Lili Hall, started her own business at her Bryn Mawr neighborhood kitchen table during the recession of 2001-02 after she left a dying Minneapolis marketing agency.
After more than a decade working in product development and marketing during turnarounds at companies such as Adidas and B.U.M. Equipment, and agency work, Hall had designs on building a successful full-service agency around a mix of large and small clients.
Hall has long since moved out of the kitchen. KNOCK is located a few minutes from home. About a mile away at what is a neat reclamation of a once-abandoned industrial site on Glenwood Avenue N., just a couple of miles outside downtown.
Today, Hall, 51, who grew up in Chicago and Brazil and studied international business, has clients down the street and thousands of miles away.
“More than 90 percent of our business annually is either repeat customers or referral business,” said Hall. “We intend to be around for a while.”
Hall was joined 11 years ago by her business partner, Todd Paulson, 46, the chief creative officer at KNOCK. The native of southwestern Minnesota is a veteran of several agencies.
KNOCK, which employs 65 and up to 20 contractors to supplement staff, boasts annual revenue of more than $30 million. And it has made the Inc 5,000 list of fast-growing small business for the last five years.
“I self-funded this business with too much credit on my Citibank credit card in the early years,” Hall recalled. “But we’re in a good place now. We’ve got a year’s expenses in the bank.”
Target is the single-largest and oldest client of KNOCK, which has a portfolio of small and large customers in the consumer, professional services, higher education and several small businesses.
The list includes Best Buy, Levi Strauss, Caribou Coffee, Perry Ellis, New Balance and Metropolitan State University, as well as such small concerns as Beet Vodka, EarthKind and Handsome Cycles.
Like most agencies, KNOCK principals try not to be just marketing-message order takers but immerse themselves early with clients in order to intertwine with strategy and message delivery. And they say they don’t take every piece of business offered. No tobacco, for example.
“Culture is everything to us,” Paulson said. Our company is driven by design, accompanied by strategy and service. Collaboration is in our DNA.”
Hall, who bootstrapped the business with savings as well as credit card for years before getting a bank relationship, understands the value of big clients and repeatable revenue. But she concedes a heart for struggling small businesses with a mission that she can embrace.
Over the last several years, as KNOCK’s cash flow has improved, Hall and Paulson have agreed to take minority ownership positions in several small businesses that couldn’t afford to pay for KNOCK’s marketing services.
For example, KNOCK has been involved with Handsome Cycles of Minneapolis, in return for unspecified equity. And KNOCK lent Handsome about $500,000 a couple of years ago so that Handsome’s owners wouldn’t have to sell a majority stake for unfavorable terms in order to be able to finance a direct-to-consumer market approach rather than selling through bike shops.
“They know quality bikes and parts,” Hall said. “But they didn’t know retail. And it was not the time to give up that much of the business [for an outside investment].”
CEO Ben Morrison of Handsome Cycles, which was founded in 2008, said the KNOCK investment and expertise is “the best thing we’ve ever done. KNOCK saw the long view of our business plan.
“Over the past year, we’ve done an entire pivot on our business model and KNOCK has been integral. We’ve been switching to a more direct-to-consumer model. Our original sales channel was independent bike shops. I never could have afforded that caliber of strategy. We now sell over the Web. We have a brand-new [KNOCK-developed] website that will go live in November.”
Hall, who grew up around the world, and Paulson, who’s from the farm town of Bergen, also like having a national-to-neighborhood impact.
KNOCK is a finalist for a Minnesota “Brownfields” redevelopment award for its work over the last six years in buying the once-dilapidated North Side properties on Glenwood, a gateway from the Harrison Neighborhood to nearby downtown, removing the ground pollution, expanding, renovating and connecting the buildings into a cool headquarters, workstations, digital photo and video labs. It’s about a $4.2 million investment since 2010.
“You could eat the dirt around here now,” Hall said. “We wanted to make our neighborhood better.”
Moreover, the agency has developed relationships with nearby nonprofits, such as the Washburn Center for Children, and Juxtapostion Arts, the 20-year-old creative business that has expanded to four buildings on W. Broadway Avenue.
“It can be tricky, but I like to say we’re healthy and running a long-term business in a short-term world,” Hall said. “And we want to remain independent.’’