How to Build a Tech Culture that Makes People Want to Stay

One of the first things to suffer when things take off, is culture. Rapid hiring that ignores cultural norms can introduce new attitudes and expectations. Some good, some bad, the worst of which can deteriorate trust and breed a culture of fear — and fast. So how can you start to repair a tech culture?

One of the most effective ways to build efficiencies in a technical team is to focus on culture. It’s said that culture trumps strategy. Why? Because the execution of any strategy by a dysfunctional team, will be poor.

Some of the signs of cultural problems within a technology organization are:

  • Poor communication between development teams
  • Lack of visibility to the business
  • Ability to avoid accountability
  • Avoidance of meaningful conflict
  • The ridicule of ideas

If you’ve spent any time at all working within a technology team, you’ve seen several of these problems.

So, let’s get started. Below are three things I do to get things moving.

Prove that Conflict and Vulnerability are Acceptable

People often avoid conflict because their leadership taught them to. It’s that simple.

Many situations occur where someone disagrees with leadership and they are dismissed. Worse, they could face ridicule in front of their peers. The effects of this type of behavior are fast acting and long lasting. In such a culture, the best ideas often die before they’re ever explored.

Many years ago I was co-writing a song with a very talented writer who said to me, “Give me any ideas you have an I’ll give you mine. Some are going to be awful, but you never know what other ideas an awful one will spark.” It was a little uncomfortable at first, but I soon recognized my ideas weren’t getting an eye-roll. That motivated me to dig deeper. We agreed, we disagreed. There was meaningful conflict. We were kind to each other, but didn’t hesitate to disagree.

It was an impactful experience that I carried into other areas of my life.

And that’s exactly how to approach it in the tech world. Prove that conflict is acceptable by welcoming new ideas. Avoid any response that could make a person regret their decision to be open.

More important, the team should see you do this with other leaders. Show that you’re not afraid to be vulnerable and introduce conflict. Above all, show your team how to do that while being kind.

Praise Those Who Take Accountability, Whether for Success or Failure.

One of the best signs of an improving culture is the admission of failure. In a recent client engagement, a team member sent me an email telling me of a problem they caused. It cost the company customers and money.

Here’s what I did next:

  1. Immediately thanked the person for bringing the issue to my attention
  2. Asked for their recommendation on how to solve the problem
  3. Requested they quantify the impact to the company and share the detail with me

This person knew they made a mistake. There was obvious regret. But they had the courage to step forward and make things right. No need to make them feel any worse.

It’s important in this situation to express gratitude that you’re now aware of the issue. Learn what went wrong. Hear recommendations from the person that brought it to your attention. You will get the best from your team if they can be honest with you without fear of retribution.

Quick story: A CEO and CFO were talking about a new salesperson. The CFO was angry that the rep messed up a $2 million dollar deal and recommended he fire the salesperson. The CEO responded, “Why would we fire someone we spent $2 million training?”

Be Open in Your Interactions with Everyone

A few years ago, I had been coaching a 25 person development team on the importance of building trust. I wanted people to admit when they didn’t know how to do something. I wanted them to be open when they made a mistake.

Then it happened.

I had been upgrading a Jira instance and something went wrong. Long story short, every single bit of data had been completely wiped from the system. Not realizing that had happened, I decided to head home and get back at it the next day.

The next morning everyone was frantic. Luckily, one of my colleagues saved me from embarrassment and restored Jira from a backup. Things were up and running again. All was good with the world, right?

Not at all. I needed to prove to the team that everyone, including and especially me, needed to be open. At a team meeting that afternoon, I opened with, “We found out who deleted the data from Jira.” A nervous silence enveloped the room as people looked around and tried to guess who was in trouble.

“It was me”, I said. “I made a mistake during an upgrade and I apologize if it caused anyone any trouble.”

The team was gracious and accepted my apology.

From that point on, people new that it was OK to be honest. That they could trust I wouldn’t hold myself to a different standard than I expected from them. Communication almost immediately began to improve.

You must be the example you want your team to follow. Asking people to be accountable, yet avoiding it yourself is only going to build cynicism in the team.

If you’re in a position of leadership, prove that you will hold yourself accountable. And prove that the standard isn’t any different for you than it is for your team.

It’s an Ongoing Process

You can have significant impact and begin to repair a tech culture by taking these straightforward actions. But it doesn’t stop there.

As a leader, you are the guardian of the culture you want to have. You will have to make occasional adjustments to process, technology, and, yes, people.

Sometimes they will be painful decisions. But make them anyway and learn as you go.

And when you’re wrong, tell the team, adjust, and keep moving. I promise you, it will be worth it.

[This post originally appeared on TheFractionalCTO.blog]

How a Recruiting Process Exposes Your Authentic Values

If you’ve ever looked for a job, you know.

You know what it’s like to put time and effort into a resume, research a company, and write a thoughtful cover letter. You send it off and wait. And wait.

And a response never comes, or comes long after you’ve already found another role.

In one case, I received a rejection email from a company a full 6 months after I had already landed another role. And yeah, I’d already figured out they weren’t interested by then…

The funny thing was that this company heavily sold their culture in the job posting. They said that people were their focus, they valued communication, and acted with a sense of urgency.

Unless you’re an applicant.

Well, OK, I added that bit, but you get my point. My experience with that company conflicted with who they wanted me to believe they were.

[The article was adapted from Kevin Carlson‘s original blog post]

Show Applicants They’re Important: Respond

A few years later, I found myself in the position of being responsible for the recruiting process. The roles I posted to job boards generated hundreds of responses. Of those I received, many were not qualified and some didn’t appear to have read the job description.

Even so, I remembered my earlier experience, and wanted to make sure I responded to everyone, even if it was to give them bad news. As applications piled up, the task seemed like a tough one to tackle.

“I’ve been there”, I thought. “I know what it’s like to face rejection and now I have to do the rejecting.” It’s a normal reaction to want to avoid this step in the process. If that’s how you feel, congratulations, you’re human.

The solution for me was two-fold:

  • First, use the Applicant Tracking System we had to organize things. If you don’t have one, I’ve listed affordable options and alternatives at the end of this post.
  • Second, recognize that my silence helps neither the company or the applicant.

Use the Right Tools to Make Responding Easy

We used our Applicant Tracking System to post jobs to job boards and to our web site. It organized responses and made it easy to move candidates through the pipeline. It also made it very easy to send candidates a response.

Applicant tracking systems allow you to create email templates that request a phone conversation, an interview, or let someone know they haven’t been selected. Take the time to create a template for each type of communication you might want to send a candidate, including those for rejection.

