Journey to Entrepreneurship – Interview with Kurt Theobald
Posted by John Livesay in podcast | 0 comments
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Episode Summary
Kurt Theobald is the CEO of Classy Llama, a full-service ecommerce agency. He has failed countless times, but has always gotten back up to try again. Failure doesn’t define you and the journey to entrepreneurship is often a journey of self-discovery as well. Kurt discusses company culture, the importance of people, and so much more on this episode!
Journey to Entrepreneurship – Interview with Kurt Theobald
Hi. Welcome to The Successful Pitch podcast. Today’s guest is Kurt Theobald. Kurt is the CEO and co-founder of Classy Llama, an Inc 5000 eCommerce agency that has already done $5 million in revenue. I found out about him from a wonderful blog he did on the three points of wisdom. He said, “Entrepreneurs should create shiny new things. The edgier the better.” Reality disagrees. Kurt is going to tell us all about that. Kurt, welcome to the show.
Thanks a lot, John. I’m glad to be here.
Tell me about what you’ve learned about valuable work often lies hidden, that you have to dig deeper. You said you’ve cut your teeth on ten previous business, all of which died. You said you went too far. What do you mean by that? What happened that you’ve learned from ten things not working that’s made, now you are so successful?
Journey to entrepreneurship: I’m just going to do something that’s not as cool, I’m going to do it really, really well.
I think there is a culture in the entrepreneurship circles, there’s this culture that drives towards you’ve got to do the next big thing. I tried to do the next big thing so many times. I realized that sometimes, doing something that’s not cool but it’s in a niche where there’s a real need, sometimes that can work a lot better and a lot faster than pursuing the next big thing.
That’s where I got my traction, is I’m just going to do something that’s not as cool, I’m going to do it really, really well. That works out pretty well because a lot of people that don’t do things really, really well in those uncool niches. That’s worked really well for us.
Talk about what’s considered a cool thing versus an uncool thing.
The cool things are the things that will publicly change the way that people do things. A lot of times it’s going to be consumer facing. There’s this whole market where you’re serving businesses that people don’t really see. That’s just not cool because nobody hears or knows about it. When you’re doing something that’s going to change the behavior of the consumer, it’s going to reshape the world in some way, these are the big things that people want to do.
They want to change the nature of energy or the way that people buy things or a big new way to play video games. Virtual reality, how to apply that? There’s all these big things that are being developed that honestly, it probably has lots to do with how much they hit the news, honestly. The more they hit the news, the cooler they are.
Your willingness to do “the uncool things” sometimes require some sacrifices. Tell us about what you and your partner, Erik, had to do as far as just the office space? You have to be almost like MacGyver sometimes.
That is true. It’s probably true of both cool and uncool things. It may just be a common part of successful entrepreneurship. It’s the willingness to go through difficult circumstances. Things like you hear a lot of entrepreneurs started in a garage. We started in a garage. It’s a common thing.
Journey to entrepreneurship: It’s the willingness to go through difficult circumstances. You hear a lot of entrepreneurs started in a garage. We started in a garage.
I remember in the early days with our business, we had a two-car garage in my house that we were using as an office. In the winters, we have this thin 6 mil plastic hanging up by the garage door to try to create some barrier for heat. I had a wood fire stove in the adjacent room and that was all we have for heat. It got really cold in the winter. The guys are trying to code and their hands are shaking because it’s so cold.
In the summers, we took a panel out of the two-car garage door and put three quarters of that panel, we put in this particle board and then put an AC unit in there to try to keep it cool enough, which also didn’t worked very well. We we’re too hot in summers, too cold in the winters. I guess it’s part of being an entrepreneur and cutting your costs to the quick. You just bear through it because you believe in what you’re doing.
You really have to have tenacity and grit and passion to survive those kinds of things, otherwise you’re like, “It’s not worth it.” You have to believe in what you’re doing and that you really want to work for yourself and have a big why of why you’re doing this. Even if it’s “uncool”. I just think that’s so valuable. Congratulations on exceeding $5 million. So few startups ever get to $1 million, let alone 5. What is it that you could share as the motivation factor beyond just making money that makes you so successful, that makes your clients at Classy Llama want to keep working with you?
I think that from the very beginning, you mentioned that very important why, I actually started a professional journal back in 2004 towards the end of the year. That’s now about twelve years ago or eleven and a half years ago. At the very beginning of that journal, I expressed that who I am as an entrepreneur, it’s part of my DNA.
[Tweet “To do anything other than be an entrepreneur is to betray who I am.”]
To do anything other than be an entrepreneur or to, when I fail, when I fall down, to not get back up and keep going is to betray who I am, and that I will not do. That powerful why and that foundation, it really makes it to where you’ve made, as a friend of mine says, a diffision. A diffision means, like incision is to cut, like an incision as to cut into. Diffision is to cut away. You’re cutting away all other options and you have one path, and you have to stay in that path.
I love that.
Journey to entrepreneurship: You have to cut away all the other options so that you really only do have one path to keep going.
I made a diffision according to who I am and I have to stay on that path because I’ve cut away all other options. It’s like scuttling the ship from the, I think it was Cortez or whatever, that scuttled the boats. Now, they only have one way to go. They can’t go back, they had to go forward. That’s so important because there’s so much pain involved with entrepreneurship that you have to cut away all the other options so that you really only do have one path to keep going. Because you never would have done this if you knew how difficult it was going to be. It’s just important to have that frame of mind. This is the only way to go.
It’s so valuable. What you said there, if you don’t come back from failure, you’re betraying who you really are. Failure might be something that happens but it doesn’t define you and it certainly doesn’t stop you from trying again.
I think it’s very important to clarify that who I am isn’t necessarily who’s someone else is. My walking in that was appropriate, where someone else who, they’re more of a supporter or they come alongside, they’re more consultative, whatever it is. Different people have different strengths. If you put someone who’s not an entrepreneur and they go, “I want to be the American entrepreneur because of what other people have said about me, rather than who I really am,” it can really get them in a mess.
[Tweet “Journey to entrepreneurship: Different people have different strengths.”]
This whole thing you talked about is, the journey of entrepreneurship is really a journey of self-discovery, which I think is so important because whether you’re pitching yourself to a client or an investor, they’re buying you much more so than the idea or your skills, don’t you think?
Especially in an early stage of a business, they’re investing in you, not this idea. The difficult thing about business is not getting a good idea. There’s lots of people that have good ideas. The difficult thing is executing that idea and bring it to fruition and making the smart choices and being able to receive good feedback and not be too proud to receive the wisdom from others and have the fortitude to endure through the pain that is going to be required to get to the finish line.
Journey to entrepreneurship: Have the fortitude to endure because it almost always takes longer than you expect it will for it to be successful.
Because it almost always takes longer than you expect it will for it to be successful. You hear about these huge successes that happened overnight. Usually, there’s a long story before those successes. Secondly, those are super rare even if they do happen. You got to invest in people that are going to be able to endure, going to have humility to receive quality feedback and have the wisdom themselves to be able to guide an idea to quality fruition.
The willingness to be coachable and not think you have all the answers and not even ask for help is so important to realize that you don’t have to know everything and you can use your resources and your network to get insights and give you a different perspective. Because we can become so myopic on thinking, we only see one way out of this. We always have other moves. Let’s talk about your big point about be careful who you accept wisdom from and how you choose your mentors and advisers. Not just by how successful they’ve been, but are they a cultural fit with your philosophies. Can you speak to that?
Something that I’ve learned by just interacted with different people, and there’s a lot of successful people out there, according to the world standards of what success is. A lot of people with a lot of money out there. But, that doesn’t necessarily mean you want to learn from them how to become wealthy. A lot of people say that’s the objective of entrepreneurship, is I want a lot of money.
The challenge is the way you get that money in the end will determine the quality of your life in all other aspects. If you’re learning from someone who has a bunch of money, has been divorced three times, works 80 hours a week and has for the past 30 years, is that the way you want your life to look? Is that what kind of money you want to have?
[Tweet “Journey to entrepreneurship: Be careful who you take wisdom and money from.”]
