What It Really Takes To Build A Resilient Business

[00:00:00] Nick Friedman: Success in business or sales or whatever the case may be, it's a combination of, information, motivation and then removing the interference.

[00:00:22] Lee Brumbaugh: Thank you everyone for joining us. I am Lee Brumbaugh, CEO of Sales Xceleration. This is another episode of Sales Against The Odds. Very excited to have, uh, someone I've worked with in the past. Nick Friedman, co-founder of College H.U.N.K.S., which he's got if you're watching, he's got his shirt on today. Always Be Branding, co-founder of Trash Butler.

[00:00:45] Lee Brumbaugh: And for those of you that are Shark Tank fans, you can go back and, I did do this, Nick. You can go back and watch the very first episode of Shark Tank and see Nick and Omar giving the, the vision and the starting areas of College H.U.N.K.S.. Thank you so much for joining us today, Nick.

[00:00:58] Nick Friedman: Oh, thanks for having me, Lee.

[00:01:00] Lee Brumbaugh: Nick, a lot of what we wanna talk about today and and really dig in is around the growth, especially with where College H.U.N.K.S. started, where it is today, nationally recognized.

[00:01:10] Lee Brumbaugh: So let's start there. I know the story myself, but talk a little bit about with, on the College H.U.N.K.S. side, what was the biggest challenge you were, you were up against at the onset, and, and how did you overcome it? Through some of that determination that I know is innately in you.

[00:01:25] Nick Friedman: Yeah, brute force, uh, definitely comes to mind as I think about the 20 year overnight success, uh, journey that we've been on. But it started with a beat up cargo van. Uh, I was in college, my buddy and I from high school. Uh, we're home for summer vacation looking for what we were gonna do that summer. And his mom had a beat up cargo van. She let us borrow it. Uh, she looked us up and down and said, you guys could be College H.U.N.K.S. who haul junk. Most college kids would stop when they graduate from college. And we did briefly.

[00:01:51] Nick Friedman: We got regular jobs and then decided it was pretty unfulfilling in the, in the real world and said, you know what? Why don't we circle back to that business we did in the summer and, and try to make it a year round venture. And I do always tell the story. We went and we bought a one 800 number to try to make ourselves look like a big company, even though we just had the one truck and it was still routed to our cell phone.

[00:02:09] Nick Friedman: And so, you know, I'd be in the driver's seat and people would call the 800 number to complain about driving and I'd answer the phone saying, oh yeah, we'll, you know, fire those guys when they get back to the office, you know, thanks for. Sure for reporting the erratic driving to us. But, uh, we learned about franchising as our growth engine.

[00:02:24] Nick Friedman: And uh, we decided to take that path, which carried with it a lot of a steep learning curve. And we had to navigate the, uh, economic downturn of 2008, 2009 COVID of 2020. You know, now there's kind of some headwinds in the housing market that affects our industry. And, you know, you mentioned Trash Butler.

[00:02:41] Nick Friedman: We launched another business along the way. There was never this one sort of momentous shift that happened. It was literally like one step in front of the other, grinding it out, getting great people in the organization to help us, you know, execute on, on the vision and the values that we kind of set in place.

[00:02:58] Nick Friedman: And, uh, you know, here we are now 200 franchises across the country. Uh, roughly 300 million of annual sales. our second business Trash Butler that you helped us and have continued to help us grow, uh, is gonna do about 40 million in revenue this year. So it's been a 20 year overnight Success is, is the way I like to describe it.

[00:03:16] Lee Brumbaugh: Great story. I, I love the fact that the mom involved in really setting your value proposition there. I mean, it's just great. I mean, it's sheer determination and will of, amazing story of how you grew. So.

[00:03:25] Nick Friedman: We’ll leave it to a mom to, uh, kind of give you the confidence to call yourself a college hunk and, and use that as your company name. Of course, the, uh, initial asset that we needed, the, the beat up cargo van to go out and actually fulfill the work, uh, that we said we were gonna be able to, uh, to do for people.

[00:03:43] Lee Brumbaugh: It tells a lot. And, you know, the next year I want to focus on is, and we've already hit this a little bit, is Resiliency, right? So. At the onset, you're doing a lot of the sales and you're, you know, it's through resiliency, it's through grit, which is, I know a word you, you like to use, but talk to me about at the onset, how did that sales, that determination, how did that link together from just getting out and selling your brand and your vision for the company?

[00:04:04] Lee Brumbaugh: I.

[00:04:05] Nick Friedman: I learned very early on that we had to be. Self-promoters. There was sort of like a, maybe a stigma around this notion of sales or, you know, you're, trying to do something to somebody. But I heard a, a, a talk very early on in our business and they said if you have a business, a product, or a service, if you think of in the context of sales, you may feel like you're trying to do something to somebody.

[00:04:27] Nick Friedman: You're selling to somebody. But if you have something that helps someone, uh, you're actually helping somebody and, and any product or service. of value is there to provide a solution to somebody's issue or somebody's problem. And so when I started looking at it through that lens, I, I realized, okay, people need to move and people have junk that they wanna get rid of so far be it for me not to be the one to tell them how we can help them get rid of that stressor of, of moving in junk removal. Uh, so I kind of took it upon myself to be that, Pounding the pavement, knocking on real estate agents' doors, putting out flyers to say, Hey, hey, we're here and we can help you. I think our name brand and our story of how we started in college kind of helped lend itself to a conversation. Uh, people were like, well, the College H.U.N.K.S., you know, what's that about? Or, you know. This bright orange and green truck, or, oh, you started in college. Tell me more about that. So it allowed us to have a conversation with people where we could then transition it into our kind of elevator pitch of what we could offer them. and then also I think the media gave us some attention early on because of that story as well. But, uh, to your point, the early lesson I learned is, especially in the early days of your business, if you're not gonna promote your business, who will? And if you're not gonna promote your solution, who will? And yes, eventually you'll get, whether it's investors or team members or clients, to appreciate what you're doing in creating and, and the value you're building. And they'll help evangelize it for you as well through reviews, referrals. Kind of reputation or even repeat business. And that's how that sort of flywheel slowly, slowly grows.

[00:05:59] Nick Friedman: And, you know, eventually we got to be able to hire people and try to teach them sort of that, brand champion, uh, mindset. And we actually made always branding become one of our core values because the thought is, you know, you've always gotta be out representing as a walking, talking billboard or walking, talking solution, to somebody's issue that you might be able to solve.

[00:06:20] Lee Brumbaugh: You hit it really well As you as the founder, if you can't sell the solution, you know, you can try and add on salespeople all if you want, but if you don't have a message that solves for your customer's problems and you as the founder, can't have traction there.

[00:06:34] Lee Brumbaugh: You're not gonna make it right. So I love the fact that you did it, you walked it, and you were doing what you preached.

[00:06:39] Nick Friedman: Yeah. And, and I think, you know, sales comes very naturally to some people. I don't think I was a, naturally tactful salesperson. That's why I kind of used the word brute force. Like I was kind of more of like a, sheer will grit, determination. Let's, let's try to get as many reps as we can. And even if I'm not a great closer, if I get enough. Reps at it, I'll get better at closing and I'll have more opportunities to get the business. So that's kind of the way I approached it. Of course, I did start reading books, uh, on sales tactics and, you know, psychology of influence, and, and how to, you know, show, uh, interest and, How to Win Friends and Influence People by Dale Carnegie. You know, different things that talk about givers gain and, and connector's mindset and things of that nature.

[00:07:22] Nick Friedman: That helped me figure out ways to add value or be more, interested in, in discovering what people's needs might be, and then be able to tactfully, you know, offer the solution and overcome objections and all the really, I would say, tactical elements of sales. But at the beginning, it, it really just boiled down to, I would say, just taking the shot attempts, like getting out there and, and making the effort.

[00:07:42] Nick Friedman: Even if I was throwing up, you know, bricks using the basketball analogy at the, at the beginning.

[00:07:47] Lee Brumbaugh: Activity breeds good things. I'm with you a hundred percent. I wanna go back to point that you made around branding. 'cause again, we're seeing it firsthand for those watching I've seen it with, with how you've really instilled the brand to your employees. But we've got a lot of companies that'll be joining in, in that SMB space and branding is, is a tough area, right?

[00:08:06] Lee Brumbaugh: It's a crowded area. There's a lot of noise out there. Talk to me about what's really important for creating that brand, doing it consistently. And then lastly, how do you, how do you get it to resonate with all of your employees? So, well, I've seen you firsthand do that. Can you share a little bit about that branding and how it's trickled down to the whole company?

