David Baker is a consultant who has been working with marketing firms and advertising agencies since the late 1980s. He is an author, a speaker, and an adviser who helps companies make high-quality business decisions. David focuses on finances, benchmarking, performance, and positioning of firms, as well as PR, advertising, and more. Having spent the majority of his childhood living in a Mayan Indian tribe, David didn’t attend formal school until he was nearly 18 years old. It was during graduate school where he was studying theology and language that he (somewhat naively) decided that he could produce better ads than the ones he was seeing in newspapers. He began consulting peers on the side and realized that he wanted to pursue consulting as a full-time career.
Once he discovered that he had the skills he needed for success, his career took off and hasn’t stopped since. In our conversation, David shares the mistakes he made in the early days of his career, how he has achieved the perfect work-life balance, and the number one error that he wishes consultants would stop making. With over three decades of experience under his belt, he is definitely a consulting and business expert, and you won’t want to miss the insights he shares on this on this episode of the Consulting Success Podcast.
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Consulting success will be yours when you start taking greater risks and stop reinventing the wheel with every new client that comes along.
Taking Greater Risks to Enjoy Greater Rewards with David Baker
I’m very excited to have David Baker joining us. David, welcome.
Thank you, Michael. It’s great to be here, especially on a podcast that’s top ten I hear, which I feel very honored to be on. Thank you for having me.
David, you work with marketing firms and advertising agencies. Tell us a bit more about what you do.
In my signature line, I say I’m an author, a speaker and advisor in that order, but I’ve been an advisor more than anything for many years. I help them make better business decisions because I’ve felt for many, many years that the difference between a firm that thrives and one that doesn’t is the quality of their business decisions more so even than the quality of their work. I help them think through the financial side, performance, benchmarking people’s roles, how they position their own firm. I work with the principals of creative firms of all kinds, PR, advertising design and so on.
Before all that, if we go way back, you grew up with a tribe of Mayan Indians in Guatemala. What was that like?
It feels like a completely different world because I go back to visit there and they do have electricity now. They don’t have running water in most of the village, but I go back and it’s largely unchanged. It feels so strange. When I was four, my parents were medical missionaries and we went to Costa Rica and lived there for a year while they learn Spanish and that’s where I learned Spanish. They just threw me in kindergarten and then we went and lived with this tribe of Mayan Indians in a little teeny tiny village in the mountains. No running water, no electricity, no roads, no stores. It was a very strange upbringing. I didn’t go to formal school until about the tenth grade in the US, but it was a great experience. I wouldn’t trade it for anything. Although, I’m probably the world’s worst Trivial Pursuit partner because I missed everything about the culture in the US over those years. In fact, I remember Elvis’ death is about 40 years old now and I was thinking about this. I was in the US, I happen to be when he died. Everybody was staying up late at night watching movies of Elvis and I’m thinking, “Who is this guy? He’s a terrible actor.” I didn’t realize he was a musician. It was a great upbringing but very apart from the US culture at the time.
What language were you speaking? Was it Spanish or there’s an indigenous language?
There was an indigenous language and it was called Q’anjob’al and then there was the trade language which was Spanish. We spoke both of those and then English in our home.
Give a bit of background. You arrived back in the US, grade ten or so. From there, how did you get to advising agencies?
My story is probably similar for a lot of folks because more and more people aren’t trained in school for what they end up doing professionally. That was certainly true for myself. I was in grad school for six years full time and about halfway through, I was flipping through the newspaper one day and I was looking at the quality of the ads. I just thought, “These suck. This is really lame. How hard could it be to do a better job than this?” I thought very naively, honestly in retrospect, “I can do better than that,” so I decided to start an agency.
What were you studying in grad school?
I was studying theology and language. They put me through grad school was to be a foreign language typesetter with ancient languages and those are the ones that I happen to be studying. We started an agency. We did that for six years and I struggled. I didn’t run a fantastic agency. I ran a very pedestrian, average, normal agency, but I would constantly be reaching out to peers to figure out if they do something that could give me a leg up so that I didn’t have to make all the same mistakes or as I say, could have reinvent the flat tire. Through a strange series of circumstances, I began advising peers and over about a six-month period of time, I switched to that full time. That was 23 and a half years ago and I became a consultant to my peers and have been doing that ever since and learned drinking from a fire hose at first. It wasn’t my superior experience that made me a great consultant. It was that I was learning from a new firm typically every week and loved the process. That was how I got where I am.
