Scaling Up Faster, with Peter Martin

Well, if you listen to the show, you probably do want to scale up faster. So how do you scale up faster? But in particular, what if you're not a funded company? What if you're bootstrapped? What if you own the business? I've got some clients right now that are bootstrapped. Historically, most of this audience is bootstrapped. Right. So you probably don't have a whole bunch of VC money to grow your business. And that is what our show is all about today. What a real lesson and real underlying principles of lots of companies that have scaled up. That's what we're getting into today. Hey, everybody. I'm Bill Gallagher, scaling coach and host of the Scaling Up Business Podcast. We bring our show to you every week with one of the speakers, authors, gurus, CEOs in the world of scaling up. And there's over 500 episodes on everything to do with your strategy, people, execution, cash, all that and more@scalingcoach.com as well as our free course on the four stages of scaling up, how to navigate each stage and what's involved. So there's a free course there. You can go get that now. You can also get this show, notes for this show and everything else, the links, all that kind of thing, links, offers, like, whatever else, our monthly workshops and scaling up all kinds of stuff and more@scalingcoach.com so go there for all.

Of our good stuff. All right.

From Cleveland, Ohio, Pete Martin joins us. Pete spoke recently to our scaling up audience and we wanted to spend a little time and go a little deeper and take it from a different angle and let him share some of his things. So Pete has an extraordinary background, highly successful in growing, scaling and selling companies and pretty good size and to really, you know, big folks like KPMG and so, and comes from kind of a traditional thing. So he did a study here and he looked at some companies and he drew some really interesting lessons and stories. So welcome to the show, Pete.

Thanks, Bill. I really appreciate it and happy to be on the show. I love your. I love the content. I love all the value you give to all the business owners that are trying to scale up. So hopefully will add a little bit more value here.

So you have great stuff to share. The book is Scale Up Faster and the link and we'll put that on at the end as well. But ScaleUpFaster.com is where you can go get more.

So yeah, let me, let me give you a little backstory kind of how this book came about. So as you mentioned, I sold, I'VE kind of done the whole gamut of being an entrepreneur and working for big companies. So when I was 18 years old I thought I was the smartest kid on the block. So I started a car leasing company back when nobody leased cars. So it was very missionary selling. Did that for about four years and ended up, you know, I thought it was a, you know, classic snot nose smart kid and the world just kind of slapped me around and I ended up selling that business and basically got out with a small loss and then decided to go back to school. So I got my bachelor's of my MBA in three and a half years and then went completely in the opposite direction and worked for IBM for eight years. So you know, from single man startup to the biggest company on the earth at that time and then ended up doing some corporate stuff. And then in 2002 kind of went back into my entrepreneurial journey and started, scaled and sold three additional businesses that I sold. Got a couple that are still active. And the last one that you mentioned I sold to KPMG was a consulting firm for 12 times EBITDA and a great exit. And about two years after that I decided that, you know, I was so smart that I was going to write a book and I started laying out the chapters and kind of writing some stuff and at some point something had hit me and I'm like, you know what? Nobody am allowed to cuss on your show, you know. No, no, nobody gives a shit about me. Right. So I'm like, you know, maybe I could have sold a couple of issues to my family and friends, but that's about it. And about that time, VC money was flowing. You're in Silicon Valley, Bill, and money was just flowing. This is kind of pre. Covid. Covid days, right?

Sometimes, yeah.