[00:08:24] Nick Friedman: Yeah, I think it's iterative and it, and it takes intentionality and, and repetition and reinforcement. We knew we had a catchy name, college CH.U.N.K.S. hauling junk. It's memorable. It's a long tongue twist or mouthful. So it kind of flies in the face of maybe traditional branding best practices. Uh, but we thought of it as kind of a pattern interrupt, not what people typically associated with movers or haulers. And then when we were searching for colors, we were like, well, we wanna stand out. Uh, we actually looked at college sports teams to try to come up with the, the color scheme. my business partner Omar, had gone to the University of Miami and for a smaller.

[00:08:57] Nick Friedman: Private university, it's a pretty well known brand. And so we thought, okay, well orange and green stands out. Uh, so let's make that our company colors. And then I think, uh, just sort of. Recognizing that branding is more than just wearing the shirt or passing out the business card or putting a sign out and, and or a website and saying, this is what we do.

[00:09:17] Nick Friedman: Or, you know, getting a wrapped truck in our, in our case. Uh, but it's kind of like how you conduct yourselves at all times. We use the analogy in our company that you're, again, sort of on stage, I say like, imagine Oprah or 60 Minutes is following around and they're going to, you know. Show how we behave throughout the day. That is our brand. it's the behavior that we exhibit that then people have a perception that they make about their experience with it. And so brand touches now, you know, it's, it's online, it's on social media, it's on the phone call that you make if you're calling into the, the customer service or to the sales center. And so all of those things to me are what help build the brand or develop the brand. And it's, and it's evolved over time. I'll give an example. You know, in the early years of the business, people kept asking us, you know, well, how do you hire College H.U.N.K.S.? You know, how do you determine whether somebody's a hunk or not?

[00:10:06] Nick Friedman: And we kind of actually got a little bit sick of answering that question. So we were like. We need a better answer for that. So I give it to Omar. He came up with this acronym for H.U.N.K.S., which stands for Honest, uniformed, nice, knowledgeable Service. So we basically redefined the term H.U.N.K.S., to be honest, uniform, nice, knowledgeable service.

[00:10:23] Nick Friedman: And that has actually become our brand promise. So now when we train our employees, we, we explain like, hey. When they hire, maybe if they don't know our business, uh, a customer doesn't know our business, they might be expecting, you know, a big brony buff dude showing up. And that may or may not be the case, but we, we wanna instill to our clients is they're going to get a trusted, polished, friendly individual that knows how to do the work.

[00:10:45] Nick Friedman: And then that has sort of defined, I would say, what our brand. Represents and what people should expect. So it's, it's sort of the emotional feeling that people have when they interact with a business. And so for anybody getting started, or a small business owner, whatever the case may be, you know, your logo may evolve, taglines may evolve and things of that nature.

[00:11:04] Nick Friedman: But the brand is sort of the impression that you leave when people see, touch, interact with what it is that you do.

[00:11:11] Lee Brumbaugh: Obviously you've grown, you've got a significant amount of employees. We, we know you're in two industries, growing other companies in the service area. How do you get that frontline person who's interacting with the customer every day to buy into their selling, they're creating brand awareness, like they are part of the solution here.

[00:11:30] Lee Brumbaugh: How do you, how do you make sure that quality stays, stays so consistent? 'cause you've done it so well at College H.U.N.K.S.

[00:11:35] Nick Friedman: Yes. again, I would say starts at leadership and it starts at communication, and then it starts with the way we, enroll people into the organization when they join the company. It actually starts before that. It starts during the interview process. We try to set expectations with our job postings and our interview process. We ask about our core values, how they resonate with the, uh, person that we're interviewing, both as a franchise candidate as well as a, uh, potential employee. And then, and we actually just unrolled kind of our official College H.U.N.K.S. way playbook. Uh, it's almost like a 2.0 version that we rolled out to make sure that everybody's training their frontline employees from the same playbook, uh, when somebody joins the organization.

[00:12:16] Nick Friedman: 'Cause as a franchise, to your point, consistency is critical. And, and it's not like a food. Business where people are coming into our stores and getting the same assembly line of, of sandwiches made. It's, we're going into people's homes, we're sending team members out into the community. And so I think it's just reinforcement. I heard it said like the rule of seven in marketing. If somebody as a potential customer, they need to see something at least seven times before it even becomes aware of it. And the same holds true with your staff. Your staff needs to hear and see and have something reinforced. At least seven times before it's something that they, are cognitive of or conscious of.

[00:12:54] Nick Friedman: And, and then eventually it becomes second nature for them. I took a page out of Nick Saban, uh, playbook. He's the head Co was the former head coach of Alabama football. And I remember I saw an interview with him and they asked him a similar question. They were like, well, you know, you're graduating guys to the NFL or people are transferring, you know, how do you keep that, that Alabama football, so consistent as a championship team.

[00:13:15] Nick Friedman: And he said, you know, the names on the back of the jerseys changed. But the way we've established things here. Alabama football is an identity that people are coming into, and so the new people that are coming in, our existing players are saying, this is how we do things here. So there's sort of a set of standards and, and principles that everybody lives by, and I don't know if it was him or somebody else where I heard it say on a good team, the coaches are holding the players accountable, but on a championship team, the players are holding each other accountable.

[00:13:41] Nick Friedman: So that's, it's aspirational. It doesn't happen overnight. Uh, we've had plenty of examples of. You know, people that join the organization and they, they kind of roll their eyes when they start hearing about things like core values and brand promise and or their eyes glaze over and it doesn't really connect.

[00:13:55] Nick Friedman: And eventually they either after hearing it seven times or more, start to understand what all that means and what that can do for their role as a employee or what it can do for the customer and the community. Or maybe they don't align with it and we help them, you know, off to a different organization where, where maybe they'll be a better fit. 

[00:14:41] Lee Brumbaugh: I love playbooks. Right. And not only from a service side, 'cause you know, I mean we did a sales playbook at Trash Butler for College H.U.N.K.S.. And the, the thing that really stands out, it's been the biggest. Probably one of the growth areas for Sales Xceleration are advisors delivering the playbook because it's exactly what you said, it's the consistency.

[00:14:58] Lee Brumbaugh: If I go stay at Four Seasons, I know what to expect. We do it from services to know what you expect when, like you said, you come in the home and you leave the home. But even from a sales process, you know, when we start, what is the customer journey? How does it begin? Who gets involved along that customer journey?

[00:15:14] Lee Brumbaugh: And the other thing I think is so critical is you gotta make the playbook. interactive and engaging. If it's static, it collects dust. So how do you, how do you continue to refine your process and your playbook to make sure you're always pushing the envelope to deliver around customer service and expectations?

[00:15:30] Nick Friedman: I guess continuous improvement is just sort of the mindset there. And, uh, you know, we did this, like I said, this big rollout of our college HS way. Playbook 2.0, but we're already collecting feedback from the

[00:15:41] Nick Friedman: field, from the franchise owners, from the managers, from the team members who are going through the training.

[00:15:45] Nick Friedman: You know, what's working, what's not working. we're sort of in this world now where everything's evolving to, of course, already digital, but AI based training and, and interactive, uh, you know, short, short little training modules versus, you know, the old fashioned, you know, bind three ring binder

[00:16:01] Nick Friedman: With With worksheets and, and I think there's something to be said for both, because I think, you know, just human learning, we still maybe, stuff resonates or sticks a little bit more if you're writing it down on paper or if you're, you know, reading it on paper verse on a, you know, small screen. And so I think. For us, it's, it's evolving with the tools that are evolving with kind of the times and making sure that it's still working out in the field, that our customer service is still, uh, consistent. We're measuring those, uh, things that our turnover isn't increasing. We wanna reduce turnover. So by having, you know, more consistent training. and I've also heard it said, you know, training isn't something we did. It's something we do.

[00:16:41] Nick Friedman: And so it's an ongoing event. It's not, you know, you train somebody once and then they're off, you know, playing the, the game for the, the rest of the, the time you look again, a lot of the sports analogies I think are so relevant. they're huddling up before every play. They're practicing throughout the week to go play the game. You know, in business every day is game day, is what we say. So you've gotta have like these little micro moments of training, whether it's in the morning huddle or at the end of the day where you're reviewing, you know, how things did. if you're a manager or a leader, you should be coaching, we say in the locker room and on the field, just going out, you know, doing some sales calls together, uh, with the salespeople or over the phone, or shared zoom, whatever the case may be. it is just continuous improvement and, continuously looking for ways to, you know, enhance the skillset of the, team that's gonna be out there representing.

