• Why adding more initiatives feels like scaling and usually is not — the to-do list getting longer is a sign the founder is still in the wrong job
• The specific work Todd pulled himself out of, and what it actually took to leave it alone once he handed it off
• How he reads his own calendar to tell whether the shift is real or imagined — his scoreboard for the scaling years
• What he expects senior leaders to carry before the founder can genuinely step back, not just nominally
• The signals that told him he was drifting back into delivery, and how he caught it early enough to matter
• Founder-dependent delivery is the most common ceiling on a boutique firm's growth — the constraint is almost never the market
• The work a founder stops doing is what creates the room for the leaders underneath to actually grow

Jeff Klaumann: Hey everybody, welcome to the Pro Serv Podcast, brought to you by Collective 54. I’m Jeff Klaumann, I’m the president of Collective 54, and I’m your host. If you’re new to the show, here’s what we’re all about — helping you do three things: make more money, make scaling easier, and make an exit achievable. Everything we record here is exclusively for boutique professional services firms. So if you’re in the expertise business, if you market, sell, and deliver expertise, this show is for you.

We have a great scaling topic today, and it starts with an assumption. When we decide to move from running the firm to scaling it, we often assume the job gets bigger — more initiatives, more projects, more things on the list. Todd did exactly that. He added six more things, called it scaling, and the to-do list just got longer. It didn’t get manageable until he stopped stepping into client work. The shift turns out to be subtraction, not addition. What the CEO stops deciding matters more than what he or she adds. That’s the show today.

To help us think through it, I have Todd Rapp back on the show. Todd is the owner and CEO of Rapp Strategies, a public affairs firm in Minneapolis. He’s a Collective 54 member, and I’ve known Todd for a while now. What makes him the right guest today is where he sits — he’s in the middle of the stretch. Most of us only talk about it, but he’s in the midst of scaling the firm, handing off leadership, and then an exit. And he will tell you he has never done any of it before. So, Todd, welcome back to the show. Great to have you on today. I gave everyone the headline, but tell us who Rapp Strategies is for and what problem they hire you to solve.

Todd Rapp: Sure. What we are is strategic communications and public affairs, and that’s a broad area — it’s about public-facing clients. What we do for them is help them advance their good ideas and reach their business solutions more easily by thinking through how to manage the environment that they’re in. At the same time, we’re helping reduce risk — identifying obstacles they have, or the potholes that may show up. The key problem we try to solve is: how do you manage an increasingly complex environment when you are naturally a public-facing company, such as a hospital, an electric utility, or many other types of organizations?

Jeff Klaumann: Fantastic. I appreciate that. So you’ve explained that you did what a lot of founders do — you added six more things to your work, called it scaling. Take us to the moment you realized the list was just longer. What did you see?

Todd Rapp: Just in background — this firm has existed for 45 years. I’ve been the owner for the last nine years, and I’ve worked here for about 26 years. For the first 40 of those years, we were a lifestyle firm. Sometime during COVID, I just said to myself, I want to try a different challenge here. I want to figure out if I can build an asset. By chance, I found Collective 54, and that got me started in the right direction. Greg’s book finally explained what was going on with the founder’s bottleneck. For me, what happened was that I was doing what I thought was scaling because it was increasing revenue. We were busier, there were more client opportunities, more revenue — so I assumed I must be scaling. At the end, it was that new things came forward and clouded the reality that I wasn’t really thinking about what scaling was about.

The moment was when I began to try to keep my to-do list on my iPad in GoodNotes. I started using black for client things, green for new marketing and growth things, blue for operational, and red for what I had to get done at home. And I started noticing that I was just growing black — the items that had to be done for clients. I took a step back and said, wait a second, that can’t be right. If I’m truly trying to scale, I’ve got to be taking the black and the blue off my list and really focusing on the green if I’m going to grow in a certain way.

The way it came together for me was: my goal is EBITDA growth, and the outcome is probably increasing gross margin. Scaling is a strategy, and it’s one strategy for doing that. But if I’m not focusing on EBITDA and gross margin, I’m not really accomplishing what scaling is supposed to do. It’s not about more — it’s about more and better.

