“Maurice, have you seen the film ‘Goodbye Mr. Chips’?”
“Yes Michael. Why do you ask?”
Two weeks after the collapse of Lehman Bros, Alan Jarvie my creative partner of 15 years, and I sat down to lunch with Maurice Saatchi, at Sartoria in Saville Row, to inform him that we would be resigning later that day to start our own global advertising agency.
Having worked for Maurice for 21 years since joining Saatchi & Saatchi as a graduate trainee I had never resigned from anyone before. To say it was an unmitigated disaster would be an understatement and perhaps not the most auspicious start for a new agency as once Maurice understood what I was saying he stood up, left the restaurant and did not speak another word to me for six years.
Everyone who knew us thought we were mad. And everyone who didn't, said "the best time to start a new company in the heat of a recession." In hindsight I think the former were right, but I'm glad we have proved them wrong. To the latter, my unsaid response was "if you think it is such a ******* bright idea why don't you do it?" The nearest analogy I can think of to the experience was jumping into a swimming pool in the dark without knowing whether there was any water in it.
Fortunately seven years on and we are still afloat. What I can tell you is that starting your own business at any time is one of the most fraught, stressful yet rewarding experiences you can have. It may not go to plan and experience tells us that 8 out of 10 new start-ups fail.Yet, if you don't try it, you will never know. And far better to be master of your own destiny then sitting in a bar in Soho and complaining into your beer about how your senior management doesn't value you.
Because if you don't value yourself how can you expect anyone else to? I freely confess that leaving the most famous brand in advertising working with wonderful colleagues doing wonderful work, as well as being well paid and having equity in our own business was pretty mad. But as I badly tried to explain to Maurice over lunch using the analogy of the film "Goodbye Mr Chips" I did not want to be advertising's equivalent, having only ever worked in one school/ad agency. More importantly, what we had learnt from him was the liberation and excitement of starting your own agency. Unfortunately he thought that taking him to a public place was a way of humiliating him. Nothing was further from our minds as we thought it was a courtesy to inform him before handing in our resignation to Moray MacLennan.
Despite the blip in the process I have to say Moray could not have been more supportive of the fact that two of his senior executives wanted to start their own business.Alan and I had been working for Saatchi & Saatchi in Hong Kong when M&C Saatchi was formed in 1995 and were asked to head up the new agency's operations there. We won the HSBC account in our first year which generated from page news around the world. We had then gone on to run agencies for M&C in New York, London and Africa and the Middle East.
To be honest we were the misfits. We believed in an integrated offering when M&C Saatchi's philosophy was about specialist agencies. We believed in providing one core idea and running that globally from one office when they were building an international network.
Our experience working around the world taught us two things. First, in the 21st century you no longer needed an international network to do international advertising. And second, clients globally see London as the epicentre of international creativity.
Our mission statement for our new agency was "to deliver London-quality creative in any media, in any language, anywhere in the world". (Since then from our one office in London with 12 people we have created ads that have run in more countries than WPP with 179,000 staff has offices in.)
When I started to write the business plan I needed to put something on the front page. I wrote one word "London". When I showed the plan to Alan he looked at the front page, raised his eyebrow, and turned it over. It was the first and only time that Alan has ever approved a creative idea that I have had. But in his inimitable style Alan guided every other aspect of the genesis of our brand with the same brilliance he applies to our clients.
It so happened that the URL www.LondonAdvertising.com was available and so our new agency was born. When we informed our lawyers they said "you can't possibly call your agency LONDON" to which we replied "perfect ".
Part of our madness was not to have any revenue lined up from day one. We take great pride in the fact that we had not spoken to a single client or member of staff before we resigned. Having worked for the Saatchi's for over 20 years it was not just a matter of honouring our contracts but also honouring them as people.
Alan and I put £50,000 each of our own money into the business and we secured an investment of another £50,000 from Can Invest, the investment arm of our advisors SI Partners. Half of that money went to them for their advice on how to set up the company but I can confirm that it was worth every penny.
However entrepreneurial you think you are I believe it is very important to have strong, impartial and experienced advisors on board.
When we set up the world entered the biggest financial meltdown in its history and at first we were not too perturbed. We thought, naïvely, that our proposition of delivering global advertising "better, faster, cheaper" was very much of its time.
It did deliver us a front page article in Ad Age as well as coverage in UK national newspapers, the New York Times and feature globally on CNBC. Getting exposure in Campaign for some reason proved much harder.
However, the reality for clients was that they had far more significant issues to deal with than changing ad agencies. Marketing Directors simply called their existing agencies and told them to cut their fees 25% whilst they got on the business of trying to save their companies. New business went into deep freeze.
Fortunately the day after we left M&C Saatchi, I received a phone call from a previous client who had just taken up the post of head of communications for a large corporation in the Middle East. He told me he needed a senior team who could look after the rebranding of the company and manage a raft of global communications to help prepare for its forthcoming IPO.
When I informed him that Alan and I had recently left M&C Saatchi to set up LONDON his reply was "Great! I can be your first client. Can you send me a fee proposal today." I sent him a proposal for a eye-watering fee over three months. He called me back and said the fee was too high so could we reduce it 30%, but as he thought we would need longer could we increase the period to 6 months.After a pause of about one second I agreed and then sent him a simple contract. He rang me back and said that as the Dubai-based company we need to change the fee from pounds to dirhams.
The client took our contract to the CEO the next day, a Sunday, which is the first day of the working week in Dubai. It was duly signed and airline tickets were booked for us to fly to Dubai Bahrain and Omar on leaving that very evening. So at 8am on Monday, 3 November 2008 Alan and I stepped off an Emirates Airbus at Dubai airport to begin our first day at our new agency.
It was a little odd that our client was not there to meet us as we visited the company’s facilities. Later at dinner he joined us and apologised for his absence. Apparently the owner of the company had fired the CEO that morning. His last action before hand was to sign our contract. Phew!
To cut a long story short the financial contagion then hit the Middle East and the IPO was cancelled. But our contract gave us a month's notice so we ended up with three months of the fee. During this time sterling plummeted by over 35% so our contract in Dihrams was worth more than our original proposal in pounds.
Now some people might say we were lucky. I like to think that had we not taken the risk in the first place to set up our own business we would not have ejoyed that luck.
And that is the moral I hope for you, dear reader, of our story.
Over the coming ten weeks I will relay what I think are the ten most important lessons for anyone considering starting up their own agency and hope they provide useful advice and inspiration.
“Come on in – the water’s freezing!”