By Tom Richman, April 1985
Founders of Professional Service Firms Have a Choice to Make: Do They Want to be the Company or Do They Want to Build One?
Norma Rothenberg and Sally Jackson are unhappy with their businesses, for similar reasons.
Rothenberg, in her late 30s, was the public relations director of The McCall Publishing Co. when she decided that she ought to start her own agency. For a while, things looked promising. To get business for the new firm, NAR Communications, she drew on her contacts from earlier work in the industry, and she wasn't shy about calling on new prospects. In fact, finding clients was the least of Rothenberg's problems. She quickly had more than she could handle alone.
But as business got better, life somehow got tougher. If there was more work than one person could handle, how was it going to be split up? Who was going to do what—and specifically, what was Rothenberg going to do? She had started the company, admission she didn't have the slightest idea what her role in it was to be. She hired people who weren't capable of acting independently, then faulted them when they didn't. She didn't want to manage, but wouldn't let anyone else manage. She knew she couldn't do all the work herself, but she constantly meddled with the people she hired to do it. She was afraid of hiring people who might be better than she, or who might want to approach clients differently.
For Rothenberg, starting her own firm engendered confusion, self-doubt, and anxiety. "I want you to know," she said over a take-out salad in her midtown Manhattan office, "that I am embarrassed to tell you what I'm about to tell you. I have gone through six secretaries and four assistants in the past nine months. I don't know if I'm not paying enough, or not hiring good enough people. . . . They say that I'm too demanding, too much of a perfectionist." Now Rothenberg is working with a consultant who intervenes, as she puts it, "every time I'm convinced again that I can do it all better by myself and that I should fire everybody."
Sally Jackson's situation isn't as stark as Rothenberg's, but it isn't all that different, either. Jackson worked for the PR arm of two advertising agencies before she decided to try it on her own, and soon she had more business than she could handle. Today, if a Boston-area company wants to stage a highly visible grand opening or an attention-getting promotional event, one of the first people it will think to call is Sally Jackson.
As an agency, though, Jackson & Co. is in a rut, promoting one event after another. Jackson herself is too busy to spend time developing new markets, let alone developing new services; large potential accounts don't seek her out, she says, because they perceive her as small. Jackson doesn't have the same difficulty with delegating and supervising that Rothenberg has, but she, too, has seen her two-to-three-person agency reach its limits far short of her expectations for it.
"I feel like I've come full circle," says Jackson. "I've done it; it's been successful; and people respect it. Now it's clearly time to do something different." But to diversify, the firm would need to grow larger, which would mean hiring more people and creating a more complex organization. That is where Jackson, like Rothenberg, has balked. "My limits have to do with management," she says, "and the company's limits are my own."
What Jackson and Rothenberg have in common is not simply their trade, public relations. Rather, they are caught in the same dilemma that confronts every entrepreneurial professional, affecting lawyers and consultants as much as it does financial advisers or flacks. Most such professionals launch their start-ups without deciding whether they are in business to practice a profession or in a profession to build a business.As a result, they find themselves unable to do either one to their own satisfaction. And their companies, started with such confidence and enthusiasm, become sources of frustration for the increasingly unhappy founders.
But because this dilemma is so widely shared, it would be surprising if there weren't a few lessons to be learned from people who deliberately chose one road or the other—or who learned from harsh experience exactly where their personal priorities lay.Paul Franson and Milton Glaser fit in the former category.John Brockman fits in the latter.
Franson, a former journalist, opened a public relations shop in 1980, when he was 40. "I wanted to build a business," he says, "and this was a business I could build with very little investment." He set it in San Jose, Calif., in the heart of Silicon Valley, and he made high-tech companies his market. In just four years, Franson Associates's annual billings climbed to $2.5 million and the work force to 43. O'Dwyer's Directory of Public Relations Firms for 1984 listed Franson's as the country's fastest-growing PR agency.
