What Lessons Can Be Learned From Founders Who Started Agencies in Times of Crisis

Despite bleak outlooks, they managed to stay positive and forge ahead

a man walking through a lightning storm
Muh-tay-zik Hof-fer, Pereira O'Dell and Stink Studios all launched during the financial crisis. Adweek Staff
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Key insights:

If you’ve recently gone out on your own to start an agency, you might be panicking right now. Are brands, with so much on their plate at the moment in light of the coronavirus, even looking for new agencies? And if they are, what are the chances they’ll come to a shop no one’s ever heard of?

Agencies new to the scene are now grappling with a world that’s dramatically different from the one that existed only months ago. Take Broken Heart Love Affair, a Toronto-based agency that officially opened its doors last month. Its founders ultimately chose to move forward with their launch plans despite the global pandemic.

“It’s a hard time to talk about yourself,” Denise Rossetto, Broken Heart Love Affair’s chief creative officer and co-founder, recently told Adweek. “We’re definitely terrified, but at the same time, we really believe in what we’re doing. We have to be positive. We’re now a Canadian small business, and we have to carry on.”

It’s impossible to predict how and to what extent the spread of COVID-19 will ultimately affect the advertising industry, but agencies just starting out might take comfort in the fact that others have found themselves in similar situations. Several agencies and studios that are still around today managed to find their footing in other times of crisis, such as the Great Recession or during the aftermath of 9/11. In fact, many claim the experience made them more resilient.

Finding a breakthrough moment

In September 2008, Mark Pytlik signed a lease in London for the production company he’d founded, Stink Studios. With a small staff in place, he was ready to officially get the ball rolling. Weeks later, Lehman Brothers went bankrupt, sending the global economy into a tailspin.

“We were basically ready to go out and do a dog-and-pony show and tell everybody that we’re open for business, and literally the following week was when everything happened,” Pytlik recalled. “Not only were clients behaving completely differently and thinking about protecting money rather than spending their money, but nobody wanted to hear about us either. The whole moment for telling people that you’ve launched a new company was completely gone.”

"Not only were clients thinking about protecting money rather than spending, but nobody wanted to hear about us either."—Mark Pytlik, CEO of Stink Studios

Stink Studios didn’t see a single brief in its few months as a company “because clients were just taking their budgets and parking them, essentially.” He feared he’d have to shut Stink Studios down before it had the opportunity to do any work.

According to Pytlik, its saving grace came in the form of a project for Philips, which was working with Tribal DDB in Amsterdam on a campaign for one of its new televisions. Stink Studios was tapped to create an elaborate, Hollywood-esque film for the brand to show off the television’s cinematic qualities. It ended up winning a Grand Prix at Cannes Lions in the film category, giving Stink Studios the momentum it needed to make a name for itself.

“I have a feeling there’s probably a lot of companies right now who are going through a similar sort of pressure cooker,” Pytlik said. “If you can come out on the other side and figure out a way to survive this moment, I think it can actually make you stronger in the grand scheme of things.”

San Francisco-based agency Pereira O’Dell has a similar origin story. Founded in April 2008 by P.J. Pereira and Andrew O’Dell, the duo also found themselves in the midst of the Great Recession just as they were trying to get their name out there.

“We just decided, ‘Alright, we’re going to make the most of this. If we can make it work with this financial crisis, we’ll be able to build a business,’” O’Dell said.

To get through, O’Dell said they aimed to have a “ring the bell” moment each day, forcing them to reflect on a piece of good news instead of dwelling on the bad. Eventually, they landed an opportunity with Lego through a friend and former colleague. The agency’s first piece of work was an animated film that celebrated the 30th anniversary of Lego’s “Miniman” figurine.

“Hard work and good fortune came together to give us that opportunity, which then led to another one,” O’Dell said. “It was a remarkable period of time because nobody expected us to be successful. It was incredibly challenging, but also some of the most rewarding times of my entire career.”

Staying optimistic when the going gets tough has proven helpful for Dan Khabie, who left his role as global CEO of WPP-owned Mirum last year to launch his own digital shop, CourtAvenue. Earlier in his career, Khabie started digital agency Digitaria (which was eventually acquired by WPP) during the dot-com bubble. He said he’s taking a few lessons he learned during that tumultuous time and applying them to his current business.

“You have to have a positive attitude in a time of despair,” he said. “You have to be really patient. You have to go with the flow versus fighting it—if you fight it, you’re going to end up really hurting the business. At the end of this thing, hopefully, we’ll come out better and stronger.”

Find the silver lining

Agencies just starting out may find that they can take this time to focus on what brands really value and need from their marketing partners right now. It might involve shelving previous plans and outlooks to focus on the problems at hand, but it could also open up doors. 

John Matejczyk, co-founder and chief creative officer of San Francisco-based agency Muh-tay-zik Hof-fer, said one of his first clients was PGi, a company that specializes in online meetings and conference call software. When the Great Recession hit, he said PGi shuttered its marketing department—and brought him on to help. According to Matejczyk, he essentially built the agency around PGi as the workload increased.

Fast-forward to today, and Matejczyk said he thinks some marketers may begin to reconsider the in-house agencies they’ve spent recent years building as they try to cut costs, possibly giving external shops a chance to step in.

“Ad agencies are not famous for being inexpensive, but I think when you look at what it takes to really maintain a full department and staff internally, an agency starts to look pretty efficient,” he said. “I think ad agencies are still pretty affordable in the grand scheme of outside help for companies.”

Some leaders have found that starting or expanding their agencies during times of financial uncertainty provided them with the chance to take a pause and reassess their plans. For example, in the early aughts, Charles Day was busy expanding the film editing company he’d founded in Chicago and Los Angeles. Days before he was set to acquire London-based editing firm Whitehouse Post, 9/11 happened.

“That gave us massive pause,” he said. “We pushed forward with the deal anyway.”

"Building the company in that time was the most valuable thing we could do, because it made us so much more conscious and focused on the things that were important.”—Charles Day, former CEO of Whitehouse Post

Day said he also proceeded with plans to open a location in New York City, although the office space he’d initially eyeballed fell through when the building was rented out to businesses that had lost their offices due to 9/11, forcing him to find a new one.

According to Day, the circumstances forced him to scale back in some respects while maintaining his lofty vision of becoming the “best film editing company in the world.” For Day, this involved everything from rethinking how much equipment his teams realistically needed to implementing salary cuts to avoid layoffs.

“We really got very focused on the day-to-day practical reality of how we could deliver against our mission while minimizing literally every dollar that we would have to spend to do that,” he said. “I often say to people, ‘Building the company in that time was the most valuable thing we could do,’ because it made us so much more conscious and focused on the things that were important.”

@Minda_Smiley minda.smiley@adweek.com Minda Smiley is an agencies reporter at Adweek.