You didn’t go into the corporate world and move up the ranks there. It was straight out of university into the trenches, learning as you were doing.
I knew some things were true that I would never compromise on. I knew what my value was worth and I decided that if I can’t get other people to agree with me, that I’m going to fold it and I’ll go do something else. I was so convinced of that and I made some bad decisions, some good decisions. One of the decisions I made was that I was going to take a full-time second shift job where I could feed my family with this so that I wasn’t faced with the economic pressure to compromise on my pricing in my consulting work. I had to do that for about seven or eight months before there was enough income on the consulting side to let me quit that job. I find that when I talk with clients, this notion of feeding the machine is what pushes them to compromise on pricing so frequently. I was determined not to do that so I have that job on the side.
When you say feeding the machine, because there’s also a lot of mindset stuff going on there, tell us a little more about what you mean?
We’re living in the land of opportunity with developed cultures. Canada, the US, Australia, to some degree parts of Europe, not quite as much love the idea of growth. We get all these opportunities and we add people and maybe we borrow money. We sometimes make foolish decisions to respond to the acceptance that the marketplace is sending our way, the signals that are sending our way and so we grow to meet that demand. In the process, we’re creating this bigger machine. When things slow up a little bit, that’s when we switch into this mode of feeding the machine. That is precisely when we make all these compromises about charging less than we should or maybe accepting a client that we know is not a great client, but it’s either take work from this less than great client or my people are going to be sitting in their seats doing nothing. It leads to this constant stream of compromises and that’s what I call feeding the machine.
What will you say then to someone in that position who maybe right now riding what I often call the roller coaster where they’re having some good months and some nice projects and then all of a sudden things wind down? They find themselves staring at their computer screen or looking at their phone waiting for something to happen. What do you suggest? What about their mortgage? What about their expenses, their life? Will you suggest that they should not take a project even if they have to reduce their fees? What would your advice to them be?
That’s such a great question and I can tell by the way you’re asking it and you could tell by the way I’m snickering that we’ve both been in those places at earlier parts of our career. I would say that it starts by deciding how big a firm you want to be. Not letting the marketplace determine that for you and then moving up and down based on the degree of acceptance in the marketplace that’s standing in your way. The second thing I would say and this is more important than that first one, is that you need the size you’re firm. Whatever you decide the ideal size is, that size needs to be significantly less than the amount of regular opportunity you get. The delta between your size or your capacity and the amount of opportunity you get, that delta is what represents your ability to say no and maintain prices higher and be choosy about who you work with. Some people can pull that off because they’re very confident. Other people need a steady stream of marketplace acceptance in order to learn that confidence that needs to come from that amount of opportunity. Essentially, it’s about sizing your firm so that it’s never as big as the opportunity coming your way so that you can keep saying no. Then o if some of the opportunity falls off, then you’re not saying no quite as much, but you’re going to get back up to the point where you can say no again.
David, your latest book, The Business Of Expertise, let’s talk about that. One of the points that you make is that too many people in business treat it like a hobby, don’t make the tough decisions. Tell us more about that.
I kept working with people years ago who weren’t making any money, but they were still calling it a business and it hit me. It’s like, “There’s got to be a distinction here.” I came up with this very simple rubric. A hobby is something that costs you money. In my case it’s riding motorcycles, it’s flying, it’s doing fine woodworking, it’s photography, that costs me money. I buy something and I cringed a little bit. A job is something that exchanges a known amount of money for a known amount of effort. An entrepreneurial enterprise does more than that and it yields profit consistently. I hear people come up with all these excuses about why their business isn’t making money. Some of them are valid. If you are newer in the business, that’s valid. If there’s a certain downturn and you decide to live with not making much money for a short period of time, that’s valid. When people talk about having cashflow issues regularly, that means they’re not making money.
