How to Operationalize Your Business with David Moss

Greetings, folks, and welcome to Business Brain. Today we've got an interview for you. And I think it's. It's an interesting one, wouldn't you say, Shannon?

It is, yeah.

There's.

There's a lot of little tidbits to kind of tease out of the discussion.

That's a good way of saying it. Yeah. We've got David Moss, who. He said a phrase to me operationalizing your business when he and I were having a conversation about something that we might wind up doing together. And that phrase stuck in my head and I thought, man, we need to dig in and figure out what that phrase means, because I'm sure there's parts of this that I am not doing. And when I know that's true of me, I know it's probably true of many of you. And so, you know, figured we'd dig in with David and that's exactly what we did. So do you have anything more to add, Shannon?

I don't. I'm ready to learn.

All right, well then, this is Business Brain. The Entrepreneurs Show. Episode 441 for Wednesday, April 19, 2020. Today we have David Moss from Thasis, LLC on the show here. David has run a bunch of businesses. He's been involved in the growth and I think even the exits of a few. And we're gonna talk with David about a lot of things, but focusing on operationalizing your business. Easy for me to say. David, thank you for joining us.

Hey, guys, very much. Thank you.

Yeah, absolutely. So tell us, I know Thasis LLC is your consulting business that you've been running for a while, helping business owners. Can you tell us about your experience and how it came to be that you found yourself in this consulting role?

Yeah. So my. At the risk of sounding like a reading of a resume.

Well, that's what, that's what literally what I just asked you to do. So it's okay. You have permission. Yeah. Yeah.

Okay. So, you know, early in my career, I was amongst a lot of things. I was in technology sales. Made my way through senior management at a number of decent sized companies, of which include Avaya and Cisco. And after Cisco purchased a company I was with at the executive level, I ended up finding my way to Siemens. And I had done both sales, executive management and also business development for a long time. But when I found my way to Siemens, which is the big German company, Siemens, in the communications division, I was responsible for business development and business development included M and A. So we were looking at starting up several new businesses and even in a large Company. When you start up a company within a company or a division within a company, you're no different than starting up, you know, startup by yourself. You've got to come up with a concept, you have to validate the concept, you've got to figure out how to operationalize it, and then you've got a decision of either build or buy. So you get into a scenario of analyzing how you build it, how you bring it to market, or going out in the market and looking to potentially buy someone. So from that perspective, I got, you know, a real quick lesson as to how to do all this. And even, and this surprises a lot of people, even in a large company, it doesn't mean you're necessarily just going to get the money to go started. You have to still fund it. Sometimes you fund it internally, sometimes you fund it even externally, even in a company like Siemens. So I was relatively successful. Long story short, we sold Siemens not too long after that to a company by the name of Atos. And I got an exit plan and a really nice package and I didn't know what I wanted to do. And coincidentally at that point in time, a couple of people that I knew, we're looking to start a business from a scientific perspective with a product and even in a market that I knew nothing about. It happened to be medical devices, and it happened to be technology within medical devices, which again, I knew the tech side, but I knew nothing about medical devices at all. And this was a product that would, in the early days, before people were calling everything AI, essentially, it's what it was. It would take an X ray apart, literally pixel by pixel. It would write some algorithms that would analyze the pixels and, and then reassemble the X ray in, in an allowable fashion. That allowed a radiologist to have better visual acuity to look for abnormalities, you know, particularly cancer and particularly within, you know, mammograms, monography. So I went with these guys and the other people were the technology side. And when you go in, and primarily you've got people that are really smart and in some cases where the propeller's in the corner, they don't know how to run a business or how to even validate it or bring a product to market. So I had some experience by doing that, you know, prior at Siemens, sure. But within a big company, never had experience doing it by myself. And literally from a startup perspective, and we did well, we started the company, we validated the market somewhat. Very specifically, we put the right kind of plan together and we run out within the course of about a year, year and a half, and raised $6 million and then operationalize the product. And in medical devices it becomes even more complicated because you need to get FDA clearance and go through that whole thing. And we did, you know, we did all the, the stuff right to be able to move in the right direction from that perspective. And then about four and a half, five years into it, for personal reasons, I decided to leave and I exited. I exited, you know, very well from that perspective. And that was about five and a half, five years ago. And what I decided to do was after having now close to eight years worth of understanding what it takes to launch a business, I decided that I wanted to do it myself. So I opened up Thesis, which is a small boutique consulting firm, to help entrepreneurs understand is their product valuable. How you sell that product, how you market that product, more importantly, how you finance the company. And I'll give you an example, Dave. It's very easy for someone to say, I'm going to start this and I'm going to go raise vc, because VC is like, you know, saying Coca Cola.

