$0 to $1.5MM ARR (2020 update)

Some of you may remember me from posts in the past. I started a content marketing agency called Optimist in December of 2016.

Since then, it's grown from a side hustle built off of my personal freelancing work to a real, full-blown company with more than a dozen clients.

It’s been a wild ride and I’ve truly had a great time sharing details and advice with the folks here.

Each year, I’ve shared my progress and tried to answer questions as best as I can.

I’ve received hundreds of messages, emails, and LinkedIn requests over the years from posting these and hopefully they’re helpful for new entrepreneurs or anyone looking to grow.

Since it’s 2020, I thought I’d share a new update, some lessons learned, and a bit about our plans for the new year!

This year, we hit our revenue and growth goal of $1.5MM ARR ($125k MRR) — in September!

Here's our monthly revenue from January 2017 to September 2019:

So, I wanted to share some of the big changes that have happened over the last year, what I've learned personally, and how we're continuing to evolve.

Let’s get to it.

How Optimist Works

First, an overview/recap of the Optimist business model:

• We operate as a “collective” of full time/professional freelancers
• Everyone aside from me is a contractor
• Entirely remote/distributed team
• Each freelancer earns $50-75/hour
• Clients pay us a flat monthly fee for full-service content marketing (includes research/strategy, writing, design, and content promotion/outreach)
• Packages range in price from $5-20k/mo
• We offer profit share to everyone on our core team as a way to give everyone ownership in the company

Second, a breakdown of Optimist by the numbers:

• 16 clients on retainer
• $133k MRR
• 21 "core" team members (freelance/contract)
• 35 additional freelancers in our community
• $70k paid in profit share in 2019
• Gross profit margin ~40%
• Net profit ~25% before paying my salary and profit share

Now, let's get to the lessons from 2019 and plans for 2020!

1. Keeping the structure flat at >$1MM Revenue

In 2019, we implemented a lot of changes.

Some of the systems and processes that worked to get us to 10 or 12 clients really started to break down when we got above that point. This put me in a difficult position where I was often overworked and trying to figure out how to grow.

Our goal as an agency has always been to remain flat. In fact, our entire business model is built on this concept.

The reason we're able to pay competitive freelance rates AND offer profit share while maintaining healthy profits is because we don't have the overhead associated with most agencies. We don't have editors or managers or directors or creative directors or any of the other layers.

But, that gets more difficult as you scale.

Without the managers and producers and other middle-management roles of a traditional agency, much of the day-to-day stuff falls on me. Any of the communications or hand-offs or little tasks fall to me. Finding writers and designers falls on me. Creating editorial calendars falls on me. Answering questions about promotion falls on me. Running reports falls on me.

TL;DR - It's a lot of work. We needed to fix it.

But I didn't want to radically rethink our entire business model. If I started bringing in other people just to push the work around, then we'd add overhead -- we'd eat our profit margin. We'd either need to dramatically raise our rates or entirely change our compensation and team structure.

Fuck that.

Rather than hiring project managers and adding layers of complexity to our operation, I did the more difficult — and more expensive — thing.

I doubled down on the idea of autonomy and ownership.

I asked everyone to do more in order to help us sustain growth without the extra work falling on me.

Writers and designers were asked to work directly with clients, to manage hand-offs, and to connect directly with everyone else on the team to answer questions and solve problems. I re-positioned our promotions team to have one person act as a central coordinator and to put a team of people around her to help share the workload.

This decision meant that our organization has remained flat.

This only worked, I think, because of our unique structure.

If we were a traditional agency and I was paying employees a normal salary, I don’t think I could reasonably expect them to “step up” in the way that they have in the last year.

But, because everyone is paid both hourly for their work and given a profit share percentage based on their involvement, everyone has a vested interest in taking on more work, helping the team succeed, and keeping our clients happy.

I think this decision was the right one, even though it's more difficult and more expensive. It's indicative of most of the choices that I've made with Optimist. Our entire business model has been built on this collective ownership model that bucks conventional wisdom about building an agency, maximizing profit, and preparing it for acquisition.

First of all — my goal was never to maximize profit nor my personal wealth. If I wanted to get rich by starting Optimist, I would have done things very differently. I wanted to create a collective that was built on shared ownership and we have done that. To reverse course now would have been backtracking on that original vision.

Second — I think that the reason we have been so successful is because of the ownership model we have built. Many other agencies in our space likely have higher margins and their owners make more money. But they also work with young talent that’s just there to collect a paycheck. The work is low quality. Good people burn out and quit. And because of that, they churn and burn through clients like crazy.

Yes, it’s more expensive and less lucrative for me personally. But I philosophically believe that the team should retain more of the value that they create. And, as an entrepreneur, I think it gives us a competitive advantage to have a team full of smart, autonomous professionals who have a personal stake in our success—they truly give a shit.

My 2cents is that the “obvious” choice may not always be the smart one. Cutting costs now may not be the best way to maximize profits over the long run.

2. Using the 70/20/90 rule to scale my time

As you scale, you can’t keep a leash on every process or every piece of work that your team creates.

