In this session we will delve into the fascinating story of transforming a lifestyle firm into a thriving boutique business. Miles Kailburn, Founder and CEO of OTM will share how and when the decision was made to shift from a freelancer model to a true boutique, to today’s efforts to scale the firm. Discover the challenges, strategies, and lessons learned along the way, and gain valuable insights for your own business transformation.
TRANSCRIPT
Greg Alexander:
Hey, there, everybody. This is Greg Alexander, Founder of Collective 54. You’re listening to the Pro Serve podcast to show dedication to helping founders of thriving boutique professional services firms to grow, scale, and maybe some day exit their firms. And on today’s episode, we’ve got an interesting story and I think this story is going to resonate with everybody and that is some of us have started our firms kind of accidentally. We accidentally acted like a, for a number of years. And then the business grew and grew. And then we wake up one day and we say, jeez maybe I got something and I wanna go from this kind of freelance business model and try to build a real firm. We call that a boutique and try to scale it to something substantial that might be a wealth creation asset for the founder. So that’s what we’re going to explore today. And with us to help us explore, this is somebody who lived that very journey. He’s a longstanding well respected Collective 54 member. His name is Miles Kailburn, and Miles, would you please introduce yourself to the audience?
Miles Kailburn:
Certainly. Thanks, Greg. My name is Miles Kailburn, I’m one of the Co-Founders and CEO, at Old Town Media. We’re located here in Fort Collins, Colorado. And we’re a marketing firm that focuses on high lifetime value segments. So, medical automotive, housing, B2B pro serve those types of industries. And really behind all that is our customer journey work. So that’s the segment we’ve found ourselves in after 17 years.
Greg Alexander:
Okay. So speaking of 17 years, when you and I were speaking last, you said something to me that really stuck. And there was the reason why I asked you to be on the show and you said, listen, I accidentally ran my firm for years. So let’s hit the rewind button and go all the way back to that time period and tell everybody how the firm started, why you feel you accidentally ran it for that long? How long did that last kind of put some color around that for us?
Miles Kailburn:
Yeah, certainly it’s something that’s made us feel a little awkward. So, I think a lot of excuse me, a lot of businesses start out, you know, have this perception. They start out with this grand vision and they set out business plan to execute it and it’s just linear path. And, and our path was definitely not that at all. You know, my wife and I moved out from new York. We moved to Colorado, and she was finishing her college undergrad in design and she decided that she would do some freelance work and my background was in it. So we kinda looked at the numbers and said, hey, you could do a couple of freelance projects. While you’re going through college, you’ll make the same amount of money that you would be making work on a college job and get some experience. And so we kind of started down that path. I moonlight Ed for her writing some code, you know, she’s really just kind of a small boutique little, I shouldn’t even say boutique freelancer building web projects. And so that started to five to six ish and it slowly just kind of built on itself. I left my it consulting gig and joined her fulltime probably around 2007. And we reincorporated as otm at that point and started to just run that model. We didn’t know what the model was. We didn’t know what we’re doing. We were focused on the craft and… excuse me, couple of years into that process, you find yourself with an employee and then you find yourself looking for office space, you know, a massive 600 square foot office and you sign that lease and… you know, every year or so probably about every year we’d added a team member. So probably around 2009. Well, you know, we’ll skip right over 2008. We grew through 2008. You know, we were a small company growing through that. We didn’t know what a recession was. So, so we fared pretty well through that kept growing. And I think around 2009 or so, we had four or five people. And, and that was probably around the first time that we kind of looked around the office, and there is this moment of it’s no longer this side gig, freelance model. You know, we have stable recurring revenue. We have team members who have mortgages and there is a strong co dependence and there is this just kind of moment of we actually, I think we have a company here. I think that’s what this is now.
Greg Alexander:
It’s such a great story and you shouldn’t feel awkward about it because I will tell you, I’ve heard that story dozens of times inside collected 54. I think that is a common way that professional services firms get founded. Many of us might not have the courage to admit it like you were doing here publicly, so, thank you for that, but I think that’s, a very common way. I wanna hone in on the moment that you said, jeez there’s a co dependency here. We’ve got employees, they got mortgages, you had this sense of obligation, continue to provide employment to these people and of course, you were dependent on them because they were doing the work and, you know, helping you pay the bills and all that. When did you decide to go for it? To say we’re going to really try to scale this thing and like, and what was the motivation? Because it sounded like you and your wife had a heck of a nice lifestyle. There wasn’t a lot of stress, happy clients. You, you blew right through the greatest recession, you’ll ever see in your life and didn’t realize what happened. So, like why I screw that up and go for it?
