Conversations: Max Burton, Who Founded Matter and Then Sold It to Accenture in 2017

Max Burton’s experience is an enviable tour of creative powerhouses. He’s held leadership positions at Smart Design, Nike and frog, and then founded and sold his design company, Matter, to Accenture.

Tell me a little about how you started your own consultancy.

I was at frog design for about 4 years. I wanted to have a bit more autonomy about what I choose to do and not do, so I left frog and started Matter. I started the company with the thought, “I want to do what I want to do.”

It was just me when I started. I had one employee after a few months, and then it rapidly grew to just shy of 30 people in five years. The speed of growth was definitely taxing, and was hard to manage. Murphy Freelen, a colleague I had previously worked with, became my business partner. She was managing a lot of the business and administration, and that allowed me to focus more on creative and strategy for the company. Vision, strategy, marketing, new clients—that kind of work.

Did you found the company with the intention of being acquired?

No; I never was actually intending to be bought. That wasn’t my motivation when I started the company. However, some things I did made us attractive to a buyer. We had a great team, the right kind of clients, and a strong brand that was recognized and somewhat unique and identifiable in the mass of other design studios. It was standing out.

Our team was a mix of industrial design, interaction design, experience designers, information architecture, motion designers… It was really good, and we were always busy. And we had a great culture. I think that was the other thing that attracted and kept people; they wanted to work there. For example, I’m British, and we had tea time each afternoon at 4:00. It’s a nice moment to take a break and connect with each other.

Our positioning in the marketplace was quite appealing at the time (in early 2013), too: we were designing for the connected world. I think that resonated with a lot of clients. We very quickly became on the radar of design firms, competing against some of the other big firms here like Ammunition, fuseproject. We had a lot of physical/digital convergence projects for Samsung, Logitech and Disney.

What sparked the idea of the acquisition?

We were working with Carnival Cruise Lines, our biggest client. We were the primary creative partner for what was called the Medallion Experience, which was making a connected smart ship; we were working on the guest-facing side of the experience. There were about another six firms doing other parts of the project. One firm was all about film and TV, and they made a television series. There was a big engineering firm, software engineering, and an electronics engineering firm. There was a company in LA that was doing a lot of the animated work.

Fjord was working on the project, too. They were focusing on the employee experience. They said, “You can’t have a great customer experience unless you have a great backend and happy employees with the right tools.”

We were at CES in 2014, and Carnival Cruise Company took out one of these massive, entire block exhibits. I was at one of the parties, and the General Manager for Fjord here in San Francisco, Steve Boswell—who worked with us at frog—said, “Are you interested in some sort of ‘joining us kind of thing’?” And I said, “We’re certainly interested in the conversation.”

Carnival was our bread and butter and was weighted quite highly in terms of the amount of work we were doing relative to the other work. I knew that work would end, and it would probably mean we’d have to shrink. I didn’t want to have to do that to the team. So selling was a bit of a strategic decision. I wanted the team to go on and for everybody to have the chance to continue. And it seemed like a good idea from that perspective.

I had calls from their acquisition team, and it went from there. It was about a six to eight-month conversation for the deal to go through, and then we were part of Fjord.

It sounds like your reason for selling had to do with minimizing your risk and diversifying your client base. What do you think was their goal—why do you think Fjord and Accenture wanted to buy Matter?

To this day, I don’t fully understand their strategy. I was literally told, “One of the reasons that we are bringing you in is because you, Max Burton, know how to be entrepreneurial, know how to grow a business, build a brand, hire the best people, and get the good clients.” They told me, “We need you to bring some of that juice, mojo, into Accenture.”

But I think they were mostly interested in having the Carnival Cruise Line client. After the acquisition, they were able to do some follow-on work, mostly software kind of stuff, that was amounting to tens of millions of dollars.

Their motivations for buying us were not very clearly spelled out to me, and I think they were not particularly straight about their reasons for buying the company. If they were straight in the beginning, and transparent and honest, things would’ve gone smoother because people’s expectations wouldn’t have been mismatched. When people think they’re doing one thing and then they’re doing another thing, it’s very uncomfortable for everyone.

Did your team stay?

