Hello and welcome to another
episode of The Operations Room, a
podcast for CEOs.
I am Brandon Mensing and joined by
my amazing co-host, Bethany Ayres.
How are things going, Bethany?
Not very well.
Look, I feel like this has been a
year of highs and lows.
So I was pick pocketed
on Thursday
in London.
I was coming back from Manchester to
meet some friends for dinner in
Soho, and there was
a mini landslide
on the train tracks
between Manchester and London.
I don't know what a mini landslide
is, but it means that the trains are
moving very slowly.
So I was getting in 45 minutes
late.
I had already cut it fine for
dinner, so I was in a real rush and
I was clearly a target.
Like in retrospect, I have my
backpack on.
I have a big coat.
You have my wheelie bag.
I'm pushing through people trying
to get to the restaurant as quickly
as possible.
And because London has had so
many sun thefts
right now, you know, it's talking
about it's in the news.
I just felt like it was inevitable
that I felt was going to get stolen.
I bought my iWatch
so that I would not have to take my
phone out and be less
of a target.
And to do navigation on my
watch. But I haven't figured out how
to do navigation well on my watch.
And it was 100% the navigation that
got me. So I knew where I supposed
to turn down. I turned down and it
was just taking a really long time
to get to the restaurant.
And so I picked up my phone to make
sure I was still where I was going.
And I kept further down, put my
phone back in my pocket and zipped
my pocket.
And then going down the
road, I'm kind of passing people,
everybody. You know, it's Soho.
People are slow, there's tourists,
I'm annoyed, and
somebody jostles me.
And maybe it took a little longer of
a jostle than normal or I just
somehow noticed this one,
but I didn't think, they're just
stolen my phone. I was just kind of
like, Why is this person so close to
me? Carried over great Marlborough
Street and I was like, God,
is this restaurant really that much
further away? Stuck my hand in my
pocket. I want to stick my hand in
my pocket and my zip was undone
and my stomach just fell.
And I was like, fuck.
And I put my hand in my pocket,
phone gone.
And then, of course, I look in,
there's the restaurant.
So Russian get
to my friends and
borrow one of their phones.
And luckily I have my husband's
phone number memorized.
The only number that is not
a childhood phone number that I have
memorized in my whole world,
and the only reason why I have it
memorized is because he hasn't
changed his number since we started
dating, and I used to have to call
him from America and had figured
out how to memorize it.
Never thought that I would need it
for not having a phone so
horrific disaster.
Losing a phone like so
huge amount of admin and hassle
with the phone. I won't go into all
of it, but all I have to say are the
staff at the Apple Store
are just so amazing.
They must get paid really well
because compared to all the other
retail people you deal with, like
the Apple staff is just another
level.
I'd like to thank all of them.
When I was like nearly in tears
trying to sort out my fucking phone.
So I now have a phone but I don't
have a sim so I still can't do
any to f.a.
I'm still waiting for O2 to deliver
me my sim and then I
had to fill in the police report.
One of the things that did not
require two factor authentication
and filling, and it was great to be
able to fill it in like online and
not have to call the police and do
everything. And if you
did your name and where it happened
and describe what happened and then
there's like a bunch of check boxes
of things you have to fill in.
And one of the questions is,
what is your relationship to the
crime?
Something like that.
And so it was I am the
victim.
I am a bystander.
And the top one is I'm a victim.
And I was just like, no.
And so I read the list
for it.
Has to be something.
Else. Yeah.
And I was like, my God.
And it was so hard for me to click,
I am a victim
of it. It's a it's fine.
It's not really either.
But, you know, technically,
as I found that really hard
to click the victim button filled
in everything.
And also because of my find my
iPhone, I could put in an exact
address where it disappeared and
you know the address of where it happened,
the whole thing.
And then the next day I got a
here's your case number and then a
couple of hours later and now your
case is closed.
We've looked at the CCTV footage.
Nothing obvious, no where
to pursue this. Done.
So we have got a great topic for
today, which is a CEO's journey
to the Google exit.
We have a wonderful guest for this,
which is Shane Harris.
He's the former CEO of Cameo,
which was acquired by Google in
2024, and he is now
working at Google in operations
and go to market strategy.
So one little caveat to Shane.