[00:17:30] Lee Brumbaugh: Yeah, I love that. And so many, you know, we talk about that with so many owners that, that we work with. In the SMB space particularly, you're the founder, you're the CEO, you're wearing a lot of different hats. And that training typically comes in and you look at, well, I'm gonna tell you about the business.

[00:17:45] Lee Brumbaugh: I'm gonna tell you a bunch of information. I'm just gonna trust that you get it. But you said it, well practice it, train it, coach around it. 'cause you're continuously saying, I think this is how you heard it. But when you have them repeat it back, it's often very different. And I love the ability too.

[00:17:58] Lee Brumbaugh: You said it using the tools out there. We have a new productivity partner, uh, called Yodlee, and you can go in and do coaching feedback, you know, you can set it up for different times of the day. You've got AI features that can say, here's where you were lacking in this sales call object, objection handling.

[00:18:13] Lee Brumbaugh: There's so much that you can do in the coaching world nowadays that makes it engaging, makes it interactive and makes it sticky. 

[00:18:19] Nick Friedman: the other thing that came to mind as you were talking, you know, I always say that, And I don't know if I borrowed this from Tony Robbins or what, but, success in business or sales or whatever the case may be, it's a combination of, information, motivation and then removing the interference.

[00:18:34] Nick Friedman: So information is like, you know, how do you do something? Uh, but it was Tony Robbins who said, if all we needed was information, we'd all be billionaires. We'd all have six pack abs because, you know. How to get in shape, you can chat GBT, how do I sell X, Y, Z? Or how do I do A, B, C? So you need to have the information on how to do it, but then you also have to have the motivation or the drive or the the want. To do it. And motivation usually comes both intrinsically, internally or externally. And so at college cH.U.N.K.S., you know, we say our motivation is driven by our purpose. Our company purpose is to move the world. It's basically a double meaning. It's making a positive impact in people's lives. So we want our team members to really see that sort of North star as like, I'm here to make an impact in somebody and, and so this is why I am doing what I'm doing. And then the interference is the stuff that, whether it's negative self-talk. Or we get discouraged from that 99th No. Uh, that we heard on the sales call or we're not hitting our numbers and or, you know, we're not closing those deals or we're not, you know, hitting our, our projections. So, you know, how do you remove that interference to just kind of keep picking yourself up to, to keep going?

[00:19:38] Nick Friedman: Which I guess comes back to that grit, resilience, uh, no quit mindset that, that we started with.

[00:19:44] Lee Brumbaugh: Especially for helping our team members be successful, removing that interference, creating clarity for them is so important. It's not just the accountability piece, it's being a resource, being a leader. I think that's what you've done so well in your company.

[00:19:58] Nick Friedman: Obviously you can tell I'm an avid reader and listener. I, I try to just like digest all this stuff and apply it to what we're doing. but, uh, you know, a great coach is somebody that can hold some their team members accountable without their team members being resentful about it. And, uh, you've gotta be able to show your team member that accountability comes with basically. Wanting to be better and me wanting you, my team member, to be better. It's not just because it affects my paycheck, but it's literally like I care about your success as well, uh, in the field. And so I'm, I'm trying to help you be better and holding you accountable to, to be your best self.

[00:20:35] Lee Brumbaugh: We've talked about obviously what you've done with. You and no more building College H.U.N.K.S.. Building Trash Butler, we've got joining this, A lot of people will be listening. they're going from their first business to their second or they're thinking about creating the first business.

[00:20:48] Lee Brumbaugh: When you were looking at, obviously with College H.U.N.K.S., something resonate, started with your mom, but you know, when you looked at Trash Butler, you build a vision there. What's most important for those that may be joining those, those starting entrepreneurs? When you look at building a business. Was, was there an aha moment?

[00:21:04] Lee Brumbaugh: Something that really stands apart that they need to do to be successful when they're looking at that mission of building that first business or that second, I should say too,

[00:21:13] Nick Friedman: Number one. If it's your second business, make sure that it's not just a shiny object that you're chasing after at the detriment of your core business. When we launched into Trash Butler, we kind of already had a good foundation with College H.U.N.K.S.. We had a good leadership team.

[00:21:27] Nick Friedman: Uh, we saw that it was somewhat adjacent to what we had done with in terms of our, subject matter expertise and, and skillset with, managing a decentralized labor force.

[00:21:36] Nick Friedman: Uh, there were some nuanced, obviously, differences to the business. Trash Butler’s not franchise. Uh, it's more B2B versus business to consumer. I use this, framework I call the four F's. When you're looking at whether it's to buy a franchise to, you know, grow yourself, whether it's to start a business from scratch, start a second business, uh, fit, family, financial, and fun, uh, or fulfillment. and so the fit is, is there a transferable skillset? Is, is this something that I can actually apply? My talents to and be good at, the family piece is whether it's spouse, parents, neighbors, you know, inner circle, do they believe in this? Venture that I'm getting ready to pursue because the last thing you want to have happen is you get into something.

[00:22:20] Nick Friedman: 'cause every business is gonna be 10 times harder than you thought it was when you got into it. The last thing you wanna have something is somebody saying, I told you you shouldn't do that business.

[00:22:27] Nick Friedman: You want your inner circle to be, you know, cheerleading and, and championing for you.

[00:22:31] Nick Friedman: 'cause things are gonna be tough. Uh, the financial piece is when you run the projections is the time and the money that you're going to have to invest worth. The return that you're hoping to get. So you've gotta have some sort of financial proforma or projection. Obviously they're always optimistic, but you know, does the conservative model still paper out to make it a worthy and, you know, endeavor to pursue?

[00:22:53] Nick Friedman: And then the fun factor or fulfillment factor is like, can I see myself getting outta bed in the morning and doing this? Now I, I would say, I didn't wake up or grow up saying, I want to, you know, envision moving furniture or hauling junk or owning a big moving and hauling business. And I don't think our franchise owners said that either. what I enjoy and I think what our franchise owners enjoy and what they recognize as fun about our business is the coaching component, uh, of the frontline team members. Uh, being able to mentor and develop those young minds, the branding and marketing, having, you know, sort of a creative brand in a more traditional industry, you're able to stand out and make yourself known, have some creative approaches to marketing and community impact.

[00:23:32] Nick Friedman: So those are the things that I enjoy that is fun for me. I think our franchise owners. Find fulfillment in that as well. So those would be, I would say, looking at it through those four lenses that those four F's, I think could be helpful.

[00:23:44] Lee Brumbaugh: I love four Fs, that that's gonna stick with me and, and some areas that, you know, I didn't think about it was really having family alignment is a great point, but you alluded to it. You need something. At the end of the day, we all wanna wake up in the morning and have something that gives us energy. And it doesn't have to be, like you said, that you loved moving things.

[00:23:59] Lee Brumbaugh: It was all the creativity that you put around it. So really well, put as you look, especially as the next business too.

[00:24:05] Nick Friedman: And that energy is, you know, there's such thing called an entrepreneurial rollercoaster where, you know, one day you're having a breakdown, the next day you're having a breakthrough. I mean, there's a reason they think, you know, entrepreneurs have some, you know, manic uh, tendencies because, you know, you're, you're riding this emotional rollercoaster. Uh, you know, things are, never easy as, as you hoped they'd be. That takes longer to, to get to the, the vision than you hoped it would be unless you know, You're one of these unicorns that the media ts, but even behind the scenes, those unicorns probably took a long time to, develop before they really blew up.

[00:24:34] Nick Friedman: being able to have that steady mindset and, and sort of curtail the, downs or move the interference when things are tough and have the. Confidence to sort of keep pursuing that vision. Uh, you talked about having a vision from the very beginning. So if you do embark on that journey, you know, having a three year sprint, that you're working towards and maybe it pushes out to six years or nine, or our case 20 years, and we're gonna keep pushing it out.

[00:24:56] Nick Friedman: And so I think being able to have that, uh, those milestones and that big picture that, uh, you're trying to build towards.

[00:25:03] Lee Brumbaugh: All right. Well, I've got one hot seat question for you. Now. I, I mentioned at the beginning audience that you've, uh, you were on the first episode of Shark Tank. I know you've done undercut of her boss. You've done a few of these different things, which has been great for not only your employees, but your brain and what you learned out of it.

[00:25:17] Lee Brumbaugh: But anything interesting that you'd share? Like any, uh, funny story, anything interesting that, as you've gone through, also this kind of media, uh, area as well, that, that stood about from Shark Tank or Undercover Boss or any others that you've been a part of?

[00:25:31] Nick Friedman: The one that pops into my head was, was sort of media based. We did this thing called Red Bull Fluke Tag last year. If you look it up, you know, College H.U.N.K.S., Red Bull Fluke Tag. It's this, uh, different promotional tour that Red Bull does. Touring around different cities and competitors or, or I guess, contestants enroll or, apply to participate.

