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Just Say No To Bad Clients

Feb 09, 2007
Startup Nation – Chris Johnson

Name: Chris Johnson
Company: Terralever LLC
Location: Tempe, Arizona
Year Founded: 2002
Initial capitalization: $40,000
2006 Revenue: $2 million

Chris Johnson’s Story: When Johnson left a huge tech company to start Terralever LLC, he had a laptop, an extra bedroom-turned-office and a lot of technical skill. He was hungry for work, hoping he could convince marketing folks at large companies that he could build great Web sites for them to implement complex marketing campaigns.

“That first year, all you’re trying to do is get people to buy into your services,” says Johnson, whose only other employee was his wife, Kim, who handled accounting. “You take on a lot of questionable clients because you’re just looking for [ways] to pay the bills, so there’s no bad client. Any work is good.”

Of course, that’s not exactly true. Johnson got out of the house and set up shop at local cafés. Terralever began to grow. Johnson took on a partner – Andy Richter, who was experienced in interactive marketing, technology integration and branding – nabbed more clients, hired more employees and moved the company into its own workplace. And he revisited the idea of “no bad clients.”

Getting Choosy
Johnson was working with a small local company that “didn’t have a lot of focus. It was always difficult to get in contact with the executives and get direction, and ultimately it was hard to get paid for the work we did,” Johnson says. “Collecting money isn’t billable, tracking down executives isn’t billable, delayed projects cost us money. Nobody enjoyed working on it.”

What should have been a two-month project turned into a four-month mess, and Terralever collected less than half its fee. That’s when it hit Johnson that he didn’t have to work with such clients or subject his employees to corporate headaches. He could just say no.

“The minute we made the switch from a mentality of desperation to taking more control of our destiny and choosing the kind of work we’d [accept], we transformed [what] we were doing.”

Saying no isn’t hard. Early on, Johnson tries to identify which clients are worth it and which aren’t. “It’s always delicate,” he says. “You don’t want to come off as arrogant or disrespectful. We just say, ‘This isn’t a good fit for what we’re doing, and we’re going to bow out of the opportunity.’ Generally, every time we do it, it goes well.” And they’re also happy to refer those clients to smaller tech shops.

Getting Happy
Terralever has seen 100 percent growth in each of the last two years. Johnson attributes his company’s success to being selective and keeping in mind the overall happiness factor.

“Our team members are all type-A – strong, intelligent people,” he says. “They don’t enjoy working on projects that are going to be a failure.”

Terralever targets marketing departments at big companies to build ambitious Web sites for product launches and entering new markets. The idea for the company came from a rift Johnson saw often at his old job: small and under-funded IT departments – which were resistant to change – duking it out with marketing departments that were by nature experimental and innovative. Terralever bypasses the rift and, often with more technical expertise than an internal IT department, connects directly with marketing.

“We get to come up with creative solutions and do neat things,” Johnson says.

Those “neat things” pay. After learning to just say no to certain clients, Terralever now employs 19 people – and reported $2 million in gross revenue for 2006.

Copyright © 2007 StartupNation, LLC

Media Contacts

Celeste Johnson
Sacks Public Relations
direct: 602-619-4444
celeste@sackspr.com

Andrew Richter
Terralever, Managing Partner
direct: 480-839-1080
sales@terralever.com

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