This transcription belongs to episode #9, you can watch the complete episode here!

 

Morgan (Host): Hey, everyone, welcome to the latest edition of “Client Horror Stories”. And I feel honored to have my new virtual drinking buddy, Josh Silver, here. And he was telling me about a great client horror story. Let’s dive right into this with Josh.

Josh Silverbauer (interviewee): Thank you, Morgan. Do you think for a CEO, saying “Yes” is an incredible thing to do? Saying yes gets you very far as an owner. But sometimes saying yes has problems, and sometimes saying yes can put you in situations where you wish you had said no. 

Morgan (Host): And often, saying yes to an offer involves money. So, it is hard to say no when you see a dollar sign. The temptation of green bills is quite powerful.

Josh Silverbauer (interviewee): Along with the money, when you run a business, you want to feel like you are progressing in that business. So, you try to figure out issues along the way. And when you say yes, it means you have the confidence to figure out problems along the way. But sometimes, especially when you are in the beginner stages and trying to figure out things around you, saying yes without any research can get messy.

In our case, when we started our business, we didn’t have a proper structure. We had a lot of different services. We used to call ourselves “The Everything Agency.” We named our country “Grue and Bleen” and then we changed it to “Great Big Digital.” Our initial concept was to do everything to solve people’s problems that they couldn’t do themselves. We wanted to take care of people’s businesses. So, that was the initial thought process behind our company.

So, my friend/business partner’s parents had a business associate or friend in the holistic community, and they were fairly well-known for almost 25 years as they had developed a type of practice that was popular in the holistic community.

Morgan (Host): In my experience dealing with famous people, when you know nothing about them, other than they are famous. That’s already a Yellow Flag.

Josh Silverbauer (interviewee): True, it was a huge Yellow Flag.

Morgan (Host): And, in a lot of people’s experience, the more your fame goes up, the more your ego tends to go up.

Josh Silverbauer (interviewee): Sure, there were a lot of egos. My client was one of the famous 90s and had developed a website in the 90s. They needed a company to modernize their brand. And, we were a website development company, so we came across each other eventually.

Morgan (Host): We’re back again. This makes the yellow flag turn into a dark yellow flag because he was not just a famous person. He was a famous person fading away. And this scenario can shatter their ego pretty badly. And this shattering ego is worse than the high ego. 

Josh Silverbauer (interviewee): I completely agree with you. I was trying to stay relevant during the whole project. We were a small website development company, and they only wanted a new website. We had a developer to build all kinds of websites, i.e., WordPress, etc. Little did we know that their website had chaos all around. They had five different verticals that they wanted to essentially fuse altogether. There was a database that stored all their data for the past 20 years. When they hired us to modernize their website, we didn’t understand that it was a part of it. 

Morgan (Host): Due to your inexperience, this sounds like a mistake in managing them on your site. You should dive in and figure out these sorts of requirements beforehand.

Josh Silverbauer (interviewee): We did, but this was potentially our biggest client, as we were a small business. We had lost one large client before this. I’m not going to get into that story. But there was a lot of miscommunication and just bad stuff.

Morgan (Host): We’ll discuss it definitely in another episode at a different time.

Josh Silverbauer (interviewee): So, this client appeared out of nowhere with a $180,000 budget. We were only four people at that time, so we were excited about it. Who knows, this project may help us in the future to expand our business. So, we prepared ourselves to build a website and the things that go along with it. Then we planned to refine the brand with marketing. In the meantime, we didn’t ask any questions. We didn’t outline the requirements of that website in any way. We took an initial point and started working on it.

Morgan (Host): By the way, I want to call another thing; along with inexperience, we find ourselves trapped in big numbers. We always imagine we can do the job with a big budget and with the help of a bunch of people. We always think, “Yes, I can do this.” 

Josh Silverbauer (interviewee): Even today, my first thought about projects is, “Can I do this? Yeah, I can do this. “As you know, I am a “yes” person and I love solving problems; my first instinct is always, “Yes, I can do this.”

Morgan (Host): That’s right!

