Sunday, September 25, 2022

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    Meet the Berkshire-based agency that spun out 3 successful digital brands

    Adam Smith is managing director of Berkshire-based digital agency Rawnet. He was the agency’s co-owner until selling to investment group Castelnau in 2020. We sat down with him to talk about growing up, letting go and three successful spinouts.

    Adam Smith didn’t found digital agency Rawnet, but he was third through the door. He followed university friend and Rawnet founder Ross Williams to the company, becoming creative director in the early 2000s.

    The agency was always entrepreneurial; in its early years it jumped on the early-2000s online dating boom, launching a platform for creating dating sites, White Label Dating. As that brand’s success grew, it became the first in a string of spinouts from the agency. Rawnet’s then-chief Ross Williams departed to run the dating company (now known as Venntro), leaving Smith to take the reins as Rawnet’s owner and managing director.

    Smith sold his shares in the dating business, in pursuit of a self-directed career. “I’m not a very good co-boss,” he says. “I’d rather have something small that was my own than be second fiddle.”

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    The raw truth

    “I never wanted to own an agency,” he goes on. “It just kind of happened that way. When I took it over, I was incredibly naïve. As an employee, I wasn’t massively in the figures. I didn’t really understand the business side of things. But I had to learn fast when it was all mine and down to me. The company was in a lot more debt than I thought it was, and for a while I kind of regretted the move of taking on the agency when this other company was making millions.”

    With the dating site, he says, making “millions per month,” his job at Rawnet was clear: “It couldn’t fail after I’d given up so much.” Regret, it seems, can morph into determination. “Year by year, piece by piece, we got out of debt; we got better clients; we started to become a decent agency again, purely because of the focus and the determination for it not to fail ... that regret was pretty short-lived. I’ve loved every second of running the business.”

    That successful early spin-out left its mark on Smith’s business philosophy: Rawnet has continued to build and spin out its own platforms. Success stories include in-store music provider Startle Music (that one started out as a jukebox taking requests via text message) and “B2B Netflix” This is One (which lets media buyers stream international TV).

    “You have to live in the client’s world; build your own products; do your own sales; create your own systems; and create your own businesses in order to understand what the client’s going through. We’re not just agency people who only know the agency world, and only see things from the agency side. We run successful digital products as well.”

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    The confidence of maturity

    Smith and former director (and wife) Donna Smith sold Rawnet to brand investment vehicle Castelnau, part of ‘turnaround specialist’ Phoenix Asset Management, in 2021. Donna left to run another business; Adam is on a three-year earn-out.

    Among the assets managed by that group are longstanding Rawnet clients such as The Wedding Shop and iconic toymaker Hornby Trains. At acquisition, Rawnet became “truly an in-house agency” to those and other brands – albeit one that aims to transact half of its business externally to the parent group.

    “This was the perfect exit for Rawnet,” says Smith. “We get to be the agency we’ve always wanted to be, working on the projects we’ve always loved to win, but without all the usual stuff that tends to get in the way of a client-supplier relationship – briefs, specs, expectations.”

    Post-acquisition, the agency has doubled in headcount – not to mention, says Smith, confidence. “It’s allowed us to only go for work that we want, and I think one of the things that slows an agency down is taking on projects that aren’t 100% suited,” he says. “Now, we don’t have to take on work that isn’t 100% aligned to what we believe as an agency. It’s something I wish I knew 10 years ago. I could have done that 10 years ago, but it’s a confidence issue. As soon as you have that authority and confidence, and you know that you can do a good job for clients, they sniff that out. Our win rate is better than it’s ever been, purely because we’re just going after the projects that we really enjoy.”

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    The nature of the acquirer was no accident. “We weren’t selling to a large agency or advertising group, so we could remain ourselves. We’re the only agency in the group; we get to write the briefs and strategize with the clients, which is what we’ve always kind of been strong at anyway. We were never really an RFP-answering type of agency. I don’t agree with them as providing the best outputs.” Now, “we’re not seen as an agency; we’re not seen purely as digital or website. We’re seen as real strong strategic partners – but we also execute and deliver in-house.”

    Passing on ownership of the company Smith has given his life to hasn’t felt how he expected. “The emotions aren’t what I thought they would be. I thought, the second it happened, I would feel differently about the business. But I don’t ... Rawnet and me were pretty much the same thing for so long. That’s not something you just turn off.”

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    As for that earn-out – does the medium-term challenge lie in letting go? “It probably doesn’t pay to think like that at the moment. My job is to still grow it and still to run on it. If I put a timeframe on that, that’s going to affect my thinking and motivation. I’ve got a job to do. The staff deserve an MD who is focused on growing the business.”

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