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The Connected Enterprise

PODCAST

How to Go Further, Faster: Catalyst Growth Advisors Helps Business Thrive

Posted by Vision33 on Sep 29, 2021 12:00:00 PM

 

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Show Notes

 

Carl Lewis: Welcome to the Connected Enterprise Podcast. I’m Carl Lewis, your host from Vision33, and my guest is Bill Flynn from Catalyst Growth Advisors. Bill, welcome to the podcast. Please tell us about your journey and Catalyst Growth Advisors.

Bill Flynn: Thanks for having me, Carl. There are two arcs to my journey. I was a start-up guy for about 25 years in the Boston area. I was five for six at one point, which is a phenomenal percentage. I've been through two IPOs and seven acquisitions. But my last four weren’t very good, so I switched to coaching. Mostly, I ask myself, “Do I want to do another startup?”

I love startups. I think they’re fun. I love puzzles and figuring stuff out. But it’s getting harder to find a CEO or founder who doesn’t suffer from “founderitis.” That’s when they fall in love with their idea and not the problem or customers. And they’re constantly challenged because they’re not doing anything people want, but they think it's awesome. 

I became a coach five and a half years ago, and now I know what a calling is. I knew it intellectually, but now I know it emotionally. I love what I do. Time flies when I'm doing it. I'm more of a teacher than a coach, and I've always had a Socratic approach to my leadership. I teach people a growth framework. That's what's in my book: a snippet of the growth framework I believe is excellent.

Carl Lewis: What's the title of the book?

Bill Flynn: It's Further, Faster: The Vital Few Steps That Take the Guesswork out of Growth.

Carl Lewis: One thing that intrigued me about speaking to you was your startup experience and that you recognize some people are cut out to do startups and others aren't—but that maybe there’s help for those who try and aren't fit for it. 

I decided after a few failed attempts that I wasn’t cut out for startups. Maybe I learned faster than you did, or my early failure taught me faster. But I have great admiration for people who run their own businesses. My audience is full of such brave people. Because starting a business takes courage.

Bill Flynn: Courage is a good word.

Carl Lewis: I admire them because they have something I don't. 

But some had a great idea that worked initially, and now they're stuck. They're trying to take the next steps. My first question is, “What should a young business do to survive, given that the majority of businesses fail?”

Bill Flynn: Let's talk about the person who starts it. They're the most critical piece. They need three things: curiosity, compassion, and courage. Those are the traits they must come with. Because starting a business is hard. There are a lot of obstacles.

You have to believe in what you're doing. You also need compassion, which for me means empathy with action. Empathy is all over the business world today, but I think we're missing the mark because empathy is, “Carl, I feel what you feel.” But it stops there.

But if I share something that might help you, that’s compassion. A leader needs both. Because people don't care what you do, they only care what you do for them. Most leaders don't understand this. 

10-12 years ago, a co-founder and I made three sales calls in a week. Every time they didn’t go well, he said, "They just don't get it." Finally, I said, "Your sentence is perfect, except your pronouns are wrong. THEY don't have to get it. YOU have to get THEM." That's what founders need to do. They need to ‘get’ the customer.

You have to fall in love with the problem, not your idea. I've done 10 of these, and only once did the original idea turn into a business. The rest morphed into something else. As Mike Tyson said, "Planning is great until someone punches you in the face." And customers will punch you in the face when you ask for money. When you don't ask for money, they'll be nice and say, "Oh, Carl, that's a great idea."

Then you say, "Thanks! Can you write me a check?" and their response is, "I'm not ready yet. We've got other things going on. I'll get back to you." That's them saying no. Saying, “I love what you're doing, but I don't value it. Because if I valued it, I would pay for it.”

Those are the things a founder needs, at least at the beginning. I don't go for the conventional wisdom that says you have to be humble and curious and have integrity and charisma to be a leader. It isn't true. Steve Jobs is considered one of the best leaders in the world, and he had no integrity.

He bought a car every six months so he could keep the handicap sticker and get a better parking space. The guy had how many billions of dollars? That's not integrity. And Warren Buffett isn’t the most charismatic person on the planet. So, it's nice to have those things, but you don’t need them to be a leader. You need two things to be a leader. And there's only one thing all leaders have: followers. We should study followership instead of leadership because leadership is amorphous and subjective. Followership is not.