Unfortunately, we had some technical
difficulties in the conversation
whereby we didn't quite get to the
the Google exit part of it as much
as we had hopes for the
conversation. But that aside,
just wanted to, as usual, start with
you, Bethany, in terms of our back
and forth.
And the first
thought I want to drop on to you is,
Shane, you talked about
bootstrapping a culture of getting
stuff done, a cameo and a bit of
this no frills, more with
less attitude.
Do you think the finance SEO person
and finance voice perhaps more
broadly, is undervalued
and now it is being valued with our
current circumstances that we have?
Once you raise a bit of money,
you need somebody who's a grown up
to control that money and
make sure you don't do stupid
things.
So there's obviously the basics
of getting your accounting right and
your cash collection right and
making sure people pay you.
I'm actually surprised the number of
companies that don't have their
accounts payable set up and don't
really know who is and isn't
paying them and don't have
conversations with their customers
about if you're not paying us, you
don't have source anymore.
Like I think a lot of startups,
every customer is so hard.
One that even
a customer that's not paying somehow
counts as a customer and you don't
want to take it out of your numbers.
I'm working with the company, not
Peak, a different company where that
exact scenario has just happened
and they're like, We just want to
clean up some churn.
And then there are churn cleanup for
customers that have just never paid.
Like, I don't think this is churn.
Well, this is stuff that just should
not have been counted in your
numbers full stop.
And they don't have a finance
person. I guess for me, that's a
perfect example of you need
those checks and balances.
You can't just rely
on the glory of growing
your M.r or your RR
without making sure that it's
actually translating into cash.
And if it's not translating into
cash, what are you going to do about
it? And that's just like a
fundamental that's not even advanced
finance, but that's kind of the
first thing you need, that you need
somebody who is creating
a budget, managing a budget,
explaining to people why they can
and cannot have things and
make sure that the money is being
used appropriately and also
something that finance, at least in
my experience, finance should do
rather than the CFO or Ops
is the reporting.
I actually prefer reporting to be
with finance rather than
with ops because it's like
for me, the more trustworthy,
you know, because even Ops has skin
in the game around how things are
going to look and maybe
cutting metrics in a slightly more
flattering way. Whereas I just trust
the finance people are like, This
is the definition.
I have run it through the definition
and this is the metric.
It's good or it's bad financial
metrics or pipeline metrics or
whatever. Plus, finance tend to be
really good at visualizing data
and making stuff understandable.
He also spoke about from
day one at the outset,
kind of like Mark Farnell making
sure that you take your data hose
and make sure that it's clean and
wrap your process around it and
carve your metrics out according
to whatever that process is in a way
that's meaningful and helpful to the
business.
And I'm just wondering what you make
of that in terms of his
view that it should happen from the
very beginning and culturally set
that because oftentimes in
companies, they don't spend the time
and effort to do this upfront.
We just need to get customers on
board and sell effectively to get
the RR rolling and we'll deal with
this afterwards.
So I'm curious the balance between
upfront versus later.
We see this all the time and I get
it because most founders and founder
CEOs don't care
about metrics.
They live five, ten years in the
future. They have a vision that
they're trying to get to.
The boring metrics along the way
just are slowing them down as
an archetype.
And so you do end up
not looking at numbers are on
the whole companies don't look at
numbers till really late
until they have to pre
a post a depending on
how they gather their a round
where they realize they need to
somehow prove that they have
traction and they other than they
are, they have no proof of traction
or proof over traction.
And so if you're at the point
where you want to move from founder
led sales to sales
leadership, you need to be able to
put those numbers in place because
otherwise, how are you going to tell
whether or not you've hired a good
leader? Is your pipeline growing
or your cost of acquisition
acceptable?
And at that point, you should hire
in rev ops or
biz ops or whatever kind of ops
you want to call it, depending on
how broad people are looking.
The ops systems thinking person
is like, you should do it from day
one and build it into the culture.
But then both the realist and
also there's a lot of
things you have to fix in the
beginning.
Like, does it actually just slow you
down?
Particularly if you're doing
enterprise sales.
If you're doing high volume sales,
you need to do it from the start.
Or if you're doing product led
sales, you need to do it from the
start, a product that grows PLG.
Because then it's all about metrics
and you have enough numbers to make
a difference.