Josh Silverbauer (interviewee):So, I had to work very hard over the years, and I had learned that when it comes to business, everyone should have the courage to say no. So, these clients were friends with my business partners’ parents, so they were willing to not do a whole lot of research upfront. They knew we were new and they believed us. We were all willing to take the risk. And there was a misunderstanding at the beginning of what we were going to do. And this misunderstanding caused a lot of issues along the road. 

We were not only going to build the website, but we were going to do marketing and rebranding for them. But we didn’t have an actual plan at that point. We were just solving issues that were coming along the way. So, we were working with a slowly fading famous person and his wife, who was, basically the manager of the brand. And they had one other technical guy, who had built all the systems. So, we were dealing with three people at a time. 

There were so many issues with them. The famous guy didn’t understand digital marketing and the wife was the one who had done all the branding, so she had lots of opinions. And then we’re dealing with the person who had built the entire tech but doesn’t understand basics like mobile. 

So, they had done everything, but they didn’t know how to get this next step to market. Remember, we were dealing with three decision-makers at that point. We’re not just dealing with a famous person also he was not interested in business at all. He just wanted to be in the limelight. He didn’t want to be involved at all in terms of negotiations or anything. His thought was to get fame only. And then the other two had very, very strong opinions on everything. 

Morgan (Host): Let’s take a breath. Let’s talk for a moment about working with people who have very strong opinions. Another point is that when we are younger, we all have strong opinions. But once we grow in our career, more confidence grows inside us. One day we may be able to say, “Hey, are you hiring me for the wrong things? Or are you hiring me to be your robot? Or did you hire me because I’m the expert? You don’t think I can make good decisions?

Josh Silverbauer (interviewee): Yeah, that is a great infographic on the types of clients. And one type of client is Mr. No and Mrs. No at all. Whenever I got into a conversation with them, I kept thinking, “Why did they hire me at all?” All along with the project, they wanted to be in control, but they were having trouble executing their thoughts. So, they hired me, essentially, to execute them, and I thought they needed my thoughts. So, there was a miscommunication at the beginning. They were controlling everything without any understanding, and their responses to our actions were never vivid enough.

Morgan (Host): That’s the worst combination: strong opinions combined with not knowing what you want.

Josh Silverbauer (interviewee): It was a battle from the very beginning. They didn’t know what they wanted, but they knew what they didn’t want. Early on, they wanted us to redo the logo, so we created new logos. We started with two different versions of the logo, and then all of a sudden, we were at six different versions of the logo, and then all of a sudden, we were at twelve different versions of the logo, and then we had 25 at a point, with different colors and types of text. It slowed down the whole process. And it became tougher with multiple decision-makers. 

Non-profit businesses are great, but the problem with non-profits is that there’s always a board, and the board always needs to decide everything together. But the trouble with that type of situation is that things move slowly. They had a $180,000 budget, but they were spending lots and lots of time on a logo. They wasted the time, which had great value to us. And after that, we found ourselves slowly pulling away from the website, which was the main reason for hiring us. 

We couldn’t build a website because they didn’t know what they wanted in terms of designs. And as we’re going along, we just realize that they don’t get the idea. Looking back on this scenario, there were so many Red Flags. But how is this conversation? It is just a good conversation. How can you know, if a client isn’t going to get it? How do you know that?

Morgan (Host): They’re not going to get it, and they never will.

Josh Silverbauer (interviewee): And they never will. And that’s the biggest thing we figured out during the contract. And even if we had figured it out early on that they were never going to get it, we already had a contract. And I was unable to get them the value of what we signed as quickly as possible. We designed the site and took them into it after lots and lots of meetings about direction. The wife told us about the things that weren’t working. And we finally get to some level of compromise with the direction of the homepage and a couple of other pages. 

 

It took about four or five months just focusing on design, and the wife was actually a print artist, so she did all of their pamphlets and she was a very opinionated lady. So, we held a meeting to decide where we wanted to go forward with the design. We walked into the place where we were meeting, and they had printed out all of the pages of our website design and tacked them onto the wall to see how the pages felt. The room looked like one from Russell Crowe.

Morgan (Host): Oh, my goodness!

Josh Silverbauer (interviewee): We walked in and we’re like, “Oh, no, they’re never going to get it.” They didn’t have any intentions to understand the Web. Regardless of as much education as we could potentially provide, they were looking at it as a magazine. They both have different rules and we can’t communicate that to them. 

