Necessity is often the mother of invention and the past months have seen an ever-increasing number of agency start-ups come to market. As the pandemic changed the way consumers worked and shopped virtually overnight, society, brands and businesses alike faced an unprecedented moment of reassessment across the globe.

“Everyone adapted very well and very quickly,” says David Pattison, Chairman of Gravity Road. “The agency world is good at adapting quickly and the pandemic made that a necessity.”

For Pattison this moment of reassessment came mid-writing his book, The Money Train: 10 things young businesses need to know about investors. He had started his book at the end of 2019, having had the idea after going through a particularly bad fundraising experience. “I decided to do it as a helpful guide to support people to prepare for that process,” he explains.

With a first draft due in May last year, the limitations of lockdown gave Pattison the perfect opportunity to knuckle down, write and edit. A commitment that meant he started 2021 with a brand-new book on the virtual shelves at a time when so many would-be entrepreneurs and employees alike were grappling with the drive to do things differently.

The pandemic start-up effect 

In the advertising sector this drive to do things differently has led to a flurry of start-ups in the wake of the pandemic. Pattison notes that with the two fundamental foundations of people and technology, starting up an agency is not a very costly business.

“The agency world is very simple from a start-up perspective. If you have a great idea you can attract client revenue and ultimately you are building your brand in a relatively small sector,” he explains.

Yet its notable that Pattison, the ‘P’ in PHD, a media agency that was not only at the forefront of strategic media planning, and arguably one of the most-trailblazing media agency brands in the world, is refreshingly outward looking when it comes to assessing the importance of brand building in adland. “The only people who really care about your brand are you and your family. There isn’t really a lot of brand recognition,” he says.

When it comes to identifying opportunities for growth and scale, Pattison points to the businesses serving agencies as a key opportunity. From barter business to language analytics to chat bots. “It’s the businesses that are providing that infrastructure to the industry that really have the opportunity to go out and raise funds,” he notes.

Repeatable revenues

For fledgling businesses, getting attention is hard and start-ups that focus on consumer revenues and subscription revenues are attractive to investors. “Investors are looking for contracted repeatable revenues,” he explains. “Everyone wants to build a brand, but investors don't get turned on by that. It's all about revenues.”

In the context of the industry’s ongoing focus on the balance between long-term brand building and short-term activation investment, Pattison’s position is nuanced. The long and the short of it is, perhaps the industry is asking the wrong questions and seeking certainties where they simply do not exist.

“We are a great industry for looking at things in black and white, but there are a million shades of grey. There has been an acceleration of trends as a result of the pandemic, but many of these shifts such as the growth of online shopping were already happening,” he notes.

Highlighting the growth of streaming services as another example of that acceleration effect, he adds that, “coronavirus has been the accelerator of many trends”. Yet he notes that the growth of one channel doesn’t simply equate to the death of another and people should beware of the ‘herd mentality’.

“There is nothing new in media, it's just the delivery system that has changed,” he explains, pointing to the rise of social-driven brands such as Gym-Shark, as one such example.

Innovation at home

The notion that necessity is the mother of invention is more than an empty cliche. Pattison talks about the way in which people and businesses have been thinking on their feet, such as the flurry of restaurant group’s bringing out dine at home delivery boxes.

“People are doing more when it comes to trying new things, even though they are staying at home. When you consider that GDP is down 6%, it shows that people are getting on with doing stuff,” he explains. 

Yet these shifting consumer behaviours can provide both an opportunity and challenge for established brands. “It’s much harder to be a brand leader than a brand challenger, to keep a brand fresh and get people to believe in it,” notes Pattison. He continues: “It’s harder to change an existing business significantly. Established businesses and brands are taking more notice of innovation in the market and there is an acceleration happening.”

Pattison discusses the way in which brands have adapted to innovation through investment and acquisition or a combination of both. Unilever, for example, has an investment arm. “In the past some companies have taken consumers for granted, relying on minimal research into users,” he explains. However, the shift to social listening and actually really listening to consumers means a growing number of brands are ‘walking the walk’.

Evolving the agency model

He believes that agencies too are ‘walking the walk’ when it comes to adapting to the current crisis, from the massive shift in production to the wholesale adoption of remote working. “We’ve been talking about the death of the agency model since 1971, but the truth is that holding companies are doing well because their clients appreciate the way they have adapted,” says Pattison.

Then of course there is the impact on talent. The media industry like many other sectors is facing up to the challenge of five generations working side by side in the workplace. With the added challenge that many millennials look up at their bosses and simply don’t aspire to work like them or follow their path.

“Millennials are encouraged to start their own businesses,” explains Pattison, discussing how success has changed. Where once young people aspired to go into investment banking, followed by the tech sector now it’s starting your own business that is defined as the ultimate badge of success.

Take fundraising seriously

Just as that old adage that ‘everyone has a book in them’ gives false hope to many, the notion that anyone has what it takes to start their own business is equally full of holes. Especially, according to Pattison, if that business is an app.

This is not to say that there isn’t a wealth of brilliant ideas out there, waiting to go to market given the right opportunity. But Pattison cautions that entrepreneurs should think more carefully about how and if they raise investment.

“They are taught that investment is the only way to fuel growth, yet they don’t take the fundraising part seriously. Often, they give away too much, too early,” he says. This is why he advises founders to take it seriously, to ask for advice and talk to those with experience.

Pattison urges founders to stress test their businesses, to have a genuine proof of concept and prove there is a market for it. “Just going out into the market on hope alone is never going to cut it,” he adds.

Innovation in the second act

In an industry in which ageism is still a major issue, much of this innovation is coming from the ideas, energy and wisdom of older talent. It’s notable that the stereotype of the young ‘tech bro’ investor and the conflation of youth with innovation might finally be challenged by the long-term fall out of the coronavirus crisis.

At a time when employees have been living at work, as well as considering what some commentators have called ‘the age of no retirement’, innovation in the second act of an ever-increasing working life is a notable shift. The industry fatigue with ‘side-hustles’ has been challenged by the reality of redundancy in the midst of a global pandemic. For those who had their own brand or business on the side found a safety net of sorts.

“There is a lot of reassessing going on. That capitalist drive that is completely all-around accumulating money is really being questioned,” explains Pattison. “People in their 40s and 50s are thinking hard about what they are doing and why.” It's a shift which he believes is not just about addressing financial concerns, but also the emotional concerns too. “People are thinking really hard about how they lived their lives before this all happened,” he adds.

It's a reset moment that brings with it a unique opportunity to do things differently, whether starting a new business or working in an established organisation. After 2020 that desire to turn the page to the next chapter is perhaps a universal one.

David’s new book The Money Train: 10 things young businesses need to know about investors is out now