The Art of Business: Thriving through Unconventional Collaboration

CreativePro Staff

One of the joys of my job is keeping in contact with designers and design firm owners and seeing how their companies grow (or shrink) with the times. Back in the dot-com heyday everyone seemed to be a brilliant success, but in the last few years, as we’re all painfully aware, even the talented have struggled.

Few designers I know have dealt with the market changes as skillfully as Vic Zauderer, general manager and creative director of Zaudhaus Design, a nine-person firm with offices in Venice, Calif., and Mill Valley, Calif. Just the fact that Vic is thriving in San Francisco and Los Angeles — two of the hardest hit markets in the country — is testimony to his success.

But Vic wasn’t always thriving. He, too, got hit hard a few years back when his company consisted of himself and one other designer, Marc Escobosa. Together the two squeaked by with stray jobs here and there — very much in the freelancer mode. When the work started to get really thin, Vic and Marc, along with a new partner, Jessie McAnulty, decided the only way to succeed was to grow bigger — and differently.

But rather than build a capital-intensive firm on a traditional small-firm model, Vic reshaped the business to account for a number of changing market conditions — moves worthy of emulation by small firms today.

Creative Consortium
When things get hard, in a way it’s easy being a sole proprietor, you simply suck it up for a while. But in a small firm you can’t be hiring and firing people with every market up tick or downturn. So Vic designed his LLC (Limited Liability Corporation) with no employees.

All nine principals in his company are contractors who, on each job, can decide if they want to work on an hourly basis or for a lump sum, or if they want to take the job at all, for that matter. They also retain the right to take small jobs without handing them over to Zaudhaus, so when the pickings are slim they can stay busy. Zaudhaus, in turn, has made a commitment to work expressly with these partners, and eschews small jobs so as not to compete with the principals in this arena.

Instead, Zaudhaus focuses on larger projects such as identity and branding, Web development, and application interface — projects that require multiple disciplines. Zaudhaus also provides a project manager to schedule and task the principals appropriately.

The principals receive no benefits and job security isn’t guaranteed either. But each gets to work from home and be part of a larger team working on complex projects beyond the scope of the solo practitioner.

So how is this different from a loose consulting arrangement? The principals are paid shortly after they invoice Zaudhaus for their work. They are guaranteed payment and are freed from the hassle of collections, even if the client doesn’t pay. Additionally, if a job earns a profit above a certain amount, the principals participate in profit sharing.

Vic says he has chosen his “consortium of experienced communications experts” very carefully. These are senior-level people with proven track records in both design and self-motivation. The consortium model has allowed Zaudhaus to enter territory it couldn’t previously. And when a job requires expertise that the principals don’t have, Zaudhaus goes out and finds a consultant/partner to work with on a one-job basis.

A New Twist on Business Development
In many firms, business development is either handled by a rainmaking partner or handed off to a business development person, who takes a cut from every contract and grows impatient when the deals aren’t coming. Vic didn’t want to be a constant rainmaker and he couldn’t afford to keep a biz dev person happy, so he borrowed a concept from the world of network marketing. Anyone — and that means anyone — who hands Vic a name and a phone number that results in a job, receives three percent of the gross revenues from all work stemming from that contact in the next 12 months.

Any Zaudhaus partner involved in structuring the deal in any way gets five percent of the gross for the year. And if that client happens to be at the executive level of a major firm, the compensation bumps up to seven percent gross per year.

As a result, Zaudhaus principals all are involved in business development, and the task of bringing in new clients is spread evenly across the group and all their acquaintances. The strategy has paid off, and the company is keeping very busy from referrals, including referrals in markets new to Zaudhaus, such as healthcare and education.

Collaboration from a Distance
Since Zaudhaus offices are split between L.A. and the Bay Area, and the principals work at home, Vic has invested a lot of time and energy in finding appropriate collaboration technologies for his teams.

In addition to ubiquitous e-mail, every Zaudhaus project has an internal Web site that allows all principals to post and share files. Contact information and other pertinent information like schedules are also there, and the clients can watch the work as it progresses.

In addition, an internal Zaudhaus intranet allows principals to post issues, ask questions, and basically keep track of project notes in a threaded discussion-group format.

When more is needed, Zaudhaus principals use Apple iSight cameras to videoconference with each other. The technology is low-end by videoconferencing standards, but it works just fine, according to Vic. And if all the technology isn’t enough, the principals simply meet face to face, like all partners should.

Keep it Simple
So here’s the strategy in a nutshell: Keep the overhead ridiculously low; establish a stable consortium of senior-level people with varied expertise; develop business through a network incentive program; and use collaborative technology aggressively to keep principals on the same page. It all adds up to a business model designed to meet the challenges of these very challenging times.

Read more by Eric J. Adams.