Carving out a successful niche with Crowd Favorite, Karim Marucchi talks about finding your niche, specializing and selling your business.
Trust me, you’re going to get so many pearls of wisdom from this podcast, no matter what size your business. You'll want to take some notes in this week's interview with Troy and the ever insightful Karim Marucchi!
Watch the Videohttps://vimeo.com/232034936
Who is Karim Marucchi?
Karim’s company, Crowd Favorite, is a WordPress speciality development shop that works specifically integrating WordPress into large enterprise systems. The company is an amalgamation of three companies that came together around 4 years ago for their complementary specialisations: Karim’s original company, VeloMedia; the late Alex King’s, Crowd Favorite; and James Archer’s design firm, Forty.
Although Karim’s background is in architecture, in 1994 he founded one of LA’s first web agencies (one of only three in LA at the time). In 1997 when the internet was growing fast, they were acquired by a large firm that went public. When he left that company, he went to work for a major advertising group in Europe. He then founded another company and took it public on the Italian stock exchange, followed by working with a major European conglomerate to buy small web shops and place them into advertising agencies who needed digital departments. He was certainly a busy man!
Troy asks how he was able to make these risky decisions with an architecture background. I mean, can you naturally be so good at all this stuff, right? He explains that he came from a family who had a similar business but in construction, then he learned along the way and just felt his way through it.
According to Karim There Are 3 Categories of Acquiring a New Company:
- For large agencies buying medium-sized agencies, they are looking to grow revenue and sometimes to acquire a specific client.
- Market verticalisation / specialisation: for when the acquiring company lacks expertise in a certain area such as design they may work with an external company before they bring them in-house.
- Acqui-hiring: when you bring in one or two experts to be able to handle more projects. This is a financial play though because it may bring revenue up, but you also have more production hours to sell. You need a stable pipeline to be able to do this.
Karim’s motivation for acquiring was market specialisation. All three of the companies were well known for their specialisations, so they brought the teams together rather than have one company take over and lead with its culture. He explains that they did this without funding which gave them a short runway to experiment with new ventures and business units. However, on the flipside, there was no one breathing down their necks to work within a timeline or within a financial budget.
Specialisation and Choosing a Niche
Karim’s advice on this is that you either be all things to all people (but you need to be 500-5,000 people to do that properly), otherwise you should start specialising. You can be general if you are a small shop, but make sure you find someone that doesn't do what you do and partner up!
The question on so many people’s lips is that if you specialise, won't you miss out revenue by passing up other work? More words from the wise – you always have FOMO of what you could be doing; it takes discipline.
“If you’re chasing everything, you’re going to end up having a problem” @karimmarucchi on the WPE podcast
- Fill the gaps. Find people who fill gaps in your knowledge or area of expertise.
- Make yourself redundant. Be able to go on vacation without anything blowing up while you’re away!
- Expand your sales team even if you’re only a team of three! You need someone out there looking for your next client while you work on the project.
This leads Troy to ask about the people who don’t want to relinquish control because they think that others can't do a good job like you can. Karim’s advice is simple – how much do you want to suffer? You can continue to do it that way or you can be a bit more disciplined about it and get to live a little!
Karim’s Advice on Hiring
Usually, you want to hire people you like, but don’t do this. Rather, make sure you hire the people who will challenge you and are different to you. Just don’t get in your comfort zone and that will keep you on your toes.
Karim explains that a good measure of success is “making yourself replaceable. That means you've created a process that's outgrown depending on one person”
Karim says that there needs to be a balance of creating processes within the company that aren’t too restrictive (the type where employees just give you script answers). Create a framework that allows people to shift and move. Tune in at the 23.45-minute mark to hear about the growing pains that they experienced from merging 3 companies with 3 different sets of processes.
What Makes a Company Valuable
- Make yourself redundant: build a business that makes you replaceable.
- Specialising: this makes you more attractive to approach and to be approached by other companies to merge with. Have a disciplined balance of taking in work and pushing some away to find the right client to grow your specialisation.
- Acqui-hire: This is the best for small companies. How far out is your pipeline guaranteed? Not many small businesses have contracts that are signed out past a quarter and they struggle to do business development. You need to be of such value to your client that they will commit to a longer contract. Create long-term projects and work by knowing your client’s business.
- Stop talking about code, plugins and the tech side of the project: Start asking questions about the business problems and understand what they do.
Troy and Karim finish up by talking about taking the gamble with your specialisation.
All this and more on this week’s show. I told you there’d be so many pearls of wisdom, didn't I?! Enjoy.