For a digital agency to survive in the long-term, it needs to constantly evolve as the market changes.
I’m consistently humbled by the continued success of GRAYBOX over the last ten years. When I started this company in the recession of 2009, I did not imagine that our unique approach to digital consulting would resonate so well in the market, or that we’d be able to consistently grow our team & skills to the ever-changing technology demands of our clients. Great consulting only happens if you have great consultants — so, I’m most proud of our team and the consistently top-level talent that we’ve been able to attract, retain and develop over the years.
For a digital agency to survive in the long-term, it needs to constantly evolve as the market changes. As such, today I think of the company as “GRAYBOX 4.0”. For the record books, let’s talk through our various iterations and explore what’s next.
GRAYBOX 1.0 - Circa 2009 - 2012
I started GRAYBOX in my little Wallingford apartment in Seattle, WA in February 2009. At the time, I was working as an senior E-commerce and Digital Marketing consultant for a Internet Business Consulting firm in Bellevue, WA. My hours were cut way back due to the recession (and clients pulling back from investments in Marketing), and being newly married as well, I wanted to start freelancing again to earn some side income. I had freelanced successfully in Eugene, OR (at college) for multiple agencies, and I knew I could get a bunch of side work in Seattle.
I took on a few clients in Seattle, where I did all the work myself, mostly in the evenings and weekends. My wife and I then moved back to Portland in October 2009, and started working from home. I was going a little stir-crazy at my house all day, so I started rotating through a bunch of East Portland cafe’s each day. In doing this, I began to notice that from about 10-3 each day, the coffee shops were full of other people like me — marketers or developers, who were writing code, making designs, editing photos, or writing.
At Bipartisan Cafe in the Montavilla neighborhood, I got the core idea for GRAYBOX’s origin. What if you could combine all the great freelance talent around in a loose network, then use that network to compete for bigger work; the type of work that typically goes to a bigger agency, instead of the small work that typically goes to freelancers. If you could do this, you could compete with the bigger agencies on skill, but without any overhead, so you could offer a much lower price — delivering a super high-value — exactly what bigger clients were looking for in the recession.
So I got to building a network, and somehow, landed ourselves a huge contract to redesign the McDonald’s corporate intranet in the first couple of months. We also landed bigger accounts with local medical clients, manufactures, startups and Lewis & Clark College. At peak our freelancer network got to 45 people and I could run about 10 projects at time as head strategist, project manager, editor and QA.
Everything was going great, but as the recession got better, our network started to decline and had to adapt.
GRAYBOX 2.0 - Circa 2012 - 2014
Over the course of about six months, I saw our contractor network dwindle from about 45 people to 12. It was scary, and I found it getting harder and harder to fulfill our contracts. I had to take on less projects, do more of the work myself again, and worst, my scheduling issues were starting to make us unreliable to my long-term client-partners.
So in late 2012, I got a small office in Old Town Portland (about 120 Sq. Ft), and started to hire staff. I didn’t have the work yet to pay both the initial team and myself, so I stopped paying myself and lived off the small saving I had built up over the last few years. We hired a Jr. Developer, and my favorite two freelancers to be our first Technical Director and Creative Director.
The new staff allowed us to have a lot more capacity, and I aggressively sold work to keep the team busy. We grew rapidly, outgrowing the first office in a few months, and moving to SE Portland to a space about 1200 Sq. Ft. We went from 1 to 14 people by the end of 2013. I was still running all accounts and project management, and I was the only operational person on the team. I was working probably 70-80 hour weeks.
With having staff now, we had to make up all the standard operating procedures for a team — staff meetings, scheduling, HR, IT, admin, etc. Moving from a ragtag team of independent freelancers to one team was a difficult by fun transition.
By early 2014, I was increasingly stressed and it was clear that I needed help.
GRAYBOX 3.0 - Circa 2014 - 2017
We brought on operational help for me in a few ways. First we hired our Office Manager (Hi Kerri!), who immediately freed up about 20 hours a week from my life, but also started to streamline and standardize our chaotic ways of operating. Her discipline, thoroughness and care has been huge over the last five years.
On the Account and PM side, I needed someone that I could trust completely, so I called an old colleague from my old consulting firm. After a few months of talking, Jon agreed to come on as a true partner, and help me run the entire business. A year later, he vested into his stock options and we co-own GRAYBOX today. We split accounts, and he started building his own book of business, and I continued to build up mine. It’s been a tremendous relief to have another owner in the business, and we’ve learned to trust each other and fill in each other’s weaknesses.