No. Most of the team left within a year. The really top people, people who knew that they could be commanding good salaries… There’s a big difference between agency world and corporate world. People who like agency world like the fact that it’s not a corporate environment. They want that freedom, they want that creativity. They want to work on different kinds of projects. They want that casualness that comes with the small design studio. It quickly became very apparent that Fjord was also losing its identity, its culture, and the mothership of Accenture was slowly absorbing them in and all the other companies they bought. The ways of Accenture, the ways of working, influenced everything.

I found out later that they actually had an internal project at Accenture to figure out why CEOs of acquisitions like mine were leaving at such a high rate. What happened to Matter was not unique; it was across the board with lots of companies they bought. They bought the companies, and then very quickly people left.

Here’s an example. For me as a creative, I think good ideas can come from anybody. It could be an intern, it could be the CEO. It doesn’t really matter. The idea is what’s important, not your title and your position.

But at Accenture, these frigging high-level managing directors would waltz into the meeting room and start directing people. “Do this. Do that. Do that.” Then they’d piss off for six hours, come back, and say, “No, that’s all wrong. Do it all over again.”

I would think, “What the fuck? You don’t even know what design is.” It’s these people who are just talking heads wearing suits, walking around like they own the world. It’s awful.

As a designer, your first and foremost motivation is to be creative and to be in service of people. That is the first thing, and then money follows. Whereas with Accenture, money is first and everything else is next. It’s extremely money focused. They’re a very profitable business, so what can I say? But, when I had my own company, I made very strategic decisions to take on startups that didn’t make much money as clients, because I knew that it would build our portfolio and that we could put it on our website that we could use for marketing, which would lead to bringing in bigger clients. That kind of strategy, they aren’t interested in that. If the deal size wasn’t bigger than half a million, they were not interested. Some of our work was industrial design, and industrial design deals don’t go that high. That meant we were essentially starved of work because of those thresholds.

How quickly did you and your team realize that the experience wasn’t working the way you expected?

Honestly, it was shockingly fast. I think in the first six months I realized there’s something going on behind the scenes that I wasn’t privy to.

Some of my team pretty much immediately said, “This is definitely not for me.” A lot of people had previously worked at Lunar, or had friends who worked at Lunar. Lunar had been acquired by McKinsey, and they all heard about how hard that was. They said, “This is another big firm coming to eat us up.”

Others tried it, and said, “This is interesting, because I’d like to learn about service design. I’d like to mix with the other creatives and do more strategy.” For some of my team it was a good move, and they stuck around. For others it was just, “I’m not interested in it.” Very quickly those people left and just found other jobs.

How many people left?

Everyone got some kind of money, a retention bonus, after year one. But after that, I think we went down from 28 to 15 people, and by the time I left, it was probably just ten, eight, nine people.

Why do you think that is?

I mentioned earlier that I do tea time every day. When we started, one of the things they asked was, “What is one of those cultural things you’d like to bring over to Fjord?” I said, “Tea time. It’s a thing we really love to do, and it’s a great time for us to connect as a team, as people, just not about the work always.” They said, “Okay. We’re going to do that. We’re going to bring that cultural part to the company.”

After a year, we had this offsite. We asked the employees, “What is one of the most engaging, attractive things that you like about Fjord?” Almost everybody said, “Tea time.”

But then, after that, the effort they put into it dwindled to nothing. They just used the facilities people, who brought a bunch of tea bags, and had hot water and some stale cookies. This is not culture building, this is culture destruction.

Did you see that sort of issue happening right away?

They left our brand alone for a year, but after one year they sunsetted it. Their belief was that I, personally, was the way to sell this type of work. I told them, “The brand I built is the means of generating work. You cut the name, and if you don’t do something that’s going to remarket the company somehow, we’re just going to starve.” We were just given work that was within the Accenture world.

Design is tiny compared to a big multi-year software deal, digital transformation deal, which is $100 million. Do they really care about a half-a-million-dollar program with design? No, not unless it leads to $10, $50 million.

And I understand that. They have a bar they all have to hit. When you get promoted in the Accenture system, you then have to close more and more millions of dollars of deals a year. I had to close $6 million in deals a year, which was really hard. So I spent my whole time trying to close deals, and 90% of them just fell through. It was very hard. Very, very hard.