And you know, in the business media I kept reading about the unicorn founders and it really kind of pissed me off because to me, you know, you can go be valued a billion dollars or $50 billion like your son's company and but you haven't created a sustainable company, right? And we've seen this last couple of years, a lot of these companies that raise hundreds of millions or billions of dollars are literally out of business now. And so, so it really kind of, it got my, it got my craw, so got in my craw and so I decided to do the same thing that Jim Collins did for Good to Great but with private companies. And you know, you can argue you can like or not like what Jim did with Good to Great but what I think is Hard to argue against is the discipline he put into the research methodology. Right. He took a very point of view. He didn't have an opinion about why these companies were great. He just really dug into the details. I wanted to do the same thing for private companies. So over the last, it's almost been three years now, I looked at the Inca 5000 over a seven year period from 2015 to 2022, and there were about 30,000 unique companies in that database. I then filtered them by companies that doubled revenues every year for the majority of that seven year period for basically about four years consecutively. So that took the 30,000 companies down to 384. I then wanted to take, take the companies away that did that by raising outside capital by, by raising growth equity or being VC funded in the beginning. So that took 386 down to 324 companies. So oddly enough, it came out to be basically the top 1% of the Inc 5000. Okay. So that started my journey. When I kind of started this project, I thought I could bang this out in six months. I never imagined this would be almost a three year journey, right. To kind of put this research together. So what I did then is I took these companies and I reached out to all 324 CEOs. I had about 65 respond and say they would love to participate. One of the biggest reasons is one of the questions I first asked of them, you know, why did you want to contribute? And they all said, look, growing a company fast and doing on a bootstrap basis is really, really, really hard. And there really aren't any books or formulas or frameworks out there that we could have tapped into. So we want to give back to the entrepreneurial world and help other entrepreneurs and business owners do this a little bit easier than we did. So I went about then researching. I've had almost 90 some interviews now, face to face zoom interviews like we're doing here. I had over 300 questions of CEOs and their executive teams. And then I used, I ripped off of Vern's four Decisions framework, which, you know, our audience is very familiar with. I put spin on it, but that's the essence of the book. So I looked at first the team and then I call it Customers. Because without customers you don't have a business, right? Sales, marketing and service, kind of from the functional perspective, then we've got the capital piece of it, right? You gotta have cash. And then I call it strategic execution. So, you know, not everything that you do operationally is equal in terms of a growth lever. So I really want to understand what their growth levers were. So that's the essence of the research. And now obviously the last one is kind of leadership. So a couple of I'll touch on some kind of high points from the book and then we can dig into some of these very specifically. So one of the first things that I thought was a little bit shocking is none of them had a business plan. And, you know, I've got an mba. The only CEO that I talked to that had a business plan was a guy who had just graduated with his mba. And he thought that's what you're supposed to do, right? So Silicon Valley talks about getting product market fit. That's effectively what these guys did, right? They went out, they talked to customers, they figured out what the customer problem was. They kept iterating and figuring out their value proposition, figuring out what the product should look like, whether it was a product or service, and really got very intimate with customers. And so instead of having a business plan, and most of them told me, said, you know, look, a plan is worthless, planning is valuable, right? I don't remember who said that, but that's effectively the case.

Churchill, Eisenhower.

And so that, you know, a couple of them kind of said that. And they said, look, whatever we put into a business plan is completely made up. The financials though, like, we'll figure it out as we go, right? So that was kind of a pretty big aha. Many of them, which was really kind of surprising, had what I called a chip on their shoulder, so they had something to prove to somebody. I'll give you two examples. So one of the companies I studied is a company called Farm Girl Flowers, started by a lady that grew up in Indiana, which is why it's called Farm Girl Flowers. And when her, she has an older brother and a younger sister, and her older brother, her parents saved money for her older brother to call it college. And so when she was ready to go to school, she said, hey, mom and dad, you know, where's my money? I want to go to college. And they said something to the effect of, you know, honey, you're, why would you go to college, right? You're, you're a woman. Like, you're gonna be barefoot and pregnant, right? They didn't say this, but that's spectacularly that demand, right? And it really pissed her off. And so her tip was, I'm gonna prove to my parents and my friends that I can be a successful business executive. And she, she Grew accompanied over $100 million in about four years in a male dominated industry of multi billion dollar, you know, organizations in the floral industry. Another guy is a company called Advertising.

Wait one sec, you're going to go on about these things? But I think it's useful to notice because this is a powerful thing. Very often leaders who accomplish stuff have this and somebody did something and said whatever. And there was a guy. It wasn't Led Zeppelin, it was somebody. And they were like, yeah. Why I did all this is because my music teacher told me I'd never amount to anything. And I was like, f you buddy. I'm doing it. I had a woman that I coached who really accomplished and she's like, I just was heartbroken and then angry when a professor told me that women didn't belong in engineering. And I. And I'm like, ah, good for you. Like turn it around and let that, let that fire fill you up. It's okay. Like, you know, you might have some.

