Paul Bellows | [Top Agency Series] How to Niche and Diversify an Agency Business
Smart Business Revolution

Paul Bellows is the Founder and President of Yellow Pencil, a Canadian digital agency focused on the public sector and digital service transformation. He is a 25 year veteran of digital service industries and currently provides consulting and advisory services to leaders at different levels of government in Canada and in the US. Paul is also the host of The 311 Podcast where he features innovators in the digital space as well as in government. 

In this episode of the Smart Business Revolution Podcast, John Corcoran interviews Paul Bellows, the Founder and President of Yellow Pencil, about his work in helping governments digitize their services. Paul explains how he started his agency in the 90s, how losing a key client affected his business, and his process for helping clients adopt new technology. 

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Here’s a Glimpse of What You’ll Hear:

  • Paul Bellows explains how having and losing a key client impacted his business
  • How long did it take for Paul’s company to recover, and how long did he go without a paycheck?
  • Why Paul decided to work with the government — and some of the challenges he has faced working with them
  • Paul talks about the struggle to provide challenging and purposeful work for his employees
  • What Paul does to encourage his clients to invest in new technology and some of the projects he has implemented to improve user experiences
  • Paul talks about starting an agency in the mid 90s, the lessons he learned along the way, and how he has transformed the business over the years
  • The people and companies Paul admires and how to connect with him

Resources Mentioned In This Episode

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Episode Transcript

Intro 0:10

Welcome to the revolution, the Smart Business Revolution Podcast, where we ask today’s most successful entrepreneurs to share the tools and strategies they use to build relationships and connections to grow their revenue. 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 it’s such a privilege every week to get to talk to smart CEOs, founders and entrepreneurs of all kinds of different companies ranging from Netflix to Kinkos’, YPO, EO, Activision Blizzard, LendingTree, go check out our archives as there are lots of great episodes in there. I’m also the Co-founder of Rise25, where we help connect b2b business owners to their ideal prospects. Quick shout out to Carl Smith, Carl Smith of Bureau of Digital who helped connect me to today’s guest who also belongs to the Bureau of Digital Community, which I belong to as well. And this is part of our top agency founder series. Paul Bellows is our guest. He’s a 25 year veteran of the digital services industries. He was designing websites in the mid 90s, back when most people didn’t even know what the internet was, or they even call it that back then it was the World Wide Web and the information superhighway and stuff that we never, you know, I think we stopped calling it around the time of y2k or something calling that. And he is the Founder and President of Yellow Pencil. It’s a Canadian digital agency focused on the public sector and digital service transformation. That’s my background in the public sector. So I’m going to be interested to talk to him about that. And he’s provided consulting and advisory services to leaders at all kinds of different levels of government in Canada and the US. He’s also the host of The 311 Podcast featuring innovators in digital government, and he’s also the proud co-parent of the future teen star of whatever replaces TikTok and roughly five years. I love that. This, of course, is brought to you by Rise25 Media, where we help connect b2b businesses to the clients, referrals, and strategic partnerships with podcasts and content marketing. Go check us out at, or email us at [email protected], if you have any questions about that. 

Alright, Paul, it’s such a pleasure to have you here today. And take me back to this moment in time. This is about 10 years ago, now, you have got one source, one predominant source of leads for your business at this point you’ve been in business for, let’s see, is probably about 15 years, 1415 years, and you’re doing great things. You know, you don’t even need a sales team or marketing team because you got this consistent source of leads. And then oh my gosh, everything grinds to a halt. Because this company that you’re partnered with, just decides to have a pivot interaction. I think my heart is palpitating just thinking about it. But take me back to what that was like,

Paul Bellows 3:09

I still get a bit of a cold sweat when I revisit that time in my memory. But there’s an old saying in business that you can solve. There’s a few problems in business, you can’t solve with revenue, you know. And there’s a few problems you can solve without revenue. So when revenue stops coming in, it’s really a really challenging moment for any business person. And we had, you know, we had grown. So at the time, my brother and I were running the business together, my brother Dave, and he was a great innovator and a great colleague to work with. And the two of us were had stumbled you stumble across relationships in business, sometimes sometimes you’re really strategic about it, sometimes you’re in the right place at the right time, you know, the say, you know, it’s about being ready for when lightning strikes, we had had one of those lightning strike moments where we’ve been working on a large we’re up here in Canada, and I’m based in the province of Alberta and city of Edmonton. And so sort of the seat of our provincial government is here and a lot of the core communications folks are here. And we have been brought in to help them with a website redesign for their global platform. They run about 400 websites, 125,000 pages of content, and there’s a massive ecosystem. And at the time, we were one of the companies that was really probably skilled at doing that kind of work that larger enterprise digital work. We were digital specialists. We weren’t an agency that had stumbled into the web. We sort of were born on the web, and we’re on the web. And so we were well positioned to do that type of work. And we’ve been doing a lot of work with content management systems and the Government of Alberta had bought this platform called red dot, which was in the mid the early 2000s, one of the hot technologies of the company out of Germany, and they created this really innovative Database Driven platform for managing content And we got into the government was really struggling with it. They were having trouble with the technology. They weren’t, they hadn’t really done this kind of implementation before. And we’ve done several of them. So they extended our design contract and said, Can you help us get this technology, right, and we did a great job and got most of the kudos from my brother Dave, who was more, I was more on the creative side, he was more on the technology side. And he just managed to get in and figure it out and made some great decisions for them. And they loved it. And then red dot, the company loved us, they said, Hey, you just rescued this client who was slightly in jeopardy and wasn’t sure they were gonna continue to pay their license fees, you know, they’re considering backing away. So they brought us into another engagement and then another and then eventually, they got acquired by a bigger Canadian company actually called open text out of Ottawa, here in Canada. And open text brought us along as a partner and kept sending us deals and sending us deals, and almost 100% of our growth came from that key relationship, we made them their customers happy, they brought us new deals, every time someone bought their platform, they would recommend us as a preferred partner, anyway, no thinking

