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Apr 30
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How leaders can learn, lead and grow

By Blogs, Business Leaders

I am a big fan of Warren Buffet and Bill Gates. One thing these iconic leaders have in common is that they are veracious readers (Bill Gates reads about 50 books a year). Although I cannot even begin to compare myself to them, I do have the lifelong commitment to learn and grow intellectually while sharing my insights/knowledge with clients. At the end of 2022, I began to feel just a little stale. Upon thinking about it, I was not reading and learning as much as I did pre-pandemic. That needed to change this year. So this year I have masterminded, listened to Podcasts, attended some amazing online masterclasses and, yes, read one business book every 2 weeks.

As a leader, your company deserves the smartest, most knowledgeable individuals to guide the company successfully. The speed you grow as a company will ultimately be determined by the speed of growth of its leaders. I am sure a lot of you are motivated to learn, but if your motivation has waned just a bit, I encourage you to set some goals and step it back up.

How can you learn more in 2023?

Here are some sources/ideas to consider based on my experience and research:

  1. Peers in the industry
  2. CEO or leadership forums (such as Peer to Peer networks)
  3. Pursuing an advanced degree
  4. Online classes
  5. Webinars in and outside of your industry
  6. Create a reading list, and commit to a book a month
  7. Find a mentor
  8. Hire a Professional
  9. Read newspapers, journals and white papers

Buffet’s infamous reading habit is what he attributes as the foundational tool to improve knowledge. He is a voracious reader who spends 80 percent of his own day reading, and he suggests that anyone hoping to achieve similar success should read 500 pages per day.

One point Warren Buffet makes is that you have to allow time to reflect and think about what you are learning. Information is one thing; turning that information into knowledge that you can act on and leverage is another.

There are many other activities you can engage in to increase your knowledge, and these are just a few to get you thinking.

Dec 03
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3 Ways to Create a Valuable Culture Inside Your Business

By Blogs, Business Leaders, Business Owners

Many factors drive your company’s value, but perhaps the most important is how your business would perform without you. 

To get your company to flourish when you’re not around, you need owner-like effort from your team. Inspiring owner-like effort comes from cultivating a vibrant culture inside your business.

Here are three ways to get your employees to care as much as you do:  

1. Cast Your Employees as Stars in a “David vs. Goliath” Movie

In 2008 Gavin Hammar started Sendible, a platform that allows companies to manage all their social media accounts from one place.

Sendible grew steadily until 2016, when a large competitor entered the space, causing it to hit a sales plateau. Hammar gathered his employees and explained the challenge they were facing. Rather than sugar coat the problem, Hammar encouraged his team to think of themselves as underdogs in an us-against-the-world battle.

Hammar set out to position his company as smaller and started a podcast, shared photos of his employees online, answered customer questions via asynchronous video, and sent personalized LinkedIn messages to every new customer. 

With an enemy to hate, Hammar’s employees followed the boss’s lead and gave extra effort to humanize themselves and the company.

Sendible started to grow again. By 2021 the company was thriving, which is when Hammar accepted a lucrative acquisition offer from ASG.

2. Provide Perks Others Can’t

Another way to create a thriving culture is to offer perks your competitors can’t.

Natalie and Chris Nagele are the life and business partners behind the software as a service (SaaS) company Postmark. Unlike most hard-driving software executives, the Nageles were committed to creating a great place to work. Rather than take on outside investment and the corresponding pressures of demanding investors, the Nageles decided to self-fund their business.

Obsessed with helping her employees do more meaningful work, Natalie began researching ways to inspire her staff. She came across data from the Henley Business School suggesting implementing a four-day workweek created a healthier workplace culture. 

Inspired by Natalie’s findings, the Nageles considered implementing a four-day workweek. They didn’t need the permission of their board or outside investors, because the couple owned the company outright. After a short discussion, the couple decided to try it.

Transitioning to a three-day weekend created a culture in which their employees enjoyed working, resulting in consistent growth for Postmark until 2022, when the Nageles sold the company in a life-changing exit.

3. Gamify Your Business

Another way to inspire your employees to give owner-like effort is to gamify your business. 

Josh Davis is the founder of the freight brokering company Speedee Transport. Brokering freight is all about gross margin—the difference between what you charge the customer and how much it costs to hire a driver to move the stuff.

Rather than simply telling his employees to focus on gross margin, Davis made a game of it. He created quoting software with a virtual gross margin scoreboard for his employees to see. The software gave each employee a very public, objective, and transparent scoreboard they could follow daily to know whether they were winning or losing that day.