Because money can own you or you can own money. If you take wisdom from those who have learned how to become the slave to money and they have a lot of it but they’re still a slave to it, that’s no life to live. Just look to the advisers that have a life that looks like the life that you actually want to have. Not just in the sum of money that they have or the make and model of their car. Look at his family, look at their relationships, look for the deeper things in their life because those are the things that really has staying power.
I love that. That’s so important, because otherwise you’ll burn out. If you don’t have a balance going on and a reason to have some other life outside of what your business is, people think, “I’ll just put that all in the back burner and they’ll still be there when I finally become rich and successful and then I’ll be happy.” You have to figure out a way to be happy during this whole process.
I think what ends up happening is they say, “Once I’m rich, then I can take …” I think what happens is that other parts of them atrophy. By the time they actually get rich, that’s the slavery, that’s all they have. Suddenly their lives are about building and growing. As Dr. Seuss says, the biggering and biggering and biggering. That’s what it’s all about at that point and they’ve lost the context, they’ve lost the sensitivity to the other things that are so much richer in life.
As you get more and more successful in this success that you now have, how do you find the right people to join your team that have this mindset?
[Tweet “Journey to entrepreneurship: Right experience, soft skills, and cultural alignment.”]
It adds a third variable in any interaction when I’m evaluating people for the team. They have to have the right experience, they have to have the right soft skills. The third thing they have to have is the right cultural alignment. That’s really difficult to find all three things.
Let’s take a little deep dive into each one. Obviously, the experience is pretty obvious. You need somebody to be a creative director or know technical stuff about eCommerce since that’s what you do for people and you want them to prove that they know how to do that. Tell us what you mean by soft skills, is that emotional intelligence?
Journey to entrepreneurship: There’s things that you learn through osmosis and through relationship and culture, you learn those soft skills.
By soft skills, I mean things like their ability to communicate effectively, to write things down in a way that’s coherent. Maybe this extends somewhat from a culture, but just to be able to like be generally responsible for showing up on time and showing up in meetings when they say they’re going to and scheduling their time. Just some fundamentals life skills, time management, communication, those kinds of things that you don’t go to necessarily a class to learn them. There’s things that you learn through osmosis and through relationship and whatever the culture that’s around you, you learn those soft skills.
Let’s talk a little side note, side road there because I think what you said is so interesting. Just about the basics of being on time. I had another guest who wrote a book about managing millennials. That’s anywhere between 16 and 36 at the moment. Some of the baby boomers are having so much trouble managing millennials because they have a different mindset of what they think about work.
If you don’t tell someone what your expectations are that they show up on time, then they’re going to think it’s loosy goosy. Then you can’t get mad at them if you haven’t been very clear at the beginning, “This is what we need from you.” Do you have any insights as to how important it is to set the tone and expectations right from the get-go or even before you hire someone to make sure that’s a fit?
That’s actually really important. I feel like when you’re in the interview process, you’re not just evaluating whether they are right for the team. You’re actually setting context. You’re setting the table for what and that the foundation for what it will be like, provided they actually do get selected and join the team.
Setting those early expectations around, “We expect you to be personally responsible.” That’s like tying your shoes in our organization. It’s a fundamental. You got to tie your shoes before you run the race. Just being able to manage your own time, to communicate effectively, these are the tying the shoe things in our organization.
[Tweet “Journey to entrepreneurship: Tie your shoes before you run the race.”]
I love that. You have to tie your own shoes before you run the race. We’re going to tweet that out. That’s great. Now, let’s talk about your culture alignment. How much time did you spend defining what the culture was so that you could decide what you wanted to have and what makes your culture unique?
The culture, my understanding of the culture and what I want to design and create into the culture, has been an evolution over a number of years. Early on, I really felt like I have this vision for what I want the culture to look like. I’ve had a lot of jobs and I’ve experienced a lot of different cultures. I didn’t like any of them that I experienced, there’s a lot of things I didn’t like. I had this thing I wanted to create. I built out a presentation and I built out a vision for it. There’s a lot of good to that.
I was able to articulate it and express it. It attracted people. However, what I learned through experience is that you can’t just write down the culture you want to have but if the people in your organization that make the culture what it actually is. You can write it down and that’s what it theoretically is.
Journey to entrepreneurship: Your culture actually is the sum of the interweaving of the thread of all the people in your organization and what they make it.
What your culture actually is, is a product of the sum of the interweaving of the thread of all the people in your organization and what they make it. You can still design a culture. “This is the culture I want,” but then what you have to do is you have to go out and you got to find people that don’t just look at the cultural state and go, “I like that. That’s great.” But rather, you find out, are these the kinds of people that are going to contribute into this culture? Do they bring this culture to the organization?
Because that is the only way to really make it happen. You can guide a little bit here and there, but ultimately, the people you bring together have to make the culture what it is. It’s really all about that culture alignment, making sure you don’t just like the culture but you align with it. You’re going to be a contributor to the culture. I tell people, I may be in a position where I’m the last line of defense for the culture. But all of us, all of us need to be culture bastions. We are the propagators of the culture, every one of us.
[Tweet “Journey to entrepreneurship: We are the propagators of the culture.”]
Wow. That’s really walking your talk, isn’t it? Giving a people a sense that the tapestry needs all of the threads to make it work. When you make people feel like they’re part of something, acknowledged and needed, then you get their passion to work in all kinds of situations. Because they love that. That’s what people are looking for much more than just a paycheck, is a sense of acknowledgement, appreciation and contributing and making a difference.
I think, if you can create a culture where that is the thing that people want to come to work for, it gives them a reason to get up in the morning, gives them a personal sense of pursuance, you’ve really done something well. My suspicion is that’s the reason you’ve been so successful now, been able to achieve the revenue you have.
[Tweet “Journey to entrepreneurship: Revenue is a by-product of what really matters.”]
I agree. Revenue and all, these are reflections. They’re by-products of what really matters. To speak to what you’re saying, all that I have done is I really try to be careful to honor each person that I’ve interviewed. To evaluate, is this going to be good for them to come into this environment? Are they going to be able to contribute to this environment and how are they going to thrive in this environment?
I want each person that comes into the organization to be able to be fully themselves, to not have to check part of themselves out of the door when they come in. Speaking of millennials, I think this is so important to capturing the hearts of millennials. I look at the millennial generation and there are things I really appreciate and things that I think are things that they struggle with. That’s true with any generation.
Journey to entrepreneurship: Millennials really thrive on and demand authenticity and they thrive on being independent.
One of the things I love about millennials is that they really thrive on and demand authenticity and they thrive on being independent in their thinking and really valuing, “I want to be able to express myself and be who I am.” I love that.
I want to make sure to protect that, because when you do that and you make sure that you got the right people in your organization that they can just be themselves and it’s going to work, suddenly you no longer have to draw passion out of them. You don’t have to draw it out of them. It will naturally organically come from them because they’re just being who they are. You don’t want to force it anymore, you don’t have to draw it anymore. It comes from their core. It makes everything a lot simpler.
I’ve never heard anybody express it quite like that. If you have somebody who’s just “phoning it in” and doesn’t get to express themselves and has to feel like they’re a robot and has to tone down their personality and their vision and their comments because they’re not appreciated or wanted, then there’s no way there you’re going to be passionate about your vision.
If you encourage them to be authentic so you don’t have to be one person at work and one person off work and just looking at the clock until you can get off work to be yourself, then they’re passionate about their whole life and passionate about their day. They’re probably not going to leave at the next offer that’s just slightly more money because they’re motivated by more than money.
I can speak from experience, watching this happen. First of all, the retention level at Classy Llama, and now Nucleus Commerce, it’s the second company I started, is just phenomenal. People stay. I really believe it’s because they are able to be fully themselves here. The second thing is, we haven’t compromised on our team growth.
Journey to entrepreneurship: When there’s an opportunity to grow, we don’t get loose on our standards in order to take advantage of the growth opportunity.
When there’s an opportunity to grow, we don’t get loose on our standards in order to take advantage of the growth opportunity. Rather we limit our growth to how quickly we can find quality people. This is wisdom you can find from Jim Collins and others.
I’ve seen the benefits of it in than people want to stay because they know that they’re being honored in who else is coming into the environment. They get to work with great people and they get to be fully themselves in the space that they’re in. That makes a space that they want to stay in.
