Episode 94 – How A 3rd Generation CEO Drives Change Inside a 40-year-Old Management Consulting Firm – Member Case with Peter Bilello

A boutique requires different things from its leaders and partners as it scales. On this episode, Peter Bilello, President & CEO at CIMdata, shares his journey as a non-founder to becoming President & CEO. He will dive into how he championed the culture shift to drive scale and put the firm in a position to be able to sell one day.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast with founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively to helping you grow, scale and exit your pro server. My name is Greg Alexander. I’m the founder and I’ll be your host today. And today we’re going to talk about stakeholder alignment and how difficult that can be at times when you’re attempting to scale and maybe someday sell your firm. And what I hope with the help of our role model is discuss ways to do this from a non founders perspective. We have really two kind of broad people that are in our community. We’ve got founders of boutiques and our founders and I was one of them have a certain profile and then we have presidents slash CEOs who took over founders at some point and are growing, scaling and selling those firms. And they have a different perspective. And we’re going to hear from Peter Bilello, who is a member of Collective 54. He’s our role model tonight and is someone that is in that category as the CEO non founder, if you will. So, Peter, would you please? Well, first, welcome to the show and you introduce yourself to everybody. 

Peter Bilello [00:01:35] Thanks. Happy to do that, Greg. Peter Bilello, CIMdata President and CEO. CIMdata is a boutique firm, of course, in the area of product lifecycle management. But we told people that this is where global advantages were global because we have the travel last two years hasn’t been as much travel, but it’s definitely cranked up again. And as a company, we do management consulting work across companies that make just about anything, anywhere. And as a company, we’ve done work in about 50 countries, and I’ve been on six of the seven continents. 

Greg Alexander [00:02:07] And where are you today, Peter? It sounds like maybe you’re one of those. 

Peter Bilello [00:02:11] I’m in northern Germany today. I traveled from India yesterday, and I’ll spend a couple of days here and then go back to the States. But I was in India and a couple of weeks ago was in India and that trip ended a week or so in the Netherlands, so you never quite know. But then I’ll be home for a couple of weeks and go back to India again. 

Greg Alexander [00:02:29] Well, you’re a great member and thanks for squeezing us into that very hectic international travel schedule. Peter, I’d love to hear a little bit about your personal journey because as I mentioned in the intro, you’re the CEO of the firm but are not the founder of the firm. I’d love to hear when you took over and who you took over from and what and how all that happened. 

Peter Bilello [00:02:49] So give a little bit of background. The organization itself was founded in 1983 by three gentlemen. Two of them I never met. The third one was the chair chairman when I joined the company in the late 1990. So 97 or so when I joined the organization and I came on board as a senior consultant. I had already a number of years in industrial experience in the area of product lifecycle management, what we call today and became at some point, because my background in system integration work and large scale projects, I became our director of consulting services for industrial companies. We work with industrial companies and with software providers and service providers. And then by the present at the time was not a founder either. But we reported to the chairman, of course, the chairman passed away back about 20 years ago, and I was made vice president by the CEO at the time or president we would call him at the time. And then he passed away, unfortunately, about 12 or 15 years ago now. And I was promoted to president and then netted the title about three or four years ago of CEO, as we’ve recognized the expansion of the business and also the the way we present ourselves as an organization. So it’s been a progression, as, you know, starting as a senior consultant, moving into director position, moving into vice president and then president. I think if the previous president had not passed away, probably by this point, I would be president. He would be chairman. What we ended up doing is doing some restructuring after he passed with responsibility. Our one of the other nine can not founders because the other founder. Passed away as well. So we haven’t had a founder in the organization for about 15 or 20 years. But most of my colleagues, like the chairman, has been with the company since 1990. CFO A little bit less than I’ve been. I’ve been 25, 26 years. CFO About 24 years or so. And there’s a few others, you know, ten, 15 years with the organization. But they’ve shifted from the founder’s role. 

Greg Alexander [00:04:51] You know, you’re working too hard. The two previous leaders both passed away. I hope that doesn’t happen to you. 

Peter Bilello [00:04:56] Well, there were some of those circumstances. The first one was 96, so I’m okay with that. Second one was quite a bit younger. But, you know, significant health issues that it was he lived a lot longer than his siblings, but it still was a young life, unfortunately. 

Greg Alexander [00:05:11] Yeah. Well, all right. Well, I wanted to talk to you about culture, stakeholder alignment, particularly, as, you know, you try to get you try to drive scale of the storm. But a firm like yours has been around a long time. The leader in that space and maybe put yourself in a position to sell something the challenges associated with that. So would you mind sharing some of that with us? 

Peter Bilello [00:05:36] Yeah, one of the one of the key challenges I’ve had is with some of the ones that have been around for a long time. You know, they, you know, great, great people, great experience, great now. But they have historically seen a company as a group of individuals, even though we’re a C Corp and we manage like a C Corp for quite a long time, but it was still more of a, I want to say, club or a pyramid. I mean, as you know, a lot of founders kind of run things and they don’t look to scale. So that was probably the biggest challenge is getting people to realize that scale is important and to develop out the way we manage, the way we’re structured, not just adding cost because that was attempted in the past, it did not work well, but adding structure for repeatability and scalability. And it took some time to convince some of the ones who’ve been around for as long as I or longer than me, that we actually have to shift and change because it’s better for us, not just today, but it would be better for us if there was ever an exit. 

Greg Alexander [00:06:37] So how do you get old dogs to do new tricks? 

Peter Bilello [00:06:41] Give them some responsibility that they didn’t have before. Show them other examples. You know, it’s going to be organizational change one on one, right. Get get them to understand why they should care about it. What does it mean to them? The remember the days when it was feast or famine. You know, getting them to remember how difficult the pain is during, you know, early phases that we had for a long time. And we didn’t go the five years and try to start the company when for probably about 20 years in that feast or famine mode, because we weren’t scaling. We weren’t doing the things that were necessary to produce repeatable revenue and other streams that we really need. So again, education is probably the key to that, just like any other organizational change and then giving responsibility and some accountability as well, which was. Lacking the organization, which still, even though was formed as A and C Corp. The structure was more based on individuals selling and delivering, so it was really more of a a collaboration among individuals rather than a organizational structure that created roles and responsibilities. So. One of the things he did very early on is actually develop a role as a responsibility definition that didn’t exist. We had people that had different roles and responsibilities in theory, but nothing was defined. So that was another element that had to be done to give greater appreciation to those that have been around as long as me or longer that what we were trying to accomplish in. I was valuable to them to be on board and virtually all of them bought into it. We didn’t have to lose anyone, any of the ones that have been around as long as I have and longer Allstate and they have they’re more plugged in, they’re more focused and they have it. We all have a better understanding of what the vision is for the organization instead of just getting together and. You know, selling something, delivering something. It’s a bigger picture about building something. Not just as individuals, but as an organization. 

Greg Alexander [00:08:34] You know, a question that I’m going to ask on behalf of the members, because I know when they listen to this and when they get to the Friday Q&A, they’re going to ask this question. When you ask, you know, senior people that have been around a long time to do, quote unquote, firm building activities that don’t necessarily drive personal ability, could be perceived as taking a hit to personal compensation. Did you have to make any adjustments to the program? 

Peter Bilello [00:09:03] But actually, it’s funny you ask that. We dismantled. What’s what? What happened is we had, like, three phases. We had one that was, you know, eat what you kill. And everyone was basically commissioned based. So you were selling and you were delivering. There was no business development. So we took that away basically, and created a business development group as one of the first business practices that we created. So that changed the way people were getting paid, but it was also getting people more focused on what they did, and that helped actually. So people have a more consistent pay actually than before. But then so that’s one change we did. But there was an interim period where previous management team thought we had to put in a pay structure, which on one hand you do in order to gain access to other people that wouldn’t come if it was all pay for what you do. And but unfortunately that was done without actually understanding where the money was going to come from. And it, quite frankly, put a big dent in the ability to go invest in anything in the organization and create a lot of debt, which, you know, we’re all totally paid off and actually have quite a bit of money in the bank now. But that took quite a number of years. It was almost it was about a ten year period of just dealing with debt, which we were able to out come out of last three or four years now. So we first thing it did is I killed that structure, totally went back to partially to the pay for what you do, but restructured it because I added a business development team in so that people weren’t so keen on just selling and delivering their own stuff. But you know, we had a group just selling and then groups just delivering. So while we did minimize any kind of base salaries for senior level people, we didn’t. So we all create the debt by having it and having people do anything. But we removed their responsibility for selling so they can actually do what they really enjoy, which is delivery. So the number of changes we made. 

Greg Alexander [00:11:01] That’s a great story. Of course, it sounds like it was painful for you to go through that ten years of dealing with debt. That’s a big burden. Unfortunately, I hear this all the time. So I’m glad that you’re sharing that with us because, you know, part of the reason to learn from peers is to not repeat mistakes others have made. You know, when you peak ahead to possibly exiting the firm someday in any form, that that may happen. How do you get all these people on the same page? 

Peter Bilello [00:11:27] Well, we have had discussions in recent years about what does it mean, what what’s the criteria? Let’s say we’ve gone through some analysis as well. We have a reasonable understanding of what we’re probably worth. There was a look through the acquisition a couple of times in the past one well around the time I joined or a year or so out there, and I know what figures they were looking for and the figures were ridiculously high. So it never went through. After the president, the last president passed away, people approached us, but they didn’t understand what we did. And we never got to the point where there was an offer. But in recent years, you know, there has been some inquiries. So we did some decided to do some due. Allegiance. But three years ago, to understand tangible value, not tangible assets, tangible assets, all those types of things to understand what could possibly worth. And we probably have a better understanding of what value is and how we would position ourselves. But then there’s other things that people think are really important to that still kind of working through. For example, some may say, well, the only way will sell is that the name stays. Well, I, I could care less if the payments. Right. I don’t care what they call the company. It’s kind of irrelevant to me. So again, we’re site we’ve done some prioritization there. But again, there are some people that are more attached to certain things than I probably should be. And I like your story about, hey, you don’t even you stepped aside and let people go figure out what things are worth and everything. And not because we get so emotionally tied to things. And there are some. Some of my colleagues are still emotionally tied. I hope I’m not I hope any of the factors are right. Then we would go do it because it’s the right thing for us to do. 

Greg Alexander [00:13:10] Yeah. Alright Peter, my last question is for the group of members and at Non-Filers, maybe they’re working with the founder, they’re handling that founder transition, having been somebody who’s come up through the ranks, so to speak, and has had several promotions and ultimately landed in the top spot. Any any words of wisdom to that group? Anything that if you were to do it over again, you would do differently? 

Peter Bilello [00:13:38] Do differently? Probably not, because as I’ve gone along, I’ve besides getting more responsibility, I’ve got more ownership, which I wouldn’t have done if it wasn’t for the ability to go get something at the end. Now, quite frankly, I don’t really care if if I exit. I mean, I’m happy with what I’ve been doing. I have the flexibility. I want to have a lot of other benefits. Being in a boutique that we all know about and getting paid, paid as I want and so on to get the cash out at the end. Yeah, I wouldn’t mind doing that if it’s the right situation for the organization. It’s not about me, it’s about the organization. And we did our acquisition a few years ago and the founder of that company came to me and said, I want to find a place for my people. And I thought that was a nice, a nice thing to do and it was a great opportunity. Didn’t cost as much, but we got a number of really good resources, which we still have to to this day, that type of thing. And it was a fire sale because he was he was dying, unfortunately, and he wanted to fight. It was nice that he found it to find a nice place for his people. We’re not in that situation. I hope we’re not never in that situation. So if we were going to be acquired, then it has to be the right fit and the right pay out all the wonderful things that could go along with that great kind of connection. But, you know, I would I would do the same thing I did before, as you know. Get the right type of ownership, the right type of control and the right type of people around you. When the previous president passed away, we decided what as a group of a few of us that were already owners, how would we split that up? Because it would start coming back into the company. How would we divide that up? And I got quite a bit of increase, so I have a reasonable share of the company. We have a stock plan, though, that no one can have more than 50% of the company, actually, no, 49 and a half or whatever it is. But I have my fair share, my other two other colleagues that have their fair share, and then there’s two others that have a small share. So that to me, that’s important. I was always simple and it still is important in order that one have control and the other one has to have not just control, like from a role of responsibility perspective, but also from an ownership perspective. I really honestly can’t think of what I wouldn’t do. Maybe, you know, the ten years were painful and they had very little ownership at the time and very little responsibility. But I think in the end I still had the flexibility that I wanted to have. So it was okay. I could look for other job and probably gotten paid more at the time, but I still wouldn’t know how to. Much fun and hard to control that I have to this day. 

Greg Alexander [00:16:10] Yeah. Alright well listen, I thought you would try to keep these shows short, so we’re at our time here, and I know that it’s probably late in the evening where you are. So on behalf of the members, this is a really interesting subject to hear from somebody like yourself who did not found the firm but is running the firm and that generational story that you share with us, getting stakeholder alignment was really important. So thanks a bunch, Peter. I appreciate it. 

Peter Bilello [00:16:33] Alright, you’re welcome. 

Greg Alexander [00:16:36] Okay. So for those that are in professional services that are listening to this, I want to belong to a community and meet really interesting people like Peter. Consider applying to Collective 54 and you can a Collective54.com. And if you want to read about this subject and others, you can pick up a copy of my book, The Boutique How to Start Scale and Self, a professional services firm. You can find that on our website Collective54.com or you can buy it on Amazon. Thanks for listening and I look forward to our next episode. 

Episode 93 – How the Founder of an Accounting Firm Has Grown by Acquiring Multiple Firms  – Member Case with Matthew Lescault

Scaling a boutique requires scale capital. Adding more headcount, entering new markets, launching new service lines, and other initiatives require capital. On this episode, Matthew Lescault, President & CEO at Lescault & Walderman, shares how he has financed his new acquisitions and how he has been able to successfully integrate the acquired firms into his processes and culture.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community dedicated exclusively to helping you grow, scale and exit your pro search firm. My name is Greg Alexander. I’m the founder and I’ll be your host for this episode. And today we’re going to talk about growing through acquisition. Very often we talk about selling your firm, but there’s another side of that equation, which is buying other firms as part of your growth strategy. What I hope to accomplish today is to put this on your radar as a possible growth avenue to discuss maybe how to finance it. The strategy behind acquisitions and how to integrate it successfully after you’ve bought the firm or firms. And we’re very fortunate to have a role model. Role model with us today. His name is Matt Lescault, is a member of Collective 54, is going to be sharing parts of his journey with us. So, Matt, welcome to the show. 

Matthew Lescault [00:01:17] Thank you, Greg. Great to be here. 

Greg Alexander [00:01:20] Would you provide a intro to the audience? Tell us a little bit about your firm and yourself. 

Matthew Lescault [00:01:26] Yeah. So my company, Lescault & Walderman, the outsource accounting firm, providing bookkeeping controller, CFO services as well as system implementation of ERP level accounting software and third party products. We’ve been around since 2006 of formula services, but I would say that really the iteration of the company as it is today, the model that we have as that is today, really started in 2017 and was with a big change in how we’ve done things in the past. Just as a quick sidebar, you know, we went from really a siloed model to a firm model and that really changed the game for us from a scalability component. 

Greg Alexander [00:02:09] Tell me about that. What do you mean by siloed model to a scale model or firm model? 