Davis then tied his employees’ compensation to gross margin, which created a healthy competitive culture within the company.  

After gamifying his business, the company saw tremendous growth. Within two years, Speedee Transport grew from two to forty-five employees, which caught the attention of an acquirer, who offered to acquire Speedee Transport for a truckload in 2019.

In Review

One of the secrets to building a valuable company is to get your employees to work as hard as you do. The owner-like effort comes from making your people feel like part of a shared mission and giving them a working environment that brings out the best in them.

Nov 07
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How to Get Your Customers to Pay for New Ideas

By Blogs, Business Owners

There is never enough money to invest in developing products when you’re running a self-funded business. When you’re running your company out of cash flow, most of your resources go into selling your existing products and services, leaving little left over to fund your new product ideas.

You could keep plugging away with your existing product or service lineup, but you will leave yourself exposed to competitors that dream up a better offering. The other option is to develop unique new offerings for customers that ask you to customize your solution, but that can eliminate any scale in your business as you develop a unique thing for every opportunity.

The other option is to offer to develop a custom product for one client with the understanding that you will retain the rights to the intellectual property (IP) associated with developing their unique solution.

The most famous example of getting your customer to fund your new product development comes from Microsoft. As legend has it, co-founder Bill Gates negotiated a deal with IBM that paid Microsoft $430,000 to develop the DOS programming language, which IBM was given a license to use. However, Gates retained ownership over the code, which allowed him to sell it under the MS-DOS brand.

How Brian Ferrilla Got a New Product and a Premium Valuation

In a more recent example, Brian Ferrilla ripped a page out of Bill Gates’s playbook when he started Resort Advantage to help casinos adhere to new anti-money-laundering laws. Criminals were laundering money through casinos, and Ferrilla’s software helped casinos spot the bad guys.

Ferrilla started by selling a simple version of his product to small casinos and eventually got a call from MGM, the granddaddy of casino operators. MGM needed extensive customizations to Ferrilla’s product, but instead of building a custom solution that MGM would own, Ferrilla offered to waive the customization charges in return for retention of the ownership of the product.

Ferrilla reasoned that since MGM was one of the biggest players in the gaming industry, whatever levels of security and features they wanted, other operators would also value.

MGM got their custom solution, and Ferrilla retained the rights to an underlying product that the entire gaming industry valued. In the end, Ferrilla was glad he kept the rights to his IP when his $3 million business, with just 15 employees, was acquired for more than $10 million.

Had he slipped into the trap of making custom software for each of his customers, Ferrilla’s business would have likely been worth less than half that as custom software development shops offering a unique solution for each customer usually trade at around one times annual revenue.

The next time a customer wants you to develop something just for them, consider agreeing provided you maintain ownership of the IP behind your work.

Do you want to improve the value of your business?

Get in touch to discuss our proven methodology for maximizing the value of your business.

Oct 19
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TAM vs. Target

By Blogs

As you enter the fourth quarter of the year, you may be starting to think about your marketing plans for 2023. Terms like Total Addressable Market (TAM) and Target Market may surface in your planning, and you could be tempted to use them interchangeably.

However, your TAM and your target market are related but slightly different. Treating them as synonyms may be a mistake.

First, let’s understand the difference between the two terms. Your TAM is an estimate of the total size of the market for your product or service over the long term. For example, if you sell left-handed spatulas, your TAM would be anyone who is left-handed.

Your target market is the person or company you plan to focus on in the short to medium term.  Using the left-handed spatula example, you may decide to launch your utensil to restaurants, so you decide to target professional chefs who happen to be left-handed – a subsegment within your TAM.

The trick to writing an effective marketing plan is to pick a target market within your TAM that is large enough to meet your medium-term sales goals (i.e. the next year or two), but not so large that your messaging will become diluted.
How Avail Confused its TAM with their Target Market 

In 2012, Ryan Coon started Avail, a software application designed to help landlords manage and communicate with their tenants more effectively.

Avail defined its TAM as landlords in the United States and Coon started marketing to all of them. Large commercial landlords have different requirements than small real estate investors, but Coon was treating them all the same. By 2016, the company had grown to $1 million in revenue, but Avail was experiencing churn, causing their growth to plateau.