If you're selling 500,000
pound ACV
or dollar ACV deals and you're
selling for a year,
your metrics really don't matter
because there is nothing repeatable
there for a very long time.
It's almost like a descending scale,
isn't it? Enterprise Mid-Market,
SMB, PLG.
As you go down that pathway, the
earlier you have to start in terms
of tracking the stuff in a way that
actually makes sense for the
business.
But I think at the end of the day,
what I've seen over and over again
is that the Series A, when the
company grows to a certain size and
as you're getting toward the series,
B and the founder are starting to
not lose control, but they don't
know what's going on in the
business. They don't know what everyone
is doing as they used to, and they
start freaking out a little bit and
they're like, Brandon, I just want
to see a dashboard, one dashboard
that tells me what's happening.
So that's where that flipped.
The switch I think really happens in
a substantial way where the CEO
that maybe would not have been
behind it earlier gets behind
it because they're feeling like
they're losing control.
They need to see a dashboard.
And that's the point by which you
can actually step in to make
something happen.
And that's when you can get the data
to be accurate, because up until
that point, no matter how accurate
you'd like the data to be,
everything's on a spreadsheet
somewhere hidden and HubSpot
is empty or randomly
half used and there's no information
in there. And so you have to go and
actually start to enforce
data quality.
I cannot tell you the number of
times I've seen HubSpot being
licensed and just kind of sitting
there.
And then you also have nobody in the
business who knows how to use it
exactly.
You have somebody who's kind of like
a little bit systems has maybe
watched one demo, has
done things and customized
a little bit of it.
In a strange way, it's not working
and then they just revert to the
spreadsheet.
I always find the attitude funny
because on the one side of it
they're always like, Well, we
know we need to have HubSpot.
So they license it and I, okay, well
we got it now.
And then they just kind of ignore
it. And then at some point when
things start to like really go
haywire at some stage in terms of
just not knowing what's happening in
the business, like, okay, we
should actually do something.
And then that revolves higher
happens, then the cleanup happens,
then the tracking happens and the
metrics happen and the culture piece
of sales reps actually doing stuff
properly happens.
Or doesn't, where they
hire the rev ops person and the rest
of the culture, change doesn't
happen. And you have this revolves
person is just banging their head
against a wall trying to change
the culture and nobody else goes
with it.
I mean, this is where the operator
comes in, doesn't it? Because
oftentimes his rev ops people are
fabulous, but they're not great
communicators. And I greater change
transformation in the business.
If you're sitting there with 25 reps
or 30 reps, nobody's going to do
Jack unless they're
in a, I don't know, a well thought
out transformation program to get
them in a place where they
understand why it's useful.
They're being held to account.
And it's not for me, the Red Bob's
person that does that, it has to be
somebody else.
And also, sometimes they're
perfectly fine communicators.
They're just not senior enough.
When the CEO's like, I don't care
about it, I never look at it, Here's
my spreadsheet. Nobody is going to
listen to the rev ops person who's
trying to get them to use HubSpot.
So here's another question for you,
because I've also seen this
repeatedly where the CEO, the
company recognizes it needs
to happen. He or she wants to do it.
It starts happening in some form,
but it's still kind of half baked.
And the message that I get back from
the CEO is that I want
reporting to happen, but I do
not want to look at it.
And HubSpot, I hate those charts and
I'm not going to bother to log in.
I have also seen that one.
You kind of get one or the other of
either I don't want to log in.
I hate the way it looks, can't be
bothered or gets
really excited by it and drills in
but doesn't quite understand it and
goes into like these weird
like rabbit holes and
misunderstandings.
So I think there's two things.
Either you work at getting
them to like it and keep working
at it or accept
that HubSpot is your database
and you're going to export the
information into pretty charts
for that person on a regular basis,
either weekly or monthly,
and then like refer back to
the finance people who can
make pretty charts.
It's a bit of a waste of time, but
at least you have a good database at
that point, even if the consumption
of the information is not
in the tool.
I think in the SEO case that I've
experienced taking that data, that
hopefully is good data that actually
is clean to your point and track
properly, you can export it
and either visualize it in Excel,
which people understand, or Google
sheets or possibly
start thinking about like things
like Power BI and visualizing there.
