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- [00:01]
Grainger Announcer
Grainger knows. When you're a procurement manager for an office park, you're not managing one building, you're managing all of them. And to stay ahead, you need to see through walls and around corners. Lights about to fail, filters ready to clog H Vac on its last leg. If you wait until something breaks, you're already behind. Count on Grainger for quality products, easy reordering and 24. 7 support. Call 1-800-GRAINGER click grainger.com or just stop by Granger for the ones who get it done.
- [00:30]
Scott Becker
This is Scott Becker with the Becker Business and the Becker Private Equity Podcast. Today's discussion is a short discussion between myself and Molly Gamble on building great businesses. This took place at the Business leadership summit held June 22nd virtually. Thank you for listening to myself and Molly Gamble talking about building great businesses. And thank you so much. Molly, I'm going to turn it to you. Molly's the long term editor in chief of Becker's Healthcare, vice President of Editorial affairs. Fantastic co author with me on the book Building Great Businesses. Molly, I'm going to turn it to you.
- [01:08]
Molly Gamble
Yes, we're on the eve of the book coming out tomorrow. Building great businesses create momentum, Overcome setbacks and scale with confidence. So, Scott, you had a lot of thoughts that you channeled toward this book. I thought we could take some of the front page A1 Concepts and Share them and talk about them here. But you obviously have your experience with your businesses, but you also have been just such a sponge for learning from other business leaders around you. What are some of the most important habits you've really seen shine through from those who were successful founding and building and scaling great businesses?
- [01:42]
Scott Becker
Sure. No, I really think always in terms of three or four things. Clarity of what you're trying to accomplish and what you're trying to do. You know, second is we talk about this a lot, but nothing's done without great teams. I'm not a believer in the solopreneur concept. I'm a believer in teams. The third thing we think about is niche markets versus broad markets. And everybody's got their own opinion on this. The fourth thing I think about is really product market fit. Are you doing something that the market actually wants or something that you just want to do? If it's something you just want to do, it's an advanced hobby. If it's something that people will pay for as well, then you've got product market fit. And in an ideal business, you really constantly know who your ideal customer is and who you're trying to work with. So we think about those things a lot. Real clarity about what you're trying to do, who you're trying to do it for, building great teams, almost always around niches and really taking great care of your customers. Molly, thank you. Let's, let's keep on rocking and rolling and we'll encourage anybody that's got questions to ask questions. And again, we talk about in the book overcoming setbacks. We've had plenty of them, but also have had some really, really nice successes, both in companies that we've built and companies that we've been on the board of, investors of and related to. So thank you.
- [03:10]
Molly Gamble
Scott. Before I move on to the next one, which is about founders journeys, can you just one other habit I think that you have been really persistent about is when it comes to naysayers, can you just share a little bit about your thinking there? Do we lose?
- [03:22]
Scott Becker
Sure. So no. I love that. And so there's two things I think about often, Molly and I love that question. Naysayers. Any business you really get going in, you are inevitably going to have somebody that tells you you can't do that, it's too competitive, you shouldn't do it for whatever reason. And so that's the first concept is I'm a believer in ignore the naysayers, test your business, go after it, try and build it. In my experience, the naysayers have been largely been wrong. Obviously Becker's Healthcare became a really, really successful media company. And when I got going in it and really expanded into the hospital area, which became 90% plus of our company, I would have people tell me, you have no business getting into that area. It's too competitive. You can't do it. That, of course, became literally 90% of the company that ended up being really successful company due to a lot of people and a lot of different leaders. But, but if I listened to the naysayers, I would have never gotten there. Similarly, there's this other concept. When I first got started, you know, people had, when I first started, it was a very small newsletter. And somebody who I know, a physician, said, you know, I use your newsletter for toilet paper. And it's very easy to get discouraged and get down. And if you listen to the naysayers, the negatives, it's very easy to give up. And you have to decide at some point to ignore the naysayers and to push forward and grow. And that doesn't mean you keep at it forever if it's not working. But for us, it ended up working. We got past the naysayers. And we grew. And quite frankly, in almost every business I've been seriously involved in, there's been naysayers. And at some point, you got to have a thick enough skin to ignore them. One of these I love about the things Bill Ackman speaks about all the time on Twitter is if you're going to be an entrepreneur, you better have a thick skin because you're going to have periods of time when you need that. And that goes hand in hand with this concept of, you know, ignore the naysayers, don't listen to the naysayers. I love that question. And I, you know, we've lived it. Everything I've ever done, we've had people say, you're too short, you're too slow, you're too dumb, you can't succeed in it. And we, we've done fine. So I love the question. Thank you.
