Pedro Lerma WINS by building brands while breaking barriers

[00:00:00] Carrie Richardson: Good afternoon, everybody. My name is Carrie Richardson. I am the host of win what's important now. And today we're asking that question to Pedro Lerma, the founder of Lerma, an advertising agency located in Dallas and also an EY entrepreneur of the year nominee.

[00:00:17] Carrie Richardson: Welcome to win. Thank you for joining us today. 

[00:00:20] Pedro Lerma: Thank you for having me, Carrie. It's a pleasure. 

[00:00:24] Carrie Richardson: So tell us a little bit about your journey into entrepreneurship. 

[00:00:29] Pedro Lerma: Sure. I will tell you that from, a pretty early age, I had an uncle who owned a construction company. 

[00:00:35] Pedro Lerma: In fact, when I was 15 years old I worked a summer there because I wanted to buy a car. And then later in college, I also worked a summer because I needed money for tuition. And so I was exposed to that idea and and it was intriguing to me. 

[00:00:51] Pedro Lerma: In my twenties some friends and I opened up a bar.

[00:00:55] Pedro Lerma: There was three of us. We bought a small building in downtown Wichita Falls, [00:01:00] Texas. And we gutted it. We did the demolition ourselves because we couldn't afford to have somebody else do it. And that was something we felt equipped to take on. Over the course of nine months we hired professionals to build it back up and ran that for about three years and ended up selling it.

[00:01:17] Pedro Lerma: Then I started in 1998 within the Richards Group family of companies. I was hired within the digital practice, and this was 1998, and we didn't really know what digital was going to be in terms of advertising, so we were trying to figure things out as we went, and I would bring ideas to the table.

[00:01:36] Pedro Lerma: I would create some structure around. Hey, we need to offer this practice or we need to build this expertise. This is how we would staff it, monetize it essentially put together a small business plan and my boss at the time who also didn't know a lot about. Digital would say, do it. And so I was given a blank slate on which to build a business.

[00:01:59] Pedro Lerma: [00:02:00] It was a great experience for me there. Although I didn't have ownership so I didn't have the risk that was typically involved in entrepreneurship. But I was given an opportunity to build a business. And after running that for 11 years we ended up launching a separate company called Richards Lerma that was focused on the Hispanic market.

[00:02:23] Pedro Lerma: And in that venture, I had 51 percent ownership of that business. I did have a stake in this entity. Although again, I didn't have to take a huge risk to do that. That was an incredibly valuable experience. April of. 2021 I ended up buying my former partner out and I became independent. I really had a lot more to learn. Then the risk was there. There was nobody that was going to be a safety net for me.

[00:02:55] Pedro Lerma: It's been an interesting path, maybe an unconventional path one that I'm grateful [00:03:00] for and that I think really prepared me for where we are today. 

[00:03:05] Carrie Richardson: Did most of the team from your previous venture join you when you launched on your own? 

[00:03:11] Pedro Lerma: They did. And it made a lot of sense because, we had worked autonomously from the main agency for many years.

[00:03:20] Pedro Lerma: We had an opportunity to retain some of our clients, that was the team that had been working on that business. They were also excited about becoming an independent agency. So all of them came over. But we also had some people from the main agency that later came over to Lerma because they were intrigued about what we were doing and especially once we started to grow there, there was a lot of interest in joining Lerma.

[00:03:50] Carrie Richardson: I understand you had a commercial in the Super Bowl. 

[00:03:56] Pedro Lerma: We've had a few this year we had two [00:04:00] spots for "He Gets Us" and and for those that may not know, "He Gets Us" is a campaign that is intended to rebrand Jesus, to rebrand Christianity with an eye toward making that a much more inclusive and inviting brand, essentially.

[00:04:18] Pedro Lerma: I don't know that a lot of people have thought about Jesus or Christianity is having brands, but they do. 

[00:04:24] Pedro Lerma: And our role has been to help reshape that. And I'm really excited about that work. The year before we had spots in the Super Bowl for avocados from Mexico, and "He Gets Us". Those have been really fun projects to work on, and right now, in fact, we're working on future Super Bowl work, so it continues.

[00:04:46] Carrie Richardson: I really enjoyed reviewing all of them, and anyone who would like to take a look at that work, it is posted on the LERMA website, so you can head on over there and see the excellent naked New York avocado [00:05:00] commercial, and the striking comparison to the He Gets Us. Campaign 

[00:05:07] Pedro Lerma: and that was funny to you know.

[00:05:08] Pedro Lerma: It never occurred to me that in the 1st time that we, as an agency would have work in the Super Bowl, that 1 would be again rebranding Jesus. The other. Was a story rooted in the Bible, but it was, anything, but a religious message. In fact, I told people leading up to that.