Morgan (Host): Let us foster that because it’s great imagery. I can see the climax of the story. It leads me to wonder about the challenge of working with someone who fundamentally doesn’t understand your medium. I never thought about this explicitly until right now. But it might be useful to have a process to identify the type of the client. If they want your services in marketing, do they understand the basics of marketing itself?

Josh Silverbauer (interviewee): I think we’ve kind of developed a way to sniff out a little bit if the person has an understanding of buzzwords or keywords regarding the field. They need to understand the basics. It makes us detect the “Red Flag” and we had conversations like, “Alright, just call Google and get them to put me up on the top. Go and fuck people at Google if you want, just get me to the top. “It was a Red Flag. They didn’t understand SEO in general at all.

Morgan (Host): I wish it worked that way because it would be easier. 

Josh Silverbauer (interviewee): Exactly, who knew it would be that easy? I like your idea. There does need to be some level of education that the client comes in with, to be able to meet you in some way. And one big Red Flag about the whole situation is that you have to look at where their brand is today. When was this person relevant? Are they relevant anymore? If they want to rebrand, they should know about the medium that is relevant today. It was hard to get them to understand the new medium. If we did a little bit more research on them as a brand beforehand, we could have possibly sniffed out the problem earlier.

Morgan (Host): That’s a great point. I would add in another rule of thumb inspired by that. With general exceptions, the best type of client is the one whose brand is at its best point ever. In other words, if a client’s business is small but upgraded and they’re on their way up, this pattern is much, much better. 

Josh Silverbauer (interviewee): They did have some momentum at one point, but it quickly faded. They weren’t sure if they were trying to get new people or if they just wanted to keep the older generation happy and interested. There were so many missed messages about where they wanted to take the brand and all that stuff. It was an interesting experience. The development of the website turned into massive brand chaos, and we were unable to change these people’s perception. 

And this famous person didn’t quite understand what was going to happen once you step into the world of social media. He was anti-Vax and had different beliefs. It was about the time when John Oliver put out a whole thing on vaccines, and our client thought it would be a good idea to say, “John Oliver is wrong” and boost it to a whole bunch of people. As soon as he expressed his opinions, everyone exploded with anger. He just didn’t understand why people were so angry but it was just a different world of young educated people who knew what they were doing. It was just very hard to tell him that it might not be his medium.

Morgan (Host): My question is, “Did you try to warn him to strategize his steps before he did that?”

Josh Silverbauer (interviewee): We warned him that he was going to evoke a lot of anger among the people and might receive thousands of negative comments, and he was like, “Well, that’s good for controversy.” And we said OKAY, but then I don’t think he realized the seriousness of the matter.

Morgan (Host): Everyone says they want controversy in theory, but as soon as it happens, they start gasping.

Josh Silverbauer (interviewee): And he was commenting back to every single person. People found him on “Google My Business” and slammed negative reviews all over the place. This person went from 4.5 stars to 1.5 stars on the app. Because of his mistake, we felt super distracted from our project. He did that because he wanted to get out as a brand person and wanted to build a new brand. And then we had that tech person who wanted us to build a ridiculously complex website. 

As we started getting more and more into the website, we realized that there were countless systems connected to their website. To update the website, we had to update all of those systems as well. Every single time somebody signs up for a seminar there, it processes into a backend system. Our biggest mistake was signing the contract with no research. It is very important to research about every single project you do. Sometimes things are tricky for new businesses. Scoping of the project needs to be done in every condition.

Morgan (Host): The trick is to know what to do to be discovered. 

Josh Silverbauer (interviewee): No one wants to pay you for research. They want you to do that on your own. Some companies research by themselves, and like us, they’ve also lost a lot of business to people who then come back to us because they couldn’t produce the product, they thought they would. There are always people who come to us for pricing too. We should make our mind beforehand: “This is what we need to succeed at this project.” And if we can’t do these things upfront, and you aren’t willing to work with us to get there, then we have to pass on this project”. 

And it’s hard to accept when we don’t get the project. It feels like we’re going to lose business. As business owners, we’re always anxious about the next step. We do business to support our family and support the growth of the business. So, when you rush to get a project, things get messy.

