Rob Stokes has built one of South Africa’s most successful digital agencies – Quirk. BWB video takes you inside what it’s like running a mega multi-national agency. Click play below for the interview and you will find the full transcript below.
C: Rob Stokes welcome to Bandwidth Blog video.
R: Hello Charl nice to see you.
C: Congrats on all the recent success it seems that Quirk is just cleaning up all the awards.
R: (laughs) I think we‘ve got a long way to go.
C: OK. Tell us about the early beginnings of Quirk you know legend has it you started in your bedroom.
R: That is a true legend strangely and embarrassingly to admit. I was in my third year of business science at UCT and I ran out of money and an entrepreneur makes a plan and so I started a business called Quirk and here we are today.
C: Beautiful story for your memoirs or autobiography one day.
R: It is yah. I think, tough beginnings make for hopefully a resilient business and we certainly had some tough beginnings so I‘m hoping we will make it long term.
C: Tell us about Quirk today – the amount of staff, office locations etc…
R: So we got three agencies – Joburg, London and Cape Town. We‘ve got about 200 staff in the agency side of the business and there‘s about 100, 120 of them in Cape Town, 50 or 60 of them in Joburg and I think about 30 in London. We‘ve also got a couple of other businesses. We‘ve got an online education and training business specifically focused on marketing training called Quirk Education that‘s got about 10, 15 people in it. We‘ve got Brandseye which is an online reputation monitoring software. That‘s also about 10,15 people and then much smaller business Idea Bounty which is a crowd sourcing platform and yah, the biggest of the three offices is Cape Town which is I guess because we were birthed here, which is in many respects our HQ but I see that momentum shifting increasingly to Johannesburg particularly next year.
C: Very interesting. Now when you grow as aggressively as you have how do you keep the company culture?
R: It‘s hard. It actually definitely is one of the things that keeps me up at night. If I may say I think one of the reasons Quirk has managed to get to where we are is because of our culture. I think we‘ve got an amazing group of people. We have a lot of fun in process. We work really hard but you will walk around our offices and for the most part I think see smiling happy faces. When you double in size in a year from 100 to 200 people it‘s tough to keep that same kind of nuance that you had in the beginning. In many respects we proceduralize it and that‘s something I‘m personally working on. I‘m considered the culture captain at Quirk. It‘s my job to get this right but also it‘s about who you hire and how you hire. We are extremely fussy as to the people that we hire. We‘ve got six, seven, sometimes eight, nine, 10 rounds of interviews. Everything from skills tests to culture tests, junior to senior interviews and it‘s that process that allows us to vet people according to not only what they‘ll bring to our organization and clients but the type of person that they are and given that you know, call it the first hundred people were culturally spot on, it‘s their job to hire the next 100 people and I think we‘ve got a good enough process to make sure that for the most part that continues. It‘s tough to say whether we‘ll succeed from 200 to 400 but I back us to do so.
C: On that note, is the agency model scalable? Does new big client mean lots of new staff?
R: Yes. It doesn‘t mean it‘s not scalable. It‘s definitely scalable. It‘s just harder to scale than say a Google or a Facebook where it‘s adding more servers and servers are far easier to manage than people but also less fun. The agency model is certainly selling time as a principal is a difficult model. A wise man once said to me that agencies create intellectual property which they sell to clients for a pretty poor margin so clients can take that same intellectual property and make much more money out of it and there‘s a lot of truth to that. That said, coming up with great ideas and seeing business success delivered those ideas even if its for a client is hugely rewarding and it actually gets us up every morning. It‘s what keeps us working hard throughout the day, is getting those little successes.
C: Do you anticipate the same rapid growth in 2012?