[00:25:51] Nick Friedman: And you have to build a self manmade flying machine. Uh, and launch off of a 30 foot platform into water because the Red Bull supposed to give you wings.

[00:26:01] Lee Brumbaugh: Gives wing. Yeah.

[00:26:02] Nick Friedman: We created one called College H.U.N.K.S. Flying Junk. I guess I drew the shortest straw because only one person is the one that gets actually launched in the machine.

[00:26:10] Nick Friedman: The other four people push you off the platform. So Omar, my business partner, got to be one of the pushers and I, I'm the one who flew off this platform and, uh, you know, in my early forties, I, I would've been happy to do it 20 years ago, but I did it in my early forties and, and I don't think I would venture to do it again.

[00:26:25] Nick Friedman: 'cause I was sore for about two weeks after. Hitting the water and tensing up every muscle in my body. But thank goodness I didn't fall on this, flying contraption we created, I got launched, I think I pushed off my legs as we hit the platform. 'cause I got launched. They said further than any human has gotten launched, it was almost like a catapult out of that.

[00:26:42] Nick Friedman: So I think there's sort of a parallel there, or maybe some metaphor there in, in, you know, entrepreneurship, right? You're sort of taking this leap into the unknown, into the abyss, uh, or you're building the plane in flight, right?

[00:26:55] Nick Friedman: And, and trying to figure out, you know, how you're gonna keep it, keep it flying. So, I'm big on encouraging people to stretch their comfort zone. You know, I know a lot of entrepreneurs will train for, you know, half marathons or climb mountains or run Ironman. I'm perfectly content just going to the gym and doing my hourly routine.

[00:27:11] Nick Friedman: So I think doing some of these other things, Omar and I did, another one just popped into my head. Omar and I did something called the, uh, CEO Comedy Challenge 

[00:27:18] Nick Friedman: We had to come up with a 12 minute, uh, standup comedy set, uh, which, you know, 12 minutes might as well have been 12 hours standing up there trying to, you know, tell jokes to an audience. But that was, you know, again, a stretch of the comfort zone. So, uh, for me, you know, I think, uh, being an entrepreneur kind of gives us those opportunities that open the door, and if it sounds interesting and fun and maybe not too dangerous. Unlike jumping off a 30 foot platform, I'm all for it.

[00:27:44] Lee Brumbaugh: I did watch some of the comedy one and you, you, you actually got some skills in the jokes I laughed at. I I had a couple laughs. It was, it was good And then the other question is, what was your wife's opinion on the, uh, flying out of the, uh, launching yourself into, did you get alignment there or was this a just entrepreneur going with it?

[00:27:59] Nick Friedman: That was a bit of an entrepreneurial curve ball. Uh, both my wife and my dad had one-on-one conversations with me leading up to it 'cause they had watched some of the videos of other flu tags and they were like, I really don't think you should do this. I really want reconsider.

[00:28:12] Nick Friedman: And I definitely did reconsider. I, although I did change my launch point, I think I was supposed to be on top of it, initially on top of the truck, but I then repositioned myself to inside the truck. But like on the front of it, it was like an open front. And I launched forward as we, the truck was coming off the platform.

[00:28:28] Nick Friedman: So, warnings did gimme some, uh, pause as to how we tackled it. 'cause I, I'm also kind of a ready, fire, aim type of guy. But my, as my wife likes to say, there's certain things you can't aim after you fired. You've gotta, you know. Make sure that at least you have some semblance of what you're aiming at.

[00:28:44] Lee Brumbaugh: I'm glad it was just soreness. So, uh, and, and you love to tell about it. So, last thing I'll say, you know, again, a lot of business owners, $5 million companies, $10 million companies will be listening to this. Anything that really, one last thing that you want a parting area That I'm a $5 million company I want to get to 10.

[00:29:02] Lee Brumbaugh: Anything that, that you want is a key takeaway that they can, that they can take and put into place with their business starting tomorrow.

[00:29:10] Nick Friedman: There's a book, I think Dan Sullivan wrote it called 10x is Easier Than 2x, and he also wrote The Gap and the Gain. Uh, but there's a chapter in the 10x is Easier Than 2x about the gap versus the gain. I think there's also always a tendency, I'm guilty of it myself, to be looking ahead, uh, especially in a growth stage entrepreneur, you're looking at. Other successful entrepreneurs that are further ahead of you, and you're always worried about that gap. the distance between where you are in this sort of unreachable ideal. But the problem is that gap always continues to move because the moment you reach that ideal, the goalpost moves and now you're trying to reach another one. That book and, and the chapter and, and the other one really encourages you to focus on the gain, meaning where you started. To where you are today. Anybody who started a business already has a lot to be proud of and consider themselves successful, especially as you mentioned, whether it's a million, 5 million, I think I saw a statistic less than 98% of small businesses ever make it to a million in annual revenue.

[00:30:06] Nick Friedman: And so, you know, to know that you're in the, already in that sort of elite air, puts you in a mind instead of gratitude. That doesn't mean you stop striving for gradual improvement or, or maximizing potential or even 10xing your business, but it allows you to do it, I think, in a way where you're not sort of like. Feeling with a, you know, place of scarcity or, or glass half full. You're approaching business every day with a place of abundance, a place of gratitude. And I think it'll, it puts you in a head space where you can lead a lot more effectively. You're, you're not leading from a place of fear or, greed.

[00:30:36] Nick Friedman: And, and so I think I would encourage that either looking at that chapter or just kind of contemplating the, the continued journey to do it from a. Be proud of how far you've come. And now be excited about how much further you can take this from a potential standpoint and, don't get complacent.

[00:30:51] Nick Friedman: Uh, I think Nick Saban also said complacency leads to bad decisions. Bad decisions lead to bad outcomes. So, you know, if you're in that five to 10 million or even, you know, one to five or 10, 10 to 50, whatever the case may be, there's also sometimes a tendency to become complacent, and that could be a dangerous place as well.

[00:31:07] Lee Brumbaugh: I really like that, Nick. I will. I will definitely check out the book, check out the chapter, and you're right, our entrepreneurs have a lot to be proud of, just having the ability to see the vision of where they want to go and have the initiative take, the risk to go out and do it and accomplish something is amazing.

[00:31:21] Lee Brumbaugh: So. Well, Nick, I really appreciate you joining us today. This has been great. Uh, I'm Lee with Sales Against The Odds. Again, we're focused on giving business owners tangible solutions that we can put into place. 

[00:31:40] Lee Brumbaugh: Nick, thanks for joining us.

[00:31:42] Nick Friedman: Thanks Lee.

[00:00:26] Lee Brumbaugh: There’s no silver bullet in sales, but on Sales Against The Odds, we’re here to give you the best shot at building a sales infrastructure that helps you scale. I’m your host, Lee Brumbaugh. Welcome to Sales Against The Odds. Joining me today, I’m very excited for the guest we have — Dave Parker, serial entrepreneur, investor, former CEO of Entrepreneurs Organization, and author based in Seattle, Washington. Dave, thanks for joining us today.

[00:00:58] Dave Parker: Thanks for having me. This is great.

[00:00:59] Lee Brumbaugh: So Dave, I was really excited to have you on the show. Obviously, you’ve done so much work leading Entrepreneurs Organization, but also in the world of smaller companies, startups, and growth. You’ve had real-world application helping startups grow and find their product-market fit. So talk to me just a little bit about how you got started. Your company’s helped hundreds of startups define their growth strategy. How did you get into that? What got you started?