In the first two years, I acted as the strategy director, the account manager, the managing director, and the creative director—I tried to own everything that we did.

Delegating was painful.

Mostly because I felt like I was always the one who had the most knowledge and experience—and, of course, that was often true.

But the 70/20/90 rule changed everything.

The idea is simple:

• Find someone who can replace you 70% of the way
• Train them to do 20% more
• Be happy with 90%

The reality is that any time you delegate work—especially as an expert who has built a business on their own experience—it’s likely to take a small hit in quality. As a manager, it's your job to manage against that natural tendency. But that can create a world where you never let anything go and you never delegate—the worst possible outcome.

This concept has helped me a lot.

For one, it's reminded me that very few people will have the same knowledge and experience as me. It's reminded me that a big part of my job is helping people achieve that level (or as close as I can).

The biggest item here has been that we rolled out a Distributed Ops model.

In a nutshell, this means that outside of client work, we asked our creative teams to (voluntarily) take on additional roles related to client operations. These roles are paid hourly and also come with additional profit share.

Roles like recruiting, onboarding, planning team retreats, scheduling team activities, and others have all been delegated to people across the team.

From this, I've taken a few things:

1. I delegate more freely. Accept that people won't do things the way that I would do them or have done them and that's okay. This is hard for me as someone who is perhaps a bit on the controlling side. But, I have had to divorce the company from my personal ego. This company is bigger than me and our success depends on everyone doing great work, not me micromanaging every decision and action of the team.
2. Investing (time and money) in training. This is especially strange given our structure. Most companies don't "train" freelancers. And, I'm certainly not looking to teach writers how to write or designers how to design. But, that's only 70% of the work that we do. In order to get people to 90%, they need the extra 20% knowledge of strategy. So, I've been working on a course for our internal team that helps everyone learn and understand the business goals of our clients, the nature of the content marketing strategy, and how all of the moving pieces come together.

3. Shifting to a strategic and proactive talent pipeline

One of the biggest challenges with our content marketing model is that the work is a constant treadmill.

For most of our clients, we are producing 4-10 new articles every single month.

There’s almost never downtime in the schedule, and that means that our team is constantly on a production schedule, facing down new deadlines.

We found ourselves treading water on client accounts. falling behind, and sometimes missed our scheduled publish dates, despite the fact that we planned for a 1-month lead time on content production.

If a writer fell behind on work for a client, it might take them weeks to fully catch up. And, worst of all, once one person in the process fell behind, everyone else would be behind as well—it was a cascading effect.

We struggled with this a lot. The nature of creative work is sometimes unpredictable and hitting 3-4 deadlines consistently, every single week can be a tall ask for any writer or designer who needs time to think, process, and create good work.

But, we overlooked something critical.

Part of our competitive advantage as a firm is that we don't have a full-time staff. This means that we have a lot of flexibility to add new people to our team, bring in specialized freelancers, and otherwise customize the team on every single client account.

We don't have unlimited flexibility, though. Part of the reason our clients love us is because we bring a freelance team that gains account knowledge and works with them on a consistent basis (versus a revolving cast of random freelancers).

Because of this and because of the structures that we've created—profit share, operations roles, etc—we were slow to add "extra" people to our team unless we had consistent work for them with a specific client. We didn't want to promise people work, bring them in just to help us catch up on a few clients, and then run out of work to give them.

So, we created the Optimist Freelance Community.

This is like an extra roster of freelancers who we have vetted and trust to take on client work. But they aren't assigned to work with any specific client on an ongoing basis. This gives us the flexibility of having more freelancers "on call" but without the problems of adding too many people to our "core" team when we don't have enough new work for them to take on.

Once we had the a-ha moment, the process itself was pretty easy.

Over the years, we've received over 1,000 applications from freelancers who want to work with us.

We simply started by sifting through all of the applications we've already received, tapped into that pool to identify the best possible talent. Then, we offered them a "pilot project" to test and evaluate their skills first-hand. From this, we selected the folks that we liked best and added them to our FC.

We were sure to communicate this step to everyone we added. We wanted it to be clear that this would only make them eligible for project work and they wouldn't qualify (yet) for the other perks, like profit share or retreats.

Now, we can use the Optimist FC by tapping them for project work or specialized expertise whenever we need it. Writers can work with vetted freelancers to get help when they need to get caught up or want to take some time off.

In addition, the FC serves as an unofficial pipeline for future members of our "core" team. We've already tapped several FC members to join our core team as work has become available.

I think this process is worth reflecting on for a few reasons:

1. Our competitive advantage comes from our pay/benefits. Again, we see that choosing a more expensive option rather than vying for bottom-dollar rates puts us in a good position to win in the long run. We've attracted more than 1,000 applicants for our freelance positions in the last 3 years, which gives us a well of talent that we're drawing from now. If we were hunting for bottom-of-the-barrel freelancers, we likely wouldn't have the talent pool we need to make this work.
2. Lean into your strengths. We started out this process by trying to solve for the wrong problem. We were looking for a way to mitigate the realities of creative work (e.g., strictly enforced deadlines) when what we really needed was more flex in our work capacity. This is our exact strength as a firm and we ignored it for the first several years because we weren't leaning into this obvious advantage.
3. Get strategic about hiring and growth. At the end of this year, I feel better than ever about what we've built because it feels like we've side-stepped the hectic and crazy reality of hiring. We aren't treading water. We aren't running from fire to fire. We're being both proactive and strategic. I think this is the holy grail for most companies -- to push through the day-to-day chaos and finally get far enough ahead that you can see (and plan for) what's beyond the horizon. I think we're there in this capacity.