Yes it will be different. So our Cape Town office we‘re intentionally going to consolidate next year and I think we‘ll still probably add 50% in terms of head count and revenue and head count growth over the last two or three years has been pretty much 100, 120% year on year. Cape Town we‘ll slow that down a bit and focus more on margin. Joburg we‘ll ramp it up a bit. Our Joburg office, it just doesn‘t make economic sense for it to be half the size of our Cape Town office. There‘s obviously a lot of business in Johannesburg and so we need to ramp that up and likewise the same with London. They‘re just growing leaps and bounds we almost don‘t have to do much for them to grow so really its just about adjusting the priorities I think the group as a whole will achieve similar growth to what we have in the last 12 months.
C: Is Quick profitable today, agency and group level?
R: Group, agency it is profitable. We can definitely make much more money but the focus at the moment is certainly on growth. Yes, we are a profitable business.
C: Was there a tipping point where you just started growing exponentially and was that when you went from being really well known as an e-marketing agency to today being a full-service agency?
R: I think there is kind of three tipping points in Quirk‘s history. The first is certainly when we started out you know every entrepreneur wants to be able to say they started out with a vision, my only vision was to pay the bills. We quickly got a vision and I think that process was quite a tipping point shifting from being lets just make some money with technology and marketing to being a marketing agency but that was very early days. I‘d say our next tipping point was in fact my own realization that certain of my weaknesses weren‘t worth fighting and it was better to surround myself with people to compliment those and it was at that point that really Quirk started taking off. I‘m not the strongest person operationally. I‘m a better entrepreneur and once you realise that you compliment those weaknesses and play to those strengths, the business can achieve much more and that was probably about five or six years ago whilst we were opening up our London and Joburg offices and then probably about two or three years ago the market came into play where digital as a marketing call it channel or platform was viewed with a certain skepticism particularly in South Africa prior to that that really started changing about two or three years ago and that was the big moment where our growth really started to take off. Interestingly we have pretty much grown year on year by 100% a year throughout our entire 13 years. We just started off on a miniscule base but maintaining that kind of growth you know with the size of business that we are even though the growth stays the same it becomes much much more challenging and I think that we needed that market upliftment to continue that at our scale.
C: Talking about hiring clever people around you you poached Justin Spratt from Internet Solutions. Was that a tough call moving back as the leader of the agency and operating more from a group level. What has Spratt‘s hire meant for the agency?
R: I wanna unpack that on a few levels. Firstly it definitely wasn‘t a poach. I think Justin and I, we met each other at a Geek Retreat a couple of years back and I think we immediately had a meeting of minds. We‘ve got extremely complementary skills. He certainly is substantially better than I am at the day to day management of business. I think my strength is where are we going three to five years from now and preparing us for that today and so its hugely complimentary and I think we both realized that immediately and we actually spend a good part of six months to a year actually figuring out how we would take these complementary skills and make them work in business and eventually he joined us. For me to move back given that I‘d had that realization about my own strengths and weaknesses was actually very easy. It was completely logical and everything that he does is the stuff I don‘t particularly enjoy and frankly he has been brilliant. He‘s been in the business now for about 18 months, he‘s been running the agency group for about a year and it‘s been phenomenal. To manage you know going from 100 to 200 people in 10, 12 months is extremely difficult and I think what he has done really well is he came in, in the nature of his personality and the nature of business came in with a swoop of excitement and hype and I think many people would not have delivered on that and he has and he‘s delivered on that with sincerity and thoroughness that you‘d expect from a genuinely good business leader and indeed a professional manager.
C: Quirk textbook. Now, brilliant move, you have you know lots of fresh talent bashing down your door wanting to work here because they have studied out of your book. Now in hindsight everyone thinks “˜wow‘ what a move by Rob by writing that book. Was that always the plan?