- [05:34]
Molly Gamble
Thanks for speaking to that. Founders Journeys this is when founders evolve from doing everything themselves to leading really great teams. And it doesn't always happen in one fell swoop. There's often stages to this. Sometimes those stages aren't always cleanly announced. Some founders, I imagine, don't realize it's occurring until they're a ways in with their teams around them. SCOTT but how did you see this evolution unfold for you and what are the stages of it? That so everyone can pay attention to as they look to scale a company and grow?
- [06:03]
Scott Becker
Sure. No, we see this a lot, and we see this in leaders, in founders, in CEOs. You know, there's this concept. The old adage is that you chief bottle washer, cook, you know, you do everything. And when you start a company, that's often the case. And then you get to the next level where you started to hire people. And we always talk about 2x versus 10x evolutions. A 2x evolution is you've hired a lot of people. Some people, they're not necessarily better than you as the founder at what you do, but they help you leverage yourself. They help you get a little bit further, but you're still the limiting step. So phase two is you're no longer the chief cook, bottle washer, everything, but you still are. The limiting step. Stage three is you've hired people to fill out all the various different leadership positions, the executive positions, and all of those people are now better at their particular job or leadership area than you are. And that's the point where a company could accelerate and become a 10x growth company versus a 2x growth company, because you're no Longer the limiting step. I remember so many times of this being the case in our business. Molly runs a team of 30, 35 plus journalists. I could never do that. I just couldn't do it. I don't have. The patients weren't of the methodicalness to do it. She does it far better than I could ever do it. And that's far different than early on when I was writing everything or managing and following everything and micromanaging everything. Similarly, our CEO Jessica Cole is just magnificent. I can't do what she does. That's just the reality of it. And it's that point where you're no longer the limiting step on stuff and your people could accelerate without you. We've got a lot of that throughout the entire company that you could really grow. It's when you go from 2x to 10x. We call it the three stages of evolution of a founder. We say this as an employee, your job is to be indispensable. As a founder, as a CEO, your job is really the opposite. It's to build to such a place where you're dispensable, where the company could run and grow without you being the limiting step. And this is very hard emotionally for founders and CEOs. People could tell me it's not, but for most people it is because you sort of want to be indispensable. But if you want to build a great company, you have to get yourself out of being the limiting step and pass the spot of being into the spot where you are somewhat dispensable. So, no, I love the subject, love the question. We talk about it often. We talk about in the three stages of the evolution of a founder. But it's true for a CEO, it's true for a leader, it's true for a lot of things. You know, where you go from being everything's done yourself. So you've got a team that can accelerate without you being the limiting step. And that's where companies really grow.
- [08:56]
Molly Gamble
And leaders who mistake themselves and see them as being indispensable as their purpose and role. Scott, that's one way they can get in the way of a team or a company trying to scale. But what are some other big mistakes companies make as they move from growth to scale? What are some common pitfalls?
- [09:13]
Scott Becker
Yeah, there's so many. But I think about them as the best leaders I know do a really good job of constantly staying really aligned with their leaders and paying attention to making sure they're thriving and they're developing leaders that thrive all the way around them. When I see companies, there's a great story. I think it was the Stryker company originally that used to limit itself to 10% growth a year because they would get to us, because they didn't limit themselves to 10% growth a year. They would get to a spot where the, where the marketing would outpace execution, sales would outpace execution. And it's very important for great companies that things. Things go hand in hand, that you're able to grow and execute really well for your customers so that you're constantly building great teams, you're constantly taking great care of customers. You know, we see it as, you know, in the success I've had, I've been compelled by trying to grow great things. In the failures that I've had, I've often found myself excited about getting to the next step without putting all the foundational blocks in place correctly because I was too excited about just having a success versus building something great. So when I see people make mistakes, it's at the end of the day, they stop really remembering or minding the things that really make things great. And they're not necessarily pursuing greatness. They're pursuing just growth. One of the best CEOs I ever work with is a CEO of UCLA Health, Jenny Spiso. And she is the very best at constantly coming back to are we doing great patient care? Are we taking great care of patients and safety and delivering great results for patients and not losing sight of that. For all the discussion about metrics like where we ranked on US News and World Report or where are we at on this different stat? And I think that constantly coming back to very centeredness, very grounded. Who are we trying to take care of? What are we trying to do? Do we have the right team in place? Do we understand our ideal customer are, are so important? And when I see people sort of lose sight of that and pursue growth and scale as opposed to greatness, I often see trouble. And so that's sort of one mistake that we see founders and leaders make. And I'm not immune to making those mistakes sometimes, that's for sure.
