On this episode of THRIVE — sponsored by Workamajig — Kelly and Rachel Renock, CEO and Co-Founder of Wethos, discuss strategic ways that creative leaders can work to dismantle toxicity within their organizations.
EP 91: Dismantling Toxic Workplaces
Kelly: So we've got an important episode for you today. I'm joined by Rachel Renock, CEO and co-founder of Wethos, a platform that helps people build magical virtual studios. We'll hear a little bit about that. But we're really going to focus our conversation today on something that we are both incredibly passionate about, which is dismantling toxic workplaces. Welcome to the show my friend. It is so good to see you again.
Rachel: Yeah, it's great to see you. Thanks for having me.
Kelly: So your story is actually one that I think a lot of entrepreneurs tell. You work for the big firms. You want to create something different, better, more disruptive in the industry. That's kind of how the first iteration of Wethos was born. Do you want to say a little bit more about that? And talk a little bit how it's transitioned from then?
Rachel: Yeah, sure. So we always say like, the first virtual studio was our own. Basically, like, I used to be an art director. So I used to shoot commercials and do a lot of social and digital campaigns. I worked on big brands like CoverGirl, and Hershey's. And I worked at a few large agencies in New York City. Back in 2016, I was highly engaged with the Black Lives Matter movement. I was really involved politically. And it got to the point, I think, where I was working at a big agency where I really was seeking more meaningful work, I guess. I met my co-founder, Claire at that agency. And ultimately, we left to start our own studio in pursuit of more meaningful work. Through the journey of working with a lot of nonprofit organizations, we realized that there was this key around teams, both because the organizations we were working with really required different myriad of teams based on the policies or the initiatives they were doing. And on the side of, a lot of independence, that we are working with a lot of our friends who really wanted access to those bigger projects, and the more meaningful work that they used to get from an agency perspective in terms of like these big problems that they want to solve, like these freelancers are pigeonholed into like, make a few logos and call it a day. And when you come from an agency, that's not really what you want to be doing. So there was this sort of magic that happened there. And basically, as Claire and I started to scale our own studio, we realized how challenging it is to scale a creative business, from the business revenue model to resourcing to like all of the things basically. That when you're at a big agency, you don't really have to think about it.
Kelly: I don't know what you're talking about.
Rachel: It's exhausting. So we went out, and we raised a bunch of venture capital money, and we ended up building internal software for ourselves that helped us facilitate and we actually ultimately grew our own studio to like 1.4 million in revenue in about 18 months. And we essentially took that technology and consumerized it for other owners, independent owners of different studios, collectives, boutiques. So that's where the evolution is, like we ran our own studio through it for a long time. So we know that it's powerful. And really, our vision is to put more money into small businesses and independence pockets. And so, we do that through teams, and through making teaming up easier and more accessible to a wider audience.
Kelly: Yeah, it's such a powerful platform. I've definitely had the opportunity to demo it myself. So if you haven't, check it out.
Rachel: I showed it to my mom and she was like, “This is great, but like, I have no idea how much of what you just showed me is like prototype.” I was like, “No mom, it's real. We built it. Like people pay for it.”
Kelly: I think your greatest critic is definitely like your parent. Right?
Kelly: It's funny. I have a story of funny parents’ story. My dad used to say like, “I don't really know what you do for a living. I know you're really good at it. I know you make money at it. I just tell people that you like built the internet.” And I was like, “Please stop telling people that I built the internet.”
Rachel: And then you go over to their house and they're like, oh, could you fix our Wi-Fi? No, I didn’t signed up for that.
