GOOD CEOs: Issue 10

🚪
 
This CEO didn’t
want his name
on the door

How do you name your creative agency? For a traditional law or accounting firm vibe, all that’s required is to combine the surnames of your founding partners into one acronym. If you’re more irreverent, then you might land in the arena of brand names that sound like they could be a 1990s record label. All options are permissible when it comes to naming.

But whether your agency name is named after a person, an idea, or just an enticing word creates an association with how your company is led, and what sort of culture it has. Or so James Greenfield believes. When he co-founded Koto in 2015, the CEO purposefully avoided having his name above the door. Part of his reasoning is that great work is carried out more by large teams working in concert than it is by some figurehead at the top.

If the last ten years are anything to judge this way of thinking, then James has been proven right. Koto has become one of the most respected independent branding firms in the world. The agency has grown from a startup studio into a global business with offices across London, Los Angeles, New York, Berlin and Sydney, working with brands including Airbnb, Amazon, Google, Microsoft and WhatsApp.

At a moment in time when the creative industries are dividing – micro agencies on one side, big groups on the other – Koto has remained resolutely independent. Last April, it took private equity investment from WestBridge to accelerate its next chapter. For James, the move was carried out in the same spirit as Koto’s founding – to create a business that’s bigger in stature than its founders.

In this conversation, we explore what private equity really means for creative businesses, why James believes AI will increase the value of creativity rather than diminish it, the rise of independent agencies, and his predictions for the future of the creative economy.

The conversation left me feeling deeply motivated.

Or should I say, Koto-vated? 🫠

Ahem.

Let’s get it into it.

Ollie Scott: What, in your opinion, makes a brilliantly successful piece of design – in the sense that it becomes a real commercial success?

James Greenfield: One of the early examples of that happening for me was my work with Airbnb. That was a seismic moment in my career – helping create and launch ‘Belong Anywhere’, and designing the Bélo symbol. The whole identity system is still relevant, and being used today. Longevity is a sign of strength. While having to re-introduce yourself to audiences again and again is costly. You want to be building a lasting relationship.

OS: What is the one piece of work that Koto has produced that has made you go, ‘that is why we did this’?

JG: There are two things that stand out. The first thing is our Amazon rebrand. We managed to land a very effective, cohesive piece of work. And you can see that in how the brand executes itself day in, day out. It’s a rare example where the creativity has made it onto the streets globally, has made it onto the vans, has made it onto the boxes, has made it onto TV. It’s one thing come up with a creative vision – delivering that vision through is another altogether.

OS: What’s the second thing?

JG: I can't say too much about this. But we were lucky enough to be partially involved in LA 28 Olympic and Paralympic Games. That’s an absolute bucket list thing. As a designer in my early twenties, Olympic identities were always the pinnacle. Hopefully we can reveal more in time.

OS: That’s fair. So last April, private equity firm WestBridge invested in Koto. Why do you think PE is so interested in the creative economy right now?

JG: The creative industries are accounting for a growing share of GDP in the UK. I think smart brands are investing in creativity and understanding it as a differentiating factor. While this is a separate issue, we're about to see the floor raised in terms of capability that AI is going to enable brands to do this kind of minimum viable brand a lot quicker a lot easier.

OS: What will that mean?

JG: Companies that want to stand out are going to have to differentiate themselves even further. So the creative spend is going to increase at the medium and the bigger size companies that are aware of this as an urgent priority. But the question for brand clients is this: do you look at the floor or at the ceiling? AI raises the floor – but creativity raises the ceiling.

OS: Nicely put.

JG: To come back to your question, PE is interested because they know that creativity is becoming a more important, prioritised area of spend. They want to be where capital is being deployed.

OS: Let’s go deeper into the AI issue. When LLMs first emerged, some people thought they would allow anyone to produce agency-quality creative. While that hasn’t happened, many creative workers and agencies are moving away from execution, and upstream to strategic consultancy and advisory. What’s your view on where this is heading?

JG: I think the complexity of the task matters. If I own a small hotel, I might have paid a copywriter to put some info on the local area on my website before. For that sort of content, an AI can put together clear sentences about how to get to a famous castle, some gardens, or a beach.

OS: Right.

 
Creativity is a team game;
it’s easy to understand the idea
of a single creative genius,
but I think it’s a myth

– James Greenfield
 

JG: But if you own an international hotel group and you want to create cohesion around the brand across two-hundred properties, it’s different. If you put that into Claude or ChatGPT, however good your prompt is, you're going to get some standard boilerplate. It’s not sophisticated enough. I am massively sceptical about this idea of AGI – I just don't think we are where people say we are. And on second thoughts, your local hotel guide could probably benefit from some creativity and differentiation too.

