Zero to $10 million in five years: The rapid growth of Alec Lynch’s DesignCrowd

When Alec Lynch founded DesignCrowd in 2007, the business was “boot-strapped” for two years. To get the crowd-sourcing design marketplace off the ground, Lynch quit his previous job at Booz & Company, moved back home with his parents, took out $10,000 of his personal savings and ran the business from his garage.

In essence, DesignCrowd is a platform for designers to compete for design projects posted by people. The businesses looking for a designer are able to set their own budget and projects attract “scores of designers” from all over the world.  Typically this is cheaper than using an agency and the first designs come within a few hours.

Lynch’s motivation for DesignCrowd came while he was working for Booz & Company, and he discovered the “traditional industry” was too expensive for many businesses. Lynch found it was slow and often fundamentally risky as you were never sure what quality of product you would receive in return for your money. To address these problems and counter the traditional design environment, Lynch created DesignCrowd.

Two years after launching, it raised $300,000 from angel investors, established its first office and co-founder Adam Arbolino joined the business. Between 2007 and 2009, DesignCrowd grew 14-fold and in 2011 it raised $3 million from investors at Australia’s largest venture capital firm, Starfish Ventures. Since then it’s continued its strong growth.

Lynch took DesignCrowd public in 2008 and now the business turns over between $10-15 million a year, employs 20 staff and serves as a platform for 100,000 designers globally. SmartCompany spoke to Lynch about business culture, managing the business’ fast growth and working 24/7.

Name: Alec Lynch

Company: DesignCrowd

Location: Surry Hills, New South Wales

Mornings

In the mornings, Lynch can often be seen jogging around Centennial Park. “I like to start the day with exercise,” he says.

“Our office is based in Surry Hills in Sydney, and I live nearby in Bondi. Once at work, each day we have multiple stand-up meetings, so our technology and engineering teams have a meeting and the marketing team has a meeting.”

Lynch regularly leads the marketing team meeting and says he likes to apply “agile principles” to all components of the business.

“I often attend and lead the marketing stand-up, which goes for half an hour and during that meeting we’ll look at what the team has done in the last and coming 24 hours.

“The idea is to make sure we’re working on the right things. This is critical and monitoring and constantly testing what you’re doing is also really important. If something is going to fail you want it to fail quickly and learn from it so you can then succeed,” he says.

Each day Lynch considers: “How am I going to grow DesignCrowd today from a cool Sydney start-up to a global, successful business?”

Daily life

On a daily basis, Lynch says one of the best aspects of being a business founder is “getting to work across all the different areas”.

“A role in a start-up is inherently always changing.

“I find it really energising, so for me personally day-to-day I’ll be involved in marketing (which could include an email campaign or gorilla marketing initiatives), the next day I might be leading the launch of the business in a new country, or working with the engineering team on new product features,” he says.

To help grow the business, DesignCrowd employs a number of marketing tactics including guerrilla marketing.

“Generally the way we approach it is to involve our community and ask them to have a bit of fun and to submit creative ideas regarding a brand or an organisation or an individual which we think might need some help or deserves to have a bit of fun made of it.

“It constitutes less that 5% of our overall marketing effort and it can be a bit hit or miss, but it’s fun for our designers and it’s a way to give back to them. It’s a lot of fun for the team too, and it’s essentially a form of content marketing which delivers sometimes inspiring and viral content,” he says.

Examples of guerrilla marketing campaigns DesignCrowd have run, which take the form of community design contests, include running a contest to crowd source a T-shirt for Kevin Rudd’s 2013 re-election campaign (from which Kevin Rudd selected a winning entry) and Crikey’s competition to create a new logo for News Corporation in the wake of the phone hacking scandal.

For Lynch, establishing a positive, hard-working company culture is important.

“There is a good saying: culture eats strategy for breakfast.

“We’ve got a young and fun culture, but we also work hard and we do look for certain characteristics in the team members we hire – high achievers, hard workers, creative people and people we think will fit with our culture and build on it.”