Sure.

People don't, people don't understand that you're not starting a company and raising vc. There are other avenues to get money, but it's not vc. And if you try that path, you're going to fail. So there's a number of lessons along the way that people need a, a quick master class on in order to be able to execute this effectively. And so Thesis has been going now for a little over four years. We're a small team, we're very boutique. We pick the customers we want to work with, we're very, very selective. And it's basically startups as small growth companies.

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I. I think you know, so I think it means a lot of different things to a lot of different people. And it means something different to where you are in your business grows. But let me start at the beginning. And, and, and to say that here are all the steps. Sometimes companies have multiple steps already in the process. And they do well. Sometimes they're missing a couple. Sometimes I meet entrepreneurs that have no steps that are in the process. So you know the story about an entrepreneur is right. I've got A great idea. And because I really like it, I, I think it's going to sell. And that's not necessarily the case. And I mean, Shark Tank, right.

What you have proven with that is that you have one buyer for your product yourself right now.

Exactly. Right.

Yeah.

And I mean, Shark Tank is the best example of how that exists.

Yeah.

You know, how many people in Shark Tank even get funding and then those products even make it very well versus the number of people that actually try. So it's a matter of, okay, so you've got a great idea. It's an idea that you know, to the best of your knowledge, no one's thought about. You're the first customer. Awesome. Who else is going to buy it? And the validation step to understand who is going to buy it is a very, very critical one. To have very hard hitting facts that you've got a customer base. And then you get a little bit more complicated with that. Dave. It is a customer base at a price and value point that will allow you to make money because you may even have a great product and a lot of people will buy it and, and you'll lose money every time you sell it because the value of it's not going to hold above and beyond, you know, what, what you can sell it for or what the market will buy it for. Even though it's a great idea.

Sure.

So the first part of this is validation. The second part is operationalizing the company. All right, what does the company need? You know, you don't need to go out and hire a director of HR the first day. You don't need certain things, but it's the identification of what do you need. Do you need salespeople right away? Well, if you're in medical devices, not until you get FDA clearance. It could be years down the line. But people think, oh, I'm going to go hire a sales rep, start talking to customers. Well, maybe not. Right, right, right.

Yeah. If you don't have regulatory approval and you need that, well, then your customers can't buy from you, no matter how great your salesperson is.

Correct. And then the biggest piece is, how are you going to finance this? And really projecting forward in terms of the kind of money you're going to need for a long period of time. And, and it's not just mortgaging your house. It is, can I get private funds? Can I get angel investments? Are there grants available? Many products that are brought to market. Entrepreneurs miss the fact that governments have a lot of grants to be able to give small businesses given Particular areas, particularly if you're dealing in areas of healthcare or education, there's tons of money out there. If you're dealing with something in technology, there is millions of dollars that the government gives to startup tech companies, along with the fact that companies like intel actually have grants that they give to entrepreneurs as well. So how do I finance this and what kind of plan do I put together to finance it and then delivering that message, which is the most critical thing. So I deal with a lot of customers that, well, I should say I interview with a lot of potential accounts that I end up not taking. And a lot of it is, you know, when the first things I say to them is, have you built your pitch deck? And they come back and they said, yeah, and it's awesome. And it, they send it to me and it's all about them and their product. And they're forgetting who their audience is. They're forgetting they need to show value to the investor and value to the buyer, not just how cool this is.

Yeah, right.

And when you try to coach many of them through it, some of them understand what you're saying, know a majority of them believe it or not, do not because they're so enamored with their product. And that's just an early sign. So you know, the. Fine, go ahead.

No, no, no, no, no. Finish your thought and then I have a question that's going to take us in another direction. But, but finish that thought. Yeah, please.

So the financing is a critical piece and once you get the financing, you get into things and I'll short circuit this a little bit. Right. But you get into things like product delivery and product development. And what do you need to do that to? You hire people, do you subcontract people, do you offshore it, do you onshore it? How do you do that? If you've got warehousing requirements, what do you do with that? And then once you're past all that and you have the money and you've got the product and you validated the market, how do you go out and sell this? Recognizing that a lot of people think that they could just hire 100 salespeople and just go to market and get 5% of the market in a year. Not so. And there are steps that you need to take in order to be able to evolve that way. So, you know, in a long winded way, the operationalizing a startup is a variety of factors along the way that.