As a rule, I would go through the new resumes first thing in the morning, and send each applicant an email:

  • We received your resume and are reviewing your qualifications…
  • We’d like to set up a phone conversation…
  • Could you answer a few questions for us…
  • Thank you for your resume. Unfortunately, you have not been selected as a candidate.

The first three? Pretty easy.

The last one is more difficult to send, and here’s why it’s so important: How you treat people outside of your company says volumes about the real values inside your company.

Actions show Authentic Values

Wall posters that display company values — we’ve all seen them.

Integrity. Honesty. Collaboration. Blah, blah, blah.

Seriously? Those values are table stakes.

If you have to tell people that you like to collaborate, are honest, and act with integrity, that’s a pretty low bar. When I see that, I’d rather ask your customers what they think your values are and get the real scoop.

Values must be in your heart and mind, not on the wall. People you interact with will talk about how they experience your values and culture. Your actions and inactions will have an impact.

How many great candidates don’t apply because a friend ridiculed your recruiting process? Might be only a few. Might be only one.

AND IT MIGHT HAVE BEEN THE ONE CANDIDATE THAT MATTERED.

So, take the time. Write the responses. Send the appropriate email now. With an Applicant Tracking System, it’s easy. Doesn’t matter if there are hundreds or even thousands of applicants. If you’re actually looking at the applications, it takes three seconds. And most savvy candidates know this.

What if Someone Responds to a Rejection?

You’ll get responses to rejections, no matter how tactful and kind you are. For me, they’ve varied from, “Your loss” to “Can you explain where I fell short?”

No, I didn’t respond to the first one. I have responded to many of the second type, though. Taking the time to help a candidate understand the skills or experience they need may result in their eventual hire. Ignore them and when they have the experience, they may ignore you.

The responses don’t have to be long. Send a simple note explaining there were candidates with more experience in certain areas (name them). Or perhaps tell them they need to brush on specific interview skills. It may help them and give them a little confidence to continue the hard work of looking for a job.

The “Thank You” Paradox

You’ll almost always receive a nice thank you note from those you hire or interivew. That’s common practice. Almost expected.

Yet I have received at least ten times as many emails from those that didn’t make the cut. The top responses may surprise you:

  • “Thank you for letting me know.”
  • “Thanks for your guidance.”
  • “Thanks for the encouragement.”

When this happens, you have preserved a future candidate. You may have given someone the boost they needed to write yet one more cover letter. You may have let them know that someone actually cares about the hard work they’re doing to find a job. They will remember you and your company. Your recruiting process, even in rejection, is showcasing your company’s values and takes a long-term view of candidate viability.

Recruiting is Early Proof of Your Values

When you’re faced with a lot of applicants, I encourage you to take the time to respond. You will prove your values and show that the culture you talk about is real. As I mentioned in a previous post on tech culture, you are the guardian of the culture.

Screenwriters have a mantra: “Show, don’t tell.” It’s the same thing when it comes to company values.

So, do what’s right and not what’s easy. Let candidates know where they stand so they can progress or move on. It will prove to them that your company — and you — are worth talking to.

INFO ON APPLICANT TRACKING SYSTEMS AND ALTERNATIVES

If you don’t have an applicant tracking system, don’t despair. There are a lot of them on the market with varying price ranges. Some cost as little as $25/month or charge a reasonable per job posting fee. Well worth the money. Below are links to a few that I have used or have that colleagues recommend.

If you’re on a tight budget, you can use something as simple as Excel to track candidates and responses. A little tedious, but worth it.

If I’ve missed an ATS that you have used with good results, please provide a link and your comments below!

Three Non-Technical Things a CTO Must do to Survive Growth

A growing company is a great place to be. It’s fun to see customer acquisition rates and revenue increase. You’re excited for each new day, each new customer, and each new employee that joins. You’re working like crazy, but it doesn’t feel like it.

And then it happens.

Your team isn’t getting as much done. Quality drops. Employees feel stuck in maintenance roles. It’s a very common occurrence in a growing business and it’s one that you can’t solve with technology alone.

You’re heading down the straightaway and it feels great. That corner you’re approaching is going to be a challenge. The good news is that you can prepare for it. The bad news is that everyone may not make the turn with you.

Below are the top three things that you as a CTO must do — all non-technical — to help a company survive rapid growth. By the way, they’ll help you survive it, too.

Pay Attention to Process

I used to think process was boring. That it stifled creativity. I was a young man, a software developer. And I was quite wrong.

It wasn’t until I worked for a great manager, one that understood techies and was one herself, that I learned. Process is not only necessary, it enables growth.

[The article was adapted from Kevin Carlson‘s original blog post]

Defining a process takes the guesswork out of knowing when something is complete. At a meta-level, each process should mesh with the next stage of work so that handoff errors are minimal.

Here are a few places where processes can usually improve:

  • Development: How does a story, a bug, an enhancement flow through your team? Who handles a task and when? When is it done?
  • Communication: What events do we need to communicate? When? To Whom?
  • Hiring: What roles do you need? How are they approved? Who is interviewing which candidate and when? How are we communicating the each candidate and hiring manager?

Process is nothing more than describing how things move from concept to completion. It’s also not static. Review the effectiveness of a process and make changes, as needed.

Process helps teams align on how things work and will help the entire team function in a focused way.

Define Metrics and Share Them

Every development team I’ve worked with has shied away from publishing metrics. It’s a common theme.

Here’s how development teams learn to dislike providing data:

  • Development publishes a release date.
  • There are unforeseen technical difficulties or unplanned additions.
  • Development misses the release date.
  • The business blames development for being late.

Common result? Yes, but the on-time metric doesn’t tell the whole truth. Metrics can tell the entire story, if you track a holistic set and report on them.

I worked with a team in the past that was being criticized for Sprint velocity decreases. When we began tracking hours, it was evident that the decrease in velocity was due to the unplanned. Bugs, enhancements, and other issues were devouring an increasing part of each Sprint.

When the management team had the entire picture, it was clear that a lot of people played a role in the delay. So they took steps to make things better.

Anyone can stand on the accelerator and get a car to top speed. If speed is your only focus, good luck getting through the next turn.

Everyone wants to track velocity. The problem is that, in and of itself, it’s meaningless. You should also track metrics that uncover issues with quality, bottlenecks, and unplanned events.

It’s true — what you measure is what matters. So measure things that tell the whole story, not a fraction of it. Then, tell the story to everyone.

Hire for the Long-Term

It’s normal to have a cafeteria-style list of skills when looking for a new hire. It’s important to make sure you hire people that have the skills to do the job. But watch out for the pitfalls with taking only that approach.