Healing to do at some point. But yeah, I mean this discussion I have in leadership, I call it leave. They leaned into their chip, right. So I think when people, situations, they get one or two paths. One, they're just like, you're right, I suck and I'm just going to kind of pack it all in. I'm going to do my thing. But the ones that really successful it, they use that to fuel them, to fuel their growth. Right?

Yeah. Yes.

Yeah. So that was kind of a very interesting aha. That you know, I discovered through like a lot of them. They, they were all very lean at the top. The average revenue of these companies was about $78 million. Right. So these are pretty good s. So I expected them to have a lot of C level executives in the organization.

That's my audience, like the core people that actually, I mean our show audience is probably bigger than that. But that's. The companies that coach with us are right around 40 to 75 million.

Yep. And so, you know, when I was, when I asked to talk to the leadership teams and there were a couple of cases, there was two companies. One is they'll do 180 million this year. The other company will do, they're over 100 million as well. And they're like, I want to talk to your marketing person. Well, you're talking to them. Well, I want to talk to your sales guy. Well, you're talking to him. I'm like, hold on, come on. Right. And so they were very lean at the top, you know, and part of that is just being bootstrapped. Right. But they figured out how to do things very efficiently without having a lot of overhead. And they really pushed decision making down in the organization. One of the other very interesting things is I'm on the marketing guy by degree. I got my MBA or my bachelor's in marketing, MBA in finance. But I've always professed this concept of this fully integrated marketing. So, you know, you have SEO and you have this channel and that channel and this channel, and they should all be integrated. And if you do this, like, you know, growth will just happen. It was completely the opposite. They all had a single growth lever that they figured out that fit the culture of the company and they went and they mastered that. Five of the companies that I talked to that were between 60 and 150 million, their number one sales method was cold calling, believe it or not. So one of the companies I talked to is called Freestar. And what Freestar does are actually in Arizona. And they will effectively go to a publisher that has a website that sells advertising on the website. And these guys are the best in the world at monetizing that advertising platform on the website. So what they will do is they will literally take over your website, all of the revenue side of your website, and they have all kinds of algorithms and everything to maximize the revenue. Well, they call the publishers and say, hey, we want to take over your website. Right? I mean, it's really kind of crazy. And so it's just a very interesting, you know, really, the aha coming out of it was instead of trying to do SEO and social and viral and product led growth and all this kind of stuff, they pick one platform, one channel and they mastered it. And they looked at all of the incremental steps along the way. One of the companies I talked to called Retail Service Systems rss, they sell mattresses out of warehouses, literally. They have a sales process that they patented that has a 90% close rate. From the time that person applies to go have an appointment to see a mattress, they've got an above 90% close rate. So just really, really fascinating stuff. Let me, let me stop there for a second because I can, I can keep talking.

Well, I already hear a focus on a customer problem and a focus channel and not trying to be too gimmicky. And in today's TikTok Instagram reel led world, where we see somebody who makes a course about making courses and then tries to game a system and resell something on Amazon and whatever, and everybody's trying to create something with no effort and doing really nothing unique involved and learn some formula or whatever. These are people who are creating a new formula and focused on a customer and a customer problem.