If we figured out why people follow other people, we could be excellent leaders. We could also do it for ill reasons, like populists who say things people want to hear and people follow them. Eventually, the shine goes off that. But to get followers, you have to tell them where you're going. I'm a big fan of vision. I'm a big fan of telling them where you’re going and what you're about. Give them something to follow. And then, all leaders have courage.

That’s the only trait they all have. Because whether it's defending their vision or sticking through something, or the courage to give autonomy to others so they can help them get there, courage is the only trait you need as a leader. All the others are optional.

Carl Lewis: That reminds me of some things I've heard in my lifetime. One is to make the most of what you have. If you want to start your own company, you are what you are, so make the most of it. And if you have the chutzpah, you have 100% of what you need.

I'm a big believer in leadership emergence. Often, people think they want to recruit a leader, but what they really want to recruit is a good follower. And if I was looking for a leader in my own business, I’d look at all the followers and pick the one who’s leading. Don't pick someone who will do what you say all the time—pick someone who will challenge you. 

Which leads me to my second question. Like you, I'm old enough that I've worked for many companies. I finally found one where I could be 10+ years and have no intention of leaving. I'm headed toward the finish line. But I’ve probably worked at 18 companies in my career.

Bill Flynn: Wow.

Carl Lewis: Many leaders have difficulty getting out of their own way. How do they do that?

Bill Flynn: “Getting out of your own way” is an interesting phrase. I don't think there's an issue of getting out of your own way to be a leader. You have to get out of their way more than anything. Unless you’re a small company, your job isn’t to do the thing you're leading. The larger the company, the less you should do day-to-day. Instead, you think about how to help your team become a better team and how to optimize the team’s assets.

Bill Campbell, the trillion-dollar coach, coached Steve Jobs, Eric Schmidt, Sergey Brin, and tons of Silicon Valley leaders worth more than trillions of dollars. He’s no longer with us, but he said team is first. If you're going to be a leader, you're leading a team, and you have to think about the team. Do I have the right team? Are we positioned to do whatever our function is that's helping the company become better?

There's a great book by Stanley McChrystal called Team of Teams: New Rules of Engagement for a Complex World. And if you're the ultimate leader, the head of the company, you're leading a team of teams. Your job is to teach people how to run good teams. Attract the right people, put them in the right places. We often try to fix people to fit our idea of the thing instead of figuring them out using their strengths to get an optimal version of the function.

I'm a huge fan of Marcus Buckingham, and he's all about strengths. Strength is critical because people are idiosyncratic. We’re not well-rounded. We’re good at a few things. Our job as leaders is to figure out the few things our team members are good at and try to shape that to get our outcome. Sometimes they're not a good fit for the team, and you have to move them to another team or maybe out of the company.

But the best teams put together different people. I'm from New England, and one of the best coaches in the world for making good teams is Bill Belichick. He had a great leader in Tom Brady. He was all about the team, so if you talked about yourself and your accolades, he got rid of you. More than a third of my book is about team because performance is a team sport. We don't do enough of that. We try to fix individuals, but we should be crafting teams.

Carl Lewis: I agree. Some of it is that our compensation programs in business focus on high-performance individuals versus high-performance teams. That doesn’t promote teamwork—it promotes being a loner.

Bill Flynn: There's a great story about the Ohio State Buckeyes, an awesome football team from the 1930s-1960s. Then they trailed off, and Jim Tressel took over. He found that the team wasn’t a team. They were a bunch of individual performers, all about their own accolades, etc. I don't know how much you follow football, but they have things on their helmets for the Ohio State Buckeyes.

Carl Lewis: Buckeyes.

Bill Flynn: Yes. And they got one when they did something great for themselves. But Jim Tressel said, "Not anymore. I'm giving buckeyes for the unit—when the unit makes a sack, gets a touchdown, etc.” He turned them back into a team, and they won the national championship twice in an extremely competitive world. And they've been in the top five almost every year since he took over. 

Carl Lewis: To the demise of my Oregon Ducks a few years ago.

Bill Flynn: Sorry. At least you're not from Michigan.

Carl Lewis: I remember when Michigan was up there too. So, it's all about people and how they fit into the team. But how do you recruit people who make you a stronger team? You talked about finding the right role for people and letting them do what they do well. I'm fortunate that my company encourages me to focus on what I do well, like talking to folks like you, sharing things with and visiting customers, and being with people.

Because I have empathy and compassion. I don’t just listen to the story—I go back to the office and say, "We need to do xyz for this customer." So, how do you recruit people to fill roles that will make you a better team?