Miles Kailburn:
You know, when we started the business, I don’t know, we were 20 and 21, maybe we had no idea what we were doing. You know, we’ll say business but, you know, freelancer then incorporating as a business and all that. It kind of hit in two stages. The first stage was recognizing that co-dependence and then realizing, shoot, there’s a whole lot to this that we don’t know. We need to go figure out HR. We need to figure out payroll. We need to figure out all these other systems that really were not part of the vision to date of the company. But we love the team. We love the people that we’re working with. And so I would say that was kind of the first toe in the water around building that and it was just out of, you know, obvious necessity. I would say the crazy part is, I think, you know, that aha moment was really closer to 2016 to 2018 for us, which is kind of wild, you know, it’s nine to 11 years into our journey. But, you know, when we talk about how we started it, you know, we started the business and we accidentally kept going. It was really around that 2016 time when we had probably closer to nine or 10 team members. We actually started to understand systems and processes and start to look at a sales engine and how do we actually build this? And that really was the start of we have to, we have to run this as a mature organization. And that’s really where we started to look everywhere. Ironically, the last place we looked at were agencies, you know, in my opinion, and I think you would probably share, the traditional agency model doesn’t really scale that well. Ironically, I just read a research paper in my inbox maybe a week ago and I kid you not the actual title of it was digital agencies don’t scale and let us help you grow. And I was like, no, no, we’re actually doing the other thing and it works very well and you actually need to scale. And so 2016 is, you know, that’s when we started it and,
Greg Alexander:
Yeah.
Miles Kailburn:
From there, it’s just been a journey towards persistent improvement.
Greg Alexander:
You know, so, for long-time listeners and particularly the members, they know, we have this thing called the boutique framework and it’s based on a life cycle of a firm. And we believe to go from grow to scale. The three stages are about 15 years, three stages grow, scale, exit five years each stage. And sometimes when Miles, when I talk to people like yourself, they say, well, well, jeez I’m really behind schedule. You know, I’ve been at this 17 years and I’m probably another 17 years away from selling the firm, and what I would say to those people as well. You got to really think through what the start date was. So in your case, listening to you, I would suggest that your start date, at least the way we look at it, you know, very kind of academic and methodical was really 2016 is, when you thinking about it as a firm, you know, not just a way to raise the family and pay the bills and that kind of thing. So, from that standpoint, you know, what I hear it is 2024 your eight years in. So that feels about right? Because you’re smack dab in the middle of the scale stage. I wanna ask you about that because sometimes when people make that switch, you know, from the old way to the new way and they start worrying about things like payroll and HR, the job satisfaction dips because they’re not practicing the craft anymore. They’re building a business. And sometimes that’s not as fun. Did that happen to you? Did that not happen to you? How did you deal with it? How did your wife deal with it? Like tell us about that?
Miles Kailburn:
Yeah, the first couple of years, well, jumping back to your 2016 point, that’s how we’ve come to accept it. You know, that time in, you know, we don’t really count the time in our twenties. We didn’t know what we were doing. And so, but actually before that, you know, you share some benchmarks around certain statistics, and key metrics in grow, scale, and exit, and you showed them at the founders summit. And when we look at that, we, to your point, we found, you know, some of our metrics were in exit stage. You know, a good chunk were in scale and certain ones were in growth. And so, you know, I think to your point, we’re transitioning through that. And that structure has really helped us start to fine-tune where we need to focus because I think jumping into ultimately what your question was the five years or whatever 2016 to 2021 ish when I joined collected 54, you’re just looking for pebbles to turn over and see. Is this a good idea? There’s no models in the agency world to really scale? And nor is apparently scale as a concept in our world. And so, I didn’t want to grow as a marketing company. We looked at a bunch of them. The models didn’t make sense. It didn’t actually excite us. It just introduced a lot of complexity, and not a lot of fun. And so we’re always trying to grow a different way. And, and we just kind of, you know, some people on our team refer to it. You got to kiss a lot of frogs, to find the princess and keep looking for things. And so honestly, we started to look at other time but other professional service companies. So we looked at accounting firms. We looked at legal firms who looked at architects and we started to pull elements of those back into the company. And I remember some conversations with our other partners. So, my wife and I are the cofounder majority shareholders and we have two other minority partners who I love absolutely dearly and when we kind of bring that or when I bring those ideas back, they’re like you’re nuts that’s not us that’s not our industry. And I’m like, yeah, but this is how this should work. And if we did it this way… we could do something really different, and a lot more fun. And so for me, the tipping point was, you know, finding the book, and looking at your model. I vividly remember reading it thinking, holy cow. This actually is the model I’m only 70 percent through it. He’s clarified that it is actually a model. And here’s the other 30 percent and you, I remember running back to the office and it was like, hey, this is a thing. This is what we’re gonna be. We’re going to benchmark and consider ourselves and operate as a professional services company. And, you know, we’re gonna run ourselves as a mature organization, which also then means we had to, you know, we’re very comfortable except the fact that we ran it as a lifestyle business. We had no idea what we were doing. We didn’t have metrics, and a lot of this stuff. And so, the more we started to focus on some of these elements within the professional services side, the more it became clear that we were the stereotypical lifestyle business, and that was not what we wanted to be.
