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UPSTARTS REVISTED STARTUP AGENCIES WERE THE RAGE IN '93. HERE WE REVISIT SOME OF LAST YEAR'S BETTER KNOWN ENDEAVORS TO SEE HOW THEY'RE WEATHERING THE TEST OF TIME

By Published on .

WHAT A DIFFERENCE A YEAR MAKES. JUST THINK, WHO GAVE a shit about Newt Gingrich last Thanksgiving? And who would have thought the World Series would be called on account of greed? Or that O.J. Simpson was on his way to becoming the Bruno Richard Hauptmann of his era?

On a different note, who would have predicted that Ground Zero would be the subject of a New York Times profile, or that Butler Shine & Stern would end up on the cover of Advertising Age? Most agencies spend years toiling to get this kind of publicity, but not these upstarts. No, all they had to do was open their doors and the press flocked to them. Funny thing is, so did clients. Hence, a year after Creativity looked at these agencies and a host of others in our report on the startup craze, we've revisited some of the players mentioned in our December '93 cover story to see how they've been faring.

First off, some interesting similarities: Fashion, media and recreational products are copiously represented on their budding client lists, many of which boast the same names; several shops founded solely by creatives rather quickly found themselves looking for account exec partners; everyone claims to have more business than they ever imagined at this point; their media mix has been surprisingly heavy on TV, given their relatively small size; and, not surprisingly, their levels of personal and professional gratification approach occasional euphoria.

At Butler, Shine & Stern in Sausalito, Calif., the transformation from a project-based agency to one with more structured client relationships is in full swing, admits Mike Shine. The agency is billing the equivalent of $21 million, and their client list includes the Walt Disney Co., clothing chain Millers Outpost, the Cartoon Network and Bolt Security (they make bike locks). Shine says there are some big clients they work with on a "retainer/project basis," and they're still using outside research and media services. They currently have 10 full-time people, including an additional creative team, and, believe it or not, an account executive who was recently brought on.

The payoff so far has been worth the effort, Shine reports. "We've gotten a lot of really cool work on the air, and clients are happy, they say the stuff is working." As for whether they've achieved the sense of autonomy they were looking for when they left Goodby last year, Shine says, "I think so. We still have clients, that's the nature of the business, but we're at the top of the ladder now in terms of rank. If we like something, it goes." As for the future, Shine says they've already had more than one offer to be bought out. "But we feel it's too early; we're having too much fun and the business is going too well to need backing.

At Ground Zero in Venice, Calif., founding partners Court Crandall and Kirk Souder followed the Butler Shine lead in quickly linking up with an experienced account side partner, in their case Jim Smith. Says Crandall, "We wanted someone who was a strategic thinker, rather than someone who could hold hands with the client and do the usual account service things."

The agency is up to six full-timers, and would hire more if they had the room, Crandall says. (They currently share space with Windmill Lane, a production company.) Running a win streak that has brought them to around $35 million in billings, they still work on a more or less creative-only basis, although Crandall says they see themselves as full-service. The biggest client is Buena Vista Home Video, followed by Virgin Interactive, a videogame company; other clients include Louise's snacks, Diamond Back mountain bikes, Cobra golf equipment and the NBA, for which it has produced a stay in school PSA campaign.

Being on their own has taken the partners to a different level of involvement in building brands and coming up with strategic positions, Crandall says. "It's harder to do that when you're working for someone else," he adds, "and besides, creative people are not encouraged to take an active role in the strategy. The feeling was that you were just hired to do creative."

At The Leap Partnership in Chicago, where they like to keep a low profile, the full-time staff now numbers 30, says partner George Gier. The agency is pretty secretive about its client list and billings figures, although they are working for Boston Chicken, Miller Brewing, the University of Notre Dame, Disney and the Acme Brewing Co., for which they've created a goofy product design and print campaign for Naughty Boy Beer. They're also in the midst of producing their first CD-ROM, putting the entire 1994 One Show annual on disc, one of several new-media projects they have underway.

Gier says that he and his partners were surprised by the extent to which clients embraced the concept of the unbundled creative service. As for account execs, which they made a big point of eschewing when they opened last year, Gier says the thought of hiring them hasn't entered their minds. Calling the Leapers a "new breed of creative person," he says they're involved in their clients' business "and don't just create in a vacuum."

In New York, Houston Effler Hampel & Stefanides, the shop that's going the traditional full-service route, is well on its way. Billings are at $70 million, the staff numbers 30 and they're moving to new offices soon that will double their space. Clients include Castrol, NEC, ITT Hartford and Sun Apparel's X-An, X-Pro and Code Bleu jeans.