There is no such thing as cashflow except on rare occasions. If you’re regularly having cashflow issues, you are regularly having profit issues. I don’t think this is a success or failure issue. Some people are cut out for running a business and some people are not. If you’re not cut out for being an entrepreneur, then quit doing it. This nonsense that you follow your heart and success will come is bullshit. It’s not true. A lot of people are following their heart and success never will come. It’s a mix of having entrepreneurial expertise, entrepreneurial courage, having something to sell, knowing how to sell it. The same things that people are learning when they’re listening to your podcast or when you’re consulting with them as clients. I’m sure you must come across people every once in awhile and you would think, “These are great people and they’re very smart, but they shouldn’t be entrepreneurs. They shouldn’t be business owners.”
You, in fact, referenced a study in your book that you conducted where you found the most successful entrepreneurs and experts are the risk takers, which means that they’re often wrong, but they’re right often enough about the right things. What does that tell us? Maybe you could share an example either from the work that you’ve done or even in your own business in the early days. There’s a lot of mindset that goes on with consultants and experts where they’re afraid to make decisions. What I’ve found, they look at all the negatives before acknowledging the positives and they spent so much time looking at the potential negatives. That holds them back from taking any action. Even though they might make some mistakes and they may only yield a certain percentage of a total result, they end up not yielding anything because they haven’t taken any action. How does that play into and what’s your experience around that?
I can tell then by reading between the lines that you’ve run into the same issue with clients and your job at that point is to help them save themselves from themselves. There’s one approach we could take and that’s to not ever make any mistakes. The only safe way to never make any mistakes is to never make any decisions and you’re going to end up on the sidelines at that point. If you have employees, it gets even more complicated because you’re not sure should you hire this person? Should you dismiss this person? Should you make this person a partner? What about positioning the firm? What if my key employees don’t agree with this decision and you get paralyzed thinking about all the implications. I feel like employees will forgive you for making bad decisions, but they will not forgive you for not making decisions.
I was surprised at this research I did. I was expecting to find far more common personality traits in the successful folks that I had studied. There were 1,340 in there and I kept thinking how they make decisions or how they process information or their worldview. There was no pattern at all except the fact that they make decisions, they take risks. If you believe that, then it carries over into so many other areas. When you think about adding a partner, “Is this person going to be a risk taker?” That’s the most important question you can ask. The truth is that most people who are working for you are not risk takers or they wouldn’t be working for you. Although, certainly there are many exceptions to that. We’ve all worked for somebody else, but this is the right question to ask. Is somebody a risk taker and how much information do they need before they can pull the trigger and make that decision?
A lot of it is based on instinct. I do think you should listen to other people, but at some point you should just stop listening to other people. I’ve been doing this interesting second study. I’m calling it The Entrepreneurial Defense System. It’s this ability that entrepreneurs have to know who to listen to. I’m trying to figure out exactly where I’m going to go with this, but who to listen to, how often to listen to them and then when to quit listening to them. There is this lone wolf nature of being an entrepreneur that means they are going to make a lot of mistakes. What happens when you make a mistake? Acknowledge it, fix it, apologize if you’ve hurt people and then move on. Don’t quit making decisions if you make mistakes.
On the top of the mistake essentially because I know that you talked about that you had some failures, I like to call it learning experiences, in the agency that you were running. That gave you the opportunity, the insight to go out and start advising other agencies or other agency owners. To some that might sound a bit counter-intuitive. They might think, “David, if you made all these mistakes, how can you advise us.” I know that that whole experience has positioned you and given you insight that has helped your business to grow. Talk us through a little bit how the mistakes, the learning experiences or failures, whatever you want to call them, that you had in your previous agency allowed you and continues to allow you to serve clients so well?
It’s self-reflection. I don’t know if that’s just the way my mind works or everybody is the same way, but I honestly don’t remember the many great decisions I made. I’m sure I made them but I sure do remember the bad decisions I made. Those are the ones that it’s almost like a tattoo. As an agency, we had a client concentration problem. That means we had a client that represented too much of our business. We knew it but it felt very secure and they were ready to ramp up with us and we had everything in writing. We went ahead and bought the requisite equipment and hired the people and then we discovered some embezzling was taking place on the client side. I turned my compliant contact in thinking that this will endear me to the client and it’ll be even better. They appreciated it obviously, but it brought the whole project to a halt and just about took our business out. That was one massive mistake I made. Another massive mistake I made was I borrowed money for the wrong reasons. I borrowed money for operational things. Instead of asking myself when we needed to expand, “Why I didn’t have the money to expand?” I said, “We have to expand. I don’t have the money. Where do I get the money?” Instead of asking the right question, I borrowed the money, which enabled me to mask the real issues that were happening at the firm. That was another mistake.