Right? That's exactly right. Let's talk about the team side of things. This is pretty interesting conversation too. Yeah. So you might imagine, I mean, of all these companies and they range from. The range of revenue was pretty big, but the average was about 78 million. So again, pretty sophisticated companies. Right. So on the journey they had to hire top performers and they had to figure out when the company outgrew maybe some people that had really helped them along the way. So I really dug deep into. This is probably where I spent the most time on the. On the team side of the questions in terms of the number of questions and how deep I got into it. And the number one thing that came through this will sound like a little bit of motherhood and apple pie. They focused on culture. Let me be more specific. So they did an exceptional job of a. Figuring out what their culture was all about and then be really being able to describe it in very rich terms and words. In the book I've got some really good examples of how they describe their culture versus somebody else that's in their market. And if you were to go look at the way they did, if you were a job applicant looking at their company versus their competitor, you're not even going to think about their competitor. You're going to absolutely put your application in to these folks and did a phenomenal job. And then in defining the values of the company and then the cultural elements, the values and the mission, they really used as not only a way to screen applicants that were a good fit for the company, but they carried it all the way through to performance management and performance, performance management development and everything else. They wanted to make sure that number one, you were a great culture fit. And one of the companies, forgetting which one it was, actually has a cultural engagement manager. So they make sure that when you're doing there's doing the screening of job applicants coming through, that they are, number one, cultural fit and then number two, that when they get into the organization, all of the onboarding is in keeping with the culture of the company. And one of the things I talk about in the book, and I had this same experience myself, is virtually none of them were successful hiring professional hires. So I wouldn't have been hired by these guys. I don't think you would have been hired by these guys. Right. And I know when I had my consulting firm, we were at a place where we wanted to go hire. So we, we did hire a partner from kpmg, we hired a partner from Deloitte and they completely washed out. And it wasn't because of their deficiencies or their skills. They weren't a good cultural fit. And you know, one of the things that I talk about and they found exactly the same thing is you know, if you're IBM, I work for IBM, I could go get a meeting probably pretty much with anybody with Pete's consulting firm. They're like, who the hell are you? No, I don't think so. Right. And so it's hard to separate the brand equity that the company is working for from the individual performance. Right. And that's kind of what they found. So what they discovered was if they were going to hire a professional hire or even contractors, some of them talked about, about they would hire from UPWORK or Fiverr or whatever, but they would take the cultural screen that they'd use for employees and actually apply it to contractors. So really pretty surprising.

Let's unpack a little bit this idea of culture and what it means and what you do with it. So and why it's important because I look, I've had a couple of really great examples that are very much like this where people misunderstood top grading and then applied it incorrectly. And they, they were like we' they. The misapplication is generally there's a view that a players is sort of an absolute, that it's not subjective or situational. So they go looking for the best degrees and the biggest company backgrounds and the progression of moving up in every company and they overweight that and they don't think about this culture fit. Right. So they hire somebody from MIT and Apple as one of our clients did, who was great, brilliant, accomplished person but a really bad fit for their culture and then really held the company back for more than nine months and another one who hired somebody with a really extraordinary background and grew some big companies, that kind of thing. But they were a very small company, a very different scrappy, hands on environment and the person bombed again because they wanted to rely on vendors and departments and teams of people and not rolling their sleeves up and in being practical about it. So time and again we overweight people from bigger environments and then don't think about culture. So what is culture? And culture is a little nebulous. Right. And for sure, like you talk about at its heart, core values is at the root of. But it's much more than that, right? What is, what is culture? Right. So I could talk about it, but why don't you tell us how you Define it. What are the elements of that? And like that. What did you notice?

Yeah, so I think that the way that a couple of them talked about it and the way that I describe it is how do you act when the CEO is not around? Right. What are the decisions that you make? What do you do? What do you not do? How do you react to teammates? How do you react to clients and vendors? What happens when nobody's looking? To me, that's kind of culture and. Right. It is hard to describe. And the companies that got this right, really, when you read the job description or the way they describe their culture, you know exactly what kind of company that is. One of the examples was, in fact, I think it's Farm Girl Flowers. They tried to raise Capital. The CEO got 102 no's. So she basically just put that aside and said, forget it, we're just going to go bootstrap this thing. And they put bootstrapping at the very center of the culture. So when they were talking to a job applicant, they would say, let me tell you what we're all about. We are a bootstrap company. Let me tell you what that means. We're not cheap, but we will take time to make decisions. And they would, they kind of would walk through scenarios about what being a bootstrap company means, with the benefit being, oh, by the way, I, as a CEO and our leadership team, we make all the decisions. There's nobody that makes a decision for us. And so every decision we make is for employees and for customers. And so we could also talk about not only what is the culture like in rich detail, but what is the benefit to that individual of going into that environment. And they'd say, look, we're not, you're not going to make the most money here on a salary basis, but on a performance basis you could make more, but it depends on if we're making money and generating cash. Right. So they get, they tied everything together for all the cultural elements, the type of people they were trying to hire and what the benefit to them was from a careers perspective, which was another huge thing that they did, was they made the hiring and recruiting of team members about them. What was in it for them, not for the company. A great example was a company called JCW Group. It's a staffing and recruiting company at Corner of England. They've got a bunch of offices here in the US and if you go to their website as an applicant, they, it's the first time I've ever seen this. They actually have a career Transition plan. They have the roles of the company, how you move one role to another, what you need to do to go from one other one, why you would come work for them. They hire a lot of people right out of college and so they want to know what's the career map look like and how do I move from this one to this one? And phenomenal, right? They made the whole process about the candidate and what's in it for them. This was very consistent with a lot of the other what I call bfgs or bootstrap fast growth companies, you know.