Morgan (Host): One way, I try to solve it is in my seminal work, I present a massive list of assumptions. It is not a full solution, but it helps. In the case of your contract, it was a change of scope as there were systems upon systems. It changed the range of your contract.

Josh Silverbauer (interviewee): Totally. And that change of scope kept happening. And, it started building a sense of distrust because we had to keep going back and saying, “Okay, you want videos now? Because there were three decision-makers, and all of them had different opinions, the tech guy would get outvoiced by the other two, who were the wife and husband. 

All the branding and videos for marketing were not going to be helpful enough. They kept changing their directions, and the tech guy, whose opinion mattered to us the most, kept getting outvoiced. It was a continuous battle where we kept asking for more time to meet their demands. And all of a sudden, we became like an hourly contract retainer. 

We lost ourselves in the way of the process. But we still had the contract which caused a lot of problems in the end. And so, the lesson here is, if there are so many changes to the scope, always revisit the contract.

Morgan (Host): That is a lesson.

Josh Silverbauer (interviewee): When you get wind that things are changing and that people are attempting to avoid the contract, you should create a new one based on those changes. And the client should understand that because they’re the ones asking you to change things at that point. Now, there might be some back and forth, but it’s really important to build that out. Because, you know, ultimately, it’s going to save you a lot of heartbreak later, and as far as my story goes, it was a failure.

Morgan (Host): Yeah, powerful points with powerful lessons. I want to add another point that the clients thought they were getting a too good deal. One of the factors is to think about the psychology of the husband and wife; they gave you a lot of work just because they had a contract worth $180,000 with you. They were getting more and more work from you, sometimes intentionally, sometimes unintentionally. They thought they were paying a good amount so they were allowed to go beyond the contract. And it is always going to result in revisiting contracts or breakdowns of some sort.

Josh Silverbauer (interviewee): Yeah. So, we were about seven months into the engagement with them and our whole progress was a bunch of marketing videos.

Morgan (Host): Did the engagement have a timeline originally? 

Josh Silverbauer (interviewee): The original timeline was a year to get them this website.

Morgan (Host): I want to tell you what I’ve been doing. Before signing long contracts, I insist on a small 90-day contract to see how we work together. 

Josh Silverbauer (interviewee): The tricky thing is that when we structured the agreement as a project, it was about the website. As opposed to retainer engagements, our contract was essentially to build them a website in a year. But then we got pulled into designing and branding. They were curious about how the audience may perceive them. They wanted to do interviews and make a bunch of videos. All the website stuff became a lot more content stuff. We were at seven months and we only had a blog. 

That’s all we had. Looking at this scope of how many hours we had left, we’re down to $60,000, which equates to very little time to build this insane system of the website. We could not complete the project in the remaining hours. We analyzed everything and concluded that we needed an additional $60,000. So, we informed them about our condition. They considered our requirements ridiculous and stopped the project. And all we had to show them at that point was a blog with some videos and some content. We had partial systems in place, but they weren’t nearly finished. And so, to them, they just paid $120,000 for a blog. 

Morgan (Host): So, they felt ripped off by the blogs and your site. They had endless meetings back and forth with 4 million versions of every tiny little thing, and still felt ripped off.

Josh Silverbauer (interviewee): So, this scope creep happened. We couldn’t get them a value because of roadblocks.

Morgan (Host): Since that time, have you come up with a strong strategy to prevent or limit scope creep? Because I will admit, I still struggle with it.

Josh Silverbauer (interviewee): Now, we have much better ways of identifying the projects that make sense for us to take on. We don’t do custom web developments very much anymore. It helps us stay within scope. Even on the difficult website, we kind of have control over it. If there’s no custom development, like backend data, involved, it’s still hard. Because sometimes, a client starts with one idea and has multiple different ideas throughout the process, and to keep that person happy, we sometimes refine the scope. And it maintains a balance between client relations and getting the value of the project.

Morgan (Host): I still haven’t found a good way to sell the scope. I do it by focusing my whole practice on the things I’m confident in. With my eyes closed, I can tell the price, the details, the risks, and everything else.