Greg Alexander:
Yeah. You know, and when you think about this, right? In the model, I mean all that we’ve done through the community is codified, right? The story that you’re sharing with everybody is the story that everybody lives. And you hear the term professional services, people like people say what’s a well that’s the designation according to the bureau of labor statistics and the IRS. That’s why the number 54 is in the name collective 54. And what it basically is that it’s the expertise business. In the expertise business, we all have the same business model where marketing selling and delivering our expertise for a living for a fee. Now, you might package that fee. Maybe it’s hourly. Maybe it’s a retainer, maybe it’s a fixed bed, whatever it is. The expertise might be in your case, marketing, in my case, it was management consulting and others, it’s writing software. The expertise could be different, but that is the business. And there’s one point 5,000,000 of those firms just in the US alone, two trillion dollars a year spent on it. If you can believe that, which is miraculous. And over 3,000,000 people in the United States work for these firms with the overwhelming majority of them in the boutique, the small firm. So, the reason why I’m saying all this is because you said something there, that was funny. It’s a thing. Yeah, it is a thing once you recognize it, it’s the thing that all of a sudden there’s patterns that you can model yourself after what a lot of firms do, well, that’s interesting. What are accountants do? That’s intriguing consulting shops. They do it a little differently, but that’s interesting as well. And you can learn all these things and pieces things together. And that’s where the scalability comes from. And that’s the real distinction between the freelance lifestyle business. And again, there’s nothing wrong with that, but that’s never gonna scale you’re gonna make a heck of a living and live a nice lifestyle, but you’re never gonna be able to in wealth, and sell that to somebody else. Maybe your employees, maybe your clients maybe an external acquire it’s. Never going to happen. If you stay in that way. One final question then we’ll wrap this up because we’ll save all the Rich stuff for the private member. Q and a. Do you think your life cycle as a person, your age had an impact on your desire to want to have more than a lifestyle business? Because, you know, you started in your early twenties. And, and if I’m looking at you right now, you’re probably in your late thirties, maybe early forties. Is that about right?
Miles Kailburn:
Yeah, early forties.
Greg Alexander:
Yeah. So, did a, did that have an impact on your motivations?
Miles Kailburn:
Yeah, you know, certainly, in our twenties quite literally, time was an unrestricted commodity. You know, that’s how we built the business that’s what we could bring to the table… as we started to approach probably our mid thirties, and I, it’s not necessarily kids but kids factored into that picture. You just can’t do it that way. And also we needed, you know, different talent sets. We needed, you know, a little more structure and that started that shift into, you know, professionalising the firm and compared to how we operated, you know… then versus now it is night and day. You know, we’ve got systems. We’ve got predictability. We’ve got accurate forecasting, you know, these are all hard things to get through or, you know, they took some effort and some iteration to get through. But the stability and comfort at the end of the day, putting my head on the pillow, knowing that, you know, our company is supported by a mature maturing group of processes and systems is huge. I would be terrified to go back to the freelance life cycle model where it’s feast or famine on small projects. It’s the worst of most worlds. When you get to the predictability on the other side, yeah.
Greg Alexander:
Very well said. And the way you rest your head on the pillow every night, that’s one of the benefits of building a sustainable firm, repeatable processes that isn’t just, you know, flimsy, I could go away overnight. Well for those that are listening to this, you know, if you want to hear more from Miles about specifically what he did, to go from this kind of freelance lifestyle business to this professionalised professional services firm that allows him to sleep peacefully at night. I encourage you all to attend the role model session which will be on Friday and we’ll hear more about Miles story and you’ll be able to ask questions directly of him. But until then, Miles, I always appreciate you giving back to the community. You are a giver, not a taker. And we’re so lucky to have you. So, thanks for coming on the show and sharing your experience with us.
Miles Kailburn:
Yeah, thank you, Greg. My, my honor. My privilege.
Greg Alexander:
All right. Until next time, everybody, thanks for tuning in and I wish you the best of luck as you try to grow, scale, and exit your firm.
Note: This transcript was generated by Gong.