But I always find that's like just a
whole other world of pain, to be
honest. If we don't need to do it,
then I think kind of in that AB
world, visualizing it outside
of HubSpot and just Google sheets or
something like that is perfectly
acceptable.
I think I would not spend my budget
on power by any spare
budget I have. I'd be spending on
I. Tools for the company to
just experiment with in this new
world of cash is not free and
constrained. And where am I going to
spend my IT budget?
It would not be for a
company that's.
Series A series B,
maybe even series C.
I wouldn't be spending my money on
buy tools anymore.
Yeah, there's a good point.
And there's so many of those buy
tools and they're so expensive.
Typically, like if think about these
things like Snowflake and Tableau,
they are super, super expensive,
like crazy expensive and a list of a
certain size and transactional
scale.
It's hard to argue that it makes any
real financial sense, especially
when people either.
Don't use it, can't use it, or
whatever does show up on those
dashboards is not correct for all
sorts of reasons.
When it comes to metrics.
What do you love?
What do you hate?
What gets Bethany excited when it
comes to the world of metrics and
what kind of metrics?
I like to strip it back to the ones
that really matter.
The gross margin.
Are you making money or not?
Payback, period.
Are you making money or not?
Those are probably my big
ones. And then net revenue retention
because are you growing?
Are you standing still?
Are you going backwards because you
can't retain customers?
Everything after that is
interesting to see how well
the system is functioning.
And is the SAS flywheel rolling?
How about you, Brandon?
So I love the standard stuff.
Obviously I slice and dice it to
death in terms of RR
year on year, quarter on quarter, a
month on month growth rates that are
attached to that.
Looking at the forecast and figure
out where our burn rate is, how it's
tracking, and if you increase budget
here a little bit or increase
revenue there, how that affects the
cash burn itself. So I like the cash
burn as an actual.
Thing to to focus on and obviously
gross margin or whatnot.
Operating income are always quite
interesting in this respect as well.
Other ones of interest for sure.
We call that net dollar retention
out trend, my last company.
But effectively, you know, if you
combine expansion,
churn all those other factors,
are we incrementally growing our
customer asset from a revenue
perspective or are we starting
to lose steam?
And also looking at the cohorts of
the some segments within that is
quite fascinating because oftentimes
you see very clear trend lines
of like segment A is
tanking it for some reason.
Segment B is kicking ass and just
understanding what that difference
looks like, what kind of customer
assets are maybe not
entirely suitable.
And you can kind of see it where
they're not growing at the other
rates of the other customers.
And there's a reason for that.
And digging into what that reason
is, recognizing it's not the best
customer set for you to be targeting
or that perhaps you need to be
doubling down in that segment to
actually bring forward more
functionality or experiences to to
get them more excited by what's
happening, perhaps.
So I've worked with one company that
has a very traditional
small, medium, large processor
in the smaller micro, and so
it was all credit cards and
it was low touch, but
in the beginning it was not low
touch, but they were the ones that
were turning on and off all the
time. So it wasn't necessarily
churn, but because it was a monthly
subscription, they would turn it on
when they needed it, turn it off.
And so in the numbers it looked like
churn. So one of the first things I
did was really delve into what's
going on because they were going out
for a fundraiser.
I was like, my God, you have all
this churn and by doing Get into the
Cohorts, you could see that
Enterprise actually had a really
strong expansion.
Mid-Market was fairly okay,
and the churn, as we called it, was
all in the small markets.
And although they were small
companies, they actually made up a
large chunk of the revenue.
And so it looked like it was all
bad churn when you rolled it all up
together. But by segmenting it into
in those cohorts, we could see what
was actually going on.
And then we focused on
there wasn't anything with the
product that you could change.
It was a structural issue, like
these customers just were not going
to ever commit to a year.
And so we focused instead
on massively lowering
the cost of acquisition
and making it completely
no touch, only
credit cards.
If somebody's credit cards expired
immediately turn them off from
the product.
And therefore we still had this
really bitty revenue.
But the profitability
of the customers massively increased
that.
My former company, we had exactly
this, which is you had freelancers
that would turn the software on and
off depending on their workload and
what was happening from a contract
perspective.
And you could very clearly see them
as we find at the time, churning out
and that we could clearly see them
reactivating at a later point.