Determined to get the company back on a growth track, Coon transformed his strategy. He niched down to his primary target market. A sub-segment of Avail’s TAM they defined as “DIY landlords managing less than ten units”.

Choosing a segment of their TAM helped Coon turn the company around. Narrowing their focus allowed the product team to simplify their features for amateur landlords. With a purpose-built product for smaller real estate investors, retention improved. The tighter definition of their market also led to better messaging that resonated with their target leading to improved response rates.

Between 2016 and 2020, Avail’s revenue grew from $1 million to $7 million. That’s when their expansion caught the attention of Realtor.com, which acquired Avail for around five times revenue.
Why Your TAM is Still Important 

You may be wondering why your TAM still matters if the secret to a better market is narrowing your target to a segment within it. However, your TAM remains important as you talk to investors or potential acquirers. Acquirers and investors place a premium on growth, so they are going to want to understand the total size of the market that is available for your product, even though you may have no intention of targeting them in the short to medium term.

Your TAM is important to the long-term value of your company, but tightening your target market in the short term may be the key to meeting your goals for the coming year.

Sep 13
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Research from 23,158 companies

By Blogs, Business Owners

In a study of 23,158 companies, we found that 40% of business owners are Rainmakers, the primary revenue drivers for their company. Despite experiencing early success, our research suggests a plateau is on the horizon. Their revenue stagnates, and business value plateaus, forcing them to confront the Rainmaker’s Dilemma.

The solution? Help them evolve into an Architect.
In The Rainmaker’s Dilemma, you will learn:
• The defining characteristics of a Rainmaker and how to quickly diagnose your clients.
• The one common problem business owners will face, and how to best prepare your clients.
• The negative impact Rainmakers have on receiving an acquisition offer.
• 9 strategies you can propose to help owners transition from a Rainmaker to an Architect.

Download now

Aug 31
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Systematize Your Business (Without Making it Boring)

By Blogs, Business Owners

Have you ever noticed that you get some of your best ideas in the shower? Every morning, you’re stuck there for a few minutes doing something you’ve done since you were a child. Your mind knows it has a couple of minutes to think. 

Employees get the same mental holiday when you specialize and give them systems for routine tasks.

How Ethos3 Unleashes the Creativity of Their Team

Ethos3 is a Nashville-based design company specializing in creating presentation designs. Doing just one thing allows them to systematize their processes much more efficiently than most other design firms. They have a standardized business development method. It’s a templated proposal that includes the number of slides you’ll get, the number of revisions, and the pricing formula. For project management, they use teamwork.com. Again, there’s a set of templates for each stage of the development process, and the project delivery approach is the same every time. It’s a recipe – just add water.

When you give people a procedure to follow for the boring stuff, they can stop worrying about what to do and pour their creative talent into how to do it. Ethos3 has finished second in the World’s Best Presentation Contest, and Apple pioneer Guy Kawasaki is among its fans.

As entrepreneurs, it’s easy to assume that everyone likes the adventure of bushwhacking their way through life, not knowing what’s around the next bend. In fact, a lot of your employees would prefer some consistency and structure.

Systems are not the enemy of creativity. And author and consultant Kathy Kolbe has developed a personality test that proves it. The so-called Kolbe Index ranks users on four personality attributes.

Fact Finder describes the extent to which someone likes gathering data before making decisions.

Follow Through measures how much someone likes systems, structure, and routine.

Quick Start quantifies one’s inclination to start new things.

Implementer measures one’s knack for building stuff.

Kolbe’s test shows that we all have a little bit of each attribute, yet we all also have a dominant operating style. Most entrepreneurs score high on “quick start” and low on “follow through.” It’s a classic combination. Most of us love starting things but quickly tire of the details.

Most of your employees will score higher than you on follow-through, which means they need more structure to thrive. They may also score higher than you on fact finder, suggesting they need more data than you would before making a decision.

Specializing, and giving your team standard operating procedures, gives your employees the mental breathing room to be creative and the structure they need to thrive

Aug 01
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The 2 Best Ways to Make Your Company Special

By Blogs

Specializing in one product or service allows you to focus on delivering that thing better than everyone else. It enables you to hire (or train) specialists in your field, improving the quality of your work, which leads to happier customers. And satisfied customers buy again and refer their friends.

That’s why specialists often grow faster even while they are spending less on marketing, leading to better profit margins and, ultimately, a more valuable company. Specializing in a specific product or service has tremendous benefits, but what if your customers expect you to deliver a range of offerings?

