This transcription belongs to Episode #7: Stephanie Schwab’s real-time epiphany during the interview with Our Beloved Host, Morgan Friedman, on the importance of never overlooking the red flags. Please watch the complete episode here!
Morgan (Host): Hey everyone, welcome to the latest edition of client horror stories. I’m very excited to jump right into today’s story with Stephanie Schwab. Stephanie, good to chat again.
Stephanie (Interviewee): Hey Morgan, so good to see you!
Morgan (Host): Yeah, it’s been a while since our course. You just gave me a little sneak peek of the story, and I’m so excited to hear it. I’m already getting shivers for what’s going to happen. Let’s jump right in with what’s the background and tell us the story.
Stephanie (Interviewee): Great, so yeah, I mean, it’s not so great.
Morgan (Host): Not so “great” story.
Stephanie (Interviewee): Yeah, not a great story. This is a story that is about managing clients and also managing partners. I run a marketing agency, and we are already 11 years old in digital marketing. We’ve been virtual in our entire lives, so COVID before it was cool, we’ve been using Zoom since the very beginning. So 6 or 8 years ago, probably about eight years ago, we were in a period of growth, and I was doing a fair amount of networking in person.
I was living in New York at the time, and I was doing networking locally in New York. While I was in New York, I met an agency owner who did complimentary stuff. We did social media, content marketing, and influence marketing, while the agency owner did web design and some content strategy. Their problem was that they didn’t really have writers or content creators on staff, so they brought us, and I met the guy. He was a nice guy, and we were like, “Yeah, let’s stay in touch.” And like three weeks later, he comes to me and says, “I’ve got this project.”
Morgan (Host): So three weeks after you met him, so you didn’t know him that well.
Stephanie (Interviewee): Yeah, three weeks after I knew him and I just met him once at a networking event, we exchanged cards we might even have like a 15-minute phone call after that. But you know, we weren’t close by any means, and I didn’t really know much about him. So three weeks after I met him, he brought me this project, and he said, “Hey, I want to pitch this company.
This is a national, no, it’s a global brand.” which, for me, We were a relatively small marketing agency like we were sub $500,000 a year at the time, and so I was really excited about the potential to pitch this global brand. So he’s like, “Yeah, we’re gonna bring you in as a partner. We can do the web stuff while you can do the social stuff. It’s a match made in heaven; let’s go!” And I was like, “Awesome.”
Morgan (Host): Step back for a bit. I don’t know where the story is going; I just know it’s going to be a horror story. So at this point, are there any yellow or red flags that, in retrospect, you should have realized but didn’t see at the time?
Stephanie (Interviewee): Not yet. Even in retrospect, like at that point, no, I don’t think that there were.
Morgan (Host): I will point out, knowing nothing other than what you’ve told me, just meeting someone and saying, “Oh, I have a client for you” is already a bit weird. This is because anyone who’s actually confident, good, and more than 22 years old probably knows a whole bunch of people and a whole bunch of networks. So why are you going to someone you just met?
Stephanie (Interviewee): Yeah, so okay. Now, from your perspective, I think you’re probably right. At the same time, though, we hit it off, and it was some time ago when there weren’t that many people that deep into what we were doing.
Morgan (Host): That’s true, way back then. Now, there’s a whole generation of people that only do social media. You’re such a trendsetter.
Stephanie (Interviewee): I’ve been working on it a bit since the very beginning, so that’s for a long time, which is why I kind of get where he was coming from like for him, he probably had that many agencies.
Morgan (Host): That makes sense!
Stephanie (Interviewee): And at that time, I already had ten years of experience. So this is eight years ago; I already had eight or ten years of experience, which was very unusual at that time. I also had big-name clients on my roster, mostly from the agencies that I was working at previously, but he was able to bring those big-name clients to these big-name clients.
Morgan (Host): Exactly, I see, I see. It all makes sense.
Stephanie (Interviewee): For me, it was like, “Oh, my God,” you know, although I’d had big-name clients at my previous agencies, in my own agency, I hadn’t.
Morgan (Host): Okay, so exciting, and this sounds great.
