Boston Agencies Pursue Product Revenue with Mixed Results

This is the story of three talented, scrappy agencies who did great client work, and who each tried to transition to selling products instead of services and engagements. It represents one way that agencies are remaking their business models.

MagicHour

Magic Hour
In the 1990s when I met them, Magic Hour Communications was a group of talented hunter-gatherers in Watertown, MA. Their 10-person shop made corporate films, software, and drop-dead-gorgeous brand websites. I first saw their work while judging the educational category for MITX (then MIMC), the Boston-area interactive awards.  And I got to know them while working on the State House’s website on Mass.gov, which beat out far larger projects for industry recognition.

Magic Hour’s CEO, Louis Gudema, started scoring lots of work for private school websites.  And he made the strategic choice to go deep in that industry, and eventually to productize a content management system for private school websites.  It took nearly ten years, but in 2009 they were acquired by Global Internet Managment, an educational marketing firm. The team is still at work, and they made the transition to having a product and residual income to sell.

BigBad Design
big-badThey were also award-winning, but at a higher level than Magic Hour. They had 50 staff, gained larger clients, and had an office on Fort Point Channel in downtown Boston. As I recall, their clients included Harvard, Lowjack, Camp Dresser McGee, Pratt & Whitney Helicopters, and lots of other colleges.

Like Magic Hour, they had also developed a technology for their education clients: an alumni portal. And last year they scored financing to develop the product. As their CEO, Ty Glasgow told the press, they hoped that a product offering would “de-commoditize the web” or at least their services.

The House Drops on BigBad
bigbad-search

Less than a year later, BigBad was shuttered. The Boston Business Journal describes their end, which included the firm missing payroll for several cycles and facing complaints to the state’s Attorney General’s office and US Department of Labor.  Today, competitors buy the name “BigBad” as a keyword to recruit orphaned accounts.  And their corporate nameplate is hanging over my desk as a reminder of how fast agency fortunes shift.

When Bad Things Happen to Good Agencies
A friend who heard of their demise noted, in some disbelief: “But people for Sapient and Digitas went there.” So why was the smaller Magic Hour successful in crossing the chasm and becoming a product firm when Big Bad wasn’t?

Sure, timing is a factor. 2009′s financial crisis disrupted college investment in so many ways. Endowments were off and students couldn’t get loans to finish their programs, so it makes sense that alumni portal projects would be put on hold. But that can’t be the whole story.  All three agencies were deep in the education market.

Pick an Industry, and Love It
FableVisionMagic Hour picked their niche and devoted themselves to that new business. That’s also how a third agency, Fable Vision, has thrived both as an agency and product firm. They provides interactive development and also create and market their own educational products. And along the way, the company has invested time and staff in becoming a well-known part of their industry.

I’m not sure Magic Hour or Fable Vision were ever the agency that BigBad was.  But the two smaller firms made it clear they would be fixtures in their industries, and that they were out for more than de-commoditizing their business model.

There were fantastic teams at all three firms. And, as someone who works across multiple agencies,  I’ve hopefully learned something about spotting shooting stars and telling them apart from the recently great who have become inwardly focused and are on the road to decline.

When you partner with a firm, their weaknesses become yours.  When you’re investing heavily in marketing, learning to read an agency and its challenges is a client-side survival skill.  It helps to ask if they are fantastic and devoted to a well defined market, as divergent opportunities spread agencies thin, and can dilute both their value and their viability.

6 Responses to "Boston Agencies Pursue Product Revenue with Mixed Results"

  • ExBigBadder

    July 9, 2010

    Interesting perspective. It would have been interesting to see what would have happened with BigBad if the president (Ty Glasgow) didn’t lie and cheat his employees, clients and vendors. The fact that he has a new job at Bridgeline after a failed acquisition of BigBad by Bridgeline raises a lot of eyebrows. The Attorney General has apparently determined that 100′s of thousands of dollars of unpaid wages doesn’t warrant full investigation and prosecution.

  • beenthere

    July 18, 2010

    Having worked at two of the three, I can say they were incredibly different in many ways. The smaller agency had the benefit of great management, but less opportunity for growth, and smaller projects. The larger agency had good clients, elite projects, and an amazing staff. In the end, greedy management destroyed the larger firm. The smaller company never would have thought of cheating it’s employees out of their paycheck, because they were too aware of how much their employees were worth.

  • Esposito

    July 21, 2010

    The management at BigBad lacked the ability to identify and foster innovation. That truly was the beginning of its demise.

  • SeenTheEvil

    July 21, 2010

    Yeah, bigBad had a pattern of stealing from employee 401(k) plans (hence the DOR investigation) and a lack of ethics at the highest level. That the man who ran it into the ground is now in a position to do that to another company and blames everyone BUT himself demonstrates why BigBad, with so much talent, is but a memory.

  • Lesson_Learned

    July 21, 2010

    BigBad had some amazingly talented people and great clients— but the management (or should I say mis-management) squandered that away with greed and lack of leadership. Then there was the stealing…

  • BigBadder from the past

    August 13, 2010

    I worked for Ty Glasgow for several years at BigBad during some of the lean dot com years. I was astonished how poorly he treated his employees, constantly demanding they work 60+ hours for industry minimum pay, not contributing to their 401k (which is illegal), and blackballing any employee who would try to improve conditions. You can’t believe how much a tyrant this man was — he took a wonderful design culture and bled it to death. Before BigBad collapsed due to Ty’s mismanagement, he was literally lying to his management team, his clients, and his board of directors all at the same time (“I had a heart attack,” “I’ve been in a car accident”…) to cover for his scrambling meltdown. Karma is a b**** and this man has a lot of bad news coming his way.

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