A few years ago, Robbie Robertson and Alex Ritchie worked at the same award-winning company in London, Imagination, but it was not until they moved to Sydney that they first met while working at Landor Associates.
Originally from Scotland, Robertson and Ritchie noticed a gap in the market for a design consultancy akin to Imagination in London, which combines architecture and retail, graphic and interior design to create branded experiences and environments, such as the famous London Millennium Dome, which Ritchie helped to design.
In 2007, the duo launched e-2 in Robertson’s spare bedroom with no clients, a single laptop, and no external investment. They believed the market was ripe with opportunity, despite the fact most Australian marketing directors weren’t quite sure what ‘experiential design’ entailed, or how they could benefit from it.
According to e-2, ‘experiential design’ is about creating sensory experiences to amplify brands.
In three years, e-2 has emerged as one of Sydney’s most promising design practices, ranking 68th in BRW magazine’s Fast Starters ranking in April 2010. It designed the $10 million Qantas Centre of Service Excellence – a staff training facility and brand experience environment – and other major clients include AMP, Sony, Westfield and Kodak.
In the following interview, Robbie Robertson and Alex Ritchie explain e-2’s journey to date…
How would you describe your business model?
Robbie: We divide what we deliver into three core areas: experiential strategy; interior design and graphic design; and creating temporary spaces. At the heart of what we do is to bring brands to life by creating experiences.
Alex: We’re strategic thinkers who deliver design outputs. What we don’t want to do is do nice drawings – our designs have got to be ingrained in business solutions.
How did you calculate the risks/returns of entering this market?
Robbie: In our previous role at Landor, we spent a lot of time thinking about how to create an industry from scratch, and how to define ‘experiential design’ in Australia. We thought, ‘This is crazy, why don’t we do this for ourselves?’ So we jumped ship and started working from my second bedroom. We had nothing but a Rolodex, one laptop, and a Smart car.
Alex: We also had no investment apart from the pocket money we’d saved up, no clients, nothing. We quit on a Thursday and started on Monday. We bought two cups of coffee and four chicken pies and we sat in a park to talk about our next steps. That was a defining moment.
How did you secure your first clients?
Robbie: We literally called people to ask, ‘Can we come and have a cup of coffee with you?’ We were drinking about 10 cups of coffee per day.
Alex: Around 20% of our business comes from cold calling, even now. We try to target companies with an experiential ethos, and we hired a director of new business a few months ago. We probably should have done that sooner. New business is something we make time for because we know it’s the lifeblood of our company. We’ve been courting our newest client for six months – business development takes a long time in our business.
Robbie: Very quickly after starting e-2 we won a $10 million project with Qantas, and then Sony, AMP and our first international client followed, the Sheik of Sharjah in the United Arab Emirates. That all happened in the space of a few months. We started in September 2007 and by Christmas there was six of us in my spare bedroom all lined up in a row.
How did you explain ‘experiential marketing’ to potential clients at a time when it wasn’t well understood in Australia?
Robbie: By defining our process. In 2005 I undertook an MBA at the Australian Graduate School of Management, which has taught me that in order for design to be taken seriously, you need to define your journey: where you’re coming from, the customer benefit, and more importantly, how you’ll add to your client’s bottom line.
How did you develop that process?
Robbie: In the first two years we trialed different approaches, and eventually we pared that process into six phases that everything else fits into. Today, regardless of what the problem is, we are able to solve it using this process. There are many layers that sit beneath our six steps, but we are able to communicate what we do in a way where the client can say, ‘Oh, I get it’.
Alex: We start by determining our clients’ end goals. Is it improved staff satisfaction? Is it increased revenue? Better brand recognition? Staff training? In 12 months time, we analyze whether we delivered on those KPIs, and if we did, we can then go to other clients and say, ‘Here was the challenge, this is the journey we took, and here were the results’.
Did you have a business plan?
Alex: Robbie’s very good at that. Right from the start we’ve had a business plan and when we’ve shown anyone who understands business plans, they’ve thought it was very well put together. We’ve stringently stuck to it and we review it on a yearly basis. It’s slowly evolving, but it has kept us very much on the straight and narrow.
Robbie: It’s also allowed us to review ourselves from a business health perspective. Something that affected everyone in the creative industries in Australia was the GFC. We were able to go back to that business plan and say, ‘Where are we today? Where do we want to go? What is our core strength?’
When the GFC hit in October 2008, we had 22 staff. We sat down and said, ‘Okay, we need to reduce our staff to 9 people if e-2 is to survive’. It was like cutting off our arm, but it allowed the rest of the body to continue to be here.
Alex: We treated it like going to war. The whole team came to sit together to one big table; we celebrated our wins together; and if we lost, we worked out why we lost as a team, because we were hearing that our friends in the industry were losing their jobs on a daily basis.
What business indicators did you use to survive the GFC?