Kelly: Exactly. So what were the things that you saw? Because this is like, again, every entrepreneur story or most of them anyway. What were the things that you were seeing in corporate America that kind of fueled this passion to dismantle the toxicity that we have all encountered in our prior workplaces? What were some of those stories? I mean, I know we could go on forever but…
Rachel: I mean, honestly, like the way that I look at this now that I reflect back on it is through the lens of my own personal response ability, I guess, in both participating and perpetuating certain things that I definitely at my core didn't or don't agree with. But when you're within a system, sometimes you lose sight of that. And I think, in that the biggest sort of spark for me was recognizing that I was becoming someone I didn't want to be. And the reason for that is because it turned into this very sort of competitive kind of nasty sort of environment where at a big agency, they're pinning creative teams against each other to pitch, whether it's new business, existing business, whatever. And they're putting, a lot of times like ridiculous deadlines on things, unrealistic timelines. And, frankly, my co-founder for better, for worse saw how much they were charging the client versus how much money was actually going into people's hourlies or salaries. And it's like a devastating thing to look at. I mean, it's like, 5, 600%, more is being charged to the client, than what you're actually taking home. And so all these things sort of combined is what ultimately drove me to the decision. But between the sexism that I experienced, the racism that I saw, and was slapped on the wrist for calling out, very much perpetuated by both the agency and the client side, a lot of us have been in the situation where we’re trying to cast a TV commercial, you put an interracial couple on the table, and there's a lot of hemming and hawing. And oh, they don't quite look like we want them to look. And like this sort of like coded beat around the bush kind of language. And at that point, Eric Garner had just died by the hands of police. I looked out the window, my agency in New York, and I saw a huge movement of people coming down the street that I ultimately ran out the door and joined. And when you're at these two different realities where people are truly like begging you for their lives. And then you're inside of an agency, trying to make a commercial that reaches millions of Americans where you can't even get somebody to say like, yeah, an interracial couple. That that sounds good to me. You just lose. I felt like I lost my purpose. I felt like I lost who I wanted to be. And I wasn't on the path to becoming who I wanted to be. And so that's what ultimately made us or made me leave. And I think that was a big thing that pushed me over the edge. But I also will say that I worked with a lot of really incredible people. And again, I believe that the system itself is broken. And I believe that it's too deeply entrenched in this toxicity to be able to change it from within. And that's what ultimately led me to leaving and trying to build a new system outside of it.
Kelly: Yeah. It's so interesting. And I do want to kind of like put a pin in your experience because I think what you said is really powerful, and I think resonates with a lot of people. You didn't like who you were becoming as part of the mechanism inside of that system. I think that's ultimately what we're saying about the story that a lot of entrepreneurs tell like we were a part of this big machine, it didn't feel right. But what you said is actually more to the core of what's happening. It's not that it just didn't feel right. It's that it actually impacted you on a personal soul level, to realize and to wake up one day and say, yes, this is impacting me, let's start there. And I don't like who I'm becoming because of it. And I want to change it. So that might mean for some people who are in those organizations leaving and starting their own thing. It might mean leaving and joining another organization that does align with your values. I mean, it could mean a lot of different things. What about the people who are already running their own shops already doing their own thing? And are having the realization that whoa, I actually may be contributing or perpetuating this same problem inside my organization knowingly, unknowingly. That's like a slippery slope. But I hand that over to you.
Rachel: Yeah, I mean, look, it's really hard I think in my experience. I've gotten to the point where I think the biggest teams I have ever been was maybe 20, 25. I think that the hardest thing about gaining power is recognizing that you have it, especially when you come from a place where like, I quit my job when I was 25. So I was like a mid-level junior kind of art director. And so my whole life trajectory was about climbing a ladder, getting that power, getting to the top and then I'll change things and they'll do whatever, blah, blah, blah. Suddenly, I was. I left and now I'm in the seat where I have access to capital, where I am at the top of the organization where I set the tone, rise up the culture regardless of whether we are 4 people or 25 people or 100. Like the tone and what happens at the top is what ultimately sets the culture. And so I think, for me, it's a lot about reflecting on what is the power that I have, when are the moments when I'm not recognized in that power I've found in the past that I'm an idealistic person. I love to throw ideas. I do that. But as a CEO, people take that and they're like, we need to go make this idea happen. And you don't necessarily realize that you're causing a lot of anxiety with little things like that and little actions every day because you're not recognizing the influence that you have within the organization. So I think the first step, for me and for everybody really is just acknowledging and recognizing that you have power and that you also have the choice to wield that power in a positive way. And to, I think, continue to remember, because I'll never forget what it feels like to be that junior employee, and to feel like you're not seen, you're not appreciated, you're not treated well. You're not paid fairly, or all those things, or much worse. Yes, of course. And really just thinking about, what are the policies? And what are the things that we can do from day one that put some safeguards in place because we're all human and we all make mistakes, and we all have moments. I've had plenty. But I think understanding and recognizing that and not just brushing it under the rug is one of the most important parts of that.