Stephanie (Interviewee): Also, the company was in Manhattan, like, a lot of my clients are ready by then virtual, and I had never met them. I was like, “Oh my god, I get to go into an office and pitch this client. That’s super cool.” So that was kind of fun too.
Morgan (Host): Okay, great. So then what happened?
Stephanie (Interviewee): We go, and we pitched him. I haven’t had a lot of joint ventures by then, like, you know, in the first few years of my agency, the PR people that I knew were the ones bringing me a lot of business, and I would jointly pitch with people. But those are people I’ve known for a long time, mostly that I already had relationships with. And especially as I was just starting out if they saw an opportunity to help me out and bring me in, they did, and of course, it works vice-versa.
So I had done a lot of joint pitches, but this was a little different because this agency wanted to be the lead agency, and they wanted me to have all of my billing through them. Like they had a relationship with this company, previously, which I think I knew that they’d done some work before. They were already set up, and they’re a super complicated global procurement system, and so they were like, “Well, instead of getting you set up, it’ll be faster and easier if you bill us, and we’ll bill the client.
Morgan (Host): I see, so in your previous joint ventures, you bill the client directly without this sort of person in the middle?
Stephanie (Interviewee): Yes, yes, I do.
Morgan (Host): I also want to point out, not knowing where the story is going, procurement, and big companies are a total nightmare. So it also makes sense why you would agree to that deal; you’re like, “Oh my god, months of paperwork just to get authorization before we could start. So makes it quick and easy.” Okay, okay.
Stephanie (Interviewee): We were small at the time, you know, I didn’t really have somebody to devote to that effort. They just went through a big procurement process with another client, and so like, it was weeks and weeks to somebody, like, nagging on it. So at the time, I couldn’t handle procurement; it would have been really hard to do that. So he was like, “Yeah, we’re just gonna slide you in.
You’re going to bill us off; we’re gonna bill them like all smooth.” It made sense at the time, but in hindsight, that was one of the first red flags, right? I have learned that I don’t ever want to be not the lead agency. That I always want to be the primary agency or the direct agency, even if I’m going in partnership with somebody, I want to have my own billing, I want to have my own client contacts, which I did, but you know, I want to have a direct relationship.
Because I’ve now been burned, and that wasn’t the only time, I mean, other smaller things happened. And, you know, 11 years into owning my business, I feel complete, utterly confident in being the lead agency, which of course, eight or so years ago, I was not.
Morgan (Host): Okay, a light yellow flag, so you agreed to go in under his umbrella?
Stephanie (Interviewee): Yep, yeah. So now we are contracted with this big company, and they actually have somebody, but it turns out they were not in Manhattan. Like, I didn’t really realize this upfront, but they have somebody that is not in Manhattan. This person was sitting elsewhere in another state, and they are the lead person of the company. So, it turns out that they’re not actually an employee of the company. They were just like working with this auxiliary part of the company that we’re working as a contractor.
Morgan (Host): So basically, the contact that you’re working with is another outside contractor?
Stephanie (Interviewee): Yes, yes. It was like embedded in the company full time, but not an employee, doesn’t hold a business card from there, and they’re managing this important initiative, a very important initiative from this company, which is what we were contracted for.
Morgan (Host): Like that’s another yellow flag, as well.
Stephanie (Interviewee): Yeah, and then at the time, immediately the procurement thing and the billing thing didn’t raise a red flag originally. Like that right away was a yellow flag where I was like, “Huh, wait a minute.” I had to go into Manhattan a few times here and there, and occasionally, he’d come from where he was, meet us in Manhattan, and that was good. And like suddenly, I wasn’t really working for the company directly; I was working for this guy who was amassing the resources to get this initiative going.
Morgan (Host): Right, and one part of the risk here, in case anyone watching this doesn’t realize why it’s risky, this inevitably creates like a children’s game of telephone. So you report to the agency that you’re working with, who’s reporting to another outlet contractor, who’s reporting to some lower-level procedures, he’s referring to the high-level person, like there’s already five levels until it actually reaches the decision-maker. This is very risky because the telephone has to break somewhere.