What would happen if you didn’t hit that number?

You would get fired. They hold your feet to the fire. It was such a complicated formula to determine how much I could say that I was responsible for closing business. So complicated; it doesn’t encourage people to do it.

There were so many things that were just overly complicated and overly frustrating to do. When you have a small company, you don’t have to jump through these hoops and hurdles.

Here’s an example. Marriott is a big customer of Accenture, and I helped close a deal there which was a multimillion-dollar deal. I was part of the team that closed the deal. But I don’t know how they figured out what percentage I got of that deal, what I got credit for. I don’t even understand.

Tell me a little about the finances and the negotiations prior to the deal closing.

The deal was a mixture of an immediate payout—which, percentage-wise, was quite high—then it was payouts over three years, but it was also then dependent on how many of my team members left. If more people left, the less I would get.

Did you last those three years?

No. I left some money out. And there was another massive amount of money that would’ve been there if I stayed for five years, but I thought, “I’m not going to waste my life.” I’m not a money-first person. I said, “I’m not going to sell my soul for five years.”

Some of the work we were doing was very, very hard. I was on the plane all the time; I did 100,000 miles every year, and the expectations around the work style were really rough. Working until 3:00 in the morning, getting up at 6:00 in the morning to go fly to a client and present all day, and then get back on a plane and go to another. It was quite grueling. And even from a health perspective, it was really hard to do. I said, “I don’t want to do five years here,” so I left a lot of money on the table.

Did you feel like you knew what you were doing during the acquisition process?

Murphy, the partner I mentioned earlier, had some friends in the Bay Area who had already been acquired. They said, “Okay. You need to have a good M&A lawyer who represents you. You need to have, maybe, someone who’s good on the accounting side.” I hired these two people as consultants, and they were really helpful. We were able to raise the price through negotiations.

The deal itself was clear. The deal in terms of the things written on paper is one thing. It’s very nuts and bolts. But if you’re going to do this, you really need to go into a lot more detail. Have everything written down that you can. Everything should be crystal clear. Some of those are more like the soft things around culture, around working with startups, all of the things that are important for designers.

When we were working through the process, I negotiated a million dollars to use to do some strategic work or creative work with clients which would be brand building and fun for the team. But that million dollars somehow disappeared. It was a verbal agreement; I put trust in people. I probably should have had it in writing.

That’s my guidance to any design firm that wants to be acquired. Ask for some of those things that may be a bit fuzzy but important to your team, important to you, important to the culture of the company.

Are you glad you made the decision to sell the company?

In terms of the financial structure, I don’t really have complaints; I think it was fair. From a personal perspective, at that point in my life, it was probably a single moment to actually make a significant amount of money, and not be too worried about the future. Going into it, I knew that if I didn’t like it, I would just leave and I could start again. It’s not easy, but I could do it. But what pains me the most about the experience is about my team. I felt that I let them down a bit because I didn’t know that it wouldn’t be what I thought it was going to be. If I’d known, I would’ve done more to protect them. That’s this frustration I have, and it’s disappointing that I couldn’t have protected them more.

It was a mismatch of expectations. I thought it was going to be one thing, and it ended up being slightly something different. And my team was not really that interested in it.

Some people were interested in service design, some people wanted to learn about business. Some people thought, “This is good learning. I’m going to do it for a few years and come out better on the other side.” But, for a lot of people who I’d say are hardcore creatives, it wasn’t the right environment for them. A lot of the really talented, intuitively good designers—they are inspired, and they put their heart and soul into things—said, “This is not me.” Those are the people I feel I could have supported better.

I wish that I had more clarity around what was going to happen to my brand, my clients, and the ability to keep it going. Pretty much all the clients, as soon as we went to Fjord, asked, “Did Matter just go out of business? I thought you disappeared. It’s just gone.” Not the big clients, but a lot of the smaller clients said, “I just thought you must have closed shop.”

And that’s terrible. I put my heart and soul into building a brand and reputation in the Bay Area. Even today people say, “I remember Matter. They were doing some really great work, and you were a rising star in the Bay Area.”

Learn more about Max on LinkedIn

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