That’s when the second form of specialization can help: focusing on a specific industry.

The Benefits of Becoming an Industry Expert 

Specializing in serving a specific industry confers several benefits. First, offering your products or services to one industry allows you to learn the language spoken in that sector. Every industry and profession has a unique language, and being able to speak the jargon can benefit your company. Knowing your industry’s lingo can indirectly communicate to your customers that you are experienced, knowledgeable, and able to navigate the space.  

Furthermore, focusing on one sector ensures you stay current with industry trends, which will result in being able to identify new opportunities for your customers sooner than a competitor who serves multiple industries.   

Most importantly, specializing in one industry allows your employees to become experts in a sector. You may be an expert in an industry, but chances are, they’re not (particularly when you first hire them). Focusing on a sector accelerates how quickly your staff can become fluent in your industry’s lexicon, which allows you to delegate customer relationship management faster and more successfully.

Specializing in an Industry Led to a 20x Increase in Revenue 

For example, look at the story of UK-based founder Raman Sehgal. Sehgal started a small marketing agency called ramarketing in 2009. By 2015 the business had grown to the Pound Sterling equivalent to around $500,000 USD in revenue, but the company was losing customers as fast as they were winning new ones.  

Frustrated with his company’s lack of progress, Sehgal decided to do a complete analysis of his business. He found that ramarketing’s most valuable customers (low maintenance, sticky, high gross margin, etc.) were in the pharmaceutical industry. Sehgal decided to pivot his business to solely serve clients in the pharmaceutical supply chain. 

Beginning to serve one industry created a sequence of positive events for ramarketing. 

Becoming an industry specialist allowed ramarketing to stay up to date with industry trends, learn the lingo, and ultimately improve the quality of their work. An increase in customer satisfaction led to more referrals and a strong reputation in the sector.  

His employees began to understand the intricacies of the industry. In the pharmaceutical space, there are many rules and laws to adhere to. Understanding the regulations allowed Sehgal’s employees to better serve their customers.   

Subsequently, the business boomed.  

The Proof Is in the Pudding

Sehgal’s once stagnant marketing agency grew from $500,000 in turnover in 2015 to over $10 million by 2022, which is when Sehgal accepted an acquisition offer from NorthEdge Capital of more than 10x EBITDA. 

Sehgal’s bold decision to specialize in the pharmaceutical industry led to a 20x increase in revenue and, ultimately, a lucrative exit.

Narrowing your product or service line is the most common way to increase your company’s value but specializing in one industry carries many of the same benefits.

Jun 21
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20,000 Scaleups program powers nearly $1B in exits in first cohort

By Business Leaders

With 11,000 startups launched around the world every hour, many cities have a robust startup ecosystem. What they lack is the infrastructure to turn those startups into scaleups.

Enter 20,000 Scaleups. Launched in 2018 as a successful pilot in London and Sydney, the program is expanding to 22 cities in 2022 and eventually 150 cities. The focus is supporting local, middle market companies that have a path to $100 million in revenue or valuation through a proven program that has helped over 80,000 firms scale up worldwide.

In launching the program, we made three promises to the cities: 1. We would help one company in each city reach a $1B valuation. 2. We would help companies in each city exit for a combined total of over $1B. 3. We would help the rest scale at a 20% or greater rate for the next three to five years, brining $1B in growth to the local economy. We call these promises the “triple billion.”

Four companies from the first cohort of 20,000 Scaleups have already seen an exit, with a combined exit value near $920 million:

  • Exponea, a leading customer experience and data platform, was acquired in 2021 by Bloomreach, a leader in the ecommerce experience, and received a $150 million investment by Sixth Street Growth.
  • LegalX, which was the UK division of the Australian tech firm GlobalX, was acquired by Dye & Durham for AUD 170 million in 2021.
  • Carousel Logistics, after merging with another European logistics carrier, DANX, was acquired by the private equity firm Axcel in March 2022.
  • Point A Hotels, with 1,520 rooms across 10 hotels, was acquired by Tristan Fund and Queensway, for £420m in April 2022

Three of the CEOs shared feedback on 20,000 Startups in this video.

The not-so-secret sauce that’s allowing these companies to achieve results like this is the Scaling Up platform, detailed in my book Scaling Up: Rockefeller Habits 2.0. Based on the Birthing of Giants program I helped to launch at MIT, this ongoing program draws on decades of hands-on experience, the latest cutting edge managing tools and individual one-on-one support to equip high potential companies with the skills, instruments and entrepreneurial passion to grow as rapidly as possible. The program was designed so the whole executive team can come together, meet and support each other on a quarterly basis without having to get on airplanes or book any hotels.

