From Agency Operator to Holding Company: How Peter Kang Built a Portfolio of Specialized Digital Agencies

Today we're meeting with Peter Kang, who is co-founder of Barrel Holdings.

Barrel Holdings is a holding company — a portfolio of digital and marketing agencies, very highly specialized ones. Some focus on e-commerce for CPG, others do B2B marketing websites for tech and professional services, and we even acquired one recently that does lead generation for home services.

If you could break down your journey into three eras, what would those be to get to this point?

The first era was almost like being an accidental business person — my co-founder and I went to college together, we'd been making websites on the side, and in the early 2000s people needed websites and you could make a living doing it, so that's what we did.

Phase two began when we landed some more enterprise-level clients, which meant hiring more team members and going from being the doers to managing teams. We were really ill-equipped for that, and had to shift our mindset from designing websites to designing a business.

The third era was when we scaled the agency, profits were coming out, and we started asking what to do with excess capital. We realized that spinning out agencies ourselves was generating better returns than any of our other investments, and we were the ones turning the dials.

We thought, what if we institutionalized this and made it repeatable? Berkshire does this, Constellation Software does this — so why don't we set up our own version of it.

What were you doing differently when you moved from stage one to getting enterprise clients, and then again from stage two to stage three?

Before you can transform your business, you have to transform yourself. A lot of it coincided with getting more mature personally — building better habits, getting better sleep, being more intentional about what content I consumed and who I surrounded myself with.

For the longest time I thought the founder had to do all the sales — that was just how it was. But when you read more broadly about business, you realize you can build sales and marketing teams, and that business is ultimately a game of talent.

How do you attract talent when you don't have the resources of a VC-backed startup?

Sometimes you have to focus on developing talent — look for people earlier in their careers who show a lot of promise and have the hunger to take on more responsibility. One of our CEOs, Lucas, started as a designer at 23 and after over a decade we realized he had the chops to lead the company.

The moment you can afford to upgrade talent, you absolutely should invest in it. One of our biggest regrets was our unwillingness to do that — we got burned a couple of times and drew the wrong lesson from it.

Early on we got too enamored with pedigree — if someone worked at a company we respected, we assumed they were great. Over time you learn that what really matters is whether they've seen and solved the specific problems you're facing right now.

Can you talk about your philosophy around specialization at the agency level — why go that route rather than being a general agency?

There's been a general shift toward fragmentation in how people buy agency services. Buyers want to talk to someone who actually knows their industry and has solved problems within it — that depth gives agencies a real leg up and creates defensibility.

At the holding company level, our specialization is the agency business model itself. An Amazon-focused agency and a B2B marketing website agency do very different things, but there's enormous commonality in how they run business development, finances, and client retention.

Do you have certain benchmarks you're looking for when you evaluate these agencies?

We like gross margin of 50% — we can work with 40% and up, but below that it's hard to invest in growth. A good formula is 50% gross margin, sub-10% G&A, 10–20% into sales and marketing, and you still end up with 20%-plus EBITDA.

Every agency is a handful of deals — two or three — away from either having a great year or a bad year. So agency leaders are always looking for ways to increase the opportunity set so they can land those deals that make the year.

What is the most important agency metric?

Probably client retention — I like looking at net revenue retention specifically, because it captures both whether clients stay and whether they're growing their spend with you.

Some of these platforms we initially thought were at risk from AI — like WordPress or Shopify — are going to be a lot stickier than we think. The stories of their demise are a bit premature.