Makes sense from a big picture standpoint, which is of course, you know, the thing that we can do Here when we're talking about it on the show, I'm curious how you might approach operationalizing a 5 to 10 year old company that is already selling, already in business, but still very much tied to the owner. Right. Someone. Because that, that describes a lot of our audience. It describes me most of the time. And I think I can speak for you too, Shannon. You know, it's how, what advice, what path would you take working with the business owner that's got something going, but it's a business that they at, at like at that moment in time couldn't extract themselves from and still leave value in the business.

So I see a lot of that.

And I bet you do. That's why I asked.

No, it's a great question because I do see a lot of that. You know, you've got entrepreneurs at the beginning that have a great idea and either they do or do not execute on them. But let's follow the path of they execute on them and they've got a nice business five years later. Right. What many entrepreneurs have forgotten how to do is continue to be creative and follow the trends and move along those trends. So what happens is they produce something, they have success with it, they forget about developing a road map, they forget about understanding where the competition's coming from and how to move that competition away from them in, in a given direction. And they forget about what it's going to look like five or six or seven years down the line and continue to plan for those operational changes. So I think, I mean, particularly in technology and medical devices, you see this all the time. You know, once you invent something new in tech, by next month somebody's going to invent something even newer in tech that's going to take your place and you've got to be able to really stair step them. And sometimes it takes pivoting your business because you have to realize that there may be a market that was available when you brought the product to market and sustained yourself well for five years, but that market is going to rapidly disappear. And how do you adjust for that? What do you do? Large companies, by the way, Dave, is not just small companies.

No, no, I'm just, I couched it that way because that's who our audience is. And so I just, but, but it makes sense that it's any company you're. Yeah, yeah.

David, I have a question for you. So you talked roadmap and I was, I was just thinking the same thing. When you engage with a new client, does it take very long or do you provide this roadmap to like, okay, guys, here's what we're going to do and how we're going to, you know, systemize things to, you know, firm up things and bring in this operations improvements, or does it take, you know, a long time for you and you and your team to get up to speed before you can really develop that roadmap on where, where they should be going?

So I don't know that I develop roadmaps. I don't think I've ever developed a roadmap. What I'll do is I'll identify trends and work with them towards how to address those trends. But the roadmap is really up to them. Right? I'm not their company and I'm not their product, but you can identify trends. And I'll give you an example. I'm working with a customer right now. Whereas one of the trends that is going to get in the way of their business without question is artificial intelligence and the ability for AI to do certain things. And if they don't figure out how to counter the potential AI threat by either thinking of something new or embracing AI, it's very likely in my belief that they'll be hurting in about two or three years.

I mean, I've watched this happen with my businesses. I've watched it happen with friends businesses. You know, that your point about how, and I'll paraphrase here, but, but I think, I think this is the way for us as entrepreneurs to think about it is successful entrepreneurs often forget about trying to be creative. Like it's the success that almost mitigates that creativity or suppresses that creativity because you've got a thing going and you want to, you know, you want to milk it, for lack of a better term. Whereas when you're starting out, you don't have a thing going. There's nothing to just sit by and milk. And you have to be creative because that's literally what you're doing is creating this business and reacting to the market as it stands, not wishing for the market of five years ago that you understood or got lucky with one or both. That's a really interesting. So staying in that startup mindset, to borrow the Steve Jobs phrase which he borrowed from Stuart Brand's Whole Earth catalog, you know, stay hungry, stay foolish. That there's something to that. Yeah, yeah, for sure.

So, David, give me an example of like a company that's come to you trying to solve a specific problem. You know, somebody reaches out and to use your services. What, what kind of, you know, inquire inquiries are do you get the, the.

Biggest thing I work with is how do I finance my company from an early stage environment, right? Yep, yep. How do I, how do I go out and raise money? And it's an interesting conundrum because I say this tongue in cheek. But you know, I'm not cheap to acquire to hire. Okay. I'm not the most expensive. I'm not like going to a MacKenzie. But I'm not inexpensive either. So from that perspective there is a charge for me. Many of the companies that come to me saying I need to do this don't have money to pay. So it's a conundrum that know my industry that deals with these startup companies does face. So I see a lot of how do I raise money? Who do I go to for money? How, you know, again ignoring the comment I made before, but how do I build the messaging and the pitch deck? Associate, you know, appropriately. You know, where are the sources to even go to? I mean I talk to entrepreneurs that have no idea that there are web portals that they need to build to allow angel investors to look at their portfolio and their whole financial structure. Right. It's not you're going to email an Excel spreadsheet anymore. There are portals you need to set up. Which ones are they? And these people unfortunately don't know about that. So that's mostly what I see. Just generally then the next thing, then the next thing I see is skip past all of that. It is how do I sell it and what do I do? And it shocks me how many small companies go out and just, just start shooting to hire salespeople and hire the wrong people and then don't keep track of it. And I'll give you, I'll give you a good example. I was dealing with a company about a year ago where I really, I'll give you two examples. I was dealing with one company about a year ago where I really strongly, you know, recommended and it was about a three year old company. To your point before Dave, they had about 20 or 30 sales reps and the executive management team didn't know who the prospects of their sales reps were because they tell their sales reps keeps in keep an Excel spreadsheet and not get a CRM package. Bad. Yeah. You know that sales rep leaves, everything goes with him. Right. And that's a, that's a big downfall for a company. But people don't want to spend the money on going to salesforce.com or Microsoft Dynamics or some of the other things that are out there.

