Adventures In Recruiting: The Wrong Way And Right Way To Start A Business

Over the years I have been approached countless times to put creative people together, usually a writer and an art director, with an account person to start a business; usually its an ad agency but occasionally a consultancy.  Inevitably, the creative people have been working or freelancing together and have developed a relationship with a company whereby they can poach the account to fund a their business.   Or, occasionally, they have enough freelance business to be able to turn it into a real business. I generally turn the opportunity down.  Here is why.

I originally wrote about this last October 10th, but I thought it deserved a fuller explanation

Usually, one or both of the creatives are fully employed and earning a paycheck from a company or ad agency, their freelance income is on top of their regular paycheck.  The freelance income becomes significant which drives the decision to leave their current employment and start an ad agency.  They approach me to find them a partner to do this.  In the meanwhile, they continue to earn money from their current employer.  In most cases they are willing to call the new person a president and offer him or her a percentage of the business sometimes equal, sometimes not. In addition, they want the new person to devote full time to the new business effort; all this normally without pay.

Unfortunately, in most cases, the new business person/president is expected to resign from their current job (or to be out of work in the first place) to spend full time developing new business for the creative team, which is currently employed or, if not, earning significant freelance income.  While the creatives share their freelance income they are unwilling to share it with the person who will become their partner because of work done on their behalf. 

Essentially the account person is expected to work for nothing.  

While this may sound insane, it is the usual process.  

Predictably, the new partner will only be paid out of the revenues generated by new business that she/he brings in.  And since the creative people often consider themselves to be the product, the account person sometimes is offered less than a full third of new business.  

Even if I am offered remuneration (rarely my full fee), I turn this kind of assignment down because, with very few exceptions, these arrangements rarely succeed; starting partners have to be respected, valued and compensated equally.  I generally tell the potential partners that they have to incorporate and set up a business with all the necessary legal paperwork, including partnership agreements.  

More often than not, they balk at the formality.  In one case that I remember, they told the account person that he was far too nervy and had too much chutzpah to ask for a contract; this is not a good start.

The irony is that in almost every case I can think of, creative people always need a partner to both administer and manage the business as well as to run the entire new business program.  This person is almost always the first person hired once the business starts.

Over many years when I explained what is wrong with this premise, almost everyone who has put it forth to me has said the same thing:  "If this person is good and really believes in themselves, they will bring in business quickly and then end up making a lot of money."  This is truly specious logic.  Anyone who has ever worked for an ad agency and pitched new business, knows how difficult it is to win an account. And it is ten times more difficult for a start-up, especially one with no history, even if there is one anchor account. In other words, they are asking the account person to give up his or her job and paycheck in order to create a business for people who are already working, getting income and have nothing to lose if their pitching is unsuccessful.

I can think of only several instances where the writer and art director (actually, in one case it was a writer and a producer) actually got the logic of the issue and agreed to split whatever they earned freelance because they understood that the new person would be working on their behalf.

If the creative people have freelance income, they should be willing to share it with an account person (or other title) so that they are all invested equally.  This provides everyone involved with incentive and insures mutual commitment.   

Mutual commitment is essential to a respectful and equal relationship.  There is no other way.