Franson never had any doubt or ambivalence about why he was starting the company. He had clear ideas about how public relations should be done, but no fascination with doing it himself. "From the beginning," he recalls, "I knew that the challenge I faced was to make a business out of it, not a personal service. So I set out from the start to hire people who could do the job." This was not the same thing as building an organization to help Paul Franson deliver public relations services. "I do want it to be an extension of me," he says, "but through education, through my showing new people how to do things the right way.
"I don't make initial calls on clients. Even the second meeting I don't often go to. The people who are going to do the work go. Typically for the third meeting I'll go and meet the president or the general manager of a really large company. . . . [But] we walk away from business where people have such an ego problem that they have to deal exclusively with me. We once considered running an ad that said, 'Don't hire Paul Franson. Hire Paul Franson & Associates.'"
Sometimes Franson's enthusiasm for creating a well-managed company led him to get ahead of himself. Early in the company's growth he devised a structure in which everyone in charge of client accounts reported to a single supervisor who, in turn, reported to Franson. The structure, he says, isolated him "The first thing I noticed was that I got bored." There were other problems, too. When he thought he had detected some trouble with one account, for example, he went to talk to the account manager, who was surprisingly unresponsive. "I found out eventually that [the supervisor] had told her not to talk to me. . . . This manager was trying to keep her territory intact."
Franson let the supervisor go, and restructured the agency. "The bad part is, I now have seven or eight people reporting directly to me. I've read all the books about management and how you shouldn't have so many people reporting to you. But now I think that advice applies more to a $1-billion company instead of one [our size]. . . . It turns out that if you hire the right people, they come to you with answers, not questions."
Franson is designing a compensation system that will allow these "right people" to share in the company's growth. "I want," he says, "to make it very difficult for anyone who is with us to leave." Franson says his objective is to keep the agency expanding as rapidly as possible.
Expanding as rapidly as possible Nothing could be further from Milton Glaser's mind.
Glaser doesn't do everything, but nothing emerges from the Manhattan town house occupied by Milton Glaser Inc. that the internationally influential graphic designer hasn't had a hand in creating. Every person on the staff works for Glaser. "If," he says, "somebody wants to be on his own as a designer, then the only reason to work here is to learn what you can and leave, which is appropriate and which people do. I represent a difficulty for people who are here to assert themselves." Milton Glaser is Milton Glaser Inc.
Unlike Franson's company, Glaser's has no apparent organization, no hierarchy, no formal lines of communication. "I've never sent a memo in 30 years," Glaser says, "because, basically, everybody can hear everything that's going on."
In 1954, Glaser, who is now 55, co-founded Push Pin Studios, where, as Newsweek magazine put it, he "revolutionized design in America." With his friend Clay Felker, Glaser founded New York magazine and created its distinctive style, which became the model for scores of city magazines across the country. His 1966 Bob Dylan poster became a pop classic. More recently, Glaser put the heart in "I [heart] NY," a device that lovers of all sorts of things have made ubiquitous on bumper stickers and T-shirts.
In 1974, Glaser left the studio he had founded. "Push Pin," he says, "had too much history at that point. Too many people knew too much about it, and there was too much definition of what it did. People were always asking me to do things that I had already done." The same year, he created Milton Glaser Inc., and, in 1977, when Australian press magnate Rupert Murdoch bought New York, Glaser left the magazine. For the first time in many years, he was free to pursue . . . what?
"I began getting involved in projects that went beyond illustration and design in the conventional sense. And that really was my interest. I wanted to see how far I could stretch my own understanding of the relationship between forms that are usually not considered appropriate for a single person to be involved in—advertising promotion, marketing, merchandising, interior design, signage, packaging—the whole communication system."
An opportunity to do just that came several years ago, in the form of a commission to redesign the 379-store Grand Union and Big Star supermarket chain. Everything was included—building facades, interiors, merchandise displays, and food packaging. Few other designers had ever undertaken a commercial project with quite so many disparate elements. Glaser's staff and billings hit new highs at the peak of that project last year 35 people and: $2.5 million. But now that most of the creative phase of the redesign is completed, he hopes to be able to cut his staff back to about 20. "That size feels about right," he says, "[and] I'm looking forward to a few years of substantially smaller billings unless something unexpected happens.