One of the big costs that’s hidden and really doesn’t get itemized is the cost of attrition and turnover. It’s hard to put a dollar amount on it. When you have to start from scratch and retrain somebody and get them to start developing relationships with the clients from the get-go, that’s a big hit on your productivity, which affects your bottom line. If you can attract and retain good people, that is gold right there. That’s a big, big part of being successful, financially, emotionally, every way.
I think that a lot of times, there’s too limited a view on the compounding effect where you can look at money and you say, “If I got a 5% return on money every year, after 20 years, it’s way bigger than 100%,” which is 5×20. It’s true of time. A lot of people don’t realize that time is a resource that compounds. How you invest your time now and the return you get now is something that can compound.
The other thing is people. The investment you make in people and in building that team. If they stay with you and the team stays together, it’s like a sports team. The longer a sports team stays together and stays united, the more effective they’re going to get because they just start learning each other.
[Tweet “Journey to entrepreneurship: Invest in people and in building your team.”]
They learn the game better, yes. But they also learn each other better and that’s strength of the fabric, as we’re calling it, grows and you become more effective together in what you’re doing as well as more effective as a team. I can’t underscore how powerful that is.
I watched these private equity companies come in and they buy up other companies, or even public companies, whatever. They come in and they buy in, they buy these companies and they insert, they’re impose their culture on them. I see all of the good people scatter. People are falling off left and right, they’re quitting. I’m going, that company that bought that organization doesn’t understand that the most valuable thing in that company is leaving, and it’s the people.
Let’s talk about also the importance of saying no to the wrong client as well. You can’t just take any client even if you need the money because that can be a nightmare as well. A drain on your time, your employees’ morale and end up maybe even costing you money. Have you had that experience?
Journey to entrepreneurship: You have to draw a line and say, “These are the ones we’ll take and these are the ones that we won’t.”
Yeah, many times. Honestly, that flows from that same thing of we have standards and we stick to our standards. Our culture standards and who we work with as a client early. Especially early, it’s just so painful because you’ve got only so many opportunities and you need the revenue. You have to draw a line somewhere though and say, “These are the ones we’ll take and these are the ones that we won’t.” I think I can say confidently that in my business, I’ve never turned away a client and regretted it. I have many times accepted a client and regretted it.
There we go. There’s the line, everybody. You never regret saying no but you’ve often … We can say yes and regret it. It’s very much like dating too. I think people respect you if you’re not desperate and say, “Look, this is who we work with. This is who we’re for, this is who we’re not for and we’re not so desperate that we’re just going to take anybody’s money.” It’s not a dictatorship. When you work with us, it’s a collaborative situation. We may not be a good fit for you. It’s not just a one way street of you deciding whether you’re going to hire us or not.
I think a lot of it has to do with the willingness, where people want success before it’s time. When they’re engage with these different clients, they’re saying, “I can accept these fewer clients and I can live on a really lean budget and rough it for a little bit longer in order to be principled in who I am expecting as clients.” Or, “I can say yes to more and try to grab that success before it’s time.” It’s just that lure of impatience. Let success happen when it’s time. You focus on living by the right principles and the right standards and doing things the right way and success will come when it’s time. You just do the hard work, success will come when it’s time.
[Tweet “Journey to entrepreneurship: Do the hard work. Success comes when it’s time.”]
Nice. Let’s talk about who your ideal clients are, both for Classy Llama and Nucleus.
Classy Llama typically works with companies that are generating, let’s just say $1 to $50 million in online sales. They’re looking for a partner relationship and they’re focused on or they’re needing help or wanting to build on the Magento platforms. We’re focused on that piece of technology, that’s a key niche for us. We’ve been building on the Magento platform since it came out in early 2008. We have focused on it, we pushed everything else off our plate and focused exclusively on it since being gold partners with Magento, which is the highest level of partnership you can have.
Anyway, we’re deeply invested in Magento, we know it very well. We look to help. It’s established eCommerce companies or well-funded, sometimes well-funded startups as well, get going in their eCommerce businesses on the Magento platform. The Nucleus Commerce actually serves the same market. It just does it in a different way. We sell software extensions that help people specifically that are getting on Magento 2.0, which just came out recently. We’re one of the early providers of additional software that enhances the functionality and offering of the Magento 2.0 platform.
Fantastic. I love how much symbiotic relationship there is there, that the extension of the second company totally fits the knowledge you learn from the first. Is there any book that you recommend for our listeners to read about life or business that you found specifically inspirational or helpful?
Good to Great: Why Some Companies Make the Leap And Others Don’t
Two books. One is Good to Great by Jim Collins. It’s got some really great fundamentals there. What I love about it is it’s all data driven. There’s a lot of things that are data driven. Like, “That’s data driven but it doesn’t really smack of true because you can make any data look like anything.” I read what he found and I feel like this was a true blue, data driven exploration because it’s found a lot of unexpected, surprising truth that isn’t popular.
When I see something that’s not popular, and I see the data behind of them like, “Okay, that’s not popular and I know it’s true, and so I trust it.” I really believe they did good work with the Good to Great book.
I would actually offer up for young entrepreneurs that are just getting started, I’d offer up a book that I wrote called Finding Truth at the Bottom. It really outlines three keys to being effective, to being productive. It also really tries to combat certain common paradigms that I think are really confused about what the expectations are, around what it looks like to be an entrepreneur, to run a business.
Finding Truth At the Bottom (Leadership In the Round, Vol. 1)
I just think there’s some common held lies about what that means. This book really tries to combat that. It’s a simple read. It’s relatively short. I know a lot of people have really gotten a lot a value out of it.
Fantastic. How can people follow you on social media? What’s your Twitter handle, all that good stuff?
My Twitter handle is easy. It’s just @KurtTheobald. I’m on LinkedIn, /in/KTheobald. Those are the two key interface points on the business front that I use.
Fantastic. Kurt, it’s been a pleasure having you share your wisdom of how you’ve been so successful. Not just in revenue, but creating a culture that attracts and retains the people who not only share your vision, but contribute to it.
I appreciate the opportunity, John. I hope I helps a lot of people.
Fantastic. Thanks again.
Thank you. Bye.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Classy Llama Website
Nucleus Commerce Website
@kurttheobaldon on Twitter
Kurt Theobald on Linkedin
Finding Truth At the Bottom by Kurt Theobald
Good to Great by Jim Collins
Crack The Funding Code!
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How to Close A 15M Round – Interview with Mark Bidwell
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Mark Bidwell helps traditional organizations become more innovative and entrepreneurial in the digital economy. He helps to lead intrapreneurial change in market-leading companies such as BP Oil, the Hay Group, Syngenta, and more. Mark is also the co-host of the Innovation Ecosystem podcast, where he interviews thought leaders who are disrupting out-of-date methods, turning them into experiential growth. Mark talks about his work with Syngenta as well as how to get on the investor’s ‘good side’ on this episode.
How to Close A 15M Round – Interview with Mark Bidwell
Hi. Welcome to The Successful Pitch podcast. I’m thrilled to have today’s guest, Mark Bidwell, on with us because Mark has so much to tell us about innovation, fund raising, pitching. He actually has his own podcast called The Innovation Ecosystem podcast. He spent much of his 20 year career seeking out people and resources to help them innovate and grow businesses. He’s worked at BP, The Hay Group, which is part of Korn Ferry.
Most recently, Syngenta, where he led the creation and development of a $2 billion specialty crop business unit. He learns from other people’s experience. With his Innovation Ecosystem podcast, he brings fresh insights and perspectives and tools that you can use to get yourself funded fast.He is here to talk about how to close a 15M round, among other things. Mark, welcome to the show.
Thank you very much, John. It’s a great pleasure to be here.
You are calling in from?
From Switzerland.
Switzerland. I love it, how global the world has become. Mark, I always ask my guest to take us back to what made you decide to pursue your career. Did you know in college that you wanted to get into business and investing and raising money for startups?
No. I didn’t, actually. I’m an anthropologist by training, and the reason I studied that was because I just love reading books about different cultures and explorers and travelers. I found once I graduated that it didn’t really qualify me to do anything. I followed my father into business. He was in the food business. I worked for his home delivery supermarket startup in London. This was in 1990. From there, I got approached by British Petroleum.