Matthew Lescault [00:02:15] So, you know, in professional services, you know, there’s two, two kind of models that can be that. You see that in a lot of ways. So silo model is each partner kind of has their book of business, operates their book of business in a way that they see fit. They might have different processes, might have different billing rates, might have different focuses. And it’s really, you know, and a lot of times that you put your kill mentality for a model really takes the idea of one collective vision, one collective strategy and deploying that firm wide across all partners and all staff. 

Greg Alexander [00:02:54] Okay, got it. And what caused you to make that rather substantial change? 

Matthew Lescault [00:03:00] I call them glass ceilings. I’ve hit a number of glass ceilings over my career. What I mean by glass ceiling is sort of a barrier that you kind of put put in your own way, a barrier that that can be broken through. But you have to be able to self-reflect and understand where your where your strengths are and where your real weaknesses are. So what we noticed is that, you know, when we were in that kind of siloed mentality, we didn’t have processes that allowed for the real growth to bring in middle management, to bring in the ability to take on more work and take it off of the owners to be the main points of contact. And so when we were able to take it away from us and create this process, that strategy that’s firmwide, we were able to empower our staff to be the points of contact and not fall directly on the ownership group. 

Greg Alexander [00:04:00] Yeah. That is a really big change that graduations are making that change. You know, that’s that’s a pretty common path, the approach that firms go through and sometimes they get stuck and they never make that change. So congrats on that. The team wanted you to come on the call today for a particular reason, and that is you’re one of the few firms inside of our membership that has made some acquisitions, and that’s part of your growth plan. And that’s where really my line of questioning is. And I guess my first question would be maybe a 30,000 fee, kind of what’s the strategy around growing through acquisition? 

Matthew Lescault [00:04:35] So our strategy is twofold. I know we’re here to talk about acquisition and I won’t spend much time on this, but I truly believe in organic growth coupled with acquisition growth. You can say the other way around, you know, acquiring growth and or acquisitions as a growth strategy and having an organic component. What we looked at as we saw in our industry, in the accounting industry, a lot of role grow ups happening in a lot of books of business out on the street and some general industrywide issues around hiring and what everybody’s talking about. So from from our perspective, when we understood how the financing worked, we thought that the way that we could solve kind of two components, one, or gaps within our own capability structure and two, and in creating deeper trenches within our industry focuses in our what we what we consider our niches. Acquisition was a it was a way to pump a big chunk of clients in at one time. 

Greg Alexander [00:05:41] Yeah. So I love the fact that your strategy is, is to protect, you know, you have your organic growth, which for obvious reasons is very important, but you’ve augmented it with inorganic growth, meaning grow through acquisition. And this is a real area that you can contribute because a lot of our members are boutique pro firms and they haven’t gotten to that second leg of the stool yet. They’re relying almost exclusively on organic growth. And I do believe that in some niches yours is an obvious one, that there is an opportunity to augment that growth and plug some gaps and deepen some niches, etc., through acquisitions. But the challenge is some of them have, practically speaking, especially those that haven’t done it before, is a how do you find the deals and B, how do you pay for them? So what advice would you give our listeners on those two dimensions? 

Matthew Lescault [00:06:37] I hate to do this, but I want to take one step back because I think that there’s a real key component to being able to successfully go go into an acquisition strategy. And doing one acquisition is not what I would call strategy, and I don’t think that you have to have the infrastructure. But if you want to go into a into a the acquisition strategy, do multiple ones, which is what we’re doing. I actually started this path back in 2019 and which I identify a lot of shortcomings within our company that would stall the ability to scale. And so we spent from around November late 2019 to mid 2021, building our infrastructure up in preparation for the acquisition. Now part of that goes into some of these you’re talking about right now is understanding the overall playing field that you’re dealing with. For me, a lot of a lot of firms are represented by business brokers that are akin to investment bankers, and they didn’t really understand the understood the industry, the accounting industry and how that worked and didn’t understand what a good book look like. And so what I started doing through through my research is really trying to align myself with people that understood and work specifically within the accounting and accounting consulting industry. And really started to pick those people’s brains of what successful what other firms had done and create a strategy around that. What’s going to be the most successful for us? So it really started well in advance and saying, okay, we need to have really good H.R. processes for onboarding multiple staff at one time. We need to have great client onboarding experience because we’re going to be switching all of these new clients over our engagement letters in our process, and we need to have the appropriate level of staff from a again, middle management, upper management, so that it didn’t fall completely on the owner. And so we spent we spent a good year and a half just creating that infrastructure to get into the acquisition mode. The next thing was really understanding the financing component. You brought this up. I went and found a bank that all they did was finance for accounting firms and actually our firms. But I don’t know a lot on that side of it, but they really they they’re a bank that understands the accounting world, understands what makes the value of the firm, how cashflow works from a seasonality. And I go one about the process in a very unique way. So I didn’t go through SBA. This wasn’t SBA lending. This was underwriting through the understanding of our entity. So they came in, look at our profits, they looked at the way that we structured our client relationships, and they underrated us for a certain amount. And basically they understand how how we fund and finance through the acquisition process. 

Greg Alexander [00:09:51] Okay. Very good. You know, that’s interesting. A couple of things that you mentioned there. I want to just double click on. It’s really fascinating to me that your strategy from the get go was to do multiple acquisitions as opposed to a single acquisition and the prep work that’s needed to be put in place to make that happen. That’s a real lesson to be called out. And I want to underline and circle that for our members that are considering growth through acquisition. And then the second thing regarding the financing, so if I’m from to understand you correctly, given the fact that you went to a bank, it sounds like these deals were done through debt. Is that correct? 

Matthew Lescault [00:10:25] Yes. 

Greg Alexander [00:10:26] Okay. So regarding the debt, maybe just broadly speaking, what are the structures? What’s the structure of a loan or a set of loans used to execute this strategy? 

Matthew Lescault [00:10:40] So the way that the way we’ve structured this from the actual banks perspective was we took the valuation that we agreed to with the seller and we split into two, two buckets, basically your asset purchase and then your consulting for retention. So there’s always earn outs and that’s a big, big component, especially in accounting. But I think professional services in general is that you really need to make sure that you have a strong earn out clause within your agreement. And so from the banks perspective, we got the 50% from them financed that over a ten year period and then it will pay out from consulting for a three year period after that. That’s tied to the retention of the client base. 

Greg Alexander [00:11:27] Okay, very good. So half the deal. So if I’m selling my firm to you, I’m going to get half the deal, a cash at closing, then I’m going to be in a three or and I’ll turn largely to client retention. And then you as the buyer just a. Everyone listening. You’re funding that really with 100% of other people’s money, the bank is providing the cash at closing and then the business, based on their performance, is funding the rest of it through the three arena. That’s really a brilliant strategy regarding the debt itself. Do you have to personally guarantee it? 

Matthew Lescault [00:11:59] I did. 

Greg Alexander [00:12:00] Yeah, I thought so. And that makes me admire you greatly. Obviously, you’re convicted. You really have a lot of conviction on this strategy. So some of our members are reluctant to extend themselves in that way with personal guarantees. So how did you get there emotionally, psychologically? How did you accept that risk? 

Matthew Lescault [00:12:23] And that’s an interesting question. I guess I just I just kind of realized that if I wanted to get my goals, there wasn’t going to be a bank or a no or to get debt that wasn’t going to ask for a personal guarantee. I didn’t want to give a personal guarantee. I had to get a private equity. And my goal is to not sell out private equity, at least this early on. And if I ever do, it’s going to be I want to be on my terms. And also with sort of planning out the strategy of the debt financing, I really understand the cash flow of what I’m doing. And again, when I haven’t when I have an earnout, you know, and I know what the profit margins are, I know what they’re going to be consistently. You know, we can we typically are purchasing books of business that we believe we can get 20 or 30% gains out of out of the out of the gate. You know, every every time that we’re financing these, we’re actually picking up additional gross profit that is allowing us to go back in and get more lending. And so at the end of the day, I feel very confident in our ability to do this. I’m not too concerned about my personal guarantee because, you know, that’s the best way to put it. I got the funding based on my current EBIDTA. And so every time I purchase a new book of business, an increase in my EBIDTA from a dollar amount, making me more or less risk because I have more cash. 

Greg Alexander [00:13:52] Yeah. And making you more bankable. Right. 

Matthew Lescault [00:13:56] Well, my joke my joke to the bank was, you know, was lets make me too big to fail. 

Greg Alexander [00:14:02] Yeah, exactly. I tell you, it’s a really innovative strategy. I have to tip my hat to you. I’m not seeing a lot of this. I don’t know if it’s sector specific or not. Is there is there a general kind of sector roll up happening in the accounting space right now? 

Matthew Lescault [00:14:18] Big guys are are buying up firms left and right. It’s. I’m going to say this, so I’m going to start with I believe that you have to have a Y for growth. Everybody wants to grow. Everybody talks about growing. But what’s your why? And so I think this is really started for me as I saw what was happening in the industry. And I saw that really you as an organization or us as an organization would need to have investment into technology, technology development, not just buying technology, but innovating new technology, integrating new technology. We would also need to invest in professional development paths for learning paths to for staff retention. And we need to be able to compete. We don’t to be the size of of the Baker Tilly’s of this world or the RSM or the clay is. We don’t need to be that big, but we need a capability perspective. We have to be able to be competitive. So with that being said, the Y is what really drove the reason for the growth and why we wanted to go down that path. I did not want to be forced at any time. Again, the other side my way is I want to make the decision. I want to be able to say I want to sell because I want to sell. I feel like I have to sell or I don’t want to sell, period. And I’m never going to sell. I want I want at the end of the day to have the choice. And I really believe that if we didn’t invest in being at a certain level, at a certain size, that my hand was me force at some point. 

Greg Alexander [00:15:58] Yeah, well, that it’s such a great story. And we’re at a time when to where we try to keep these episodes short. But this is a real contribution. It’s something that I don’t think a lot of members are thinking about. Those that are thinking about it might be thinking too small, maybe one deal, as opposed to doing several deals. They probably aren’t ready infrastructure wise to do a lot of deals, and maybe they’re not confident enough to go on the line with a personal guarantee. So all those things, you provided a great role model this week and hopefully it’s inspirational for the other members. So you have on the membership, really appreciate you sharing part of your journey with us today. 

Matthew Lescault [00:16:37] Thank you very much. It’s great to be here. 

Greg Alexander [00:16:39] All right. Okay. So for those that are in pro share and want to belong to a community and learn from great people like Matt considered applying to Collective 54, you can find us at Collective54.com and if you want to read more on this subject and lots of others, pick up a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Store. Thanks for listening and I look forward to our next episode.

Episode 91 – How the Founder of an Architecture Visualization Firm Built a Culture That Produces Zero Employee Turnover  – Member Case with Jing Johnson

Culture can be described as how things get done in your firm. Intentionally focusing on culture is critical to the success of a boutique professional services firm. On this episode, we invited Jing Johnson, Founder & CEO of PRISM Renderings, to share how she built a highly effective culture and the positive impacts it has had on retention and the success of her firm.  

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are not familiar with us, Collective 54 is the first mastermind community dedicated exclusively to helping you grow, scale and exit your pro search firm. My name is Greg Alexander. I’m the founder and I’ll be your host today. And today we’re going to learn from a fantastic entrepreneur and a woman who I feel has achieved outstanding business results due in large part to the unique culture of her firm. And what I hope to accomplish today is to highlight how the culture and the uniqueness of it can translate into outstanding business results and why culture is more important in a processor firm than it is in a corporation. Because a processor firm is really a collection of people and therefore culture is of the utmost importance. We’re very fortunate to have a fantastic role model with us today. Her name is Jing Johnson, and she’s going to share parts of her story, which is a rather unique one. So, Jing, welcome to the show. 

Jing Johnson [00:01:26] Thank you, Greg, for having me. 

Greg Alexander [00:01:28] Would you please provide a introduction of yourself and your firm for the audience? 

Jing Johnson [00:01:34] Of course. My name is Jing Johnson, the founder and CEO of PRISM Rendering Space in Houston, Texas. Greg, we help commercial real estate developers raise capital, get entitlement and pre-leasing their buildings. We accomplish that by creating photo, realistic renderings and videos so our client can preview their visions with their stakeholders before the building get built. There are a couple of unique differentiators about our business and our team. First, unlike most of competitors, we can we can help our clients on early stage projects with new images or sometimes no design information because of all architecture backgrounds. Secondly, we are the only all women team in this male dominated field. I think we are going to talk more about that later. 

Greg Alexander [00:02:40] We are adjourned. You know, I’m going to share some stats for the audience and I’m sharing them because Jing is so modest. She would never share these on her own. So I’m going to I’m going to brag on her behalf. But for the members that are listening to this Jing, Jing’s gross margins are about 50% higher than the membership. She doesn’t do much hourly billings at all. Most of it’s fixed bids. She has 100% employees. No, no. 1099 are kind of freelancers, if you will. Remarkably has 0% turnover. Just let that sit in for a moment. 0% employee turnover. She’s running at about 80% of our revenue is coming from existing accounts. So just put those two things together. 80% of revenue from existing accounts, which would suggest an incredibly high client satisfaction score and no employee turnover, which would suggest an incredibly high employee satisfaction score. And those two numbers, employee satisfaction and client satisfaction and profits are really only two that count to get those two right. Everything else takes care of itself. So your numbers are outstanding. And I want to connect the dots here because as I understand it, you employ moms. Is that true? 

Jing Johnson [00:04:02] Yes. We are a team of all working moms. 

Greg Alexander [00:04:06] So tell us how you landed on that very unique employee strategy. 

Jing Johnson [00:04:13] Well, as come from my original story, I started a business at 25. I was struggling between my career and my family life. Basically, I work in a big architecture firm. It’s very demanding in terms of my schedule, my time and a time I had two boys, five and eight years old, need a lot of time from me as well. So I was just struggling between getting, you know, the balance between both and why I started this business is my goal is to, you know, first to provide a sustainable service provider to our clients. In the meantime, I can have the flexibility to raise my voice. So that’s how everything started. So when I started to hire employees, I realized that, you know, other working moms can benefit from this business model, not just me. So that’s my mission now, is to help even more clients and also help more working moms. 

Greg Alexander [00:05:31] Very good. And I also understand that you’re working. Moms are truly global. They’re all over the world. Is that true? 

Jing Johnson [00:05:38] We actually the our team, U.S. is all here. Some most of us are in Houston and one in Arizona. But we do have production teams overseas. 

Greg Alexander [00:05:53] Okay. So maybe that’s what I was thinking of. So what are the production teams do for you? 

Jing Johnson [00:05:58] Every day they create those images and they basically are our creative team to take the information we get from our clients and create those images and videos for us. Our team in us are, you know, basically our management, you know, members. 

Greg Alexander [00:06:24] Okay. Very good. All right. So how is it that you have 0% turnover? 

Jing Johnson [00:06:32] Well, I think it’s it really comes to our culture. I’m trying to create this culture that I want to be in. Right. That can allow the opportunity for our team members to realize their potentials in in a professional career. But in the meantime, they have that flexibility to take care of their families and their kids. And so we are very intentional in create this environment to feel safe, to feel appreciated and respected. And they they learn every day. It just we we tried to create this, you know, environment. Everybody feel that they are they have this opportunity. They can do whatever they they can to realize their full potential. 

Greg Alexander [00:07:31] Yet these brave working moms are also highly skilled. So share with us the typical background in terms of maybe professional credentials or education levels, etc.. 