[00:01:27] Dave Parker: It’s kind of a funny backstory. So I did my first startup in 1998 and sold it in 2002. So if you remember that season, it was the tech bubble. Some would say we’re in a different bubble right now with AI, but that’s a different topic for a different day. I built that first company, and I had a CEO group that I was part of. It wasn’t EO, wasn’t YPO — it wasn’t because we were an innovation economy company, not a services business, and we clearly weren’t big enough and hadn’t hit over a million dollars in revenue as a startup, but we had raised money and the company grew from zero to 32 million in sales in four years. And so we were a very fast-growth company. What I discovered was there wasn’t a lot of support organizationally for companies like that. You had venture capital, but VCs don’t really support other than money. They say they do, but it’s very rare. So most of the support you get from that is here’s a check and don’t lose it. So one of the things I discovered through the process was how do you build a community, especially in your home city — for me, Seattle — and really around the ecosystem of supporting other startup founders. And then when I sold that company, I took a little bit of time off and went back and said, hey, how do we build a better ecosystem here? So I’ve kind of been working on the Seattle ecosystem for startups and the startup community for the last 20-plus years. And what’s funny about it now too, Lee, is a lot of the same questions people are asking today are the questions we asked 15 and 20 years ago. It’s a little frustrating, like, oh my God, we’ve asked that question, and yet because it’s a new crop of people, the answer is, oh, we should do this. And we’re like, oh, we tried that — it didn’t work, right? So a lot of time spent in ecosystem development, ecosystem building that then got me into Startup Weekend events back in the late 2008-ish, 2009-ish. And I ended up joining that organization, which was a nonprofit. They had basically created a movement around Startup Weekend events. And for those people who don’t remember Startup Weekend, it was — you’d come on Friday, you’d say, hey, my name’s Dave, here’s my idea, join my team. And by Sunday night, you would launch a demo in front of a group of investors or entrepreneurs and you’d get feedback. They were doing 550 events when I joined them, and we ended up doing 1,725 events in the trailing 12 months after we sold it to Techstars. So there was a unique opportunity there that was really fueled by the tech people who came out of the Great Recession going, I need to do something new. So the growth you saw from Founder Institute, YC, Techstars were all about the same season — 2008–2011 sort of timeframe — and really it was a reaction to, hey, coming out of this Great Recession, how do we help more startups get going and help entrepreneurs go after their own dream and vision? Didn’t realize it at the time; I just kind of walked into a movement, which was great. I don’t take credit for the movement, by the way — Mark and the team did that. I just helped scale some stuff, and we ended up selling it to Techstars.

[00:04:24] Lee Brumbaugh: So you’re going through this bootcamp and they’re coming up with their go-to-market strategy, it’s all in this consolidated window. What are some of the biggest areas where you’re like, “Oh, this person gets it”? Again, we’ve got a lot of people listening today who are thinking, “Do I have the right go-to-market strategy? Would I pass the test?” What stood out as — this entrepreneur gets it, or doesn’t get it?

[00:04:49] Dave Parker: Actually, Mark just ran a new AI edition of Startup Weekend in Colorado last weekend, and I was talking with him about it because in the earlier seasons of Startup Weekend, there were a lot of very technical people — deep technical people — and what you saw consistently was that building a team mattered. Storytelling matters a lot. Does the customer understand your story? Even if you build something deeply technical but you can’t sell it — that’s the reason why 92% of startups fail. The founders end up building stuff people don’t want or won’t pay for, which, by the way, is the same thing. If the customer doesn’t pay for it, it doesn’t matter how great the technical thing is. So storytelling — does the customer understand what you’re doing? Can you explain it to them — that matters. And then the people dynamics are really important. Can you riff on and develop an idea and do it quickly? So with AI, obviously, you can do that a lot faster. And having been on the venture capital side, what you would see is people would come and say, “Hey, I have this idea,” and I’d say, “Oh, like so-and-so?” And they’d go, “Who’s that?” And I’d say, “They’re like what you’re doing, but they’ve raised $40 million already.” And in my world of innovation economy companies versus the SMB side, if somebody’s raised $40 million, the venture world is winner-take-most. It’s not winner-take-all necessarily, but it is winner-take-most. And if they’ve effectively sucked the oxygen out of the room by raising $40 million, you’re not going to be a third or fourth player there. A lot of that has to do with the fact that many startup founders come across an idea, and their idea is so precious to them that they don’t do the research to look for competition. It feels like a threat, and people will say, “Oh, well, you’re being critical, my baby’s ugly,” and I’m like, “I just have to go do the research.” And now, in the AI world, the answer is, oh my God, this is so much easier to do a market map and tell me who’s been funded and who they’re funded by. Just ask ChatGPT to act like an analyst for a venture capital fund and you’re going to get so much better data than we could get.

[00:06:54] Lee Brumbaugh: Different world out there for sure. I want to go back to the point you made around storytelling. I see that so often. I’ve done a lot of work myself in Houston with the Texas Medical Center accelerator program — great organization. You get digital startups, digital device companies that come through on the healthcare side, and so many times I’m talking with the founders and they’re like, “Well, we’ve got to build a team of five salespeople.” And I’ll say, “Have you gone out and actually executed sales?” Then I’ll have them talk to me about their messaging and, like you said, their story, and it’s all features and benefits. It’s not telling the story of how you really solve for the problems. You go back to that StoryBrand-type concept. When you think about founder-led sales and how they start and ramp, talk to me about what you’ve seen from those entrepreneurs that get it — that do tell the right story, that are able to go out early and find their customer base and then be able to expand there. I guess what I’m asking is — what’s doing it right and what’s doing it the wrong way?

[00:07:55] Dave Parker: Yeah, so one of the common misconceptions I think, especially of deeply technical founders is I have a product and I just need to hire a sales person. If you can’t be the first person who sells the product, you can’t hire somebody to sell your product. So let that sink in for a minute. If you’re like, but Dave, you’re wrong. I’m like, again, 92% of starters fail. There’s a reason for that. There’s math behind this. So if you can’t sell the first product, nobody else is going to be able to do it. So from a storytelling perspective, you have to, I’ll give you the easiest way to your point. It’s like feature, feature, feature, feature and then no benefits is typical where what I would really rather have you tell me the story of is what’s my customer’s day in the life before my product and what’s their day in the life after my product?

[00:08:42] Dave Parker: So if you get lost in the feature benefit, what’s a benefit? What’s a feature? All those things are confusing, simplify and make your true north here. What’s the day in the life of the customer? Before my product and after my, so today I have a deeply technical product that does workflows in a healthcare environment and involves medical devices. Well, there’s things that happen upstream before your product and there’s things that happen downstream after your product. So in that context today, you go through these six steps in the process, then you define this thing and then you pick that thing and then you’re basically saying there’s 16 steps in the process today. And we take those 16 steps down to four. The concept there is Clayton Christensen talked about the jobs to be done framework and his point on that, and if you kind of net it all out is if you look at the cost and you analyze the cost of what the customer’s doing today and you take $10,000 out of that cost, you’re not going to say to the customer, Hey, give me $10,000.

You’re going to say to that customer, Hey, we’re going to save you $10,000, but it’s going to cost you $2,500 because generally you can get between 20 and 35% of that cost recovery back into your pricing, which gets us into a separate topic on pricing, which we won’t have time to cover today, but I’m super nerdy about revenue models and pricing, but telling the story of what the customer’s life is like today before your product and after your product, that’s where I’d start because that’s really your true north. And then you have something that salespeople can say like, oh, okay, if Dave can sell it and Dave’s not a good salesperson, he’s very super technical and probably a little too geeky, I’m going to take this story from Dave and then I’m going to bring Dave in to close the sale initially because in the early stage, the customer wants to meet the founder, the technologist or the person behind it. And then at some point when you start to get more at scale and you have more than one salesperson, then it really is less and less dependent on you being involved with the sales process and more about how do you scale it.

[00:10:40] Lee Brumbaugh: So much of what we do at Sales Xceleration in our advisor community is building that sales process. And so many times the founder gets in and they’re like, all right, now I’ve scaled, I know I can sell it. We’ve got kind of a story, I’m out of it right now. I’ve got five sales reps, account managers. But there is so much as your point to be able to bring in that founder and really to insert members of the team. When you look at a sales process, when you’ve got a smaller organization, as that sale goes through the life cycle from start to finish, who in the organization needs to be helping guide it? So if it’s an operational area, when does operations up, when it’s a C-suite closing deal, when is the founder and the CEO brought in? Because I think there is a lot of value there, but so many times those founders think, well now we’ve got to this, we’ve got this runway, I’m just going to focus on visionary ideas and not be still face of the company. And that’s such a miss, right?

[00:11:28] Dave Parker: I was separate into two different groups. So you have people who predominantly sell services and people who predominantly sell product.

[00:11:34] Lee Brumbaugh: Elaborate on that for me. I know we talked about in the past there’s a big difference there. We’ve had both.

[00:11:39] Dave Parker: There is, and I think that one of the things that hasn’t happened in the market, there’s a lot of great resources around scaling up. Vern Hardish who founded EO, wrote a book about scaling up. There’s a book called Scaling Up Faster. There’s tons of resources around now AI and scaling up, but I’ll give you a parallel analogy. So when I wrote the book, a third of the book is about revenue models and pricing and those things, and it really is how do startups make money? And the idea here is your product, I hope your product is unique. If you’re in the services business, your product is never unique. People are buying product from somebody else. This question is will they buy it from you? So that’s the service sector. And by the way, service sector involves as I add new customers, I add more people.