I thought startup is good but actually, to get a decent graduate trainee program under my belt with a large corporation, which BP was and still is, would have made a little bit more sense to me. I joined them, was there for three years. Then I found myself in consulting because consulting I think is a great way of learning, getting a lot of exposure to a lot of industries and lot of disciplines very, very quickly. I really enjoyed that.
How to Close a 15M Round: I was in the right place at the right time and continued to help innovate in a number of different roles.
That’s where I started getting interested in innovation, business model innovation, because the consulting industry, as a business or as an industry, isn’t a particularly exciting business model. Because to make more money, you either have to work harder or charge more, and you reach a ceiling on both of those. I got involved in thinking about what other assets did this company, The Hay Group, have that they could make available to their clients?
I’ve found myself launching an internet business in the mid 90s in Europe, which was quite hard work back then. It’s hard to think of it, but it was. 20 years ago the world was very different. That got me into thinking more about business models, more about technology. I ended up going to work for the CEO in Philadelphia to help drive this program.
Finally then, family came along and we relocated from the US back to Europe, to Switzerland. I joined Syngenta to open up their biofuels business. That one thing led to another. I was in the right place at the right time and continued to help innovate in a number of different roles. I guess, I’m an accidental executive to be honest with you, John. It was never really my plan but I was continually being offered really interesting opportunities.
That took me to a place where, at the end of last year, the end of 2014, I decided there weren’t the opportunities available in that company any longer. I thought now is the time to go out on my own. That’s when I left, set up as an entrepreneur. I became chairman of one company and on the board of another company, and I’m building a business related to, but not specifically around Innovation Ecosystem. Really, helping companies and individuals become more entrepreneurial, essentially.
Wow. Let’s take a deep dive a little bit, if you don’t mind, because it’s such a fascinating story. This $2 billion Syngenta. Tell us about what that was like because it’s being an intrapreneur, it sounds like to me. You’re within this big corporate structure, but you’re being very entrepreneurial within it. Is that accurate?
Absolutely. Syngenta is the largest agri business in the world. In the previous role to that, to leading the specialty crops unit, I was looking after a portfolio of products, which were coming off patent. I was lucky enough to have a great team and a couple of quite good ideas that we were able to implement, which resulted in some really significant value creation for shareholders.
What normally happens when a product comes off patent is that the price collapses overnight, or in agriculture, it might take a couple of years. In certain pharmaceuticals it collapses overnight. Literally, as the trucks leave the Israeli manufacturing facilities at one minute past 12 full of your product. It’s an extraordinary industry.
How to Close a 15M Round: I was able to take all the previous experiences of creating the conditions for innovation and apply them across a team of many hundreds of people around the world.
Now, in our business we are able to change that dynamic completely with a completely different strategy, related to the characteristics of the product we were looking after. As a result, we are able to raise prices for two subsequent years, patent, which was unheard of in the industry. As a result of that, I was lucky enough to be offered an opportunity to form a new business unit and grow that out. It ended up as about $2.3 billion dollar business unit.
This was servicing or looking after probably 40 different crops around the world, growing in every part of the planet, essentially. It was a hugely exciting, challenging, scary role for four years. What I was able to do John, was to take all the previous experiences of creating the conditions for innovation and apply them across a team of many hundreds of people around the world. We are fortunate enough to generate some quite exciting results as well.
It’s amazing. Were you solving a particular problem of world hunger with all these crops? Or what was it that caused that incredible growth?
I guess what we did was we thought far more about the grower and what their issues were and what their problems were. A lot of these growers were based in subtropical or in tropical environments where they were … In agriculture, I think it’s the largest employer in the world, agriculture. I think it’s something at 17% of the world’s population are directly or indirectly employed by agriculture or supported by agriculture.
How to Close a 15M Round: Their issues really are not often how do they grow their crop, but it’s how do they actually ensure that long-term, they have a business so they can hand over to their children.
A lot of growers, you come from the US, there are some fantastically, wealthy industrialized, professionalized growers. They reckon there’s about 100 million professionalized growers around the world. There’s something like 500 or 600 million smallholders who are living, not quite hand to mouth, but whose family in their extended families rely on crops. What we did was we look and try to understand, what are there issues?
Their issues really are not often how do they grow their crop, but it’s how do they market their crop, how do they fund the investment in their crop, how do they actually ensure that long-term, they have a business so they can hand over to their children.
We took a very holistic view and we are able to then look at what’s available in the market and pull together a number of different solutions, which could be financial solutions. It could be traceability solutions, it could be new business models, and bundle them around our core products. That enabled us to grow our market share, as well as create more value for the overall value chain.
That’s such a huge takeaway, is you looked at something and figured out a way to see it in a different angle, an innovative way to look at something to solve a big problem, it seems like to me. Now, you’ve taken that skillset and that experience and have applied it to other things. Since this is all about how to make a successful pitch and one of the things investors look for is, obviously, rapid growth. Can you talk to us about your … Congratulations on this fifteen million series B that you’ve just closed.
This is in agriculture. It’s an architect company based in Canada. There are number of different ways that you can look at this industry. I looked at it with the management team and we figured out that this is what … The most compelling way of thinking about this is as a platform play. This company and the technology that we have enables other organizations or other products become far more efficacious and successful and perform far better in the field with our ingredient, if you like, which is the technology.
It’s almost like in Intel Inside. If you look at it that way, you’re able to tell a story to investors, which is around, “This isn’t about how much product we can actually sell to farmers, but it’s about actually we can enable a whole new category of products to become far more mainstream in the world of agriculture. Literally around the world but starting in North America and moving very quickly to Europe.” It’s using a different lens.
[Tweet “How to Close a 15M Round: We used an analogy that investors could understand.”]
I think what we did was we looked at the pharmaceutical industry and said, “Look, this is really where the biosimilars were ten years ago, which are now a huge business for a lot of big pharmaceutical companies.” Ten years ago, they were just a very very small subsegments. We used an analogy that investors could understand and say, “Look, here we are at the beginning of this curve in this industry. By the way, this is a $70 or $80 billion industry.” There aren’t many companies like ours out there, at this stage, with this technology, with this potential in front of us.
You did a couple of things there that I want to really summarize for the listeners, which is when you’re pitching, no matter whether it’s a seed round, a series A round, or in this case a series B round for $15 million, you need to paint a picture and not talk about just numbers and how something works.
Instead use analogies, see things through a different lens and then talk about how big the market is. What you’re doing is describing something that’s very disruptive, it sounds like to me, when you talked about it almost being like Intel, right?
[Tweet “How to Close a 15M Round: you need to paint a picture.”]
Yeah, absolutely. When you got a huge market opportunity in front of you, like we have, it is important to get people of a glimmer of how they can actually take advantage of that in a leveraged way. Because to build out a really significant organization with a direct salesforce, with all the standard marketing, it’s going to take an enormous amount of resource.
This is about finding a way to accelerate that growth and scale that growth, leveraging some of the other dynamics in the industry that potentially some of these investors weren’t necessarily aware of. Most investors in this space have been looking at drones, they’re looking at precision agriculture, looking at water and very few of them are actually looking at this space.
Being able to bring this space into mainstream and give them a glimpse of how it could grow into something significant, was really what we, the management team in particular, the CEO did very well to close this funding. It was probably 40% oversubscribed. We were very happy with how it developed.
[Tweet “Give investors a glimpse of the future with you”]
Wow. So you’ve really became irresistible and you had a multiple fear of missing out thing happening. You were able to select which investors you wanted to work with.
Absolutely. Now, you and your listeners will know, it’s not easy. It’s getting the first, the lead investor, which takes a lot longer than one hopes. Once that group is in place, then a number of others do fall in partly because of fear of missing out, partly because they don’t want to do a lot of the work associated with being a lead investor, and partly because you get developing more confidence and you are able to communicate with more confidence once you got the first anchor tenant on the term sheet, essentially.
Now, were you involved with the previous rounds before you got to the series B?
No, I wasn’t.
Got it.
This is the first institutional round, essentially.
Got it. Do you have any tips for the listeners on how to get that first lead investor with a pitch that makes them feel willing to be the first one? Are there incentives to being a lead investor that you give?