Stephanie (Interviewee): Absolutely, that wire is getting thinner and thinner with every single person that gets added to the mix, right? And then there would be a lot of misconnections, right? There’s a lot of drop calls, where, you know, my partner, the lead agency, talks to this guy and doesn’t let me in. Or this guy talks to the client and goes back to the partner, right? So I’m only moderately in part of this conversation for some of it, right?
Okay, I’m in the thick of it, but for some of it, I’m like only hearing stuff right off the bat. As we start working like this is clearly not an ideal situation. But miraculously, we got the website off the ground, we got all the copy written, we got everything going that this other agency is primarily delivering, we were very involved in it, and you know, it looked gorgeous, it worked really well, and it accomplishes all of our objectives. So that was fantastic. Now my team is contracted for social media, influencer marketing, blogging, content marketing.
Morgan (Host): Back then, it wasn’t even called influencer marketing. You were one of the first.
Stephanie (Interviewee): Yeah, “working with bloggers,” that’s what we’re called. Working with bloggers.
Morgan (Host): it’s funny how now, like back then, it was just “Oh yeah, I’m gonna work with some bloggers.” But now there’s like a whole title, industry, category around that.
Stephanie (Interviewee): Yeah, now they’re creators. Now we are taking it one step further, right. There were bloggers; then, they were influencers. Now there are creators, and now we work with creators. So yeah, it’s definitely evolved.
Morgan (Host): It just was fun virtual coffee. It’s funny how. When you want OLED TV, when people try to watch right or create TV shows or movies now, in an old-style, you can always tell if it’s not from the time because people use modern vocabularies for things that didn’t exist then. So someone in 20 years is going to do something about in 2000, and we’re influencer marketing, while people used to be like, “Wait a minute, that did exist, but it wasn’t called that.”
Stephanie (Interviewee): We called it “Blogger relations.” Yes, it was a totally different thing.
Morgan (Host): Totally, okay, so a game of broken telephone, it’s going to break, these meetings aren’t happening where certain people weren’t looked at loops, and then what happened?
Stephanie (Interviewee): Yeah, so you know, while the websites were being built, the process, you know, that’s taken a few months, I can’t remember exactly what it was. But while that’s happening, you know, our team is setting up, you know, what is the social media brand voice, how do we sound, this is an initiative that is starting from scratch with this company. So we’re like laying all the groundwork for that we are interviewing bloggers to get engaged with the brand and getting them set up to start going once the website is launched. And the whole initiative launch happens.
We’re creating blog content, so then it’s ready to go and to get ahead of our end of the work calendar like we’re doing well; it’s normal agency stuff. And that part of it is like totally like; we know this. We could do this. It was awesome. It worked really well. It worked really well. So you know, everything was tight, and we felt really good going to the launch. The launch happened, big fanfare, companies were excited, everybody’s excited, you know, everybody’s happy with what’s going on. I noticed that at that moment, the client doesn’t see that we, crackerjack marketing, are doing anything, right?
The kudos are going to the lead agency. So like we’re just one more email name on the distribution list, so right off the bat, I see like, “Oh, wait, the client really doesn’t know who we are. I mean, they do, but they don’t.” So that was sort of another like, early, fairly early red flag where I was like, ah, yeah, I’m not crazy about this arrangement. But it seemed to be going okay, and the bottom line was we had this amazing launch that we could now talk about, can be used as a case study, but now the real work begins. And so now for us, now we’re really in the thick of it, and we’re the day-to-day agency, even though we’re not the lead agency. Now suddenly, so the first three or four months or whatever the website that we took really belonged to the lead agency. But now, tides have shifted.
Morgan (Host): So for the first few months, you had to do content, marketing and they’re building the site. But after the launch, the site’s already built, so it’s all just you.
Stephanie (Interviewee): Right, here we are, and now it’s all us. So, now we realize they were too busy when they were working on the website to really get engaged in what we were working on. And then we were delivering and showing to the client, and the client was approving, you know, all of our pre-launched communication so that we could be ready for launch.
And then, after the launch, now suddenly they have time on their hands. And they want to be they want to continue to be the lead agency. And so now they’re starting to insert themselves in our processes in a way that we did not expect and that we did not need. They’re not experts, so they, again, like a friction point.