Dean Stefanides says that what's been most frustrating for him was how long it's taken them to get work produced, given the size and corporate nature of their clients. Still, he says, "I thought this was going to be a grind-hard work, lots of hours and not a lot of return for it, but it's been better than I ever imagined." What appeals to him most, he says, "is that you make the rules, you decide what accounts are right

for the agency ... the politics are gone and all that matters is the work."

Tracy Wong, partner in Seattle's WongDoody, says he's been most surprised so far by their luck. "This is a small market," he says,"and the business in town is not great right now." Nonetheless, WongDoody is now billing between $5-$6 million, most of which comes from the recently acquired Seattle SuperSonics account and their earlier win of K2 Skis. Other clients include Pro-Flex mountain bikes, Sierra OnLine computer games, Lettuce Entertain You Restaurant Group and project work for the San Francisco 49ers, CBS and Grateful Dead Merchandising.

Wong says that he and partner Pat Doody, an account guy, didn't expect to be so big so soon; they opened their doors with just a six-month plan, he says, admitting, "that's all we had the money for." Since then they've added staff (they're up to six, not counting freelancers) and moved to a larger space, during which time Wong has turned down offers to come back east and take a big-agency job. He says it's not his goal to follow in the footsteps of his revered former bosses, Goodby, Berlin and Silverstein; their interests lie in staying small and doing design and new-media work. "I hope we'll be soon at the income level of a $10 million agency," he says, "but it won't all be advertising."

With a full-time staff of six and billings in the $10-$15 million range, Paul Cappelli, founder of The Ad Store in New York, says he's finally seen the light-he's in the market for an AE partner. "You need someone to face off with the client who comes from a marketing mentality," Cappelli says. The agency's client roster is a mix of big and tiny names, from Blockbuster Entertainment, ABC/Cap Cities and MCI to the Gramercy Park Flower Shop and Mirabella's Bakeries, and they were finalists in the $20 million Stoli review, which, to Cappelli's relief, they didn't win ("that would have been the 800-pound gorilla," he says). They were also finalists in the Arizona ice tea pitch. And, six months after he started, he too turned down an offer from a big agency to sell. "At first I said yes, then I said how much, then I asked if they'd help me grow this concept, and that's where things started to fall apart," he explains.

Campaign, the former one-man band of ex-Henderson Advertising CD Kerry Graham, is now a two-man band. Graham, who's based in Atlanta, quickly took on an account side partner, David MacPherson, after opening last year. (He previously worked with MacPherson years ago at HHCC in Boston.) Total media billings of the work they do is about $10 million, and Graham says they're pitching about $15 million more, all of which would be full-service work. Yes, he admits, they've be

come a full-service agency (he used to rant about the problems of "traditional agency structures") but some of those services are not in-house. "Clients kept asking, 'Can you do this, can you do that,' and who was I to say no?" he explains. "So we started partnering" with independent media buyers, design firms and commercials producers. One of their regular collaborators is Toth Design in Concord, N.H.

The client list includes the Cartoon Network, the Weather Channel, London Fog, XcelleNet software, Nicklaus golf equipment, Tommy Hilfiger and a certain local sports enterprise identified by a series of five interlocking rings. As for staff, for now it's just Graham, MacPherson and a receptionist, working out of an old mansion in Atlanta.

Cabell Harris has decided to position Work as "the agency for agencies," given his growing business in handling campaigns and projects for agencies rather than for clients. He's relocating his family to Richmond, Va., from Marina Del Ray, Calif., and installing himself in a stately old downtown residence complete with studio (a former doctor's office) and carriage house (for his visiting freelancers).

Since starting out last year, most of his work has come from outside of California, which encouraged him to move back to his hometown. Also, he's been able to handle jobs the way he likes-that is, as a subcontractor who hires his own writers and stays with the job through production. Among the agencies that have worked with Work are Fallon, BBDO/New York, Chiat/Day/Venice, DDB Needham/New York, The Martin Agency and Valentine Radford.

Harris says he knew that if he went after clients right away he'd quickly become a small regional agency, a prospect he found unappealing. Agencies, he believes, often find themselves doing things they don't want to do just to pay bills, "and that's when the poison gets in the system," he likes to say.

Finally, good news to report from Alan Blum and Charles Herbstreith of New York's Blum Herbstreith: they've moved out of Herbstreith's living room.

With billings estimated between $10-$12 million and a client list dominated by Air France and the recently won Nikon eyewear, Blum Herbstreith is yet another startup that's surprising its founders. The client list also includes women's apparel maker Donna Rico, Activision videogames and the Little Switzerland chain of gift shops (a plum assignment-they're all in the Caribbean). They now have seven full-timers, as well as a "loose association" with account guy Tom Carroll, formerly of Weiss Whitten Carroll Stagliano, who's replaced departed original AE Jill Beraud.

As for how they're dealing with life as agency principals, Herbstreith says, "There's a strange sense of flying without a net." At least he's doing that flying to St. Martin.

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