In their Agency Growth Stories series, The Future Factory interview some of the most interesting agencies operating right now to unpick and share what makes them so unique and successful.
Mitch Kaye, co-founder of The Academy, shares the details of the deal that enabled him to own his own agency which was later acquired by Engine Group, without investing or risking a penny - a unique opportunity he and co-founder Dan Glover now plan to offer their team at The Academy in the years ahead. Their agency is five years old and growing fast, but starting an agency from scratch again after you’ve built a team of 70, sold and exited, is harder than he’d ever imagined.
Mitch, you’re the co-founder of The Academy, you previously founded Mischief after you were backed by Shine Founder Rachel Bell, and in 2016 The Academy merged with Shine, retiring the Shine brand and powering on as The Academy. Is that right? We’re a little confused!
I’m not surprised! Shine was the first agency I joined in 1999, I was their seventh hire. I was there for two and a half years and then went back for the second time in 2004 as a Director. I founded Mischief, with the backing of Rachel, in 2006 and I sold the agency to Engine in 2011.
I launched The Academy with Dan Glover in 2014 and the Shine deal two years in enabled us push on quicker, which is handy as we are both extremely impatient.
So Shine and Rachel have been pretty important in your career?
Looking back, Rachel is probably behind the two most significant moments of my career. Getting my first agency job at Shine and backing me to set up Mischief. She is an amazing lady, and someone who I’ve been privileged to have in my life for 20 years.
How did that deal work?
She owned Mischief on day one, which was only fair as she was taking all the risk and enabling me to take my three biggest Shine clients with me. We agreed a series of targets, and each time I hit a target, 10% of equity would be transferred from Rachel to me. It was a brilliant deal for us both, and extremely motivating for me as it enabled me to set up my own business without taking any great risk or forgoing a salary.
That’s incredible. Equally generous and smart.
Yeah, Rachel is both! Just one year before I set up Mischief, I was doing a really bad job as a Director at Shine and had really lost my way. It felt like I needed something to change the narrative around me. I read in PRWeek that the Krispy Kreme account was up for pitch, and it was around the time when Krispy Kreme were relatively new in the UK. I called them on a Friday and they told me that the process was almost complete and all the pitches were on the following Monday, and their MD was away, so there was no way I’d be able to join the process. I basically said to the Marketing Manager “I have to win this account. I’m going to risk it and work all weekend on the pitch document. Ask the MD on Monday if he’ll take pity on me and see me.”
On Monday morning I called again and asked for the verdict. She said “he loves your attitude, and he’ll be at your office at 3pm for one hour!” So I roped a few people in, we presented the pitch, and we won it. It changed the conversation around me and just over a year later I set up Mischief.
When Mischief was 5.5 years old, you sold it to Engine, and exactly 2 years later to the day, you left. How did you find the earn-out period?
Genuinely of all the things in that deal that you negotiate, the one I never bothered negotiating on was the two years. I thought, if I’m not willing to go somewhere for two years, I really shouldn’t be doing this deal at all.
I look back at the whole experience as a positive one. I was lucky to deal with Peter Scott and Debbie Klein at Engine who were very good people who I admire a great deal.
Did you have a plan when you resigned?
I always thought there was an independent second agency waiting for me to do. Plenty of people warned me how hard it would be to go again, and they weren’t wrong!
Was it hard to leave?
It was really hard to walk away from Mischief. There were something like 70 people there when I left and it felt like my life’s work. It was eight years that felt like twenty-eight years that were magical, life-changing and better than I could have imagined them to be. But it also felt like the right time to go, and I’ve never regretted the decision.
Did you still feel protective of the Mischief brand after you left?
I made three decisions on the day that I left. One was that I would hire my successor and I wouldn’t let Engine do it, because I thought having done that job myself, I knew it better than anyone else. You can build an agency in 8 years, and ruin it in 8 months if you don’t get that bit right.
Decision two was having hired that person myself, I wasn’t going to fall out with them by returning 6 months later to try and hire half of the agency back. Which is always tempting.
And the third decision was to avoid the temptation to try and win Mischief clients. There would have been no guarantee they’d have left anyway, but it wouldn’t have felt right to try.
I didn’t talk about those with anyone, I just did them.
Everyone told you doing it all again would be harder than first time around. Have you found that to be the case?
Why, when you can fast track so many elements?
The thing that’s harder second time around is that the highs are not always as high because they are second time around. So they’re good but sometimes not as good. So take awards for example. The first time around its epic to win, but the second time around you feel you should be winning them, and not winning is difficult. It’s the same with new business pitches.
And the downsides of the job sometimes hurt even more, because second time around you can’t help thinking ‘how are we still getting this wrong?’ Like resourcing! I’ve worked in this industry for 20 years, how can I not resource properly? Or someone is leaving to go and work somewhere else. You’re kicking yourself and feeling how can this still be a thing?
But the upside is you definitely know what you’re doing second time around, and you’re braver, more comfortable in your own skin, and less likely to over-react as a result.
One of the reasons I wanted to get out of Engine quickly was I wanted to get out while I still had the energy to do it all over again.
Winning new business and growing clients is central to this game you’re playing. What’s your approach?
At Mischief we were growing so quickly that some of the best opportunities we had, we didn’t make the most of, because we were so busy pitching, we missed what was already on our doorstep.
When you go second time around, you think, wouldn’t it be great if instead of having 40 clients, we had 20 clients, but we did more for them, and we were really embedded in their business? To do that we’re going to have to spend a lot more time with them, get under the skin of their business, build better relationships with them, and really invest in them. You can’t do that if you’re pitching three times per week. It’s the equivalent of having a really good set of friends, but not spending any time with them because you’re rushing off to try and meet some new ones.
We did a bit of an experiment last year. We prioritised organic growth and decided that we’d just do a few handpicked pitches. We were very selective. As a result we won nearly all of them, but more importantly we had 40% organic growth. This is what happens when you spend more time with your actual clients than the ones you’ve yet to win! They’ve already put their trust in us, so we worked hard to repay it.
I can look every client in the eye now and know that we’re doing the best job for them, and keeping the promises that we made on the day of the pitch. That was harder in the past, because we were spinning plates, and just doing enough to avoid a problem.
The Academy is now 45 people. How do you stay connected with all levels of your team as the business grows?
One thing I do is peer groups meetings. We split the company into three groups (determined by their levels) and I sit with each group every 2 months and just talk with no agenda about whatever is on their minds. It could be a suggestion, asking why we do or don’t do things. They can challenge me on what I or we could do better. It’s a completely open forum. Lots of ideas come out and I can also spot problems early.
If anyone is crazy enough and brave enough to embark on starting another agency after a success story, what advice would you give?
Don’t try and do a slightly better version of what you did before. There were 2 motivations to not going back and poaching Mischief staff or clients. The main one was I didn’t want to fall out with them or damage what I’d help build. But the added bonus of not doing that, was not becoming just a Mischief 2.0.
For your own sanity, you have to spot the gap in the market, and then by doing that you’re ensuring that you don’t become another version of what you’ve already done.
My second piece of advice is that while you’re going to want to get back to where you were, quickly, you can’t run before you can walk, however impatient you might be. Culturally you can’t go from 0-30 people too quickly. If you try to, you’ll end up with a bunch of strangers who barely know each other. The best agencies have a togetherness and in year one we struggled to recreate that.
What keeps you hungry & motivated?
Dan and I are hugely competitive and paranoid about being average.