Bob Hacker • Written January 2016
Bob Hacker graduated from the University of Washington in 1966 with a BA in Journalism/Advertising. After a short stint in the Coast Guard and a detour to San Diego for a year, he joined David W. Evans in Seattle as production manager/AE/copywriter. He then went to work for KING Radio but soon left to attend Harvard Business School, where he graduated with an MBA in Marketing/Entrepreneurship.
After Harvard, Bob returned to Seattle and had, to put it bluntly, a rather checkered career. Advertising at Sea- First—that didn’t last. Marketing at Kenworth—that didn’t last either. He then co-founded an advertising agency with two partners, landed two big accounts, lost two big accounts—and the agency was no more.
Then, in 1981, he joined Thousand Trails as director of direct marketing. With an unlimited direct-marketing budget (yes, unlimited) he could and did test everything that he, his team, vendors and agencies could dream up. Armed with knowledge gained through thousands of test observations, in 1986 he launched The Hacker Group, now HackerAgency.
Bob and his first hire needed an office. The got free space, phone and fax by camping in the spare office of the telemarketing center they were using to handle inbound calls. Growth forced them to take the space next door. Free furniture from a bankrupt client made the move affordable.
Over the years, clients such as IBM, Hilton, Hyatt, Symantec, AT&T Wireless, GNA, Airborne Express, Microsoft, Expedia, Oracle, Washington Mutual, and more, continued to help built the company.
He and his wife and COO, Jo Anne, sold The Hacker Group to Foote,Cone & Belding (FCB) in 1999 and they continued to work for the new ownership for another three years, before retiring from the agency in 2002. After the second glass of wine, he’ll tell you about the four things he’s most proud of during The Hacker Group era:
• The agency grew ever year, so he never had to lay off staff.
• The bonus program changed a lot of lives for the better.
• Turnover was low—under 5%.
• FCB had 205 offices worldwide. With a staff of only 85 in Seattle. The Hacker Group generated more than 20% of FCB operating profit while Bob and Jo Anne were still involved. Within FCB at that time, The Hacker Group was called “The Cash Machine.”
Not many agencies survive the departure of the founder, let alone thrive. And who would have guessed that the two biggest agencies in Seattle (HackerAgency and Wunderman) now are direct-marketing shops, not general advertising agencies.
Bob still consults on direct-mail strategy and copy with his old creative team from The Hacker Group as Arcanum, Ltd., from his home office on Bainbridge Island. That’s when he’s not fly fishing off the shore of the Yucatan Peninsula, Christmas Island or British Columbia.
My career had two, distinct phases. Right after college, I didn’t do a very good job of holding a job. My BA was in advertising, so I started there, but soon found that the advertising world wasn’t a great fit. To me, advertising seemed shallow and focused more on agency egos and awards, less about solving real client problems. After two or three years in a job I’d move on, usually voluntarily
I wanted to become a more professional marketer. So I applied to the University of Washington and Harvard Business School to get into their MBA programs. The University of Washington rejected me out of hand—apparently my 2.38 GPA did not blow their socks off. But Harvard was different. The application was almost all essays, ten or twelve of them. I wrote and rewrote each essay, as many as fifteen different drafts, and mailed the application off to Boston. I was in! Never worked so damn hard in my life. Scared to death most of the first year, but then I broke the code and knew I’d graduate.
In my second year, I was heavily recruited by Time/Life. “And what would I being doing for Time/Life?” I asked.
“You would be working in the direct marketing department. We love the fact that you are a copywriter and now, with your Harvard degree, you’ve got great analytical skills, too.”
“Not me, man, I don’t ever want to go into direct marketing, I’m an ad guy.” And with that, I concluded the interview and got back on the plane for Boston. Dumb move, it set my career back nine years.
At the end of the school year I headed back to Seattle with a newly-minted Harvard MBA in hand.
Even then, I couldn’t find a job that would stick. I started out working in the advertising department at Seafirst. Jack David was my boss and was a great guy to work for. After a few years in the advertising department, I moved over to manage the marketing planning department. My first two bosses were great. But then they brought in a P&G guy to manage me. He was a product planning guy, we were selling services. He knew nothing about banking. He had a rigid, top down style that wouldn’t work in a bank. You have to get buy-in and cooperation from independent divisions and departments and you can’t dictate to them. He thought we could and should. I resigned in disgust.
Two weeks later, I went to Kenworth Truck Company. I reported to Keith Rowe. He scared a lot of people to death, but I loved that guy. He was my most important mentor. It was Keith, and Kenworth, that taught me how to make money. Kenworth was rigid on margin management. I would be, too. Later on, when FCB was doing their due diligence, they asked to see profitability by account. I told them I didn’t have a report like that but could get them one.
They were stunned, “You don’t look at profitability by account?”
“No, I look at profitability by job. If every job makes a profit, the account makes a profit.” FCB couldn’t even do job costing, they were floored.