4. Gratitude and perspective cure almost everything

Burnout is real.

Even in our most successful months, it can feel like everything is on fire and it’s not worth the problems or the stress to keep going.

But perspective is a free antidote.

At the beginning of the year, I was on a call with a client of ours. We were just chit chatting before jumping into a status update and he was asking me questions about my work and my schedule. I mentioned that I often get emails and Slack messages at all hours of the day and had to try to partition my time so I wouldn’t be on call 24/7.

We joked a bit about the nature of always-on communication and I mentioned how I liked to be available in case anything went wrong or there was an emergency.

He paused for a beat.

“Is there even such a thing as a content marketing emergency?,” he asked innocently.

It knocked me back for a second.

I had never really asked myself that question or even stopped to consider the way I had set up my life or taken on ownership for the company.

Of course I had to be on-call at all hours. People were relying on me and if there was a problem, I had to fix it—right?

This is another place where leaning into the team — giving away control and letting them own the outcome — has allowed me to free myself mentally and emotionally.

This perspective gave me permission to rethink the pressure that I was putting on myself and reset my expectations.

It’s not like I quit caring about what happens. But for my own mental health, I had to find a way to offload some of the stress and anxiety that comes with juggling 16 clients and dozens of pieces of content every month.

Add to this the gratitude that I've received from members of our team over the last year, and I've found that no matter how stressed I feel, I can always take a step back, take a deep breath, and reflect on the bigger picture.

As an entrepreneur, it's so easy to feel like the weight of the world is on your shoulders. It's easy to feel like everything that you do is literally life and death. But is it?

Unless your work is truly about life and death (and even if that's literally true), you need some perspective.

No one will die if they don't get their widget. The world won't stop spinning if you get fired by a client. The polar ice caps won't disappear if you're late on an assignment or forget to send that report or make a mistake in an article.

Yes, those things suck. But they're probably not that big of deal, when you really think about it.

5. Putting people in the right roles

Another major change from this last year was shuffling and restructuring parts of our team.

In all honesty, this has been both great and challenging.

We had some people who were simply in the wrong roles. We had asked them to take on work that was not a fit or their skills. In some cases, we also realized that some people were simply not well-suited for our unique business model and having them on the team was not good for them or good for us.

These realizations led to some tough (but ultimately good) decisions. We moved some folks around on the team, re-thought their responsibilities, and tried to put them in a role where they could win.

I had to make those calls. I had to make the decision, break the news, and pick up the pieces.

I've actually learned a lot about this from my wife, who was a retail manager and now works in HR and as a recruiter.

Part of my learning experience over the last year is that every person is unique. We all have our strengths and weaknesses. We have things that get us fired up and other things that completely kill our spirit.

Are the people on your team spending their time doing stuff they love?

Or are you pushing round pegs through square holes?

The nature of work is that we all have to suck it up sometimes and do work that isn't "fun" or doesn't fit our particular skills or strengths. But if people on your team are spending the majority of their time doing stuff they hate, then chances are that they aren't happy—and they're doing shitty work.

That bad for them, but it's worse for you as an entrepreneur.

Chances are that you can feel it in your bones when someone's doing the wrong work.

My lesson here is to really get to know the people on the team. Understand their wants and needs. Then do my best to put them in the best possible position to do their best possible work.

That's a win-win.

What comes next: Optimist 2.0

Now that we've closed the chapter on 2019 and we look to 2020, it's time to lay out what's next for our business.

Rather than steering the ship myself, I asked the team to help.

At our last team retreat, I asked the team to offer their thoughts and vision for what Optimist can do next. I explained the realities of our situation, laid out some of the challenges that we could face in the future, and even proposed some possible directions.

Here's what we decided:

1. We're going to focus on stabilizing at our current size and revenue. This means we'll only be accepting a few new clients over the next year and likely churning some of our smaller engagements to make room for larger ones.
2. As part of that stabilization, we're spending ~6 months (since last October) focusing on internal ops, workflows, and processes. We want to iron out all of the remaining wrinkles and get to a place where everyone on the team feels comfortable and confident.
3. Our team is going to begin investing in our own projects and owned revenue streams. The specifics of this are still unknown, but we'll likely build and launch a variety of projects as a team—sites, books, courses, products, or whatever else we decide feels like a viable and achievable project.
4. Similar to Optimist itself, these projects will be collectively owned and the profits will be distributed based on a TBD model.

Okay y'all, I think that's it for 2019.

I've learned an insane amount over the last year alone. Every day is a new adventure, a new challenge, and a new opportunity. Not every day feels perfect, but whenever I take a step back and look at what our team has built together, I'm just awe-struck.

This team is fuckin' killin' it!