Episode Transcript

SK2
You’re listening to startup redo a podcast where founders pay it forward and inspire other founders to be great. My name is Steve Kiernan II, and I’m an entrepreneur who has walked the highs and the lows of starting, growing, exiting. And yeah, failing at startups. And I’m sitting down with other founders to talk about key moments in their journeys, the good, the bad and the ugly that they wish they had handled differently.

Joining us today is one of the founders of Algonquin studios. I give you Dave finnicky. Thank you for spending some time with us today. I really appreciate it. Dave.

THIEMECKE
Steve, absolutely.

SK2
in your own words, what was your vision for Algonquin studios when you started it?

THIEMECKE
Our vision originally, in fact, the name Algonquin studios came from two places. Number one, my tribe of friends had been dubbed the Algonquin Roundtable off of the Hotel in New York at which writers back in the 20s had very wet lunches and then went back to work and wrote some of the most pivotal magazine prose in that era, combined with the word studios. So studios was supposed to evoke this idea of were architects and designers of what? Of your business processes. And when we smacked the two of those together, that was the original vision. And what I was really blessed to see over the course of 18 years was what happens when you run what is basically a consulting company. That’s how we, how we framed it over that time, from almost beginning to end, we almost saw the entire spectrum of what it’s like to run a consulting company, a company where you’re basically selling an inventory of hours to clients for the privilege of working on a very diverse set of problems. And we got to see all the limitations and benefits of being in that model for a really for what for me was a really long time. So the original vision was, oh my gosh, if we could just find somebody who found us valuable that we could do work on and the kind of work that we would do for them would be in that era, and this was from 1998 t o 2016, the original vision back in 97/98 was, oh, there’s this thing called the internet, that some of us have been on for more than a decade at that point and we’d most like to do is help our clients go transact work there.

SK2
So now that we understand what the original vision was behind Algonquin Studios, would you at this moment in time, say that you were successful in achieving that vision?

THIEMECKE
We got successful in achieving that vision by like, year two or three. And then after that it was it keeps going, and it keeps going and it keeps going. And you get to see how it evolves an environment where you’ve totally bootstraped this thing. And it went all kinds of places, I don’t think we ever expected it to both good and bad.

SK2
When you reflect on that time, what are some of the battle scars that you carry with you that have turned into a lens that you find you use often when you look at the rest of the world?

THIEMECKE
All right, I can come up with a bunch, I’m gonna limit it to one or two. So the first one was this one. How do you measure your progress? How can you tell if you’ve made it or not? You know, we’ve probably been in business, I can remember from the from day one, just about we were like, you know what, by the time we get to like 20, or 25, consultants, full time equivalents – bodies – working for us, there’s going to be enough work coming through the door just from them interacting with clients that we won’t have to really spend time selling. There will just be this natural, organic quality to surfacing more work and we’ll just keep growing. And all that stress of going out and saying, well, how are we going to fill our pipeline, it’s just going to go away. And as we push 20 to 25, we kept holding on to that idea, and we just kicked the number further down, we still only get the 50. And then we got the 50. And we still weren’t satisfied. As a matter of fact, we had the land bigger jobs, and they were they had much more lead time on them. And they needed deeper relationships, and they needed to be cooked in a different way. And and then we get to like 65. And we’re like, Oh, well, so we’re having trouble keeping everybody engaged in the company so let’s start spinning out companies. But I didn’t realize that we were doing it obviously for those for the first like seven or eight years that we were doing it. I didn’t even realize that it was something that other people saw until I started asking the question to people who were founding other consulting companies who had this ambition to grow and to make a really big difference. And more often than not that same answer, body-count, was the same way that they decided that they would measure success, too. And it wasn’t until we engaged in some other business models that we’re not consulting. And by the way, when we were consulting, we had consulting companies as clients, we had law firms and marketing firms who all measured themselves in a lot of cases in the very same way. You know, it’d be the first thing we’ll be putting up on their website and that era was we’re the largest in this region. We are the largest with this capacity. We are – oh it’s the same proxy. So we saw everywhere around us was kind of an echo chamber in that era and it wasn’t until we started to step into product-oriented businesses into businesses that weren’t even software connected, that were manufacturing oriented, that we realized, oh my gosh, there are other ways to carve that up. What’s really the feeling behind that? The feeling behind that was I want to have different stress down the road, or I don’t want to keep experiencing at least this stress that I’m experiencing right now. I’d like the world to be different in a few years and different might bring with it some uncertainty about well, in what way is my stress going to change, but at least I’d like it not to be the same. It’s gets taxing to, to have it be the same stress. So then we started to head in the direction of can you choose your customers? And we started to realize that yes, you actually can. And there’s very specific things you need to do to uncover what matters to them because they’re thinly spread when you choose your customers. In the era when we started Algonquin, we were basically taking all comers who could fit through the door, could afford a project with us and we had a project that was sized for any one of them, we could, you know, about the smallest project we come up with probably cost about 1500 bucks at the beginning, and didn’t even have an assessment in front of it, it was just, we can slap together a website for you. [bah bah bah bah bah] Just…

SK2
If you could only choose one thing that you yourself as a founder either did or didn’t do during that time that you believe would have the greatest impact, what would it be?

