If you work on the web, odds are you’ve come across Christopher Butler at some point. If not, you’ve certainly heard about Newfangled, or read his book, white papers, or many articles. Alternately, you might have met him at one of the HOW Conferences he helps shepherd.
What you probably didn’t know is that over the past (more than) 20 years Christopher and his colleagues pushed through some tough times. The difference between most studios and theirs? They used a philosophy of ongoing learning and personal development to transform their business, and the businesses they work for.
In today’s interview, Christopher is surprisingly candid about his studio’s shortcomings and gaffs along the way. He also underscores some of the ways studios need to think in order to remain relevant as the web matures. If your web design studio is still bouncing from project to project—and dealing with uneven cash-flow—this is a must read.
Your company, Newfangled has been around for a while. Can you explain how the company started, and grew over the years?
Sure! Newfangled was founded by Eric Holter and Steve Brock in 1995. At that time, the web was still very new, and most people didn’t know much about it. But, plenty understood that they needed to be on the web. So, Eric and his former classmate at RISD, Steve (who still works with us as a developer today) started Newfangled—to help the kinds of clients they’d worked with at their former agency, get on the web.
Since then, the company has grown and evolved in many ways. We’ve hired more people, added offices, and refined/expanded services to include many things beyond web design and development. We still have an office in Providence, but we’re now headquartered in Chapel Hill, N.C., and work with agencies all over North America and Europe.
What went wrong along the way? Are there any mistakes you wish you could have avoided?
Plenty of things went wrong! The biggest were ones that were out of our control—like the two major recessions, first in 2001 and then in 2008. The first time around, Newfangled was mostly project-based. So, when business dried up, it made for lean times. But the company survived thanks to the care and determination of Eric and the others working there at the time (several of whom are still with us).
By 2008, our business model had evolved to rely much more heavily on recurring revenue. Specifically, post-project revenue. When a new website was finished, our goal was to continue to work with our clients for a long time to come, maintaining and improving what we’d created with additional rounds of work, as well as providing ongoing hosting and support.
Because of that—and the fact that, by 2008, digital marketing was preserved in budgets that were cut just about everywhere else—the second recession was less of an immediate blow. But it did eventually catch up with us.
A number of Newfangled team members have been around since the company’s early days.
What was that like? How was the 2008 recession different than the one that preceeded it?
The 2008 recession was longer-lasting and more generalized across the market (remember that the earlier recession was, in many ways, a localized, post-dot-com-bubble-burst phenomenon). It started to alter patterns we’d gotten used to in our new business practices. We’d grown accustomed to certain ebbs and flows season by season, but in 2010, that pattern broke significantly, and we had a couple of very low sales months back to back.
Meanwhile, we’d been working for the previous year and a half to get our house in order, in terms of the core business metrics. We now hold ourselves almost religiously accountable to these—especially utilization and payroll percentage of gross.
We’d done a ton of work in that area, including changing our pricing, timekeeping practices, and internal resource management. Nevertheless, those two bad months revealed the one thing that was keeping us from gaining traction on our utilization number: we were overstaffed. And so, for the first time, we faced a small round of layoffs. It was a hard thing to do, but absolutely necessary. Had we not acted then, we might not have lasted at all.
Any thoughts on how you could have reacted differently at the time? What could have saved those jobs?
There were three things we could have done then that would have prevented the layoffs:
1) We could have been resourcing better. Up until 2008, we had done a pretty poor job of project management. We had no centralized resourcing and traffic coordination, so Account Managers were routinely under-pricing and double-booking resources. And that showed in the numbers: everyone was too busy, and yet it seemed like we constantly were behind with revenue. So the first step was getting a person in that role and standardizing procedures. We did that.
2) The second step was changing our pricing. We had been charging the same prices for many years, and had no clear sense of whether they were accurate. Once we’d implemented timekeeping across the firm, we spent a year gathering data, and analyzed it to determine what it really took to get the work done. Turns out, more than our prices covered. So we changed them.
3) Had we done both of those things earlier, we probably wouldn’t have ended up overstaffed. So the third thing was evaluating roles and properly defining our process. When we weren’t charging enough and botching the project management, we could only see the need for revenue and would constantly take on more work to meet it. That meant more people.
Doing 1 and 2 earlier would have prevented that, but since we didn’t, 3 came in the form of layoffs. It should have come in the form of not hiring more people until the numbers demanded it.
