The Complex System: Story of an Entrepreneur

We Are What We Are

Have you ever heard of the idea that dogs and their owners look alike? There have been a variety of studies on the subject and in my experience, it’s often true. I believe this phenomenon is due to a person’s subconscious desire to align themselves with like things. In business, I see a similar occurrence. Professionals enroll in careers or start businesses that fit their personalities. I discovered a great example of this recently. As a business that is very focused on a select set of verticals we work with may like companies. One of our core verticals is the debt/loan modification industry. An interesting, yet aggravating, trend we’ve uncovered in recent months is that these companies tend to break contracts more frequently than companies in other industries do. If you think about it, this makes sense. Debt settlement, debt consolidation and loan modification companies are, in fact, in the business of breaking and re-negotiating contracts for their clients. These companies will lie, cheat, steal and do anything to break an agreement. At the core, these companies, and the people that run them, have no respect for contracts. They simply sign anything because, whether consciously or sub-consciously, they know they can and will just break them if things don’t work out. Doing business with a company like this is difficult. Like an owner who looks like his Jack Russell, an entrepreneur in the debt industry, who’s core business is to help clients get out of debt by breaking or re-negotiating contracts, will look and act like the services he offers.

This is seemingly true in other verticals we play in. Insurance for example is a conservative product. You buy insurance as protection for what might happen but hopefully never does. If my theory is sound, someone selling insurance is likely to be conservative and risk averse in their own behaviors. In some ways this is a good thing; I doubt many of our insurance clients will just ignore agreements they’ve signed with us or lie about signing them. However, they are also more likely to lack the willingness to try something different, something risky. As an example, implementing a lead management system like Leads360 is a bit of a risk, certainly an exercise in change. As a company you are basically betting that we can help you find a better, more profitable, more efficient way to do business. In order to get these results however you have to get out of your comfort zone; you have to be willing to change.

Look at our core vertical, mortgage. This sector is in the business of risk. They are selling debt. They are basically selling product that says, “hey, I don’t have the money for this, will you loan it to me if I promise to pay it back. Ironically this industry made so may risky bets they crashed. But even in a conservative responsible market the product is still risk. How do you think they approach their business? They take risks. On the one hand this is great. A client may hire 20 sales agents on the come, great for us; but then with the potential for bigger reward comes the probability of increased failure. Believe me, we’ve seen a lot of both with our clients in this industry.

Finally, let’s take our newest vertical, Education. What does their dog look like? I don’t think we have enough data to back anything up as of yet, but I would hypothesize this. Schools are in the business of helping people learn. They provide a structured way to absorb information, process it and make a change. I suspect our education clients will have very good product adoption. I think they will put in the time, effort and analysis to thoroughly benefit from our products.  We’ll soon see.

GUT

More than once in my career I’ve trusted my instincts and reaped rewards for doing so; but more than I care to admin I’ve ignored what my gut was telling me and missed some big opportunities. This happened to me recently and I’m irritated with myself for letting it happen. I always have something inside me guiding my opinions. Often I have a strong feeling about something, but I’m not always convinced in my heart as to the right thing to do. But, in some cases I am. In this recent example I just knew it, from balls to bone that my instinct was right. I had this tingling passionate feeling inside telling me; push on this one, push. I wish I had, we missed out.

I don’t think the key is simply knowing what the right thing to do all the time, that’s unrealistic. And it’s not about blindly trusting my gut. But it is about distinguishing between a feeling and a passion. It’s happened enough that I can make that determination, and when I do, I won’t sit back and listen, I’m going to push and push hard.

RISK

Risk is a concept that denotes the precise probability of specific eventualities. When I think about my life I know I’ve taken some pretty big risks. However, at the time I didn’t feel that I was taking that big of a risk. So I question what really makes up risk. If you have little or no fear about the results is that risky? What if you have fear, but your passion, adrenaline or some other emotion drives you to ignore and push forward, is that risky? What if you actually stop and shudder when you really know, in your heart, that something is risky, is that risky? In life, and business, risk is what makes the difference between playing small life and creating the big bang. When the time comes, and risk presents itself as an opportunity, I hope to have the courage, intelligence, insight, strength, curiosity, passion and poise to grab the bull by the horns.

