TL;DR
Podfly will limit our active clients to 50. This strategy, derived from Midroll Media’s O.G. biz model of focusing on quality over quantity, allows us to provide better service and maintain high standards.
Instead of scaling up or cutting costs, we reduced our client base. We responsibly transitioned some clients to independent arrangements with their production teams, ensuring continued service and job retention.
The shift aims to maintain quality and create a sustainable, employee-owned company. This new approach contrasts with the common growth-at-all-costs mentality, emphasizing enjoyment, shared rewards, and values.
I once interviewed Lex Friedman. No, Google, that’s not a typo.
Lex is a super genius who, among other things, worked for a podcast ad firm called Midroll Media. In the funky, early days of podcasting, Midroll brought a fresh approach to advertising that somehow made ads the second coolest part of podcasts. Then, Midroll was acquired, Enshittified, and converted to another SXM Media property. Lex makes puzzles now, and podcast ad revenue is in the toilet.
I found talking to Lex yielded one valuable insight. Turns out, there were at least two.
Our company only works with 50 active clients at a time. It is a cap in place largely inspired by that conversation with Lex. (You can find that conversation here if you’re curious) He mentioned that Midroll only worked with 200 clients. As a budding production company in what was then an era of 'scale at all costs,’ this seemed counterintuitive. I like counterintuitive business decisions.
Servicing only that number of accounts meant the team could be right-sized beforehand. They were able to focus on attracting higher-paying, quality clients rather than cramming more and more accounts into the CRM. It was a box, and they could only fit so many things in it. This made decisions on what to put in that box very clear.
Growth, at great costs.
Though I liked this idea, I neglected to act on it. Around that time, Podfly had up to 150 active shows and as many as 50 team members.
I've run service companies of this size before. In a previous position, I managed operations for four physical locations in two countries with 130 employees. I knew how to manage large, hybrid, multilingual teams. I also helped scale and sell an online radio and podcast network. Scaling, managing, and exiting was my jam.
Yet, Podfly was becoming an organizational headache.
Process over people was the focus, and worse, employing (deep breath) middle managers became necessary. Rather than improving the service, we were improving the internal processes. Revenues grew, and profits shrank. Sure, it felt validating in the elevator at podcast conferences to compare company sizes—mine is bigger than yours! It was also infantile and irresponsible.
Eventually, growth comes at the expense of quality - especially in the service industry. Team members are soon treated like employees, and everything has to fit into a spreadsheet on which quarterly decisions that affect real human lives are made.
Look, I get it. That's how big companies are run. I know because I've worked at or in them. I mocked them as big, bloated, and pointless. Granted, twenty people in cafés around the world can’t make an iPhone. But that's not who I wanted to become; it was time to pull back.
New org chart, new mandate.
We recently went through significant leadership changes at Podfly. I put a qualified Creative Director in my place and stepped into the CEO role. It admittedly sounds more impressive than it is. However, the title meant that my job description was clear and what I did next was easy. I laid out a new accounts mandate for the company.
Podfly will only service 50 active accounts at any given time.
I spent three months working with our new fractional CFO to generate a rundown (The Office) of our clients. We established that we had 85 active accounts. Only half were profitable, and the rest were breaking even or losing money.
The intuitive response might be to:
Raise prices
Cut staff
Acquire more clients
We did the opposite on all counts.
Our first mission was to shed 41% of our 85 clients. That was a fairly easy prospect from a numbers perspective. A couple of emails and a nice blurb about how we “value” you, and it’s done, right? But remember, we don’t operate a service business hiding behind a laptop screen and email. We talked with our clients and team members. We shared the situation account by account and asked what everyone thought we could do.
Clients and team members were surprised. They weren’t accustomed to being treated like reasonable people in an economic downturn (yes, there is also universally an unspoken downturn in podcast revenues).
What we did next (I’m told) is unheard of.
Any account that didn't fit into our 50-client mandate had to go. As humans, we couldn't simply fire clients and stiff the production teams who earn a living on the shows. That would be a dick move, and we're not dicks (I'm looking at you, Rogers Media). That's the kind of lazy teenage breakup that adds just more yuck to an already un-yummy media landscape. Instead, we offered the shows to the teams.
We were able to:
Lower the prices for the clients (we don’t need a cut anymore)
Retain the staff on the accounts (clients already had working relationships)
Off-board the clients from our roster, kindly and responsibly
It was the exact opposite, and everyone loved it.
This activity has built a clearly defined box where we can put our work. We can select what projects go in and which go out. We learned to take projects out of the box with gratitude and respect. We can shepherd projects to relationships where they continue to thrive in what may be a better, more cost-effective fit.
You may recall the second lesson I didn’t take from Lex.
Midroll got acquired and eventually added to another media Borg. I promise you that spreadsheets and a handful of middle managers (mostly those infantile men measuring in elevators) are in charge. At one time, I foolishly thought, "Man, wouldn't it be great if Podfly were acquired too?" Put a couple million in the bank, get a blurb in some press release, and the short-lived envy of my colleagues? Seriously, I put energy into this idea, knowing it would likely end up screwing a lot of people. I even hired a consultant to show me how it's done.
Gimlet, Pacific Content, Parcast, and dozens more are gone or shadows of their former selves. Bought, sold, misunderstood, kicked around, and eventually not worth keeping or even trying to sell off. And that’s just the company. Those sensitive, talented artists who worked in good faith on projects were treated like 90's radio disc jockeys and disposable cups. I know because we have hired many of them. Sure, we got our acquisition offers at the height of zero-interest SBA loans. We didn't take them. TBH, only because the money wasn't "life-changing" enough. I know better now.
I was caught up in it and am glad we dodged that bullet.
So, now what?
As I work more on the other side of the pandemic, having read inspired works such as Four Thousand Weeks, Company of One, and The Boutique, I realize I’ve always wanted what we're already moving toward.
An employee-owned company. Kind, sustainable, fair, professional, and most importantly, enjoyable. We build together, we share rewards, we embrace values, and we have ambitions beyond ourselves.
Finalizing the 50-client mandate and thinking bottom-up about how we provide fair work for producers (rather than accounts for Podfly), I see this agency becoming what it started out as—a collective, creative community collaborating with brands we like.
Now, on to killing those pesky slide decks and contracts no one reads…
WHAT’S INSPIRED ME LATELY?
Steve Pratt wrote hard and fast about shuttering Pacific Content. I like him, I like his writing. This is what he said about it.
Here are more funky Canadians are rethinking how businesses are owned. I’m super digging the vibe at Rewrite Capital.
I’m a guitar nerd. I’ve been buying boutique effects pedals from a fellow in Ontario, Canada who goes by Rarebird. He shipped me a Greer Lightspeed Organic Overdrive clone that is the right amount of low-gain overdrive, and mid range frequencies that, in his words, seems to “find notes for you.”
If you dig this thinking, our team periodically pecks away on our Insights page at Podfly.net/insights.