Morgan (Host): That’s a friction point. Question; at this point where I still don’t know where the story is going, do you understand how their billing works? Like were they marking up your time? Were they just being paid, you know, a retainer, so they had extra hours that they needed to kill, or was all that invisible to you?
Stephanie (Interviewee): My understanding, although it was somewhat invisible, I mean, they didn’t have the full picture, but my understanding was, we built them X amount as a retainer per month, which included pre-launch months of creating the launch content and afterward. So we were building them; I think we had a startup fee, then some of the launch events, and the monthly retainer. My understanding was that they were doing something similar. They were paying them a fee for the website, plus a monthly retainer. But they do have those hours of their own billed of that monthly retainer, so it wasn’t like they didn’t have any hours.
Morgan (Host): So basically, they had to continue getting their feet, and they had to justify doing something. So they’re trying to make themselves useful and important.
Stephanie (Interviewee): Exactly, though, if I’ve done this, I would not have made any of that transparent to the client, right? The client would have had X amount for the fee, you know, here’s the $20,000 a month fee or whatever it was, and they wouldn’t have known how much was me versus the other agency.
Morgan (Host): Ah, so in the way, the client knew that it was this much for them, and it was this much for you?
Stephanie (Interviewee): I don’t know that, but if that were the case, you know, and they were trying to justify, like, “Why would they do that?” You know, that would not be how I would have done it. You know, so I don’t know where it was coming from that they were kind of desperate to stay engaged. But of course, they wanted more work from the client, they wanted to stay visible and front and center to the client, which I would have done the same I would have wanted to be visible as well.
So we run this project pretty well for you know, six months, nine months, maybe even a year. It was like an 18-month initiative, I think. It was a side initiative from the company. It was a cause thing, so they wanted to market this cause. So we’re running it, we’re pretty well, and for the most part, it was pretty smooth up until we got farther and farther behind in payments for the lead agency. It was like slow pay, right? We would invoice them on the first of the month with payment until 30, and we get it on the 35th day or the 40th day.
I was like, “Okay, it’s not ideal, but if I know that, I can manage it.” So for the first few months after the launch, maybe that’s how it was, six months maybe, and then they start to get further and further behind. So now I’m going to them, to the lead agency, and told them, “What gives?” I mean, I haven’t been doing that somewhat along the way, but now I am like,” What gives? We can’t continue to work like this. I can’t afford to because I have costs, staff, and everyone who is devoted to this.” So I’m frustrated, and he’s like, “Yeah, yeah, the client is slow to pay. I can only pay you when the client pays me.”
I was like, “Okay, I’ll buy that, right? Big company, global company lots going on, I understand that.” But I’m starting to feel insecure about how much delayed the payments are coming. And then every now and then, I’ll get two months of payment and once, you know, like the lead agency would be two months behind and I’ll get both payments at once. Again, like it could be like I’ve had big companies that paid me, it could be that. But I have that feeling that this guy is having cash flow problems, and he is holding on to my payments to fix his cash flow problems.
Morgan (Host): So, two comments on that; one I’ve personally started putting into my standard contract and invoice template that if it’s past net 30, there’s like a 5% monthly fine. And guess what, that solved my late payment problems completely. The second thought is a question; when you started to suspect that he’s having cash flow problems, did you ask him directly about that?
Stephanie (Interviewee): Not really. It was more like me trying to protect my own by saying, “I just can’t keep doing this.” But I did not confront him to say like, “What gives? Can you tell me what’s going on here?” And at that point, I get this contractor involved.
You know, maybe when we’re getting to be like 45 days, 60 days past payment, I went to this contractor who’s running the project, this other guy who’s representing the company, and told him, like, “I don’t know if you see and if you realize what’s happening, but I am now 45 or 60 days out on my payments. I am going to give all of you a deadline by which we have to get hold; otherwise, we can no longer do work.” And so this guy says, “Okay, yeah, that makes perfect sense. We will do that right away.”
Morgan (Host): Wait, so did he confirm that the company had been late in paying your agency client, the big agency?
Stephanie (Interviewee): He couldn’t, but he was my day-to-day client, you know? I also had no direct line to the accounting of the company to be able to even try to investigate what was going on there. I also don’t have a say in it anymore. So you know, I couldn’t march up to their accounting office virtually and say like, “Hey, what gives? I haven’t gotten paid yet.” because it had nothing to do with them because it all has something to do with the lead agency.