[00:12:22] Dave Parker: And in the services business, I don’t make money when I sleep right? In the product business, I get up in the morning, I’m like, how much did we sell overnight? The answer is, I’m making money when I sleep. And if I do subscription businesses, I have annual recurring revenue versus transactional revenue. So there’s 14 revenue models used in technology, things from commerce to services to subscription and metered services like web services as a metered service. I have a base level subscription and the more I use, the more I pay. And for a lot of companies, they see their Amazon bill go up and they’re like, oh my Amazon’s bills. If your product is priced and your Amazon bill is going up because usage is going up, it should be an early indication of future growth If your product is priced, if it’s not priced right, then you’re going to be freaking out because it’s cutting into your margins.

[00:13:13] Dave Parker: So we tracked 2,654 companies through a five-year longitudinal study. Partially it took me so long to write the book, but we went out and looked at how do they make money. So that gave us the 14 revenue models and we basically looked at all 2,600 websites. And then we also looked at the ones who died, the companies who failed. And all these companies by the way, had raised a seed round of funding. We had some level of success to tell the story, to get to a seed round of funding. And then what we saw, we don’t know this causality, but correlation wise, what was interesting is of the ones who failed, we went back and looked at the Wayback machine, which is the internet archive on all those companies, and we discovered that 92% of them had two things in common, no pricing on the website and no call to action. So if you were fortunate enough to get somebody to come visit your website, you didn’t ask them to do anything, book a demo, download a white paper, you asked them to do nothing and compounding that there was no price. And a lot of founders are like, well, my price is going to be wrong. Yes, your price is going to be wrong and then you will change it.

[00:14:22] Lee Brumbaugh: And I talked to so many founder CEOs, it’s like, well, if the price is out there when my competition can get it, I’m like, okay, well then make sure you’re winning. The other thing is a lot of times you’re looking at enterprise type models or growth, then you say, here’s our starting point. But if you don’t have clear direction, welcome to tiered

[00:14:40] Dave Parker: Pricing.

[00:14:40] Lee Brumbaugh: Yeah, absolutely.

[00:14:41] Dave Parker: It’s three or four tiered pricing the features, and you have time-based trials versus again B2B versus B2C here as well. So my point, you end up categorizing things and saying, in the services business, here’s how we think about services growth. People are buying your services. If you’re an accounting firm, I’m already buying tax services from somebody. The question is, will I buy them from you? So that’s one value proposition. So you have to map your ideal customer profile to your value proposition, to your sales process. Now it gets more complex for a product company because in a product company, I’m shipping my beta version today as a founder, I see the future of what the product’s going to be and all the great features it’s going to have, and sometimes they have difficulty separating out actual from forecast. Part of the way founders live in that a little bit of delusion, and by the way, I am one, so I’m not calling other people delusional.

[00:15:36] Dave Parker: I’m just saying I’m occasionally delusional. I love the product ideas I create. It doesn’t mean they’re always ready. So the thing I have to be able to map to my sales process is I have an ideal customer profile. I now have a product roadmap, and now I have different pricing than it will be pricing later. Because in the services business, I have typical time and materials bill rate and pay rate, and there’s market ranges that are acceptable there. On the product side, I could be all over the map. I could be free. I could be free for the first 90 days. I could be an annual contract, I could be a multi-year contract. So there’s a whole lot more complexity on the product side of the business. So for your listeners, if you’re in the services business, congratulations, it’s simpler. You have to map my ideal customer profile to my value proposition, to my sales process. If I’m in the product business, I have to layer on some things. I have an ideal customer profile today based on the product roadmap and tomorrow, which by the way changes prices because my ideal customer profile may change.

[00:16:38] Lee Brumbaugh: Ideal customer profile. I know we get in our business sales, but ideal customer file.

[00:16:42] Dave Parker: Yeah, ideal customer profile is your ICP. And one of the things you see typically with this one, especially with early stage startup founders and it’s deeply technical ones, will be like we’re building a platform. And I’m like, no, you’re not. You’re building a product, product first, platform second, because what happens with the platform thing? Really platform is a technical code for we don’t know who our customer is. It could be anybody, right? And the answer is if it’s everybody, you’re in trouble. You don’t have enough money to go after everybody. You only have enough money to go after a very narrow customer niche. So I would rather as an investor and helping somebody with the early stage stuff, I’d rather say, I’d rather you narrowly cast your ideal customer profile and get super specific to who they are and then look for market adjacencies. And if you find out that customer profile is the wrong customer profile, change it.

[00:17:33] Dave Parker: But don’t say we have 16 customer profiles, right? Because the answer is you will never be focused. I’ll give you a couple examples. One of the startup studios here in Seattle, they were coming to us for funding and they had seven customers. It’s great. Well there are seven customers from the portfolio of this other big venture capital fund and there were seven companies that weren’t alike at all. And I’m like, I don’t even know what to do with that. Because the answer is where do you have conviction? Where will you go deep in this customer segment? How can you charge them more money? And it was like seven random customers and you’re like, I don’t even know. You can’t build a sales process around seven different ideal customer profiles unless you have seven different vertical market reps and you can’t afford to do that when you’re a small company.

[00:18:17] Dave Parker: Product companies versus services companies have a different level of complexity. I think services companies have it better in the sales process. I’d say it’s more complex than the people side because as you scale the business, you have to scale with people versus product. And the challenge there is in the early stage you run into the small business dilemma, which is if I get one new customer, it’s not really great. I really need three new customers. If I have three new customers, I can hire another person to deliver, but if I get one new customer, it means I’m not going to get to my kid’s soccer game on Saturday.

[00:18:50] Lee Brumbaugh: And so much of that too is around the diligence. I think too, I mean with the Sales Xceleration, somebody, look, there are companies now out there, we’ve got more advanced that they do a decent job of setting their ICP defining and starting value proposition, putting that in the sales process. But then you hire that first sales rep and their second sales rep and well, I want to go here, it’s outside of our ICP, but that’s okay because we can sell something. But then it kills your margins, it kills your time, the energy, I mean you have to stay laser focused.

[00:19:17] Dave Parker: Again, another product company, when they first launched, they decided they had a specific ideal customer profile and two years in they’re like that customers we sold to originally are not the customers we’re selling to today. And now I either have to keep the old product up or I have to shut off all those old customers, which is painful because those are customers that I knew their name, I recognized their voice, I was the one who sold them as the founder. But when you look at how you’re going to scale the organization, you have to do things that scale. Everything can’t be a bespoke to one-off. Let me jump forward. For the listeners benefit, one of the things I think about a lot is enterprise value. How are we driving the enterprise value of the company? So if you have seven different ideal customer profiles and you did a profitability analysis on them, you would come back and say, these two profiles are our most profitable customers.

[00:20:11] Dave Parker: And you’re like, yeah, but it’s revenue. And the answer is, but not all revenue is good revenue if your cost to support the customer is off, if your cost to acquire the customer is off in the venture business. And the thing that I think scales as we think about it is I have this concept of lifetime value and customer acquisition costs. So I’ve got CAC to LTV, so how much does it cost me to acquire a customer and what’s that lifetime value of the customer? What’s that customer worth? In a B2B state, it should be kind of a five to one or better in a B2C business to consumer tends to be more transaction. So I have to have a 10 to one ratio or an eight to one ratio. So if I spend a hundred dollars to acquire a customer, I need to get $800 in revenue because that lifetime value is likely to be shorter. Where in B2B, it tends to be multiple years.

[00:21:06] Lee Brumbaugh: Most companies don’t have the bandwidth to build a high functioning sales department to allow them to meet the revenue targets with Sales Xceleration. They don’t have to. Our experienced fractional sales leaders consult and implement your sales strategy, infrastructure management and team development, discover how we deploy these proven sales solutions to address your sales challenges. By going to our website, filling out the contact form, we’d love to hear from you. So your first book is Trajectory Startup Ideation, the Market Fit, so talk, we’ll go back to that, like for you to recap the biggest moments you got out of that book and then where the second book is going, but just want to make sure we get that out for the audience. A great book. So

[00:21:50] Dave Parker: The second book is Trajectory Scale Up, and it was really focused on the product side of scaling up. So again, the complexity goes up. I’ve got to do a product roadmap and give you an example. If you’re building an enterprise product that takes three or four years to build and you need revenue in the short term, the answer is I have to really bring down the product scope to deliver value for a customer today that can give me revenue so they can continue to build a product with cash, not just with venture capital because that model doesn’t work anymore, right? No one’s going to be like, here’s $5 million, good luck. The number of early stage rounds is now staged to go hit milestones and deliverables. And if you’re a founder who can only look three years out and say, well, in three years we’ll be able to sell the product, the answer is what are you going to do for revenue between now and three years?

