Your Reputation is All You Have, An Interview with Paul Bellows of Yellow Pencil
- Paul Bellows owns and operates Yellow Pencil, a web design company in Vancouver and Edmonton
- The Vancouver office exists not because of client location, but because of talent location
- First job in digital was for Peter Gabriel’s CD-ROM’s out of the RealPlayer office in Seattle
So, Paul, how big is Yellow Pencil?
We’re a team of just shy of 35. We’re hiring right now for our 35th position.
Decent. And there’s two offices—one in Edmonton, one in Vancouver?
Yeah, we started in Edmonton and then over time we expanded into Vancouver mostly because that’s where a lot of digital talent is. A lot of the people that we hire are in Vancouver so it’s easier to grow a team there.
Really, even though it’s probably wildly more expensive? I mean, you could expand into Winnipeg if you wanted? Is there more work and better work in Vancouver or just better people?
No, it’s actually less work in Vancouver of the types of things that we do but there are better, more people in Vancouver to do the work and most of our clients are remote. We don’t really have offices where the work is. We have offices where the people are.
That’s amazing. So if you are to expand into where the work is, which cities would those be?
Probably the next city where we would go in terms of where the work is would be Toronto, Canada, and then we are looking in the future at the U.S. It’s kind of a – not to say it’s a crap shoot in the U.S, but there isn’t necessarily a better or worse market. We’d probably start on the eastern seaboard somewhere. You know, Boston, New York, Philadelphia, in that region. There’s just a ton of client work there. A lot of big head offices, big corporations. So, if we wanted to be close to the clients, we’d probably go north eastern U.S initially.
Right on. Is that a plan or is that something that’s kind of far off?
No, it’s stated in our strategic plan that we’re doing that and it’s somewhat opportunity-based. We do a lot of work in the U.S right now, on the east coast but not quite enough to justify a full team. But we’re getting closer to its tipping point right because at some point if we found the right company to acquire, the right people to hire, we can almost make that leap at any point now. We can really almost support a team from the east coast now. Likewise in Toronto, we’re doing quite a bit of work in the east. Today, we fly back and forth which is expensive and increases our carbon footprint, so at some point or sooner, it’ll probably make more sense for us to actually have a team on site in Toronto to service our clients there. We really do see western Canada as home base and where probably the bulk of our team will continue to live and work.
Yellow Pencil—it’s not just a web design company, I mean there’s kind of a difference between a web design company and what Yellow Pencil is. Can you explain what the difference between those two are?
Yeah, I think it’s an important distinction, because there’s so much diversity in the types of work in this space. So probably one of the biggest differentiators is that we primarily work with the public sector. So government, educators, big post-secondary universities, some crown corporations in Canada like government agencies and then sort of into the TPA Canada as a client. They’re not quite a public sector but they’re not also private sector.
We work across what we call, I guess, the plural sector, is sort of the description of the industry category. And what’s different about those folks is typically they’re not looking for just a website design activity, like, everyone needs a new website from time to time. They’re really looking at digital transformation. Like how do we over time, start to build the capabilities, the practices, the tools, the software, the design systems, so that we can communicate with our citizens, our clients, our stakeholders using digital technology and get transaction on the way we work to come online? It’s just really sort of what this long, slow change of the organization, a different way of working, which sometimes means hiring new people, training new people, building new business units, procuring sometimes, fairly expensive and complicated software and learning to work with it.
Designing a website is one of the big things that we do for our clients but we do a lot of other things. Consulting, ongoing enhancements and improvements. Our firm is more a partner to the clients rather than just show up, we design a website, we drop it off, and we leave, and we move to the next project. Our work relationships happen over many years usually rather than over months.
Right. So the organizations that you work with need full time, ongoing partners to help them?
Absolutely. When they start, sort of the first thing we do is redesign the website and then we hand it over to the client to start to operate it, but they usually don’t have the people and the skills in how to do all the development and the ongoing design enhancements because a webpage never really is done. You launch something and you continually have to work and improve and test and validate and find ways to improve it. So we’re their partner while they start to build their own internal team and kind of get things up and running. The ideal relationship for us is that clients start with something resembling a website redesign and by the end of it, we’re more just a partner and a consultant and they’ve built their own team to start taking over and do that work.
So who do you work for right now?