Kelly: Yeah. I think that's true. I think that's definitely true. My own experience was like, I definitely encountered a lot of sexism, especially because of my sexual orientation, being queer identified and encountering the types of leadership that I encountered, I mean, it was really like, I don't know, I mean, I kind of joke around about it, like I was riding my motorcycle to work listening to Anita Franco. And they were like, we don't know what to do with you. And that would have been fine. If they kind of like embraced it, like oh, it's like the art director is just being expressive or whatever. And it's embraced and it's tolerated, like in that culture, that would have been baseline. But it wasn't that at all. I mean, it was like so egregious. And, it's funny, and looking back at it, I think that there was definitely some trauma around it that I didn't process until many, many years later. And like you, I was really young. When I left that whole environment, I was only like, 22. So it was like my first entrance into “corporate America”, like small business. Corporate America was like wealthy, white, cisgender, male lead, top down fear based. And I was like, oh, this is like so repulsive to me. And I was like I could probably do this better. And, you don't know any better at the time. So I didn't come from the big firms. I just came from a super toxic work environment.
Rachel: Yeah, I think it's interesting to be on the agency side too, because you're not only interacting with your coworkers every day in the agency itself, but then you also have this whole other thing that is the client. And like, each account inside of an agency has its own little business, it's own little thing, and its own little people run it, and it has its own budget. And, you could jump accounts inside of the agency and have a totally different culture shock, go into a different account, led by different creative directors, whatever. And so, I think that definitely experienced sexism. I mean, for everything from like overt, about, like, we know, you came up with this idea for this men's sex product, but you're not a man. So we're going to have the male ACD pitch your idea to the client. Telling me that in the car on the way there, like you're going to be quiet, and he's going to pitch it and I'm like, men have been selling women's products for years. I do not understand. And like that kind of overt sexism to, the death by 1000 paper cuts to your point, like being told, I'm aggressive, like the gambit of things and I have the privilege of fortunately unfortunately presenting or people think I'm straight cisgender woman even though I am queer, and so like I can “hide it” or it's not in people's faces. And like, there's privilege to that, honestly. And I think, being in those spaces, I had a lot of moments people didn't know I was gay and were saying shit in the room. And I was just like, yeah, so this isn't gonna fly. And it's really frustrating. And I think the problem that I see a lot in people starting their own businesses after leaving that environment is not doing the work of reflecting on what they learned and what they don't think is right. And then applying that to their new business and whether or not they're conscious of it, or perpetuating the things that they've learned and have been ingrained in them. Because they've never seen any other way. And that's something that's a big challenge for sure.
Kelly: And I want to also highlight that, when we say toxic workplace and dismantling a toxic workplace, it doesn't necessarily have to be something egregious like that. It doesn't have to be something where there are racist comments being thrown around, or overt sexism, like there are things that are much more nuanced that are just as impactful to the people on that team.
Rachel: Yeah, a hundred percent.
Kelly: Can you share a couple of examples because I really want to drive this home because I think that a lot of small business owners, like their heart is in the right place, they really start these small agencies, they're trying so hard to grow them to be good leaders even if they've never seen what effective conscious leadership actually looks like. I just want to have a couple of like concrete examples, so that they can potentially see where they might be falling into those same traps that are more than once.
