. "It's hard to do the one thing neither one of us has done, which is to start a business and grow a business," said McDonald, previously creative director and partner at the former Holland Mark in Boston (Nodvin had worked as a new-business and strategy consultant). "We're so focused on strategy and creative, we don't want to deal with the business."
Aura 360's Frost adds that running a shop "forces you to understand the fundamentals of business you would otherwise overlook—such as the importance of a payment schedule—the nitty gritty of operating a business on a daily basis."
One of the first shops to open in 2004 is The Group Advanced Marketing and Advertising in Miami, scheduled to launch last week by Rudy Bozas, a former principal and group account director at Publicis Sanchez & Levitan in Dallas. Like so many others who now have the keys to their own agency, he thinks he can do things better.
"It's a great time to be launching this venture within [the Hispanic ad] industry," Bozas said. "There are a lot of shops that are getting work that don't necessarily do good work, and that opens doors to people who can really make a difference."