THIEMECKE
Okay, so here’s the mistake, and then I’ll tell you what the alternative would have been to that mistake. In other words, the next iteration that we should have run that we didn’t. So the mistake was this. We had an idea for a product, it was a content management system. So today, you know content management systems as Wix, WordPress, Squarespace and so on. In that era, the only content management products that existed were enterprise class, like you need millions of dollars to go buy these, they were not consumer oriented products at all. And when we built one, between 2000 and 2001, and launched two simultaneous clients on September 7, 2001, we thought we were golden. Because suddenly, we were going to have real customer traction and this is just going to lead the jobs proliferating across North America, as we became the only people that we knew of in our space who are offering something that allowed, let’s say 50 different departments inside of an organization, all could contribute to a coherent website. And we were like, a decade ahead of Squarespace, Wix, WordPress, and prior to them probably five to seven years ahead of open source products doing the same thing. Ah, it was basically just connecting websites databases, and, and mediating that experience, and delivering it to a non technical user was the idea. So mistake we made was that we treated it like an accelerant on consulting jobs, it allowed us to get what would take another firm, probably two to three times as long we could do in a fraction of that time and still charged the same. So we’re charging premium dollars for that. And it helped lead to our expansion. It became – we owned the neurons of every person in the market who might be interested in that for a while. But the downside to it was this over a period of about eight to nine years, what we saw was more competitors entering the market. And there was nothing terribly special about what we’re doing as time went on. And toward the end, as consumer plays started to come out the charge that we could earn from our customers for that price fell below our cost of delivering the service so we couldn’t even be in the market and earn a profit anymore. We had to sunset and for us to be 10 years ahead on that and not have empowered anybody else to get rich on it but ourselves was the core of that mistake. We totally failed to capitalize on that by not doing everything you need to do to stand a product that somebody else can use in their own context. We didn’t empower anybody else. We didn’t finish doing customer discovery, we never really started. We didn’t make it so that there was even an installer that a non technical user could use. We didn’t build a support team in house for that.

SK2
So a significant amount of time and energy went into creating something but very little effort or time was spent on changing the business model to match what today we might know as a SaaS business, or at least a product focused business.

THIEMECKE
Yeah! And if you remember Salesforce, the original SaaS business was launched in that era, right? I’m not saying we would have been big as as big as Salesforce we weren’t certainly going after the same customers. But it was possible to cobble together that business model in that era and they clearly proved that.

SK2
if you ran across somebody today who was trying to build a company that was equal to the vision that you had for Algonquin back in the day what would you say to them today?

THIEMECKE
I would start by saying I would start by telling the story of what happens when you play that out eight or nine years from now. And how we basically didn’t get rich on any of that. In fact, in the later years, probably years five through through nine of that we saw diminishing returns on it to the point where we couldn’t even profitably do jobs anymore because enough competitors had entered the marketplace. And then if you really want to play a pivotal role in that market, you need to think differently right now. And you were really fortunate to have the time to do that. You know, the best time to do this was yesterday, the second best time is today. Let’s think differently right now about how you move to making other people the stars. You can be Yoda. Let them be Luke Skywalker.

SK2
As you sit here today, knowing what you know and the opportunity to create another Algonquin Studios was right in front of you, would you do it again?

THIEMECKE
Most of the time I answer no. There’s only one criteria where I answered Yes, it’s the ability for that company, that consulting firm, to really narrowly pick its customers like absurdly narrowly, so that, but to completely saturate the market for them across the globe, because I think that’s possible now. You know, you’re not governed at all, after COVID-19 by whether you’re whether you can travel to where that customer is. You just have to master timezones well on your video conferencing software, and you could serve people everywhere who had exactly this problem. And if you already feel like gosh, that makes me feel really good because I want to bring value to other people. When you are running into clients who have a much narrower band of problems, you can become so much more expert in that. You can delight them way further than you could if you’re a generalist, and that will make you feel powerful.

SK2
Wonderful! Dave, founder of Algonquin Studios. I really appreciate your time today and I look forward to talking to you again soon.

THIEMECKE
You’re welcome, Steve. Absolutely!

SK2
Dave and his partners started Algonquin Studios in 1998 and it continued to operate until this very strange year 2020. I was struck by how strongly Dave felt about the errors that he believed he and the team made looking back, which we’re not recognizing early enough that they were on the cusp of following companies like Salesforce in the very early days to revolutionizing the way a business could be run and entering a space that today, we all know as the SaaS space, but Algonquin Studios stayed the course as a professional services firm. And that’s a story that probably resonates with many, many founders around the world, which is when to pivot? Where to pivot? What to pivot to? And those are all tremendously difficult challenges that you as founders will face day in and day out. And I wish you luck with all of them. Thank you for listening, and we’ll see you next time on Startup Redo.