Some of the relationships we’re really proud of right now: the government of Yukon is one of our big clients. So we’re helping them with their whole e-services overhaul. We did launch Yukon.ca where we’re on e-commerce systems and secure citizen identity systems. And we’re working on forms and service automation platforms that connect them to Yukon.ca. We’re working on content migration, moving their 20 departments into this new platform. There’s all this work that has to happen for them to go from sort of digital immaturity to digital maturity. That’s one of the relationships we’re really proud off.
We’re also working with the City of Edmonton. They’ve been a big partner for us for years. That’s where our head office is and we’re really proud to work with our hometown. City of Surrey, likewise in the Vancouver region. Those two are big Canadian cities and there’s a lot of moving parts to their web platform. In fact, just a webpage – The City of Edmonton has 400 content authors and more than 800 different systems that need to integrate, backlog of like 80 digital system initiative project that all need to get integrated shipped.
Likewise City of Mississauga has been a partner for years. We partner with them in their strategy, how they’re going to approach it, how they’re going to build their team out.
Down in the U.S, we work with the Wharton School of Business. They’re one of the oldest business schools in North America. One of the top business schools.
Trump went to Wharton, right?
Yes, but Wharton has many famous alumni and people that have been really impactful to the business community. Benjamin Franklin started this school. We got some really reputable folks going way back in history. They’re really a great partner for us as well.
That’s the types of clients that we really thrive with and we’re really proud of those relationships.
One thing that’s interesting to me is the team is in Vancouver and in Edmonton, maybe with a freelancer too out there but, why are you doing work in Philadelphia? How does a Vancouver, Edmonton company get a client in Philadelphia?
That’s a great question. One of the things we really work hard at is partnerships. Technology partnerships. We really realized early on that Edmonton is not, let’s say, the centre of the universe. In terms of business and where interesting things are happening, sometimes it’s far from where everything is. So they say, location, location, location is the key. So how do you get located in the right place when you’re remote, from where the work is happening, and where the clients are?
So we won the Wharton School project because we were going to software conferences. We’re just making the investment to show up, to be there. And there was one year where we we’re working with a company called OpenText. We were given their Global Partner of the Year Award. They have big corporate customers all over and we were their top partners. We showed up to the event and as part of that, we were on stage, we were up there with Deloitte and other companies and we just got recognized by some of the folks from the Wharton School. They were using the OpenText product. They approached us and said, “Look, you’re apparently the best at this. We’re looking for people who are the best at this” and we started working together. I think it was 2009. This is now nine years ongoing. They’re not on the platform anymore. They’re using WordPress and other open source technologies that came to work with as well.
We just built a really solid working relationship. There’s good trust there. We do what we say we’re going to do and they trust us. So we’ve been working at the Wharton School for nearly a decade now. Just keep on showing up and then doing the work and building trust.
So getting new business for you isn’t emailing people out of the blue? It’s not cold calling. It’s not online lead generation. It’s none of that stuff you would hear like an online lead gen marketing expert say. It’s about showing up at a conference and being the best at something?
It’s interesting. We’ve never had success with online lead gen directly. Cold calling specifically has been a disaster for us. We’ve invested lots in it and it never worked. What works for us, I will say, part of showing up is being online. So we recognize we need to up our game on digital marketing in terms of content creations, storytelling online, helping to explain who we are and what we do for our customers. We need to be better at that it is part of showing up for us.
Most of our best work comes from word-of-mouth and referrals. People will ask “Who’s the best at this? Who can do this really well?” And from time to time, our name comes up and that’s how we end up with a seat at the table. So sometimes, it means going to a conference, sometimes it means being at a specific industry event, sometimes it just means good, old-fashioned networking and there is a little bit of cold calling and talking to people. But cold calling and online marketing itself have never provided—I can think of maybe one or two clients we won through those kinds of activities directly and those have never been the big strategic clients for us. Those have never been the big game changer clients. The big game changer clients always came because we were present. We were doing the work. We were out in the market. We were building good relationships. And then people talked about us.
So word-of-mouth has carried the business over 20 years or so?
Twenty-two years. So speaking of the 22 years, how did you start Yellow Pencil? Like how 22 years ago, web at its infancy, were you a web designer? How did you get this off the grounds?