Lynch says DesignCrowd often run team building days to help cement strong relationships within the team and create a good working environment.

“We recently held a Segway Olympics, and we have a group of people within the business which is in charge of organising social events and outings – we’ve taken the team out for lunch out at Port Denison in the harbour and gone barefoot lawn bowling.”

When DesignCrowd launched, competition in the design crowd-sourcing space was minimal, but now Lynch says there are around 30 businesses globally which have a similar offering.

“We’re the second largest, but we like to think we’re the best. We aspire to improve and continue innovating within the crowd-sourcing model.

“We pay designers money for participating in design contests, which is not only fairer for the designers, but it helps to attract higher quality designers. We’ve also set up a second marketplace called BrandCrowd which helps designers sell their designs,” he says.

Increasingly, Lynch finds himself travelling to the United States, which has become DesignCrowd’s biggest market.

“I’ve been to the US twice this year already and we’re hoping to open an office there later this year and hire our first staff member in the US. Now we’re making more sales overseas… I’m finding that personally it makes more sense to travel. I expect I’ll be leading the effort to open the US office,” he says.

While Lynch is continually thinking about the direction of the business, he runs quarterly planning sessions with the management team and key leaders of the business, as well as monthly board meetings where he discusses the strategy of DesignCrowd with the business leaders.

“We determine the top growth strategies and priorities for the business in three-month blocks. We treat those blocks as sprints for the team. We also have a board which includes Anthony Glenning from Starfish Ventures.

“A few times a year we’ll also hold an investor day where we invite our angel investors, management and board members to come and review the performance of the business over a longer period of time and talk about the strategy of the business for the coming year.”

Lynch says the ideal investor group includes people who are strategic thinkers and can facilitate introductions and support outside of “just money”.

“That’s been one of the brilliant things about working with Starfish Ventures and our angels, we get a lot of value from the broader group.

“One of the philosophies we’ve adopted with both new products and marketing is to try and test things regularly. With an idea, whether it’s your own or someone else’s, you can’t know if it will work or not until you try it,” he says.

In terms of what business metrics are measured, Lynch says DesignCrowd’s “level of sophistication” has grown over time.

“Key metrics which we look at in running the business include our conversion rate, customer lifetime value and the cost of acquiring customers.

“When you’re just starting out and you’re boot-strapped, you’re flying and don’t have a chance to consider many metrics, but as the team grows you need to more and more. It’s a little bit like going from flying a glider plane with manual controls to a medium-sized plane with a bigger dashboard and then a big plane with a big dashboard, and eventually we will hopefully have a jumbo’s dashboard.”

Lynch is aiming to grow DesignCrowd from a $10 million business to a $100 million business.

Leisure time

Like many entrepreneurs, the working day never ends for Lynch.

“I work from home every night and I often work until after midnight. But, I don’t mind that, I love what I do and when that’s the case and when you can see a link between effort and reward, it’s a great motivation to work hard,” he says.

Outside of DesignCrowd, Lynch dedicates time to staying fit.

“I love playing sport and exercising – running, the gym, cross fit and I also play touch football. I also enjoy meditation and I would like to try yoga,” he says.

Future

Looking forward, Lynch says one of the biggest opportunities for DesignCrowd is to expand the business outside of Australia.

“Today Australia is our second largest market, but it’s not the second biggest market in the world. There are big opportunities in the UK, Canada, Germany and Brazil, and in Asia there is also a high demand.

“While we’ve launched in some of those countries, there is a huge opportunity for us to grow further in those markets. This will involve hiring more staff outside of Australia and the US is the top of our list at the moment,” he says.

Lynch intends to grow the DesignCrowd team from 20 to 100 people and establish offices in the US and the UK, but it’s this fast growth which he identifies as being one of the greatest challenges.

“One of the biggest challenges of late has been scaling the business with the demand we’ve seen. We’ve seen a huge spike in demand in the last six months, the projects posted have more than doubled and this is great, but at the same time to fulfil that demand we need to grow the design community, the infrastructure and the customer support team along with that,” he says.