Compound's February '25 Update

February was a record month for Compound. It was also the hardest month since the first few post-launch, when I was managing 10+ client accounts as a solo writer (summer ‘23 is a key period in Compound lore).

Whatever my limit is, I think I found it in the past 30 days.

[Real quick: If you're new around here: My name’s Tommy. I’m building Compound into the best B2B marketing agency. We had our first $1M year last year, and now are pushing to hit mid-7-figures. This series, Compounding, is my attempt to document it all.]

(1) The 90% rule

Your agency should never really be operating a full capacity. Not for long, at least. Most of the time, you should be operating at 90% capacity.

Running at max capacity gives you no room for error. Think of it like driving a Ferrari at max speed down a winding canyon road. Looks sick if you pull it off. But one wrong move and it’s all over.

This pace also gives you no room for opportunity, either. You’re so bogged down in the day-to-day, that you can’t make your service better. You’re too stretched to take on a dream client, should an intro end up in your inbox.

90% gives you room to fail - and to grow.

One problem: in January and the first half of February, we were closer to 120%.

The team was red-lining. I was red-lining.

I tried to deny it because I also saw the numbers going up. We had record months in December, January, February…and very well could have in March. We also picked up a few flashy logos.

If recruiting was easier, we might have been able to keep the same absolute output at 90% capacity. But alas, sourcing talent is one of the great mysteries of running a content agency. Hard to rush.

My Head of Content finally had a come-to-Jesus talk with me. The team was swamped. I had to course correct.

The funny part about this is that I ‘knew’ about the 90% rule. But like most business lessons…you have to learn by putting your hand on the hot stove.

(2) The Law of Flashy Logos

There’s an inverse correlation between the level of hype a company has and how easy they are to work with.

Again, you know this as an agency owner, but you don’t know it until you try to be the exception to the rule. Classic hero complex - I can make this work.

Corollary: the ‘boring,’ stable client pays the same retainer the flashy, trending company does.

Now, here’s the counter. Your most ‘difficult’ clients will push you and your team to develop the most. You want some of these on your roster.

I’d also be lying if I said logos didn’t matter. One of our case studies with a ‘hot’ SaaS startup has driven 20-30+ referral leads.

Here’s the hypothesis I have for how to make the distinction:

You want clients who are high-flash, low-ego. Founders who are killers, who will push you, but will do so in a kind way. You don’t want the next Steve Jobs wannabe on your client roster. Well, maybe you do, but I don’t.

These high-flash, low-ego founders exist. That client I mentioned who’s sent 30+ referral leads our way simultaneously runs one of the hottest companies in Silicon Valley, and is a kind person.

You’ve got to thread the needle carefully here. And you’ve got to have the discipline keep your roster clear of red flags.

The obvious part about this: bad-fit clients are bad-fit clients, whether or not the company is ‘well-known.’ So, by choosing to take on a flashy logo founder who gives you a bad feeling in your gut, you're doing them a disservice.

I cannot stress how much easier this is said than done. When you get intro’d to a hot company, you want to say yes on the spot. Especially if they’re ready to pay full-price.

But be careful. So long as you do great work for great clients, new business will always be there. Sometimes that new business will have a flashy logo, sometimes it won’t. But the revenue looks the same when it hits your checking account.

A few more tactical comments:

• Following the 90% Rule allows you to be more flexible here. If you have capacity, you can flex to accommodate high-lift clients. If you're already filled to the brim, any deviation from your process will cause you to overflow.

• Sometimes you roll the dice and see how it goes. Run a month-to-month contract and get a vibe check. Usually, your hypothesis will be reinforced. Sometimes, you’ll be surprised.

• Back-channel clients just like they back-channel you. If you know other agency owners who have worked with the company, ask them about their experience with the prospect. I have been saved from nightmare clients plenty of times by a simple text to a friend. And I have saved many others.

(3) Don’t let your edge go dull.

Every founder has some sort of superpower. There’s a skill in business that you're uniquely suited for. It’s likely what got your business off the ground in the first place.

For me, that’s content & writing.

I’ve put in my 10,000 hours, and well over 10,000 posts.

Content has driven every lead for Compound that hasn’t come from client referrals.

The weird thing: the more the agency has grown, the less I get to work on content. My writing blocks become scattered and scarce. I’m writing this essay on Sunday morning - the one day of the week I can sit down and create without worrying about Slack.

I noticed two concerning trends in my calendar this month:

• More time in meetings. Gross.

• More time editing client content.

First point is obvious - too many meetings make me want to die. They drain me. There’s a sweet spot here, as a great meeting with a client is a lot of fun. But I find that anything over 3hrs of meetings in a day just saps whatever joy I have running this business.

Some context around that second note, since you might be thinking: But Tommy, don’t you like working on content? I don’t see the problem.

Editing and writing are two different skills. I love writing. I hate editing. Also - getting pulled into editing client content means we’re having a capacity issue and I’m needing to QA more stuff before it gets sent over for review.

Both are necessary to scale Compound into a top content agency. Meetings are part of running an agency, and enjoyable when managed well. Editing content is the most effective way to ‘download my writing process’ into the rest of the team.

As these two items have expanded to occupy more of my Google calendar, writing has taken a back seat.

I’d like to change that in March. Writing is how I grow the agency. I also love it. A few things I’m trying:

• Writing more internal memos for our team. This way, I get to flex my writing muscles and set the culture for the agency.

• Using writing as a recruiting tool. One of the purposes of this series, and my other writing on the internet, is to create a magnet for the **talent.

• Forcing myself to follow the 90% Rule, so I don’t need to get pulled into as many client edits.

Exceptions

There are always exceptions. These 3 rules are no different.

Sometimes you need to hit red line to understand where your team’s limit truly is.

Sometimes you need take on a difficult client and ‘make it work’ despite the discomfort.

Sometimes you need to fill your calendar with important work that you also hate to get through a growth plateau.

So yeah, maybe you actually need to disregard everything I just wrote. Depends on where you're at in your journey.

This reminds me a lot of fitness. There are so many different modalities. So many different, often conflicting, philosophies. One person will tell you that lifting to failure is the only way to build muscle. Another will tell you you should always leave two reps in reserve. One person will tell you running ruined their knees. Another will tell you running changed their life.

It all works, some of the time, for some people. Business advice is the same.

Final thoughts

One of the lessons I have to remind myself constantly is that I am in control of how I build this business.

I’m a solo founder. I’ve taken no venture capital, nor do I plan to (working with VC-backed founders will do that to you). Yet, when momentum takes hold, it’s easy to lose control of the business you own.

Social media only magnifies this. You see everyone else winning. Everyone else is ‘scaling.’ So you feel like you need to keep up.

What you don’t realize is that 99% of the time, especially in the agency business, everyone else’s business is a shitshow, too. It’s all fugaze. If you're running a growing, profitable business with happy clients and an engaged team—you are winning.

My aim with Compound remains the same: build the absolute best B2B marketing agency in the industry. Not the biggest, the best—though I do plan on growing this to 8-figures in revenue.

I’ll keep share what I learn as I make that happen.

PS: working at Compound is the best opportunity you have to become a better writer, editor, and content professional—fast. We’re hiring for two roles right now. If you're obsessed with the craft of writing, ambitious, and enjoy working with speed, you should apply here.

📚 Reading list

Everything I’m reading—fiction and non-fiction—in the past month.

• Hyperion 📚 (started slow…but grew on me and now I’m hooked reading Book 2)

• Beta reading one of my friend’s upcoming novels 📚

Thanks for reading this edition. I’ll see you in the next one.

Keep compounding,

Tommy Clark