Startup Fever

Have you ever had startup fever? Whether you’re a carrier or you get infected somewhere, it’s super contagious. It’s also one of the most powerful attributes of an innovative and exciting emerging company. Unfortunately startup fever doesn’t last and once cured, it rarely returns. So what can be done to start an outbreak? I’ve been fortunate enough to have been among he those suffering from this compelling sickness in more than one occasion. Certainly we had a case at Leads360 and I would argue that we’re showing signs of a relapse. The symptoms of startup fever can be different for each company and for at different stages in a company’s maturity lifecycle.

This encouraging epidemic began with momentum in revenue. Beginning in October of 2008, we buckled down our operations and began to see signs of growth; i.e. expenses down, revenue up. Then, in early 2009, strategic thinking was all the rage and we began to plot our moves. Now, big decisions upon us, we’re starting to innovate again. And if you walk the floor of our office you can begin to feel the aches and pains associated with startup fever. When key pillars of success like growth, strategy and innovation converge, sickness erupts and good things happen. Oh, it hurts so good.

Finance Shminance

Yup, I failed macro economics in college. That was freshman year. I really hated the class so much I never bothered to take it again even though anyone could take a freshman class over and take drop the lower grade. That added a 0 into my GPA. I still managed to eek out a 3.2, but imagine how much better it would have been; rather I don’t need to imagine, I guess I could just do the math, but I didn’t really care much for those subjects either.

Soon after I started having some entrepreneurial success my father suggested that I take some finance classes. He tried to impart on me the value and importance of being able to read and understand financial statements. It wasn’t so much that I didn’t regard the sound advice; quite contrary, I knew it would be useful and that I fully believed it due to the repetition of that same counsel in the various business books I’d read. Insomuch that I didn’t heed my father’s direction, partially due to my own obligation to do things my way (that’s another post entirely to be sure) and partially because I just didn’t enjoy it.

I winged it. And as my business evolved, financial sophistication became increasingly more vital. I’d say I made an effort to understand and manage by it, and to some reasonable extent I did that with success. But it wasn’t until recently that I truly discovered the benefits and was inspired by results of financial scrutiny.

As I’ve said many times before, ironically some advice I did take from my father, I hired people smarter than me, or at least more worldly in ways I was not. This capacity has served me well, and the hiring of Dan Morefield has opened my eyes to financial management. Weekly we study our P&L, cash flow, balance sheet and so forth. Without question just keeping a watchful eye and regularly examination of these documents from trained perspective has made a dramatic impact on our business. In fact, from Dan’s perspective it’s less about his understanding of the numbers as it is for him to ensure that we, the management team, understand the numbers. His diligence in our comprehension of them is in an effort that we discover problems early and make sound decisions.

As someone who failed economics, you could say I’m a poor student. But I think perhaps I didn’t have the right teacher.

Cracking the Marketing Nut

Of course any marketer wants to turn a dollar into more than a dollar, but the holy grail of marketing is figuring out how to scale. If you can demonstrate that spending 20 grand more on the same thing will generate 35k in return, who wouldn’t do it? I’m obsessed with this quest but it’s extremely challenging. I started about 8 months ago with consistent metrics tracking. It took several months to hammer that out and its producing data. Deep down I somewhat hoped that would be all and the answer would suddenly come, of course it didn’t. Now I take that information and make best guess decisions on how to tweak marketing. Maybe some will say it’s a perfect science, but my experience is there is some art here. My decisions are about 50% data and 50% gut. Right now, that’s the best I can do. I feel like I’m making progress. I’m definitely getting ROI, that’s not the issue. We make more than we spend, but I can’t say with any decisiveness that if we doubled the marketing spend, it would result in double the ROI. That’s the mission though.