Well, it’s funny because 22 years ago, it wasn’t actually clear that this was even going to be a thing that people would pay you to do. It was kind of like in 1996, there were design agencies starting to sell online work and web design work but it was really rudimentary. We’re building little landing pages, you know, like people-based layout and slicing Photoshop files to build little graphical something to advertise your company online. It wasn’t really clear that this was going to be a big industry at all. But it was in a space of hobby at that point. I was a musician. I was working sort of side jobs. I was always good at kind of sales. I was always interested in technology. I was using web technology to market myself as a musician.
Just through relationships, I stumbled into an opportunity to do some work with Peter Gabriel’s record company, but on their new media division. They were doing CD-ROMs at that time. They had a couple of big award winning CD-ROMs – that one called Eve that was a huge hit in Europe and kind of less than so in America. It’s a cool, interactive CD-ROM where you can explore Peter Gabriel’s music through sort of an immersion of art and online experience. We delivered through CD-ROMs back in the day. CD-ROMs look like beer coasters but they contain the data.
Are you saying one of your earliest jobs in web was working with Peter Gabriel’s CD-ROM?
That was the first real job I had in web. It came because there was a distributor. He got the contract. Somebody I knew, we were working on some other projects together, and I said I know how to build a website. So we started building online stores. We started doing some streaming audio. Really early stages.
I was in the RealNetwork’s office in Seattle. They were doing the finishing touches after they had the big IPO and it was mid to late 90’s, I stood in the RealNetwork’s office while they were lacquering the bowling alleys in the basement, like this was early days – pre-initial dot-com bust.
Wait, is that RealPlayer?
Yeah, RealAudio. They were a thing and they were just streaming music and we were working with them, looking at bringing UK artists to the US via streaming audio.
So you had some early things that just kind of worked out for you 20 odd years ago and then you just kept at it and people just kept paying to do things? Is that kind of a small scale of what’s happening now? People just hear of you, you do good work, you’re normal enough to work with and is that sort of like a smaller scale thing of what you do now?
Yeah, I think to a certain point. I think what changes for a business is, especially in the tech space, there’s a point in time where just knowing how to do things is good enough. You’ve got some skills. You’ve got some capabilities. Therein sort of a leading edge technology space and you’re helping someone to do something that they don’t have the skills to do. And you can really do well at that for a period of time.
Like a plumber.
Well, sort of, yeah. You’re a plumber but you’re a plumber that knows how to do like a really specialized—plumbers are not exactly the right analogy because everybody has a house and plumbing components will wear down and break at some point. These materials don’t last forever. At some point, the cycle of renewal of this plumbing work. And that kind of, I guess, represents what a regional digital agency would be doing. Look, we’re in the market, there’s a certain amount of work, someone’s going to be always needing you to upgrade their Shopify sites or do something else. But you are always going to be sort of going to working in a very regional way, work through these customers.
You got to have to be trying the higher challenge that knows how to use the tools of the day, always upgrading skills. You’re sort of chasing where the market is. I think the really important thing is to think about not just what I do know how to do, but also getting out of your own shoes and into the customer’s shoes, client’s shoes and saying what is it that they need done? What are they trying to achieve? We can make that transformation from just “What do I know?” to “How to do it, from what is it that my customers need done?” I think that’s where we really see sort of the magic transformation points for businesses.
I guess I’m saying the plumber analogy is actually probably pretty good even though—
Well, I mean, early on maybe I was just saying plumber because you have a technical skill set that someone else doesn’t have.
Do you feel that that was your differentiator? That you’re able to think about small problems and be asked small problem questions, you take a step back and think about it larger and then once you open people’s heads about those big problems, they trust you more? Is that the narrative?
I think it’s slightly different. Here’s like one of the business 101 concept that I think a lot of people fail to grasp which is about barrier to entry. All you need to be a plumber is to go to school. You need to get a certification. To be a good plumber, you need to have a good reputation. That means you need to have been working for a period of time. You think about it: the toilet blows up in your house, you go to the internet or Facebook for referrals. You ask who’s good. And you get a variety of answers back from friends or from Google. That’s how you work. The plumbers who have been doing it for a long time, who’ve worked really hard to maintain a good reputation and engage in good business practices, those are the ones who are going to survive because that’s how people find service providers.
The problem with web and digital is that you need none of the technical education or certifications. There is almost no way to certify or tell that a particular agency or particular individual knows what they’re talking about, or how good practice has maintained a certain level of credentials. That’s where in the digital space particularly, if you want to get in to this, you need to think clearly about how you’re going to really be able to validate that you know how to do something.