So we actually call that bucket
reactivation.
So it became very clear a bucket of
trend was in the forecast that we
had a certain expectations around
reactivation, what that look like
and just making sure that it was
cleanly segmented from the churn
number to ensure that investors
understood.
And then you got some profitability
out of it as well. Like if you make
it no touch low touch,
you're not actually paying for it,
then that's nice.
Extra money.
What do you think of the rule of 40
combining profitability with growth
as a thing?
It seemed like it was really, really
trendy Right after the
tech crash.
It was articles about it every.
But he's talking about it.
And I think it's because it's coming
from private equity and it's a way
of PE firms being able to
value companies.
Are you still hearing it?
Not as much.
What I do think about is the
RR Peretti.
So the amount of revenue that you're
making divided by the number of
employees that you have, it's a
direct correlation of the efficiency
of like to be 30 people to get to
this revenue level or
is it 60 or 90, 120?
And how does that benchmark versus
other companies in a similar
category? It's quite a useful
benchmarking tool.
And also it'll be interesting with
all of the AI being
rolled out in companies,
what the new benchmark will become.
I read an article about
a AI and
tech professional services, a
professional services like
lawyers and accountants
and consulting
firms, the vertical professional
services.
And they were saying that because
I can do
a lot of what juniors do,
basically, like a junior lawyer does
just all of the shit work and now a
machine can do it, that a lot of
these organizations are not planning
on hiring nearly as many graduates
now. But that's like kind of an
existential issue of like,
where do all these kids go and
having children. I am a bit worried
about this. You know what?
Where are their jobs in the future?
But also, experienced
people are not worried about losing
their jobs because they can see
what is good and not good
in AI and like where the
hallucinations are.
But what you end up having is
because we're not having the
next generation trained on it,
when the experts retire, you don't
have people who are going to be able
to tell what's good and what's not
good.
I also just thinking about
like what's going to happen
to tech companies in the future.
Would you hire graduates?
Like I think if you have a company
with a good culture that's growing
steadily, companies might
just kind of age together.
And not hire juniors.
You mean and not hire juniors?
And not just the P.W.
seasoned eccentrics of the world,
but across the board?
It's going to be interesting to see
what happens to
the workforce in the coming years.
What are we going to do with all of
our kids if we don't hire them?
We have to do something with them.
Yeah, but you're right.
Especially for scale ups when you're
being very efficient with your cash
and only spending where you have to.
If you don't need juniors to be in
the business because you have A.I.
doing a bunch of that stuff for you,
then you're not going to, period.
It does matter what your values are
of your organization.
It's taken a slightly away from
metrics, but we'll be able to do is
measure the metrics.
But as interesting as it came from
the R per head, this whole
little bit of conversation.
So reason why the metrics
matter and the philosophically,
what does it show us?
And is part of your your number
one goal usually is growth, right?
Andrew and our
original founders, they read
the market well in that they
forecasted in the future
they could see that there was going
to be a major impact from
cloud on virtualization.
So from day one, we actually knew
that acquisition was a likely
exit path for us.
We didn't box or sell sent where
that was the only exit path, but we
knew that that was a very likely
exit path.
And then another piece of it was
we looked at scaling and
every company has culture
and core values and something
that we as an executive
team really focused on.
I know that sounds silly, but
we got things done and no
frills, no hype, just all
results focused in what we were
doing.
And do more with less
was something that we were used to
doing. And so part of our culture
was being gritty, being scrappy,
finding ways to get results and make
things happen without getting
involved in the hype and the waste.
And it's really interesting because
at the time, money was so cheap.
So there was this temptation to
raise a series, a round, and we
actually had an opportunity to do
that at a pretty meaningful
valuation.
But when we took a step back,
we just looked at the things that
we're being asked to do, the
expectation of growth at all costs
and, you know, hire a bunch of
people if things go wrong, you fire
them all later, you know, like it
just was it was a little bit counter
to our culture.
And what was crazy was like
six months later, after we made
that decision, the wheels
fell off, like the interest rates
started going sky high, adventure
firms coming back and say, hey, you
know what?
You got to be profitable.
Your growth, you got to be cash flow
positive. You got to show results
for all this money you're sending,
which that was something we cared
about from day one and was
part of our culture.