Jeff Klaumann: Fantastic overview, couldn’t agree more. I think there’s a great lesson in there about the color coding, because essentially you’re identifying your time and where your time is going — that was a great wake-up call for you. So, once the client work started coming off your plate, some decisions stopped coming to you at all — they basically evaporated. Name two or three of those decisions you used to make that you no longer make, and who picked each one up.

Todd Rapp: Wow, two or three? If I was gonna make the list, I would include a lot of client management. There are still a few things I’m pretty closely involved with, in part because of my own personal interest and where my strengths are. But contract management, business development, how the firm markets — that’s almost completely run by the team now. Staff reviews, AI implementation, what benefits packages we’re choosing. I think I need to focus on three things over the next couple of years: geographic expansion, building out the continuum of services that we have, and EBITDA and gross margin growth. Those have to be my focus.

It doesn’t mean I won’t be part of client work, but what I told my team — and there’s a team of five senior people right now — was that you’ve got to think about me as your strategic asset. Not as the boss, but as somebody who can help you do your job better and figure out how to do that. So maybe in one week I touch a few more clients because I’m helping them get better at what they do, and then a week will go by and I can really be focusing more on the business growth opportunities and how we scale internally — in ways that I couldn’t do in the past because I was so focused on, well, what’s the next client thing I have to get done?

Jeff Klaumann: You told those five senior leaders that they needed to carry three times more output. Of course, that’s a big number to put in front of your leadership team. How did they take it, and how will you know when they’re there?

Todd Rapp: I’d start by saying they took it pretty well. When we first sat down and talked about this about three, three and a half years ago, and I explained to them, folks, I’m going to sell and retire someday and you’ve got to be ready for that — we started working our way through that. But I realized pretty quickly after we talked about it that I could assign all the duties I wanted, but if I wasn’t letting things go, it wasn’t really going to be a solution that worked. So we sat down and I worked on a three- or four-stage process for getting the operational and client things into the hands of other folks. Each one of them also got a major area to focus on — business development, AI implementation, operational management, and so on.

I threw out this number: if we can get to the point where you all do three times the work I used to do, we’re going to be successful. It’s kind of made up, right? But my point to them was that if they work together as a team, they can generate more revenue, do it more efficiently, and we can have a business that’s truly transforming in a way I could never do myself. And they’ve bought into it. I’m not saying the road is perfect — it’s jagged and we’re all still working through things — but they’ve embraced this idea that them working as a team is more powerful than I could ever be alone. And I agree with them completely.

Jeff Klaumann: That is wonderful. Great that you challenged them, and you’re right that it’s rarely a straight line — in fact, it’s quite a zigzag as you go through the scaling with ups and downs.

Every founder has one piece of client work that they’re quietly the best at — after all, that’s part of how you ended up as CEO of a firm. So, what’s that client work for you that you found hardest to let go, and why that one?

Todd Rapp: I’m going to offer two different answers, because one of them I think we’ve succeeded on and one we haven’t — and let’s face it, us CEOs, we’re a little more egotistical than you just described, unfortunately.

Utilities. I worked for electric utilities my entire career. It’s something I think I’m really, really good at, but there was no way this place could continue to operate if I was as focused on their long-term infrastructure projects as I had been in the past. We needed other team members, and we now have multiple team members working for different utilities on some really important projects in the upper Midwest — on reliability, safety, and making sure the energy supply is complete. It doesn’t mean I don’t touch that in some way, but they drive it now, and they’re doing a great job.

The thing I’ve still hung on to somewhat, but we’re working through it slowly but surely, is research. We do a lot of opinion research for clients — we use it to drive strategy, it’s not like you’ll ever see a press release on it. It’s been hard to transfer because somebody really has to take it on if you’re going to do it the old-fashioned way. But we don’t necessarily have to do it that way anymore. I’ve met Claude. Claude’s a great assistant around here. Claude and I have sat down and worked through ways that we can analyze surveys and crosstab tables really effectively and bring out the most important information. Once you can do that with AI, all staff members can use it to help drive strategy. We’re partway along to having a great Claude role in the analysis of surveys, and when that happens, it’s going to be less important that I’m rolling up my sleeves and working on the data — and I can be working more on the overall strategy of the research and helping them develop the package that works for clients.