Really, that comes down to client service, good business practices, doing what you say you’re going to do, showing up, like just all the basics of running a business that have almost nothing to do with the actual thing you do which might be coding or design or configuring Google Search parameters or buying ads for somebody, whatever you’re doing in the digital space. Almost none of that is really going to be the differentiator. It’s how you run the business and how you treat your customers and how you make them feel and the confidence you give to them, that’s actually the thing will make you a differentiator in this space.
Right, that’s why word-of-mouth is such a big deal is because all those check boxes in order to work with somebody and trust somebody with a big project, there’s so many of them. You just have to demonstrate that through hard work and years of experience.
All you have is reputation. It’s the only business asset really —well, not the only thing but it’s the biggest. It’s the most important business asset to cultivate.
Do you think other agency owners or other business owners in general that have 35 staff or so, do you think they’re thinking those terms?
I hope they do and I think if they don’t, they’ll have a nasty surprise at some point. Reputation can come to fluke. You can just do the one project that everyone looks at and say that’s really cool, you know, is it because you had business practices over a decade that you did that work? No.
I think it was Don Cherry who said you got to be good to be lucky, but you got to be lucky to get good. You know? And there’s this certain element of just being in the right place at the right time and having the brain flash or doing the right creative piece or solve it in the right technical problem. And then there’s the other side which is really getting good over time. And really looking at building a business rather than just sort of being a one-hit wonder that can thrive for three or four years based on that reputation. There’s a lot of that in the industry.
It’s easy to get a company that has 35 employees, but employing them for a decade, that’s the hard thing you know. It’s something that you can actually grow a business you can turn into a retirement plan or something that you’re proud of or something that has an impact to the community. That’s the thing that I think takes the long, hard grind where you really have to work and have reputation.
Wow. It just seems to me that maybe other business owners when I asked them some of these questions, they would be more centred around yeah, we have sales staff that make us money. That’s the success. That’s why our numbers are high. Some of those, not entirely, but it seems to me that there’s more of that than not.
It’s certainly not, not a factor. If you have reputation, good salespeople multiply that. That’s the multiplying factor. If you’re old in the market, if you’re active, if you’re chasing people, that’s part of showing up. Like it’s not, not a factor. We’re fortunate in that a lot of our revenues reoccur with existing clients so I don’t have to renew my whole business every year. It’s not like I do 10 websites in 2017 and have to find 10 new customers in 2018. Sixty percent to 70% of my revenues come from the customers that I’ve worked with in 2017. Our business renews over a three to five years cycle rather than over a three to six months cycle. We’ve been fortunate in that way, we built our business. It’s about that long term relationship rather than just the short term.
We have folks on support and focus on ongoing improvements and sort of driving our customers forward down the task. We renew business in turn. It’s very, very relationship driven there. I have account managers, not sales people.
Due to the nature of who our clients are, a lot of business come to us through some sort of a public RFP. It’s posted to a public website, everyone can bid on it, we try and show up and have the best story, but we don’t get our business through a traditional sales activity. Our business is a little different from others where we sort of intentionally do not have to have the big sale staff. That’s really just how we designed our business.
So, if you already talked to a web designer, a single person, or a small team, and they want to grow their business, your advice would be to what? Don’t hire sales people? Don’t think about the business in those terms, but just keep doing a great job?
I think my advice would be both. As an owner, you’re going to be the best sales person because you have the most credible voice and you have the most on the line. You are the one who’s going to be most compelling to talk to and you’re also going to be the one who’s most convincing because you believe it. Whereas the salesperson may be more like a hired gun who’s out there just trying to get some revenue on the door, you’re aware that you’re still going to have to build a relationship with this customer. You’re putting your own reputation on the line.
Initially, if you’re an army of one, you’re going to be the salesperson. And you’re going to have to get out there and talk to customers. I would say my advice would be initially, think about yourself and what you can do and what their needs are. Always try and get your feet into the shoes of the customers, your head into their hat, living their world, think about what they need and try and speak in their language about what it is and recognize you’re just bringing the how and they have the why. They’re the why it’s going to happen, you’re the how and you’re there to help and support them.
There’s a great book on just sort of thinking about how to build a sales pitch, The Brain Audit.