I think it does come back to two tips I give. Firstly, be prepared for a lot of knock backs. It’s rather like interviewing for a job, I guess. I haven’t done this for a long, long time. I do remember when I did it, that the first few interviews are an opportunity for you to polish your message and to get comfortable and confident and to hit your stride. I think it’s the same with raising money.
[Tweet “Be resilient when you pitch”]
You’re going to get a lot of pushbacks and people, for whatever reason, are not interested in you either because of timing, either because of that sectoral focus, or because they’re looking at different bite sizes or different stages. Be prepared, be resilient, be prepared to expand a lot of shoe leather in dialing for these leads. I think the second things is, understand what they’re looking for.
It’s not about you, it’s about them and their issues and how can you actually meet their needs and give them something that they genuinely want. I think, often it’s going in and selling too hard without actually listening. There’s a reason we’ve got two ears and one mouth. It’s important to remember that.
It’s all about putting yourself in the investor’s shoes, having empathy for them, as opposed to just saying what you need all the time. Is that accurate?
Absolutely.
Some of that has to do with your own due diligence and doing a deep dive on that person’s LinkedIn profile, what other investments they’ve made, any potential people you might have in common, things like that I think really help get the rapport going, get the trust going, which is all needed to get someone to take a leap of faith with you.
Absolutely. It’s a human business at the end of the day. It’s them feeling comfortable with you. Something very subtle happens here. Unless you ask them at the beginning, not necessarily using these words, but unless you are demonstrating an interest in what their needs are, then you can come up with the most compelling pitch.
[Tweet “Investing is a human business.”]
There’s always going to be something in the back of their minds saying, “They’re not really interested in me, they’re just telling a good story.” I think it’s really important to, somehow or other, demonstrate a level of empathy and interest in how can you help them, even though obviously, the dynamic is exactly the other way around. Particularly they’re sitting across from a well funded, prestigious venture capitalist.
There’s a lot of intimidation going on in the relationship because they feel they hold all the cards. I think, as you go in looking for money, have the energy that says, “I want to actually help this person.” If helping them means that they’re not going to invest in me, then that’s okay. It’s very, very subtle.
My personal belief is this is a hugely important distinction because it changes how you approach the meeting, how you hold yourself in the meeting, how you actually engage with them. Both of at a physical level, but also at a subliminal level as well, if that make sense.
Oh my gosh, Mark. I love what you just said. No one’s ever said it quite like that. What I hear you saying is you need to think of yourself as a brand and they’re a brand, and you’re equals. That you each have something of value. You may not have the same amount of money in your bank account. But as far as intelligence and integrity and character and vision, you have something to offer to them.
I’m guessing that what investors are looking for, in other words, how you can help them is by giving them an incredible opportunity and a return on their investment in a way that they hadn’t thought of. Will that be something they would want?
How to Close a 15M Round: You want people who are locked in for the journey and who have that level of mutual trust.
Absolutely. Let’s be honest, any investor in a fast-growth company, it’s a difficult journey between the management team and the investors. It’s not going to be easy. You want people who are locked in for the journey and who have that level of mutual trust.
A bad outcome is that you, for whatever reason, you raise money but there isn’t that level of trust because at the first opportunity, it’s going to blow up. That’s bad for everyone. Again, a lot of this is how you approach the meeting and it’s got to feel right. It’s not a marriage, but think about it as a long-term relationship. I think it’s going to make life a lot easier.
That’s fantastic. Now, you also have some insights about pitching for money from large corporations. Is that right?
Yes. In my last role with Syngenta, I was looking after a lot of new products and new research and development compounds that cost anything up to a quarter of a billion dollars to get to market. Often, they require significant investment in infrastructure and assets.
I got quite a lot of experience taking big projects with many hundreds and millions of dollars of capital in front of the executives, the leaders and the boards. Even though you know the individuals and you got a better sense of the politics and the relationships, it is, in many respects, the same process. It’s being totally clear what you want out of the conversation and what their needs are and the extent at which you can match the two.
[Tweet “The why is more important than the what.”]
I think the other piece here, I think the why is really important as well as just the what. I think it’s trying to connect with, trying to paint a picture of what’s possible here longer term beyond the financials is quite a useful way of thinking about it. Because it makes the conversation a little bit less dry and a little bit more engaging emotionally. Because at the end of the day, these decisions for public companies are big decisions and people need to feel they can trust you as an individual.
I love what you said. It’s important to have your numbers but you have to paint a picture and give people a sense of why this is important to you and why you’re passionate about it.
Absolutely. The Simon Sinek TED talk, which is all about the importance of the why. It’s easy to forget this because we’re all business people who go and then we talk about numbers and stuff. In actual fact, comes back to what I said early on, if you can engage people at the emotional level and get them to understand why you’re doing this, I think it’s far more powerful than the what. It’s a precursor obviously for the what, but it is actually far more powerful. It moves people, John.
[Tweet “Engage people at the emotional level. Get them to understand why you’re doing this.”]
Yes. That begs the question, which is what is your why to start The Innovation Ecosystem podcast?
It’s a really good question. I’ve been doing this work in large organizations for almost, well probably over 20 years actually, John. I’ve made lots and lots of mistakes, learned a huge amount, I got a few scars on my back. But I began to figure out how to do this. I figured it all out for myself in the sense of there were no real resources, no go to people, no places where you can educate yourself in this stuff. It’s not easy and it depends on the organization you’re in.
Coming out of the corporate world, one of the things that I was very keen to do was to make available these kinds of resources, these kinds of insights, these kinds of experiences, to people who are doing these kinds of jobs in organizations as I was. Entrepreneurs in large mature industries with long product life cycles, how can you actually help them move the needle, have an impact beyond what they’re expected to do in their day-to-day jobs?
How to Close a 15M Round: I wanted to make available these resources, insights, experiences to people.
Because there’s a lot people, particularly as you got millennials coming into the workforce, who have been wanting to leave their mark on organizations. They’re looking for purposeful work. I really wanted to resource these kinds of individuals because there’s a lot of people out there with insights and distinctions and materials. That’s my why.
I’ve teamed up with a friend of mine who’s got a business providing information to corporations and lots of links with business schools. What we’re doing is we’re interviewing a number of thought leaders in the area of innovation, change, leadership. One of your previous guest, Guy Spier, is an interviewee. Now, he runs a hedge fund.
We’re also interviewing a number of high performers. A hedge fund manager, a concert pianist, we’ve got an explorer on, and then we’ve also got some CEOs and some executives and entrepreneurs, all talking, John, about innovation, change and leadership.
Europe is not quite as advanced as North America in the podcasting world, so we’re working to create a number of digital assets such that people can consume this not just verbally over podcast, but they can download and read transcripts and that they’ve got nice designs. We’re also creating videos of the podcast as well. People can consume them in multiple ways such that if they’ve got a need for this, there’s not a technological barrier, if you like.
It doesn’t surprise me that you’re being innovate in the podcasting world and bringing things to Switzerland and Europe that haven’t been done before by incorporating not just the audio, but the transcript and the video. Good for you. Let me ask you, what about your speaking? Because I know you’re an incredible speaker. I’ve watched some of your talks online on your website. What are your favorite topics and who’s your ideal audience to speak to?
Thanks, John. It’s not something that comes easy to me, but I’m getting a bit more practice. What I like doing is, I’ve done a number of talks to organizations and industries that are mature, slow moving, regulated. It could be a banking company, a bank, it could be a glass manufacturer. Companies that have similar characteristics to the agricultural business that I came from before.
How to Close a 15M Round: What is the mindset of the entrepreneur? How do you need to think? How do you need to articulate your purpose? How do you need to make decisions?
Just helping them understand the journey that we went on over the four years, building out this $2 billion business. One of the relevant topics that they can take away, what are their takeaways? Then we’d worked with the leadership teams and start thinking about other certain things that they, as leaders, are doing that they’re getting in the way of innovation, for instance. That’s one area.
Then the other one is entrepreneurship. I’m doing a number of talks. I will have given a number, by the time this goes out to your audience, on what is the mindset of the entrepreneur? How do you need to think? How do you need to articulate your purpose? How do you need to make decisions?
