$0 to $3,333,686 (2021 Update)

Back in 2016, I quit my full-time job running growth and marketing for a venture-funded startup. I became a full-time freelancer focused on content marketing and SEO.

Later that year, I outgrew my personal capacity for freelance work. I also realized that most of my clients really needed an end-to-end solution for content marketing. So my freelance work grew into an agency called Optimist.

In the first 3 years, we grew the company to about $1.5MM in ARR.

It’s been a fun journey:

• Year 1 - 0 to $500k ARR
• Year 2 - $500k to $1MM ARR
• Year 3 - $1MM ARR to $1.5MM(ish) ARR

Each year, I’ve shared lessons and progress as we’ve grown, trying to document a transparent look at our victories and our failures. I've gotten tons of feedback, questions, and messages over the years. It's been one of my favorite parts of growing this company.

Needless to say, 2020–year 4–was easily the most challenging so far.

So, sharing the lessons and progress will be a little bittersweet.

But, I’m nothing if not transparent.

So let’s do it.

Optimist Year 4 - 2020

Here's our monthly revenue from January 2017 to January 2021:

As you’ve all probably experienced.... 2020 was a weird fuckin year.

For Optimist, it was a year of both ups and downs.

Fortunately, we work primarily in the tech space. So many of our clients and potential clients were less effected by the pandemic and shutdowns than other sectors. On the whole, we had a stronger year than I imagine many other marketing agencies experienced.

Nevertheless, we suffered some setbacks—and I learned some valuable lessons that will hopefully make us stronger and even more resilient in the future.

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 $7-20k/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, as we stand now:

• $3,333,686 in total revenue to date
• 16 clients on retainer
• $120k MRR
• 24 "core" team members (freelance/contract)
• 46 additional freelancers in our community
• $82,948 paid in profit share in 2020
• Gross profit margin ~40%
• Net profit ~25% before paying my salary and profit share

The impact of COVID on the business

I don't believe in the idea that, "everything happens for a reason."

Frankly, I think it's a bullshit cop-out for trying to avoid internalizing or processing all of the bad stuff that happens—sometimes at random. It's a mental trick for putting it out of your mind rather than examining and learning from the experience.

Instead, I think, "something good can come from everything."

This is an active mindset.

It implies, first of all, that there is still a potential for something positive to come from even the most horrible things that happen. But, it doesn't happen automatically.

Just because something good can happen does not mean it will.

It's up to you to figure out how to take something negative and find the opportunity.

I've tried to remember that throughout 2020.

Obviously, the most notable thing from this year was the COVID-19 pandemic, which killed many businesses and hurt many of those it didn't kill.

We were not immune.

In the early months of the pandemic, we lost several clients.

All told, I feel more than fortunate.

Nevertheless, we spent almost every month of 2020 below our target of $125,000 in monthly revenue. Over the summer, we dipped below $100k in monthly revenue for the first time in about a year.

We're only just now getting back to the level of revenue where we ended 2019.

Unsurprisingly, this reality drove most of my learning from the year.

I think something positive can come from the tremendous challenges that we faced over the last year. It's my job to figure out how to make that happen.

#1 - Entrepreneurship is responsibility

In my update last year, I wrote extensively about my need to let go of some responsibility. I explained my plan to double-down on our model of ownership—asking the team to step up, take on more of a role with our clients, and play a bigger role in our operations.

I’m extremely fortunate that the team responded.

Many people took on new roles, picked up new skills, started helping to handle stuff that usually landed on my plate, collaborated more independently with other team members, and otherwise lightened my load.

This was a huge win.

It saved me tons of time and created more space in my days for focused work rather than constantly responding to questions and requests from across the team.

But, when COVID hit and our revenue dipped, we had to "let some people go."

I’m putting that in quotes because our team is comprised of freelancers, so it's not quite the same as cutting a FTE. But, we no longer had enough work to support our full team.

I had to be the one to break that news.

I had to make the decisions about who would keep work, who would lose work, and what the team would look like moving forward.

Deep down, I think that part of me hoped this collective model would shield me from some of the responsibility that comes with running a business. I thought that working with freelancers meant that it would be easier to manage our capacity without hiring and firing.

I thought I could have my cake, eat it, and avoid the calories.