So the founders probably made
as much by not taking funding
as they would have had they grown a
bigger company.
You know, when you do the math, it's
crazy just speaking in general
terms like bootstrapping
and being cash flow positive does is
it preserves your autonomy so that
you're never stuck in a situation
where you have to raise money
at a valuation you don't like or,
you know, the market takes a turn.
You end up in a scenario where
upside down, I mean, the scenario
described is like absolute tragedy
to me and it happens a lot where you
have a very hyped up firm.
We're going to hire a ton of people,
We're going to get these crazy
evaluations or pay wild
salaries to the executive,
and then the market shifts
or something happens and three years
down the road, they end up selling
at still a very meaningful
valuation.
But in doing that, nobody
made any money because of the way
they financed their growth leading
into it.
It's hard to make that call.
And I think this is where it comes a
bit to Brandon's question of do you
know what kind of exit you want?
Because sometimes if you have that
idea that you believe in that
is that unicorn idea
and you're going to create a
category and you're going to take
over the world and that's your
ambition, then it's really
hard to not want to take the money
and to feel the urge
that if you don't move fast enough,
somebody is going to come and steal
your idea.
And like the glory of
being the next Salesforce.
Not that Salesforce is like exciting
for anyone anymore versus
actually what I want is a nice
amount of money for my
children and my family
and keep the autonomy and
grow a business that I like.
And all those things are
considerations.
There's no one size fits all,
but I think there's something
beautiful about being
I don't want to use the word
realistic. That sounds wrong, but
being pragmatic about
what you're doing because
there are a lot of visionaries out
there and the road
is there's carcasses all along
the path to becoming a unicorn.
You know, there's a lot of
people that they go too hard
when they should have just taken
a more sustainable path.
And it aligns to
culture. I really think it aligns.
The person highlights the culture.
So when you think about the secret
sauce, Shane Harris is the CEO
in Cameo specifically.
What is it about Shane that really
helped make this happen?
The role of operations
is to enable the
strategic business objectives
of the company.
It's everything that is happening.
You're helping the company get from
A to B in the most efficient,
effective way.
A great CEO is to
have a way to combine everything
the company is doing from
There's so much data flowing through
your company is so much information
to be harnessed by just your day
to day processes and operations and
you need to establish performance
metrics across the organization.
It tells you how the company is
doing.
And then also you have to put
systems in place that
fuel those metrics, right?
So you're collecting the data that
you need to collect to make the
right decisions. As a company to be
able to take risks in Belfast,
to be able to optimize, to be able
to determine what should we change
to reach our strategic plan.
What things do we need to adjust?
We need to get out ahead of those
things.
You're talking about systems as in
more of the like supply
chain as a system or a customer
journey as a system rather than
literally technology
that you're putting in place.
It's actually both.
That's what I mean. Whereas I think
people think systems like you're
talking about whether you're using
HubSpot or not, but we were actually
talking about is the system
of the customer journey or the
interconnectedness system that is
the entire company.
So when I'm saying system, what I
mean, you have a business process,
right? We have the work that needs
to get done and you put in place a
process. Here's how that work is
done. The system is what facilitates
that process.
It could be the technology
that you're using.
I mean, maybe it's a spreadsheet,
but you have to have some framework,
some structure around how
you're doing your work or else it's
just chaos and nothing can be
measured and you don't know why
you're getting whatever results
you're doing and everyone's scattered.
You can't scale that way.
So a system is probably
the combination of the technology,
but also the process that
you're following to get work done.
And if you think
through whether the metrics that
I need to have, when you're putting
those systems in place, you're going
to do it right and you're going to
have clean data.
If you have the expectation that we
collect this data as an
organization, we have metrics that
we follow and measure to when
you bring a sales rep on.
You train them in the process for
collecting the data.
They're inputting the data.
And it could be HubSpot, it can be
whatever.
And that's part of your culture
because they see, you're making
decisions off of this, and that's
how we're growing. That's how we're
scaling. You make that available,
you make metrics visible to
everybody in the company.
They understand from day one how
important those things that
people typically hate to do.
I've had the luxury of working
for CEOs that get it and
understand how strategic
it is to a company to have that
data on hand.