Sure.

And there are others that are a lot less expensive, but still they want to spend the money. I dealt with a company not too long ago whose website got hacked and they were down for days. And as a result of getting hacked, and by the way, when we set the website up, I had indicated to them, look, we need to hire a security person to ensure that this doesn't happen. Well, they didn't want to spend the money.

Sure.

So the website got hacked, the website was rebuilt, they're back up. And I again make the recommendation that we need to hire a security expert which I could bring in to make sure this doesn't happen again. Well, we got a quote and they don't want to spend the money. So these are mistakes that the three to five year old companies continually make that we see, you know, from that perspective all the time. And we can only give so much guidance.

So. Yeah. And on the finance side, so somebody comes to you and, or you know, we're talking about fee structures that, you know, your consulting business charges. You work with them on options like how to. Okay, if we're going to try to raise X, you know, we work out a commission structure to get paid. Or do those people just not get to avail themselves to your services if.

They can't, you know, I cannot work out a commission structure because I'm not a licensed broker. So that's very tightly kept by the sec.

Got it.

So you have to be. It's like a real estate agent, right. You have to be licensed in order to be able to see a commission based upon financing. It doesn't mean I don't help them with financing and I don't set them up and even attend some of their pitches because I do.

But you're getting paid a flat rate regardless.

I'm getting paid a flat rate on occasion and I really have to believe in the company on occasion. I will waive my fee in terms of getting stock up front in the company because I believe that the management team's a strong one, the product is very marketable and I've researched the market and I believe these people have the ability to execute through that. I do it rarely and a couple of times it's worked out for me. A couple of times it hasn't. But like a.

Right, that's actually, those are pretty, those are pretty good numbers.

Yeah.

50. 50. That's not so bad.

Well, I'm not saying it's exactly 50.

50. We, we always mark it up, don't we? That's right. Yeah.

But you know, it's like a stock portfolio. Most of the stocks in your portfolio are not going to do great, but the ones that do good for all.

The rest they make up. Yeah.

And that's what it's like.

That's.

And it has so far. So that's great.

Yeah. Okay, so this. Thank you. This. I appreciate you coming and joining us here and talking through this with us. This is fantastic and I think answered my question and hopefully provided some value for all you folks listening to David. First, I want to make sure you share where people can find you. And if there is any last little tidbit of advice that we haven't gotten to that you want to share, feel free to do that too. But, but where, where can people find you?

So the company is thasis.com. that's T H A S I S dot com. My email address is david.moss and that's M O S S@thesis.com and I am certainly on LinkedIn and a number of other sites as well.

Amazing. Thank you so much for joining us. A real pleasure.

Yeah, this is great, guys.

Well, there we go. Operationalizing our businesses from 10,000ft.

Yeah, yeah, definitely. You know, there's, there's definitely some good things like I mentioned in the intro to tease out of this episode. I, I'd be the first to admit I have a corporate bias on some of the.

You mean a non corporate bias?

Yeah, I have a non corporate bias because I'm small business guy bootstrapper. But if you can bring some of those operational systems into your, you know, small to medium sized business, you definitely can benefit. So it's definitely worth looking into and, and bringing some of that structure to your team.

I totally agree. I think this, yeah, there's, there's teasing out important things I think is key. The idea of knowing the price point where you can make money, not just where you can sell to people and lose money yourself, like that was a great one. And then stopping and looking at any given stage, especially with a new venture, figuring out what you need. That whole idea of, you know, hiring salespeople too soon, I, I like, to me that's always the first thing is like get sales going right away.

Right away. Yeah, I thought it was interesting how, you know, his number one inquiry really is how do we raise money?

Yeah.

So, you know, we've discussed that, you know, a number of times on the show, different methods to do it. So it was interesting.

Yeah. Good stuff. Thanks for hanging out with us folks. If you have any questions for us, of course. Feedback at Businessbrain show. If you you have questions For David, that's david.mossis.com make sure to check out headspace.com brain30 and keep living that charmed life. We'll see you next time.