We moved to a new 3,600 Sq. Ft office in the summer of 2014, and grew to 28 staff by June of 2016. We moved into our current home, the top floor of the Olympic Mills building, in August 2016, building out space for a future team of 80.
From a work perspective, we hired our first Project Manager, and our life became immediately better, basically overnight. We felt like idiots for not having this role before, and we started hiring more great PM’s when we could. These key team members started giving us better management of the work, with less risk, more communication and more clarity that we had ever had before.
During this time, we also started a SAAS-based website builder platform, Businesstastic, that we’ve since shut down. We also spun out Run AMZ, an Amazon management / rep firm, from the GRAYBOX ecommerce/amazon team. To service each of our companies well, we also made our own parent company, Digital Industries, which handles shared operations (Financial, HR, IT, Facilities, Legal, etc) for each of our subsidiary companies.
As the team grew we remained a functional-oriented organization, but we split up the team into discipline-based groups. We had a development team, a creative team, a marketing team, and a consulting/back-office team. Everyone could work on any project, and the PM’s were responsible for scheduling/resourcing their own work. This worked well in theory only, and as the team got busy, this led to an intensive amount of scheduling conflicts and skill constraints, resulting in frustration for both our internal team and our clients. At peak, we had 46 people, 9 of whom were PM’s to schedule the other 30ish consultants for our client work.
As it became clear that our organizational structure was inefficient at this scale, we realized it was time for a major organizational change.
GRAYBOX 4.0 - Circa Late 2017 - Today
In October 2017, we switched from a functional business organization to a divisional one. We call these teams “Practices” and they are organized around the unique needs of our different types of clients, and around the type of work that these clients need. We intentionally aim to keep our practices small, ideally the size where everyone knows each other well and can collaborate easily. To steal the Amazon/Bezos term, we’re shooting for “Two Pizza Teams."
Each practice is then staffed by people from our various functional areas. The team is mostly dedicated to their own area of work, and they can develop their own deep expertise in that area. The transition has gone extremely well and we continue to get great feedback from our clients and our team.
Strategically, we’re extremely dedicated to the Portland metro region and aim to be the most well-known and respected, northwest-focused digital agency in town. About 85% of our clients are local.
In recent years, we’ve also dug deeper into our retainer-model with our clients. About 50% of our revenue & work is on a retainer basis, and it forms the backbone of our work and schedules. We’ve introduced a new tagline, 'Your Partners in Digital,' and an internal mantra, 'Partnerships, Not Projects,' to help align on our team and clients that we’re in a relationship for the long-term with each of our clients.
We also recently opened up our first international office, in Mexico City. Being a high-end, tech-forward agency in Portland is tough — we can’t keep up with the massive tech salaries in PDX without majorly increasing our rates (tech salaries went up 11% in 2018, and 9% in 2019). So we've decided to tap into the massive creative and technical talent pool in Mexico City in 2019. Our goal is to have 1/3 of our production-level (non-senior) team in Mexico, which will enable us to continue to pay our Portland-team competitively and to lower our average rate for our clients. Strategically, we think it’s going to be huge for us.
Overall, we’re in a good groove. Our team is awesome and we’re able to bring in top-tier talent. Our client relationships are strong, and we have a large amount of repeat work. Our local reputation is growing, especially in the Enterprise space. We understand how our practices can scale and adapt to meet the next challenge. We’re continually learning new things and bringing on new services/solutions for our client’s benefit. We’re excited about our future and hope to keep doing this for another 10 years!
As for the future, we hope that we can keep on this groove for another couple of years at least, but we know that we’ll have to evolve again eventually. Who knows what the future will bring — but I’m confident that we can tackle it.
That said, we do have a few objectives in mind for the next five years.
- Increase our number of active clients from 115 to 150
- Increase our percentage of retainer revenue from 50% to 65%
- Open our first US expansion city somewhere in the Northwest
- Explore new partnership dynamics like profit shares, earned equity, pay for performance, etc
- Expand our service offerings into more services (More Mobile, VR, Crypto, etc)
- Increase our community involvement via events, speaking opportunities and sponsorships.