So in culture, when I'm working with teams on culture, the thing that I first want them to get is so think outside of business culture, what are some cultures? Right? And at first they have trouble naming them, but I'm like, go really basic. You have a regional and ethnic religious combo culture. Like you have some things like that. And if you're in North America, you probably have a combo culture that's both regional, ethnic and religious. And it's a blend of things. I know our family will celebrate both Hanukkah and Christmas. It's North America and we have all sorts of identities in our family. And when you think about that then and think about, there are holidays around which we say things, around which we put up things that look, smell, taste, we have things that we say on the regular, things that we repeat and all of these things. And there are specific events and moments in life and in years, seasonal events. So all of these things define culture, but they all underscore a set of values and an underlying purpose or why for, for that community. And so if you think about a community, so how would we build that in a company? Right? We want to create rituals, traditions, symbols, terms, phrases, all these kinds of things to reinforce the why, the values, the brand promises of the company so that they think and they do things the way that you intended to do when you're not there, right?

Exactly, exactly. And these companies did a really good job in defining that. And you know, one of the examples was this company would talk about, you know, they're really scrappy, they are, they move quickly. They, you know, I hate to say fell fast, but you know, that kind of was the essence of it, you know. And so if somebody came through and they're like, you know, I really need to analyze this decision. They kind of assume that's the way that personality was. They're like, they're going to, you know, they're going to fail in the culture. And so they could, they picked verbs and Adverbs and adjectives to really kind of hone in on what it meant. And they were. The way they described the culture was slightly different than the values. The values underpinned something that all of the applicants needed to have. And it was beyond honesty and integrity, whatever. Again, they did a pretty job of defining those, but it really was separate from the culture. So you could have the same set of values and go to work for the scrappy company versus we're an engineering company. You know, one of the companies was an engineering company and they were not scrappy. They were designing sewer systems. And they're like, we are very cautious about what we do. We are very disciplined and. Right. And you can have the same values, but two different cultures. So those two things are distinct and unique should come together.

It's helpful to get some outside input to have somebody say, because, like, you know, there's an old saying, there's actually several versions of this, but they'll say that we'll never really know who discovered water, but you can be pretty sure it wasn't a fish. Like, there's a thing about ourselves that we don't really notice. And other people are going to be like, no, you guys are super methodical. Or no, you guys are all heart and soul. Or no, you guys are creative or whatever. There's a vibe, right? There's a vibe, there's a style. There's something that's already there and you don't notice it about yourself. Now, people interviewing you, your friends, your family, your customers, they would notice it if they walked around and if the two were inconsistent. If you said, we're like this, but you're really like that and the two weren't the same, other people could spot it better than you can, right?

Yep, absolutely.

It's useful to get a consultant or just some friends to give you some feedback on what do you see here? Like, you know, when I share my company or tour you, what do you notice? Right. What stands out for you? How are we different? Right.

Super employees. And a couple of them did that, right?

Yeah.

Why did you leave? They were like this.

I didn't like that. Good.

Yep.

Don't eliminate that. Just be proud of it.

Own it. Right, Right. Exactly. Exactly.

Well, you did something. I think it was your prior company that you sold SAP. You created a manifesto, right? Is that right? Tell us about that, what you did there.