I promise you, if you're having
issues with the CEO, the second
that you show them a
real time live
just simple dashboard that shows
them the metrics they care about,
the answers and question every CEO.
When you get past like 1020
people in a company, the
CEO can't be involved in everything.
They just can't.
What drives them nuts is
wanting to know how are we doing
and why are we doing how we're
doing, good or bad?
You know, that's the question that
every CEO has.
And in operations, you're answering
that question.
If you build the system,
the metrics, the flow.
With that in mind, where you can
give them real time answers to that
question, they're going to love you
and then you won't have to fight
them and they're going to be begging
you for more because that's what
you need as an executive
to lead your business.
Does that help put you in a good
place for the acquisition?
So we're able to build business case
as well. What was the integration
like? Because I think some CEOs
go, yeah, okay, I can have some
metrics, but a story about
how having good metrics means
a better evvie
that is probably more compelling for
most CEOs.
I know if you're considering
buying a business, right,
you want to know why
is this business worth buying?
And at the end of the day, whether
you're raising venture funds
around, whether you sell yourself to
your cut, I mean, this goes back
to your question, how can operations
be strategic to a company?
Everything you do boils down
to a mini business case.
Why should we do this?
What's the evidence that tells us
that this is a good thing to do,
whether it's internal external data,
but like, why are we making this
decision and how do we measure
if this was a good decision or a bad
decision and pivot?
So coming into an acquisition
and coming into raising funds,
yeah, they want your data.
They want to know all of your your
top performance metrics.
Why are things going well?
Why are they going poorly?
They need an answer for
you need to know the metrics they're
going to be looking at. You need to
have a flow of data that
honestly answers those metrics, but
you also need to be out
in front of it.
You don't want to wait until you're
trying to raise around put all this
in place because what's going to
happen is it's going to boil up.
Hey, wow, we had this weird blip
over here. Why did we have that blip
over there? And if your answer is,
I don't know, we just found it, you
know, you're going to look like an
idiot. But if you can say,
yeah, you know, we actually
recognize this dip
in conversion rates, our leads
in Q1.
And we knew that that was never
going to hurt sales in Q4.
And so what we did was instead of
doing this campaign, we shifted
those funds into another campaign
with higher conversion rates.
And what happened is as a result,
sales in Q4, we nailed our forecast
because we were three months ahead
following the leading indicators.
You showed them that and that just
gives them. Confidence to give them
trust.
And that's your job as a CEO, is to
to have all that information on hand
and to have the story.
But the story comes out naturally if
you're following it in real time.
It gets awkward and clunky and
people can smell the B.S.
if it's something that you not
addressed until you're pulling the
data last minute for somebody who's
asking for it.
So if you think about what you just
said and you had to break it down in
terms of stages of development with
Cameo, in terms of what you did,
just to give it a level of
granularity as to what that looks
like.
Coming back to strategic objectives,
Right? Like the first thing I did
when I came on is
is towards the tail end of a year.
So we had the luxury of kind of
measuring how we performed.
And then it was putting in place a
forecast model that
made use of our historical data
drew on external information,
on market sizing and all this
and, you know, industry metrics.
And let's create a forecast model of
what we're going to achieve as a
business over the next three
years and what are the metrics
that are going to tell us,
like what assumptions are driving
this forecast model?
And you can piece all of those
assumptions out into metrics.
And okay, so here
are the assumptions we're making
that's going to drive this forecast
model. How do we measure those so
that we know that we're on track
for this forecast or do we need to
shift things? Where do we need to
shift things? And the forecast was
dynamic in that not just was
it applying to,
hey, this is the goal we want
to reach, but what are
the pressure release valves and the
ways to, you know, we have X amount
of funds right now.
We've decided we're not going to
raise money.
So how do we use
those funds to get us
from A to B, which is this
strategic objective, this goal that
we're setting, that that's
attainable? You know, but it's a
stretch.
How do we deploy those funds in a
way to get us there?
Let's put in place metrics so that
we know we're marching to that plan
and we're using our resources to
grow at the most
sustainable possible rate.
Right? And we have like something
that we did that that was just
really, really impactful is
we had this dynamic budgeting
process. You know, you can't live in
a world when you're bootstrapped and
you're working to scale.
You can't live in a world where you
have a static budget.
Never you just spend money when
they're not showing results, right?