Morgan (Host): Yeah, this is where the game of telephone has become really painful.
Stephanie (Interviewee): Yes, yes, exactly. And just my lack of connection, right? That I’m removed, I’m like on the shoulder of this other agency, and I’m not really in the thick of it. And that’s a problem, so I say to my client, you know, to this contractor, like “Okay, so if we’re not paid, if we’re not caught up with the two months of payment that are past due, (I think we were about two months past due at that time), you know, we’re going to give this other agency 15 days to get hold, and then we are going to stop working.” Then, of course, the other agency started paying us one of the two months and said, “Hey, hey, don’t stop working. Keep going; we can’t afford this business to go off; this initiative still needs some work for a couple of months. Please don’t stop working. Here’s one month to slide you over. And I’m like, “Okay”
Morgan (Host): It’s the worst outcome, like continue when they give you anything, go if they give you nothing. But “Oh here’s some,” to give you some hope.
Stephanie (Interviewee): It’s breadcrumbs, right? I’ll just be leaving breadcrumbs for you on the table, okay? Like, live on crumbs for a little while; it will be okay. We were like Cinderella during that moment.
We didn’t have the ball gown; you know we only had the glimmer of it. So we continued the work, but we were still like one month hanging out there that was not paid. But they were like 15 or 30 days late, but they were paying us monthly. However, there was still at least a month that’s not paid all the time, if not, at some point two. And every time I would raise the concern, you know, and I would start to say, “Here’s the new date that we’re going to stop working.” Suddenly, miraculously, some money would get thrown at us, and we would keep working.
Morgan (Host): Quite a coincidence.
Stephanie (Interviewee): We were getting some money, it didn’t feel like a total loss, and this contractor calls me up one day and says, “I need to have a really frank conversation with you.” I’m like, “Oh shit.” You know, anytime a client calls you up like that, I don’t know about you, Morgan, but for me, it’s like a punch to my stomach, right? Like, “Oh my god.”
Morgan (Host): By the way, even when things are great and you receive a one-sentence email, “Hey, let’s talk,” like you think the world is ending.
Stephanie (Interviewee): It feels like we are going to crash down, right? Like, it’s, you know, it’s some imposter syndrome. Like, “Oh my god, I’m not good enough. What’s wrong? What have we done wrong? What are they angry about?” And it turns out it’s not always because they are angry. But after almost 30 years or 25 years of working for clients, I still have that pit in my stomach when I do get that text or that email.
Morgan (Host): Wait 25 years working with clients? So you started client work when you were five years old?
Stephanie (Interviewee): Absolutely, absolutely!
Morgan (Host): So precocious!
Stephanie (Interviewee): Yeah, no, I really gosh. Oh my god. I have been working with clients now for 25 years. That’s insane, that’s insane. Wow, yeah, so I have a lot of these horror stories.
Morgan (Host): Okay, so the subcontractor called up and told you, “Hey, we need to talk” you got that pit of your stomach feeling; you got the call, and then what happens?
Stephanie (Interviewee): We have the call, and he’s like, “You know, I gotta tell you, I see that you’re having problems with this other agency, and I hate them.” I’m like, “Okay, what do I do with this information?” Like I don’t want to throw them under the bus and be too negative about them.
But of course, I’m being burned by them right now, and I don’t understand what value they’re bringing, like, needless to say, this whole time they’ve been putting their noses in the middle of my business, and they really have no value right now. You know, like, I am learning everything, and they’re just sort of riding alongside and picking up a fee. So I’m resentful, I am angry, I’m not getting paid, so that got me even angrier.
So this is not a great relationship for me, and suddenly the subcontractor called and said, “Yeah, I hate them, I don’t like them either.” And I’m like, Oh my God, now what? So that was really a tough conversation because I kind of had to be like, “Oh, yeah, well, I think they’re really bringing value to the table.” I was very tentative about it because I didn’t know how to position my feelings about them to this guy; I didn’t want to be like the disgruntled partner.