[00:05:29] Pedro Lerma: I said, "you're going to love what we put in Super Bowl. We are going to put a whole bunch of naked people in the Super Bowl." Obviously, everything was filmed strategically. It wasn't anything obscene. It's a fun spot about what the world might be like had Eve taken a bite of an unforbidden fruit instead of.

[00:05:49] Pedro Lerma: The forbidden fruit. 

[00:05:51] Carrie Richardson: My favorite part is the part where he's doing the phone demonstration behind the podium. It's fabulous. 

[00:05:58] Pedro Lerma: It's an avocado, but it's [00:06:00] also a phone. 

[00:06:02] Carrie Richardson: What was the most interesting thing you learned about yourself? Along this journey, all of a sudden, you've had the support of an enormous staff and a lot of money behind you.

[00:06:14] Carrie Richardson: And now you've got to do it all on your own. 

[00:06:17] Pedro Lerma: I think, and it wasn't just me, but the agency and the team as a whole we had to to behave like grownups. It felt like we had been a small division of a much larger agency. That agency had a profile within our industry was well respected and and we were, somewhat in the shadows. In this case, it was time for us to, take a seat at the big table and to behave. To carry ourselves in a way that was look, we've been trained in one of the best agencies in the world. And, we are now in a place where we can express ourselves in and [00:07:00] become one of the best agencies in the world. Once we really embraced that mindset of, "Hey, we deserve to be here".

[00:07:07] Pedro Lerma: A lot of doors opened up for us and in our minds and, also, in terms of opportunity. 

[00:07:13] Carrie Richardson: Tell me about prospecting for an organization like this. What's the difference between selling advertising and selling programs that end up in the Superbowl? 

[00:07:24] Pedro Lerma: I would say a lot of what we do is relationship based prospecting.

[00:07:29] Pedro Lerma: Many of us have spent our whole adult lives in the industry. We've had relationships, in some cases, it was when we were very junior in the business, but we serviced a piece of business and, those people remembered us and they've now landed in the C suite and, have reached out because they had a good experience with us back then. 

[00:07:50] Pedro Lerma: And the other part of it is what we've done in terms of raising our profile within the industry. There are publications that service the advertising industry[00:08:00] Ad Week is 1 of them. Advertising Age is the other and we have gotten a lot of recognition by those publications.

[00:08:07] Pedro Lerma: In fact, Advertising Age recognized us as Small Agency of the Year in 2022. And again in 2023. And that was huge for us. 

[00:08:17] Pedro Lerma: I had grown up within this industry consuming those publications and seeing the agencies that were in there. Those agencies were agencies I looked up to.

[00:08:26] Pedro Lerma: They were my heroes. 

[00:08:27] Pedro Lerma: They were places where I drew inspiration. In 2024. We had actually outgrown the small agency category and they have another set of rankings called their "A LIST" and we were recognized as a standout agency on their A list. 

[00:08:44] Pedro Lerma: These are agencies I've admired my whole adult life and all of a sudden we're there. We're on that list. And personally, professionally, it has been incredibly gratifying. 

[00:08:56] Pedro Lerma: From a business development perspective it helps a lot to be on those [00:09:00] lists. That's where a lot of clients go to to decide, who do I want to invite for a prospective project or to handle my brand moving forward?

[00:09:10] Carrie Richardson: Is there more inbound activity than outbound solicitation? 

[00:09:15] Pedro Lerma: There is. That has always been the case. In my experience with the Richards group, there was always plenty of inbound interest. And that's the case here as well. 

[00:09:26] Carrie Richardson: How do you use technology as a strategic advantage for your agency?

[00:09:31] Pedro Lerma: I am grateful that I grew up building a digital agency within an agency. I felt like I had to learn something new every day and if I didn't, well, that was a day missed and I was going backward and I never wanted to go back. I embraced this idea of loving change and not being afraid of it.

[00:09:51] Pedro Lerma: And when I launched Richards Lerma. It was the same thing. We built an emerging technologies lab, when we launched Richard's [00:10:00] Lerma, and this was a time when emerging technologies were things like virtual reality. We were experimenting with the very 1st software development kit for the Oculus.

[00:10:11] Pedro Lerma: It was called the Oculus rift at that time. We had a 3D printer. We were experimenting with, the connected home and, and we were doing that on behalf of clients. Home Depot is 1 of our clients and, and I talked with them about what 3 D printing might mean for their future.

[00:10:30] Pedro Lerma: Also, the connected home with how consumers might engage with their homes in a way that would have relevance to the Home Depot and, that has always just been an interest of mine and a core part of who we've been as an agency. And today it's no different. Artificial intelligence is something that we are experimenting with today.