[00:22:36] Dave Parker: Because that’s going to be critical in your funding path. So it’s really focused on that. And then the thing I’m excited about Lee, is I didn’t write the book two years ago. The world has changed with ai. So one of the things we’re doing in this one is really focusing on how AI impacts each of those phases. I’ll give you an example. So we have a buddy, Elaine came up with this framework, he’s super engineer, it’s TA mechanic, pioneer square Labs, TA has this ITI list, which is important things I’m not doing yet. And the reason is because us as founders, we’re always like, I love my ideas. So my team wants to get focused in and deliver and stay focused and I keep coming up with new ideas. My team’s frustrated. They don’t know if this new idea is something we’re actually going to go do, or if it’s just Dave thinking, insert your name here.

[00:23:24] Dave Parker: If you’re the visionary founder and then the founder gets frustrated like, well, I’ve been clear. And the answer is, well, you have been clear on some things, but you’ve been riffing and brainstorming on the other things. So the concept of the IT attendee list and it attendee is just one section of it, but it’s like I need to have a place on my quarterly board planning document where I’m really just saying, this is a great idea. I don’t want to lose it, but I’m not going to work on it now in this quarter and I’m not going to work on next quarter. And honestly, I may not work on it until next year. And that’s okay.

[00:23:56] Lee Brumbaugh: For the many companies that are in the s and B world that are, you’re an EOS company, it’s your long-term rocks, right? You’re moving it over and capturing it there and keeping it.

[00:24:04] Dave Parker: That’s really the starting point of good congratulations. You’ve got all these brilliant ideas, but you need a place to park them so that you don’t feel like you’re losing. And by the way, when you’re a venture backed company, you’re going to have, your board is going to have new ideas for you. It’s the same way. And sometimes there’s pressure to feel like, well, the board wants me to go do this, and the answer is no. The board was just brainstorming with you as well. So you have to be very clear around do these things make it in my product roadmap or not.

[00:24:31] Lee Brumbaugh: Yeah, absolutely. Good rock setting, good goal setting is critical. It’s easy as you come into this founder, you had a great idea, now you’ve got 10 ideas in which ones can you execute upon. I want to go back to obviously a lot of with Sales Xceleration, our advisor community takes a lot of companies that were in the startup phase and what we find a lot of times is again, they go back to they set a good starting ICP, they set their value proposition, it’s rolling into at least a starting sales process, but they think, well now I’ve done it, I’m done with it, right? So it’s going back and saying, you’re right. How do you learn from So much of the work we do though is our advisor community will go in and work with the founder and CEO and they’ll say, well, we did that ICP. And you’ll say, well, it was three years ago and is it still working? Is it still the right customer base? And what are you doing top of the funnel to solve for that? And they’re having challenges and parts of the funnel because they haven’t gone back to what they originally did. So how do you see it, make sure it stays relevant? What do the best founders do of spot checking that, of making sure that the proof points are still relevant?

[00:25:34] Dave Parker: I’ll give you the answer in a context of what I think about is our pricing committee. So first off, lemme give you a little bit of what I wish I had been slightly clearer about in book One was this concept of product market fit in the product world and the venture world is people are like, oh, we’ll know it when we see it, which is super not helpful for a VC to tell you that it’s a founder. And the thing I love about product market fit having, so I did the book and then we came out during the pandemic, which is hard to do book tours. So I ended up doing tons of seminars and webinars and trips to the Middle East and working with accelerators worldwide. And what I came away with really is product market fit is really just, it’s math. It’s five things.

[00:26:13] Dave Parker: There’s four trends that should be trending upward and one trend that should be trending down for the listeners, here it is. Here’s the five. This is super important by the way, by themselves, they may be a vanity metric is the traffic at the top of my website going up again, could be vanity if I’m buying traffic one month and shutting it off the next month. The trend question is if you have a large product that if you’re in a sales driven high price point, my sales team is going to go make sales calls and the people are going to come visit the website to validate what the salespeople told them. You’re not going to be doing inbound marketing if you’re selling $250,000 sales engagements, but I’m still looking at the trend. Google analytics free tool, you can go use that. So what’s the trend on traffic? So traffic then should convert to leads back to that call to action problem.

[00:27:01] Lee Brumbaugh: We went past that earlier, but again for those listening we could pull up Dave, we pull up 10 websites right now and two to three of them would have a good call to action. It seems so simplistic.

[00:27:12] Dave Parker: You need a call to action on every page, every page. The only reason the website exists is to get people to say, I want to try your thing. So traffic converts to leads and you’re looking every month. How’s that percentage though? Traffic’s going up, lead percentage should be trending up. Customer count is a percentage of leads. How many customers are we closing? Now you may have a six month sales cycle in the early days or a 12 month sales cycle if you’re doing something to big in the enterprise space, but I’m looking longitudinally traffic leads customer count. Next one is average revenue per contract or average revenue per customer, depending off your B2B or B2C. So a CV is another way. Annual contract value is another way to look at it. So those four things should be trending up. My traffic should be trending in the right direction.

[00:27:58] Dave Parker: My percentage of leads should be stair stepping. Its way up. My customer count is a percentage of those leads and then my annual contract value or how much I’m charging those customers on a contract. So it reflects your ability to sell a higher price point, but it also, if you’re doing product, it also says, is my product getting better? And the last one is my sales cycle and my sales cycle should be coming down. So four things trending up, one thing trending down, if you think about those five items, it’s the magic of compound interest. For a small business, you have product market fit, congratulations. One or two of those things, it’s trending, that’s great, but it’s not product market fit, right? In a services segment, the question is are we having enough leads at the top of the funnel to talk to the businesses that are a qualified ideal customer profile? And then how do we make it easy for the customer to buy?

[00:28:52] Dave Parker: Can I give ‘em a trial? I’m not a fan of discounting. I come from the sales world, so I never believe in discounting, but I am looking for ways make it to take friction out of the process. So keep in mind 14 revenue models, we break down, only one of them introduces friction to their customer and it’s the gaming one. So if you guys have played Candy Crush, it’s the only business in the world, the gaming business, not Candy Crush, where we introduce friction, we make it harder for the customer to do business with us. That’s the only one. All the rest of them, we’re trying to take friction out of the process. We’re trying to make it simpler. So what we’re trying to do from the business perspective is make it simpler for the customer to do business with us. And that’s part of looking at the sales process at the front end, but it’s also looking at the service process in the backend. So if you have customer success reps, I would put ’em as part of the sales process part of your retention and long-term.

[00:29:45] Lee Brumbaugh: Value. So much what we do at Sales Xceleration, we actually have an area within what we call our building the framework. And so when you look at it, it’s obviously all the seats, but who is touching the sales process? Where do they fit in? And the biggest gap that we see is you do all this work as you alluded to, of getting a good call to action getting customer, and then it’s how do we create that friction point comes back in because again, we’re calling, it’s like, well, I’m going to set you up with somebody and then they’ll talk to you two days later and maybe they’ll give you pricing. And so we’re not meeting our customers where they want to be. And all the work you do on that front end is lost by not having a good sales process that ties together and you do it. We

[00:30:23] Dave Parker: Then look at every six months as a pricing committee and that pricing committee is like, what’s happening with the market conditions? Is our customer reacting or is our competitors reacting to what we’re doing or not? Are we losing deals or winning deals? And it’s just something as the founder, I would put on your calendar every six months and just step back away from the weeds of the business and look at a bigger picture and say, is our product meeting the customer needs? What are those five things doing? Is the traffic going up? Is you’re going to look at ‘em every month, but from a pricing perspective, there are chances where you can raise prices. Price gouging aside, that’s not what I’m talking about. We’ve gone through a bunch of that from a market perspective over the last couple of years, but in general, there’s chances the product gets better, your efficiency gets better.

[00:31:13] Dave Parker: There are chances to raise prices, and what we saw in the data from the 2,600 companies was most companies did not raise their prices in the first three years. So instead they took dilution in the form of equity investment for most of them where if you’d raise your prices, you as the founders would have more equity at the end of the enterprise value equation because when you go to sell the company, ultimately that’s why I’m so focused on enterprise value these days is like are you increasing the enterprise value of your company or not? That’s really the bellwether of success.

[00:31:43] Lee Brumbaugh: Yeah, so Dave, you’re working with these startup type companies, they’re doing the right things at the onset and the company is growing, CEO founders wearing more hats now all of a sudden there’s a lot of complexity. You’ve got hr, you’ve got accounting, you’ve got a lot of different areas that are coming in. That’s where I know with Sales Xceleration we see that’s where we get involved quite a bit coming out of this, where do you see as far as that messy middle, we call it that area of now we’ve worked with a company like yourself to get the right framework, but how do they stay current? Endless plug here on the Sales Xceleration side, but I know that’s a lot where we work. Where do you see they fall down in that message manual and specifically tie it back into from a sales perspective?