Jing Johnson [00:07:46] So our team members range from, you know, M.D., have a master’s degrees to have just have no, you know, university degrees, but highly, highly skilled and and, you know, into like intellectual have an intellectual, you know, skill to and, you know, do their best to serve our clients. So for me is really not about your degrees, your your education, right? Is your excuse is how you can have that people skill. You can, you know, serve the clients and serve your team members the best way you can. 

Greg Alexander [00:08:32] Yeah. Now, Jing, when I was reading about you and and your story, I was I was really surprised at the juxtaposition of some of these numbers. So, for example, you run a pretty high utilization rate north of, let’s say, 80%. But you also have this remarkable 0% turnover. Those think those two things are usually in contrast with one another. You know, normally if somebody were working that much as your employees are, there’s some turnover because there’s burnout. How do you balance this requirement to satisfy employees and kind of log the hours, so to speak, but also not make to also make sure that your employees don’t get burnt out? 

Jing Johnson [00:09:18] Well, I don’t. I mean, I work long hours sometimes, but I don’t require my employees to. For example, I like to spend a few hours a Sunday to Sunday afternoon or evening to plan my next week I would set up. So, for example, if I have a few things I need to each team members to pay attention to, I will schedule those emails, send it out first thing Monday morning. I’m not sending out or doing the weekends. So they feel anxious to, you know, reply to my email, which is not necessary. I’m trying very hard to, you know, not taking their family time away from from, you know, just from work is really when during the weekend or evening time they should focus on their families and not on the work, but doing the work hours. So we are a very productive and efficient. 

Greg Alexander [00:10:20] Yeah. And I’m imagining when we get to the member Q&A on Friday, you’re going to get this question, which is it sounds like you’ve tapped into this hidden labor pool, these these moms, so to speak. How did you find them? Did you know the ball or what did you recruit? Like, how did you locate them all? 

Jing Johnson [00:10:41] Yeah, mostly either, you know, I met those ladies, wonderful ladies from my church or from work, some professional events or you know, they are highly recommended by somebody I trust and respect. So it’s pretty much from our inner circle. 

Greg Alexander [00:11:04] Yeah. Okay. Got it. You know, it’s always the hiring success goes up dramatically when the person that you’re considering joining your team. 

Jing Johnson [00:11:17] Yeah. 

Greg Alexander [00:11:18] It comes from a trusted source like you’re mentioning. 

Jing Johnson [00:11:21] That’s right. And also why you create that, you have that reputation of helping working moms and, you know, in the meantime, create some really beautiful, you know, work, you know, works get around and people notice. So it helps us recruiting. 

Greg Alexander [00:11:40] Yeah. Now, during the great resignation, which we’ve been living through the last couple of years, you know, there’s been a lot of poaching going on. Employees are getting lured away with bigger paychecks. And you’ve been able to not let that happen to you. Have you experienced any kind of wage pressure at all? 

Jing Johnson [00:12:04] Not really. We did increase our salary at the beginning of the year. You know, we kind of keep it that we usually have a salary increase every year. But we were able to no, we were not able to do that 20, 20 and last year, just trying to see how things going. But this year we did. And then we have a good. Benefit package used for one case and other benefits. But also, we actually I was just told a couple of weeks ago by a respected advisor that one of my team members was approached three years ago before Covid. It was a wonderful opportunity and it was perfect for her and she turned it down. She said, I just I love work here. I’m not going anywhere. And this advisor told me she’s he was saying that that says a lot about your culture, that, you know, this individual has a great potential. It was a great fit for that company. But she chose to stay with you. And and it says a lot. 

Greg Alexander [00:13:26] Yeah, it does say a lot for sure. You know, the the the point I really want to emphasize here for the member is that I learned from this is to remind ourselves that we have to value propositions. Mhm. We have a value proposition that tells clients why they should hire you. Right then we’ve got a value proposition that tells employees why they should work for you and founders of boutique pro. So firms are really competing in two markets, the competing in the market for clients and they’re competing in the markets for employees. And it’s just as important, maybe even more so they have a very compelling employee value proposition so that when somebody comes knocking, as was the case and one of the things employee three years ago, they don’t take that enticing job. They evaluate working for you in totality, the culture, who they’re working with, the type of work they’re doing. Yes, the compensation, the benefits package. But the whole thing in totality. And you’re just a remarkable example of putting that to work and and having it translate into these remarkable results that I just shared with the members. So it was it was wonderful to have you on the episode today, and you’re an inspiration for the rest of us. And thank you for being part of Collective 54. 

Jing Johnson [00:14:48] Well, thank you. We I just have learned so much from this community, and I appreciate that you include me in this episode. 

Greg Alexander [00:14:58] Okay, great. All right. Well, for those that are in professional services, who want to belong to a community and get a chance to rub shoulders with great people like Jane Johnson, consider applying for membership, which you can do at collective54.com. And if you want to read more about topics like this one, pick up a copy of my book called The Boutique on a Start Scale and sell at Professional Services Firm. Thank you for listening and I look forward to our next episode.

Episode 88 – How a Founder of a Training Firm Scaled his Firm by Scaling Himself – Member Case with Tom Abbott

Scaling a boutique takes a team but firms are often started by a single founder. On this episode, Tom Abbott, CEO and Co-Founder of SOCO Sales Training, shares how he transitioned from being involved in every aspect of the business to focusing on team development. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander. I’m the founder and I’ll be your host today. And on this episode, we’re going to discuss how a founder of a boutique processor firm is able to scale the firm by replicating himself in an executive leadership team. This is a really fascinating topic because we’re combining a couple of different chapters from our book, The Boutique, and we’ve got a great role model with us today. His name is Tom Abbott, and Tom is in the throes of this as we speak. And he’s had the courage to attempt to do this. And we’d love to hear his his story. So. So, Tom, welcome to the show. And and if you wouldn’t mind, please give the audience a proper introduction. 

Tom Abbott [00:01:20] Hey, thanks for that, Greg. Yeah, a real pleasure to be here. Tom Abbott here, co-founder and CEO of So called Sales Training. We help companies to optimize their sales performance, so we do that through virtual instructor led training, through webinars and through our e-learning platform called SOCO Academy. So anything about sales, we help B2B companies particularly to optimize their performance. 

Greg Alexander [00:01:44] Okay. Very good. Okay. So let me set this up a little bit. So sometimes founders and co-founders like Tom suffer from what I call the hero syndrome. And the hero syndrome is that we as human beings, we love to feel needed. We love to feel like the hero. We have our personal identity wrapped up in the firm, and it feels good. We get validated when when clients say, Hey, you have to be in the key meeting, or when employees come to you all the time with major decisions that get made. And this insecurity can get in the way of scaling a firm. And the fix here, if your aspiration is to scale beyond a lifestyle business, is to build a firm that is not dependent on you, a firm that can run without you. And this requires, you know, being able to kind of check your ego, so to speak, and surround yourself with an executive leadership team that can do what you can do as well as you can do it. And if you’re able to do that, you’re you’re able to overcome the founder bottleneck and scale yourself by replicating yourself and others. And this is a big stumbling block for many. So so, Tom, as I understand it, this was once a stumbling block for you. And it’s either no longer or it’s in the process and partially no longer a stumbling block. So would you would you share with us kind of where you are in your journey and how you first became aware that maybe you had this problem and maybe what your first steps were, etc.? 

Tom Abbott [00:03:18] Wow. Okay, so there’s a lot to that question. The first the first part is it’s always a work in progress. I think the first key is realizing that you suffer from hero syndrome. And that’s the first part is the awareness. And then sort of realizing is this is this working for me? Right? Is this really helpful? Does this help me grow the business? Do I feel like a hero that I can swoop in and save the day, but at the expense of doing other things like actually growing the business and thinking about strategy and expanding and doing the kind of, you know, boss stuff. So, you know, typically, you know, that’s always a challenge. But I came to that realization, you know, probably about three years ago, I imagine, where it just became really apparent that this this company won’t grow beyond me if I don’t kind of get out of my own way. So the first step for me was to say, look, I’ve got to stop doing sales and I’m awesome at sales. So that was very difficult and I’ve got to stop delivering training programs and I’m a great facilitator and trainer, so that’s really hard, you know, you know, I’m still available for keynotes for companies still engaging to come in and do the big, you know, motivational rah rah as a thought leader. But when it comes to the training for a half day or one day or a two day program, we’ve done a really good job of of of getting freelance trainers certified through me and our training program, which I can talk about later to deliver that on our behalf. And that’s just been honestly a game changer because the training is happening all over the region, all over the world. Sometimes when I’m asleep, it’s just it’s just been a game changer. All right. 

Greg Alexander [00:04:56] So I want to I want to probe in a little bit because you are great at sales and you are great at facilitating. But one of the reasons why you’re great at both is because you love it. So I think founders don’t do what you did because they they love what they do and they don’t want to. Doing what they love doing. So how did you reconcile the conflict between, Hey, I can go out and sell the next client, which I love doing, that I get energy from it it feels good with. Yeah, but that’s in the way of me trying to scale my firm. Like, how did how did you how did you put those two things together? 

Tom Abbott [00:05:35] I think what I did, Greg, was I realized that there were other things that I also love to do. So I love to train. But then I could change my love for training sales teams to training my own sales team. So I can I can do that. I can change my love for, you know, sales for well, let me let me coach my sales team and then they can bring me in for some deals. On some cases, if there is, you know, three or four C-suite people on a call, they’re like, hey, Tom, if we get you on this call, you know, you sprinkle a little founder’s magic 3 minutes. That’s all I need from your time in and out. And you’re good. That’s fine, because then I can still have the team do the grunt work, the follow up to put the proposal together, to send the brochures, to answer the questions, to schedule meetings, all of that stuff that I should not be doing. Because something I realized a long time ago is I was the most expensive trainer on the planet. I was the most expensive salesperson on the planet, probably the most expensive data entry clerk on the planet, like everything we’re doing as founders. And I realized a few years ago, I always ask myself, Is this making me money? And if the answer is No, this isn’t making me money, then I’ve got to stop doing it and get someone who’s, you know, cheaper to do it for me. Yeah. 

Greg Alexander [00:06:49] One of the primary, if not the primary reason why boutiques don’t scale is they have senior people doing junior work, which is what you were just talking about, because in the most senior person in the firm is the founder who happens to be the most expensive. So if you’re doing something that a junior person can do, by definition, you’re eroding all your margin. And that’s a great realization and a great reminder. So I love your answer around how you didn’t sacrifice job satisfaction to make this happen. You just redeployed your love in other areas that lended itself to scale. For example, instead of training clients, train your own staff. That’s a great example. What would you say to founders who say this to me all the time? And it’s somewhat of a religious battle between me and them at the moment that says, Well, I’m special what I do, nobody else can do. So it’s impossible for me to replicate myself. Junior people can’t do X, Y, Z. What do you say to that? 

Tom Abbott [00:07:46] Well, the first thing I say is two things. One, I totally get that because I struggle with that. And you’ve got to get over yourself, because if no one’s going to be as great as you and I’ve realized that I feel, you know, and maybe, maybe we’re wrong, okay. Founders maybe were wrong. Okay. There’s a slight possibility that maybe we’re not as amazing as we think we are. However, we’ve all taken our businesses to a certain point, which means we’re great at a lot of things. But the point is, and I’ve said this to people, my 80% in front of a classroom in a workshop selling my 80% is probably most people’s hundred. Right? So if you can get someone who’s 80% of what you’re able to deliver, that’s pretty darn good. So do you want to have 100% of a small piece of the pie or get someone who’s 80% but you’re able to scale? So if I can get, you know, three salespeople who are 80% my level, that’s still better than me at 100%. There’s no comparison. If I can get three, four or five, six trainers around the region delivering training at 80% of what Tom Abbot would normally do, that’s fine. Now, a good way to solve that problem and we started doing this this year is we charge the same rates for our training across the board with a so-called certified sales trainer. But if they’re insistent on having me hey, Tom, you know, you worked with us last year. We’d love to have you back. I’m happy to do it. It’s at 50% more than our usual rate. 

Greg Alexander [00:09:22] Wow. 

Tom Abbott [00:09:23] Yeah. And I’ve had some people take me up on it, which is great. Okay, I’ll get out of bed for an extra 50%, like, why not? Yeah, you know, because I still love to do it. So don’t get me wrong, all the founders out there, we still love to do what we do. We’re still great at it. But we have to realize that if we want to scale, we need to get more people on the team doing what we do. And look, there’s there’s no magic. You can document this. I can talk about that, too. You can document the process. You can train people to do it. So let’s get out of our own way and leave the ego at the door. It can be done. But in the event that, you know, people are like, We really insist on having you, the answer is yes. And here is what the investment is. Take it or leave it. Yeah. 

Greg Alexander [00:10:05] Which is a great way to quantify it in the eyes of the customer. And some people will say, you know what, time, yeah, you are worth it. So here’s the premium. And some people will say, okay, you know, I’m okay with. You’re a certified person and that gets you out of it gracefully. Right. It’s a it’s a really excellent example of that. And 50% is a big number. Okay. So here so I’m going to play the role of of these. 

Tom Abbott [00:10:24] And let me tell you, I a 50% is a big number, but it has to be big because I played around with that. And if it’s too close to the regular rate, they’ll just pay that all the time. And then you will never get out of doing that delivery ever. 

Greg Alexander [00:10:37] Okay. So here’s the next objection that when you speak to our members in the future about this subject, this is what you’re going to hear. They’re going to say, okay, I get it. However, I’m time starved. So the time it takes for me to teach somebody to do what I do as well as I do, it just takes forever. I can just do it myself in half the time. So I’m going to scale that way. What do you say to that? 

Tom Abbott [00:11:02] I say that’s actually going to take a really long time. And the reality is the quickest way to scale. Get someone to follow. You want a sales call? The quickest, easiest thing to do. You’re already doing it. Get someone to shadow. You want to call, get them to follow you on a sales call. That’s number one. Number two, hit the record button on Zoom. Super easy. That doesn’t take any time. You can. Then what we’ve done is we’ve recorded all of my sales calls over the last two years. And look, we’ve been in COVID for so long. If you haven’t been recording your Zoom sales calls, you’ve missed out on a tremendous opportunity to start this learning bank. So it’s a lot easier than you think. So we’ve got literally dozens to hundreds of different sales calls that we label and tag. Oh, this was an inbound prospect. This was a discovery call. This was a follow up call. This had multiple stakeholders, you know, whatever. This was a follow up call. So you can tag those. And then when you’re onboarding your reps, you just send them the link. Hey, watch this, watch this, watch this. So it’s not as hard as we think. And then you just start documenting. So you’ll notice that with your emails that you send out, you’re probably doing your own kind of a copy paste almost every time. So it’s just a matter of, you know, you save those, you put them in a folder, you copy paste, he put those on on a note, you put it in Dropbox or put it on Google Drive before you know it. Before you know it, you’ve got the makings of a sales playbook. It’s not as easy. It’s not as hard as we think. And you could be doing it right now and you don’t even know it. 

Greg Alexander [00:12:29] A lot of our members have handled this issue in the sales function, meaning other people are now selling work on their behalf. Most of them have done that because they’re not like you. They don’t enjoy selling. You know, if I’m a management consultant that specializes in cybersecurity, I can geek out about all the possible hacks that I might deal with. But I don’t want to talk to a client and sell it. So they they delegated that just out of the fact that they didn’t enjoy doing it where they really get nervous about delivering the work. So a client hires me to go to do X, Y, Z. I’m supposed to be an expert with charging them a lot of money, and then I’m going to trust somebody else to deliver the work. It scares them. So how have you overcome that? 

