How to Get from Zero to One in Agency Land

Mitch Stoller
Red Krypton Publication
4 min readJan 24, 2024

When Peter Thiel wrote Zero to One, his now classic take on startups, he wasn’t talking about marketing and comms agencies. Instead, he wrote about solutions to change the world — disrupting a major industry or creating a new one. In the world of ambitious entrepreneurs and venture capitalists, agency businesses aren’t top of mind. Why?

Several reasons. Agencies don’t scale like software. Expensive people make or break the business when they go home at night. Artificial intelligence, not agency pros, will drive innovation and transform the business model…

In other words, most agencies — like most businesses — are variations of existing models. Not true Zero to Ones in Thiel’s terminology, i.e., creating new technologies or categories. But let me tell you, when you’re starting out it sure feels like you’re at Zero!

Agencies, however, have the potential to be high quality businesses. They are capital light to start. No inventory. No marketing spend (word of mouth works best at the earlier stages). No rent (who needs an office…). Just the skills, contacts, a laptop, and phone.

If you can scale, things get even more interesting. There are buyers, whether strategic (other agencies and holding companies) or private equity (attracted by the cash flows). Even if you don’t get your firm to the level where it attracts buyers, an agency can be a great lifestyle business — interesting and varied work, creative people, good margins if run correctly.

Yet most people starting a new digital, comms, production or other kind of agency don’t approach it from a business or investor’s perspective. They’re professional services folks. In the trenches. They get started for a different reason.

Sheer frustration.

Frustration with bureaucracy at large agencies, chaos at smaller agencies, stagnant pay everywhere, a belief they can do things better. No more taking orders. While these are all great reasons to go out on your own, and you need real passion as your fuel to get through the early, difficult stages, frustration as a prime mover puts many agency entrepreneurs at a disadvantage versus established players. When, in fact, the playing field is open, and clients are looking for the best partners, ideas and solutions.

So, in the spirit of filling that gap, here’s five questions to help you go beyond your burning ambition to do it yourself and actually build the next great agency from Zero to One.

What’s Your Niche? While most talented founders have a range of experience and skills, it’s much harder to get your first meetings as a generalist solution. Decide whether you’re B2C or B2B and where you excel in each category. It will make networking much easier. You can add services and capabilities later as you scale.

Why Are You Different? Peter Thiel sought game-changing businesses, and in a more modest way, a new agency needs to answer this question. Why should a prospective client listen to you, let alone switch firms? Give them a powerful reason, e.g., deep expertise in investor relations for middle market public companies.

Do You Need a Partner? If you can build a shop on your own, more power to you. You will keep all the spoils. For most of us, it’s good to have partners to match strengths and weaknesses. Few people are good at selling and project managing (well, at least at the start). You will learn from your partners and get smarter. Treat them well.

What’s Your Billing Model? Sounds boring and trivial. Yet it can be crucial to your profitability. If you bill by the hour, you need more and more staff and corresponding expenses to scale. If you bill by the project, you can work towards clearly defined outcomes without giving clients surprise overages. Think it through!

Do You Have Tech? It’s a question agencies are going to start hearing more and more, and proprietary AI applications are already becoming commonplace. (We have a great one!) Nevertheless, you’re going need it sooner or later. Dig in now on how to AI-enable your service offering.

The bottom line is that agency entrepreneurs lack training and support. There’s no venture capital eco-system — think Y Combinator — to help incubate and launch the next generation businesses. But as technology, driven by AI, becomes more essential to marketing and comms, there ought to be. The sector is only going to become more attractive to investors with its hybrid services plus technology model.

In the next piece, we’re going to talk about how to start building this much needed eco-system for this dynamic but often overlooked sector.

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