Karl Sakas | [Top Agency Series] Strategies for Building a Powerful Agency
Smart Business Revolution

Karl Sakas is an Agency Consultant and Executive Coach at his firm, Sakas & Company, where he helps digital agency owners take control of their business so they can conquer growing pains and increase profits. Referred to as the “agency therapist” by his clients, Karl has helped hundreds of agency owners worldwide find a passion for their work again. Karl started doing business more than 20 years ago as a high school student, where he helped nonprofits and small businesses in the DC area build websites.

Karl is a fourth-generation business owner, which motivated him to turn his skills into an agency. He’s also the author of several books, with his most notable work being Made to Lead. Outside of his work at Sakas & Company, Karl volunteers as a Past President of AMA Triangle and as a bartender on a 1930s railroad car.

In this episode of the Smart Business Revolution Podcast, John Corcoran is joined by Karl Sakas, an Agency Consultant and Executive Coach at Sakas & Company, to discuss how to successfully run an agency. Karl explains project management and account management and how to approach each in an agency setting. He also talks about the pod agency model, client concentration problem, and the two possible ways to manage business risks when diversifying.

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Here’s a Glimpse of What You’ll Hear:

  • How Karl Sakas turned his website-building skills into a business as a high school student
  • Karl’s work helping nonprofits and small businesses as a full-time college student
  • The three agency charging models — value-based, milestones, and hourly — and how to choose the suitable one for your agency
  • The difference between account and project management roles in an agency
  • Understanding the upsides and downsides of the pod agency model
  • What is the client concentration problem, and how do you solve it?
  • The two ways to think about risks in your business and properly diversify
  • Karl talks about his agency’s pandemic experience and the lessons he learned
  • The colleague that Karl admires, plus where to find the details on his course 

Resources Mentioned In This Episode

Sponsor: Rise25

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Episode Transcript

Intro 0:01

Welcome to the Revolution, the Smart Business Revolution Podcast where we asked today’s most successful entrepreneurs to share the tools and strategies they use to build relationships and connections to grow their revenue. Now now, your host for the revolution. John Corcoran.

John Corcoran 0:40

All right. Welcome everyone. John Corcoran here. I’m the host of this show. And every week I get to have great conversations with CEOs, founders, and entrepreneurs of all kinds of different companies ranging from Netflix kinkos, YPO, eo Activision Blizzard, lending tree, Open Table, and many more. I’m most of the co founder of Rise25, where we help connect b2b business owners to their ideal prospects. And this is part of our top agency founder series where we interview interesting agency owners and agency experts talking about some of the strategies that they are using to be successful today and I want to give a quick shout out to Carl Smith of neuro digital who helped to introduce me to today’s guests, and his name is Karl Sakas. He helps agency owners to grow profitably so they can work less and earn more who doesn’t want that right. He’s personally advised hundreds of agencies in every inhabited continent. He’s also the author of Made to Lead the in demand marketing agency and more than 400 articles on agency man management and fun fact when he’s not helping clients, pro volunteers as a bartender on an antique train. How often do you hear that not very often right? So Karl it’s a pleasure to have you here today. Of course this episode is brought to you by Rise25 where we help b2b businesses to get clients or frozen strategic partnerships but done for you podcasts and content marketing. If you are curious about how to do that contact us at support at rise25media.com and Karl you got this great backstory you’re in high school you are working at it sorry you’re attending high school you grew up in the Washington DC area I was born in DC area as well. You going to Thomas Jefferson High School for science and technology and the web is just developing and you start as a little side hustle building websites on the side I love that because I didn’t have my act together high school I certainly wasn’t earning any money as I worked in ribs restaurant but that was doesn’t really all the ribs you could you could eat yeah it helped my waistline back then doesn’t really help my job skills today so I love that you’re designing websites but how did