Secondly, as an entrepreneur or as a leader of entrepreneurs, how do you actually want to create this space for your team to come up with innovation ideas, to explore new concepts, in a reasonably safe environment without the fear of failure, which characterizes a lot of innovation in large organizations. Those are two topics, if you like, that I’ve got a lot of energy around.
That’s fantastic. This whole concept of helping people get over the fear of failure, whether you’re an intrapreneur or entrepreneur, is desperately needed. I’m sure it’s a topic that has everyone riveted to listen to. Mark, what inspires you? What books do you like to recommend to listeners?
Sam Walton, Made in America
I do read quite a lot actually, John. Let me think. I’m just looking around my office at the moment. I guess, biographies, first of all. The first business book that I ever read was Sam Walton’s Biography, Made in America, which actually oddly enough, I took that book and reread it before I developed the post patent defense for this product I was talking about. Because the way he thinks and the way he executes and the way he identifies his core source of differentiation was fundamental for how we transformed this product. Biographies.
I read a lot of books on, I suppose, personal development and professional development books. One of the great ones that I’ve read the other day was this book by Cal Newport called Deep Work, which I found really interesting, particularly in this always on, over-scheduled world that we live in. This is about how do you actually start focusing and do really good work in a way that enables you to really differentiate yourself from the vast majority of people who are multitasking, thinking they can get stuff done.
Deep Work: Rules for Focused Success in a Distracted World
The signs is very clear now. We are not wired for multitasking and you do need to create space and focus to actually dig into stuff, to deliver deep work in a way that is value adding. Those are some examples. I’ve got probably more books piled up that I need to read, surrounding me than I have done at any point in my career.
I think that Deep Work is a great suggestion. We’re going to put all your recommendations in the show notes for people to be able to click and buy the book or look at it. This whole concept of multitasking being a myth is another great message to put out to people. If you want to be productive and focused, pick one thing to get done before you go on to try to complete a bunch of other things.
Mark, there’s many ways that people can follow you on social media and you have multiple websites. Tell us all the ways that people can follow what you’re doing, subscribe to your podcast, etc.
I’ve just put up a new website, which is MarkBidwell.com. Then the podcast is InnovationEcoSystem.net. By the time this goes out, I think a book project that I’m working on will be pretty mature as well.
Hopefully, there’ll be a number of resources, beyond the podcast interviews, that people will be able to get access to and take advantage of. I guess most importantly, come back with some feedback to us. I’m also on LinkedIn and I’m on Twitter as well.
What’s your Twitter handle?
My handle is @MarkEHB and the other one is @InnovEcoSys. I’ll give those both to you so you could put them in the show notes so that people can spell them correctly.
Fantastic. Mark, it’s been a pleasure. I can’t thank you enough for giving us your insights on how important it is to position yourself from the standpoint of what can you do for the investors instead of being someone who’s just asking for something and really focusing in on building trust and painting a picture. Thanks again.
Not at all, John. It’s has been a great pleasure. I love your podcast. I’m very pleased that we’ve managed to meet. Let me know how I can help in any way.
Links Mentioned
The Innovation Ecosystem podcast
J Robinett Enterprises
John Livesay Funding Strategist
Mark Bidwell Website
Syngenta – United States Website
Made in America by Sam Walton
Deep Work by Cal Newport
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Hiring Smart People To Get Funding – Interview with Dan Weinfurter
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Dan Weinfurter is a serial entrepreneur and the author of Second Stage Entrepreneurship. He is the founder of GrowthPlay, a company that helps drive profitable revenue growth by improving overall sales effectiveness. Dan dives into the hiring process and believes it’s better to hire no one than hire the wrong one. After all, hiring the right person is often a multi-million dollar decision. So, how can an entrepreneur hire the right person? Listen in to today’s interview for more information.
Hiring Smart People To Get Funding – Interview with Dan Weinfurter
Hi and welcome to The Successful Pitch Podcast. Today’s guest is Dan Weinfurter, the author of Second Stage Entrepreneurship. He’s also the founder and CEO of GrowthPlay, which is a sales effectiveness business consulting firm. Dan consults with many organizations, developing and implementing sales and leadership effectiveness, strategies that drive profitable growth.
Second Stage Entrepreneurship: Ten Proven Strategies for Driving Aggressive Growth
In his 25 years of being a serial entrepreneur, he’s built three, not just one, but three successful companies including Parson Group, his first start-up that landed number one on the coveted Inc 500. In addition to consulting, speaking and interim management, he guest lectures at leading business schools and was a mentor for the Clinton Foundation’s Institute for Entrepreneurial Excellence. Dan, welcome to the show.
John, pleasure to be here.
What a great background that you have and what great experience you have, especially for a podcast like this, one called The Successful Pitch. You obviously know how to sell and pitch. Can you take us back to your early career of selling and your first start up, and how did you know that that’s what you wanted to do?
It’s probably a two-part question so I’ll try to answer succinctly and then we can go from there. Right out of college, I was hired by General Electric and I went through their sales training program. That was back in the day where a company would hire a 22 year old and put him through a year of training with the hope that the 23 year old would be able to sell sophisticated services to executives in big companies. Those days are somewhat gone where companies spend that amount of time and effort bringing young people up to speed.
For me, it was really fortunate and has got me started in a career. Really, even the businesses I’ve started, the common denominator has been the buildup and deployment of an effective sales organization. My GE career lasted eight years. Subsequent to GE I’ve now done, this is my fourth actually that I’m working are now, all in business services, trying to help companies do one thing or another.
Let’s talk about the Parson Group. Did you have to raise outside funding for that, and how did you come up with the idea?
I resigned, wrote a business plan and raised essentially $4 million on a PowerPoint. I was hiring smart people in Chicago in July 1995.
The idea for Parson Group actually came from a business that I was involved with previous to starting Parson Group. It was an information technology staffing business. We watched ourselves grow and we completely and continuously outran our operational capability, which included finance and accounting. We turned to the outside staffing temporary service providers for help. As we watch what these firms did, we saw that they frankly were terrible and violated all of the things that we thought were responsible for our group at the firm that I was at.
The notion was hatched, “What if you took our business model and applied it to the finance and accounting vertical and you had capital and you built it correctly, what could you do?” After ARC, which was the firm I was at, went public, I resigned, wrote a business plan and raised essentially $4 million on a PowerPoint. We used that to hire five people in Chicago in July 1995. Six years later we had a $90 million business, all organic growth.
Amazing. I bet those investors were happy.
We needed to go back to them a couple other times.
Which is fine. That’s expected.
Which is fine.
You hit the milestones. You need more money to grow, yeah.
We did. They were very happy. It worked well for all parties involved.
Great. Let’s talk about this great book of yours. I’ve had the pleasure of reading it cover to cover. It’s just fantastic. How did you come up with the title, Second Stage Entrepreneurship?
The original title was How Hard Could It Be, which was not meant to be serious, but that was part of the problem. The editor that I was working with didn’t think that that title was right and thought it might offend people. As we were working with the publisher, which is Palgrave Macmillan, we kicked around a bunch of different ideas. Frankly, the editor at Macmillan gets credit for this. She thought that there was this void between how do you start a business and then how do you get it to the next level. Plenty of books on startups, plenty of books on sales.
But this whole, what we call second stage growth, she thought that there was a void in the market. We reshaped it a bit through the editorial process and made it far more broad-based. Instead of just talking about sales, we talked about all of the things that tend to be important in growing a business from an early stage to what we call the second stage, which is a much bigger business, obviously.
The process of hiring smart people, while it is the most important part of the growth journey for any company, ironically, my view is that it’s the least disciplined.
One of the key things that’s over and over important is hiring smart people, which you talked about in this great book. I know that investors look to that when you’re pitching for money, who’s on your team. Even as you continue to be successful and need higher and higher rounds, one investor told me that the quality of your team has to equally go up. The CEO can’t be the CFO anymore. Can you speak to some of the things you talked about, about the process of hiring smart people? In specific, I love what you wrote when you said intellectual curiosity. Tell me what that means.