Tom Abbott [00:13:12] Well, there’s a couple of ways. The first thing we do is we we certify all of our facilitator. So how do we do that? One is, you know, knowledge. So we’ve got testing. So I’ve written two books on sales, for example. So we make sure that they read the books, they watch all of our videos and so called Academy, which is our e-learning platform, and then we actually test them on content. Are you a sales expert? Are you a subject matter expert? I can’t teach you to do that. I don’t have time for that. So are you competent and confident in training sales? Do you know your stuff? That’s number one. Then number two is the the skill of actually facilitation. So that’s what we need in our business. Number one is you’ve got to have the sales acumen and knowledge. But the second is you need the delivery skills, the so-called platform skills. Can you engage an audience? Are you good, coach? Do you know how to answer tough questions? Can you put people in breakout rooms and facilitate discussion and role plays? So that’s all part of my world in the training world. So preferably we get people that have had some certification in training. They’ve gone through a training program. They understand about curriculum development or they are or were an internal trainer within a large company. So they’ve got their chops. Having done that, I don’t have to teach them how to do that. So we would test them. So test them in knowledge, which is a written test, some multiple choice, some, you know, short answer as well as delivery. So we get them to actually deliver a sample session with our team and we recorded on Zoom and then internally we look at it and give them feedback so we can see them in action if they’ve got a demo video even before they come to the interview process. Even better. So that’s how we can guarantee that, okay, we’ve got good people. Then they’ll work with me personally and I will train them. Okay, so this is how I handle this situation. This is how we do it here at SOCO. So there’s you as a sales trainer, and then there’s how do we do it here at SOCO? So then we just have to be able to guarantee to our customers that the experience will be the same. So a lot of people think that it’s about the trainer and in a sense it does have a lot to do with the trainer for sure. However, what most of our customers want is a consistent framework or a consistent methodology for all of their sales teams around the region or around the world. We’re able to do that through the certification program. So that’s that’s been really helpful for us. 

Greg Alexander [00:15:32] Okay. And then the last objection I get sometimes is, hey, if I hire these people to do what I do, I got to pay them. I’d rather just put the money in the bank account and not pay anybody to do this. So what do you say to that? 

Tom Abbott [00:15:46] I mean, you can do that. But again, it’s you know, do you want just like a mom and pop, you know, like a hobby business or what? But do you want to grow? Right. So if you actually want to grow and you want more business, you have to find a way to meet the needs of customers. And there’s just not enough hours in the day. I know that. There’s just not enough hours in the day to to service everybody. Now, maybe you’re happy just having a lifestyle business and maybe say, look, all I want to do is this many hours and and that’s fine. But if you actually have aspirations of, you know, reaching as many people as possible, like, you know, I have a goal. I don’t want anybody on the planet to lose a sale because they can’t sell. That’s that’s my mission. So I want to reach as many humans on this planet as possible. Tom Abbott can’t do it all by himself now. It took me about eight years to realize that, but I can’t do it all by myself. So I got to work with people. Yeah. So and it’s very hard when you feel like you’re really good to actually start bringing people on because there’s a danger in going, Yeah, but she’s not exactly like me or I wouldn’t have done it that way. That’s your biggest problem right there? Yeah, maybe they do it their own way, but following a framework, if that makes any sense, kind of, you know, you’ve got some things you need to do, but you do it your own way. You focus on the what and the why and let them focus on on the how in the sense. And and, you know, that’s just going to help you grow. You’ve just got to build that team and just trust, trust in your process. So what I’ve done, Greg, is I’ve been able to say, look, I’m going to take my energy away from sales. I’m going to take my energy away from training and put it towards training my team and becoming a leader and developing them. And I see my number one role as a CEO is to step up and be a CEO. Yeah. And run the company the way a CEO would. Yeah. Get out of my own way. 

Greg Alexander [00:17:36] Well, listen, you have a tremendous amount of self-awareness. You know, being an entrepreneur is a journey. Right. And you’ve been on it for eight years, and you probably didn’t know what you know now back then. And you now know. And it’s just a wonderful pleasure to have you in the membership because of your level of self-awareness, your humility, your modesty, because you’ve had a tremendous amount of success. And just on behalf of the membership, we’re up at our time window here, but I just wanted to thank you for your contribution. You know, the way the collective works is we’ve got to contribute to the collective body of knowledge, and you’ve just made a great contribution. So thanks, Tom. 

Tom Abbott [00:18:11] Hey, my pleasure. And thank you, Greg. I’ve gotten a lot from my membership in Collective 54, and I was just thrilled to be invited on the podcast to kind of give back because I’ve gained a lot already. So thanks to you. 

Greg Alexander [00:18:22] Okay, fantastic. And for those that are interested in this topic and those like it, you can pick up a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Firm. And if you’re interested in joining our mastermind community and meeting great people like Tom, check us out at collective54.com. Thanks again. Take care.

Episode 86 – How a 43-year-old Marketing Agency Handled a Generational Transfer – Member Case with Rob Rankin

Decision making evolves as your firm scales and the founder must be replicated in the successor. On this episode, Rob Rankin, CEO at Clarity Coverdale Fury (CCF), shares his perspective on developing the next generation of the firm, with a focus on succession planning and how decisions are made. 

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander and I’m the founder and I’ll be your host today. And on this episode, we’re going to discuss power. And when I say power, basically what I am referring to is how decisions get made inside of a boutique. And how that changes over time as we move through the lifecycle of a boutique from growth to scaled exit and even beyond. When the first generation is transitioned into the second generation and the second generation is transitioning to third generation and so on and so on, the decision making power dynamic tends to morph when that happens. That’s really important because decisions in a small firm are easy. There’s not a lot of them. They’re simple. They’re not complex. The founder who’s making the decisions can play the role of dictator because he or she is still really close to the business and has great instincts. But as you get bigger in, the founder or co-founders might be two or three steps removed from the day to day or the clients, you know, they might not be the best people to make decisions anymore because their inputs have changed quite a bit. So that’s what we’re going to discuss today. And we have we have a great role model, Rob Rankin, and Rob is in the middle of this. He has a really great perspective because he has been through a generational transfer and has a viewpoint from that standpoint. So, Rob, welcome to the show. It’s great to have you. And would you mind, please, giving a proper introduction of yourself? 

Rob Rankin [00:02:06] You got it. Thanks, Greg, and thanks for having me today. My name is Rob Rankin and I’m president and CCO of CCF, we’re a marketing communications firm that was founded in 1979 based in Minneapolis. And our sole world headquarters are still in Minneapolis. 

Greg Alexander [00:02:23] And what type of clients do you serve? 

Rob Rankin [00:02:26] About 60% of our book of business is in health care and health and wellness. And what we like to call we know health care from all four angles. So public health manufacture, payer and provider. 

Greg Alexander [00:02:39] Okay. Got it. And Rob, we wanted you to speak on this subject because as you just mentioned, your firm was founded in 1979, and right now it’s 2022. So there’s been a journey. And I’m sure the decision making power has changed over time and there’s been generational transfer. So if you wouldn’t mind, maybe kind of walk me through briefly that history from then till now and how the power dynamic changed. 

Rob Rankin [00:03:06] Yeah, so I joined the firm in 1998 and it was founded in 1979 by three Gentlemen’s Clarity, Coverdale and Furey. And in 1978, I was just an account guy and then grew up into a more leadership role account supervisor and ultimately running a department. It was also at that point in time where the gentleman who founded the company were getting ready to retire. One was very ready and the other two weren’t very far away. So over probably a 3 to 5 year period of time, we started to have discussions about a transfer. A few of us, what we call Gen two, formed a team and moved into that and we bought that firm in 2014. We’ve been running it successfully ever since. I’ve since lost one of my partners to retirement and another just is trying to retire this year. And we’re we’re going to get her out of the door to her own accord shortly here. And we’re building that Gen three team that can ultimately take it over from myself and my two other partners. 

Greg Alexander [00:04:13] Yep. And this progression. Gen one, gen two, gen three. You know, this is very common in professional services because it’s a people business. And very often there’s the next generation that wants to stay and wants to continue to do what they’re doing. And there’s an opportunity, if you handle it this way and handle it correctly, you know, for each generation to benefit for not only financially but in other ways. Rob When, when Gen one was transferring to, to Gen two, you and your partners, did it go as smoothly as you had hoped or was there, were there any bumps in the road? And what type of lessons might we learned from that, from that tale? 

Rob Rankin [00:04:59] Yeah, I’m super blessed in that it did go what I would say, relatively smoothly. Perfectly. Absolutely not. And the founding partner, Tim Clarity and myself used to say, because we intended at least to keep the name the same, that if we wake up five, seven years from now and no one know you guys bought it, it worked. And it worked really, really well. And that actually happened. I will say that there were some speed bumps early on as we were forming our Team Gen two and there was a person in place who just wasn’t going to be partner material. And so there were some really, really hard discussions that had to be had to let him know that. And to say that was what was easy. It wasn’t it wasn’t easy at all, but it had to be done or we would have been setting ourselves up not for success, but for failure. And so that was probably the most difficult thing. And then the other thing, at least from Gen two, is perspective being patient because we had we had a kind of a phased approach with each of the partners where they wanted to phase out over time for different reasons. And we allowed that to happen. And from an outside looking in perspective, it still appeared like they were in charge even though they weren’t. And that was important to them and it was okay with us. You know, it wasn’t something where we needed to be seen front and center. We also didn’t want to reinvent the enterprise. We didn’t want to rename it. We didn’t want to rebrand it. We didn’t want to blow the whole thing up. They had a model that was working and had worked for a really long time. And we felt the blow up, that type of equity in the marketplace would have been a big mistake. So that required a little bit of discipline, but we were able to do that as well. 

Greg Alexander [00:06:38] You know, what jumps out at me about your story is that, you know, you joined as a young account person and grew up to where you are right now, which means that those that Gen one did an excellent job of identifying high potential employees and grooming them to take over bigger and bigger responsibilities. That that happened in the typical kind of apprenticeship model where it was just through osmosis or was there some formal system put in place? 

Rob Rankin [00:07:05] It was really more of an apprenticeship model. Tim Clarity I tend to be the type of person that if you give me a lot of room to move, I work better. If you constrain me, I’m not good being micromanaged. And so that’s kind of the philosophy in the culture here. We hire really responsible people and let them do their way, do their job, and we do our best just to get out of their way. That doesn’t mean they don’t need coaching. It doesn’t mean they don’t need training. It doesn’t mean they don’t need mentoring of sorts. But but we let them do their job. And Tim allowed me to do that and allowed our media director at the time, Danny there to do the same thing and in and of it. She and I both kind of grew up together in the business and became somewhat area parents at the end of the day. Diane was probably interested in retiring sooner while she was. She’s already retired sooner than I and and she’s since moved on. And because of that, she didn’t want as big a share when we transitioned. But we had a third person internally who also had really was a finance person and had really great, great credentials in that space. And so she worked in that and she was interested in buying in a little bit more. And between the three of us, we found we found a good balance for each of us. 

Greg Alexander [00:08:21] Now, you mentioned buying, so I’m assuming there was some type of transaction that happened from Gen one to Gen two. And was it the traditional way where the first generation kind of set up, maybe like a sellers note and they transitioned a piece at a time based on profits that were being generated by the business? Or did you guys have to go out and raise the money to pull this off? 

Rob Rankin [00:08:42] No, we were really fortunate. There was an owner financed buyout over a five year period of time with an option for a year, six and seven, if needed, at the seller’s discretion. So we didn’t control that, and then we did have to have some skin in the game. So there was a certain percentage of the overall price that we agreed upon that we had to we had to go to a bank and we had a we had to find financing for that. And based on our individual percentages, that’s what we had to put up. 

Greg Alexander [00:09:13] And they structured that way because they wanted skin in the game. Or was that the only way to close the gap in price? 

Rob Rankin [00:09:19] They wanted to know that we were serious and 100% owner financed buyout, I think and I believe that it was the right decision for us. It was the right decision for them. They wanted to know that we were serious and that, you know, being able to have needing to go to a bank and taking out some form of a loan, you know, it it ratcheted things up just a bit. 

Greg Alexander [00:09:40] Right. And during that transition, let’s call it five years. Back to the main topic here, which was how decisions are getting made or the power structure externally. It was important to them to still be perceived to be in charge. But internally, you and your partners were running the firm. Sometimes this gets messed up because the generation that’s on their way out, sometimes they don’t want to give up control and they they stick their nose where it doesn’t belong at times. How did that happen at all? 

Rob Rankin [00:10:09] And in not to a not to a degree where it was terribly difficult to the partners that simply wanted their name still on the door, it was more that they just wanted to be seen as still the important person that started the company, and rightfully so. They’re fantastic gentlemen, their friends and mentors to this day. There was one that loves to do the work and is just passionate about the work and was an in 30 until the day he walked out the door. But it wasn’t difficult and there wasn’t anything that was acrimonious or needed, lawyers or anything like that. 

Greg Alexander [00:10:46] Okay. You know, and then Gen2 takes over and some of them are retiring, as you mentioned. Is there like a mandatory retirement age or is there some some rules around when somebody can walk out the door there? 

Rob Rankin [00:11:02] There aren’t, other than once you decide to walk out the door. The firm has up to ten years to purchase your stock at the firm’s discretion. I say so we can do that over time. But you can’t hold on forever. And you also can’t be the one that drives that. You can’t walk out the door and say, I want to get paid tomorrow. 

Greg Alexander [00:11:23] Very good. I mean, that makes a lot of sense. That keeps everybody on the same page there. It sounds like to me you had some great legal counsel that held your hand here and put these things in place to make sure that, you know, there was no unnecessary tension and drama. Is that fair to say? You had great counsel. 

Rob Rankin [00:11:40] We we had fantastic counsel. And my only disappointment is that he moved on and went and worked for his dad’s company. So he’s no longer my lawyer. So. 

Greg Alexander [00:11:52] And would you advise our members that might attempt to do this, not to do it themselves and find the right attorney to help? 

Rob Rankin [00:12:01] 100%. I would say that unless you’re an attorney yourself, and even if you are, it would be a mistake to try to do this without the one. Putting the structure in place from a legal standpoint. Kept us all in line. Yeah, we all knew the rules. We agreed to the rules, and we knew we had to follow them. And we did. Yeah. 

Greg Alexander [00:12:18] And that’s the important thing. And everybody agrees upfront, right? So there’s, there’s no surprises. And when I’ve seen this and I’ve seen it several times now, it’s very rare. Does a dispute wind up in court because of this? I mean, it was it’s friends cell and a friends, so to speak. And it’s a very natural, organic thing to do. And this is well-worn territory. This isn’t something for those that are listening. You don’t have to go invent the wheel here. I mean, this has been going on for a long time period just because it’s the first time that you may be doing it members. It’s not the first time that it’s been done. Okay. So now let’s fast forward a little bit. So your partners are retiring. At some point you’re going to retire and you’re going to have to go to June three. Do you plan on using the same approach or are things the world is different now than it was back in 1979, 1998, even 2014 does is the process still workers? Is it changing? Does it need to be modernized? 

Rob Rankin [00:13:13] I think it can work, but we have to be sure that certain components are in place. So right now we have one gentleman who’s actually a member of Collective 54 as well, because he’s brought in and is a partner and and he’s a candidate to take that lead. Now, we have to do a few things. We have to surround him with people just like I was surrounded with great team members to be a part of that. And so if we can do that over the next 3 to 5 years, then we’ll have a gen3 and I think it can work pretty seamlessly. If not, we do need a plan B, you know, whether that’s a merger and acquisition selling, where we’re bringing on talent to help round out that individual or surround him, I should say, with others that can help him with the day to day business. And then that’s an option too. So I’ve seen several people in our space, specifically marketing communications, be left at the altar by that internal person who was supposed to buy. And so I know that we do need a plan B. 