Yeah. So after I had sold my third business and started up this, this fourth one, we decided to. My co founder and I sat down, we wrote this manifesto, and it basically described again in very rich detail the kind of people that we wanted to work with, the kind of people that we wanted to hire. We created. We wrote down the values of the company, we wrote about the kind of clients we wanted to attract, the clients that we didn't want to attract, really. We, we defined on a piece of paper what the culture would be. Right. And again, pretty rich detail. This thing was about, I don't know, 15 or 18 pages. We had all kinds of philosophy in there and all this kind of stuff. Every employee came in, we made them, well, when they, during the recruiting process, we made them read it. And then once they got hired, they actually had to sign the manifesto that they were prescribing to. This is the way I'm going to run my business. So fast forward then five years later, we kind of forgot about the manifesto. And we were coming up on our fifth anniversary. And so without mentioning the manifesto at all, we said, you know, we're going to rewrite, we're going to redo the website, we're going to kind of put up the mission and values and all that kind of stuff on there. You tell us what you think this company is all about. And almost unanimously they described it exactly the way that we had it in a manifesto. And you know, by that point we were, oh gosh, probably 20x what we, you know, from like the very beginning. And so we were really proud of the fact that we had kind of stuck with that. And for the first year we were really pretty disciplined about bring out the manifesto. Does this person fit the manifesto? Then we kind of left it, you know, and then as everybody else started hiring, you know, we obviously hired a players a players hire a players, right. And it really kind of turned into this really wonderful thing for the company. So. And I was one of the reasons why I was able to sell it for such a high valuation.

We do like two versions of that. With most clients. We work on a rich long thing like you described that we call a vivid vision statement. And then we also work on a short manifesto that they can use very frequently. That just is things like purpose, values, brand promises, bhag and sometimes some vision, but something short that could be repeated like all the time. Not a 15 page doc, but I like that you had people like, you found ways to use it. It didn't just go into a doc that you presented once and it was done with it. Like people had to read it, they had to sign on to it. You referenced it regularly. If you don't take a Manifesto and find ways to bring it to life over time, then it's not going to have a lot of value for you. I grew up, like many of us of a certain age, reciting the Pledge of Allegiance every day at school. Now, that was a simple rote recitation with very little reflection. Right. So we pledged allegiance to the flag of the United States of America and to the republic for which it stands. Right. So what does that mean? Very rarely did a teacher teach or reflect. Like, why do we say that? What does that mean? What are those words all about? Right. But you could take those words of your company and not only recite them, but actually say, well, why do we say that? What does that mean? What does that look like? And how does that affect you today, this week, that kind of thing. And it would be more powerful than our old Pledge of Allegiance.

Right? Yeah.

Which is, I think, a fascinating thing.

For all of us.

Describe how it is, and this idea of this kind of a manifesto, he would call it a vivid vision, is how Brian Scudamore scaled 1-800-got junk and his O2E brands and has that now, you know, rapidly approaching a billion dollars in sales. Right. Like, that is the way to, you know, and. And there's not. That's a bootstrap company, and that's not a guy who has an mba. That's not a guy who went to college. Right. So powerful.

Yeah. Yeah, for sure. I found, is that, you know, in the concept of a bhag. So I'm a. I'm a big believer in the BHAG as well. I love the bhag. None of them had one. And so.

Right.

It was really fascinating. I really. I believe in the value of. Of having a mission and having everybody aligned towards kind of this common purpose. And one or two had one. I. I definitely wouldn't call it a bhag. It was maybe a little hag. And. But what they did, though, was they, again, kind of back to the culture thing. They said, this is what we're all about. This is. This is the value that we're trying to provide to customers and got everybody aligned around that. And, you know, there's one company that came back and they're like, you know, maybe we should put a BHAG together. I'm like, well, you guys have grown to, you know, 150 million in four years. Do you really think you need one? You know, they're like, yeah, probably not. So it's really. It was kind of an interesting conversation. I expected to see more of that Expected to see, you know, scaling up methodology, EOS methodology or something. I really didn't see a lot of that operationally. They were all kind of messy. And I think what I, what I discovered from that is if you're doubling your revenues every year, right. You don't even know what the hell's around the corner, operationally speaking. And so, so there's a lot in the book about kind of this, this maturity model that they all kind of went through over time and had just figuring out at some point in time they're like, all right, we need some systems or either compliance, risk reasons. But you know, I think that a couple of them said, you know, if we would have, if we would have bought a ERP system when we were like five years ago, it probably would have killed us because we were taking our off the ball from our customers and we would have been focusing internally instead of externally. One of the companies who shall remain Nameless was 110 million. Phenomenal customer experience, phenomenal brand, great customer loyalty, amazing community. Their financials were on Google Sheets.