Jeff Klaumann: Brilliant. We tend to assume that when we stop doing as many things — when we don’t have as many things on our to-do list — the job gets lighter. What decisions actually got harder when you started to step back and cull that list, instead of it getting easier?

Todd Rapp: Well, the first thing is you have a different relationship with your contracts at that point. It’s really interesting. I’ve got a great partner in Clifton Larson Allen — they provide me a fractional CFO. She worked really hard on helping understand the gross margins per employee, but also per client. When you start looking at those, you find out that some of the clients you like the most are also your least efficient. Why is that? Because you don’t discipline yourself. Now, there’s nothing wrong with having a few clients you work for out of love, but it should be a strategic decision — and we weren’t making any kind of strategic decisions there whatsoever.

I would also say that in terms of complexity, if you’re going to do a good job of expanding your continuum of services, you’ve really got to spend a lot of time on it. We’ve been trying to get more and more into visual design — more people are consuming information visually as opposed to through the written word. It’s not that easy. You can’t all of a sudden snap your fingers and rethink how you do that. That needs more of my time. I have to dedicate more of my time to that in 2027 for us to do it extremely well. We’re lucky right now — I think we’ve got the right set of partners. Now it’s a matter of finding the right way to apply this so that it can really be meaningful for our clients and something where we can help expand our services.

Jeff Klaumann: Todd, I want to jump on that, because you’ve just said something I want to make sure our listeners truly understood. When you’re in the seat of not working in the business and instead working on the business — like this shift to visual — you have to have uninterrupted, heads-down, dedicated time to really make progress on that. That’s why this shift is so important for people to go through, because otherwise you’re context switching continuously. It’s really difficult to be strategic when you’re in that kind of mode.

Todd Rapp: Well, at the beginning of doing this, I felt guilty as heck if I wasn’t in the office for a while. You go 25 years of being in the office, and then my CFO looked at me one day and just said, it’s time for you to get out of the office to do this work. And that’s okay — we’re fortunate, we’ve got a lake place in Minnesota, it’s fully outfitted, so I can run the company from there. But it also meant I could spend real time thinking through how to approach these things appropriately and be able to invest the money well in how we’re going to grow.

I want to make it clear to everybody here — Jeff is making me out to be some kind of expert in scaling. I’m not. It is trial and error to some extent. But if you put some good thought to it from the beginning, you will generally find that you can go down a path that’s going to make your business more efficient. And if you trust your staff and you don’t worry as much about their mistakes, and you really focus on all the improvements they’re making and the successes they’re having, you’re going to be able to go down this road pretty successfully.

Jeff Klaumann: Yeah, great guidance. So a perfect segue — when something goes kind of wrong with a client or provider, our instinct is often to dive back in and take the whole problem back. How do you decide which part of the problem stays yours and which part continues with the team, and make sure you’re not too far into things?

Todd Rapp: Well, you’re of course assuming my team has problems, and we can’t assume that. The types of issues we work on are public-facing — there are going to be forks in the road, and you’re going to have to make decisions along the way that aren’t all risk-free. There’s almost no such thing as a public issue where you win 100% — there’s always kind of a shared result, and we just want our clients to achieve their business goals.

I’ve really asked my team to focus on how they need to bring me in, and to think about that. Just like any other owner, I set up regular meetings with them, and we talk through those issues as they’re emerging. Occasionally, if something really important comes up that’s going to influence whether or not a business goal can be hit, that’s fine — I can jump in, I can work on how we deal with that, I can be working with the client directly during that time. But they’re using me as their strategic asset. In fact, if I redid my business cards, I’d put “leadership asset” instead of CEO at the bottom, because I think that’s the best role I can play with them for most of the client work we have around here.