Greg Alexander [00:14:14] Yeah, I’ve seen that happen too, you know. And then also, I mean. Can you go so far as to think about zero on Jan three? Can you peak down to Jan four? Is that too far of a stretch? Too many years will pass by by then. 

Rob Rankin [00:14:27] I think for me I don’t I think by by the time I hand off the torch it’s it’s then there’s to have and I think that’s part of what really worked with us is the guys never came back and wanted to be back in the business. They let they let Jan to run it the way they they saw fit. And there’s also just a spirit and a culture here that’s been built, starting with Jan one, carried on by Jan two. That’s really important. Yeah. And it’s why I know that while it’s likely, maybe even probable that we could get more money if we did an external sale, it’s not in the spirit of the enterprise and what the guys were gracious enough to do for me and my other partners, we want to do for those that have been working with us side by side for years as well. 

Greg Alexander [00:15:11] Yeah, well, this is a great story. You’re a fantastic role model. This topic is underrepresented in the world. It’s not talked about enough. And the way these collectives work, ours and others, is that, you know, people have to make a deposit into the collective body of knowledge, and that’s how we all get smarter. And you did that today, and I’m very grateful. So on behalf of the members, thanks for being here and sharing your story with us. 

Rob Rankin [00:15:37] You got it. Thanks so much, Greg. And I’ll see you at the boutique on Friday. 

Greg Alexander [00:15:41] Okay. Very good. And for those that are listening to this and they want to learn more about this topic and all the other ones related to growing, scaling and exiting, if you haven’t already, pick up a copy of the book The Boutique, How to Start Scale and Sell a Professional Services Firm. And if you’re not a member and you’re listening to this and you want that type of tribal knowledge, which is very tough to come by and meet, really interesting people like Rob consider becoming part of our community and you can find that at Collective54.com. Thanks again, Rob. 

Rob Rankin [00:16:15] All right. Take care.

Episode 84 – A Marketing Agency’s Approach to Sharing Equity with Key Employees – Member Case with Kelsey Raymond

There are many ways to split up a partnership. And the equity split needs to evolve over time. On this episode, Kelsey Raymond, Co-Founder & Chief Executive Officer at Influence & Co., shares how she successfully replicated herself by developing a key employee into her COO, so she can run the business on her own terms.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that aren’t familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander and I’m the founder and I’ll be your host today. And on this episode, we’re going to talk about ownership, structure, the right one, how to split up equity and all of the associated challenges with that. And the reason why members should care about this topic is because converting income into wealth is how boutique founders realize their dreams. Generating a high W2 or K-1 is easy. Most of our founders are exceptional people, and generating high incomes has not been a challenge for them. However, building a large balance sheet is hard. Net worth Trump’s net income and net worth is generated from ownership. We want to make sure that our scaling activities are producing lots of personal, net worth and wealth for our founders. And sometimes that requires sharing equity with others that can help grow the pie, so to speak. So therefore, the right ownership structure is so important. So we have a role model today, Kelsey Raymond. And Kelsey is an expert on this. And she’s someone who has created wealth for herself and converted income into wealth. It’s built an amazing business. And she’s going to tell us a little bit about her journey and how she pulled this off because so many of us are trying to do it. So. Kelsey, welcome to the show and please introduce yourself. 

Kelsey Raymond [00:01:58] Thank you. Thank you for having me here. As you said, my name is Kelsey Raymond. I’m the CEO and founder of Influence and CO, which is a content marketing agency. And yeah, I have been doing it for about ten years and have learned a lot and made a lot of mistakes along the way. So hopefully others can learn from some of those. 

Various Speakers [00:02:21] Okay, great. And I wanted to talk a little bit about equity and equity splits. And as I understand it, but I’m sure there’s more to the story that you have a CEO, I believe her name is Alyssa, and she’s been pretty important to you. And and you have shared some wealth with her. As I understand it, she’s an equity owner in your firm. Tell us a little bit about how that evolved over time and and why you decided to go that route. 

Kelsey Raymond [00:02:53] Absolutely. So the first iteration of this, from the beginning of the company, since we started turning a profit, my former co-founder and I decided that it was important to align incentives with the whole team. So we from the day that we started turning a profit, we allocated 10% of the company’s profit for a profit sharing pool to pay back to the rest of the team. This was always, you know, communicated as this is at our discretion. If we have a really bad quarter, it’s not going to happen. You know, don’t count on it. Don’t go plan to, you know, put a pool in the ground or anything like that. But but so from there, that was a way that, you know, even as a small team of 12 people, we had this profit sharing pool and everyone got different amounts determined by their role, their seniority, their performance. And it was paid out on a quarterly basis. Mm hmm. Alyssa was our first ever full time employee. So she’s been here since day one. I very much consider her, you know, an unofficial co-founder from the beginning. So as that her profit sharing amount was always the highest or on the higher end of everyone else on the team. And over time, we saw that one way to really show her how much we valued her was to give her a guaranteed amount for that. So it changed from, hey, you’re going to get some percentage to, you know, we’re allocating 10% for the whole team. 2% is just for you. So, you know, every quarter you’re going to be getting 2% of the profits. But at that time, it wasn’t equity. It was really I think most people would call it phantom stock. So if she chose to leave the company, that was going to go away. So I share this is kind of a an evolution over time of both Alice’s role changing in the organization and really, you know, her stepping up more and more. I wanted to tie her in more and more as her role changed. So once she became the CEO, I really, you know, and my co-founder left. So that’s a whole other story there. But I really, really saw that it would make sense for her to have some true equity. And one of the reasons for that is that we were having conversations that we were open to the idea of selling the business at some point. And based on her, the profit sharing structure that she had, she wouldn’t have been included in any exit, any sale. And so went to her and said, you know, I really would like for you to come in as an equity partner. You know, up until this point, we’ve just we’ve given you this 2%. If you want to buy in at, you know, up to 5%. I’d like to welcome you to do that. And the way that we structured it is that we only asked her to pay 20% of that purchase price for the equity that she was buying upfront. And then the rest was paid out of the proceeds of her distributions. So that really allowed for. Her to have true equity in the company without having to come up with a bunch of money upfront, but still having some skin in the game since, you know, I had brought a lot to the table when we had got the loan and everything like that. So that’s kind of the evolution over time. And then we actually did end up selling February 4th. Melissa and I are still running the company, so it’s an interesting structure. But with that, you know, her her return on what she invested to become a true equity partner, she said, is, you know, the best investment she’s ever made. Times 1000. So it all it’s all worked out really well. And it made me really happy that, you know, that opportunity that made me more wealth worth selling that business, that she was really included in that because she’s been so key and so integral to the organization. Yeah. 

Greg Alexander [00:07:04] Well, so first off, congratulations on your sale. We’re very proud of you. And I hope it was everything you dreamed it to be. But I will say I’m glad you’re still running the shop. And and it sounds like you’re going to go on a journey. Did you sell to a private equity firm? 

Kelsey Raymond [00:07:18] We did. We did. It’s an interesting, interesting structure, which I think is probably pretty standard. But, you know, part of the value was in cash up front, but then part of it’s in over an hour now and part of it is enrolled equity. And so that’s where, you know, Alicia is still included in that as well. So that’s, you know, rolling that into hopefully something a bigger pie in the future. 

Greg Alexander [00:07:39] Yeah. So your incentives remain to be aligned and hopefully the second bite of the apple is even bigger than the first bite of the apple, as they like to say. Okay, so I loved the story on how it evolved over time and the vision that you had from the get go of aligning incentives and setting aside this profit sharing pool. And then when you decided that this one individual was worth buying in and having real equity coming up with a creative, creative financial structure to make that happen, because sometimes when when members try to do that, they go to people and they make the offer, but the people don’t have the money. And it. Exactly. It’s prohibitive. Right. So and I did that with my firm and it worked out really well. There are some challenges with that. I’m sure you uncovered, for example, you probably had to have a partnership agreement at that point that that, you know, governed what you can and cannot do because you now have a fiduciary responsibility to it, to another party. So you had to weigh all the headache of doing this with the benefit. So what was kind of your pros and cons analysis there? 

Kelsey Raymond [00:08:43] Yeah, that’s a great question. I think the the biggest pros and cons analysis was. Replacing a. Like. I know. I think that she is absolutely capable to go out and start something of her own. Not even if it would just be a competitor. She could start any company. Yeah, she’s incredible. And so knowing that she’s going, she. She knows her value enough that even if she loves working with me and we love, you know, everything that we’re doing together, she knows that she could do something on her own. And so that was, you know, the biggest thing in the pro column is what can I do to make sure that she knows she’s valued and that, you know, she’s going to stick around for the long term. So that was the biggest thing I will share, that I had an instance with an employee that was leaving who also had a guaranteed portion of profit. This was our former CMO and she had asked when she was leaving, Hey, can I can I buy that portion like I’m leaving? And I know that that goes away, but I think the company is going to continue to do really well. So can I buy in and get that percentage? And the answer to that was no, because there wasn’t value there to me, because she wasn’t remaining on. Right. And so with Alissa, I really was looking at is this going to keep this person motivated and incentivized to stay with the company? And looking at, you know, if I knew that if we were going to sell someday, I needed her in my court on that. I needed it to be something that she was excited about as well. And so having those incentives aligned for her on a potential sale was really, really important to that as well. Yeah. 

Greg Alexander [00:10:29] What’s so great about the story is that her investment and the equity she got as a result of that materialized. Exactly. Yeah. Sometimes I hear, unfortunately with other members when investments made and you’re making an investment in illiquid private company. So everything has to go right in order for that to get liquidated and in it turn into real money, which it did in this case, which is such a great example of that. Sometimes when private equity makes an investment in a firm like yours, they want meaning the new investors want a broader set of owners. They sometimes they set aside, for example, I don’t know, maybe 10 to 20% of the equity in stock options. And they want to spread ownership across instead of just you and Alissa, maybe you, Alissa, and three or four others that that happened in this case. 

Kelsey Raymond [00:11:21] It didn’t. The conversation that we did have is that they are creating a liquidity pool, liquidity bonus pool for when the that second bite of the apple when it the entity as a whole because we’re rolled up with a few other agencies now sells again they’ve asked me to identify a few other people in the organization that I think are other other people that we really want to make sure are incentivized to stay, that they see that same vision and that they would be included in that liquidity bonus pool. That, though, is different than equity because they would have to be remaining at the organization during that time frame for that to materialize for them. 

Greg Alexander [00:12:07] Okay, I see. So they are aligning incentives and doing it with a liquidity bonus pool as opposed to the stock option, which sometimes happens. But I’m glad to hear that they did that. You know, you mentioned something about your CMO and her wanting to buy her phantom stock, but then leave and you had the wisdom not to do that. When I see people doing that, they create this thing called debt equity. And debt equity is when somebody owns a piece of your firm, but they don’t work there. So they’re really not creating an equity. And when you go to sell the firm down the road, it becomes a real problem because somebody says, okay, I’m paying this amount of money for this piece of equity, but there’s not there’s no one behind it. Yep. Did you get lucky there? Did somebody give you that advice? Have you you know, how did you know enough not to do that? 

Kelsey Raymond [00:12:55] Yeah. I’m trying to think. I think the biggest thing for me because this I respect the heck out of this for this woman that asked. The biggest thing for me, though, was also kind of creating a precedent for if I said yes to that, we had other people that were involved in profit sharing that may also want to buy in. I’d have to have a really good reason to tell them no if they were still with the company. And I let someone buy in who’s not with the company. So I think that was a big case of it is thinking through, you know, doing this for one person on our leadership team, anything that has anything to do around compensation, equity ownership, I assume that everyone else knows everyone else’s business. Yeah, because I think that’s the only way you can make smart decisions is if I assume that if I tell her yes, she’s going. You go tell every single other person on the team, which she wouldn’t have. But if I make that assumption, then I can make the decision through that framework of what I be willing to do this for every person that asks. And if the answer is no, then I need to be really careful about setting that precedent. Where was Alyssa? She was the first employee on the team. I think many people probably assumed she was an owner even when she wasn’t. And so telling the team the why behind Alyssa is the only one that was given that opportunity was a very easy explanation and something that I knew I could stand behind. 

Greg Alexander [00:14:22] Yeah. And they were probably happy for. 

Kelsey Raymond [00:14:25] Absolutely. They were excited because I think, you know, they also saw that as great a loss is not going anywhere. We don’t want her to. 

Greg Alexander [00:14:31] Yeah, exactly. When you weren’t selling the equity to Alyssa, how did you put a price on it? 

Kelsey Raymond [00:14:38] Yeah. So this is going to be I’m going to try to sell the short version, but interest. What made this even more interesting is that I started the company with two founders back in 2011. Two other co-founders. One of the co-founders owned a. Basically what turned into a private equity firm. It wasn’t a private equity firm at the time. It was kind of like an incubator. It was very unique model. And so he brought all of the money to the table. And myself and the other cofounder were the ones executing. That was in 2011. I had a very, very small percentage of the company over time, seeing that this other co-founder brought the money to the table, wasn’t involved in operations at all. My other co-founder wanted to do something different. It seemed like the timing was right for me to buy both of them out. So I bought both of them out in 2018. Alissa bought in in 2020. So what we were able to do is I said, you know, I would feel comfortable giving you the same deal that I got. So let’s look at the multiple that I bought it on of EBITA and apply that to our last trailing 12 months EBITA and use that same multiple. So we both agreed that was a fair way to do it because it was basically the same that I bought in at as far as the multiple. And she thought it was a really fair deal as well. 

Greg Alexander [00:16:02] Yeah, very good. So you had the good fortune there of having precedent, you know, and you were generous enough to give her the deal that you got instead of trying to mark up her deal. Yeah. Which is fantastic. And the proper way to handle that. So. Well, listen, I could talk to you about this forever, but we’re. We’re at our time limit here. I do look forward to the member Q&A, which we’ll do here in a few weeks. But, you know, the way that these collectives work is people like you deposit knowledge into the collective body of wisdom, and we all benefit from that. And every time a smart person does that, the whole membership benefits. So. So Kelsey, I literally on behalf of the membership, your story is fantastic. It’s inspirational, it’s educational. And I just wanted to thank you for contributing today. 

Kelsey Raymond [00:16:44] Absolutely. It’s fun to get to talk about these things. And like I said, I’ve learned a lot. So anytime other people can learn from the things I’ve learned along the way, I appreciate it. 


Greg Alexander [00:16:52] Okay. Fair. Fantastic. Okay. And for those that are listening, if you want to know more about this subject and others like it, pick up a copy of the book, The Boutique How to Start Scale and Sell a Pro Serv Firm. And if you’re not a member and you’re listening to this and you want to meet brilliant people like Kelsey and hear these types of stories, consider joining our mastermind community as you can find out, collective54.com. Thanks again. Have a good rest of your day.

