Small business – winner: Ship shape
2016 SMALL BUSINESS OF THE YEAR WINNER:
THREE SHIPS LLC
President: Zach Clayton
Projected 2016 revenue: $10 million
By Catherine Pritchard
Anyone aware of a meeting in 2009 between Bill George and Zach Clayton might have assumed Clayton was the one seeking business advice.
George, then in his mid-60s, had retired as CEO of medical-device giant Medtronic Inc. in 2002 before joining Harvard Business School as a senior fellow. Clayton, 24 and with a brand-new Harvard MBA, had just started a digital-marketing company in Raleigh. It had few clients and three employees, including himself.
But George was the one looking to Clayton for help in marketing himself and his business leadership books in the fast-changing digital world. He was one of the first clients to sign with Three Ships LLC, the youthful entrepreneur’s new company.
“He’s become my mentor,” says George, who is now 74. “It goes both ways.”
Over the last seven years, Three Ships has grown into three divisions with dozens of employees. The company owns the three-story building where it started in two rented cubicles on Oberlin Road near downtown Raleigh. Clients include Bassett Furniture Industries Inc., Southern Pines-based First Bancorp and private-equity firm Warburg Pincus LLC. Clayton, who owns 84% of Three Ships, expects revenue to reach $10 million this year. The company has been profitable since its first year while he and the other three owners, two Harvard friends and Washington, D.C., digital-marketing executive Jeff Giesea, have never taken a dividend.
This rapid growth prompted the judges of Business North Carolina’s annual competition to recognize Three Ships as 2016 Small Business of the Year. “Three Ships is impressive in the sense that they had a vision and idea of what they wanted to do in an ever-changing marketplace,” says Ben Kinney, publisher of BNC and one of the judges. “Knowing when to adapt yet sticking to that clear vision is a testament to their success.”
Named for the ships that carried Christopher Columbus’ first expedition to the New World, Three Ships is three businesses under one roof: CRISP, the digital-advertising agency that was its original enterprise; Demand Signals, a 2-year-old search engine optimization venture; and 3S Ventures, which kicked off in March building websites for other businesses.
Demand Signals has generated millions in incremental revenue for clients like Kool Smiles, a Marietta, Ga.-based dental service provider with more than 100 offices in 16 states, and Waco, Texas-based glass-repair business Glass Doctor. By querying Google up to 8.6 million times a day, Demand Signals makes sure such businesses show up at the top of internet searches. Kool Smiles and Glass Doctor “have gone from missing in action” to the first page on hundreds of thousands of internet searches, Clayton says.
Aftermath Services LLC, an Aurora, Ill.-based specialist in crime-scene cleanups, found new ways to connect with clients after working with CRISP. “They are investing more, creating more jobs and planning for more top-line growth because they are connecting with customers,” Clayton says. “They are executing very well, of course, but our work helps them unlock their full potential as a business.”
Digital marketing is a rapidly growing industry, says Jan Davis, who led marketing analytics company ShopperTrak RCT Corp. and a Triangle venture capital fund. Davis is an Entrepreneur in Residence at UNC Chapel Hill and serves on nearly a dozen boards of Triangle-based companies, including Three Ships.
Davis calls Three Ships a standout company because of its expansion into new marketing areas and because it has “bootstrapped” itself to success without outside funding. Clayton is “an exceptional young man. He’s amazingly compelling and bright and focused on learning and getting to be better and better at anything he does,” she says.
Three Ships wasn’t Clayton’s first venture into business, leadership or trailblazing. The Raleigh native received a Morehead-Cain scholarship and attended UNC Chapel Hill, where he earned an economics degree along with a Phi Beta Kappa key. While in school, he founded Carrboro software company New Media Campaigns Corp., which continues to thrive. At UNC, Clayton realized that he liked building businesses but was concerned that he didn’t know much about it.
So he applied to Harvard, though the business school rarely accepts students straight out of undergraduate programs. “They always want you to have at least two to four years of work experience first,” George says.
At Harvard, Clayton was particularly interested in the role of social media. “Back in 2009, social media was still a very new thing” for business marketing, Clayton says. “Facebook was just getting into selling advertising.”
After graduation, Clayton sold part of his stake in New Media Campaigns and used the proceeds to start Three Ships. Businesses were skeptical about whether digital marketing could help them, but they were also intrigued. In his first six months, he knocked on lots of doors, learning that his relative youth worked in his favor.
“If I had wanted to start in investment banking in 2009, being young and inexperienced would have been a huge problem. But as social media was coming of age, and digital marketing was becoming mainstream, being young and inexperienced was the best qualification you could possibly have. People would look at me and say, ‘How old are you? You must be good at this stuff!’”
Clayton didn’t just show up on sales calls and make small talk, he says. “We would write informative data-driven research briefings on digital marketing trends and what they meant for our clients. That was our early edge. We had plenty of time and no money.”
Clayton doesn’t plan to sell or leave Three Ships. “I’m doing work that I love,” he wrote in an email, “and my goal is to work until I’m 100!”
That’s a mere 69 years away.
Clayton, whose father, Jack, heads Wells Fargo operations in eastern North Carolina, said he owes much of his confidence and optimism to his close-knit family. The younger Clayton needed all of that confidence and optimism and more as he started Three Ships during the worst recession in decades. Noting that beauty-care giant Revlon opened during the Great Depression and Google at the end of the tech bubble in the early 2000s, Clayton focuses on what he believes is possible, not what isn’t. “I think there is opportunity all the time.”
Photo by John Gessner