Morgan (Host): Question; I don’t know how the story would turn out, but a decade later of like, not just agency experience in general, would you have managed that? Had you had that conversation today, would you have taken a different approach?
Stephanie (Interviewee): Yes. I would have been transparent and direct.
Morgan (Host): And by the way, I’m happy to hear that because my instinct is, even though we don’t want to throw people under the bus, there are cases like this where they are messing up, they are hurting you, they are hurting the client. You’ve tried to solve it in so many ways, but there’s nothing else to do other than shine a light on it and make it transparent.
Stephanie (Interviewee): Yes, well, eventually, I did that with the client. Like eventually, I did tell the client exactly what was going on. I opened my kimono, I told him everything that was going on, the client knew that the payments were late, but I also eventually, like maybe six weeks after that, went to. But it took me some time to sort of politically understand, like, is this the right thing? Is it the wrong thing? Like, what’s he really thinking? What is his solution? Does he have a solution in mind?
Because I knew what my solution was, which was I take it over, we kick out this other agency, I go through the procurement process, and we move forward with this initiative. That would have been my ideal. But the client proxy, I’m very against with him a little bit like, “Oh, well, you know, they were so instrumental, getting our brand look and feel, and it’s great to have them involved in getting the images that we’re putting up on the blog, you know, I was trying hard to figure out like where his issues are in like, where do I want to stand.
We danced like that, actually, for about six weeks, and at the end of the six weeks, I did come more direct I was much more directly to them. I was like, you know, this is really my idea. I’d much rather go straight to the client, have a relationship with the client, and not work with that agency. But the client guy is not really the client. The client guy is a contractor and can’t really call up and say, “Hey, we’re making a switch here.
We want crackerjack to be the agency. Let go of this other agency.” You know, he’s also dancing a fine line dance. And the initiative was kind of coming to an end, but it could continue; we don’t really know. Like the initial contract of the initiative is supposed to end in six months, but this client proxy wants it to go on and on. He thinks it’s a really valuable initiative for the company and thinks that it could get renewed. Of course, he wants it to get renewed because that’s where he is attached to.
Again if our client wasn’t internal, in hindsight, nobody on this project had the best interest of the company at heart. Because we didn’t really have a client champion on the company side, and we were all looking at personals.
Morgan (Host): So I think this is a good lesson from the story on the other side, that anything that client does, you always need the internal client champion to be on top of it. And it makes a difference about like internal is technically internal as compared to practically internal.
Stephanie (Interviewee): Right, absolutely, and since then, we have not done another project like that. We have learned our lesson, and we have always worked directly for the client since then. We’ve often had other agencies that we worked with or even a contractor that runs the client project that we’ve always had; in fact, I had another horror story that happens where we were contracted with the client, and the contractor also became hated by the client, but they were only a contractor, and they got let go. So that more worked out for us.
Morgan (Host): We could have another episode on another day for that story. So this story, after the six weeks, you became clear. None of the three of you really like had the best in for the client of mine. There’s no internal champion. So this was a messy situation, and what happened?
Stephanie (Interviewee): Yes, so we really tried to convince this contractor that we should go directly to the client, and he really wanted this other agency, the lead agency, out. He was getting super frustrated with it. He was pissed that they weren’t paying us because he knew that it would put him in jeopardy. If we pulled out, he would look terrible. If all of a sudden social went dark on this whole initiative, all these handles that were being populated every day, and all these bloggers that were writing about this initiative, like that would make him look like shit.
He was in a terrible position, we were in a terrible position, and he was getting increasingly angrier and angrier with this other agency. So over like the six weeks or whatever it was before, I really went to him and said, “I gotta tell you, I’m also so angry.” And then we kind of had a meeting of the minds like we were both really honest with each other about it. That felt really great, but the only problem was that we were powerless, and we could not do anything about it. So ultimately, we went along for another two months or three months maybe, where we were constantly behind.
They still owed us two months of payment. We had a new deadline every four weeks of when we were going to stop working, and some money would come on our way. Not even the whole month; sometimes, they were just throwing us like half of the monthly retainer. It was super clear to us at that point that they couldn’t afford to pay us. And so we kept going maybe for another couple of months, but we did not get to the end of this agreement.