R: It certainly wasn‘t the initial intention.The initial intention was based on the fact that we had been lecturing at many universities and we‘d been really disappointed and held back frankly as lecturers by the material that was available for the students to learn off. There were one or two textbooks available at the time but they were either out of date or written by people who weren‘t really in the digital marketing field. The reality of our game is that it moves so quickly that it‘s really quite difficult to be up to date. Even with our textbook given that we‘re an agency writing a text book which I think is fairly unique it‘s still difficult to keep it up to date so we initially said that this is a solution to a problem but I‘m a fundamental believer in kind of social capitalism if you will so that if a business receives benefit by doing social good they will do more social good and often people don‘t you know want to talk about the social good that they do and I think on a personal level that‘s quite appropriate but on a business level if you get some benefit you‘ll do it more which makes it sustainable so our approach with the textbook was let‘s write this textbook, lets give it away for free online and we will sell it. Our goal with sales is purely to break even and we just about do it, not quite, but just about do it but the payoff for us was always going to be from a marketing perspective assuming the book was good and hopefully people think it is but we really put everything into that book but the reality is that three, six months after its written there‘s more stuff we know so its not like we‘re giving away all our secrets per say but yah it‘s certainly paid huge dividend in terms of, particularly in terms of staff, our graduate programme is largely fueled by students who have learned off the textbook but also clients because you know many clients are breaking into digital from a traditional background want to understand it, it‘s one of the few genuinely up to date and thorough references available and they read it and for the most part I think they enjoy it and when they need partner to help them out we hope they turn to us.
C: Quirk Labs. What was the thinking behind Quirk Labs? You mentioned some of the companies that you‘re incubating there. Tell us about them. How they‘re doing and are there any ones that are ready to leave the nest maybe Brandseye.
R: Yes. So Quirk Labs really is at the moment hugely experimental for us. We‘ve got a lot of business ideas floating around and we needed some avenue for them so we started Quirk Labs as a tech startup accelerator taking both our internal ideas and also the ideas from the outside world so we offer startups up to a million Rands worth of funding, taken in either a combination of cash and or sweat equity as they call it. We‘ve had a number of pitches from external startups, we haven‘t invested in one yet. Not that they haven‘t been good enough but we‘ve got a fairly specific mandate and are not under pressure to invest like many VC funds per say. We have no time pressure. But actually the result I think has been many more internal ideas that are now looking to be turned into businesses.We‘ve got about five ideas that we‘re currently evaluating and two or three that we are going to be pushing out in the new year. We‘ve just actually bought our education business it‘s kind of grown up out of Quirk Labs. It‘s a mature profitable business now and now that it‘s learned to stand on its own two feet we‘re actually pulling it back into the agency and we will still monetise it through the sale of courses and workshops and white papers and what have you but it‘s going to play a much larger role within the agency around the managing of our intellectual property. At the end of the day, that is what an agency is, it‘s intellectual property monetised through the sale of time and I do believe that the management and creation and distribution of intellectual property within an agency business is going to become a key differentiator for agencies over the next 10, 20 years. We‘ve got a massive strength in our education business and we‘re going to be utilising it to deliver on that. Brandseye, we‘ve looked at some investment opportunities. We‘ve got a few new things coming out of Brandseye in the next three months. I won‘t say too much about it now. But at the moment we‘ve kind of pushed pause if you will on the opportunities to really ramp it up. We want to see out the next few months, see where these new innovations take us and then relook at that and actually likewise with Idea Bounty. There‘s still a lot more that that business can achieve before we will roll it out.
C: Tell us a little more about Idea Bounty.
R: So it‘s a crowd sourcing platform for creatives. Brands put up a brief with a bounty amount, 10, 20 thousand Dollars and they ask for a solution to a marketing problem. There‘s no production work involved so we don‘t get in trouble for encouraging spec work. It‘s got about 25 000 creatives on the platform. We get about 1000 to 1500 ideas per brief and the brands only buy the ideas they want. Fortunately that‘s most times. I think we‘ve got about 90 to 95% success rate and yah its an interesting business. It‘s got a very very low cost base which is fortunate. I think one of its challenges is operating it in the South African environment. Most of our clients end up coming out of the UK and yet we don‘t actually have a permanent presence for Idea Bounty in the UK. The agencies in the UK and Europe very much embrace crowd sourcing as an option to find creativity that hasn‘t so much been the case in South Africa, not completely, we‘ve had some opportunities but not as much in Europe and so we‘re looking to actually address that at the moment.