Jeff Klaumann: That’s fantastic. Well, you set yourself a 2028 goal of having 75% or more of your time focused on the exit side of things. I love the approach of starting with the end in mind and working backwards. What has to become true by then for this to become a reality?

Todd Rapp: We have to continue the transformation in clients, although my hope is that at least half of that — if not more — is from growth. Having a team of five people, and in fact last Christmas I got them a chief marketing officer, turned them all loose, and walked away. I said, this is for the five of you — you work with her and develop these plans. I’m hopeful that we’re growing at a pace in terms of new clients coming in so that it’s not as much of a transfer of clients anymore, but rather it’s organic or even strategic growth.

The other thing is I’ve got a couple of key clients I’ve been working with for a long time, and we’ve got to work on transition plans there. My guess is — although I’ve never been through this before — that no matter what happens when you do a sale, you’re not going to get 100% conversion. So one of the things that’s important for me to do is to not fool my team into thinking that every single client we’ve worked with for quite a while is going to stay around. We’re going to do everything we can to have that happen, but let’s also get prepared for where the replacements will come from. I think if I do that, I’m being much more realistic for them, and frankly they’ll probably be more successful — because they will understand the importance of the role they’ll play in replacing any lost revenue.

Jeff Klaumann: Todd, again, a great point that I want to highlight for the listeners — the client relationships. Naturally, you have some long-standing personal relationships with clients, and that single-threadedness can become an issue when it comes to exit. The sooner you have multiple people within Rapp Strategies interfacing with those clients — so those relationships are not simply carried by Todd — the better. One of the mistakes we often see as people go to sell is they think, okay, we’re going to sell in six months and I need to start transferring these relationships. To your point, completely unattainable in that timeframe. But the likelihood gets a lot higher the further out you start, and the more you eliminate that single-threadedness.

Todd Rapp: I’d add, Jeff, that I’ve got to be transparent with clients about this too. They know I’m aging, and they’ll also go through their own transformations during this. We’re reaching the point now where some of those decisions need to be talked through with clients, and they’ve got to become a partner in how we transfer some of that work away from me and onto other staff people. The longer ramp-up I can give the clients, the more likely it is my team can give them confidence. If I just send around an email one day saying, hey, I’m retiring at the end of the month — I think my clients have every right to be ticked off at me. I deserve that if I did that to them.

Jeff Klaumann: Exactly. One final question, then we’ll wrap it up. If a member did one thing this week to put less of the black ink, so to speak, on their own list, what should it be?

Todd Rapp: The most important thing they’ve got to do to prevent that is: you’ve got to watch your own time. You have to be cognizant of what your time looks like going forward for the next few weeks, and you need to look back carefully at your time. We tend to not bill much based on professional hours — we work much more on fixed contracts than we ever did before — but we still keep the time so we can answer those questions. That’s the reality check for me. I mean, this week I’m not doing well. Last week I did terrific. It’s important to know those things.

From there, you’re going to see the other signs come through. I get a different set of emails today than I got two years ago, different types of phone calls. You’ll start seeing those things come together. But your time is going to be the most honest measurement of whether you’re actually doing the scaling and getting your team to do the work they need to do, or whether you’re just adding more stuff to your list.

Jeff Klaumann: Todd, I literally couldn’t agree more. The time is really the insight. Todd, thank you for letting us look at your own list, so to speak, as you’re in the middle of this transition. This has been a great contribution to the members, and it was really needed today, so thanks for being here.

Todd Rapp: You bet, Jeff. My pleasure.

Jeff Klaumann: All right, members, Todd Rapp will be joining us for our private member Q&A, where you can ask your questions of him directly. And then I have two calls to action for you as we wrap up. First, if you’re not a member and you want to keep the conversation going, head over to Collective54.com and start a conversation with our AI agent. Second, our founder Greg Alexander has a new book coming out soon. It’s called The AI Native Boutique Firm: How Founders Build More Valuable Firms When Services Become Software. It is now available for pre-order on Amazon, so check it out. Thanks for listening, and until next time, I wish you the best of luck as you grow, scale, and someday exit your firm.

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