Rachel: So for me, like the number one thing is, it's all about the money, underpaying people, and consciously doing that, which a lot of owners do. And a lot of them are putting in top positions, because the client doesn't want to pay what they're worth. And, there's this race to the bottom that happens like, oh, well, if you won't do it, I'll find somebody, I'll outsource, I'll find somebody who will. And it's really tough. And I think like, a lot of the source of I think toxicity and stress and pain as a small business owner is around money. And when you're running out of money, or when your client won't pay enough, ultimately, that impacts you. But then you turn around and you impact others with that. So like one of the biggest things that I see is just people who are dramatically underpaid for what they're doing. Like it used to blow my mind, even the big agency where like, you have account managers who are literally holding the business together. I am a creative and I love account managers. They are the best like amazing account managers. It’s life-changing. They put their whole business together. They're coming out of college for a 35K salary in New York. And it's crazy when you turn around and you say, this is a Hershey’s account, they're billing the client millions of dollars. With a small business, there isn't as much cushion to play with. So you don't have the stability of having a huge account, and being able to put people on salary and stuff. But a lot of this comes down to valuing people and valuing their time and valuing them for what they're worth and telling them, showing them that they're worth what they're worth through money, because you can say it all day, but you're dramatically underpaying people. Ultimately, that toxicity is going to seep into your relationship, and there's going to be resentment, and they will ultimately be able to really turn people quickly. So that's a big thing that I see that people don't realize how toxic that can become when it comes down to it.
Kelly: Yeah. And I think what you're saying also sort of like the way that I connect those dots is that really comes down to a positioning issue, right? Like if you're agreeing to take on work where the client is not valuing you, and it has that race to the bottom mentality, where they're saying, oh, if you're not going to do this for 2000, I'll find somebody who will. That is not an ideal client. Like get better clients. Because we talk about this money following value idea. If you value the people who are essentially when you're talking about a creative or media or technology services company, your people are your product. I say that all the time.
Kelly: If you value your people, they will stay longer, they will be very productive, very dedicated, very loyal, more fulfilled, which is actually what you should care about. But you have to get the type of work. So this comes down actually to positioning, how well-positioned are you to attract those more ideal clients in whatever niche or verticals you're serving. So yeah, I mean, all of these things are so intertwined. It's very hard but I think you have to zoom out a little bit and really look at the big picture, valuing your people and paying them what they're worth is not separate and apart from the type of work that you bring in. I think there's this idea. Maybe it's just because people don't really know as much, or there's no manual for this, like there's no like here's how to run an agency. There is no manual, but like, the more information that you gather, you start to see that this cycle is very real and intrinsically connects a lot of different things.
Rachel: Yeah. And that kind of toxicity that leads into things like being overworked, especially with the remote environment that we've got going on where there's been a lot of conversation online about like Microsoft Teams and the productivity metrics and how they're basically like tracking your every move and measuring your every calendar invite, and all this other stuff. And, we've been remote for three years, like, we don't subscribe to any of those things. Like we don't have set working hours where you have to be online, you have to sit at your desk, like your employees are adults. They’re people. They need to be trusted. And trust is at the core of everything. And I think you can't trust someone, you can't give somebody a goal and an end date and agree on like, what's feasible, what's possible and say, like, okay, call me if you need me. Let's regroup on Friday. And you can't feel comfortable taking a step back and saying, like you don't need to like check in, you don't need to have that header, like the little Slack icon that's green or whatever, what people do in every other different way. Like, I don't care. You could do your work at 2 in the morning from the moon. I don't care. But if we are hitting our deadlines, we're hitting our goals. I'm good, I'm chill. And I think in doing that, and giving them trust, you also trust them to fail. And that's really, you're trying to take bigger risks, right? Like you have to build that trust, because ultimately, everybody is gonna fuck up honestly. And like, there's always gonna be that one that do it all the time. Failing is okay. It's required. It's how we respond to that failure that really matters. And I think it's those moments that really start to set the tone of where is this place that I work, and what is it really about. How you deal with those moments is really important.
Kelly: Yeah, this is like such a great conversation. I wish we could go for like another hour. But as we're kind of wrapping up for those who are listening or watching and kind of self-aware enough to just to go back to what we said a little bit earlier to see the ways in which they might be, I won't say part of the problem, but certainly could be part of the solution especially as the leader, what would you impart on them? What would your kind of like big takeaway be from all the experiences that you've had and where you are now?