I’ve participated in many interviews with clients that are more like a pop quiz than an interview. If your goal is to figure out how much someone knows about a given technology, sure, ask the questions. But if that’s your only goal, you are focusing on short-term benefit at the expense of long-term value.

Yes, they have to be able to ramp up in a reasonable time frame. No, they don’t have to have encyclopedic knowledge of an SDK (they publish that stuff online, you know).

Focusing on the skills of problem solving and communication provide longer term benefit. Avoid the temptation to skip this bit when technical needs are critical. Also critical, make sure your recruiting process is communicating your values.

During the recruiting process, ask questions that drive inquiry. Find out if the candidate asks thoughtful questions or if they jump right into code? Do they prefer the details of NodeJs or do they ask about the user?

Make sure to ask questions that can uncover problem solving ability. Experiencing how a candidate thinks through a problem, and how they communicate with others, is the best indicator of long-term success I have found.

Enjoy the Ride

Hard work, great colleagues, investors, and advisors contribute to building toward rapid growth. Enjoy that and realize that rapid growth may require a shift in focus.

A CTO’s role is one that needs to change as the company moves from one stage to another. You may have been the superstar coder and founder that built everything in the early days. Now, you have a team that requires a different focus and skill set.

Focusing on these non-technical tasks will help ensure you survive the transition.

Andersen Alumni TechCXO

The Andersen Alumni Association recently featured TechCXO and its co-founders, Kent Elmer and Mike Casey The article includes the backstory of the founding of TechCXO, including its first days at TechCFO, how the spirit of Andersen lives on within the firm, the success TechCXO is enjoying today.  The full story follows.  You can also read the story on the Andersen Alumni website or download a PDF.

Entrepreneurial Spirit: TechCXO, Pioneers in the On-Demand Economy

Six in 10 Americans recently told a Harris Poll that professional control of where, when, why, how and with whom one works is the new version of the “American Dream.”

But back in the early 2000s, in the aftermath of the internet bubble, Andersen alumni Mike Casey and Kent Elmer weren’t thinking about creating dreams; they were thinking about making a living.

From the Dot Bomb Rubble

Casey, who worked with Andersen Enterprise Group from 1985-1991 was winding down iXL, one of Atlanta’s most high-profile dot-bombs, as its CFO. Elmer had been with Andersen Enterprise Group from 1990-1993 and had just moved back from California after joining Broadcom’s M&A team through the acquisition of the early-state company of which he was the CFO. They both had successful stints as CFOs but re-entering public accounting or joining another public company held limited appeal. They both enjoyed the buzz and promise of early-stage companies.

“I was delivering outsourced fractional and project CFO and accounting services to a number of early stage and established technology companies as I looked for another full-time assignment.   Mike’s company, Mapics, was one of my clients, “ said Kent Elmer. “The more we talked, the more I realized that Mike already had a vision for the business model that I was executing – he even had the named already picked out. He convinced me that this could be more than just an interim gig while I looked for my next job – it was my job and career!”

TechCFO is Born

TechCFO was born. The premise was to present high potential companies with proven CFOs and support in an interim or fractional model. A few years after taking the plunge, the fledgling firm added more Andersen alumni, including Casey and Rick Lynch.

Those early TechCFO partners traded on their professional reputations to secure clients. Early on, clients warmed more slowly to the model, and then became fans as partners delivered service that exceeded expectations. An ecosystem of VCs, attorneys, bankers and even regional accounting firms was starting to build. The informal collection would network and refer to one another promising early-stage companies who needed guidance. The model was taking hold.

The Spirit of Andersen Lives On

Expansion followed into Boston and then Raleigh-Durham. Clients then began asking for other services, including sales, marketing and technology. The firm brought in sales executive Rick Nichols, who had ties with Andersen, launching the SOAR global account strategy and planning initiative. Nichols was drawn to the spirit and quality of the firm, which felt Andersen-like in many ways.

The company rebranded as TechCXO in 2012, and added a complement of interim and fractional COOs, CTOs, CROs, CSO and CMOs to its ranks.

Today, it is highly likely that a successful startup in Atlanta or the Southeast has the fingerprints of a TechCXO partner somewhere in their corporate profile. The Boston office has become a mainstay within the biotech and medical device startup communities, and the New York, Nashville and Midwest offices are growing quickly. TechCXO has roughly 85 partners and another 50 staff.

The firm recently celebrated its 15th year in business and has been named a 10-time Honoree of INC’s Fastest Growing Private Companies in America. The firm estimates it has assisted more than 1,000 clients and assisted on more than $5B of transactions, including M&A and capital raises.

Kent Elmer says the appeal is straightforward.

“We’re lean and flat. Because we rely on our partners’ networks to generate business, partners retain 80- 90%-plus of what they bill (see the TechCXO Prospective Partner Guide. They get to choose the clients they work with, and there’s a very strong entrepreneurial vibe in the firm, even though we’re a collection of mostly 50-plus-year-olds,” Elmer said. “We’re a casual and collegial group, too. Lots of cross-marketing takes place, and we really put our shoulder behind new partners.”

The No (Jerks) Rule

Internally, a well-worn proclamation is Rule #1: The No (Jerks) Rule. The plan for the future is simple: more partners in more markets. The firm says it’s generating more than $25 million annually.

“Every quarterly meeting, we show the same growth metrics. We didn’t start this thing to be a gig economy pioneer – it just kind of evolved into that. We’re getting to the point now where we need some more processes and infrastructure, but the basics are the same: partners are the product,” Elmer said. “Companies are getting an executive or team with no learning curve who can impact their business positively very quickly and for a fraction of the cost of a full-time department.”

Right for Andersen Alumni?

And would TechCXO appeal to Andersen alumni?

“Absolutely,” says Mike Casey. “If you’re a buyer, you’ll recognize the quality and rigor. If you’ve got some gray hair, have a strong entrepreneurial strain in your DNA, and enjoy business development, while being connected to great peers, TechCXO is a great later-stage career choice.”

Pain in the Art of Shipping

Pain in the Art of Shipping

Steve Jobs is credited to have said, “Real artists ship”, meaning that those who create — be it technology, music or a sculpture — make their art available (in galleries or store shelves) for people to consume, critique, enjoy or reject.

Anyone who creates makes themselves vulnerable to the pain of evaluation only when they cross the point of no return — the shipped item.

Hi-Tech Procrastination

The fear of putting out a product that will not be broadly loved and adopted paralyzes many leaders — particularly engineers — to continually tinker and “improve” it, fearing that they only have one shot at success. VC Fred Wilson has written about his admiration for founders and CEOs who insist their organizations meet ship dates, even if sacrifices are made, including pulling features.