Because we did eventually have to pull out and just stop servicing the client, in the end, because of that, we knew we were going to lose money; there was no question that we were going to lose money. And it was a question of, do we lose money while continuing to serve as a client and we’re more and more in the hole? Or do we cut our losses now and get out? And so, in the end, that’s what we did. We cut our losses, and we got out, and we quit.
And it was certainly not my finest moment. It was one of the hardest decisions that I’ve ever made and one of the like, feel professional like I was not at my professional best by any means. But we were like some 30 or $40,000 in the hole by now, and I never recovered that money.
Morgan (Host): So, question. Why do you think you weren’t at your professional best at that point? Like it sounds reasonable like a client doesn’t pay you for a long time and you quit? So how is that not being professional?
Stephanie (Interviewee): It wasn’t the client, the real company, that wasn’t paying me. Had the client not paid me, I could have gone to the client, the company, the big global company, and said, “You guys are screwing me over and I can’t work for you anymore.”
Morgan (Host): But for practical purposes, your client was this middlemen agency. So we will differentiate, your client was this agency, your end client is a big global company. So you’re acting very professionally in regards to your client. Your client doesn’t pay you, and you give him ample opportunity and ample warning, too much, in fact, way too much.
Stephanie (Interviewee): It’s like the feeling of “Oh my god, I have this big global client on my roster. I’m so proud to be working with them, and I am walking away screwing them.” Right even if they aren’t fully aware of it, like they’re not blaming me, they’re actually not blaming me. They’re blaming this other agency, right. And the contractor also went to the contractor like it was not good for the contractor.
But I still had this knot in my stomach about like I will never go work for this company again because I screwed them over, which you’re right. I didn’t really screw them over; I got screwed over by the lead agency that they hired. But still, this feeling of like I hate to walk away. I hate not to do a great job. I hate not to, you know, fulfill all of my obligations professionally or, of course, personally do, but I’ll still have this real feeling of inadequacy around it. But I did everything as you said too much to try to fix it.
Morgan (Host): I think the fact that a lot of people don’t appreciate is that often the difference between a good professional and a great professional is that great professionals often don’t do it for the money. Like you want to do a good job, and there’s this pride of creating and ownership. So even when you’re being screwed over and are $40,000 in the hole, you want to keep on doing a great job, and you want to be the good guy.
Stephanie (Interviewee): And we were working with bloggers who were really committed to the project, and we were paying them. I mean, we had not only my team’s costs, but we have their costs also that we gave. We also have relationships with these bloggers, long-standing relationships that we wanted to keep active. So there was a lot that caught up with this project that went directly to our professional credibility.
To me, credibility is delivering, and so we wanted to get. And I should mention, I really believed in the initiative. Right, I thought the initiative was really, really important for the world. And so, you know, like that was also weighing on me. Like, “Wait, if this goes dark, this message is not getting out there into the world. I think it’s a really good message, and I want to see it succeed.” So there was some of that too, which is why it was a really tough thing to walk away from.
Morgan (Host): So after you walked away, did you hear how it turned out? Did everything just go dark? What’s it called after a story? Is that an addendum?
Stephanie (Interviewee): Yeah, ah, the epilogue.
Morgan (Host): I can’t believe I forgot the word epilogue. You’re not the only one getting old here. I am, too. Is there an epilogue for what happened after you pulled up?
Morgan (Host): Yeah, well, the epilogue is that we tried and tried to recover the money. We got lawyers involved, collections involved and went through that process. But they kept saying, “We don’t have the money, we don’t have the money. We are cash poor, and we can’t pay you.” I looked into using them.
And you know, because the guys first of all finances were forced company finances, which is another client horror story or agency horror story to be aware of. So I could have sued him and ultimately realized that it was gonna cost me as much money to sue him as I would have recovered.
And so it wasn’t worth doing. But it took a while, and it certainly took me off other stuff while I was dealing with how do I recover this money, and there was just a lot of time and effort spent in trying to get that money recovered. That ultimately was a waste because I couldn’t get any of it. So yeah, the epilogue is, you know, it took us a year really to climb out of that hole because, you know, we now had a loss on our balance sheet from that client and had to make up that loss.