[00:10:52] Pedro Lerma: In fact I've told people here. Artificial intelligence is going to impact every discipline within the agency. [00:11:00] It's our jobs to figure out how do we adopt it in the right way but not just adopting, because I've also told them every other agency in the world is adopting artificial intelligence right now.

[00:11:10] Pedro Lerma: We have to figure out How we not only adopt it, but how we innovate with it. And one example that I'll share with you is you've probably heard that there is built in bias in artificial intelligence. As a result of that, as we started to see there were a lot of stereotypes that we started to encounter.

[00:11:33] Pedro Lerma: We would, as an example, type a prompt in so that we could get an image of a Hispanic male. Maybe we were comping something up to share with a client and what we would get back was, again, very stereotypical what you might expect, a very macho man with a sombrero and a mustache as we started to encounter those things, we decided to create a model that used images of our own employees, because we've got a [00:12:00] really representative employee base here, and we took lots of images from different angles of faces and features and then we randomized those images so that we could create a model that you could use to yield more representative, more multiculturally representative images through AI.

[00:12:22] Pedro Lerma: And we made that model available for public use. It was something that we felt strongly about and the results of what we get back now are much more representative and just to be able to have that kind of an impact on our industry is important to us.

[00:12:36] Carrie Richardson: I had the chance to see a Home Depot spot that you created about Latino women becoming more self sufficient and fixing things around the house. I don't speak Spanish, so I actually didn't understand the ad, but I understood the context of the ad. How much of your work is targeting smaller less represented groups that could [00:13:00] become significantly larger groups if well represented?

[00:13:03] Pedro Lerma: I love that you asked that question. 

[00:13:06] Pedro Lerma: Something that my clients hear me say Frequently is we should lead your brand storytelling with the underrepresented and when we do that you will absolutely connect with that underrepresented group, but it has a halo effect that will appeal to much broader audiences and one of the ways that I explain it to them is not a piece of work that we did, but it's one that seems to make sense to people.

[00:13:34] Pedro Lerma: Amazon, a couple of years ago, had a commercial where they featured a hearing impaired employee. And he talked about how he was able to thrive at Amazon as a user experience expert. And, Explain to people that when I saw that, it made me feel really good about Amazon.

[00:13:54] Pedro Lerma: I have mixed emotions about Amazon. Probably a lot of people do. But in that moment, I thought. [00:14:00] Wow. This is a great company. And what I explain is, look, I am not a member of the hearing impaired community. That work resonated with me, and it made me feel really good about that brand. And when you think about it that way it allows you to do some of those things, like I've said, to lead with the underrepresented, to connect with that audience, but also to, to have, a much broader appeal.

[00:14:21] Pedro Lerma: With the Home Depot specifically, Yes, women are highly underrepresented in home improvement, Latina women, even more and so. This was an opportunity to take a lot of what we know about Latinas here in America. 

[00:14:36] Pedro Lerma: 1, they're driving the growth of new businesses. They start businesses at a much faster rate than any other segment.

[00:14:42] Pedro Lerma: But that they're also The most underpaid. 

[00:14:46] Pedro Lerma: So when you look at what different segments make in relation to, for every dollar that a white man makes, a Latina earns about 60 cents. And there's a huge wage gap there. And so this was a chance [00:15:00] to really showcase, Latina "doers", "doers" is what we call, Home Depot customers.

[00:15:06] Pedro Lerma: And in this case it was another one of those stories where it absolutely resonated with the Latina home improvement segment, but it resonated far beyond that. It's one of their highest scoring ads, so they test their advertising and the Association of National Advertisers has a measure that they used to score brands on multiculturalism.

[00:15:30] Pedro Lerma: And in February of 2024, the Home Depot was recognized as the most culturally inclusive brand for 2024. Exactly what you said, using the underrepresented in a way that just creates mass appeal. And so you're in that scenario, you're not only doing what's right, but you're doing what's effective in the market today.

[00:15:52] Carrie Richardson: Are there any times in your career where you just really missed the mark on something? 

[00:15:58] Pedro Lerma: Sure, I think I think [00:16:00] everybody can point to that. Not that those things that are top of mind for me. I think we tend to want to block those things out. It's not just, in terms of the work that we put out, but, decisions that I've made. The failures are a part of the entrepreneurial journey.

[00:16:15] Carrie Richardson: You follow a specific strategic plan for your agency? 

[00:16:18] Pedro Lerma: I would say it it is fluid. I was never trained on business, specifically, I think what I learned in growing up in digital is to be adaptable to change, to be interested in innovation, and as a result, that has kept us at the forefront of trends technologically, culturally- and that has remained a competitive advantage for us.