Karl Sakas 2:43

you get into that you know learn HTML in a class freshman year I was lucky to go to a stem you know science technology engineering math, high school, I learned HTML freshman years This was in the you know, mid mid to late 90s and beyond just the class itself I was like oh this is fun. right let me let me do more of this and so I started building websites for nonprofits and small businesses in the DC area. And you know, people seem to like it and I kept getting referrals to more more businesses you know, this was back in the days of dial up and Internet Explorer three and 640 by 480 monitors. So actually a testimonial from a client back in the day that I was really good with search engine submittals you know back when SEO was you submit to the directory kinda Yeah,

John Corcoran 3:36

that was a very sophisticated SEO back you know Fun fact around the same time I’m working at the in the Clinton White House also in the DC area. And you that might sound glamorous, but at the time is the.com boom all my friends from college had gone on and was working for all these exciting coms in the San Francisco Bay Area. And I taught myself HTML and how to create websites and actually created some websites on the side while I was working at the White House but I wasn’t smart enough to actually get clients and get paid to do it. I was actually just burning up a lot of time so how are you as a high school student you knocking on doors these nonprofits and getting them to hire you How did that come about? You remember how you got your first clients

Karl Sakas 4:22

so within the the freelance work, I actually had two segments I did computer training and troubleshooting, which included businesses but a lot of it was individuales right? It was help you know how to send photos for the grandkids or the printer isn’t working and what do we do and then on the business side you know that was people you know need need a website kind of thing. On the personal side, it was all referral. Like thinking my German teacher needed help with her printer she was like can you help me with that hired me to do that referred me to a friend referred me to another friend who knew a bunch of people and it just went from there. You know, thinking DC I was referred to a client at the Watergate apartments and at one point my you know living in Northern Virginia my dad had offered to drop me off for the appointment and I guess who’s waiting in the lobby and apparently meets bob dole you know who live there there? Yeah. Yeah. You know, sort of the you know, unexpected he did not become a web design client. Now it’s too bad you know, kind of thing Yeah. So sort of connecting with with different businesses. And you know, your your thing of like, you know, what, why was I doing that? I am a multi generation entrepreneurs. So my parents had a small real estate business doing rental property management after they were both career army officers. My grandfather was a business professor in management consultant for 40 some years so business was normal.

John Corcoran 5:52

So it wasn’t normal. It wasn’t abnormal for you to naturally I learned a skill go out and see if someone will pay me for it.

Karl Sakas 5:59

Yeah, it’s like an elementary school. You know, my parents put us I’m the oldest of five kids they put us to work helping with rental properties, things like painting and you know, clean outs and things like that. And so you know, the idea of business and negotiating with different stakeholders and all just seemed normal. Yeah, well, I

John Corcoran 6:19

got four kids eldest is only 10. But I gotta get him to work. That sounds smart. I like that

Karl Sakas 6:24

idea. You know, I you’ll have to decide, you know, the ideal versus incentive alignment, what is something he wants to do that also matches what ideally you need him to do? But, you know, I am an expert on agency is not on parenting advice. So there, I know, I know my limits.

John Corcoran 6:44

So this is This takes you you go you go to college, you continue to do this on the side was it? Tell me a little bit about you know, the typical agencies Boehner story is you get busier and busier and busier. And then you have to figure out how to manage it all because it’s too much work. And you don’t get to take a break ever. Did you go through that whole cycle

Karl Sakas 7:06

to a point, I mean, I was, you know, in school, full time, high school, and then and then in college, you know, I was doing a lot in college, I was doing a lot of client work. Either when I was home in the DC area, or a lot of it, I was doing remotely. You know, one of the client testimonies I saw was that and I’d forgotten about this. We’d worked together for like two years before I ever met her in person.