So you know, we did it no problem eventually. But the first, you know, that first year was pretty rough because we were skating really close to the line on our finances.
Morgan (Host): Make sense. To wrap up, are there any other lessons or things you would have done differently that now you realize, in hindsight? We mentioned a whole bunch during the conversation. Are there any others that you realize now or you want to share?
Stephanie (Interviewee): Yeah, I think really, it’s hard considering that our agency was still new, or a smaller agency, you know, we were three years in business maybe at that time or four years. It’s hard when you are starting out to be confident that you can lead a project like this. So the instinct is to go with the flow.
My instinct was, and I think it’s true of others that I’ve spoken to, right. The instinct is to go with the flow to get that big name and do what you need to do and get, you know, notch those wins on the board. But I think that, if you have delivered good work to bigger companies, of course, you’ve never worked for a bigger company, that’s another story. But if you’ve delivered good work to bigger companies, even at a previous agency, even in the previous gig, you should; I would say to any other agency owner, feel confident in going for what you want, right? That you want to be directly contracted, even if it takes you a bunch of time to get it figured out. Like, don’t compromise your agency integrity to get that client because that’s what we did.
We compromised our own agency integrity, in many ways, by being willing to go in on this kind of, you know, less than certain scheme. Also, the other thing related to that is to know your partners. Don’t get into bed with somebody that you don’t know really, really well.
Morgan (Host): Question; in retrospect, during the course of the problems with the middleman agency when he wasn’t paying, was there anything that you think you should have done differently? For example, maybe you should have pulled out earlier or?
Stephanie (Interviewee): Yeah, we should have pulled that earlier for sure. We should have set a firm deadline and stuck to it and said like “Nope, the payment has to be in full; otherwise, we’re quitting.” And not taking the scraps that he was laying on the table of like, “Oh, we’ll give you this partial payment.” I also should have gotten an attorney involved much earlier. Just a simple lawyer, which would have only cost me a couple of $100 from my attorney’s time, would have possibly netted me more income coming in from that agency or would have encouraged me to quit earlier.
Morgan (Host): You know, it’s, it’s funny, you as someone running an agency, you always tell clients, “You need to hire us because we’re the professionals and we know exactly what to do.” And it’s the same thing you do to a lawyer. You have a problem with a client. They’re not paying you, and it’s the lawyer that specializes in this who has seen it 100 times. He knows exactly the letter to write and what to say and do or tell you how it’s likely to turn out to make it easier for you.
Stephanie (Interviewee): Yeah, well, as an agency owner, I am afraid of lawyers a little bit because I’m afraid of the billing, right? I’m afraid that it’s gonna rack up; I’ve gone through a trademark issue where the bills just piled up and piled up, and it’s terrifying to be like, “I’m gonna call my lawyer.” And then they would be like, “How do you suppose to pay.” But in this case, in retrospect and now I’ve gone through a couple of, not the same, but related kinds of things where my lawyer could spend like an hour or two and they can tell me upfront like, “I just need to drop this one letter. It’s gonna take us two hours; here’s the cost of it, right?” Unless it goes further, then we can control these costs.
And now I know enough about lawyers to know that, but at the time, I didn’t know that really either. And so that’s also a good lesson learned for agency owners is like having a good lawyer that’s going to be straight with you that you can really go to with these problems. And you know, and they’re going to get on the phone with you for free for sure. If they’re a good lawyer, they will, and you know, at least assess the problem, and then ask them upfront, like how much is this going to cost me, and don’t be afraid of asking.
Morgan (Host): Great advice. All of these are wonderful lessons. Thank you for sharing it, and I wish it were easier to be able to do awesome stuff without first having gone through painful experiences.
Stephanie (Interviewee): That’s life, right? We live and learn, and every opportunity is a growing experience, and it’s what makes us good at what we do for sure.
Morgan (Host): This has been super fun. I think we should schedule another one in a few months with the other story you hinted at me. I can’t resist stories like this.
Stephanie (Interviewee): I’d love that, I’d love that. It’s always fun to talk to you, Morgan. So great to see you.
Morgan (Host): It was fun. Thank you.
Stephanie (Interviewee): Thanks so much.
This transcription belongs to Episode #7, please watch the complete episode here!