Here are three things to keep in mind to focus your team on being fanatical about hard ship date deadlines.

The Last 10% is the Hardest

“The last 10% is so much harder than the first 90% of any project. That is true whether it is software, an event, a construction project, or really anything that requires a lot of planning and then a lot of execution,” writes Fred Wilson. That has absolutely been my experience in at least two dozen product launches. And for early stage companies, not only is perfection the enemy of the ship date, it could be the enemy of the company surviving be it in the form of revenue/cash flow or attracting additional funding from investors.

If you understand how hard the last 10% is, you can deepen your commitment to the ship date when you approach that milestone.  My colleague, John Murray, has launched some of the biggest products in technology for companies like Verizon. His pre-launch planning and feedback mechanisms are so comprehensive, you realize that your launch is not an end but a beginning.  He has an extensive post-launch checklist to automate feedback starting with your Go-Live moment.  Knowing that there is much work to be done post-launch will help free you from the casino, all-or-nothing mentality of your product launch.

Start with Some Friendlies

The reality is that no matter how much of an expert you think you are on the industry or on what the product needs, you won’t really know until you get the product into the hands of customers.

Find some early adopters or “friendlies” and get them using the product as soon as it passes the “it won’t embarrass us” milestone.  Chances are, many of the things you thought you absolutely had to have, are not really needed.

If your product fixes a broken business process where there are real, measurable consequences to inaction… is driven by a mandate associated with governance or regulatory control… serves and under-served problem that includes burning pain for your customer, they are more than willing to overlook some warts to get their hands on it.

Furthermore, assuming you are responsive about fixing the bugs and filling in the missing gaps identified, you will be viewed as a responsive partner and they will quickly forget about the shortcomings they had to deal with when they first got their hands on it.

Launch is Not All-or-Nothing Proposition for Product Success

“Most entrepreneurs are so passionately focused on their product and the features they have developed and delivered, they often ignore the cost and difficulty users may have to effectively use their solution. Research suggests that with less than a 10x gain/pain promise, clients will likely default to a no decision rather than buying an early stage product without market credibility,” writes Ken Goins in How to Create a Compelling Value Proposition.

What this means is that:

(a) Your product may work well once the user has overcome an initial learning curve but you may have intimidated a large audience who are intimidated by initial complexity or sophistication. John Murray talks about how product teams need to spend significant hours figuring out how to get the subscriber over the “Fear-of-the-Button” and to start the activation process, for example.

(b) Your product is fine but your messaging value proposition messaging and marketing is not compelling enough to move users.  The below chart from Ken Goins illustrates the Pain/Gain Ratio concept.

Net/Net: you don’t know where your product will need improvements to attract, retain, scale and grow.  Make the best product you can for your explicit launch date. Focus on product-market fit and a compelling value proposition to drive decisions. Plan for relentless and ongoing product feedback. Respond with speed and over-communication.  The pain in the art of shipping will be lessened.

 

Greg Smith is TechCXO’s Managing Partner for the Product & Technology Practice. See his full bio here. Or, learn more about interim CTOs and CiSO-as-a-Service.

Customer Success and Intentional Revenue

Customer Success and The Case for Intentional Revenue™

In my career, I’ve worked with and consulted many technology firms from small to large on customer renewal issues. Most have had at least a reasonable level of success, and many have gone on to do very well. Over the years I’ve collected a set of notes. I tried to understand why some have exceeded expectations and why some have fallen short. A lot has to do with consistent execution and growth, but then I looked at the numbers further – is it only about sales? About good products? Good after-sale support? It’s that and more. I’ve come up with a model that I call Intentional Revenue™ which has three elements.

Customer Desired Outcome

First, you build, sell, install and support a customer so they reach their desired outcome. You’re not selling a “product” or even a “solution”. A simple analogy – you’re looking for a new car and are considering a convertible. Reliability, power, space and value are important. But the end result is not a car. You’re buying into a lifestyle where you can put the top down and relax in the sunshine.
Your customers are the same. If a customer needs a new billing system, they’re not buying it from you because they like billing systems. They are buying because it solves a problem. They are buying relief from their current system. That’s the outcome they are looking for.

This all sounds simple. But in my experience, the value chain in technology solutions is often broken. Sales can oversell or over-commit. Products can be faulty or not deliver promised functionality. Implementation services seek sign-offs rather than delivering value. And support focuses on closing tickets not resolving the issue.

I’ve tackled and solved many problems in these areas. Often sales coaching will help along with deal reviews. Product reviews against consistent, communicated roadmaps also ensure alignment. Implementation services focused on success and not milestone achievements are critical. Support surveys that measure results, not closure rates, provide positive feedback and reinforcement.

The Intentional Revenue™ goal is to achieve 100% alignment between a sale and achieving the customer’s desired outcome. For every customer.

Renewals

The key to long-term success for startups or mature companies is customer renewals. Software or technology is usually sold in one of three ways:

– Perpetual License (fee paid for permanent ownership; annual support is usually extra)

– Term License (fee paid for license and support for a fixed term)

– SaaS (fee paid to host a solution, for support and licensing, usually for a fixed term).

In these cases there are revenue opportunities beyond the initial sale. Implementation services and education are almost always added to the license costs. There are fees from ongoing support. And there are fees for major upgrades and updates (if not covered by the license agreement).

Customer Lifecycle Management

Customer Lifecycle Management is a discipline in itself. If a customer doesn’t get their desired outcome, their likelihood to renew decreases. A customer will also renew for a short period and look for a replacement if they feel neglected or abused.

Additionally, with renewals, there are two aspects to consider: rate and yield. The renewal rate is the percentage of customers who renew after their first term. Or, those who renew maintenance if they have perpetual licenses. Cell phone and cable services have high churn (non-renewal) rates. B2C software also can have high rates of churn, often approaching 50%. Enterprise software and mission-critical technology have higher renewal rates. But they are rarely 100%.

Renewal yield refers to the capacity or dollar value of each renewal. Let’s say that you sold the customer 500 seats of software, or 500 units of hardware, but they only used 200 of them. They are unlikely to renew for 500. It is more likely the customer will agree to 250 which covers their current usage plus some growth. That would result in a renewal yield of only 50%! It’s also possible to exceed 100%, if you sell more capacity during a renewal cycle. That’s usually a great sign that the customer is getting value and their desired outcome.