But that just isn’t the case.

When you run a business, you have a lot of responsibility. Your team, your customers, and your partners all place a lot of trust in your abilities.

They depend on you.

And letting people down sucks.

I don't know that I have any specific action items that came from this lesson. But, I think it's important to sit with this realization for a moment. Remind myself that there is responsibility here—that people depend on me and our team.

No amount of "business model innovation," delegation, or restructuring will change this simple fact.

#2 - Growth can be the safest bet

We pride ourselves on keeping clients around.

We do good work and deliver results.

In fact, I did an analysis that found that near the end of our third year, our clients had an average tenure of about 21 months.

But, every client will leave eventually.

Some clients churn quickly because there is a problem with the fit or the budget or the expectations (we've done a better job of qualifying, which has reduced this).

But, even the best-fit clients will eventually leave us for one reason or another:

1. They outgrew us and decided to in-source the work
2. Our contact left and the new leader wants to try something else
3. Our contact got a new boss who wants to try something else
4. They feel like we've built enough momentum that they can "coast" for a while and maintain growth
5. Change in budget or prioritIes
6. They got a wild hair up their ass

This is one of those realizations that you’d hope would be obvious from the start.

In my case, it only took 4 years.

But, when you realize this is a rule of the business, it’s actually sort of liberating in a way. It reminds you that while losing clients is never easy, you can be smart about running the business and plan for the inevitable.

You can be strategic.

What I realized this year is that our business needs to operate under the assumption that clients will eventually leave and that must inform our entire business strategy.

We began the year 2020 with what seemed like a simple goal.

We didn't want to grow.

After hitting our revenue goal in 2019, we wanted to stabilize the firm at our current size and revenue, focus on operations, and then expand into new lines of business.

That didn't happen.

Instead, we shrunk after COVID hit.

But the lesson here isn't really about COVID, which was (I think) entirely unpredictable. It was the nature of how unpredictable things happen—and what we can do to hedge against those risks and stabilize the revenue and cash flow.

What I found out is that it’s actually more difficult to tread water than it is to continue growing.

When we were at our max, we would have new inbound inquiries. We'd have to put those deals on hold because we didn’t have the capacity for new work.

Of course, when we later had a client leave, most of those opportunities had moved on.

So we’d be left with a dip in revenue.

On the flip side, when our revenue was down, we’d often receive several new client inquiries who wanted to start right away. That led to a time of fast growth, strain on the team, and sometimes a bit of chaos.

This wasn't sustainable.

Honestly, it just created unnecessary stress.

What we need instead is controlled growth and a strategy that focuses on meeting capacity and demand—a pipeline.

So, our goal has shifted. Rather than trying to maintain the size and shape of Optimist as a $1.5MM ARR agency, we're planning to continue to grow and scale.

Rather than taking leads as they come, we're planning to develop a queue for upcoming work—onboarding new clients as quickly as we can reasonably kick-off (~2 per month). And signed contracts will reserve a spot in the onboarding queue for upcoming months.

As I'm writing this, we have clients slated to onboard in February and those in our sales pipeline would be looking to kick off in March or later.

There's still some risk that those opportunities will dry up in the interim. But, between having a more predictable pipeline of work and plans for onboarding, plus a clear timeline, I think we can stabilize our ups and downs. Even if those clients do walk away because of the lag time to kick-off work, we'll have a couple of months to fill that "slot" with a new inbound inquiry.

Ideally, we'll be able to see future new revenue for months into the future.

Of course, we then have to be prepared and able to scale our team and operations to deliver on this rate of growth.

Given this plan—which sees us potentially bringing on 24 new clients in 12 months—and even an aggressive projection of churn over the course of the year, we'd still be looking at 25+ clients by the end of 2021.

This presents a whole new host of problems, which is what drives the next lesson.

#3 - I'm the f*cking bottleneck

I've been thinking about how much of our plan from last year—the one where we'd hit our goal of $125k MRR and then hover—was driven by my own ego.

In theory, the team agreed that this sounded like a good plan. But, I also sold them on the merits not outgrowing our model, maintaining a flat structure, and keeping things steady versus dealing with the ups and downs of running a traditional agency.

What I really sold them was the idea of keeping myself at the center of our client work.

