In 2017, my partners and I founded a design strategy company called Modernist Studio. We grew the revenue and headcount, and in the peak of our growth—in August, of 2021—we sold the company. I had no idea what I was doing, and I constantly felt like I was doing it wrong. There are only a few playbooks for how to sell a company, and the resources I could find focused on selling a software startup, not a design or strategy services company. Even after spending time with founders and mentors whom I was lucky enough to have personal relationships with, I still felt like I was flying blind, and in retrospect, I made all sorts of errors. I wished there were examples and case studies I could learn from that were specifically about creative services companies.
This book—primarily made up of a series of interviews with founders who have sold design and strategy consultancies—is the set of conversations that I wish I could have read prior to selling my own company. You’ll hear from people who built companies from scratch, who navigated complex financial processes, who negotiated (some better, and some worse), and who exited their services business a little richer and a lot wiser.
Throughout the book, I’ve interspersed more pragmatics about what to expect during the acquisition process—things related to the process, negotiations, earnouts, and so-on, that I wish I knew more about before I started my own process. And along the way, I’ve pulled out some themes and details that are particularly helpful in making thoughtful decisions about a sale or acquisition.
But here’s the tldr (too long, didn’t read) from my whole set of interviews. It’s a takeaway that’s so obvious and so dumb to say, but so easily missed:
When you sell your company, it’s no longer yours.
As a founder and entrepreneur, you likely got to where you are now because of your tenacity, grit, and do-whatever-it-takes attitude in order to have your company succeed. These skills and qualities help control and manage the ambiguity of birthing a new thing and helping it grow and flourish. You built a creative business because you love to make things. You took chances, not just because building a company is a gamble, but because creativity demands risk. And you built a culture of people who care about craft, and feelings, and each other. It’s your company, and your fingerprints, heart and soul are all over it.
Nearly all of the people I interviewed recalled frustration during the acquisition and post-acquisition process because the people they suddenly worked with and worked for had other priorities, other perspectives, and other opinions on what was best. Common sense says the entrepreneur should have expected this; they didn’t, and neither did I in my own sale.
The differences and conflicts they encountered were all about creativity.
The founders I interviewed explained that an acquirer cares about optimizing things, not making things. The new owners care about minimizing risk through process and procedure. They’ve created their own culture, and want to maintain it. Sometimes these differences were small and easy to work through. Sometimes they were fundamental to the success of the acquisition. But for founders and design leaders, recognizing and embracing that simple point—when you sell your company, it’s no longer yours—is critical before deciding to embark on a sale.
Creativity is one of the most important forces we have for directing positive change in the world, and the people who run design companies are often at the helm of their companies because they are wonderful designers. However, as many designers are often quick to point out, they may not necessarily feel equipped to be the most savvy businesspeople. I hope that these interviews and observations can help these designer-owners make reasoned and intelligent decisions about the future of their companies as they support their teams and recognize the financial benefits of their hard work.
Before we get started, here are some quick notes about the people I interviewed:
First, I was pretty loose in my definition of a “creative design consultancy.” Most of the founders and leaders I spoke with were at the helm of companies that provided a broad range of primarily digital services, like experience strategy, design research, visual and interaction design, product and app design, and so-on. I’m pretty confident these results generalize to other forms of creative services, like advertising, print design, industrial design, copy-writing, and so-on, and if you’re in those worlds, I would love to hear if these stories resonate with you, too.
Next, I’ve tried hard to include founders from a variety of cultural, socio-economic, and ethnic backgrounds. But even with my best intentions, I struggled a great deal to find design consultancies that were started by women and then sold, and I found even fewer that were started by people of color and then sold. This speaks to a large gap in all aspects of the M&A process related to creative service companies: people who have historically been left out of the entrepreneurial process still are.
Additionally, this book is highly US-centric. That is less of a comment on the entrepreneurial state of the world and more about my own set of contacts—most of the people I’ve included here crossed paths with me at frog design in the US at some point. But in casual conversation with creative entrepreneurs from other countries, I’ve found that many of the situations you’ll read about in these interviews are familiar, particularly related to finances, control, and a self-described naivety around business as compared to creativity.
I also want to share one final thought before we dive in. Without exception, the people I spoke with made a good amount of money on their sale. Sometimes that money was “buy a house money.” Sometimes it was truly life changing, even described as “fuck you money.” But nearly all of the participants were reluctant to talk about and share the specifics of the finances of the deal, not necessarily because of nondisclosure agreements, but because of shame that they would be judged negatively for generating this level of personal wealth. They explained (often after asking me to turn the recorder off) that they felt like they had broken some sort of sacred rule of creativity by selling their companies.
Yet we read about and constantly celebrate product entrepreneurs—like the founders of Instagram or PayPal—for selling their companies for millions of dollars, and in these types of sales, the finances and the founders are the centerpieces of the story.
Our industry has work to do here. We need to get over the negative “selling out” attitude and culture. If you created something great, and proudly sold it, there should never be shame in the financial part of the outcome. Regret? Things to do differently? Sure. But I hope that we can evolve our thinking so that creativity and money can live hand-in-hand and designers can feel satisfaction in the financial side of their efforts, too. There’s nothing easy about running a creative consultancy. Cashed out? Scream it to the world, with pride—you earned it.
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