These exits are just the beginning. 20,000 Startups is focused on supporting the top 150 cities around the globe, helping them to build vibrant economies by delivering on the triple billion promises. The next London cohort of the 20,000 Scaleups program launches on June 8 and 9.

The response from the governments involved has been overwhelmingly positive. The Westminster City Council and itsBusiness Unit team, for instance, have been supporting the 20,000 Scaleups program from its initial pilot launch in London in 2018. Westminster is home to the largest number of businesses in the United Kingdom, accommodating approximately 58,000 businesses.

“Our ambition is for the City of Westminster to be the best place in the UK to locate, start or grow a business and a place where enterprise makes a major contribution to the rich vibrancy of our neighborhoods and communities,” says Rachel Thevanesan, business support program manager. “Working with the Scaling Up coaches’ team has helped us understand the benefits of supporting a vibrant Scaling Up ecosystem across the city and the 20,000 Scaleups program is a great initiative to provide a fast track growth to those businesses that have the ability to significantly increase the valuation of their organizations but more importantly create sustainable employment opportunities in dynamic growth sectors.”

Since the initiative began, Westminster has already seen the number of Scaleups increase across the city from 1,400 to over 2,000 companies. More than 20 companies have successfully graduated in London and on average, they have achieved a 31% revenue increase and have created more than 900 jobs.

The city has also delivered a successful Scale Up Summit with the Scaling Up coaching team and has just launched a Start Up to ScaleUp program focused on helping 40 more organizations successfully transition to their next stage of growth.

“With one organization successfully exiting in 2019 with a valuation of over $750m, and a further two organizations achieving successful exits with valuations of $150m and $110m, this program makes a significant impact to the health and prosperity of the City,” says Thevanesan.

Jun 15
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What do you do when all of your sales channels are suddenly frozen?

By Blogs, Business Owners

Wayne Spray’s nearly 25-year-old company, Frozen Drinks Africa, was scaling up rapidly when Covid-19 hit. Suddenly, Cape Town, South Africa, where it is based, went into a hard lockdown. Theme parks, resorts and the seven other major sales channels where the company installed its machines were shuttered, and residents were only allowed to leave their homes for essential errands. The then-45-person company, founded in 1997 in Spray’s father’s garage, suddenly had nowhere to sell its Ice Blasts and Eskimo Joes.

Click to read how this entrepreneur got creative…

Feb 04
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How One Counterintuitive Strategy Led to a $380 Million Payday

By Business Owners

When David Perry started his video game company, he filled a dartboard in his office with the names of companies he thought would want to buy his company, Gaikai, one day.

Why would a startup business with no revenue or employees be thinking about potential acquirers so early? For Perry, it comes down to something he refers to as “down-the-track thinking.”

Perry was recently interviewed about Sony’s $380 million acquisition of Gaikai, and he described his philosophy by using a moving train as an analogy. He described a train full of people representing an industry. Most people are comfortably inside the train watching the countryside go by. There are some people scrambling behind the train, hoping to jump on. Then there are a select few people who are obsessing over where the train is going and are constantly thinking about the upcoming stops along their journey.

Perry described himself as one of the people thinking about where the train is going next, so it only made sense to him to have a list of businesses he could sell to.

Sony was in the bullseye of Perry’s dartboard of companies to sell to so when his partner suggested they name their company Gaikai, a Japanese word that roughly translates to “open sea”, Perry agreed. The word gaikai is hard for the average English speaker to pronounce, but Perry knew the name would be irresistible to Sony.

Perry and his partners went further and named other parts of their product line with Japanese words and designed the company for the global gaming market, not just American customers, as was the habit of videogame makers at the time.

Years later, when Perry was ready to sell Gaikai, he approached all the big video game makers about buying his company, and Sony was the most enthusiastic. They were thrilled to see the extent to which Perry and his partners had gone to make Gaikai fit Sony’s culture.

Visualizing a short list of potential acquirers when you make key decisions is a good way to vet your next move. Imagining how your potential acquirers would react to hear how you are thinking of evolving your company can inspire a more strategic lens through which to make big bets. Whether you are looking to sell soon or are years away from selling, the process of developing a short list of potential acquirers tomorrow will help you make better decisions today.