So, two parts. Ironically, I think that the process of hiring smart people, while it is the most important part of the growth journey for any company, ironically, my view is that it’s the least disciplined. You think about what’s involved in hiring smart people. In most cases, it’s a million dollar and up decision that somebody is making. Seldom is the rigor applied for that level of decision making. A salesperson, for example. Seems fairly routine. It’s at least a million dollar decision. I tell people, I’ve made it wrong enough times to know that my numbers are right.
That’s great.
In a manager, so if you’re starting a new geography, that’s at least a $15 million decision. I could say the same thing there. I’ve made a mistake enough to know that that number is correct. First, I try ground people in the fact that these numbers are real. If you get the right person, great things happen. If you get the wrong person, bad things happen. The trick is that every role for every company at every stage of growth is different. You can’t just take what you’ve done in the past and apply it to the business that you’re a part of today. It might or might not work. It’s a flip of the coin.
[Tweet “Every role for every company at every stage of growth is different.”]
I teach a class at Kellogg and I was guest lecturing in this class called Digital Innovation. One of the things that the professor teaching that class pointed out, which is true, is that in the technology space, and it’s probably no different anywhere else, the founder hires his or her number two 70% of the time without defining the role and without talking to more than one person.
Really? I can understand that to finding the role because you’re going to do anything. But not talking to more than one person fascinates me.
That would be a lack of intellectual curiosity, would it not?
It would. There we go. We’ve got it defined, and you’ve brought it full circle. I love it.
It’s funny, you talk to people, and this is one of my favorite tricks, is after an interview is almost done, you ask a person, “What are you reading today?” It’s amazing to me how often you get an answer, “I don’t have time to read. Too busy. I don’t really read. I look at some magazines and newspapers but I don’t read any books.” It’s hard for me to imagine how anybody can get the information that they need to do their job correctly without reading. Furthermore, just if you’re curious about life, you ought to be picking up things, even if they’re not business related in reading. Pick up a novel, pick up a political, non-fiction book. Read something.
[Tweet “If you’re curious about life, read something.”]
Right. I couldn’t agree with you more. It’s like what you’re putting into your body for food, what are you putting into your brain through reading to keep yourself growing. One of the things you say in Second Stage Entrepreneurship is, “The cost of hiring the wrong person is higher than leaving the position unfilled.” We’re going to tweet that line out. Can you give us a story around that and around only hiring smart people?
[Tweet “Cost of hiring the wrong person is higher than not hiring a person.”]
One of the things that I learned the hard way again is it’s better to have no one in the role than the wrong person. The theory there is if you have no one, you do something about it. If you just hope that it’s going to get better, guess what? It doesn’t. I encourage all people, if you have somebody who’s not correct in the role, move that person along and then go about finding the new person. You’re going to be far better served, even in the short run.
Dan, how long do you give somebody in a new position to prove themselves? Three months? Six months? A year?
I’d give you the classic consulting answer, it depends.
Let’s say if it’s a new salesperson. Let’s say I’m a founder of a startup. I’ve got somebody who obviously needs some training and come up to speed. How much time do I give them to prove themselves, before I know it’s a wrong choice?
If you’re paying attention, it shouldn’t take very long. Again, you have to be paying attention. It’s not so much that you manage it by numbers per se, because specific numbers can be wildly good or wildly bad based on just luck and timing. But if you’re paying attention and you’re working with that person, you can see the quality of interaction they’re having with others. You can see if they’re doing the right things that are likely to make it work over time. Be a little bit lax in terms of the specific empirical outputs, but be really rigorous about the quality of the interactions and the qualitative aspects that you know will dictate success for that role over time. That’s the critical thing.
[Tweet “Hiring smart people: be really rigorous about the quality, not the numbers.”]
That’s incredibly valuable.
It could be a week, it could be a month, it could be six months. You just have to be paying attention.
I love that, because so many people just look at the numbers. If you don’t meet your quota by this time, boom, you’re out. Like you said, there’s a lot of other circumstances. If the person’s got a good work ethic and is a good culture fit, and like you said, doing what it takes, the number of sales calls, phone calls, emails, whatever it is, to be successful, then focus on that.
Now, let’s dive into this whole section you have in Second Stage Entrepreneurship about the power pitch. I love your whole philosophy that if you ask five sales people to describe what the company does, five other people who are in sales, and then five trusted customers to describe what the company does, sadly, you would probably get a lot of different answers.
You will, and it’s so fundamental and so basic.
You keep talking about the need to be targeted and consistent with your branding.
Think about it. Everybody should be able to answer these questions with complete clarity. What do you do for your customers? What do you do that’s different? What do you do that’s better? And be able to demonstrate or prove it. You should be able to do that in very short periods of time. You might only have, literally, 20 seconds to answer the question on what do you do, you might have 15. They think it’s easy and so they just wing it.
[Tweet “How are you different and better?”]
But to get that nailed down with the level of clarity and rigor that’s necessary, it actually involves a lot of practice and a fair amount of what I call preparation so that you have different versions of that for different audiences. If you’re talking to somebody at a cocktail party, it’s probably different than if you’re talking to a CEO or you have a prearranged meeting and you have that actually ready to go.
Most people think they can just wing it and they are so afraid of sounding robotic or they don’t want to memorize anything. I constantly teach people, Tiger Woods doesn’t wing it. Meryl Streep doesn’t wing it. Everybody who is a professional prepares.
They prepare. The only way that I’ve ever gotten people to take it serious is to film them and then actually show them how bad they are at it.
Yes, you really hear the stumbling and how hard it is to follow what they’re trying to say and how few people really understood what they said and all that stuff.
I go back to my GE days. We did this every day for my entire first year of training. You do these role plays and if you did it badly, they play it back three or four times until everybody in the room was laughing. It was all in good fun. We were with all these people for a year. You actually get it nailed down. This stuff all is hard and it takes practice. That’s where all this started from and it’s how it’s become part of what I use to be a critical path for business success.
Since you’re an expert in sales and managing sales teams and hiring smart people and the right team, one of the things I’d love to have you share with us is how do you get sales people who are so competitive, not only outside of the company but within the company, to start sharing best practices with each other so that the whole company can benefit?
Sales people, they’re competitive with each other but they also like to be part of the gang.
It’s a simple question but probably a complicated answer. Sales people, they’re competitive with each other but they also like to be part of the gang. There’s a fair amount of camaraderie. If everybody hates you and you’re a salesperson, that doesn’t work very well because no one will hang out with you. Effective sales teams that I’ve been part of, while they are competitive, they’re certainly more than willing to talk to their peers about what they do. Many times, they will have the point of view of, “You probably can’t do it as well as I do so I have no risk in telling you what I’m up to.”
I think the sales manager who’s doing his or her job correctly is drawing from the entire group all of the things that can be done that tend to move the meter in work in that particular business. Then bringing the team together so that those best practices are shared amongst the group in a way that they’re digestible or consumable. Most people that I’ve worked with are more than willing to be part of that process.
That’s great. Whether you’re pitching an investor for money or pitching for a new client, it’s all the same, where you have to be able to describe, as you said, what do you do that’s different and better and be able to prove it. The best way I know is through stories. You write about this is Second Stage Entrepreneurship a lot. Where you have a whole process of tell a story about a problem another client had, and be sure to name that client, and how they tried it without success, without your help. Then how you came up with the solution.
Then most importantly, which I think most people forget in these kinds of stories, is what kind of ongoing success does the client have from working with you. Can you tell us how you developed such a smart strategic way to tell a story that helps drive sales?
What’s Your Story
Actually, I read a book. This is called What’s Your Story. It’s written by a University of Chicago Business School professor by the name of Craig Wortmann, called What’s Your Story. Some of that goes back before that. My GE days, one of the things that we would do is we would build stories about where we had done this work for others in the startup world and it became a far bigger necessity for success.
If you have a company that doesn’t have a name brand and you’re trying to sell to a Fortune 500 client, you have to build credibility and trust. You can do a little bit of that by how you behave. In their heart to hearts, they want to also know, who else do you this for and how do I know that I’m not making a career limiting decision by bringing you into my firm?
The stories are a great way to build that credibility and trust, especially if you can make them personal. You name the person that you were working with and you talk about the impact that it had, not just on their business, but on them personally. Because in the end, almost everybody makes a business decision based on the impact to them personally, and then they back into the business rationale for that decision. It’s not always that way, but it almost always is that way. It’s very predictable human nature.