OS: Okay, that’s enough AI chat for now. Tell us more about the private equity story. What made you feel like getting investment was the right course of action?

JG: It starts with Koto and the kind of company we’re trying to build. I say this often, but Koto is deliberately not called Greenfield, Matthews and Roden. Growing up in the 20th century, agencies were organised around a group of figureheads, then a large supporting cast. I never wanted that personally because I've always believed that creativity is a team game. It’s easy to understand the idea of a single creative genius, but I think it’s a myth.

OS: So it was for the longevity and legacy of the company?

JG: I wanted to be true to the history of this company, my intention was always for it to be more than three founders. The primary concern for me was that there were many people who had worked at Koto for a long time – seven-to-ten years – who I felt deserved to be shareholders. The second component was I don't think many agencies or many agency founders are never very good at thinking about tomorrow.

OS: The business model often focuses on short term wins. How do you change that?

JG: I wanted to be a little bit more strategic about an agency. We're so used to solving our clients’ needs today. It’s very reactive. I decided that if you want to keep teams together and be truly effective you need to make them part of something. So we looked for ways to create a wider shareholding.

OS: Like an Employee Ownership Trust – being employee owned.

JG: The feeling for us was that this would allow us to create sixteen new shareholders. We could spread the base, and it would allow us to achieve some of the ideas we had about the future of a creative group or creative network. And how we better serve our clients in that environment. Weighing it all up, PE was the right answer for us (as long as it was the right PE partner).

OS: The other options that spring to mind are an acquisition by a holding company – like Publicis Groupe recently buying Fabric Social – or a private equity backed independent group. Did you consider these options too?

JG: We decided that we'd rather do it ourselves. Becoming one asset amongst many is totally right for some people. But we had questions: what's the governance structure? What's the regulatory structure? How is this considered? How is this financed? We didn't find an example where we were happy with the answer to all of those questions.

OS: What made you so investable?

JG: We had longevity of service, long client relationships, and are explicitly a people first organisation. In my experience, most people that work in PE have got an accountancy background, so in many ways its maths. It's either right or wrong, it's binary.

 
Advertising is in an absolute
death spiral unless someone
sorts out the creative standard
and brings that floor up

– James Greenfield
 

OS: So what’s next for you at Koto?

JG: I want more of the team to have ownership. Then I want to broaden our services and products because I think that that's what we need to do to continue to be successful. The silos that exist between agency types are falling and so it's vital to diversify. If you only think about today, one the phone will stop ringing. And the reason is that you didn’t move with the market.

OS: How do you do that?

JG: Consistency is the hardest thing in agency marketing. Some agencies you see do this amazing quarter or two quarters and it's like content consistently then they struggle to keep up with the momentum. Agency marketing is tough – there's no playbook that tells you how to do it and the business of the day always gets in the way.

OS: What have you seen that is good in the land of AI? Everything I've heard so far about AI has been bottom line – reducing costs and creating efficiencies. What about top-line generative or producing things?

JG: If one thing dies in the near future, it's going to be stock imagery and no one will be crying. We use AI all the time in the way you’ve just described. We just did a big campaign for an American brand and all the imagery throughout the whole thing is AI generated. We're all seeing amazing creative outcomes with AI.

OS: What are your three predictions for the creative economy?

JG: The first one is the increasing importance of experience. If you go back five years, if you were a DTC startup and you struck upon a good product, hired the right creative team you could find a lot of customers online very quickly. That happens less now. If brands want to break through and really stand out on that front then I think it becomes about experience.

OS: What sort of experiences?

JG: You can see it with running brands and mass running events. There's that crazy stat recently that 1.8 % of the UK population has applied to run the London Marathon next year. If you make sneakers or apparel, then how do you get there in a meaningful way?

OS: Okay, what is prediction number two?

JG: I think we're going to see channel mix change massively in terms of how and where people spend their money. I think advertising is in an absolute death spiral and unless someone sorts out the creative standard and brings that floor up, I think it might die or have to be really, really have drastic surgery.

OS: Okay, third prediction, please?

JG: I think we're not more than six to twelve months out from AI being less noisy. I think we live in the ‘big thing’ news cycle at the moment. I think we’ll get to a point where fewer people are searching for the philosophical questions of ‘what is this thing?’, and shifted to more of a ‘yeah, I use that’.

All my faith and love,

Ollie