- [11:50]
Molly Gamble
You might have indirectly addressed. This is a question from Nicole Cable, which Nicole, thank you for the question. I just made my way to the Q and A and I see it now. But Scott, Nicole had asked, when scaling a business rapidly, what is the biggest mistake you see leadership teams make regarding disciplined execution? Is there anything more you'd want to add to that thought that might address Nicole's question?
- [12:11]
Scott Becker
Yeah, I see. You know, I don't, I don't know if I have a perfect answer for it, but I see when people don't take care of their operations or teams, their people and keep this constant focus on are we delivering? We have to deliver for customers really well. So you know, there's a trend in some businesses to try and get rid of the COO as maybe that's an extra layer of management. I think that's the worst possible trend. I think making sure I'm always a big believer you can grow great if you have the right team in place. There's nothing worse in an organization than when sales get in front of business execution and development. And it's not that you're not constantly running this fine line between the two, but constantly building on execution, constantly building on really taking care of things and really growing the right team. You know, there's times when business is so good but you don't have the talent to serve it. You've got to be willing at those times to turn away business versus to keep keep growing when you can't service it and really take care of it. Well, I know we had a comment from Jeff Friedman about it's time to update this picture and I look at this picture that we have in the slide deck. Jeff, you're absolutely correct. It's time to update that picture that might be from 20 years ago. I might look 12 in that picture. I apologize, but you are absolutely right. But Nicole hopefully answers your question. What I hate in organizations is when sales and marketing get ahead of execution too much and people don't have great clarity about what they're trying to accomplish.
- [13:45]
Molly Gamble
Excellent. Thanks for taking that one, Scott. Thanks Nicole, for the question you added to our conversation here. Scott, we are making our way to the end of the questions that I was hoping we could cover in our time together. But there's a lot of lessons in this book. If you had to pick one that you wanted to leave the audience with today, what would it be if you had to pick your A1 story here?
- [14:05]
Scott Becker
No, I think about so many different things. I, I obviously I'm a huge fan of those founders, those leaders that really know their own business. And this doesn't mean you have to be a micromanager, but but great leaders, great CEOs, great founders. They know who their best people are, their best customers, their best profit lines, what works, what doesn't work. And they're very disciplined about doubling down on their best people, their best, their best customers, their best priorities. And they really know what they're trying to accomplish. I mean it Sort of comes back to the first concept on most important habits, but it's great clarity. Here's what we're trying to do with this. And when I've had great success in business or watched both, great success, you know, I mean, he's on the, he's on the webinar today. Todd Malin had a front row seat to him building with great integrity a surgery center company. And he always knew what was going on from location to location, people to people. He was loyal to a fault, but in the big scheme of things, that served him really, really well. And I look at leaders that really know their own businesses. They really know their own people. And I see so many leaders that get so distracted by the noise out there. The best health system leaders today are not constantly harping on there's going to be a reduction in increases in Medicaid over the next 10 years. They're more focused on their own business. The best businesses I see at doing what they're doing. They're aware of what's going on around them, but they're really focused on are they taking great care of their partners, their customers, their people and more. So I'm just a huge fan of really knowing your own business. And, you know, there's the great, you know, Kenny Rogers song that you got to know when to hold them, know when to fold them, know when to walk away, know when to run. And the best CEOs also know when this isn't about selling the business, but they know when it's time for them no longer to be CEO because they know, because either there's another person who's ready to do it and can do it better, or their energy level is not in the right spot. But, but we do come back to, I think about one thing, one lesson. It's, it's really knowing your own business really well. And that means the people, the customers, the profits, the revenues, you know, and, and what makes the business really go and being able to an extent, to filter out the noise and ignore the noise. Thank you for listening to the Becker business and the Becker Private Equity Business Leadership Summit. Again, thank you to each of our sponsors. McGuire woods, perpetuate capital, Thinkspan Priority Search Management, Grange Product Partners, Fairground Warner and Elevate Talent Advisors. Thank you very much.
- [16:56]
Grainger Announcer
Grainger knows. When you're a procurement manager for an office park, you're not managing one building, you're managing all of them. And to stay ahead, you need to see through walls and around corners, lights about to fail, filters ready to clog H vac on its last leg. If you wait until something breaks, you're already behind. Count on Grainger for quality products, easy reordering and 24. 7 support. Call 1-800-GRAINGER click grainger.com or just stop by Grainger for the ones who get it done.