Episode 81 – Why, and When, a Professional Services Firm Should bring Recruiting In-House – Member Case with Don Goldstein

Your ability to recruit talent is critical to scaling a market-leading boutique. On this episode, we interview Don Goldstein, CEO of 5Q Partners and he shares how he decided to invest in an internal recruiter and its overall impact on the organization.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that are familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. My name is Greg Alexander and I’m the founder and I’ll be your host today. And on this episode we’re going to discuss recruiting and in particular how recruiting changes as you move through the three stages of a boutique process, firm grow, scale and exit in the early days. Recruiting is typically done by the founder. There’s a small number of jobs that need to be filled, and he or she can shake the tree, so to speak, and fill the spots. Then you get a little bigger, maybe into the early stages of scaling and the number of jobs to fill and the types of roles multiply. And you start using, using external recruiters. And it’s expensive, but it’s still manageable because you’re not hiring, you know, dozens or hundreds of people. Then, of course, you have a lot of success and now recruiting becomes really difficult. You’ve got to hire dozens, hundreds. In some cases, believe it or not, thousands. And using external recruiters can get very expensive. And sometimes those firms themselves aren’t built for scale. So you bring recruiting in-house and you start making it a core competency of your firm. And given that we’re in professional services where people drive in business, having a talent supply chain is mission critical. So that’s what I’m going to talk about today. And we’re very lucky. We have a great guest who’s in the middle of all this. His name is Don Goldstein, and he runs a cybersecurity firm called 5Q. Hey, Don, it’s good to see you. 

Don Goldstein [00:02:11] Great to see you. Great. Thanks for having me on. Sure. 

Greg Alexander [00:02:14] Would you please provide a proper introduction to the audience? 

Don Goldstein [00:02:18] Sure. So I’m Don Goldstein with five Q. We are a managed security and I.T. services firm nationwide actually now. And we serve primarily the commercial and corporate real estate industry, which is vast and broad. 

Greg Alexander [00:02:38] Right now, Don, we wanted you to come on today because you recently brought recruiting in-house, as I understand it. And I would love for you to explain to our members and those that are listening to this kind of how you used to do it before, how you do it now, and what what caused you to make the recent change. 

Don Goldstein [00:03:01] Sure, Greg. So. When you talk about in your book. That. Personal networks are not scalable for your clients and for your new hires. That is exactly the kind of thing we ran into. So as soon as we hit a certain point there, there really wasn’t anyone else we could turn to within our network. To go find the right people we needed that had experience in the industry and so we had to look at other means to do that. Using outside recruiters can be effective, but when you’re in scale mode and hiring literally dozens of people, that becomes extremely expensive. And it also bottlenecks your people because they’re having to do a lot of the screening and interviewing. So we felt when we hit a certain point, which was right at the end of 2021, we had to make a change in the way we recruited. We were fortunate enough to find a tremendous internal recruiter. Who became available to us and started right at the beginning of December, which was exactly at the time that we were poised to scale in early 2022. So it couldn’t have come at a better time for us. And it’s been game changing, literally. 

Greg Alexander [00:04:35] Okay. So this is a great use case for us. So at the risk of asking a question that might reveal sensitive information and if it does, feel free to decline. Give me an idea of the magnitude, like how many people are you hiring and what do you anticipate the hiring need to be? 

Don Goldstein [00:04:56] I can give you some exact numbers. 

Greg Alexander [00:04:58] Okay. Thank you. 

Don Goldstein [00:04:59] So since the beginning of December 2021, so it is now been. 

Greg Alexander [00:05:05] Five months. 

Don Goldstein [00:05:06] Almost 45 and a half months, close to six months. We have hired 40 people. Wow. With our internal recruiter. 36 are still with us. In other words, I would say of the 40 we had four miss hires. 

Greg Alexander [00:05:22] Wow. 

Don Goldstein [00:05:23] Which we identified quickly and took care of quickly as soon as we identified that we had done a mishire. And that’s going to happen. Sure. In a company like ours, especially where a lot of our people are expected to travel 80 to 90% of the time. And you don’t really know until they come on board how they deal with the travel part of that. Mm hmm. So we hired 40. We dropped our cost per hire to just around $1,000 per hire or 1.3% of salary. 

Greg Alexander [00:06:02] Oh, my goodness. 

Don Goldstein [00:06:05] Now, included in those 40 hires were six internal referrals. Mm hmm. And how we deal with internal referrals is we give a $2,000 bonus at hire, and we give another 2000 at year one. Mm hmm. And I also want to say, in addition to those 40 new hires, the 36 we have with us and we expect to keep with us. We promoted nine people this year. 

Greg Alexander [00:06:34] Wow. 

Don Goldstein [00:06:36] So part of what we’ve had to do is exactly addressing the questions in your book. We’ve had to move from generalist to specialist because of the kind of work we do. The people that got us here couldn’t necessarily get us where we needed to go, and we also needed to make sure we had a manager of our employees. We had the ability to move people into those manager positions and doing it internally. Is just great for retention. 

Greg Alexander [00:07:10] Yeah, no doubt. Yeah. I mean, employees love to see their peers getting promoted. They know what those peers did. They earned it. You know, it gives them hope that that might happen to them because you believe in internal promotions. I’ve got to come back to these numbers for a second because they’re astounding. So 36 out of 40. I mean, what does that 90%. You have a 90% success rate, which is. Yes, which is incredible. I mean, hiring is good as we can get at. It is still a little bit art, not all science. So that’s a huge success. Right. The the drop in hiring cost of $1,000 per hire. What was it when you were using external recruiters? 

Don Goldstein [00:07:49] It was anywhere between 8 to $10000. Yeah. 

Greg Alexander [00:07:53] Okay. Per hire? Yeah. So, you know, if you say 8 to 10 grand savings per hire and you hire in dozens of people, I mean that more than pays for an internal recruiter and then some. 

Don Goldstein [00:08:04] Right. 

Greg Alexander [00:08:05] I want to ask you a little bit about how you make the internal recruiter successful inside your firm, because first off, it’s hard to find one. And I’ll come back to that in a moment. When you find one in you, you give them this type of assignment. I mean, this is a busy person. How did you make the recruiter successful? 

Don Goldstein [00:08:26] So what? Our starting point was that we have a director of h.r. Who is external. Mm hmm. We do not have a dedicated director of h.r. Interest. We have a part time person who has years and years of experience, and he could not continue to deal with the hiring piece, even using external criminals. He just couldn’t he just couldn’t keep up himself. And so working with him, we were fortunate enough that he had the ability to help us identify that person. I’m not sure we would have known enough to to realize what it took to find the right person. Mm hmm. We found someone. Who frankly, you know, we just weren’t sure if she was going to be able to pull this off for us. But what she did immediately was she leveraged external services. If you want me to name them, I can. Yeah, please. One primarily. Which was. Which is indeed. Mm hmm. Which is a great place for the kinds of I.T. and cyber people we needed to find. And she just knew how to leverage that and how to qualify people. How to position. The rules we have. Another thing that I have to point out was we have two main offices, Atlanta and Dallas. We realized during COVID, especially with people who are traveling all the time and the fact that we’re able to make remote work, work for us is that we didn’t need to worry about location anymore. As a matter of fact, having diversity of geography has helped us in many ways. So now we have employees, and I believe the last count was 17 states. And so once we took the handcuffs off of our recruiter and say, find the right people wherever they are. That just opened the doors wide for us. Mm hmm. And one of the other things. That made this successful. What? She just wasn’t looking at this from a hiring perspective. Just get a body in the door. She learned our business. She worked with our team. She understood the questions she needed to ask to qualify before she turned the candidates over to our hiring managers so she wasn’t wasting their time. Yeah, she literally was doing hundreds and hundreds. I tried to get the number. She stopped counting at some point. How many people she screened? But she was able to very successfully bring over. To our hiring managers, people that would really make the next cut. Mm hmm. So the other thing that she did was she paid very close attention to the process, very close attention to not only the hiring process, but the onboarding process. So she helped us get better in all of those areas because she really dug in and figured out what it took to be successful in not only hiring, but retaining those people and having a great experience in their first week, which just meant that that allowed us the ability to leverage our internal recruiting even more. And that referral business. The other thing I would point out. And I made this clear because it’s really part of our core values. I really wanted more diversity. On our team. Mm hmm. And I’m happy to say of those 36 hires, 50, 55% represent minorities. 

Greg Alexander [00:12:28] Wow. 

Don Goldstein [00:12:30] And in I.T.. That far exceeds the norm. Yeah, 25% women and other minorities. So this has also been a game changer for us because. It’s really added to the depth of knowledge and experience and just the culture of the company and it resonates with our clients as well in this industry. Commercial real estate, as you know, primarily has not been looked at that way. Yeah. 

Greg Alexander [00:13:11] The numbers are just astounding. I had one tactical question since this is a teaching call and you’ve given us such great information. I was really surprised to hear and I think it’s a great idea that the recruiter owns the onboarding process. Is that true? 

Don Goldstein [00:13:26] The recruiter is part is a major part of the onboarding process in terms of following up with the employees, making sure that their experience when they come on board is a good one, and then asking them once they’re onboarded, how was their experience and what could we improve on? Yeah, that, that was huge for us because we just didn’t have that before. 

Greg Alexander [00:13:49] Yeah. 

Don Goldstein [00:13:49] That muscle. 

Greg Alexander [00:13:50] And very often there’s a handoff there. The recruiter brings them in and then hands them off to somebody who runs the onboarding process. And at times that handoff can be a little awkward and the employee doesn’t have a good experience. And you have some infant mortality, which obviously we want to we want to avoid. 

Don Goldstein [00:14:05] And I can give an example of that. Great, a great example. So one of the things we would do because we wanted to get our engineers on board and billable as quickly as possible. Yeah. Day one, we would send them with their other engineers out to a site to learn our process of our assessments that we do at the properties. She came back to us and said, Don’t do that anymore. Give them that first week to get their feet on the ground. Don’t. Don’t have them travel the first week. Have a have a program in place to ease them into that. She also made a great suggestion for US cyber engineers because we have some really, really good top technical talent. To make it meaningful for them, give them homework. So when we bring on a cyber engineer that first week, we give them homework. So say we’re going to take them out and have them do cyber assessments in a property. One of the homework items we give them is assess your home network from a cyber perspective and tell us what the results are. I’m giving away a little bit of the secret sauce, but I don’t mind doing that because it’s something like that that has really resonated with our new people. They love it and the fact that we’re not putting them on the road. That was only because she came back to us and said, Stop doing that. That’s not a good way to bring your people on board the first week. Right. Give them a week to breathe. 

Greg Alexander [00:15:35] The numbers are astounding across any industry, but in your space IT services cybersecurity. I mean, the job market is so hot to be able to be able to do this. The way you’re doing it is is really remarkable. I guess one last follow up tactical question, Don. What are the recruiters accountabilities? How do you measure his or her performance? 

Don Goldstein [00:15:58] So she reports on a weekly basis, because we do use the EOC model and we have hiring metrics. I’ve already named a few of them. Yeah. We measure the cost of the new hire and we do that on a rolling 12 month basis and now it’s down to 1000. Once we get to December, when we have a full year, it’s going to be far less than a thousand. The other thing we measure is retention. Mm hmm. So our retention has gone from in the thirties to right at 20%. Mm hmm. Meaning attrition. 20% turnover. Yep. As opposed to in the thirties and even higher prior to that. I’m expecting to get that down to low teens. We also measure. The time to hire. One of the things that we ran into in the beginning of this year, which was unexpected because usually first quarter for us is the slowest quarter historically. This year. It was the biggest quarter we ever had. So I had more work than I had people and we were scrambling. So what we did when we brought our recruiter in was we basically said to our hiring managers. If you think this is the right person during your interview, make a verbal offer on the spot. Hmm. That’s a little risky. Mm hmm. Right. You still have to go through all of the checks. The checks after that. But what we were seeing was we do we’d have interviews. And then by the time we get to another level of interviews, that candidate was already gone. And I didn’t want that to happen. So instead of having multiple interviews, we did more team interviews so we could get it done faster. And if that team. Felt that they had the right person right then and there. They were empowered to make the offer. 

Greg Alexander [00:18:05] Yeah. Another example of iterating your process. Right. And adhering to a process to hit these numbers and you’re measuring it with metrics. I mean, I could talk to you about this for hours. And of course, we’ll have a chance to to have you with the member Q&A session. But unfortunately, Don, we’re out of time this morning or this afternoon, I should say. But it was an incredible, literally incredible role model example of how to do this. And this is a hot and hot issue for lots of our members. So on behalf of the members and the membership, thank you for contributing this morning. 

Don Goldstein [00:18:39] Thank you, Greg. My pleasure. 

Greg Alexander [00:18:41] Okay. And for those that are interested in this topic and others like it, pick up a copy of our book, The Boutique How to Start Scale and Sell a Professional Services Firm. And if you’re interested in meeting exceptional people like Don and you’re focused on professional services, consider joining our mastermind community and you can find it at collective54.com. Thanks again, Don. Take care. 

Don Goldstein [00:19:06] Thank you. 

Episode 78 – How a Consulting Firm Underwent Organizational Redesign toSuccessfully Deal with Pricing Pressure 

Member Case with Jeff Pedowitz

Labor is the biggest expense for a boutique and has the biggest impact on profitability. On this episode, we interview Jeff Pedowitz, President & CEO of The Pedowitz Group to discuss how they creatively redesigned their organization to solve increasing pricing pressures.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those not familiar with us, Collective 54 is the first mastermind community to help you grow, scale and exit your firm bigger and faster. 

My name is Greg Alexander. I’m the founder and I’ll be your host today. On this episode, we’re going to discuss organizational structure, and this is a very important topic for boutique pro serv firms because we are people businesses. And how you organize your labor dictates a lot of things such as your profit margin, your client satisfaction scores, your employee engagement scores, etc. 

So it’s a really big subject and we’ve got a great member to be our role model today. His name is Jeff Pedowitz and he has a company called the Pedowitz Group. And Jeff’s with us today. Jeff, how you doing? And please introduce yourself to the audience. 

Jeff Pedowitz [00:01:12] Thanks, Greg. Definitely glad to be here. Hello, everybody. So I am Jeff Pedowitz. I am president, CEO of the Pedowitz Group. We build digital revenue engines for our customers. So for all those businesses out there, we’re constantly trying to drive revenue in the digital world. That’s what we specialize in. We do strategy, technology and execution and end-to-end shop. 

Determining the right organizational structure

Greg Alexander [00:01:35] Okay, very good. So, Jeff, the reason why I asked you to be on the show today is that your firm has scaled to a very nice size. You’ve been at it for a long time. And you’re on the journey now of restructuring organizationally and leveraging different talent pools. And I would love to maybe start off at a high level and have you explain to the audience, you know, why you decided to come up with a new organizational structure. What led you to that? And then we can dive into, you know, how you went about determining what the right approach was for you. 

Jeff Pedowitz [00:02:11] Sure. Well, I wouldn’t necessarily call it new because I’ve had the relatively same hierarchy in place for a while. You know,we promoted some people and moved some things around. But one of the things I started doing a few years ago was really developing a core team around me and delegating the day to day responsibilities, including sales.

 So today I have a full executive team. I have a technology officer, I have a marketing person. I have chief strategy officer, chief financial officer, Chief Services Officer and they are all essentially running the business and providing the guidance and the leadership and the vision. But I can step away. They can run the business now and all the tools to do so.

 So that was really an important part of our scale, was really getting me out of that entrepreneur organization where everything that you run for me, we still we’re dealing with some, some legacy issues and married people and working at it for a long time. But we’ve really turned a corner on that.

 So even before the great resignation hit,because we work with technology now, our resources are in high demand. I mean, for years we recruited they command very high salaries and a premium. And up until last year, we actually had very, very low turnover. We were running about 5% per year, which in the consulting advertising industry -that’s fantastic. 