Josh Silverbauer (interviewee): Yeah, totally. The tricky thing with people is whether you are experienced or not, we sometimes feel confident in lots of things, including me. I tend to check out everything, but I often bend the rules a little bit if I feel confident. And it has helped me educate myself, as I’m not a very good learner. So, I learned a lot of things. Even if you are a good tap dancer, a single misstep can send you into a hole.

Morgan (Host): I agree with all that. I got out of the custom development business because custom web development was precisely an issue that I never solved. I’m a man behind Microsoft marketing; I spent days and nights creating lots of high-quality welder microsites. I have my style and team so I know about the amount of work and how much will it cost. I develop microsites. I like the WordPress process with plugins. I feel confident in keeping the microsite limited in a way. If a client asks me to build an app, I tell them to get someone else. 

Josh Silverbauer (interviewee): It makes you less likely to go off the rails and overpromise and under deliver. It also gives you the understanding to adapt to a process because the tech world changes every single day. If you’re just too rigid in a particular process, you won’t grow. So, we need to maintain a balance to make sure we have a process and to make sure that it comes first. Take a bird’s‑eye view of the scenario you are dealing with and explore the things that come along with it.

Morgan (Host): Clients value the process because a process implies reproducibility. And what every client wants is those past successes. They want you to reproduce them.

Josh Silverbauer (interviewee): Yeah, exactly. People get comfortable when they get a structure. If you go in without a structure and a proper process, there’s going to be a sense of anxiety from everybody along the way.

Morgan (Host): If I were a cynical atheist, I could potentially argue that religion exists because people want a structure in which to live.

Josh Silverbauer (interviewee): We get a level of anxiety when we face something unknown. In general, we humans crave structure, because we are completely afraid of the unknown. So, the more you give a structure the more it leads right towards the client. With a proper structure, you can find yourself in a better scenario.

Morgan (Host): If you imagine your company had a strong structure at that point and your clients would have demanded a million versions of the logo, a proper process might have allowed you to push back and say, “Hey, you hired us for our process. And our process is to develop a website for you. We can’t do a million versions of the logo. That’s not a process.”

Josh Silverbauer (interviewee): It is better to put everything in the contract. If we sign two logos and they want five or six versions, we can simply point out the contract and tell them, it is unacceptable. The more structure there is, the better it is. So, we get to the end of our relationship with them after almost 9 – 10 months and in the end, they wanted $35,000 back. We didn’t get the value that we thought and how can we argue with that. 

They wanted a website experience, and there were so many things on both sides that caused that to not happen. But, in the end, we didn’t have a great argument. We couldn’t go to court as we were not in a position to spend a huge sum of money against those who had more money than us. We mutually agreed to give them $20,000 back over time, because we felt that we had failed. And they failed us, but we failed them too. 

It happened two years ago, and it took us time to pay that huge sum of money. Not only did we mess up one thing, but it prevented us from getting other businesses because we were so focused on trying to figure out how to fulfill this project. So, we put ourselves in a bad spot two years ago, it was intense at that moment. But note that we are two years later, and we are now 20 times better than we were last time. You live, you learn, and then you build on top of it and learn from those. And that’s the most important part of it.

Morgan (Host): These are some powerful lessons. And by the way, I didn’t realize that you would drill 20 times in two years, I thought it was a story from a decade ago.

Josh Silverbauer (interviewee): No, it happened two years ago. We paid off that loan early last year. It took us a long time.

Morgan (Host): Wow. I already see that headline for this podcast, “$120,000 Blog.”

Josh Silverbauer (interviewee): 100% true.

Morgan (Host): I think one of the mega lessons here is the importance of pushing back the clients who often want meetings and revisions. In your scenario, they had a budget and a lot of emotions attached which they felt like they wasted in your partnership. No one won. So, as someone who is running an agency, it’s our responsibility to be able to push back to them and say, “You want us to do this, but you don’t want us to do this, it’s only going to stop us from actually fulfilling the contract.”

Josh Silverbauer (interviewee): I agree with you. The main keywords here are ‘Yes’ and ‘No’. While pushing back, you have to get comfortable with both of these words, in your vocabulary as a business person. Somebody who is going to say no all the time is going to turn down opportunities that could be amazing because they are just so dogmatic about the process. And, they need to say yes, sometimes a lot more. And the yes person needs to start saying no to handle situations.