It’s much easier to tackle high renewal yields and rates if you think about it up front. I once took over a large portfolio of products. The products had fast declining yield (<50%) and slipping renewal rates. I was able to get the renewal rate to 100% and the yield over 90%. It requires a lot of effort if you’re trying to do it right before a customer renewal.

The Intentional Revenue™ goal is to achieve a 100% renewal rate and 100%+ of renewal yield.

Recommendations

How likely is your customer to recommend you to others? Referrals are a huge source of leads and future business. Of course, negative recommendations are not desirable.

Again, if your customer doesn’t renew, they didn’t achieve their desired outcome. They are not going to give you a recommendation, either. There are times a customer will get their outcome, renew, but not recommend. What’s up? The customer’s treatment before, during or after the renewal cycle is the culprit. The perpetrator might be your CEO or a support technician.

There are ways to measure Likelihood to Recommend (LTR). One of the most popular measures is Net Promoter Score®. Regardless of the method you use, if you’re not getting recommended, you’re leaving money on the table.

The Intentional Revenue™ goal is to have 100% of customers likely to recommend you to others.

The Proof

You might argue that this works well for one type of product, or for one type of company. I’ve modeled out success for: (1) mature technology companies with term licenses; (2) mature companies that sell perpetual licenses; (3) startups, and (4) growth companies that sell SaaS or term licenses.

Some firms have strong sales teams but aren’t as strong in customer renewals. Others are great at renewal yield but not rate or vice versa. Some are “best in class” at the higher range for each. The model also includes all Intentional Revenue™ principles.

For the first few years of the model, the differences aren’t noticeable. But Intentional Revenue™ plays the long game. Here are the gains you could achieve over 10-years with the Intentional Revenue™ model:

[table id=8 /]

These are illustrations and your numbers may differ. But in all cases, there are tangible revenue improvements. The annual revenue run rate at the 10 year mark is close to double the typical case. This is even in a conservative scenario (mature perpetual). Small improvements in renewal rate, renewal yield and bookings growth deliver big results. If you aren’t already achieving the metrics laid out here, there is room for improvement.

Finally, this is not about selling. Nor about products. Nor about services or support. It is a holistic approach that requires all functions to work together.

How do you get started? Give me a call! My practice offers 3-day onsite assessment workshops to get you underway.

Mark Lukianchuk is a transformational global technology executive with a proven record of innovation and execution in the Software, Payments and FinTech spaces. He can be reached at (404) 777-4774 and mark.lukianchuk@techcxo.com

4 Ps Ripe for Fractional Engagments

4 “Ps” Ripe for Fractional Engagements

TechCXO specializes in providing fractional executives for a variety of positions. Our on-demand executive model is typically 50-75% more cost and time-effective than a full-time, in-house function. But not every company needs a fractional or interim CEO, COO, CTO or CFO.

In addition to the C-Suite, there are 4 other areas that would benefit greatly from expert assistance but not necessarily require a full-time employee. I mentioned in my last blog about the need for intentional processes.

As it happens, these 4 areas also start with the letter “P”:

• Project
• Program
• Product
• Portfolio

Project Work

The logical first opportunity is with project work. According to the PMBOK® Guide from the Project Management Institute the definition of a project is “a temporary endeavor undertaken to create a unique project service or result.” Projects are temporary and close down on the completion of the work they were chartered to deliver.

When your company hires a project manager, you are banking on the fact that the role will be needed indefinitely. What if the project is short term? What if you don’t need to hire a full time PM? TechCXO provides qualified, experienced partners and project managers to scale your efforts up and down as needed. We can help you with all phases of a project, from definition through implementation.

Program Work

A program is more extensive than a project in that it is more concerned with benefits rather than tasks. Programs can span multiple business units or disciplines. They can be comprised of multiple projects. Even if you have project managers on staff, often they do not have the level of experience necessary to juggle a more complex program. Even if experienced they may not have the available bandwidth to dedicate. This risks program success. TechCXO provides partners and staff with the level of expertise needed to design, implement and manage more involved programs.

Product Work

The third area is product. You already have product managers on staff. Are they delivering according to best practices? Are your products late, buggy or worse, canceled? An experienced third party can help you look objectively at any product problems and recommend a solution. TechCXO provides both technical and business-level product assistance via its skilled partners.

Portfolio Work

Lastly, an often-overlooked area is portfolio. As program is to project, portfolio is to product. As your company grows and you build or acquire multiple products things get more complex. You need to balance spend, manage renewals and run the portfolio as a business. Are you growing your portfolio as you should? You need to be better than your competitors. TechCXO provides a seasoned and independent voice to help you turn on, turn up and turn around any portfolio issues.

The final benefit – TechCXO can do this all on a fractional or project basis. We can get started immediately, without the risk and complexity of hiring a full time employee or independent contractor. All at a considerable cost savings.

Ready to learn more? I’d love to talk with you about your potential needs. I can tailor a project to fit your project, program, product or portfolio requirements.

Generalists in a Specialized World

Who provides competitive advantage to companies? Generalists? Specialists? Both? Neither?

I’m always on the hunt for a good new business book, and I’m currently reading “Range: Why Generalists Triumph in a Specialized World” by David Epstein. As somewhat of a generalist myself (albeit in technology) I can relate to much of what Epstein writes.

In the corporate world, there tends to be a higher value placed on specialization. Need a product manager? A services delivery manager? A sales manager? A requisition is opened for one with 20 detailed job requirements and an applicant must meet all of them to even be considered. In many cases this level of specialization is desirable, possibly even required.

But not always.

Trees or Leaves Problems?

It’s what I call the “forest, trees or leaves” problem.

The English writer and playwright John Heywood first documented the proverb “see the forest for the trees” in 1546. Nowadays it’s usually used in a negative context. “He can’t see the forest for the trees” implies that someone is too close to the problem to see the big picture.

When tackling a very specialized problem, this level of detail is needed. Sometimes it’s not even a “tree problem” but a closer look is needed – at the leaves themselves.

In my experience, when someone is new to an organization, they have the ability to see the forest. After a period of time (around 12 months) they become too engrained in how the company works and can no longer see the forest. They can only see trees and leaves.

The problem arises when trying to solve something strategic in nature. This might be a cross-functional issue that spans multiple teams. It might be something outside the experience base of the team members. Solving this problem means you need someone to look at the forest, and because the team members were hired to be specialists it’s tough to do.

Coming back to the book I mentioned earlier – there’s an interesting quote: “Specialization is obvious: keep going straight. Breadth is trickier to grow.”

Especially if you hire for specialization! You are prioritizing depth over breadth.