John Corcoran 7:32

Wow, that’s, that’s unusual for that period of time because it was so much harder to do things remotely. How did you manage to do these things from it was because you were designing a website remotely and you just never saw that was part

Karl Sakas 7:42

of it, you know, indicate by phone by email, I was using, you know, the FTP application to upload the file. And yeah, you know, you want to edit the menu you edited in every single page, you know, kind of thing. So thankfully, you know, not the case anymore. Yeah, it you know, of course, remotely, sometimes get into trouble. I had a, a troubleshooting client, you know, like computer setup and this mat, and she said that her printer stopped working. And it was about a 45 minute drive. So it’s like, how can you see if I can do this by phone? So I asked the troubleshooting questions, I was working through it. And it quickly became clear, there was something USB related, because everything running through the USB hub wasn’t working. So I asked, you know, to confirm the plight, is that plugged in? He said yes. Hmm. So we kept going through and what I eventually realized, in retrospect, I probably should have just driven out there and dealt with it in person. She had plugged the USB cable diagonally into the Ethernet networking port. I did not know that was possible, but hard to troubleshoot, though. That’s the thing, like, you know, the power of experience, the longer you do something, the more you realize, you know, what are the patterns? And also, what are the abnormal effects? Yeah, you know, so, yeah.

John Corcoran 9:05

And did you hire people during this time period? Or was it mostly just you?

Karl Sakas 9:10

It was just me, I, you know, I had decided, I like doing this, you know, kind of a challenge that a lot of agency owners have clients like working with them, you’ve structured things so that, you know, you’re doing everything yourself, and it’s hard to delegate. Um, you know, if I were doing it differently, but I mean, I was also a full time college student. So as sort of a, you know, graduate side hustle. Yeah, yeah. Um, but you know, certainly certainly, you know, there’s one client that found the out of the blue, it was a trade association in DC, related to financial services. And I got a call from them saying, we found your resume and we see that you know, pagemaker was in college. And I was like, Yeah, I use Adobe pagemaker you know, now InDesign as the online editor for the high school newspaper. You know, getting the newspaper online every day.

John Corcoran 10:03

Oh, I did something like that we use Quark Express when? high school newspaper Yeah.

Karl Sakas 10:07

So yeah, the they’re basically they were like, we want to take our newsletter and put it, you know, do it instead of, you know, use Microsoft Word. And they’re like, what would you charge train Assad? So at the time I was charging $35. Now, this was circa 2002.

John Corcoran 10:24

That’s excellent for a high school student. I’m a college student. Yeah. Excellent. Yeah.

Karl Sakas 10:28

So what happened was, and they were like, so what would you charge for that? I was thinking to myself, do I even remember enough about pagemaker to do this? So my solution was I said, you know, I’d like to come in and meet with you to see what is your current setup? What are your What are your goals, this and that. And effectively, I stalled. And I figured if I go in and see the way they have things set up, I would see do I remember enough of this to train them on? Yeah, I took the metro into DC. You know, out of the office, they showed I was like, oh, okay, this is very straightforward. I can totally do this. And then they asked what I would charge remember, I’ve been charging everyone else. $35 an hour at that point. The number that popped into my head, I said $75 an hour? And they said yes, very quickly. Oh, maybe I could have could have charged more like with inflation, that would be a bit over $100. Now

John Corcoran 11:24

that’s phenomenal for college? Yeah. Yeah.

Karl Sakas 11:27

I mean, that was a case where they knew nothing about pagemaker. They needed help with it, and was high value. I mean, ultimately, they had large, you know, large number of members and they wanted to communicate more effectively with, I think that that speaks to the power of at least value anchoring, you know, whether value based price or value anchoring, it was worth 75 an hour.

John Corcoran 11:51

Sure I talked about for those who don’t know what what that is the difference between value based pricing value anchoring those two.

Karl Sakas 11:58

Well, there are three agency pricing models, hourly milestone and value based hourly is your charging time and materials. milestone is your charging by deliverable, whether by project or by retainer, and then value based is ultimately about charging for the results, whether that’s a performance fee, or a royalty or something along those lines. And you can mix and match the different types of different pros and cons. Going to value based pricing is a challenge, because you need to be confident about the value you’ll deliver because you don’t want to invest hundreds or 1000s of hours of work, only to not get results, right. And so value based makes sense if it’s something that your agency is really confident about doing. And you’re also confident about what it’s going to take to get it to get it