When we interview founders here at Bootstrappers, hiring always comes up as one of the top challenges. Not only are bootstrappers restricted by budget in the most basic sense (i.e. you don’t have the money to hire a full-time employee), but it’s also difficult to find the right candidates to add to your team.
Making the most of every dollar means finding people that are truly invested in your vision – because, without passion, motivation will dwindle quickly. And you can’t underestimate the risk of hiring the wrong person. Companies lose anywhere from $17,000 to $24,000, on average, for bad hires,1 money that bootstrappers can’t afford to waste.
Felix Norton founded Woww, a South African digital marketing agency, six years ago. Together with his managing partner Garnett Thorne, they’ve grown Woww’s team to 24 passionate and motivated individuals. But it wasn’t easy as a bootstrapped agency, so they had to find a way to hire employees while minimizing risks. With a performance structure now integral to Woww’s company culture, employees thrive financially along with the agency.
Sometimes You Need a Partner to Level Up Your Business
Woww helps businesses start, grow, and thrive online. The agency achieves this by making high-quality digital services accessible to everyone. Through a cost-effective approach, Woww designs websites that rank well, load quickly, and yield a return on investment. The agency focuses on WordPress development, offering everything needed to ensure a website’s success, including graphic design, content creation, video production, and search engine optimization (SEO).
But it all started when Felix was studying computer science and game design at the University of Cape Town. He built websites as a student, trying to earn money on the side. After graduating, he realized there was an opportunity to turn his side hustle into a full-time business. So, in 2016, he founded Woww by himself.
“You know the joke about starting a web design agency… It’s that your first client is always your family. My first website was for my dad. He got a good deal,” Felix says, laughing. But that website helped him get his next client and the one after that. Through those referrals, Felix slowly built a network of clients.
At the time, Felix lived in a startup house (think similar to the house in the TV show Silicon Valley). A bunch of entrepreneurs shared the rent of this big place, and each worked to bootstrap their own business. While Woww was growing, it was essentially Felix working as a freelance web designer.
One day, Garnett (now Woww’s managing partner) was visiting a friend at the house. “We got to talking, and Garnett explained how he was working for a startup that left him frustrated and disillusioned with his boss,” Felix says. “He was doing all the work, almost running the entire company, while his so-called boss was working only a few hours a week – but Garnett got none of the rewards. His boss didn’t want to give him a raise or a bonus, even though he generated thousands of dollars for the business.”
Meanwhile, Felix was trying to turn Woww into a legit business but struggled with managing finances. He wasn’t comfortable with accounting, taxes, administration, and so on. Garnett’s background is in finance and small business development, so it seemed like Felix and Garnett would make the perfect match. What started as a casual conversation between the two ended in a partnership.
“Our skills are complementary. He comes from a financial background, and I’m good with the tech and marketing components. I offered as much as I could to match what Garnett was getting paid at his current job, but we made a deal to share in the profits. If we were able to turn Woww into a sustainable business, then we would both benefit financially,” Felix says. That philosophy became the foundation upon which Woww was built – but more on that later.
Once Felix partnered with Garnett, they started investing in lean marketing channels, with SEO being a primary strategy. They didn’t have the budget for paid ads, so they needed to find a way to use their time and skills to market Woww. While paid ads provide instant gratification, you need to sink a lot of money into them. SEO requires long-term effort, but it’s a free marketing strategy that bootstrapped businesses can leverage.
From 2017 to 2019, Woww acquired a top three position for the search word ‘web design’ on Google in South Africa. Over the past three years, Woww has secured the number one spot.
When Your Employees Thrive, Your Startup Thrives
In the beginning, Woww was strapped for cash as SEO delivered long-term results. Felix and Garnett couldn’t afford to pay people competitive salaries, which made growing the team with talented employees a challenge.
Felix says, “We were also just scared of hiring people because we didn’t know if it would be worth the investment. We interviewed developers who asked for crazy high salaries. We were concerned that it wouldn’t translate into revenue. And we didn’t want to borrow money and go into debt.”
Validating his fears, research by CareerBuilder found that nearly 60 percent of bad hires went wrong because the employee could not produce the adequate work level required by the employer.2 To tackle this problem, Felix and Garnett offered to pay employees based on their impact on the business’s bottom line (similar to the deal the partners made in the beginning).
“If they could provide value, we would reward that value-generating capacity. We would pay our employees before we paid ourselves,” Felix says. “Immediately, 50 percent of any revenue Woww generated would go to our team based on their performance. That was our trump card to safely hire people and make it worth their while. If the employee delivered, we would reward them for the fruits of their labor. But if they weren’t, Woww was protected.”