You know, I encountered that a lot. Like I had a company over 100 million that I worked with that there were some, there was Google Sheets at the top level and there was an accounting package. But around the company we had whiteboards. Right. So in all the different operating areas of the company. And I had another company that had ERP mrp. Lots of very sophisticated state of the art stuff in a new facility. But we had to go back in and put whiteboards around working areas because they needed something more tactical on the daily basis to interact with Visual Tactical. And then I had another company that did, they used a DOMO implementation. They put up screens all around their offices and flashing all this stuff and it just became digital wallpaper. It was like bunch of meaningless graphs that were colored on brand colors for the look and feel of the company, not on the informational value like red, green, yellow.

That's useless.

And how much did you spend on this system? The idea of the wrong system. I put an ERP system into a company and it cost us way too much. And it complicated with some other things, caused me to make a multimillion dollar mistake and it was the wrong time. I put it in too soon. I'm going 250 million and it screwed us up, right?

Yeah. I mean I've spent most of my career putting in ERP systems and it killed me to hear this, but I also saw the horror stories and just like the story you just told. So I got it and you know, and I kind of reflected back on man, if you're doubling every year and, and you just literally don't even know what's coming around the corner. Like it's, you don't want to put in the earpieces and it's going to constrain your growth. So.

No, it's a really brilliant idea. Right. But, but it's, it's. And I have many clients that have put them in, in the past on their way to something and when I did it and I put in a, like an open source version of SAP and in a company that was way too small for it and it, it really like over complicated everything that we did and it, it created a permanent job for our software vendor and then because of it, we made some mistakes in purchasing and production and that cost me millions of dollars. Right. So not only did that, but the system cost us hundreds of thousands of dollars.

Yep, yep, exactly.

So wrong tool, the wrong time. Let's talk about this passion for the brand and the customer connection. A couple of your stories really stood out for me. Clickfunne and Pendos maybe talk about one of, or both of those.

Yeah. So I started out this, this part of the book talking about community and I started out talking about Taylor Swift. Right. You know, are you a swifty? Right. So what I think is done, I, I won't get into the personal story, but I'm actually one degree from Taylor Swift at this point. But. Oh, yep. No, I won't, I won't go into that story because my daughter will kill me. But what's really interesting about Taylor is not, I don't want to say anything against her music, about her music or her playing ability, whatever, but she has mastered the art of community. Right. There's nobody that has a more loyal fan base than Taylor Swift. And this is what a lot of the companies did really, really, really well. So ClickFunnels is a SaaS company. They sell sales funnels. And we've all probably been through them, you know, buying whatever product, particularly an information product. Right. So these guys are about 140, 150 million this year. They were one of the fastest bootstrap companies ever to go to 100 over 100 million in ARR in about four years. And one of the things that the CEO Russell Brunson did that was just phenomenal is they created this community called Funnel Hackers. So and if you, if you've, if you're an old guy like you and I, Jeffrey Moore talks about this book called Crossing the Chasm and it's about how do you create an industry around your product or service? Right? So another word is community. So they created a community of people that were experts in putting in their technology called funnel Hackers. And he tapped into this group of folks that were making money from being consultants in his technology. So he went with it, and they created a community called Funnel Hackers. They actually created a manifesto about what does it mean to be a funnel hacker. And it's, we're, you know, we are bootstrapped, we are scrappy, we are resilient, we are greedy. We and like, literally built a manifesto for these funnel hackers. And one of the examples that I talk about in the book is, you know, I look to see what the. How rabid a community is by how many tattoos somebody has of their logo on their body. Right? There are click. There are people that click funnel statues on their body. It's pretty crazy. And his whole business is around nurturing and fostering that community. They have a live event every year where they give away awards for people that have built businesses through their technology. Right. It's not even about the product anymore. It's about the community. And if you think about it, if you can, you know, we talk about NPS and the stuff that we do in App Promoter Score and, you know, really nurturing that customer loyalty. If you go one step further and you create a community around it and that's your way of going to business, your cost is zero. You want to talk about customer acquisition cost and virality and loyalty and all this kind of stuff, if you can master community, then you can be a rocket ship and do it on a very profitable basis. But the proviso is you can't try to control the community. Right. The community needs to govern itself. And companies have found that if they've tried to kind of insert and change it, like we just saw this with Reddit, right? Reddit is a pretty radical community.