T-Shaped and I-Shaped People

Epstein also describes the difference between a “T-shaped person” and an “I-shaped person”. An I-shaped person is a traditional “narrow but deep” specialist. A T-shaped person is one who is wide but has access to depth via others already in the organization.

TechCXO is full of partners with T-shaped expertise, especially those with broad operating experience across multiple domains. I count myself in that list.

A T-shaped person will provide a competitive advantage to companies.

Day-to-day, companies can leverage specialists in the roles where they are strongest. They can bring in a TechCXO partner to assist with wider T-shaped problems that cross functions. They don’t need to have specialized domain expertise as that already exists.

The other advantage to a company: you can get access to a T-shaped executive as needed, on demand. You don’t need to change your hiring practices. You don’t need to sacrifice domain expertise and specialization.

Do you need help in seeing the forest? I and other partners at TechCXO are just a phone call away and can assist you in determining your requirements.

What Got Your Business Here Won’t Get You There – Part 2

Last time we explored how companies at different stages have differing needs. As a reminder, here are some sample challenges across several functions:

[table id=10 /]

It’s relatively simple to know which trajectory your company is on by looking at its financials. What becomes more difficult is in knowing if you are ready to meet functional challenges. How do you know if something is missing?

One of the benefits of working with sharp people at TechCXO is the knowledge and information sharing that we do. A while back Mike Allred and I were discussing ideas on a call and a comment he made reminded me of something I had built years ago – a maturity model for enterprise software. I immediately thought of its applications towards Intentional Revenue™.

What is a maturity model? It’s a process or tool that helps companies assess how effective they are and also provides a guide as to what to do next.

If you don’t know where you are, how do you know where you’re going? And how do you get there?

In IT, one of the grandfathers of maturity models is Software CMM, dating back to the 1980’s and created by Carnegie Mellon University. It’s now called CMMI and is owned by ISACA. It’s extremely thorough and comprehensive.

But there’s a challenge in implementing maturity models. Often, it’s a laborious process and I’ve found that the effort to adhere to it often doesn’t fit smaller companies. Why should a startup waste valuable resources in this way?

The answer is by having a guide as to what to do next. A simple start is often “just enough” to set up a good framework to build on later. Without this framework companies may not know where they have gaps as they grow, which can lead to problems. It also helps smaller companies know what skills and experience they need to acquire as they add new team members.

Since that call I’ve created an Intentional Revenue™ Maturity Model, the basics of which I will share with you here.

Like many models, this one has five levels:

Technically, there is also a Level 0 which corresponds to “unknown”, so consider that for a moment. The initial step for any company – startup to mature – is to know where they stand by first getting assessed. Then you can determine what areas need to be addressed.

If you’re a startup, you’d probably want to ensure you have the basics down pat across the board.

If you’re heading into a growth stage, you probably want to scale up your maturity along with your revenue.

As you become mature, you want to optimize what you have. But these are general rules.

One difference between the Intentional Revenue™ Maturity Model and many others is that you can achieve a high maturity level at ANY stage of growth. The scoring questions use process and qualitative criteria as opposed to specific tasks to perform or quantitative targets.

As an example, defining sales success could start with “hit your target (pass/fail)” which indicates low maturity. A single booking or revenue number defines if a salesperson or territory is successful or not. Obviously, it’s better than not knowing anything at all, but it’s very basic.

This progresses through “consistent measurement aligned with customer success” which indicates a high level of maturity. There is no longer a single metric used but more detailed criteria, measurement, performance management and alignment with how successful a customer is.

The actual measurement process isn’t critical here. The fact that it is consistent and aligned is. So, for a startup, this task could be done in a spreadsheet by a single person. In a mature organization it might require a dedicated team with a more detailed process and reporting requirements.

The outcome and the level of consistency is what determines maturity, not the work to do it.

This is important, and why many maturity models fail to gain traction in smaller companies. They are often too time-consuming and difficult.

No matter what you implement, you need to right-size it to the current stage of the company.

One final thing to consider: capabilities are assessed across multiple domains. In the case of Intentional Revenue™ this is across Sales & Marketing, Product Development, Implementation Services and Customer Support and Success.

A company can score well in several areas and lower in others, which yields a final maturity score that is the lowest common denominator. It’s perfectly fine to not achieve the highest level of maturity in all areas. Effort expended needs to align with expected returns.

Part of any report would also provide recommendations on next steps to proceed to the next level. A reassessment should be done in 12-18 months to show improvement.

I’ll finish off this blog series about the concept of maturity models and Intentional Revenue™ in the next blog entry. Stay tuned for Part 3 in the coming weeks. I can be reached at mark.lukianchuk@techcxo.com or at (404) 777-4774.

Mark Lukianchuk is a transformational global technology executive with a proven record of innovation and execution in the Software, Payments and FinTech spaces. He can be reached at (404) 777-4774 and mark.lukianchuk@techcxo.com

What Got Your Business Here Won’t Get You There – Part 1

Recently I’ve had some very interesting conversations about business growth and transformation. In my own personal transformation as a business leader I leveraged the standard on the subject by Marshall Goldsmith, “What Got You Here Won’t Get You There.” Here’s my take on the business equivalent.

Startups have it tough. At the same time, they also have it easy. How can this be?

A CEO I worked for once said that the most important aspect of a startup was to have a differentiated product. That “two guys and a dog in a garage” could be extremely disruptive to mature technology firms. This is true.

But the startup has the luxury of being singularly focused on this new offering. To get revenue. To make their first customers successful and happy. This level of focus makes it easier to guide what they need to do.

In the vein of Intentional Revenue™, consider the challenges of a startup:

[table id=9 /]

Pretty straightforward, right?

When you’re 2 people and a dog in a garage, you wear multiple hats. You do whatever is required in order to ensure these challenges are met. I’m not sure exactly what role the dog has, but I’m sure it’s important.

Compare and contrast this with the challenges of growth and mature companies:

[table id=10 /]

You’ll note some key differences here. There’s a revenue curve which accelerates and then flattens. Mature companies have a much greater focus on “farming” or “harvesting” than “hunting”. What skills and talent that got you started may not work later.

Product Development starts with a great idea and an MVP. But the people who were there at the beginning might get bored when it’s time to optimize the portfolio. Great features aren’t the sole driver of product investment decisions anymore.

Implementation Services transform from “do whatever it takes” to get a customer up and running to “let’s make sure we don’t lose money”. The focus has changed.

Customer Success and Support is a bit more controversial. A startup wants to keep their anchor customer happy. This often means access to the CEO or whomever is necessary. Growth companies want to maintain that level of satisfaction. At mature companies, however, it becomes understood that you can’t make every customer happy. And that’s OK, but you want to keep the customers that matter most satisfied.