Another big mistake I made was, and it prompted my fourth book, the one on managing people, was that I was at best, I was an average people manager, maybe not even quite average. I was a good person to them, but I struggled a lot with my own insecurities and so on. That showed up to the point where some of my employees were exhorting me about how to be a better manager and it was painful to hear that. I was very grateful for their honest feedback. I think about those mistakes I made and I think about the impact they’ve had on my consulting career. You definitely don’t want to listen to me because I’ve made all the right decisions. Now, I would say that in ReCourses, I’ve made largely correct decisions but that’s because I made so many bad ones earlier. This consulting business, which is just me, is very profitable. It’s well-known around the world. I love it. We’ve been able to help a lot of people. It’s a successful business. Part of that is accidental, part of it is learning from the mistakes I made in the previous business.
From what I know, David, you’ve achieved the highest level of financial freedom, lifestyle success in your business. You’ve done that as an independent solo consultant. How have you approached scaling your business? How have you been able to make the impact that you’ve made and also the money that you’ve made as an individual?
The first decision for me was that even though the marketplace wanted me to be bigger, in other words, there was enough opportunity to justify hiring people. I resisted that for twenty plus years because I want the freedom to take twelve to thirteen weeks off a year, not at once, but in different periods of smaller chunks of time and I didn’t want to have to worry about people. I also felt like my own personal management ability was still average at best and I wanted to be close to the work. That was the first decision. Then, how do I make a lot of money without employees? The key to that was making the right positioning decision. Being very bold, very public about the kind of firm I wanted to work with, and then being specific on my website so that prospects could self-select themselves out of the running if we were not going to be a good fit before I ever had a chance to compromise with them. Then charge a lot of money in a value pricing manner so that it wasn’t tied to the number of hours it took, but it was packaged pricing or value pricing.
All of that sounds good academically, but how do I get enough opportunity? In the late ‘90s, I was spending about $6,000 a month on a full-page ad in a major publication that served this industry and it was working for me. It was an enormous amount of money and I said to myself, “Self, there’s got to be a better way to do this.” I landed on the idea of starting to write emails every month at the time in exchange for people trusting me with their email address. It was an early form of content marketing. Over the years, that list has grown. There are more than a little 30,000 people that get my weekly emails now and I give them for free enormous amounts of insight and then I don’t charge them until I apply it to their specific situation. Everything is free unless I apply it to their situation and then it’s ridiculously expensive. I have these 33,000 people plus all the people that I get to speak to from time to time or that read the book that are getting this stuff there and the combination of all of that drips enough opportunity to me so that I can still be selective and charge enough money. That’s the formula that I’ve landed on.
The decision and the actions that you’ve taken in terms of producing content consistently, has that played the greatest role in helping you to attract clients for your business or is there something else?
Absolutely, that’s the biggest thing. It’s clearly not my looks. It’s the insights, the quality of the insight from having it tight-focused. My goal when I write something is I want a reader to feel like I have a camera hidden in their office. I know their world so well that when they do need some serious help, they’re going to think about me. It is easy because I love producing content. The book that you referenced is my fifth book. I love speaking. I love doing webinars. I love writing insight pieces so it’s not that difficult. It’s a natural fit for me. If I were more of an extrovert and a networker, I probably would use other ways of landscaping up a new business, but that’s not me. This is how it works for me.
What about in the early days when you first got started with your business. In content, I’m guessing you didn’t write one piece and instantly have people knocking at your door. Was it that ad that got things moving for you or what did you do to get your first few clients in the door?
