How We Exited Our Agency Without Selling It

Sei-Wook Kim (00:05.133) On today's episode, we're talking about how we stepped away from the day-to-day at our first agency, Barrel, without selling the business. We'll share what it took to make a clean leadership transition, the lessons we learned along the way, and how that move opened the door for us to focus on building Barrel Holdings. So let's set the stage. We talked a little bit about this topic in our first episode, but when we're... Peter Kang (00:47.086) Yeah, typically with an exit, a lot of people automatically think about an ownership exit where they are selling their ownership of a business. But in our case, Sei-Wook Kim (00:51.064) People hear the term exit, they usually think about selling a business. Peter, if you can talk about how our definition of exit was slightly different from that. Peter Kang (01:16.225) Yeah, we executed what could be seen as a role exit. The two of us were in our respective day-to-day roles — I was the CEO and you were the president COO. We really wanted to find a way to step out of the day-to-day. And so what we engineered was what we call a role exit. Sei-Wook Kim (01:39.95) Thinking back, what made us start thinking about stepping out of that day-to-day? Because we were in it for 18 years at that point. Why then? Why would we do a role exit? Peter Kang (01:55.367) Well, for any of you that are curious, in episode one we share our backstory and go a bit into detail. But the short story is we had obviously spun out a few other businesses and we started to have this portfolio approach to agencies — all while running Barrel day to day. We thought, hey, we really have an opportunity to grow the whole entire portfolio, but that means freeing ourselves up from the day-to-day. We had been successful in setting the other businesses up with their own CEOs, and so we thought, hey, can we do the same thing for Barrel, the company that we had been running for so long? And that's when we started to see if there was a path. Sei-Wook Kim (02:31.117) So let's go a little bit into the nitty-gritty about the transition. If you can share who we identified as a person who could take over as CEO, and then why did we think he'd be a good fit? Peter Kang (02:59.379) Yeah, Lucas Ballasy is the CEO of Barrel now. The origin story is he started as a designer at Barrel back in 2013. He applied to be a designer, started as a freelance designer, became full time, and right away we knew we had someone special. Some of the qualities he brought to the table were really impressive — super proactive, low ego, but also hungry for more responsibilities. For people like that, we're always willing to continue to give them challenges and give them what they can handle, or maybe more than what they can handle, to just continue to grow within the organization. And Lucas did exactly that. He continued to grow, soon became senior designer, associate creative director, creative director, and then eventually joined our executive leadership team. Through that progression we got to see what really made Lucas tick and that his values aligned really well with ours. When it came time for us to look for a CEO candidate, it was a pretty easy choice — we think Lucas is the right person, and if he's up for it, we should definitely invest in making him the CEO. Sei-Wook Kim (04:35.648) Yeah, it was definitely a multi-year experience. You mapped out how his role within the company and responsibilities increased. But even at that point, there were still gaps in what he needed to take on. If you could talk a little bit about how we prepared him for the role of CEO and any steps we took to get him ready for that. Peter Kang (05:00.863) Yeah, part of the journey of getting Lucas ready for this role was that we ourselves needed to do a better job of organizing the business and understanding what was going on. The first thing we started with was mapping out what our responsibilities were between the two of us. As founders in a business for, at that point, more than a decade and a half, there are a lot of little things that we take for granted — little activities, whether on the marketing side, HR side, or finance side that we were just doing on autopilot. But when you take a moment to look at it, you're like, wow, is this stuff really necessary for us to do? Is this something that could be delegated or rethought? We spent a lot of time mapping out all these things, and that gave us a better idea of what kind of role Lucas was really stepping into, because we needed to make sure it was a clean role where he was set up to succeed. We couldn't just drop all these random tasks onto his lap. Through that process, we were able to map out some of the areas where he needed more help. At this time he was already a chief experience officer, in charge of the client experience, the delivery, and coordinating between all the departments — he had a lot on his plate already. So it was more about, hey, where do we fill in some of the gaps where he might not have as much experience? Definitely on the finance side, just being able to read a P&L. On the BD side, making sure he's more comfortable with different lead gen activities as well as the sales process and managing the CRM. There were a few other buckets as well — for example, the HR side of things, the policies, PTO, how they work and all that. And then a couple other big buckets: relationships — did he have a full handle on all the relationships across the company? You and I had to transition a few relationships over to him as well, which took time but was necessary. And then the bigger picture stuff like strategy, goal setting, planning for the quarter or the year. Those are the skills that we had to build with him. Sei-Wook Kim (07:14.914) Yeah, I remember this being an enlightening exercise personally, going through and really mapping out all the different hats that we were wearing. And not all of it went to Lucas — some of it went to other team members, and we found some other people to help support him so that he's not just suddenly taking on everything we were doing plus what he was doing before. That whole mapping exercise was super helpful in general. We talked a little bit about timing. It happened mid-2024, last year. And from what I remember, the timing actually wasn't the smoothest. Earlier in 2024, Barrel had gone through a challenging period where several of our top clients churned right before the transition, and that gave us some pause about whether we should move forward. Anything you can share from that experience, about the timing and all of that? Peter Kang (08:30.899) Yeah, the headline was three of our top five clients churned all at once. Some of these included longtime clients who had significant retainers with us. We did have contracts that gave us the feeling this was going to be for the full year, but some of them had 30, 60, 90-day outs. They exercised the outs, and it was unfortunate because we went from feeling pretty good about 2024 as a growth year to being like, my goodness, we have this hole that's over seven figures all of a sudden. How are we going to make up for that revenue in a short period of time? That was weighing on our minds. And at the same time, we weren't winning deals at a velocity to make that recovery. So it was like, should we still hand this off to Lucas and let him deal with it? Is that fair to him? Is that the right move? Those were some of the things weighing on our minds, because the transition handoff date was something we had set a couple of years prior. As we got closer