"I never had any intention of creating a design institution," Glaser continues. "I don't like what institutions have to do to survive. I don't like the kind of structured hierarchy or spirit that large institutions create. I also didn't think we could become a large institution and be any better than any other institution of like size.
"In an institution, not merely the bureaucracy, but the social form and the financial form shape the product more than the individual does. . . . You can only do two hours on this because otherwise it's not profitable. And so the survival of the institution [defines] how you choose to spend your time.
"This Grand Union thing—even though servicing the company would be a very profitalbe task—I can't do that anymore without feeling that I'm spending my time in a way that isn't useful to me or to the client. They can find an institution to service them that would be as effective and less expensive than we are. And we can't maintain our spirit as a kind of service organization. It's something that makes sense financially, but not in any other way. So the financial issue does not determine the choice here. If we were a real business, by and large, it would."
A Franson or a Glaser? For John Brockman, as for Rothenberg and Jackson, the choice wasn't so clear. But unlike the two public-relations entrepreneurs, Brockman has tried out both sides of the street. He thinks he has his choices sorted out now, but the firsthand experience of deciding what he and his company should do is still fresh for him.
Brockman, 44, is a New York literary agent whose booming agency specializes in representing authors of nonfiction books and writers of computer software. How he got to this point is itself a story.
He went to business school at Columbia University, served in the Army, got his basic executive's training at Blooming-dale's, became a promoter of avant-garde films and theater, achieved some notoriety in the late 1960s for staging "happenings," developed a small cult following among radical intellectuals, and in 1967 met Katinka Matson, his current business partner and the mother of his son Max. That was the beginning of the saga.
"I said, 'What do you do?'" Brockman elaborates. "And she said, 'I'm a literary agent.' So I said, 'Oh great, I'm a writer.' So then I had to go away, pull my phones, and write. I published my first book under the title, By the Late John Brockman, so a lot of people thought I was dead. For five or six years I supported myself by doing Wall Street consulting and writing books, but I started to run out of money.
"I went out to California to a conference and [some friends] were there. They said, 'There are 20 people here, and we're all writing books and getting screwed. You know something about business, and you're in New York; why don't you represent us?' Good idea. So I went back to New York and started being an agent for serious nonfiction writers, the avant-garde in art and science. I figured, maybe I can do this agency for four hours a day and then have the rest of the day to work on books, and I won't have to worry about the money.
"But the trick was on me. The agency became an immediate success and has continued to be successful. . . . It just mush-roomed. Then it took on its own energy, and here I am today, the Great John Brockman instead of the Late John Brockman." Brockman laughs. "It wasn't a plan, you understand. I just wanted to work four hours a day and be a writer."
John Brockman Associates Inc.'s revenues, derived from a 15% cut of the deals Brockman Makes, have grown from an estimated $300,000 to nearly $3 million over the past three years. Part of this respectable growth spurt is attributable to Brockman's being in the right place at the right time as a literary agent; recently, for example, he set an industry record when he got author Stewart Brand a $1.3-million advance for The Whole Earth Software Catalog. Much of the agency's growth, however, is attributable to a different source—one that led Brockman to try building a business out of his agency.
Walking on a Long Island beach one day, Brockman experienced a small epiphany. He saw in this vision that he could do for computer-software writers what he had been doing all along for book authors. "What dawned on me was that, according to industry experts, 25 million people were going to have computers in their businesses and homes in the next five years. That led to two realizations. One was the obvious one, that everyone who buys a home computer is a potential customer for software. But the important [realization] was that everyone who buys a computer is a potential author of software, and that foftware was written, either on a keyboard or longhand. It's copyrightable, and there was no such thing as a software agent. Yet in representing book authors, we already had the hard part in place—knowing how to represent authors, make deals, and do contracts."
When Brockman was no more than a literary agent, he and Matson could handle the work with just themselves and an assistant or two. Not so when he added software to his line. By early last year, the agency had expanded to 16 people.