Yeah, yeah.

Right?

They can blow up in your face.

Yeah. I mean, you start to mess with the community and try to try to govern it, and it will turn ugly. They will turn on you.

You know, there's more than one guy out there with a Zune tattoo on. I don't know if you remember the Zune audio player from Microso, but I do. It'll also be sad. And I think there are a lot of those. I remember all my friends who had early Teslas and how rabid they were about their car, which finally took an electric car and made it cool. Right. Especially with the roadster in the beginning and then even the first the Model S's and stuff. Like they were cool. They were like, they were like a Detroit concept car that actually got made. That of course didn't get made by Detroit, but, but Elon did. And now they actually, they've gotten so big and it's gotten a little out of hand and they have tried to sort of push their base into things and they've gotten alienated by some of the mouthings of the CEO. Like not totally consistent with the community. But yeah, you don't totally control the community. Right?

Like, yeah. And you know, there's lots of examples of it. You know, there's, there's parent heads like with Jimmy Buffett and like pick yours.

There are, there's a million dollar brand, right?

You get cheeseheads, you know, Wisconsin football, like I mean on and on and on. And, and if you, if you nurture and foster that community, I mean it just pretty. It's a, it's a phenomenal way to grow. So on a very low level, I.

Think your point though, you have to remember you don't own the community and you don't get to control it. And it's not really your community, it's the community's community and they're adjacent to you. You might have spawned it, but it is its own entity. Right. So you have to serve it, nurture it, cater to it like that. It's powerful. But you don't totally. And if you think about like the coolest things, the biggest movements phenomenon on a global basis, like they start with an idea and a small group that gets out there and then pretty soon you've got a global movement and you no longer control it. Right. You don't own it anymore. Like it's out there in the world, it's just a thing, right?

Yep, exactly.

But yeah, scary if you're used to control, right?

Exactly. Yeah. There's some companies are really bad at creating communities because they're about control. Right?

Yeah, there are some really good lessons here. Of course we know now, working with many thousands of companies over time that you don't have to raise capital necessarily to scale up. There are many different ways to fund the growth of the business. It's good. I've coached quite a few funded companies over the years. And the business plan, the planning process is useful. And of course if you want somebody else's money, you're going to have to write a business plan. But just to grow a business, it's not the most critical thing. But the planning, the reflecting, that is a pretty useful thing. Being obsessively focused on the company, the customer and the market need it does seem pretty critical. And then building your own culture around it so the company runs well, even if it's lean. It doesn't have layers of management. Those are my big takeaways from our conversation today. Did I miss something?

I'd say one final thing and that is everybody admitted that the company grew as fast as the CEO and founder did. So we're all about continuous learning, right? And most of these founders were first time founders. They didn't have this experience of doing this two, three and four times. So they found a lot of very low cost, very effective and efficient ways to grow themselves so that then the organization could also grow around them.

I see this again and again, both when I look in the mirror, but also with the companies I coach. The company will grow to a point and then the CEO will hit kind of a personal barrier and sometimes they pull the company back down because they don't grow. And if you want the company to keep growing, you either have to hand it off or you have to level up yourself. And so there's some work to do. Looking in the mirror at who you are and how you've led so far and what's required to, you know, move to the next rung. Like Marshall Goldsmith would, would talk about what got you here won't get you there.

Yeah. Of the 324 companies, of all the ones that I spent time with, five of the CEOs stepped down over that two and a half year period and brought somebody else in because they just said I'm not, I'm not the person to take it from this point forward.

So, Pete Martin, the book is Scale Up Faster. It's about how boots, bootstrapped companies scale and grow faster. Scaleupfaster.com There it is on screen and of course it'll be in the show notes with links and all that kind of thing and more. Pete, thanks for joining us today and talking about these great ideas. Great study, great book, great stories, really useful for us, I think.

Awesome. Thanks Bill. I really appreciate it.

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