Greg Alexander [00:03:33] That’s best in class for sure. 

Jeff Pedowitz [00:03:35] But last year it caught up with us. Solast year we and our services team, we ran about 40% turnover. And most of that was just great resignation combined with some of the bigger technology vendors who are also our clients like Salesforce, Adobe, werepaying ridiculously high salaries, things that even at our size we just could not compete with. And we were already paying our people very well.

 So while we certainly have, I would say now year over year, our average salaries increased 30% from where we were a year ago. As you know, growing in professional services, you know, where you don’t just have 50% less margin – want to just want to double the salary in a low cost format- well we had a resource last year that was making 100,000 and my client was paying me 200,000 an increase into 130.

 Maybe they’ll pay to 60, but they’re not going to pay much more in that. And they’re not going to pay 300,000 for the same person that was doing the same job. Now, if we redesigned the services and added more value, of course they won’t. So it’s a matter of we’re trying to rebuild the plane while our client  -I have existing market conditions that enterprise customers for discerning and they also know they can get the labor if they need it to, by going offshore. 

So we’ve had to retool and strategically rethink how we want our labor force to be. So what we decided a year ago was for the lower end type of work, the execution work, data management, reporting, research, execution type of activities. We’re going to move those offshore. So we’ve been setting up resources in Colombia and then we want the people that are here to be the architects, the strategists, the engagement managers, the account managers, the people that are very client facing to be very versatile. And we will happily continue to pay them even more money than they’re making now because the value proposition will be there and then we’ll be able to kind of bifurcate.

 So we’ve been able to continue to be a competitive -pay the people that are really delivering value really, really well. And more than that now. And at the same time, move some of the other labor that we’re overpaying for because we’re able to turn that around and get value living out offshore.. 

So the net effect is we’re already doing pretty well with our gross margin. We’re running about 52%, but we should be able to get up over 60% by the -by the end of next year. And then we’ll be able to take some of that free flowing capital from the margin and reinvest it not only inthe employees, but into additional sales and marketing that will fuel our growth. 

Strategy versus execution 

Greg Alexander [00:06:12] Great story, great rundown and so many things to ask you about. The first question I’ll ask is when does when deciding what is kind of high end strategic work versus low end execution work, drawing that line and therefore determining what could be sent offshore? Sometimes our members struggle with that. They tend to think that everything is strategic. Even the tactical execution is super important, and oftentimes it is, but sometimes the clients aren’t willing to pay for it. So how did you draw the line between what to keep onshore and what to move offshore? 

Jeff Pedowitz [00:06:49] It’sthe very last thing that you said. It’s what are the clients willing to pay for custody? It doesn’t matter what we think t -he client is, what makes the market and the client who determines what the value is, not us. So if the client says, I’m only going to pay – I’m not going to pay more than $50 now for email execution. We can think it’s as strategic as we want to be, we can talk about deliverability but the client is still oing going to pay us $50 an hour

So we’ve been able to get pretty good information from our customers. And just seeing as the deals come in, what clients want, pay for what they’re not. Yes, because we work with a lot of technology and we now support over 600. 

For new technology. And it comes out like, let’s say some of the new ADX technology comes out for things like Snowflake or merchant platforms. Clients will pay a premium for that, for a short period of time, right. Until they get up and running. And then they view it more as a commodity. Then they will then want to drive the cost.

For ongoing OpEx to support and maintain technology in our business. Clients do not consider that to be strategic. Architecture isstrategic, Figuring out what systems to invest in, how they should fit together, how data should flow , business processes ,t he math, the technology – that is strategic. Running and supporting the technology itself is not strategic. 

Greg Alexander [00:08:11] Interesting. And sometimes clients might not know, but they think they know. So they might say to you, Hey, Jeff, I’m only willing to pay 50 when? Because it’s not strategic, but you know it is. Do you let the client stub their toe or do you -do you speak up in that scenario? 

Jeff Pedowitz [00:08:30] I think it’s it depends on the situation and what else we’re doing with the client. And it’s a bit of a give and take., But I think there’s a healthy  -we want to be respectful. We challenge our clients and let them know, know ultimately we’re trying to build a long term relationship.. 

And it’s also about the people and the personnel over doing the work. Even more important than the work itself.. You know, in consulting and such a relationship business, actually, one of the biggest challenges we have is a resource gets assigned to that project. And the client, they want that working really well, but the client doesn’t like it when that resource changes and gets to account because they become very attached and they’re convinced that nobody else in our team could possibly do that, even though that’s not true. 

But it’s just that trust and that bond gets built. So I do think that in so much it’s not just the type of service, it’s the person and the skill and the value of your trusted advisor to your customer. Then the client will tend to pay more for someone that they trust versus someone, of course, if they don’t.. 

Choosing offshore regions

Greg Alexander [00:09:32] Yeah. Now, once you decided what needed to be moved offshore, there’s a lot of choices there in lots of parts of the world. What part of the world did you choose and why did you choose it? 

Jeff Pedowitz [00:09:44] So we deferred to last year, so we started trying out different contractors in different parts of the world. So India was definitely an area that we know and we’re still using a bit more as a partner. Costs are higher, but we know what we’re getting. We work with ad some firms over in the Asian region, particularly in Cambodia, which is an emerging market, there’s a lot of strong tech talent that people are very good. But the time zone challenge was was difficult. 

We work with a lot of marketing teams in our business and it’s a little bit different than, let’s say, I.T. projects. The collaboration is more in real time. It’s not a follow some type of approach. But we can start something, we send it offshore, they work on it while we’re sleeping and come back the next day. The clients wanted me today and use time zones and collaborate, so we were having difficulties getting the resources over in Cambodia to work on our time zone – the costs were fantastic work and labor. At 15 or $20 an hour., highlyskilled, college educated, smart people, but not the time zone. We had been familiar with Colombia and the Latin America market for a while. We have a couple of our competitors that work down there. We’ve caught some good things, so we started looking into it. 

And then the more that we talked to different resources, we became more convinced that that would be a good market for us to enter into. It’sbilingual, college educated, good culture, hard working family values, which are very much in line with our approach and our value system. So, you know, this has not been without its challenges. Our original goal was to get this up and running in the first quarter of this year. We had a very good recommendation from-  from one of our investors and he was going to work full time for us.

 He had set up an 800 person shop down in Colombia over the last five years. So he was an expert down there, you know, unfortunately had a personal family situation. So he had to opt out after just a week on the job so that we were scrambling. But we were able to, through our professional networks… We reached out, people were great. We actually got eight referrals on different resources to use down in Colombia. We interviewed them all. We selected one and we’re now working with this partner account to set us up. So by the end of this week, we’ll have our first two full time people hired and our plan is to have 20 people by the end of this year. 

Deciding on direct hire

Greg Alexander [00:12:10] Wow. That’s an aggressive plan. And did you decide to hire a firm and partner with a firm? And did you decide to hire directly, you know, one at a time kind of thing? 

Jeff Pedowitz [00:12:23] We split it so that we – we are working with a firm called SolvoConsulting. So they are basically doing all the recruiting and it’s they are technically managing all the employees or their employees. We pay them and then they pay the employees. But we employees are fully white label so they are notworking for anybody else but we don’t have to deal with the benefits or paying taxes in Colombia or doing any of things we pay them. 

However, we also have the option as we start to build our practice areas to convert any of these people into actual TPG employees at any time. So we thought this gave us the best of both worlds. It gave us expertize down in there and mitigating our risk at the same time. 

That way we don’t have to set up a Latin America LLC. We don’t have to deal with paying taxes and doing all that stuff in a foreign government. But we still get the talent and the labor and the partnership and all the resources as if they were our employees. So obviously, check back in with me in 3 to 6 months as we get this up and running, because its still relatively nascent,. I certainly don’t want to tell everybody that we’ve cracked the code. We’re really just getting started on our journey. 

Learning to ask for help

Greg Alexander [00:13:31] Yeah. Yeah. Well, the reason why I wanted you on the show is sometimes many people need to be doing what you’re doing, but they’re not even getting started on the journey. I mean, most of our boutique founders are in similar situations where they have clients that are willing to pay a premium for some services, but commodity prices for other services. 

And unless you get to some version of this, then you’re going to have a tremendous margin squeeze and it could put the business at risk, especially in this high inflation, high wage inflation, great recession environment that we’re in. My last question, Jeff, regarding this particular avenue here is, you know, you said you got a bunch of people to go talk to and you interviewed them all. What did you learn during that interview process and what advice would you give to a founder who’s starting on this journey about how do you even know what good looks like? 

Jeff Pedowitz [00:14:21] Well, first of all, I was pleasantly surprised at the sheer response that we got, because at the time that the person opted out was one of these things where I at -at that moment, I certainly was not an expert in offshore labor or working with Colombia in particular. 

Whether or not whether we go there, you know, this is still really important. Where do we find resources? So yeah, I suppose it was a momentary situation, where am I? But I think like any entrepreneur, that faded pretty quickly. Right. Okay. But this is still the right decision for us. Let’s move forward. Let’s just start reaching out and asking for help. And I think one of the first things I was surprised, pleasantly surprised about was how much help there was – just by asking the question.

 And I think that’s one thing I’ve learned. I wish I would’ve learned this earlier in my career as a CEO – how and when to ask for help? You know, I was on my own a lot. I made a lot more mistakes that were made because I didn’t think that there was anybody I could turn to. 

So having networks like Collective 54 is great because I realize there’s a lot of people out there, that can help. You just have to be willing to ask the question and to listen., Sso myself and my business partner, who’s my chief service officer, we listened. We took copious notes, we interviewed and we learned that there’s… We learned a lot. We learnedthat much like the states, there are different ways to do this. You can go the route like an ADP, you can hire direct. 

We learned about different parts of the country and what each country, not just Colombia, but different countries and what they brought to the table. And I learned that there’s four different taxing authorities within Argentina and it’s incredibly complicated. I learned there certain provinces to stay away from and certain not to. And so, I mean, it was very, very educational over the course of two weeks.

 And so ultimately, you know, given everything else that we have on our plate right now, we decided going with someone that already knows how to do this and do this well, even though we’re going to be paying a little bit more – like if we were to go down and hire people directly in Colombia ourselves, we would probably pay them an average of 18 to $20000 per year for a college graduate. That person that has similar skills to what we have here in the US that’s maybe making 120,000. With the service we’re usingsing the margins areup 30 to 50%. But it’s still very, very cost effective. We’re still be able to make great margin, but may take care of all the headaches for us. 

Conclusion

Greg Alexander [00:16:59] Yeah. Yeah. Very good. Awesome. Well, listen, we’re out of time, but on behalf of the membership, I just wanted to thank you for your contribution today. You know, the way ollective works, as you got to contribute to the collective body of knowledge. And you have, you’re always doing that. Today is another example of that. So thanks for being a great member and being here today. 

Jeff Pedowitz [00:17:17] Thank you. I appreciate it. Greg Alexander [00:17:18] Okay. And for those that are interested in this topic and those like it, who can pick up a copy of the book, The Boutique, How to start scale and Sell the Professional Services Firm. And for those that are interested in meeting great people like Jeff, founders of scaling professional services firms, consider joining our mastermind community, which you can find at Collective54.com. Thanks.

Why Changing Your Pricing Strategy is the Quickest Way to Scale

A man wearing a sports coat holding a paper and looking at the camera

Why Changing Your Pricing Strategy is the Quickest Way to Scale

A change to your pricing strategy is, perhaps, the quickest way to scale. Why? It does not require an investment in people or money to implement. The benefits of revisiting your firm’s pricing are immediate: charge more today than you did yesterday. Are you looking to scale your boutique? Change your pricing strategy first. 

Pricing Mistakes Boutique Owners Make When Scaling a Business

One of the biggest challenges for professional services firm owners when scaling a business is choosing the right pricing strategy. Most boutiques price their services incorrectly from the beginning. Here are the main reasons why:

  • Boutiques do not know what their services are worth to their clients. 
  • Boutiques do not know what their clients are willing to pay.
  • Boutiques cannot logically explain to clients why they charge what they charge. 
  • Boutiques cannot quantify the amount of value a client receives from an engagement. 
  • The pricing approach is inward out – that is, based on internal costs.
  • Boutiques focus too heavily on what their competitors charge for similar services. 
  • Sales teams inside boutiques cannot overcome pricing objectives effectively. 

The good news – this problem is simply solved. It takes some sound judgment, but pricing best practices are readily available, and they can make all the difference for owners in developing a scalable plan for their business. Here are a few best practices professional services firm owners should use to get started. 

Scaling a Business: How to Create a Pricing Strategy That Aligns With Your Firm

Many entrepreneurs have asked me how they should choose the right pricing strategy. Here’s what I tell them: “Develop a pricing strategy that matches your business strategy.” For example, if you sell to small businesses, the high-volume, low-price model makes sense. The low-volume, high-cost approach is best if you sell luxury items to the elite. If you sell differentiated products to midtier customers, premium pricing makes sense. For instance, a Lexus costs more than a Camry but less than a Rolls Royce. 

The key takeaway: connect your pricing strategy to your business strategy. Here are two pricing models to consider when scaling a business. 

Price Positioning

Perception is a reality in pricing. Therefore, price positioning is very important. Your firm’s pricing sends a signal to the client. The price influences how a client perceives you. Price too low, and your work will be considered low quality. Price too high, and you will be perceived as difficult to engage. If you price the same as your competitors, you will be perceived as a commodity. 

Clients value specific attributes of your service offering. Understand what those are and influence the perception of your performance in these areas. An example from my past might help you appreciate the power of perception. 

The structure of the management consulting industry has three tiers. The first tier is the large market leaders. The second tier is the midsize boutiques. The third tier is the small start-ups or one-man shops. My firm, SBI, was a tier-two management consulting firm. A midsize boutique. We priced our services below the first tier but above the second tier. What perception did this send to clients? 

It said that we were the best of the boutiques. Clients who wanted to hire a boutique but were afraid to hire us. These clients felt that moving away from a brand-name firm was risky. Yet they were willing to take the chance because hiring us reduced the risk. We were the best of the boutiques and close to the tier-one providers. The perception the price set was that my firm was a premium boutique. This was a powerful differentiator.

Price Versioning 

An alternative pricing strategy to use when scaling a business is price versioning. Use price versioning to allow clients to choose their own price. This will result in them deciding on a proposal faster. Giving clients a choice allows the boutique to link price and value. Price is what you pay. Value is what you get. And the two are never the same. 

For example, personal trainers sell packages to their clients. The bronze package is $/visit. The silver package is a $/fitness program. The gold package is $/wellness program. The choice allows the client to consider what they value: visits, fitness programs, or a wellness program.

Listen to this episode of the Collective 54 podcast, The Revenue: A Practical Guide to Monetize Professional Services, for more tips on identifying revenue streams and monetizing professional services. 

Pricing Questions to Ask When Scaling a Business

Are you wondering whether a new pricing strategy would help you scale? First, you need to understand whether your current pricing is an issue for your clients and business. Ask yourself these questions. If you answer no to most of these questions, you need to revisit your pricing strategy as part of your scalable plan. 

  1. Do you know what your services or products are worth to your clients?
  2. Can you quantify the value of your work?
  3. Do you know how much clients are willing to pay for your offerings?
  4. Can you explain the logic behind your pricing model to clients?
  5. Does your price demonstrate to the client the link between price and value?
  6. Do you charge the most for the service features your clients want the most?
  7. Do you charge the least for the services features your clients don’t care much about?
  8. Do you allow your clients to choose their price by offering varying price packages?
  9. Is your sales team skilled at overcoming price objections?
  10. Have you built an annual price increase into your pricing system? 