Rachel: Yeah, I mean, look to zoom like way out for a second. If you look at the agency market today, 70% of agency revenue is owned by one of the four holding companies, WPP, Interpublic, Omnicom, Publicists; they own 70% of the market, which is $19 billion in revenue. The remaining 30% is made up of small businesses and independent owners. We, as that 30% have the power to change things. And now is the moment to do that. And I say that, because 2020 just showed us that all this work, agencies big and small, can be done remotely. That puts these big, big, big companies at a big disadvantage; it puts them in a place of being very vulnerable. And I think, in seeing the trends that we've all seen, we all started small businesses, for some reason, in seeing the trends and the direction in which the market has been already moving, this only exacerbated clients waking up to the fact that they're overpaying for these big firms, waking up to the fact that they're looking for better more agile solutions, like the time to be an independent owner is now and with that opportunity, I think comes responsibility. Because if we have this moment, we have the opportunity to sort of rebuild the system to redistribute some of that wealth, not only into our pockets as owners, but into the pockets of the people that we work with, then we need to think and reflect a bit more deeply on what is the future that we actually really want and what is the future that we want to build together because one of my favorite quotes of all time, it's like, the best way to predict the future is to invent it. And with 40% of brands saying that they're looking for new agencies this year, there's a massive opportunity to win that business to redistribute that wealth and to really create cultures and environments in which people can thrive and the next generation can really thrive. And I think, we've talked about this before we hopped on, like I came up through the agency world, you did not, you came up through more like in house at the brand and then starting your own thing very early on. For folks like you who just was like, nope, I'm doing my own thing, I could do this better, it's hard to have that for professional growth, that professional trajectory of like, what's next? And how does this work? And you don't, you're still manual work to this point. And everything I've learned to this point, everything that you Google in terms of HR policies are kind of toxic in and of themselves. And so you're left there wondering like, well, what am I going to do? Reinvent the wheel? Like what am I going to do? The answer is, yes. And I know that that sounds daunting. But there are resources out there. We have a lot of resources. And really, what we want to do is encourage small business owners, because the change starts with them. And it starts with you and whatever power you have in your circle of 5 or 25, or 100. And if you can focus in on what is behavior that I'm exhibiting or what are the things, what are the moments maybe in the past year or two that I haven't been proud of, what's the stuff that keeps me up at night, what's the kind of business we want to become, what's the kind of leader I want to become, then you take that, and you can take it into a more actionable place because we can't start talking about solutions unless we agree that there's a problem. And the problem is really with all of us who have learned these things over decades and decades of basically like this patriarchal way of doing things. So I tend to believe that the future is much more collaborative than it is competitive. And I think as agency owners, and especially small businesses, banding together on this, developing these policies, talking about these things, talking about being paid fairly, paying people fairly, it does start with us. We do own 30% of that market. And the more and more we can continue to grow that and perpetuate that and redistribute some of that wealth, the better the future is going to become for the next generation that's up and coming. And I really do think that we can change the way that we've done things so far. And I think that we can dismantle a lot of this toxicity and, frankly, move into a better situation, a better world for all of us, healthier makes me happier, less stressed as an owner.
Kelly: Yeah, for sure. Well said, I just want to take that entire couple of minutes that you're talking and make that into one soundbite.
Rachel: We’re coming for you on the com. We're coming.
Kelly: Yeah, I mean, it's great. And, I do think that there's a lot of power. And I sometimes think that we forget that as small agency owners or leaders, that we wield that power. And to your point, this is definitely not about competition anymore. This is about collaboration. This is a whole new era of leadership. And it really starts with self-awareness, which is really what you're saying. So I love it.
Rachel: Yeah, totally.
Kelly: Rachel, thank you so much for joining me today. This has been an incredible conversation and keep up the good work.
Rachel: Thanks. Thanks so much for having me. Appreciate it.