[Tweet “Build credibility and trust through storytelling.”]
I love that. Everyone thinks if we just do the job you’re asking us to do and there’s RFP, we’ll get the business. If you tell a story of somebody else hiring you over a competitor and that person looking so good to their boss that they got promoted, that’s an example of a personal impact.
In fact, throw the RFP away. You’re not going to win it. Unless you helped to write it, it’s a waste of time and effort. Spinning your wheels.
In reading your book, I came across that we have a mutual friend, Paul Rand, who runs his wonderful social media agency in the Midwest in Chicago, my hometown. He said, “Your brand is not what you say about yourself, it’s what your customers say about you.”
[Tweet “Your brand is what your customers say about you.”]
Exactly.
I’d love to have you speak to that, about not just your brand that you’re working for and how important it is to sell the brand of whatever company you’re working for. This whole concept of having a personal brand, I think is really essential as a salesperson. Don’t you?
It’s not only essential as a salesperson but for any role in life. Think of the politicians that are on the news right now. They all have their personal brands, which in some cases is helping them and then some cases it’s not. The other part of this is it takes a lifetime to build a reputation and not very much time at all to wreck it. What Paul talks about, and I’ll actually see him on Friday, is you should live your life as though every day is part of the building of your own personal brand.
[Tweet “It’s not so much what you say. People watch what you do.”]
Again, it’s not so much what you say. It’s people watch what you do. Just living a life where you’re true to your word and if you say you’re going to do something, you do it. If you’re building a business or you’re part of a business, make sure the business behaves in a very similar way. If you say you’re going to get back to somebody on Tuesday morning, get back to them on Tuesday morning. Not Tuesday afternoon.
Dan, you’re singing my song. That lack of integrity drives me crazy. Sometimes, you can set the bar just by doing what you say you’re going to do. If you say you’re going to follow up, follow up. That’s automatically sets you on the top, I don’t know, 10%, sadly, of salespeople who don’t follow up, the 90% that don’t.
It’s probably higher than that.
One of the things you talk about is this written monthly review. A lot of people hate reviews, a lot of people love them if they get good ones. I like this whole concept of doing it monthly instead of quarterly or twice a year. Some of the questions that you think people should be is asking is, how do you feel about last month?
I think that’s really fascinating, is to tap into people’s, do you feel proud, do you feel embarrassed, do you feel frustrated? Then, what didn’t happen that you want? This for me is the number one thing that made me successful is, what are your top ten accounts and your top ten opportunities? If you just focus on that, I think you will, the 80-20 rule kicks in, don’t you agree?
The important part is that the people who are doing really well get really good reinforcement and get the help that they need to do even better.
I would agree, because the ones that are on that top list are probably not going to get done. You think about any executive, it’s similar that they can only really act on the top five things on their list of objectives at any given point and time. If you’re trying to get to them with something that’s not on the list, good luck getting … They might listen but they’re not actually going to take action on it. Same is true with driving sales activity. When I was first told I had to this, this is one of the stories I tell on the book, I said, “You got to be kidding me. Monthly? Seriously?” I pushed back on it and I thought it was just going to be a time consuming bureaucratic process.
But it’s just the opposite. The people have to come in with the knowledge of what they did in the prior months, what they’re going to do in the current months. Probably the important part is that the people who are doing really well get really good reinforcement and get the help that they need to do even better. Sometimes those conversations just don’t happen with the people that are doing well. The people that aren’t doing well is a paper trail that’s built up over time. “Let’s see talked about last month. We’re having the same conversation again. This doesn’t really feel very good to me.
It’s groundhog’s day.
Deja vu all over again, as the saying goes. It doesn’t take very long before you realize that this is not going to work. At that point, then you don’t have to go through the charade of a performance plan. You can just move on the person because the trail is already built. The most important thing is it helps the good people do better because it reinforces the behaviors that they have put in place, that are responsible for their success.
The review forces a conversation that, “Where do you need help?” One of the big jobs of a sales manager is to really help the team, help the individuals that are part of the team be successful. It’s not to manage and control. That’s what people think. That’s not it. It’s being helpful.
One of the things you have on your GrowthPlay website is how to not only find great talent, but keep them. Can you speak to what your secret sauce is there?
It’s probably not changed in 30 years. Really, there’s two things that I think are critically important. One’s the culture of the business. Does the culture and the mission resonate with the people that are part of the team? If they’re engaged in a business that they don’t really like, good luck keeping that person over the long haul. That’s one. Then related to that is who they work for.
Probably the most important person is their direct supervisor. If it’s corrupt or bad at the top, that will engender cynicism and it will end up rotting from the top eventually. Ppeople who won’t put up with that over the long haul. The truth is when people quit, they quit their boss or their bosses first and foremost, and everything else follows.
[Tweet “When people quit, they quit their boss first and foremost.”]
It’s not for the extra X percent of money, is it? It’s about not feeling appreciated a lot.
Or you just work for a jerk. There was a study in HBR, I just read a few weeks ago, was done by some Gallup researchers. This is almost hard to believe. I think it ran last year. They pointed out that American businesses hire the wrong person in the first line managerial role 82% of the time.
Wow. Do you think part of that is if you’re a great sales person, then you get promoted, and suddenly you’re sales manager and it’s a completely different skill set?
Absolutely. In fact, the better the salesperson you are, the more likely it is that you’re not going to be a good sales manager. In fact, we have the science behind this, only 10% of successful sales people have the innate behavioral DNA to be successful sales leaders.
What’s the solution? Should they go through some training if they want to do that? Or is it just not in their DNA? Doesn’t a sales manager need to have been a sales person to understand what’s required?
As a salesperson, it’s all about yourself. As a sales leader, it’s all about the team.
That is true. In fact, you have to have been a somewhat successful salesperson to be a successful sales leader. But you have to go find the people in your sales organization or who exist elsewhere who both could sell and can lead people. It’s a narrow pool of people you’re looking at, but you got to find them or it’s not going to work. Think about it. As a salesperson, it’s all about yourself. As a sales leader, it’s all about the team. As a sales leader, the job is to facilitate an outcome through collaboration. As a salesperson, you just take charge and get it done. Much like if you think about an athlete versus a coach. It’s the same analogy.
Yes. Got it. Terrific.
If you’re really good, you don’t even realize what you’re doing. You just do it naturally. Can you train other people to do that? Maybe. Some can.
Yes. Or, do you have the patience to train them? That’s the other thing you have to realize. Just because you’re on a certain level of expertise, the junior salespeople probably aren’t. They’re going to need some hand-holding and some patience.
Very true.
Dan, how can people follow you on social media? Obviously, GrowthPlay.com. Tell us the best way to keep track of what you’re doing and how to engage with you.
I’m on Twitter at @danweinfurter. I’m on LinkedIn. I think it’s DanielWeinfurter. I have a personal website, DanWeinfurter.com. We obviously have a company website, GrowthPlay.com. All of those tend to work and work pretty well.
Fantastic. Obviously, besides the Second Stage Entrepreneurship, which we’re going to put the link in the show notes for people to buy, you also mentioned that great book, What Is Your Story. We’ll put both of those in there. Dan, any last words or thoughts to leave with the listeners about how to pitch or how to sell?
Probably the last thing, sales, in my view, is one of the last great frontiers that’s still not viewed as a discipline, like finance or marketing or engineering. Yet half the people that come out of college end up in a sales role and any white collared professional spends a significant portion of his or her time in their occupation of selling.
I think it pays everybody dividends to actually do what you would do with any discipline, which is to study and get good at it, and not just think that you can wing it. There are definite activities and processes that are proven to work in sales, just as they work in other disciplines, and give sales its due and its day in court, because it’s deserving of it.
[Tweet “Give sales its due and its day in court, because it’s deserving of it.”]
Fantastic. Dan, thanks again for being on the show and for talking about hiring smart people. You’ve been a great guest, and everybody, go get this great book, Second Stage Entrepreneurship.
John, thanks for having me on the show. I appreciate it.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Dan Weinfurter Website
Growth Play Website
Dan on Twitter
Dan on LinkedIn
Second Stage Entrepreneurship by Daniel J. Weinfurter
Crack The Funding Code!
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