So, it’s clear that what got a startup off the ground and through its initial funding stage(s) won’t get you deep into the growth stage and into maturity. How do you meet the challenge? How do you know if something is missing?

I’ll discuss more about the concept of maturity models and Intentional Revenue™ in the next blog entry. Stay tuned for Part 2.

5 Leadership and Management Styles

How style may impact your team’s performance

The five leadership and management styles in today’s business are: The Boss, the Judge, the Missing, the Super Performer and the Coach. Understanding these five leadership and management styles is key to becoming a true take charge leader/manager. Four of the five sub-optimize the human interaction so critical in developing a world class performance culture. A true leader/manager leverages both the organization and individual capabilities to unlock efficiency, effectiveness and true corporate value.

The ‘Boss’ and ‘Judge’

These two styles are authoritarian leadership and management styles and likely to be evidenced by a rigid rules system and an expectation of obedience to authority. This is evidenced by a manager who takes absolute control of a workplace situation, without reference to their team’s views and input would be exhibiting an authoritarian management style which is directive in nature.

Where these authoritarian management style models are allowed to thrive unchallenged, either in the work-place or in society in general, is rigidity and inflexibility more likely to result in entrenched thinking and a lack of response to rapidly changing scenarios.

The ‘Missing’ and ’Super Contributor’

These two management styles are polar opposites of delegating styles. With the ‘Missing’ style, the leader-manager is too busy with their own job and takes a laissez faire attitude, dishing out tasks to employees and leaving the rest solely up to the employee including any decisions about problems that may arise. Their attitude is to think they hire very senior people who know what to do and don’t need supervision.

The ‘Super Contributor’ leader-manager is the polar opposite, working with their people at a very detailed level, often insisting on being involved in every significant interaction, interjecting themselves into every aspect of work activity. Both contribute significantly to team frustration and under-performance.

The Coach

Coaching is the most critical competitive skill that any organization can have. It is the most potent tool available for improving performance, maximizing productivity and achieving revenue growth. Effective coaching is an integral part of how any leader manages. The broader objective is to create a world class entrepreneurial culture in which collaboration and coaching are cornerstones of behavior.

Helping your colleagues and sub-ordinates take responsibility for their own development will build team cohesion and accelerated productivity.

The first step in leadership is about vision. The second step is empowerment. The third step is coaching. While all three are interrelated, coaching pervades all three and supports the others. The goal of effective leadership is to create independence. Effective coaches and leaders:

  • Act as role models, demonstrating in the first person the skills and behaviors which are critical to successful meetings and conversations
  • Collaborate and communicate frequently with their teams and individuals to share strategies and tactics, reviewing key account, opportunity and executive briefing plans to construct optimal outcomes
  • Add value and guidance by providing domain expertise and relevant knowledge and acting as sounding boards for ideas and suggestions
  • Support team and individual decisions and actions with customers, prospects and colleagues

 

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Rick Nichols is Managing Partner of TechCXO’s Sales & Marketing Practice and a member of the Executive Committee. He can be reached at rick.nichols@techcxo.com or view his full bio.

Wurk Secures $11 Million in Funding to Facilitate Further Expansion and Support the Growing Cannabis Workforce

Leading cannabis Human Capital Management company plans to utilize this capital to bring in-demand technology and services to the market while investing in customer experience

Wurk, the first and leading Human Capital Management company for the cannabis industry, is pleased to announce the raise of $11 million in a funding round led by returning investors Poseidon Asset Management and Arcadian Fund. Existing investors Altitude, Salveo Capital, Phyto Partners and The Arcview Group also participated in the round.

Wurk plans to utilize the capital to enhance the client experience while expanding its cannabis HCM platform, including the launch of managed services. This will provide its growing customer base with dedicated human resource, payroll and tax experts. The company will also implement a robust analytics engine to provide highly sought-after data for the cannabis industry, allowing employers to increase operating efficiencies by benchmarking themselves against industry best practices.

“Our technology ecosystem allows cannabis companies to recruit, retain and optimize the efficiency of their rapidly growing workforces,” said Keegan Peterson, Founder and CEO of Wurk. “Multiple new states came online in 2018, and with a number of markets planning to implement a regulated cannabis program this year, the industry needs these critical business applications in place to support it at scale.”

“After participating in Wurk’s previous two funding rounds, we are thrilled to have the opportunity to invest in the company yet again,” said Emily Paxhia, Managing Partner at Poseidon Asset Management. “As investors focused on the cannabis space, we regularly see the HR, accounting, and tax challenges that startups in the industry face on a frequent basis. Wurk’s solution helps ease that massive compliance burden and creates a huge investment opportunity in doing so.”

TechCXO Managing Partner Rick Nichols is supporting Wurk as COO and Board Member.

Wurk helps cannabis companies manage payroll, human resources, timekeeping, scheduling and tax compliance, and minimizes compliance risks in the ever-changing cannabis regulatory environment. The company uses its expertise and trusted partnerships to provide guidance on 280E tax law, accounting and banking. Its platform is designed to scale nationally with the growth of the industry, while incorporating the local laws and regulations unique to individual states.

About Wurk

Wurk exists to help underserved businesses fortify, comply, and thrive in the face of uncertain regulatory environments. Designed specifically for the cannabis industry, our platform and managed services, allows employers to protect and streamline their operations, while providing an environment where people are a priority every step of the way. The intuitive solution automates the most complicated and risk-prone processes associated with Human Resources. For more information visit enjoywurk.com.

SOURCE Wurk

Related Links

http://enjoywurk.com

Equity Incentives for Capital Intensive Startups

The term “capital intensive” doesn’t always mean a need for high levels of working capital for equipment and facilities. For a growing number of startups, the capital intensity comes in the form of equity for talent. Your chances for attracting and retaining the top tier people you need for success are much better with some up front equity budgeting by founders and careful annual thinking about the equity pool you’ll need going forward for both new hires and merit-based awards to existing key contributors.

Equity Still Matters
Even though unicorns and IPOs have become more rare and the appeal of stock options for startups may not be what it once was, I maintain Equity Incentive plans remain table stakes for startups who want to attract exceptionally talented people. More than one founder has tried to dissuade me of this but my experience is that equity and ISOs matter, particularly for those people who have little to no variable component to their cash compensation package, such as a software engineer, versus a sales professional whose total cash compensation increases significantly based on performance.

On many occasions I’ve seen equity awards provide the hook to lure people away from larger, more established companies. There is more inherent power and flexibility in equity awards for recruiting and retention than a lot of founders may realize.