to the date, we were like, hmm, this isn't the most ideal situation for that handoff. Sei-Wook Kim (09:50.305) Yeah. Well, we ultimately made the decision — July 1st, we went forward with it and trusted that Lucas would be able to turn things around somewhat. And our lives changed quite a bit. Personally, what would you say is the toughest part of letting go of the day-to-day control after that point? Peter Kang (10:24.924) Yeah, especially with the circumstances of having handed off the business while it was still in a little bit of a precarious situation, the toughest thing was really trusting that Lucas — we chose him because we trust him — is going to be the right person to lead this company through the challenges. We really had to be patient, because these things don't happen right away, and be as supportive as possible. That meant also, look, we can't be looking over his shoulder all the time, we can't be questioning his decisions — we really have to give him the space to operate. In the early days we were still a little bit on edge, just because we're like, is he making progress? Is he making the right decisions? But thankfully we had some other stuff going on as well that allowed us to give him the space. Definitely it's hard. This is the business we had been in for 18 years at that point. It's really hard to make that switch overnight where you go from being in it hour by hour to now it's just a weekly check-in. Sei-Wook Kim (11:40.905) Yeah. Our life after the exit was interesting because it's almost like the next day we were off of the website, you and I, after he became CEO — everything changed. Our relationship with him and the company changed as well, where we weren't in the day-to-day meeting with all these different team members, and to your point, meeting with Lucas on a weekly basis across various things. But it really opened us up to focus on Barrel Holdings. Maybe just briefly talk about what that shift changed in terms of the energy and everything we could bring to Barrel Holdings, and then what did our relationship with Barrel look like post-transition. Peter Kang (12:22.983) Yeah, it felt — you and I talked about this — like starting a new job, honestly. You realize how many weekly meetings and administrative stuff and day-to-day tasks really fill up your calendar. I used to get bombarded with Slack messages from various team members, all kinds of stuff happening. The action of going from all these client-related emails and team-related emails to just, in many ways, silence — that was a huge shift. There was a little bit of uncertainty of, all right, how am I going to fill the time now and what's going to take its place? But there was also this sense of wow, the possibilities and freedom. It was really exciting because we were like, all right, what are we going to do to really make this holding company successful? The subsequent months we actually did get thrown into a project — our first acquisition — which took up a lot of our time and energy, and was exciting and fun and we learned a lot. But then even in the subsequent months after that, there were a lot of discussions. We actually had the space and time to just talk strategy, talk vision, and refine that over a long period of time. That was great, and we continue to do a lot of that now. It's just a different way of operating — we're not playing in a day-to-day where things have a daily or weekly timeline. We think more in quarters, more in years. That has been a shift where we have to be a bit more strategic, a bit more deliberate about some of the decisions that we make. Sei-Wook Kim (14:40.05) Awesome. So if we want to wrap up some of the lessons for the listeners about our process going through this — if you can share some lessons on what we learned about succession, building the agency so that it is exit-ready, even if we didn't sell in the traditional sense — any key takeaways from that. Peter Kang (15:02.042) Yeah. The main thing — and it wasn't like we were strangers to this idea, because we had that with Vaulted Oak and BX Studio, where we have great leaders of those businesses, we're pretty hands-off, and they operate wonderfully day-to-day and we're able to support them. So we had that framework and the practice there. But with Barrel, there was that extra piece of the emotional tie, just because you and I had been in the business for so long and had wrapped up our identity so much with that business. In many situations it would have been very hard to really walk away. But the fact that it was Lucas, who also grew up in the business with us — he had been with us for over a decade, building the business together — the level of trust, the stuff that we shared, all the ups and downs along the way, and you and I going to his wedding, having kids around the same time — those are all things that build upon a professional relationship. This is somebody that we care deeply about and trust deeply to take over the business. When we think about succession, especially in a business that's so important to our lives, the fact that he was so close and we had that level of trust, foundation, and history — that made it all the more possible. That's something for folks to think about: who is that person to take over? The relationship aspect is huge. It's very hard to bring someone from the outside willy-nilly and try to make that happen. Even if it's somebody that still needs to develop some skills, you've got to think first and foremost about that relationship. Sei-Wook Kim (17:02.502) Yeah. There are probably a lot of listeners who are in a similar situation and eventually want to step back from their business. You talk a lot about relationships and our relationship with Lucas and being on that journey together. Any other closing thoughts on how relationships really helped us achieve this transition and any other thoughts for people working toward it? Peter Kang (17:34.796) Yeah. When I think about a very important lesson: one is that relationships are great enablers. But combining that with some deliberate, intentional, and proactive planning — because the first maybe 80% of our career was characterized by a great deal of reactiveness, because we were just in the thick of it. As problems came up, as different client challenges came up, we were just in this mode of react, react, react. Strong relationships help in that regard too, because you're in it together, in the trenches together, battling it out and trying to conquer these things as they come up. But where the real magic happens is when you combine strong relationships with deliberate planning — doing a visioning together, thinking about the future together. I remember sitting with Lucas and you and just being like, hey, what does Barrel look like in a couple of years when Lucas takes over and what are all the steps we have to do to get there? Even you and I talking about, hey, what's the future of Barrel Holdings and what does it look like three years from now, 10 years from now — making those plans together and combining that with the relationships we have. Do that over and over and it compounds in a really powerful way. That is the essence of the big takeaways: relationships are amazing, work on them, and pair that with this deliberate intention for the future. Sei-Wook Kim (19:19.592) That's good. Well, P, thanks for sharing our experience and letting people know that there isn't one path to exiting and there is this secondary path that we took. That wraps things up for today and we'll catch you next time. Thank you. Peter Kang (19:36.983) Yeah, thanks for tuning in.