Boxes and arrows
It sounds like you had some knowledge shortcomings that needed to be addressed. Care to shed some light on those?
What’s funny to me is that over more than 20 years—almost the entire lifetime of the web so far—we haven’t really blown it with technology. We were early to the party with doing web design. We started building clickable wireframes in 2000 and had created our own prototyping tool by the following year—way before that became a standard practice or even a known thing.
We created our own content management system at roughly the same time. Again, very early. We were on-board with changes to CSS, HTML, mobile devices, content strategy, e-commerce, customer relationship management system integration, responsive design… I could go on and on.
But what we learned the hard way was basic business management. It makes sense—none of us went to business school. Eric and Steve Brock went to design school, as did I. Mark, our current CEO, was a chef before joining Newfangled, in 2000! We were a bunch of creative people, and we spent the last decade going to the business school of life.
Mark, especially, impresses me with how he’s honed a laser focus on our performance. He sets ambitious but extremely deliberate goals. He then tirelessly works toward these goals without getting distracted by things that don’t matter. That, by the way, is the key to everything: focus and discipline. Newfangled is a completely different company now, as a result.
Chris helps audience members make sense of data, at the HOW Interactive Conference
In recent years, you changed your business model—and offering—substantially. Tell me about the new Newfangled.
As I mentioned, we started off as a pretty undifferentiated web design company. Back in 1995, there wasn’t much reason to get more specific than that. By the time that first recession hit, it became clear that we needed to position ourselves in the market more intentionally. There was more competition, and less money being spent.
Eric hired a consultant named David Baker, who helped him work through the process of refining Newfangled’s positioning. The result of which was a web design firm that partnered with creative agencies to serve their clients. It was a smart move, as it made the marketing challenge much easier. Instead of trying to sell the web to different industries—who all spoke different languages and had different needs—Eric saw that he could use his knowledge of how agencies work to speak just to them.
To many, this would seem counter-intuitive (to go into business with those who could be your competitors). What made you choose to work with agencies?
They needed what Newfangled had to offer, in order to continue to serve their clients. They also had deep knowledge of their clients’ worlds. They could share this with us at Newfangled—once we began to work together. It was a natural partnership, and a dynamic that continues to serve us and our clients very well. What’s changed most since that positioning event is twofold:
1) The nature of what our agency clients need is different. They don’t need web design and development expertise anymore. But they do need help using the web to do digital marketing. That landscape has become incredibly complex over the last 5 – 10 years. We are able to help them create the right platforms—which are really an integrated assembly of several systems. These most often consist of their website, a customer relationship management system, and a marketing automation system—on which they can do better job of creating new opportunity.
2) Because this has become so specialized, we’re now focusing more on those agencies themselves, rather than their clients. In many cases, sure, much of what we do can be offered to an agency’s client. Or a client comes to us directly that isn’t an agency, and we’ll do that work if it’s a good fit. But, we’re refining our positioning even more now.
What’s an article about a digital company, without at least one photograph of a whiteboard covered in wireframes?
Tell me about that position.
You can see that on our website today. Right on the homepage, we say, “Newfangled creates better opportunities for agencies… by helping them utilize the right digital marketing tools, create the right strategies to engage the right prospects, and stay accountable to their marketing goals.”
We’ve gone from being a web development company to being a business development company that happens to use the web as our preferred business development channel. And that has enabled us to focus our offerings. These range from large-scale, soup-to-nuts engagements with some agencies, to individualized consulting programs—on things like content strategy, user experience design, marketing automation, CRM, et cetera—for others.
How is this new approach working out for Newfangled?
Wonderfully! The market has validated every single change we’ve made. With each one, we find it easier to market and sell our services. We encounter less hedging, less sticker shock, less struggle to actually get done what we’d sold to begin with. And for us, it’s made for steadier revenue streams and much higher profitability.
Chris discusses the future of web design.
Who’s your optimal type of client, these days?
An ideal client for us is an independent agency in North America or Europe who is a differentiated expert (or at least intensely committed to becoming one). To make this work, their positioning needs to be as refined as ours does! They need to be focused on an area where there are more than enough clients who desire expertise like theirs and are willing to pay for it.