First Brockman hired a technical expert to evaluate the computer programs submitted by authors. Then he hired three West Coast representatives, two in Sausalito, Calif., and another in Irvine, to scout out new business. For a time, Brockman pictured himself as the executive manager of an expanding group of employees who would relieve him of hands-on responsibilities within the business. He had, without thinking much about it, become an executive, a manager, a person in charge.
Building a company, however, was never what he had intended to do.
"The question," Brockman says in his third-floor walk-up office on Broadway near 83d Street, "is, Who wants to be a business mogul? That's the question that I've been thinking about.
"Let me tell you a story: I'm in California going over the Golden Gate Bridge with a client. You go over the bridge and then over the mountain to the left of the bridge toward my office, which was down on the ocean. On the top of this mountain is one of the greatest views in the world. I turned to my client and I said, 'Look at the view.' He said, 'John, when I leave my office I leave for one reason to work. And I keep working till I get back.' And he didn't look at the view.
"A lot of people in business literally can't see. They live in a myopic sliver of reality, which is business oriented and profit chasing, and that's all they see. I want to see other things, too.
"One thing I hate, for example, is staff meetings. And, you know, you read all these things about motivating people. I hate doing that. What do I want to spend my time motivating people for? I want to make some deals, make some money, and have a good time."
When he started articulating such questions—and particularly when he started answering them—Brockman began to realize that, whatever he was, he wasn't a businessman. Getting things done through the management of other people was not what excited him. Hiring agents was not what excited him. Being an agent excited him.
Nor was that the only trouble. He had tried to make his West Coast agents extensions of himself; he wanted them to be John Brockman in their respective offices. But he hadn't given them either the authority to act in his name or the resources to provide the clients with much service. "Anybody these people found," he says, "wanted to deal directly with Katinka and me and what we represented; that is, New York and the marketplace. . . . So all [the West Coast offices] meant for me was more work. Every morning at 11 o'clock I'd be taking calls form California, making calls, tracking what they were doing." Finally, he fired two of his West Coast reps and the third left.
His in-house software expert left, too."We had generated a slush pile of software, and this expert would be down there all day evaluating this stuff from a technical point of view and giving us reports. He did it for about a year, and as he was leaving I realized that not one thing that went through his office resulted in business. In the whole year, not one thing. When Xerox calls and says, 'We'd like you to represent us,' I don't give it to Harry down the hall; I get on the phone. So he left and I asked myself, Do I need a technical manager? Am I in the software business? No, I'm in the business of making deals."
Brockman had allowed himself, he says, to get caught up in the excitement of growth without thinking about how he wanted the agency to grow—and more to the point, how he wanted to grow.
"This week," he said in a conversation last fall, "I feel in control. Two months ago I didn't. Tinka sort of runs the company now, and I don't. I'm the agent who's out there fronting the operation. When I leave, the company runs very smoothly, which it never did before. Now we have hired away New American Library's contract director. She's better than I am. When a deal comes in now, Katinka or I negotiate the advance, the delivery date, the royalty, the territory. And then the eight hours of talking, she does.
"If I'm doing my job right, it's thinking up this Chinese thing"—a bash in San Francisco for the vice-mayor of Shanghai and others to celebrate an agreement with a group of Chinese software developers. "If I'm stuck with paperwork, I never would come up with that stuff.
"Tinka's dad, Harold Matson, was the king of the agents in the 1950s. [His firm] had 16 agents who handled people like Herman Wouk, Allen Drury, Ray Bradbury, John Irving, and Lillian Hellman. I asked him what it was like. He said, 'Every morning I woke up and I wondered, How am I going to pay all these people?' He always advised us to keep our business in our hats.
"What I don't like about my life right now is thinking about my company. What I do like is going out and selling stuff for my clients and making deals, and that's what I'm best at. . . . I've got lots of time now, thanks to two or three people who are really good, who are not me, but who have allowed me to multiply what I can do many times over."
So Brockman is free to do deals; Glaser to design; and Franson to manage his growing business. They have decided what they want to do. Rothenberg and Jackson—they're still working it out. ■
First published by Inc., April 1985.