[00:32:24] Dave Parker: Well, so I’ve invested in maybe 80 companies. I’m loathed to replace A CEO unless I really have to. I’ve only done it a couple times as a board member. So the big question there for you is the founder owner is are you scaling with the business or not? And it’s a hard one, right? Like I am doing great. I mean the business is growing, I’m doing great, but you end up becoming the roadblock in the business without somebody holding up a mirror to you going like, Hey, have you thought about would you consider this? And that’s why entrepreneur support organizations, whether it’s E-O-Y-P-O or Vistage is that you end up with a peer or a professional around you that they’re just speaking to their experience, right? They’re not trying to answer the question for you. So having somebody who’s an outsider who can give you that feedback, especially if you’re seeing the thing stall or the growth not happening the way you want it to happen, I’d be a little introspective first and say, am I getting in the way?

[00:33:23] Dave Parker: Now in business we call ‘em professional coaches and outside that world we call ‘em therapists. The point of it is still the same. You need a coach, right? As founders, we come from being so scrappy that we don’t want to spend money on anything, and that’s always a challenge and we’ll just go figure it out and we’ll go into founder mode and we take pride in the founder mode and I’m okay with that. I get that. At the same time, if it’s not in your core expertise, that’s a problem. So I’m a pretty good product guy at this point, but I’m not a developer. I was always slow. I’m more technical than a lot of CEOs, but I’m not a generative AI guy. So I know the problem I’m trying to solve, but I don’t know the technology I’m going to use. The same is true on the sales side.

[00:34:05] Dave Parker: Generative AI is going to change, go to market so fast and so much that if you’re not actually doing that work working with AI all the time, the answer is you’re going to get lapped. And the good news is you can jump back in and jump two generations or three generations. That’s the good news. The bad news is you’re still going to get lapped. It’s a scary time or it’s an exciting time. I think of it as an exciting time. It feels like looking at my first Netscape browser and going like, this changes everything. So I would just say you have to figure out where you’re investing as a CEO to stay at the front edge. You don’t have to be at the bleeding edge, but you should be a little on the front edge of this curve. Your competitors are going to be.

[00:34:50] Lee Brumbaugh: Yeah, we’re doing so much on our end with obviously we’ve got a lot of productivity partners with Sales Xceleration, and when you look at it from an AI perspective, we talk so much today about your ICP, your value proposition. Our goal is to help you stay ahead from that perspective. So when you’re looking at your IACP, you can use AI to enhance it so much to define your customers. We’ve got a suite of tools that we use that help from that perspective, but it still doesn’t take out so much of what we talked about as well as the human touch, the CEO still being led on these large deals, still telling a story, still losing friction points. How do you pair, it’s pairing the AI tools that we have to make you more efficient in all the basics that we’ve talked about today.

[00:35:29] Dave Parker: There’s no killer app yet. We’re still talking about stuff that has an amazing amount of potential and is making incredibly fast changes, but no one’s figured it out yet, and that’s exciting. As an entrepreneur.

[00:35:45] Lee Brumbaugh: We talked a little bit about, I mean, with your time as CEO of entrepreneurs, and I’ve done a lot with that group, we do a lot. Our advisors are great resource for Vistage, EO, YPO, we, our advisor community helps so much with those types of companies. When you were with eo, what’s the biggest company you saw this EO is a lot of $3 million companies. They’ve grown, but they’re trying to take next levels of growth. What’s the biggest thing that you saw EO companies struggle with? Anything that jumped out to you that you helped them solve for that they got out of that community?

[00:36:17] Dave Parker: EO is in 87 countries and 20,000 members, so you have very wide range of business types. So third generation businesses in Southeast Asia to first generation founders, but typically they think they have in common is that they’re the business owner. I always looked at it as if I put my Amex down, it’s not an expense for the company, it’s part of my dividend that I’m not paying myself. That’s the big difference between EO and the other groups. When you think about scaling, the big questions are, there’s lots of uncertainty right now in the market and there’s times to take market share and there’s times to be cautious and you just have to have a good read on the market. And I think having the perspective that outsiders, there’s a ton of people who sell to EO and YPO and Vistage companies because it’s an entire market unto itself.

[00:37:04] Dave Parker: What I discovered was it was really a different market than the market I had come from though I would say we’re all entrepreneurs and in the same tribe in one way, but we’re really different entrepreneurs because the innovation economy companies have a whole different pressure to grow fast where the services businesses are, a question of how fast I want to grow is really gated by my own personal motivation and skillset and where I want to invest. I’m choosing where to invest, and I may be taking cash off the table as part of my dividend so I may not be investing in the same way. So you have a wide range of founders with expectations of what they want to do. As soon as you take outside capital from a third party, you now share their objectives. So it’s not about what vacation am I going to take with my spouse this year, perhaps to be my business partner and my LLC, right?

[00:37:57] Dave Parker: You’re now focused on do we share the same return and objectives that our investors share? You do compromise your vision when you take third party capital, if that’s what you decide to do. And I think it really comes down to when I look at what you guys deliver for those businesses, it really comes down to what’s the business objective that you are as the founder and as the owner trying to deliver. A lot of those businesses have a lifestyle goal and they’re never going to exit. A lot of those businesses are in a real conundrum right now, which is we’re in this largest wealth transfer in the history of the world as boomers exit their businesses and they haven’t put in scalable processes and people and the business is dependent on them. And I’ve done over 20 transactions and one of the common things there is sit down with the founder and they’re like, well, I did this and I did that.

[00:38:50] Dave Parker: And I’m like, no, I want you to say my team did this and my team did that, and I put these people in place to scale, so it’s less dependent on me because otherwise your buyer’s going to look at you and say like, oh, well, we don’t want you to leave. And you’re like, no, I just want to sell the company and leave. And the answer is no, but you did that and you did this. So I think it’s an interesting time. People are like, well, I want to sell it to my employees. The problem is your employees don’t have any money. So unless you’ve been incredibly generous with your compensation, which means you’re probably not taking as many vacations as you could, and it’s not a criticism, it’s just like selling to your kids one in the west. Your kids may not want it.

[00:39:29] Dave Parker: And two, the question is, do they have the money to buy it? Then if they don’t, they’re going to use your money to buy it anyway. So on the merger and acquisition side, it’s a super interesting time to be in that side of the business. Historically, I’d spent about eight years, 10 years doing venture and m and a work. It’s an interesting time. It’ll be there. But I would say, look for the areas you can scale. Look for the areas that don’t require you to be in the business, because at some point you’re going to want to exit the business. Life happens. All kinds of things happen, and for a lot of us as founders, that’s hard because our significance is tied up into what our job title is.

[00:40:07] Lee Brumbaugh: It’s your baby, it’s part of your life. So I think good points I took out is find the right partner. When you’re looking at that, especially that onset investment, we’ve talked so much today about getting it right at the beginning, setting your ICP, your value prop, finding the right people that’s support and growing. And the big thing that I took away too, and I just came from Chicago and talking with a bunch of PE companies on the side, we have our PE team, and it’s kind of like you said, it alluded to earlier, when you’re looking at that next level, it’s not the, it’s if you are the business, if you don’t have a repeatable process, if you don’t have a pipeline that has everything built around it, your multiplier’s not going to be there. You’re not going to have a business that can thrive without you, and that’s your goal as the entrepreneur is to get to that part where the business continue to grow with your vision, but not necessarily your doing of everything.

[00:40:58] Dave Parker: You have to decide to scale the business at some point. And I think if you put the right team around you, the answer is you can do that. By the way, the value multiple on the enterprise value goes way up when it’s less dependent on you.

[00:41:12] Lee Brumbaugh: And that’s so much what we do is helping with that scale, that strategy, that’s the execution, that management side, right people, right strategy, right process helps. What you do is from taking the startup to the next phase and then Sales Xceleration, we take that next path. So Dave, this has been excellent today. Thank you so much for all you’ve done. Excited to get your next book again, so much that you’ve done in the community, it’s great to have a resource for the startup side on the growth and excited for all you’ve done for growing IT in Seattle and growing it nationally. So this has been Sales Against the Odds. Thank you everybody for joining us. Again, our goal is to bring on not only sales thought leaders, but general business leaders like Dave that can help you grow and expand your business. Thanks Dave for joining us. You’ve been listening to Sales Against the Odds. Be sure to hit that follow button so you never miss an episode. And if you want more resources on scaling sales, check out our website Sales Xceleration.com.