I learned that at Kenworth. We did a P&L on every truck and every part number and managed to that level of detail.
Kenworth did have one problem at that time. Their compensation program sucked and they wouldn’t or couldn’t fix it. I was very frustrated with their inaction and got recruited to start an ad agency with two guys who had worked on the Kenworth account at Cole & Weber. That didn’t work either and my checkered career continued. So I sat down for two or three days to figure out how to kick start a career that would last.
The conclusions were simple, but life altering. One, I had to work where marketing was the most important thing in the business. At Seafirst, it was banking. At Kenworth, it was manufacturing. And, second, I needed a job where success could be objectively measured. I don’t do well where subjective judgement rules the day. Opinions are like belly buttons, everybody has one. I wanted to manage with facts.
That’s what took me to Thousand Trails and Phase 2 of my career path. When I got there, the direct mail program was in trouble. On my first day, I got very specific direction, the most specific direction I’ve ever gotten on the first day of a new job. “If you can’t fix the mail program in the next eight weeks, you’re fired.” I’ve never had such clarity.
About eight weeks later, I called my boss, Don Kent, to give him some news. Don is in a panic, “I can’t talk to you right now, they’ve summoned me to the board room and they are going to fire me —I just know it.”
“Not if you talk to me, first.”
“I haven’t got time to talk to you; I have to go up to the board room to get fired.”
“No you don’t.”
“Yes I do, when they say ‘report to the board room’, they mean report to the boardroom.”
“Calm down, take 10 of these direct mail samples with you and tell the board we’ve just increased response rates by 310%!”
He scooted upstairs to the board room. They damn near threw us a parade and the threat of being fired never happened again. That mail program grew to be one of the largest direct mail programs in the country. Our marketing costs were the envy of the industry. Yes, we changed the creative, we had to. But, more importantly, we changed the business model and work process to ensure longer term success. The big changes were:
- We had a long, involved internal review process for all new creative. By the time “new” creative went through eight different people for comment, the “new” creative was converted to the “old” creative. So we changed the rules. As long as we tested fewer than 25,000 pieces, only two approvals were needed, mine and the attorney’s. That was the main reason for the 310% increase; we actually got to do something new!
- We sped up the planning cycle. For example, we had the final results for Week 20 on Monday of Week 21. We would re-engineer the mail program on Tuesday of Week 21 and all our vendors were expected to implement those changes on the Friday mail drop, three days later. We had 52 business cycles a year. It was intense, but I had never had so much fun.
- We changed the accounting system. I pointed out that the only thing that could bring us down was if we ran out of test budget. So we made a change, now the test budget got a credit for any sale that happened from a test program. I could start the year with a $500,000 test budget, spend $1,250,000 and have $750,000 left over because of credits from each sale made on test programs. Anything I wanted to test, I’d test because there was always money to do it.
- We tested 5-10 new ideas every week for about 45 weeks each year. That was over 1,000 test observations during my tenure, every one of them measured and stored for future reference.
I was getting antsy and was lured with stock options to Atlanta to run sales and marketing for a real estate development. There, I figured out that my first love was direct marketing, not real estate, so I started what would become The Hacker Group on my dining room table. The business grew and I needed to start hiring staff, so I moved back to Seattle and hired my first employee, Gayl Curtiss. Best first-hire anybody ever made.
Most agencies run the business side of their shops like all other agencies. I knew from my Kenworth and Thousand Trails days that the business model can be more important than “the work.” In fact, in direct marketing, the phrase “it’s all about the work” isn’t true. In direct marketing, the more accurate phrase is “it’s all about the work the work does,” so you have to organize around response capture and measurement. As an old mentor of mine once said, “He/she who controls the numbers controls everything.” We controlled everything.
There were two more things that gave us the ability to grow at 60% per year, year in and year out.
- Our stuff worked. We almost never lost in a performance shootout with other agencies or vendors. (Testing against the New York shops like OgilvyOne, Rapp, Wunderman and MRM/McCann was like shooting fish in a barrel. If program performance is critical, don’t hire one of these behemoths.)
- We were the low-cost provider. Typically, we could provide full agency services cheaper than the client could do the work themselves.
Let me give you an idea of how powerful this is. We were up against OgilvyOne in a head-to-head shootout on a piece of the IBM business. Our fees were 62% lower than OgilvyOne and our package beat their package by 246%. How can the client say no? They can’t.
Those were the building blocks that built The Hacker Group from 1986 to 2002 when Jo Anne and I retired. I’m sure things are more complicated now, but don’t forget, HackerAgency is the largest agency by revenue in Seattle, so they’re still doing things right.
I’m still consulting, when I’m not travelling or fishing, and still working with my first two creative directors at The Hacker Group, Brent Duskin and Carolyn Hansen. It’s a small world, Brent’s niece now has Gayl Curtiss’s old job at HackerAgency. The nut doesn’t fall too far from the tree.