So we put in place a plan
that was like our document, right?
That we're working off of is
spreadsheets. It's systems, it's
metrics that built that plan
out. Define the metrics that would
tell us how we're performing against
it, and then
modified our system so that we could
collect that data in real time
and constantly see where we're
marching. We mean as an executive
team, we would meet weekly
to review where are
we on this path to
our strategic objectives and
how are we doing?
So we've talked a lot around
building the operations for building
the company.
We haven't talked a huge amount
about the exit.
Looking back on what you've done, is
there anything you would do
differently or looked at everything
that you have done? Is there
anything you would do differently at
your time at Mayo to put
yourself in an even better position?
The time to prepare for an exit is
two years before you
actually are going to need
to exit. The main thing that I would
focus on just sharply,
like make sure you have your data
and your metrics there and ask
questions about your performance.
You need to be able to answer that
and you need to have clean
financials.
It's so much better if
you are internally auditing
your data, auditing your financials,
answering the hard questions as
an executive team, as a CEO,
and then the rest of the
organization so that you can
be more than prepared and show
you're prepared when you start
having those conversations, those
negotiations, the stuff we've been
talking about, systems, metrics,
forecasts, that applies
directly to having a successful
exit.
The next thing I would say is,
you know, especially a startup, you
don't want to spend a lot of money
on legal.
But the reality is
that is such an important
piece, especially when you
start looking at getting acquired
by a large organization.
So I would
strongly recommend spend
that time to make sure your employee
contracts are exactly where they
need to be in industry standards.
Spend the time to make sure all your
customer contracts are where they
need to be.
Another one that's really big and
this is probably one of the hardest
ones that I've learned
is not every customer
is actually a good customer.
You're so desperate for money as a
startup is so desperate for
customers to show growth that you're
inclined to do things
to just land an account
that sometimes
could come back to bite you.
There's two things that could
happen. One is you could find out
that this customer segment that was
easy to win early, right,
is actually a higher churn customer
segment that's not going to be
as attractive to people you're
raising funds from or.
Or to a potential acquirer.
We have to take a step back and say
what customers do we really want?
And a lot of times the early stage
customers that you win to help you
get your business off the ground are
not the right customers to increase
enterprise value long term.
And you want to shift into those
customers that give you the best
growth and the
lowest churn and the highest
customer lifetime value to customer
acquisition costs ratio.
That's a metric I love.
And then another thing I would just
say is
on the culture piece,
if something deviates from your
culture, whether it's a hire or
whether it's a strategic
decision in an investment,
if it just doesn't feel right,
revisit that over and over again
and be sure
that that's something you really
want to do before you do it.
It's quite interesting that you're
talking about like so much of what
you just talked about today is the
metrics, follow the metrics, follow
the data, and yet follow
your gut. Your instinct, your
culture is actually just
as important, if not more.
And so it's a little bit of where's
the art, where's the science?
So I would just say this culture
should guide your starting point
decisions, right?
Data will inform you how to
pivot after you make those decisions
rarely where you make the perfect
decision or execute perfectly.
Right? So it's like your culture
sets your goals, that your vision
sets how you're going to operate
as a business. Those are gut
decisions, right?
You're making and then
your judgment calls where there
isn't data to tell you this is
the right answer, or sometime maybe
the data does say something and it
just doesn't feel right because
there's something else there that
you haven't considered.
But when it comes to this, like
planning, measuring, optimizing,
making sure everyone's accountable,
every meaningful decision
should be treated like a mini
business case, like you should be
able to justify why you made that
decision. And then a month down the
road, why are you continuing on that
path based off of how you're
performing?
Before we end, like to ask
you the final question, which
is if our
listeners can only take one thing
away from our conversation today,
what is it?
Make sure you have in place the
systems and metrics
that tell you
your progress towards your strategic
goals. Right? It's worth the time
to get that right because
you need to know how you're doing
against where you want to go,
and you need to know that in real
time so that you can steer
yourself there.
That's the role of operations.
And in my opinion, the best thing
operations can do is
create that so that an organization
can reach their strategic
objectives.
Lovely. So thank you, Shane Harris,
for joining us on the operations
room. If you like what you hear,
please leave a comment or subscribe
and we will see you next week.