Case Study – From Struggle to Success: Walmac Interactive
Chris Walker is the co-founder of Walmac Interactive, a Sydney based Web Design firm that now employs 7, and has done work for Intel, Fairfax, Coca Cola, and Baz Luhrmann (Moulin Rouge).
But getting to this point was not easy. Walmac started back in 1996 with loans taken on by Chris and his business partner. Within the first 18 months, they had racked up US$20,000 in debt. "This was all spent on setting up an office, employing a graphic designer and paying ourselves a small wage of about $200 a week each – barely enough to live on," notes Chris.
The company’s first client was a small courier business. "Their logo was a flying bee, so I downloaded a free GIF animation program, animated their bee’s wings and made the bee fly across the screen. That was in early 1996, when most of the companies I’d spoken to didn’t see the value in investing in a Website, or didn’t even know what a Website was.
"I presented my piece of animation wizardry to the CEO of the courier firm, and he was sold!" Chris says. "We got the contract to build their site. I think we charged them about $1600.00 total — about the same amount that we now charge for a day of one developer’s time!"
The company’s second client came as a result of a lot of cold calls to companies listed in the phone book. "This is a tried and tested method of generating business that I learned many years ago working as an advertising tele-salesperson," Chris explains. "It’s not a lot of fun, and I got more knock-backs than most people could handle, but if you’re prepared to put the calls in, and you have a good spiel, it will generate leads. We don’t do marketing like that any more… thankfully." Fortunately, the client’s name was the "American Chamber of Commerce in Australia" so Chris didn’t have too call too many more companies up after he landed that gig!
Going it Alone
In 1998, Chris parted company with his business partner and took on the entire debt alone. At that stage, Walmac consisted of just one subcontracted graphic designer and Chris himself. "Within a year we’d grown the business to twice that size, and actually started to make money," Chris says. "I offered my subcontractor a full-time position and employed another full-time designer, a junior developer, and a multimedia developer/programmer."
Then, in 1999, fate struck him. Chris received an email from the head of online marketing for Intel in Australia. She’d seen one of Walmac’s sites, which had recently won the Macromedia Site of the Day Award, and was so impressed that she offered Walmac an opportunity to work on a project for Intel.
"At that stage we were introduced to Intel’s advertising agency, Euro RSCG (the world’s 5th biggest ad agency)," recalls Chris. "We completed the initial project for Intel, and Euro RSCG seemed to be reasonably impressed by both the work, the 6-week timeline, and the budget that we’d worked with."
"We wanted to impress the hell out of them so we decided to use as many of the technologies as possible. We came up with the idea of building a site called "Didgeridoo", which would explain how to make and play a didgeridoo, allow the user to play a virtual didgeridoo on screen, and let them visit a VR environment of a real aboriginal corroboree." You can still see the Website they designed at: http://www.indig.com/didgeridoo.
Acquisition and Growth
By mid-1999, Walmac was given the opportunity to be acquired by Euro RSCG, and become their second Web development firm in Sydney. At this point, Walmac basically became the Interactive Department for three of Euro RSCG’s ad agencies. That year, the company grew to 7 people and has stayed at that size ever since. "Today, 80-90% of our work comes from within the agency," Chris comments.
"For the first 4 years of business we consistently doubled our revenue each year. Then, over the last 2 years, we seem to have hit a "revenue ceiling". We’re working on a number of ways to overcome this — mostly by refining our internal development processes, and attempting to increase productivity without compromising quality," Chris explains.
"We’ve also begun to develop our own software solutions such as a Flash-based CMS and an online recruitment product. The idea is to continue developing content as we always have, but to also begin to sell or licence our CMS and recruitment solutions. This will generate a secondary revenue stream, promote additional contract work, and help us to move forward and grow."
Pitching to Perfection
When they’re working with new clients, rather than ask client for a brief, Walmac asks them to fill out a questionnaire. "Depending on the type of project (ie: a site re-design or re-build, a CDROM etc.) I’ll pose a pre-set set of questions," Chris reveals. "I have a questionnaire that I use for most scenarios, which asks questions like "What do you like about your current site?" "What don’t you like about it ?" "What are the primary business goals of the project?" "What is the budget?".
"Once we have the answers, I create a written assessment of the project and provide the client with a ‘blow by blow’ breakdown of how we propose to approach it. I also provide, where possible, a breakdown of costs, and highlight what I think is mandatory for the success of the project," says Chris.
"I’ve written proposals as long as a hundred or so pages and as short as a simple email – it really depends on the client, the size and complexity of the project, and the actual revenue potential of the job. I don’t chase every opportunity; if something doesn’t look like it would be a good fit for my team then I’ll generally leave it alone.
"It’s hard to avoid unpaid work — especially with a team of guys who think they are creative gurus!" Chris adds. "We tend to over-deliver on most jobs. I usually factor a small amount into each quote to accommodate ‘feature-creep’ …and I also state in our contracts that we don’t work for free.
"I believe that businesses move through reasonably similar online lifecycles. A company that set up a Website in 1997, initially putting up a brochure site, might consider moving to a CMS solution by about 2000-2001.
"This means that there are a lot of existing opportunities to be mined online," Chris explains, "especially when you consider how many sites were being established back in 1995-1997 (and most of them were pretty ordinary). By simply picking a few key industries with which we have experience, and looking at the sites of companies in those industries, we can quickly build a list of potential clients, assess their needs, and develop strategies for contacting them."
Success in the Long Term
According to Chris, developing cash flow as quickly as possible is key to survival (especially if, like most small businesses, you have the burden of debt). Develop a good cash flow as quickly as possible by networking and winning business, get out of the office — away from the computer — and meet as many people as you can. Chris advises new business owners to evangelise their company as much as they can bare it. "Sell yourself and your team at every opportunity, and don’t be afraid to take risks."
Chris also advises Web development firms to check out the local competition and identify companies who do well what you do poorly. "Talk to them about partnerships. Embrace your competitors — try to think of them as potential customers. Chances are that they’ll listen and respect you for it, and this can often lead to business opportunities," Chris adds.
"A few small firms partnered together strategically can often take on the big guys and win business. Just be careful when you choose companies to partner with — make certain that everyone is clear about ‘who will do what’ and how the payments will be divided, and the client managed."
Most importantly? Have fun!