John Corcoran 6:04

at all that this is a bad thing. It just feels like just a great thing. Because, you know, so often in business, you struggle to find a relationship like that. And when you find one that works, why, why ever would you think it’s a bad thing?

Paul Bellows 6:19

They’re bringing us fortune 500 companies, and you know, the Wharton School came to us as a client, we still have them as a client. And you know, and so they’re just bringing us these large brand name organizations that from way up here in northern Canada, we never would have found these relationships on our own, you know, we were just too far away, we wrote a market, there’s no reason that someone like that would come wandering up to northern Canada to find a digital partner. So yeah, we were no, I mean, you know, they sort of say don’t have too many eggs in any one basket with a client, but we hadn’t really looked at it in terms of what happens if our software partner goes away. And it wasn’t so much the open text went away, but they acquired some new technology that was even a little more modern, and a little more interesting to them. And really, within about an 18 month period, every lead we had dried up, just every lead we had drove right up. And like our sales team was me, someone from open text would call and say we have a new opportunity, are you interested and they would say yes, and we would sit down and write a proposal you know, for and it wasn’t really working we were even pitching competitively for, we were always the preferred vendor. And when all of that dries up, and you suddenly realize I need to learn how to market my company, I need to figure out who my customer is, we need to relearn a brand new technology stack. Boy, those were, those are just the hardest couple of years. And it all really came to a head I can recall in 2014. And I know it was 2014 because that’s the same year my daughter was born, our first child was born. And, and so my partner had gone on maternity leave for the year. So she was sort of on a very low level of income, just afraid of federal government programs to support new parents here in Canada. But you know, something can come again, I had to go off payroll, because we ran out of money in the company, like we were just hurting. And yet we had grown to 38 people and we had to downsize rapidly to 26 laying off people that you care about. And employees you fought hard to recruit and train and empower and people had, you know, trust based relationships with sitting in a room and saying, I’ve got to let you go is, is it just the worst feeling. Just, you just feel like a complete failure as a person. And as a leader, you know, and as a business person, you know, in every aspect of who you thought you were, you know, you’ve convinced yourself, you’re good at something, and then you realize, I didn’t even really know what I was doing. And then it’s really quick about space. So yeah, though, that was a hard year, a really hard year.

John Corcoran 8:51

You couldn’t, you couldn’t just evolve with this new technology and sell that new technology.

Paul Bellows 8:57

We took a look at it. And we weren’t convinced, you know, it was we and I think we were right. You know, I don’t think open tech sold a lot of that platform. I think I think that the last sale of that technology may have come before the acquisition. And I don’t think they really were successful with it. So I don’t think we would have seen much uplift and it was one of those products that looks great. On the outside, they had a great customer base, you know, Disney was a customer. But it was so complex that customers were really struggling just to get it implemented. And we thought we were unwilling to take that ride.

John Corcoran 9:30

And that’s an even tougher decision then because on the one hand, you could have pursued that, in spite of your misgivings, and continued the relationship, which had brought you so much business, but it’s almost like you took a principled stand and said, Now we’ve looked at this product and we don’t want to throw our lot in with this product.

Paul Bellows 9:48

Well, I mean, you know, it’s important because, you know, you’re sort of that sort of sacred bond you have with the customer of, you know, we’re gonna commit to a working relationship. You’re gonna pay me for work and I’m going to deliver work Good quality work. I really don’t feel like I can deliver work of good quality or at a cost that I think is reasonable in the market. It’s not gonna be a good relationship. And I just, I’m the kind of business person who likes to sleep at night, and who likes to have a good relationship with the customers. And they’d like to do what I say I’m going to do. And we just weren’t convinced we could be successful on the technology. So it was really just in our own self interest, we just started getting into this thing where you’re, you’re hustling to sell the wrong thing to the wrong person, and constantly try and convince them that they haven’t made a bad choice and constantly running change requests to solve failure failures of the technology, you know, that that just felt like a bad, a bad world, the world I didn’t want to live in.