Robbie: We judged our performance on three things: on every project we did we over-delivered. We always put things back to the client they weren’t expecting so we had that element of intrigue and surprise. And we stuck true to the numbers.
Alex: We didn’t under-sell ourselves. A lot of our colleagues were devaluing their product, whereas we said, ‘We’ll prove we deliver your KPIs’ and stuck to it. Nobody’s going to deliver passionately if they feel they’re being screwed by the client.
What impact did it have on your bottom line?
Robbie: The GFC reduced our business by about 40% simply because companies stopped all spending in the design area. This was true across the board. The clients we did maintain, we did a lot of strategy and communication work, we did a lot of planning for when the GFC was over, and having the three hats of strategy, graphics and interiors allowed us to let one area of the business prop up another.
What opportunities exist in the experiential space in Australia?
Robbie: We fundamentally believe that in the Australian market, nobody has defined and articulated what ‘experiential marketing’ actually is. Some people see it as giving away free product samples at Wynyard station. Somebody thinks it’s putting giant flipflops on Bondi beach. Well, it’s not.
We want to facilitate that discussion and allow the creative industry to agree on a definition. If we all have the same answer, we’ll be better at delivering a solution.
Have you ever considered external investment?
Alex: We’ve been approached twice but ultimately turned around and said, ‘We’re better on our own’, and that’s how we want to go on. It’s stressful enough without having someone else looking over your shoulder for a return-on-investment.
Robbie: I think our staff also dictated that decision. When we were having a conversation with a company interested in taking us over, there was a bit of a mutiny. They said: “We went through the GFC together, we want to see where this goes”.
With close to 80 projects currently underway, how do your 25 staff juggle the workload?
Robbie: I’m as fanatical about Excel spreadsheets as Alex is about drawing. That’s why this company works – because we stick to what we’re good at. The MBA side really helps – it’s often what design agencies forget. They get hung up on doing really good creative work, but at the end of the day it’s still a business. You’ve got to know how to grow the business and be profitable at the same time.
Alex: In terms of our team, we’ve hired a general manager who looks after the office on a day-to-day basis and handles all the finances. We opened a Melbourne office in late 2009, and a Singapore office in February 2010. It’s a hub and spoke model so our main office remains in Sydney, with offshoots in Melbourne and Singapore, which stops our head office from getting too big.
Robbie: We’ve watched many of our friends in the industry become too successful and ultimately lose what people first bought them for, which is the ability to interact with senior management and come and feel like it’s a big family. We’re big enough now to play at the top end of town, but we’re small enough not to feel like you’re just buying a name.
Is there anything you could have done differently?
Alex: We weren’t quick enough at defining our processes, but that’s because we grew too quickly. We were so desperate to please some clients that occasionally we over-resourced them, which ultimately led them to not be profitable. We should have been stricter about our processes, but that was a confidence thing. When you’re young, you just want to please everyone. You’re like a puppy.
Robbie: The second thing I would have done is engaged a PR consultant earlier. In a small business, in the first two years you have to do everything yourself: marketing, business development, strategy, finance – you’ve got to be an HR consultant and a specialist in running an office. We learnt some things we could get away with doing ourselves, and some things we just were flogging to death and getting nowhere. And one of those areas was PR. We were spending a lot of time calling journalists, and we were getting nowhere because we didn’t understand the intricacies of the industry.
In 2010, you launched a new business called Place Associates targeting property developers and owners. Why did you diversify in this direction?
Alex: A lot of property developers tend to jump straight into creating architecture without creating a platform to create a sense of space and place. At Place Associates, we want to convey a sense of place and experience to the architects, residents, neighbors and council before a development is designed, as opposed to packaging it up nicely at the end. Our approach will build on the asset value of a piece of land and maximize market potential.
What opportunities do you expect to emerge in experiential design in the next 2-5 years? What trends are driving your business?
Robbie: I believe we are going to see a move from high-tech to low-tech solutions that put people at the heart of the experience, be it in retail, communications or within the office environment.
We will see a realignment in the shift from social media to authenticity – consumers will look to engage all five senses and not just one. As the market in Australia matures, businesses will start putting experience at the heart of business solutions and not as a “nice to have” element of their communications / marketing mix.
Trends include the need to ensure we are talking the business language of our clients to create genuine and unique experiences that deliver upon business imperatives.
What are the key challenges your business will face looking forward?
Robbie: We expect increased competition from local and international design companies who are entering into the experiential space. There are a number of great boutique companies as well as larger multinationals, which are turning their attention and expertise to focus on this area.
AT A GLANCE
Sector: Experiential design
Launch date: September 2007
Directors: Robbie Robertson (Managing Director) & Alex Ritchie (Creative Director)
Total staff: 25
Products/services: Retail & workplace design; experiential marketing; brand design & communications
Milestones: Ranked 68th in BRW’s fastest-growing start-up companies in 2010; won B&T Magazine’s Experiential Agency of the Year (2009); opened Melbourne office in late 2009, and Singapore office in February 2010.