So, for example, we have clients who are experts at branding, marketing, and advertising in a variety of different industries, like healthcare and manufacturing. But we haven’t experienced a lot of success working with agencies focused on tourism. It doesn’t mean we couldn’t ever, but that’s an industry where virtual middle-men have ripped the guts out of an agency’s end-client’s profitability. I’ve seen agencies really struggle to press on in that sector.
How do you help these organizations?
Well, that can be an extension of my ideal client description. Because that independent, well-positioned agency needs to be willing to commit, across the entire firm, to regularly creating a significant volume of unique, high-quality content in order to express their own expertise to their prospects. We help them do that.
They also need to be willing to do what it takes to quickly amass the necessary volume of contacts for their outbound marketing efforts. We help them do that, too. They need to be hungry to adopt, utilize, appreciate, derive maximum benefit from, enhance, and refer our unique abilities as a firm.
This means they need to commit to our content strategy, user experience design, CRM, and marketing automation programs. Those are the areas where we agencies tend to struggle most, where we can help them most, and where the signal to noise ratio tends to be poorest in the market.
Your offices are a little off the beaten path. Why did you choose Providence and Chapel Hill, instead of setting up in a larger center?
Both had to do with the people at Newfangled. Providence happened to be where Eric and Steve (as well as several other Newfangled people, like Mark, Justin, and I) went to school and settled afterward.
In 2003, Mark followed his wife Katy down to Chapel Hill, where she was doing her graduate studies (it was also near where she grew up). Once they’d settled there, and Eric started visiting, he saw what a great place it was to live. He moved his family there in 2005. Several of us followed, and from that came the Chapel Hill office.
The gang at Newfangled share a couple of laughs in the office kitchen.
Is Newfangled there to stay? Are there any obstacles in working with clients in other areas?
We’ve done all of our new hiring here. With all the wonderful tools we have at our disposal—like online collaboration tools, web and video conferencing—it’s pretty easy for us to do what we do from here. This applies to just about anyone, wherever they are.
Location has never been an issue. It’s only offered benefits to us. We are happy where we are—we can live rich, rewarding lives outside of work—and can draw from the incredible pool of talent that either comes from the Triangle area (Raleigh/Durham/Chapel Hill) or wants to be here.
And for us, that’s the most important thing. We only do this as a means of enhancing our lives—that’s what we’re passionate about. So, Newfangled should be a vehicle for that. If we’re not enhancing our lives and the lives of our clients—having a real, measurable impact—then we’re not doing it right.
Why are you on Officehours?
Simple: I love the idea, and I like to help people. We spend a lot of time talking about unique ability at Newfangled: what is it that you’re especially great at, that you enjoy doing most, and that the world needs? I’ve often articulated mine as problem solving. There are many things I can and like to do, but I’m at my best when I’m helping someone else solve a problem. OfficeHours is basically that, in a nutshell.
Sessions are brief. What can you cover in 10 minutes?
Anything! The way I see it, these sessions can be one-and-done, or they can be the start to something more long-standing. I’ve had a session or two already that uncovered some interesting ideas and challenges. After that, we followed up directly, over email.
Who are you most interested in helping on Officehours?
I’m pretty open to helping anyone. I’m a bit of a generalist, so if there are creative people out there who have business problems, design problems, need career advice—whatever, really—I’m happy to chat. That being said, I think I’d be most useful fielding questions in two different arenas:
I’ve written many articles covering a wide range of design-related topics, but I think my most unique contributions tend to be about design leadership. This involves managing change, resisting entrenchment, and making sense of complexity—and the way culture evolves through the creation and integration of new technologies. So anyone who wants to discuss that kind of thing should seek me out.
On the practical side, and especially keeping in mind that 10-minute window, I’ve spent most of my career thinking about process. I’m interested in observing how things are done, figuring out how they could be done better, and creating sustainable systems that adapt well when the future comes into clearer focus. So anyone out there who needs help creating or refining a system: I’m your guy.
What questions should they ask you?
Aside from the topics I just mentioned, I’d say that the questions they should ask are the ones they’re afraid to ask. When someone can get over the fear of looking silly, they are poised to make the greatest leap forward.
So designers and agency folks. Here’s your chance to book Christopher Butler for 10 minutes of free one-on-one advice.
Bonus: If you run an agency and want to get a better grip on lead development platforms, including CRM, marketing automation, content strategy, and the conversion focused website, consider attending The Newfangled Seminar.