You read The Brain Audit and it just walks you through how to get out of your head and your world and here’s what I know: how to do into the customer’s world which is, what is the pain that I want to have go away? And you can speak to their pain, what’s painful for them if “my business isn’t selling enough”, “my customers have trouble communicating with me.” People aren’t aware that my awesome chiropractic clinic has such a great track record, you can get into their stations, speak to their problem and here’s how we can help you get rid of your pain. That’s always the best way to sell. So that’s the initial piece.
Then the flipside to that is show up, do what you said, offer value, fulfill that promise you made, take away the pain, whatever the cost is, get there. Those two things together are how you build the business and then you start to grow. Let’s say you hire the first two people, four people, your five people, get that small team that can work together. Once you have the capacity where you can grow a little, then that’s where you start to look at a sales person or a sales role. That’s something that starts to multiply what you’re doing. The sales people find new opportunities, but you as the owner are going to be the person that closes the deal. You’re the one that shows up and says great. Susan or Frank who’s our sales person, they found that you have some needs. I understand you got some pain, what can we do? What is it that we can do to help? You’re always the closer as the owner.
Up until you get to a point where say, you’re more than 25 people or up to 40 people, and when a business scale to a certain point, you as the owner probably don’t show up for every single client anymore, you need to back off. You need to create a system of generating leads and then how you close that lead and how to get that sale closed. It becomes more of a system that you create within the business. But you have to really get that 20 to 25 people. It’s you and your reputation and it’s your relationship with the customer. You’re making a promise to the customer of what’s going to happen to them because they hired your business and you need to treat that like a kind of a sacred trust with you and the customer and then figure out how to fulfill on that and deliver. I think that’s my philosophy about how business works.
Every time I talk to you, you seem to have read a new business or have a book recommendation. How many business-oriented books do you read?
Probably not as many as it sounds. Mostly because I have a 4-year-old at home so I watch a lot of Paw Patrol. I haven’t learned a lot of business that I can get from Paw Patrol or My Little Pony. I’m still mining into what truth is there.
So what’s next for Yellow Pencil? I mean you’re kind of sitting there with 35 people. Are you hiring more in Vancouver more than Edmonton? Like what’s the next thing you’re going to be doing? We’re almost at the end of 2018 here. What do you plan for 2019?
There are a couple of specific plans we have. We’re hiring but not in a particular reason. We’re hiring for diversity. We recognize that to be relevant with our clients, we need to become more diverse and also more equitable as an employer. We need to reach out to a broader market, different types of thinking, different types of talent and grow a more diverse team that can work together to solve very complex problems. Complex problems require thinking. Complex thinking comes from diversity. So we focused heavy on diversity in terms of our hiring. I recognize them saying that as a middle-aged, white, cisgender male, but it’s still important to me and it’s something that I highly value. So hiring for diversity is critical for us right now.
Second is taking some of the really good things that we do, sort of I’ll say, ad hoc. We’re good at showing up and designing and delivering and we’re really working on repeatable process but also creating some products. One of the hard things about running a service and business is managing the peaks and valleys of work. Seventy percent of my expense is salary so if there isn’t enough work, I’m still paying those bills and if there’s too much work, I can’t just expand to do all that work. Peaks and valleys are hard to manage, so taking what we do and making it more about annualized costs, kind of productizing our services making something a customer can pay like a flat rate for and have a guarantee of a certain amount of time—that’s really critical to ensure sustainability.
As we grow, we’re trying to grow not just more projects but more projects that are sustainable and predictable and where we can predict when the revenue is going to happen, when the work is before we can get in control of that. The better service we can provide to our customers, the more consistent we can provide and also the more manageable the business.
The third thing that we’re focused on is being a little more present regionally in the east. We’re looking at acquisition or hiring. We’re just having those conversations – do we buy a small company in the east? Do we hire a team and get an office in the east and kind of grow it from scratch? We’re having those conversations now to say close to lower our carbon footprint but also just to be closer to our clients to provide better service. How can we have some people out east where a lot of our really great customers are so that we can be in the same time zone? We can show up for meetings without having to get on an airplane.
Those are the three areas that we’re working on. Outside of the normal things of getting better at telling our story, better marketing. We’re doing a re-brand. We’re a whole new web platform for communicating what we do and how we work with online. Hopefully it’s going to be online by December 2018 in terms of our story and who we are. There’s a whole re-brand kind of a reinvigoration of the Yellow Pencil story happening right now.