Bill Flynn: You must step back before you recruit anybody. You must understand the ultimate function and measurement of the team. How will you know when the team is successful? Then break that down into its components. Marketing, for example. Marketing’s main job in most companies is to make sales easier. How do you know when you’ve made sales easier?

The metric I like most is that you’ve provided qualified leads to your sales team. Then you decide what a qualified lead is. That's a discussion. You need to provide enough that supports their ability to make their numbers. And not just the top-line number—profitable customers.

We're trying to provide the best possible customers that not only can you close, but that will be delighted to work with us. Once you do that, you ask, how do we do that? What are the critical functions? There are four main functions right under marketing, like product marketing. That’s determining, “Is this a problem we're solving? Is this how the market wants it? How big is the market?”

Then you must create the environment to make that product. Then you ask someone to make it—say, your software. Product management sets up the specs, then product development or engineers write code. Then you need someone to generate demand. Those four things sit under marketing. 

Three things sit underneath demand generation: Awareness, interest generation, and qualification. When you break down those pieces and know how it works, you ask, “Who do we hire?” The guy who's probably good at interest generation and qualification is likely a process person. They're good at process and asking questions, and they're curious and empathetic. They might do both jobs if you're small, but I wouldn't want them doing the creative work.

That's not how their brain works. I'm not a creative person. I'm a process guy, so I was good at sales, not coming up with new ideas. I could recognize good ideas but not come up with them. So, you don't want me as the brainstorming guy because I’m a bad fit, and I probably wouldn’t like it anyway because I'd be very uncomfortable. So, you need to step back first.

I teach the key function flow map, which tracks how we make money and has those key functions. Most companies have between eight and twelve functions that run the business: sales, marketing, IT, HR, finance, operations, etc. But before you drive the business—with marketing, sales, operations, and finance—you need to have the idea, spend the money to get them in, close them, deliver or implement, and collect the money. Understanding those four things is essential. If you can do that well and craft those teams, you're on your way to running a healthy company.

Carl Lewis: I agree. Recruitment is a big challenge. My company is recruiting almost 100 people, and it’s a massive challenge in today's marketplace. It's highly competitive, but you can't hire just anybody. They still have to be qualified and make a worthy contribution. 

One thing I've seen is that anybody can start a business if they have the courage.

Bill Flynn: Especially these days.

Carl Lewis: There are many opportunities. But once you're there, you quickly discover your deficiencies. In your experience, what's the most common mistake a failing owner makes?

Bill Flynn: There's not a common mistake, Carl. There are a million ways to go out of business. If I had to pick one, it would be that they try to do too many things, but they're not good at all of them and don't delight their customers. The best businesses are simple. Nest makes good thermostats. Southwest sells a customer experience in a plane.

Simple businesses usually endure. They can have lots of moving parts, but they have to simplify. Apple is a super simple business. They have tons of products, but everything they do is simple and amazing. If it doesn't meet that criteria, don’t do it. Do you ever go bowling with kids? They have things that prevent gutter balls. That's your job as leader.

Tell them where the gutters are. Say, “You can do anything you want in here, but this is where we play. If you go outside of that and you think it's important and you're passionate about it, let's talk. Maybe I set the guidelines too narrow. But mostly, we’ll say don't do that. If you do it, I'll correct you. If you do it twice, you're done.” Leaders try to do too much. And we don't go deep enough first; we try to go wide because we're chasing revenue. Revenue is vanity. Profit is sanity. Cash is king.

To have a healthy and thriving business with people who are happy and being paid well, and you're not stressed out about making payroll, focus on cash. That means simplifying so you're making as much profit per client as possible.

Carl Lewis: Absolutely. Someone asked Billy Graham, "Every place you go, you say the same thing the same way. Don't you get bored with that?" And he said, "Number one, it works. Number two, it's this one thing I do, not these 40 things I dabble in." Like you said, go deep. Remember the thing that got you here. What you're doing well, do it better. Before you spread out, do what you do well and get the most out of it.

Bill Flynn: I agree with Mr. Graham. It's not boring. When you see the joy you're bringing someone, it’s motivating. We’re tribal beings. We want to work as teams. If you don't like that, you shouldn’t run a team. Let someone else do it.

Carl Lewis: That's the solution for some owners: I'm not good at running the team, so I should bring in somebody who is.

Bill Flynn: Howard Schultz did that at Starbucks. He knew he was a jerk who made people mad. So, he stuck someone between him and everyone else. Smart guy.