The main reason we needed to maintain our size in order to keep things working is because I still wanted to have my hand in every single client engagement. I wanted to shape and own the strategy for every client that walked through the proverbial front door.

I wanted Optimist to be about me.

I was the one holding our team back.

I was the bottleneck.

In recognizing the safety that comes from growth, I've had to confront and challenge this directly. I've had to take a hard look at why we couldn't grow beyond our current size. I had to reflect on which parts of the business would break once we moved past this line we'd drawn in the sand.

Guess what I found?

Everything about the agency is scalable except for me.

Yes, we'll need to expand the team. We'll need to onboard and train people to work within our systems. We'll need to invest a bit more in education, reporting, building feedback loops, and developing the talents of freelancers in our core team.

But, none of those things should stop us from growing.

Our collective freelance model was, by design, built to be scalable and non-hierarchical.

That was the whole point of Optimist in the first place.

But I was focusing too much on my own ego and my own role in the daily work versus my role as an architect of the system. Eluding back to my goals to offload myself, delegate more, and extract myself from the day-to-day client work, my vision was still been too narrow. I'd thought this meant that I'd have more time to do keyword research and build content calendars.

But, if I'm still the owner of this ongoing client work, then we can't truly grow.

I'm the f*cking bottleneck.

So, I'm no longer thinking about ways to split up my time more efficiently. I'm not thinking about how much of the strategy I can still own while scaling to meet the needs of every single client.

That doesn't make sense with our new direction.

Instead, I need to replace myself—fully.

We're hiring a new role at Optimist — Content Marketing Lead / Account Strategist.

By the end of the year, I should no longer be the best content marketing strategist on our team.

In fact, my hope is that I am no longer directly involved in 80% of our client delivery.

My plan is to play a true "director" role—providing input, guidance, training, and support to a new team of strategists that can scale way beyond my capabilities.

This is another one of those, "duh" moments that has been largely misdirected by own ego. Of course we should replace me to maintain a path to growth. Of course our clients will receive better service with more dedicated strategists versus one person trying to hold it all together.

Of course this was the path forward for Optimist.

But, again, I was the bottleneck—both literally and figuratively.

#4 - Using the business cycle as a competitive advantage

My final big lesson from 2020 was another thing that should have been obvious sooner.

It's about using the rhythm of our business cycle as an advantage rather than a challenge.

Our business operates on a quarterly cycle.

Every 3 months, we spend approximately 4 weeks focused on analysis, research, and strategy for each of our clients. We put together a plan for the upcoming 3 months,. Then we execute that plan before repeating the process.

This means that for about 1 out of every 3 months, I've traditionally been heads-down on client strategy work.

Everything else got put on pause.

If I wasn't able to pause those projects, then it became overflow work—I'd quickly find myself working nights and weekends to get client work done on top of whatever else I had already committed to finishing.

In other words, 4 months of the year sucked for me, both personally and professionally.

Unsurprisingly, it also cascades to the team.

I'd be perpetually behind on projects, leaving others behind, throwing off our calendars, and leaving people without work while we tried desperately to catch up.

What a stupid system this was.

Of course, a big part of solving this is removing myself as the bottleneck. We've discussed that.

But, the other piece of the solution is to simply recognize and understand this cycle.

There will be an inevitable busy period dedicated to planning and strategy.

Other work should be planned and scheduled around this period—not on top of it.

By simply mapping out the calendar for most of the year, I can shape my other projects, commitments, and even meeting availability around the time I'll be spending on client strategy work. I can structure my quarters as weekly or bi-weekly sprints, completing other projects in the time between these periods.

As an organization, we can also plan our growth around this time, too.

In those "down" months, we can focus on:

• Onboarding new clients
• Finding, onboarding, training new freelancers
• Team events and retreats

Inversely, we can put these time- and focus-intensive pieces on hold while we're in the midst of client planning, avoiding the overlap that leads to crunch time and extra stress.

All in all, I think 2021 is going to be another year focused on stabilization.

But, in a different way.

Rather than trying to tread water for the next year, we're going to focus on putting out the fires that crop up—and getting better at putting out future fires.

We're going to focus on preparing for growth rather than dealing with it in real-time.

And ultimately, we're going to focus on resilience.