C: As Rob Stokes, what is your end game? Most of the agencies in South Africa have been acquired. You‘re one of the few, if not the only really big independent agency left. Are you guys fielding acquisition offers or are you riding this bad boy out til you retire?
R: We certainly are fielding offers and opportunities. To date we‘ve turned them all down and frankly we don‘t have a desire to sell at all. I think speaking for the organization as a whole we‘re just having too much fun. We doing great work. We‘re very fulfilled in our activities and our careers. We just see such a lot of opportunity ahead on the horizon and we‘ve got a crazy belief, maybe even a naive belief that we can achieve what we think we can achieve and selling out now would just take the fun away from that so while it‘s difficult to turn down a lucrative opportunity with a potentially great partner I think you‘ve got to be true to yourself and at the end of the day we are yes I think at a core a business exists to make a profit but the people in our business exist to fulfill themselves and to have a good time and try and make a profit in the process and I think that‘s too important to us to just walk away with a fat check.
C: So no luxury boat and just fishing for the rest of your life?
R: I would love to go and do a lot more fishing but I guess I‘ve kind of realised that I just enjoy what I do too much and as much as I can sit around and say I‘d love to go fishing for five years I‘d miss my team. I love walking into the space, there‘s a lot of energy in the Quirk station and it drives me and makes me happy and I fear we would lose that if we sold.
C: If someone wants to join the Quirk station, become a Quirk staff what do they need to do?
R: They need to stand out I think is the main thing. My goal long term is to hire juniors and giants. We‘ve got an extremely successful graduate programme where across the group we take on 36 graduates a year. One every month in every agency. It‘s difficult to get into and it‘s not just for people who have just graduated. We‘ve got some people who have been working for four or five years already and they take maybe the ego and the salary knock to become graduates knowing that there is a pay-off down the line. We invest a huge amount into our graduates. It literally costs us millions of Rands a year in training and what have you and we get about 50 applicants for every one we accept so getting into that is tough. Coming in as a giant we expect you to challenge and change the organization and shift us and push us into a new kind of comfort zone if you will and to get into that kind of space or really any space in the middle it‘s about standing out. As I said earlier we‘re very very fussy about who we hire. We not only want to be working with great people but we want to be working with cool people. We also believe As hire As and Bs hire Cs so we‘ve got to hire As and the best way to get noticed by Quirk is to do something to stand out and we‘ve actually had many insane applications over the years from crazy videos to we had a guy dress up as a mexican wrestler and bring a massive cake into our office and he didn‘t even get the job so you do need to do something to stand out. It‘s a tough crowd but we‘ve got a very low staff churn. I think one of the lowest in the industry. We‘re very proud and we‘re very close-knit and we want and we need more people and we‘re desperate to hire great people but it‘s more important to us to make sure they‘re the right person than they just tick all the skills boxes.
C: Last question. Its our vanilla question that we ask all entrepreneurs that we interview. If you had 10 million bucks, which local company would you invest it in, you can‘t say your own stuff obviously and tough question I know. If you can‘t tell us that, at least elaborate on which sector you would look at, internet sector.
R: It‘s interesting. It would be mobile and it would be something that facilitates microwork. I do believe that platforms that allow call it the bottom of the pyramid, the great mass of people who will only ever access the internet through a mobile device. Platforms that allow them to do small tasks and make small amounts of money which over a longer period can add up to plenty of money I think is potentially very very disruptive and I think it‘s almost the new form of casual labour and there‘s a few startups that are starting to emerge in this space. In my opinion not enough of them coming out of Africa so there is quite a few coming out of the US that have not yet tapped into Africa. The startup that does that successfully, I‘d put my money there in a heartbeat.
C: Rob Stokes, thank you so much for being on Bandwidth Blog video.
R: Thanks Charl. It‘ been good to see you.
Pic credit – Heavy Chef