I networked with a few associations who did not have any offering on the business expertise side. They would refer their members to me when those members needed help. That was one way. I also used direct mail. I paid quite a bit of money to have beautifully designed and printed pieces and then we had parties over at the house where friends would come over and help us put 10,000 or 20,000 in the mail. We only had to do that twice in the early days and from there we had enough momentum that the email list had enough members. We started with a few hundred and now there are 30,000. It was direct mail and advertising and networking with associations. Networking with associations, I wish more consultants would do that. You could go to an association and these associations have thousands of members and they’re dying to produce great content for their members. You provide the content, they host it. Meanwhile, you’ll get three, four, 600 email addresses who are interested in hearing an insight from you, particularly if you don’t abuse those emails, if you’re not trying to sell to them. I don’t try to sell to people. I try to give them insight. I figured, “If they need help, they’ll figure out that I’m in that business to help them if they want and they’ll knock on my door.”
What mistake do you see consultants and experts making often that if corrected would help them to be more successful?
The biggest mistake I would say is that they spend too much time solving client problems on an individual basis. Every client that comes to them presents what seems to the consultant as a unique problem and they dive in and they fixed that problem with the client without stepping back a few paces and noticing the patterns, and start to solve problems that have a broader impact. Using that example with a client that comes to them with a problem, they say to themselves before they solve it, “What problem is this client experiencing that many clients experience? Let me solve the problem that many clients are experiencing.” I’m doing it for this specific client but every time I get a chance to solve a problem, I’m going to try to solve it in a bigger way. The second biggest mistake they make is that they do not pay attention to their own marketing. They’re the cobbler’s son with no shoes thing.
We joke about that but it’s disgusting to me. It’s pathetic honestly that consultants don’t have a great website. They don’t have a presence. Whatever prompted you to do this podcast and to put the hard work in, you’re not selling your services here. You’re interviewing somebody that everyone will benefit from, but the payoff is enormous for you. Taking the time to do that as opposed to always spending time solving a particular consultant’s problems. That’s another big mistake I see consultants make.
Where do you think that comes from because that’s an interesting topic? It comes back to what we touched on that you mentioned your book, this idea of people treating their business more like a hobby than like a business. There are a lot of people out there that have very good intentions that want to be successful, that take steps towards the destination that they want to reach, but ultimately they’re not committed. They’re not committed to putting in the work, to putting the time to making the investments that are necessary to achieve the level of success that they want. What’s been your experience around that and have you found a way for people to overcome that?
I wish we were in a bar over a beer and I could pick your mind on that as well because I don’t know for sure that I know the answer. It also feels like there might be many answers to it. One of them is that I don’t think consultants frequently have sufficient confidence to do that. You put them in front of a client one-on-one and they get lost in that and they feel a certain level of competence and they see how the client is grateful and so on. Put them on a bigger stage and they get lost a little bit. They don’t know what to say, and they don’t know what to say because they’re not positioned well. There’s no such thing as a consultant who is doing really well as just a consultant. The consultants doing well are focused. I’m focused on a very particular market. You’re focused on a very particular market. Because of that, I know what to say, who to say it to, where to find those people and the idea of what to say, for instance, pulling that apart a bit.
I’ve got this Evernote file with about 200 topics that I’m dying to write about and I haven’t had the time to do it. You have your own way of collecting those topics that you want to write about, but somebody who hasn’t made those tough positioning decisions, those ideas don’t come to them. They’re not getting smarter quickly enough. Every situation they go into, they have to start from scratch again and they’re not building on what they learned before. All of that stems from poor positioning in my mind. The other is they’re not charging enough money so they feel like they’re in a hamster wheel of always having to work because if they stopped the billable work, then there’s not going to be enough money. The idea of turning the clock off for a minute and putting their feet up and thinking seems like a luxury they can’t afford in some cases.
David, this has been a lot of fun. I want to thank you. What’s the best way for people to learn more about your work and connect with you?
Maybe the simplest would be to go to the microsite for the book. That’s Expertise.is. That gives you a sample chapter, an outline of the book. They can go to Amazon and then there’s some links there if they’d like to explore working with me further. The book is a good place to start. It’s the first book I’ve written that I really loved and I’m very proud of it almost like a child. I love the book. Michael, thank you so much for having me. I’ve appreciated the thoughtful questions and the chance to talk to your audience.
This has been a lot of fun. A lot of appreciation for you too, David. Thanks so much.