What started as a chance discussion between partners became a core value of Woww: if the company thrives, the team thrives. A sheer necessity morphed into a perk of working at Woww and has helped grow the agency.
Felix and Garnett have built this performance-based structure into Woww’s company culture. “We have refined it over the years because we can now afford to provide more benefits to the team. Instead of purely performance-based, we can also provide our employees with a comfortable base salary,” Felix says.
It’s less risky for someone to join Woww now. If they get sick or want to take time off, they aren’t tied to performance-based compensation. But at the same time, there’s still an incentive for employees to keep growing their skill set and improve their efficiency. Plus, the longer someone stays at Woww, the more their base pay increases.
This performance structure also puts Woww in a unique position to fast-track employees who perform well. Young professionals, especially developers, who don’t want to grind for ten years before getting a senior salary can prove their worth at Woww. By generating value for the company, they can earn those higher salaries right off the bat.
On the flip side, it also brings work flexibility that other agencies don’t have. Woww functions with a 30-hour minimum work week, meaning their employees choose whether they want to work more and earn higher paychecks. If you’re looking for more of a lifestyle job, for example, you could work 30 hours a week and earn a decent base pay.
Felix explains, “We have one developer who’s a very talented musician. He loves to tour and play with his band, but he also wants to supplement his income because being a musician is hard. He still earns a comfortable salary but has the flexibility to follow his other passions as well. He’s able to balance work, almost like a freelancer, but with hyper-stability. So it’s the best of both worlds.”
Not everyone agrees with Felix and Garnett’s approach, though. Woww hired a consultancy to audit its internal processes, and they quickly challenged the founders on this performance model. The audit showed that if Woww wouldn’t use that structure, it could heavily increase its profits – for the company and the managing directors.
“But that would mean we couldn’t give back to the team as much. And we want to share in the company’s success,” Felix says. “If our clients thrive, Woww thrives, and so will our team. The consultancy also pointed out that our employee retention is incredibly high for this industry. Our employees stay with us because they are highly motivated and immediately rewarded for their work. We don’t want to change that.”
Scaling from South Africa to Global
Woww hasn’t faced much adversity over the past six years. They’ve grown consistently every year, by at least fifty percent, while being fully bootstrapped and retaining all equity between the two partners.
At the start of the pandemic, Felix and Garnett braced themselves for a challenging period and were prepared to do anything to ensure Woww survived. During the first 30-day lockdown, they sat through many difficult calls with clients who needed to pause or cancel their retainers.
While things seemed dire at first, the duo quickly made up the loss with a torrent of new business and existing clients. These customers realized the importance of digital marketing in a world driven by online customer interactions. Where many companies struggled, Woww had its most successful financial year to date during the Covid crisis.
The pandemic was also a game-changer in Woww’s transition to a fully remote setup. After experiencing the ease of virtual meetings, clients became far more accepting and willing to work with a remote team, which enabled Woww to give up their office space and double down on international expansion.
Currently, Woww has 450 active clients every month, balancing a combination of new and existing projects, with an 80/20 split between South African and international customers. The founders’ goal is to scale internationally and invert that percentage in the coming year. Woww has a team of 24, but they want to grow it to 50 members by the end of 2023. The company also hopes to hit $200,000 in monthly recurring revenue by the end of the next financial year.
To achieve these milestones, Woww is implementing the Scaling Up methodology, a blueprint for building a growth-based company3. Scaling Up focuses on the four key decisions every company must get right: People, Strategy, Execution, and Cash. With the right company culture, core values, and team members in place, Woww’s next step in scaling up focuses on strategy and execution. Felix and Garnett want to leverage geo-arbitrage to grow internationally (geo-arbitrage refers to earning income in a strong economy while spending it somewhere low-cost).
Compared to other countries that are popular for outsourcing, like India and the Philippines, a South African agency is strategically positioned to service Europe and the UK. Woww can act as an outsourcing partner in the same time zone and with English as a first language.
Felix says, “We have an edge over our international competitors. While we’re not as cheap as the eastern outsourcing countries, the time zone and language barriers are completely dropped. Combined with our high-quality work, we provide a massive cost advantage compared to European agencies, so we see a big opportunity for international growth in 2023. By offering an incredible service to international clients at hyper-competitive rates, we’ll be able to increase profitability and simultaneously raise the quality of life for the team.”
1 Recruiting While Bootstrapping – Forbes
2 Prevent Hiring the Wrong Person – CareerBuilder
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