Founders’ Considerations
Founders are generally good at thinking through equity allocations amongst themselves and investors but the modeling of options for key employees (especially those yet to be hired) and those to whom you want to give merit grants is something easily overlooked in the early capitalization structure discussion.

Equity Incentives PDF

The size of the initial option pool you need available depends on the executive team you have on hand and those you will need. For example, if among your founders you already have your CEO, COO, CTO and other key executive team members, you may only need a pool of 10-12% of fully diluted shares available to create a suitable equity compensation plan. However, if you are yet to bring on several key members of your executive team, you may need 15-17% or more of fully diluted equity in the equity pool. I’ve seen founders caught off guard because they needed to come up with 5% equity for the CEO they really wanted.

The earlier an equity incentive plan reserve can be built into an equity strategy, the sooner it can be leveraged, usually in the form of winning a star employee through the draw of equity upside (either in addition to cash compensation or in exchange for a lower salary).

Budgeting for Equity: The Organization You Have and The One You Want
In addition to the executive team, you will need to think through your organization as it is and how you ideally want it to be. A good practice is to map out an entire organization chart and then do a bottoms up budget for granting equity throughout the entire organization. Budget out at least two years or to the next anticipated equity raise.

One example – and this is merely an illustration as equity grants have many moving parts and variables – is if you anticipate the need for a great software engineering team, you may allocate for your Engineering VP 1%; a senior engineer 0.5% and a line employee 0.25% (of fully diluted shares outstanding). Go through the same exercise for sales, marketing, operations and other functions. To avoid confusion at the time of future dilutive events, it is always prudent to detail option grants as a specific number of shares versus a percentage.

Again, not only do you want to create a pool of equity for new hires, but for merit awards; particularly if your horizons for major events (such as IPO or an M&A transaction) stretch beyond 3-5 years.

Conclusion
Equity compensation for employees and key stakeholders under a formal Equity Incentive Plan remains an important retention and motivation strategy for early and growth stage companies, particularly those with longer horizons to an exit, IPO or gaining traction in the market.

Founders should take care early on in their history to ensure that they have a well thought out Equity Incentive Plan and pool.

In the war for talent, equity may be your biggest capital expenditure and you can make your dollars go much further with some forethought and follow through.

Kent_Elmer_200x200

Kent Elmer is Managing Partner of TechCXO.  He can be reached at: kent.elmer@techcxo.com.  See Kent’s full bio.

Negotiating Price

When it comes to negotiating a price in mergers and acquisitions, there are, of course, two very different perspectives: those of the buyers and those of the sellers.

The buyer wants upside, efficiencies, strategic fit and certain parameters met. The seller wants fair value (or maybe a little more than fair value) for their company. Effective negotiators get deals done by bridging the two perspectives. Below are some useful maxims for the respective sides.

The buyer wants upside, efficiencies, strategic fit and certain parameters met. The seller wants fair value (or maybe a little more than fair value) for their company. Effective negotiators get deals done by bridging the two perspectives. Below are some useful maxims for the respective sides.

Sellers

Valuation. What’s my company worth? There are many variables to valuation but you can get in a reasonable range to begin negotiations with the right information. First, there are comparables in your industry. If your firm is private, look at market capitalization and ratios for similarly-sized and positioned companies that are publicly traded.  NOTE: There is a discounted valuation for private companies versus public companies. In the past, public companies were worth significantly more — the valuation gap ranged from 30-50% plus. That dynamic has changed, but it is important to note that a private company discount still exists.
Along with public company valuations, you can also research M&A and other transactions in your sector for similarly-sized companies. Another standard and popular gauge is the historical revenue per employee calculation.

Strategic Assets + Future Value – We’ve talked before about the importance of the Seller’s Story. Specifically, negotiate a price based on the value your company brings to the acquirer; determine how you can accelerate their growth and/or enhance their value, then negotiate off that prospect. That means highlighting strengths be they geographic, unique market niches, key customers, market dominance, service abilities and more.

Buyer’s Disclosure – We often think of disclosure from the seller’s side, but there is also a buyer’s disclosure that can help the seller’s valuation. Buyers use a logical process for acquisition targets and pull together for their investment banker or consultant marching orders to find companies in a certain space or market sector with the specific attributes. The company will have obtained Board approval to seek companies with these attributes. Ask investment bankers callers what these attributes are – you might even ask for a document the I-bankers have prepared for their client. Do this right at the initial stages of inquiry and then build your story along these sought attributes.

Pay Only for Strategic Fit. Avoid price discussions until you thoroughly understand the acquiree’s business; put you best people on the project team until you validate the strategic value proposition and only pay for that. Remember: No amount of back office rationalization or tax benefits can justify an acquisition; the value always comes from expanding and penetrating new markets.

Buyers

Price: Keep it Simple. Adhere to the KISS rule of simplicity when establishing a price range / multiple for acquisitions price. Keep the variables few and simple. This will increase the likelihood that both parties are focused on the good of the combined entity post closing.

Room for Growth. Set a price with room to grow the multiple in order to make the purchase “accretive” to your company’s value. If the acquiring company is valued at say 10 times net income, the target price of the acquisition should be less than or equal to 10 times earnings. That way the acquisition itself helps increase the value of the acquiring company. Acquiring for more than your valuation will result in negative value to the purchaser. Also, price represents perceived value which should represent the ability to disrupt a new market with new advantages; base pricing on the asymmetrical competitive advantages.

Demand (from yourself) a Post-Deal Plan. Due diligence is not complete until a 6 to 12 month post deal plan is in place. Without it, you don’t really understand strategic fit and can’t justify the deal. Post deal plan should center on quick market wins demonstrating new strategy.

Keep Savings for Yourself. Cost savings through shared assets, like software and licenses; shared services like accounting, legal, HR and marketing; and share operations, such as facilities, belong to the buyer and should not be part of the price negotiation. There is always risk in not achieving the savings.

Outsourced CFO Guide

Companies have increasingly delayed hiring a full-time CFO until they faced a significant financial triggering event. However, with rapidly changing business models and dynamics, companies are keenly aware that expert financial management is a requirement for their business and financial expertise must be represented on their team.

Download the eBook Now

TechCXO pioneered the on-demand executive model, beginning with the part-time, interim and on-demand CFO.  When should you to think about an outsourced CFO? There are typically three different reasons that a company would consider outsourcing the CFO function: High-Growth/High Stress; Specific Projects; Transition Issues.

Go in depth on how to work through a selection criteria when considering the on-demand CFO model.

Download the eBook Now