Looking to Scale Quickly? Change Your Pricing Strategy

Know your worth. Don’t undervalue yourself. What you do is exceptional. Price accordingly. The clients you want know this and will pay you with a smile. You do not want the clients who are unwilling to pay you fairly. 

For more insights on how to scale your consulting business, join our mastermind community. Collective 54 is the first mastermind group for professional services firm owners. Contact us today to learn more about the benefits our group offers firms like yours.

Episode 73 – How a 63-Year-Old Ad Agency Stays Relevant by Launching New Service Offerings – Member Case with Marc Cooper

As professional services firms scale, developing new service offerings is critical to staying relevant with your clients. In this episode, we hear from Marc Cooper, President and Partner at Junction59, to learn how his firm uncovers new client needs and develops new service offerings as part of a business scaling strategy.

TRANSCRIPT

Greg Alexander [00:00:15] Welcome to the Boutique with Collective 54, a podcast for founders and leaders of boutique professional services firms. For those that don’t know us, Collective 54 is the first mastermind community to help you grow, scale, and exit your firm bigger and faster. I’m the founder. My name’s Greg Alexander, and I’m also your host today. And on this episode, I’m going to talk to Mark Cooper, and we’re going to talk about designing new services. So, Marc, welcome to the show. 

Marc Cooper [00:00:47] Thanks for having me today. 

Greg Alexander [00:00:49] Would you mind properly introducing yourself to the audience, please? 

Marc Cooper [00:00:53] Absolutely. I’m Marc Cooper, and I’m the president of Junction 59. We’re a Canadian integrated ad agency based out of Toronto. We like to say that we work at the intersection of people and points of view where ideas meet to make a better tomorrow. 

Greg Alexander [00:01:10] Okay, very good. And what types of clients do you serve, Marc? 

Marc Cooper [00:01:15] So we’ve a broad range of clients actually that reflect, I would say, the Canadian landscape. But for the most part, we divide up into three different categories: B2B clients and B2C clients who are interested in reaching their clients throughout the journey. So a lot of direct marketing and journey marketing. And then not-for-profit  clients. 

Greg Alexander [00:01:41] Okay. 

Marc Cooper [00:01:42] All about fundraising. 

Greg Alexander [00:01:43] Very good. Okay. So the topic today is about designing new service lines as a way to scale your firm in the common-sense explanation. It’s pretty basic. And it says if you have one thing to sell and deliver, scaling a business  is going to be hard. So at some point in the journey, you know, firms invest in additional service lines so that they can go back to their happy client base with new things to talk to them about and potentially earn expansion revenue. 

So let me start with kind of a 30,000-foot  question, which is, how many service lines do you have today? And how has that evolved since the founding of the firm many years ago? 

Marc Cooper [00:02:25] Well, it’s an interesting question because in a marketing and communications business, you know, you could bucket all of our services under marketing communications and say we have one service. Yeah, but of course, you know, as the industry has evolved and different platforms have come to life, you know, there are lots of agencies that specialize just in digital, just in traditional print or television or out of home. 

And then across that, you’ve got some that have a strategy and some that don’t. So if you start to look at all of the different service offerings that we have at a much more sort of focused level, I would say we have upwards of 30 to 40 different services that we’re able to offer. 

Greg Alexander [00:03:14] And you’ve been around for how long? 

Marc Cooper [00:03:17] We’ve been in business since 1959, which is where the 59 and Junction  59 comes from. 

Business Scaling Strategy: How to Identify the Need for Additional Services

Greg Alexander [00:03:21] No kidding. My goodness. Well, okay, so 30 to 40 different offerings, I guess, unique services. And I understand bundled together into a solution that you might sell a client. 

So since your firm has been around so long and developed so many services, what advice would you give those listening that might have one or two things that they sell and deliver? How would they go about identifying the need for additional services? And then how would they go about developing those into something that could be sold and executed against? 

Marc Cooper [00:03:56] Sure. Well, we have a number of different ways that we do it. One of them is quarterly business reviews. At the end of every quarter, we sit down, and we look at the work we’ve done for a client over that past quarter. Then we look at the work that their competitors might have in the market, and we look for opportunities, including any trends that are happening in the marketplace with their customers. 

Then we sit down and talk to the client about what we’ve done, you know, all under the guise of how could we get better at what we’re doing for them, but also to point out opportunities where they might do things a little different when going to talk to their customers. And it’s usually at that point that a service offering that we have that we may not have been offering to them comes up in discussion. 

And I think for us, over the years, what would happen is the same service offerings were coming up over and over again with particular clients. You know, we do group our clients into like-minded  sort of buckets across those three buckets we serve. So it’s not surprising to learn that, you know, a high-tech company and a telecommunications company might start to see the need to do a particular type of marketing. 

And when we didn’t offer those services, we would always find a partner we could work with to offer them a service. But as they came up over and over again, we decided it was time to bring those services in-house and offer those services directly to our clients. So it created a whole new service offering. 

Greg Alexander [00:05:33] Interesting. So the quarterly business review, the QBR, so that’s done between your team and the client. And it’s a review. It’s always a best practice to do such a thing, and it naturally comes up during those QBRs  where the client would express new needs. Is it my understanding that correctly? 

Marc Cooper [00:05:52] That’s right, yeah. Or we would suggest new needs based on what we see their competitors or the market doing. 

How to Develop Additional Services Internally When Scaling a Business?

Greg Alexander [00:06:00] Okay, very good. Now, let’s say that you spot a trend, you know, and you’re hearing the same thing enough times where you say, “Jesus, there’s something here.” At first, you service that need by partnering with others, and that makes total sense. But then it’s a substantial enough business that it might be worth investing in that capability in-house. 

Let’s for the purposes of education today, let’s assume we’re at that point. So you’ve made the decision to bring this service in-house, and you’re going to develop it internally. How do you do it? 

Marc Cooper [00:06:33] Well, you know, being an entrepreneur, there’s always that leap of faith. Right. But you go out, and you’re hiring  for the role. And honestly, instead of working with the third-party  service provider that you were bringing in, you work with your internal team. 

Our clients tend to care more about the partners in the agency that are delivering their service than they do about the individuals that are actually working on all the different components. So they gladly accept a new name on a call or in a meeting that’s going to be helping to build out their solution. 

Greg Alexander [00:07:18] Yep. And the focus at that point of the new service line that you’ve developed, is it to bring it to the existing client base and therefore expand the revenue stream from the current clients? Or are you also taking it out to new pursuits? 

Marc Cooper [00:07:35] Yeah, I think it’s like everything we do, right. About 70% of the business is servicing the existing clients. But then you’re always thinking, you know, maybe you hit that break-even  point where it makes sense to bring them in and sell them off to your existing clients. 

But now how do you make that incremental revenue and use  it as a way to go out, reach new clients and new prospects, you know. Ss maybe a new foot in the door to build a bigger relationship with those new clients is always sort of top of mind. Yeah. 

Greg Alexander [00:08:04] What I love about this approach is it’s outward in, you know, you’re listening to the client and then responding. Sometimes, owners of professional service firm boutiques that are trying to scale, they do the opposite. 

You know, they’re educating themselves in their domain, and they get excited about the new hot thing. And they put forward all this effort to hire some people and design methodologies and automate with tech, etc. And then they go, and they take it to their customers, and it doesn’t sell. And they can’t understand why. I’ve made that mistake myself in the past, and it’s painful when it happens. Have you been able to avoid that, or from time to time, does that happen to you as well? 

Marc Cooper [00:08:44] No, I think like everybody we’re human that we think we know better and we try a few things. But I would say the majority of the time, it’s because we’re listening to our clients. We’ve heard them ask for something, and we do it. Yeah, you know, but every once in a while, you try to also be ahead of the curve. And if you’re going to be ahead of the curve, that’s when you have to try 

I think an experiment. Maybe even if you haven’t heard as many clients say they want something. Yeah. But you know, most of the time, it’s listening to your clients and delivering on what they’re looking for. Okay. Biggest payoff. 

Tactics for Developing New Service Lines for Your Professional Services Firm

1. Client Advisory Board

Greg Alexander [00:09:22] You know, there are  a few other tactics that members are using to develop new service lines, to listen to the clients, to see what the need is. We talked about your example of the quarterly business review. Another one that I’m seeing gaining traction is the Client Advisory Board. 

And just to simply explain that you collect a few clients of yours, you meet with them maybe twice a year for a day and a half or so. And in this particular case, a client is saying, you know, here are the challenges that I’m having in my business right now, now and in the future. And they’re giving feedback into kind of what your roadmap may or may not be. What are your thoughts on a client advisory board? 

Marc Cooper [00:10:00] You know, I love the idea, and it’s something that we’ve talked a little bit about but haven’t really pursued as much as we should. But, you know, one of the things that we do like to do is bring clients together for social events. 

And when you see each, you know, your clients actually interacting with each other and talking about what they’ve learned, you know, outside what’s necessary of the agency relationship, you can see that there’s something really powerful happening there where those clients are sharing their own experiences with each other. So to tap into that and get them to focus on how we could get better delivering against their needs, I think it would be well worth exploring even deeper. 

Greg Alexander [00:10:46] Yeah, it’s something that I’ve done in my past and in what I would suggest is it’s a way to formalize it. You know, the informal way of getting clients together and socializing is very beneficial for sure. And I’m glad you’re doing that. This would be the next logical step. You know, you would formalize it. 

What I always liked about it is, you know, it’s one of the only times where the client’s presenting to you. So imagine yourself in a conference room, and you’re sitting there, and the clients walk you through their deck, which is a really, really cool thing. Okay. 

2. Client Satisfaction Reviews

Greg Alexander [00:11:12] Another thing that we hear is client satisfaction reviews, or sometimes people use NPS as an example, and there’s a way to structure those survey tools to collect ideas for new service lines. Do you do any type of client satisfaction reporting? 

Marc Cooper [00:11:31] So we have a scorecard that we make available to clients after every project and now after every significant project. We have a lot of projects as an ad agency where we might be changing an offer in a banner ad, and we don’t necessarily seek big feedback on that. But on the more significant projects we seek feedback, and the feedback is really a lot of it’s about process and creativity, making sure we’re bringing the right ideas to the table. 

So there are a few times, especially when it comes down to were we being proactive for their business, where we bring in the latest and greatest ideas to the table. That’s where some of those new service opportunities pop up when they think they indicate maybe that, you know, we did a seven out of ten on something. 

It  inspires a conversation, but we don’t have a formal spot to actually ask, was there anything else that we could have delivered that we didn’t or anything like that? And I think as I’ve been researching this more, I think that’s an area where I want to spend more time. Yeah. 

Greg Alexander [00:12:39] You know, it’s a pretty easy fix. You know, you add a sentence or two or a question or two to a survey and send it out. And and when I’ve used that before in the past, it was, it was the origination of some really good ideas. And what I love about it, it’s easy to execute. So that’s a good idea for the audience to kick around. 

3. Win-Loss Reviews

Greg Alexander [00:12:56] Okay. Kind of a kissing cousin to that would be win-loss  reviews. And what this is is that for new pursuits, you mentioned 30% of your business comes from new clients. You know, after the sales campaign for those that you’ve won and for those of you lost. You know, some type of feedback mechanism with the prospect that went through the sales campaign to understand why you won and why you lost. And sometimes, that can be a fantastic way to identify new opportunities for service line extension. Have you experimented with that at all? 

Marc Cooper [00:13:24] Yeah, we have. You know, every time we do a pitch, especially in a formal RFP, we ask for a debrief afterwards, win or lose, and we sit down. Sometimes it’s with the procurement manager. Sometimes it’s with one of the review panel. But we’re always looking to figure out why did we win and why did we lose. 

There was one instance where we actually won a very large client. They’ve been with us now for 12 years. Fantastic relationship. And we discovered that we won for a reason we had never anticipated. It was because, during our pitch presentation, we put an emphasis on the great quality we put into the production of the end product. 

And we’re a creative agency, but we still talked a little bit about the production that goes into the end product, and that was what differentiated us from the others in that particular pitch. So since then, we’ve been actually able to monetize the fact that we have better standards or put a bigger emphasis on the production there. And so it actually helped us make that a bit more of a service offering than just a table stake  that we thought it was. 

Greg Alexander [00:14:41] That’s a great story. I appreciate you sharing that. That’s a real pragmatic implementation of that technique, and it’s working really well for you. So now inspire many others to do the same. Okay. 

4. Conferences

Greg Alexander [00:14:51] And the last idea I want to get your opinion on is, I guess before the pandemic, we would all go to some conferences. There’s lots of industry conferences, and I always found those very interesting to go to stimulate creativity or new things. 

We could bring up everything from just the agenda to see what the topics are, because normally whoever’s putting on the conference surveyed the audience to see what should be discussed. I also liked walking the trade show floor to see what all the other vendors are doing. Did you use conferences as a way to stimulate ideas for new services? 

Marc Cooper [00:15:25] Yeah, we still do to a certain extent in the virtual conferences. You know what we like to do. I mean, we attend all the marketing and advertising conferences that we should that are, you know, in the marketing and advertising field. But we also like to attend conferences that are in our clients’ industry. 

Yeah, a lot of them have an industry association that  put on an annual conference. So not only do we attend, but where we can, we try to present, we try to get a speaking role, whether it’s on the main stage or in a side room. And it gives us an opportunity to explain to our clients that not only do we care about their business, we care about their industry. And we want to learn as much as we can so that we can be a true extension of their team. And while we’re doing that, of course, we open ourselves up to a whole new audience because we come across as experts within that particular niche. 

Greg Alexander [00:16:23] It’s a great idea. I mean, it’s such a subtle thing, but if you’re going like in your case as a marketing agency, if you go into just the shows for agencies, it’s a little bit of, you know, everybody talking about the same thing, right? It’s a little of an echo chamber. 

But if you go to the conferences of your clients, it’s now a step beyond that, and you’re hearing how other people in that industry might need your services. And that can be a great source of inspiration for new service lines. Awesome. 

Marc Cooper [00:16:54] Absolutely. We also have in the past acted as judges for those industry associations when they have their own marketing awards. And so that opens us up to other, you know, our clients and their competitors even at those associations ceremonies. 

Greg Alexander [00:17:13] That’s a great idea for sure. Plus, it has lots of credibility. If you’re judging American Idol, you know, you’ve become a celebrity, right? Alight, Marc. Well, listen fantastic input today. Thank you very much for that. If the audience members would like to get a hold of you to continue the conversation, what’s the best, best way to reach you. 

Marc Cooper [00:17:33] If they can head over to Junction59.com,and there’s a lot of information there about us and including all my contact information. 

Greg Alexander [00:17:42] Okay, fantastic. And for those listening, if you want to learn more about this subject, how to develop new service lines, how to develop a business scaling strategy, and many others, you can pick up a copy of our book called “The Boutique: How to Start, Scale, and Sell A Professional Services Firm,” which I’m proud to say just became an Amazon number one bestseller in our little niche. 

And then also, if you’re interested in meeting great people like Marc, you might consider joining our mastermind community. And you can find us at Collective54.com. But Marc, thanks again. It was great to say hello to you and to listen to how you’re implementing this particular business scaling technique. 

Marc Cooper [00:18:18] Great. Thanks for having me on today, Greg. Really appreciate it.