Carl Lewis: One author talked about Mr. Inside and Mr. Outside. If you’re a sales guy and you start your own business, you're Mr. Outside. If you’re an accountant and you start your own business, you're Mr. Inside. But whichever one you are, don't try to be the other because you probably won't be good at it. Find somebody else.

Bill Flynn: Unless you hate the job.

Carl Lewis: True. When I worked for an accountant who forced himself to be a salesperson every day, I could see the angst he felt. He did the job, but it wasn't enjoyable. And that rubbed off on other people. 

Bill, I want to return to the cash issue.

I read up on Catalyst Growth Advisors. You have this phrase “three plus leadership.” What is that?

Bill Flynn: I only work with teams with three leaders or more on the leadership team. And being a leadership team doesn’t mean you report to the CEO. It's who the CEO wants around because they make the CEO better or challenge them. When you have two, typically, the leader wins because there's a power dynamic. And the other person is always in a one-down position. Having three changes the dynamic.

And you can gang up on the leader and say, “Let me support Carl on that, Mr. Leader. Here's why I think it's a good idea.” That can change the balance. I’ve never had a leadership team with fewer than five members, but three is my criteria. Because if the head of the company always wins, then it probably isn’t a healthy, thriving environment, and the things I'm teaching won’t be optimized.

Carl Lewis: Sounds like an opportunity for personal counseling.

Bill Flynn: I can hire someone to do that for me.

Carl Lewis: That requires an entirely different degree. That’s interesting. A friend used to say, “If all you have is Plan A, what will you do when Plan A goes down the toilet?” You need opinions about what you’ll do if Plan A doesn’t work. Three plus leadership makes perfect sense.

Bill Flynn: Exactly.

Carl Lewis: You said chasing revenue isn’t a great idea. But to make people happy, focus on cash. Why is cash king?

Bill Flynn: I don't know that cash will make them happy, but it increases the chances. Why? Because people want to be paid what they're worth. And if you're going to grow a business, if you want to have a lifestyle business, you need cash. We’ve learned that because of the three massive economic crises in the last 21 years: 9/11, 2008, and COVID.

People who didn't have enough cash to survive—unless they were lucky to get the PPP loan, which has never happened in my lifetime and probably will never happen again—went out of business. And even some who got access to money went out of business. You need enough cash to survive.

Cash is your primary financial growth metric. Why? Because it costs money to grow. And it costs money to grow in front of the growth. When I work with clients, I say, "Let's create a plan." And revenue is in the plan, and profit, but cash is the plan. We think if we do these things over the next two or three years, we’ll be as successful as we could be in that timeframe. We still probably have a lot longer to go.

But in this time frame, it's achievable. I said, “How much will that cost you? How many people should you hire? What software tools do you need? You have to buy a factory. Now, let's create an actual revenue and profit plan that drives the cash to pay for that. Because if you don't, then don't hire the people, don't bring on the factory, and don't use revenue like, ‘Oh, we did the revenue.’” You can do revenue and still come out with zero cash.

You give away things where it cost you so much money to support it. It's sucking up the profit. That's why cash is a primary financial growth metric. And I'm a 30-year sales guy saying this. I'm all about revenue. I got paid in revenue, but I should have been paid on gross margin.

Carl Lewis: I've heard that conversation often. You mentioned three events: 9/11, 2008, pandemic. My whole learning experience of starting a business and realizing I wasn't cut out for it concerned cash. Because just before 2000, before 9/11, I started a business without enough cash. 9/11 happened, and that was the death nail. We couldn’t keep up. People wouldn't pay their bills. Many dynamics go into a bad experience.

Then I called myself a one-time good learner because the second opportunity came around 2008. Instead of going through that again, somebody basically turned a company over to me said, "It's yours, just keep it going." I told them I couldn’t do that and arranged for Vision33 to acquire the company. I recognize it takes a lot of cash to survive a time like this.

When you work with somebody who had a great idea and got a business going but doesn’t have enough cash, what do you tell them to change to reposition themselves into a better cash spot?

Bill Flynn: Are we talking about a startup? Because to me, a startup isn’t a real business. It’s a temporary organization in search of a business model. If they find a business model, they’re probably a real company with some repeatability, scalability, etc. Startups and businesses are two different animals. We’re talking apples and France.

When I talk to founders, I say, “Don't spend any money. Spend time with who you think your customer is and ask them if they even care. Ask them if they have this problem. Ask them how they're solving this problem. Ask them how much it costs in time, resources, and money to solve this problem.”