Morgan (Host): Right, that should be a requirement of business partners.

Josh Silverbauer (interviewee): My business partner is also a no-person. He says no all the time as he knows everything. And I am a yes person. I say yes to everything. And that’s why we disagree on a lot of things. But that balance is very important, because sometimes that no is necessary. And if I can’t say it, then he can say it. It’s like playing good cop and bad cop.

Morgan (Host): But saying no early on to turn down clients can create different scenarios. Sometimes good comes from saying no. Sometimes you don’t realize they’ll be a bad client, or sometimes good clients turn bad. But when you’re in the middle, it’s hard to say no to a client’s revision.

Josh Silverbauer (interviewee): Yeah, from the agency’s point of view, it is interesting to see a good client turn bad. As they say in Batman, “Either you die a hero or you live long enough to become a villain.” And that’s how our relationship with clients works out. We keep on fulfilling their requirements, and their list goes on and on till we become the villain. Eventually, we’ll need to send them off on their own. If we keep them there for too long, then we have to keep on finding values for them, or else we’ll become a villain. So, it is about constantly determining what value is required and making sure that we can fulfill it.

Morgan (Host): I loved it. I’m used to throwing in Shakespearean, ancient poetic, and Latin quotes, but I loved your pop culture, Batman quote. I hadn’t known that one. But I think it’s my new favorite quote. It’s a great point.

Josh Silverbauer (interviewee): So, that’s my “Client Horror Story.” The story of failure! And it was the biggest failure we ever had, and it lasted the longest. It was the most money and was the only time that we ever had to pay back for our services. That was the only time when we legitimately said, “Okay, we failed. We will give you some money back as we weren’t able to provide the value that we thought we would.”

Morgan (Host): Experience is a euphemism for failure. So, this failure has given you the experience to identify more risk factors. It’s often attributed to Winston Churchill, but it is astonishing to be able to pick yourself up after every failure. So, kudos to you. This is one of the biggest failures of everyone I’ve spoken to. It’s like, the harder you fall, the more you internalize the lesson. We started by talking about the risks of people with high egos. And one of the reasons people, even the not-famous ones, get high egos is because they never truly experience failure. They’ve got nothing to keep their egos in check.

Josh Silverbauer (interviewee): It’s sort of like “Whatever doesn’t kill you, makes you stronger.”

Morgan (Host): Exactly! So, as a result, you were able to grow 20 times in a year. And they are both very strong now. So, Mazel Tov!

Josh Silverbauer (interviewee): Thanks man! We just keep on figuring out stuff to keep learning and building. What is better than wisdom? Nothing is better than just learning and learning and learning and learning until we get wise. And wisdom often comes with a price. If we can utilize the lessons, we learn from our mistakes, then that is a win. It’s only a failure if you never learn from it. If you can turn your failure into a win, then there is no much better way to live. 

Morgan (Host): I completely agree with your point of view. Finding wisdom is hard and one of the worst things is failing and not learning from it. I recently had a drink with a former client who ended up failing on his business and I asked him, “What did he learn?” And he said, “The worst part is, I didn’t even learn anything from the failure.” He was not looking deep enough inside himself. As for me, I’m obsessed with documents and I always write learning documents just for myself. I don’t even have anyone to show them to but writing it out helps me codify what I can learn. And even when 99% is the other person’s fault, it’s never 100%. Even when only 1% is under your control, you still could have done differently.

Josh Silverbauer (interviewee): Oh, I agree with you. 

Morgan (Host): Yeah, this is great. Thank you for your time. It was a powerful story, and I am happy that you had to find out so deeply that it made you lift yourself so high. 

Josh Silverbauer (interviewee): Yeah, I will keep going, and I’m sure, we’ll keep failing and keep learning, and I’m sure we’ll keep waiting. 

Morgan (Host): I’d be delighted to have you back after your wife’s baby pops out. Share some of your other stories as well. Thanks. And thank you, everyone, for watching.

 

This transcription belongs to episode #9, you can watch the complete episode here!