Ode to Auditors

This is a rock. It is gray. We have reason to believe it will remain a rock for the foreseeable future. The rock is hard. The rock has little use. If you throw the rock at someone it will hurt. We cannot guarantee the rock will be anything else. Unless circumstances change the rock will continue to be a rock. That is what we can tell you about the rock.

Auditors have an uncanny ability to state the obvious and charge you for it.

What are We Solving For?

If you work at Leads360, you’ve heard this statement more than a few times lately. Funny thing is, until about 3 months ago, you probably never heard it. That doesn’t mean we had no idea what we were solving for prior to that, but it does mean that we didn’t deliberately stop and ask that question. It’s actually a pretty straightforward concept articulated in a very clear and actionable way. That’s what I love about it. When that question is asked, we pause. After all it’s easy to get side tracked in a meeting. It’s easy to forget why we got together. Or maybe we just get lost in the passion of debate. Whatever the reason, it’s surprisingly common to come out of a meeting without a resolution or plan. Taking a moment to answer that, however obtuse it may seem, is pretty valuable.

What are you solving for?

The “What Not to Do List” is more important than the “To Do List”

I’ve always been a big fan of the to-do list. In fact, since discovering the technique from a colleague about 10 years ago, I’ve taken many approaches its design and use. While I couldn’t live without the to-do list, I certainly haven’t perfected it.

I’ve tested dozens of web based to-do lists, but never really found one that suited my style. So, some time ago I developed a web based to-do list tool called TabLists.com. I use this tool because it’s extremely simple. That said, I still use paper lists.

But this post isn’t about to-do lists. It’s about not to do lists. Lately I’ve been overloaded with to-dos. I’ve either got to many lists or I’ve just taken on too many projects (the latter of course is true). So now it’s about prioritization. When I come to work tomorrow I’ve got to figure out what NOT to do first and focus on the single most important item first. No matter how hard it is, I’ve just got to get through it. It’s just too easy to get sucked into the unimportant. There are too many things on my lists that just don’t move the needle or don’t make a difference. At work and at home, some things have more impact than others. And when the lists get long, I’ve got to know what NOT to do before I can figure out what to do.

BTW, I’m a student of David Allen’s Getting Things Done philosophy, but not entirely. I really think he’s over-complicated it all. But, like all great wisdom, I’ve found that I’m best served by taking what works (for me) and leaving the rest.

What Makes a Good Company; Product or Everything Else?

A lot of people would say that it’s our product that defines our company and that that is the key to our success. For me this is too simplified and I think that it can change. When we first started Leads360 I think it was our product that really jumpstarted the business. I was so deeply focused on building the best software application we could. I was laser focused on this and we developed a highly competitive solution. Over time, as the company grew, other factors set us apart. I noticed that my leadership shifted from product to team building. I spent a good part of 2007 focusing on culture and I believe that has been a major factor in our longevity and current success.

We have an amazing culture and the people at Leads360 have an even more incredible work ethic and commitment to excellence. It’s harder to measure this. Even people inside the organization still see the product as the real differentiator. But I think over the years, the core competitive advantage has become the people we have.

The trick is to balance the drivers of success so you don’t trade one for the other and swing the pendulum to far that what once was the key driver gets lost. I’d say that hasn’t happened to us from the perspective of the product, but I do see less focus or appreciation for fine tuning our software. We need to continually keep it top of mind and try to innovate at the same time. Additionally, being opportunistic about new drivers of success can be an asset. The pendulum keeps swinging and I think people may not be the most important driver for the coming phase. I haven’t fully decided, but I believe that strategy may be the key right now.

Navigating the big decisions in front of us will prove to be a big factor in our future success. If we keep our eye on the product and innovate, motivate and inspire our best people and make really intelligent decisions, the future will be big.