Get all that good information, and then, when you understand the problem, ask how to make it happen. There's a good story about Airbnb. I think it was from Brian Chesky, one of the founders, or Joe Gebbia. Their first business wasn't Airbnb—it was seat cushions for sitting outside. Occasionally, they still get an order, and one of them packages and ships it. But they did Airbnb because they ran out of money with the cushion business. They were in San Francisco, they needed money, and there was a conference coming to town. All the hotels were sold out. They thought, “What if we just rented out an air mattress?” That's why it's called Airbnb—it was an air mattress in the middle of the living room.

And they said they’d do that, but they’d also take care of the customers and show them around the city, etc. Someone bought it for $80 a day. They made some money and realized they had an idea. They did it for other conferences, but it wasn't working well. Then they got into Idealab, and Idealab asked, "Where are your customers?"

"We're the ones who were actually using your product, etc." But most of them are in New York, and Idealab is in California. The Idealab guy said, "Fly to New York and talk to them." Brian was a Rhode Island School of Design graduate, so he had chops, creativity, and was a good photographer. He said, "I'm going to help you make your Airbnb look better."

He took the photographs and sat with each one. He asked how to use the app. He observed. And he did it with 30 people. When he went back, he said, "We got it all wrong. People aren't using it the way we think they are. Let's make these changes. I think it will make a difference." And it did. That's when they took off. So that's my advice to founders: Don't worry about cash initially. But don't run out of cash. Have enough to live, so you don't have to borrow from your parents. 

Then do things. Find the problem you're solving and how to solve it in a good way. Determine how much money you need to do that. How many people you need to code. Which systems you need to buy. If you're already an established business, you probably know how much things cost. Then figure out how much you need. I'm a fan of about a year.

You should have a year of cash—working capital—while you figure out how much it will cost to run your business. If you had zero sales, how much would it be? Have that in the bank. Work as hard as you can.

Carl Lewis: That's good advice, especially for startups. Because what's the percentage of startups that fail within 18 months?

Bill Flynn: It's all over the map, depending on what you consider failure. But if failure means not generating two to three times the original investment in some value or liquidation event, it’s close to 90%. Only 10% of startups do that kind of thing in a reasonable amount of time. And five to eight years is considered a reasonable amount of time. Most businesses struggle and suffer, unfortunately.

But the ones that survive often struggle regularly. That's huge stress on your life and family. It’s probably unhealthy. I'd rather die and then work for someone else and relax than be struggling for years and years and years.

Carl Lewis: I couldn’t sleep at night. When I decided my startup was dead because the only thing keeping it alive was my lifeblood, things got better almost immediately.

Bill Flynn: Exactly. Stress is created by the stories we tell ourselves.

Carl Lewis: That's good to remember.

Bill Flynn: You told yourself a different story, which was, “I don't have to do this. It isn’t working. I can sell it.” And everything probably improved in your body. Your shoulders dropped, you slept, you stopped gaining/losing weight, etc.

Carl Lewis: I wasn't positioned correctly to be a number one. The illustration I like to use is that in Star Trek, Captain Picard always had Will Riker. Number two is executive officer, right? And it dawned on me: That's the job I want. That's what I'm good at. I remember telling one guy I worked for that being a number two means you can go on vacation and know everything will be okay when you get back.

Bill Flynn: Exactly.

Carl Lewis: A lot of people are trying to do things they're not cut out for. That's what I suggest to friends who say, "Maybe I should start my own business." I say, "Think about that again. It's not for everybody."

Bill Flynn: Are you familiar with the COO of Alliance, Carl?

Carl Lewis: I’ve heard of it, yes.

Bill Flynn: Guys get together and help each other. Look into Cameron Herold. He runs it. It's a great idea because there are many CEO organizations but very few number two organizations. Those people are super important. The visionary and the integrator together make companies successful. You need that inherent tension of reaching up and going crazy but also bringing people back down.

Carl Lewis: What made it work for me—when I finally went to work for somebody else—was the bond of trust we built. It was so powerful, and it made work fun along the way. I've often shared that with my friends and customers who are small and midsized business owners. I've asked them, "Do you have somebody like that, that you go to work every day and the first thing you do is check in with them?"

Bill Flynn: That's great.

Carl Lewis: That's what it's all about. Well, Bill, thanks so much. This has been great. I enjoyed the conversation, and I know my listeners will enjoy the stories we discussed today.

Bill Flynn: My pleasure.

Carl Lewis: And to the audience, we'll see you again. Until we do, stay connected.

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