[00:16:47] Carrie Richardson: What is it like having logos of the size of Home Depot trust you with their business? 

[00:16:55] Pedro Lerma: It's incredibly meaningful and, I have a lot of gratitude [00:17:00] about that. 

[00:17:00] Pedro Lerma: I grew up in Wichita Falls, Texas, and my advertising career actually started as a small agency there.

[00:17:06] Pedro Lerma: And in some cases, I was working with the local car dealer or the local furniture store. But I also got a chance to work with some bigger brands, but on a regional basis. I've always had some of those logos on the roster. When we get to play at the level that we're playing at now, it's a lot more meaningful and gratifying.

[00:17:29] Pedro Lerma: But at the same time, it does feel like a lot more responsibility. These are huge corporations that are entrusting us with their brands. We take that seriously. And what I tell them often is, we don't take that for granted and we will work night and day to make sure that you never regret having entrusted us with that brand.

[00:17:54] Carrie Richardson: You're already servicing some of the largest corporations in America. Who's the white [00:18:00] whale when you've gotten to that point? 

[00:18:03] Pedro Lerma: I don't know that I would point to any one brand, maybe with the exception of Nike. So that's a brand that I have admired for many years for the quality of the creative.

[00:18:15] Pedro Lerma: It is always inspirational to see that work. But more recently, I would say, for a lot of the the stand that brand has taken on societal issues. I think it takes a lot of bravery. There's risk that comes along with that. I think the stance that they've taken are consistent with their values with the values of their customer base, and with the prevailing winds of societal opinion. It makes a lot of sense for them. And it's certainly an inspirational brand to watch from the outside. 

[00:18:52] Carrie Richardson: Now, does EY tell you why you got the nod for the nomination? Why do you believe you were nominated this year?[00:19:00] 

[00:19:00] Pedro Lerma: They have not shared that with me specifically. If I had to guess, it, it has a lot to do with the growth that we've had just in these three years of independence. It has to do with some of the other accolades that we've received. And I'm grateful. I really am. 

[00:19:18] Carrie Richardson: If you've got any advice for aspiring entrepreneurs who are working in the advertising industry right now, what would you tell them? 

[00:19:28] Pedro Lerma: I would I tell any entrepreneur or anybody that wants to be an entrepreneur, to study leadership and I talk about leadership as being different from management.

[00:19:37] Pedro Lerma: Managing can be done almost mathematically. If you can manage a calendar and to do list of resources in a budget, you're good. Leadership is something else. It's about creating a vision and being able to communicate that vision in a way that people see themselves succeeding within that vision.

[00:19:56] Pedro Lerma: It's something that I feel like I've studied my whole life. I consider [00:20:00] myself a lifelong student of leadership. And a couple of books that I recommend to people are how to win friends and influence people has to do with human relationships. And the other, yes, Dale Carnegie. I actually took the Dale Carnegie course twice and was a graduate assistant a couple of times. 

[00:20:18] Pedro Lerma: The other is Primal Leadership, a book about emotional intelligence and its role in leadership and so I, Again, I say study leadership, learn to be a great communicator because I've seen people who are brilliant, who struggle to communicate their ideas and their growth gets limited because of that.

[00:20:39] Pedro Lerma: And on the other end of the spectrum, I've seen people who are not brilliant, maybe they're just pretty smart, but they're great at communicating their ideas and they advance, as far as they want. Leadership and communication. And then the other thing is. Take risks early in your career.

[00:20:57] Pedro Lerma: The earlier the better. 

[00:20:58] Pedro Lerma: I did the [00:21:00] business with my friends. We opened up a bar. There's lots of failures in that lots of lessons learned, but there's value in that. And if I had it. To do over again, I would probably become an independent agency way long ago. It just didn't work out that way for me but I think that would have been a better path for me.

[00:21:23] Pedro Lerma: And, and I think, if you take risks, when you're, young in your professional life the risks are much lower than when you do it at an older age, you get up to a certain age and you've got a home, you've got a family, you've got responsibilities and, it just becomes harder to do that.

[00:21:41] Pedro Lerma: So the sooner, the better. 

[00:21:44] Carrie Richardson: All right thank you very much. And best of luck. The finals are coming up. 

[00:21:47] Pedro Lerma: Yes. 

[00:21:48] Carrie Richardson: We will have our fingers crossed for you here and I wish you much more success in the future. Thanks for joining us on WIN today. 

[00:21:55] Pedro Lerma: Thank you, Carrie. Have a great day. 

[00:21:57] Carrie Richardson: You as well.