← The $100M Entrepreneur Podcast
The $100M Entrepreneur Podcast
You Can’t Scale Chaos: The Systems Required to Reach $100M with Jeb Blount
00:29:42
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- [00:00]
A
The work that you do to get from 10 to 25 can carry you to 100 million. But if you don't believe that you're a hundred million dollar company, you're going to hit a wall, you're going to stall, it's going to drown your momentum and you're going to get super frustrated and you'll never make it. With salespeople in particular sales teams, you got to move fast. By the way, the pace because of things like GPT and all of the AI, everything is moving so much faster. But scale is about momentum.
- [00:26]
B
So Jeff, get to 100 million. Mindset, attitude, what got you there, what gets your clients there.
- [00:32]
A
So the, the biggest problem for people who want to move from where they are now to cross $100 million is being able to see themselves as $100 million company. And that sounds weird, but I'll go back to when I was in my early 20s and I was working in a big company, big Fortune 5 company. One of the best bosses I ever sat worked with said, because I said I want to be this, I want to be a vice president of sales. He goes, you need to be able to see in your head and in your heart that you can be the vice president of sales. Like you need to start experiencing before you get there. Yeah, I think that what happens is people say I want to be a hundred million dollar company, but they do not have the ability at that moment to accept themselves as a hundred million dollar company. So this, once you get like past 25 million, you can get to 100 million. It's a lot. I'd argue it's a lot easier to get to 100 million from 25 million than it is to get to 10 million dol million from 2 million.
- [01:26]
B
Yeah, I think that the professionalization that has to happen from 10 to 25 will carry you to 100 as long as you got market size, market presence, that sort of.
- [01:36]
A
But the problem is, is that if I can't look at my company in the boardroom at the strategic level and see it as $100 million company, as the leader. Right. As a CEO, the owner, the founder, what have you, and then draw that picture for everyone else, they don't know how to get there.
- [01:52]
B
Yeah.
- [01:53]
A
And so the biggest issue is having someone, the owner who says, leader who says we're going to get there, that's the mountain we're going to climb. Because once you can get people emotionally connected to that future state, the next step is to actually say step one, step two, step three, step four, Sometimes you need a coach to get you there and a lot of times you do. You need outside business people as a consultant. That's when we'll often get caught, pulled into a company when they're saying, okay, we know the vision and we need to get all the pieces in place. And so in our world, like as consultants to help people get there, we're more of an extra set of hands. So we're, we, we, we don't have a dog in the hunt, so we don't get emotionally connected to the current mistake. And you'd hold them back. Right. When people say, well, we've always done that way, we're saying like, you want to get to $100 million, this is what you have to do. But, but you need some help to get there. So, but I think that the biggest thing is this is my opinion, but I think you have to be able to say, I want to be $100 million company is so different than clients that I work with now that are $500 million companies say we're going to be a billion dollar company. And that is a really hard leap, like going from a half billion dollar company to a billion dollar company. It's, it's, it's almost in that, in the lead between, you know, a million and ten million, you're, you have to like almost remake the entire company. Yeah, the 100 million, like you said, the work that you do to get from 10 to 25 can carry you to 100 million. But if you don't believe that you're a hundred million dollar company, like you start acting like 100 million dollar company, you're going to hit a wall, you're going to stall, it's going to drown your momentum and you're going to get super frustrated and you'll never make it.
- [03:34]
B
I remember three years ago I said to the team, all right, hundreds of millions isn't good enough for us. We're going to go for 3 billion. And they all looked at me like I was nuts. And now 18 months later, the research is done, the planning's done, the IT systems are being rebuilt, the brands rebuilt, all that. So stuff. Now they're sitting there going, I think we can do this. It's like, you know, I had to believe at first though, as you said, if you as the owner or CEO, don't call the shot.
- [04:01]
A
Yeah.
- [04:01]
B
No one's going to try and replay that.
- [04:03]
A
True. It truly is. It's Babe Ruth sitting at the plate pointing in the stands and says, that's where the home Run's going to go. Now. What you did, though, is you said, okay, we're going to be a $3 billion company, and you recognize that who you are today will not get you to $3 billion. So you have to say, I got to rebuild everything. Oh, yeah. And in my own business, that's what 20 is going to be about. We are. I'm. I'm stopping for a minute, and we are going to spend 20, 26 re. Engineering the entire organization so that we can make the next leap forward. Otherwise, we won't get there.
- [04:33]
B
Yeah, I. I told Jeffrey Gitter I was going to do it, and he turns to me and he says, you know, you're no longer in that book good to great. You're now in the book the. Okay. And it was like, typical Jeffrey trying to boil it down to the basics, but, you know, technically, everything that's great for a million will. Will stop you getting to 10. Everything is great for 10 or stop you getting to 100 and everything is great for 100 will stop you getting to a bill.
- [04:58]
A
Yes.
- [04:58]
B
You know, and, and I think that. Yeah. That psychology, though, that when someone. When you're coaching someone and they're not willing to see it yet, Any particular things that help get them to see that they can go to that level?
- [05:12]
A
Yeah, I think. I don't. I guess. Let me try to answer this the right way, because I'm trying to think the right way of saying this. Just people, I cannot create that belief for someone. Like, they have to be able to do that. So as a consultant, if someone says, hey, we want to get to a hundred million dollars and we're working with them and their actions aren't congruent with their words.
- [05:39]
B
Got it.
- [05:40]
A
In those situations, I can ask the question, you say you want to be here, you're doing these things. Is that what you really want? Because your actions aren't demonstrating that. So I can create awareness that what they're actually doing isn't going to get them where they're going to go. But there is nothing that I can do to get. And it's not my job as a consultant to get attached to someone else's future. In fact, that's a really bad thing for me to do. But if you. They don't actually believe it and I can see it, I can say, look, I think you can be a $100 million company. I think you can be a billion dollar company. But if they don't go, you're right. I think that's what you should do. I'M I'm not going to be able to help them get there.
- [06:19]
B
I remember as a young man having to pay market research firms to sort of validate your thinking today, you know, agent mode or deep research mode on GPT and they can start to see it. I had one client and they are a $40 million business in one location. I said just do the research. How many cities in America are the same as the city you're in right now doing 40 million and took them a month or so to do it. They used GPT, used other things and they came back and said Brad, there's 83 cities in America the same size structure. You know there are to 600,000 people town. And I said so technically you could be a three point something billion dollar company if that's what you chose. And it takes a bit though, I think that you can build and tell me your thoughts on this. I see people building a one or a ten million dollar company. You don't really need much market research to do that. To go to 100 or bill, you need to go and do an analysis of how much gold is under the ground type thing.
- [07:19]
A
Yeah, I think then that would be a great example. If someone says I want to get to a billion dollars and we want you to help us get there. And I'm looking at it going okay, well where's it going to come from? Yeah, that I think is important. I've got a customer that I work with out in West Texas and we're looking at their marketplace and we know where they want to go. But there is a limit to where they're going to grow there. So their ability to scale is going to come from buying other businesses or moving into other markets or plugging in adjacent businesses in because there's, if they want to get to a billion dollars, they're not.
- [07:57]
B
Yeah, dude, there's only a billion total gross value in your market. So I know ain't getting there unless you, you know, you got four competitors. You gotta, you're not getting 100 points
- [08:06]
A
at a market so you can't be delusional and successful at the same time. So you need to wipe that away. So but, but I go back to if I said this is what I want to get, I want to be $100 million company, then I can work backward from that vision to get there. But if I don't believe that I can do that in the first place, I'll never take the steps to work backward. I'll just keep keeping the plate spinning in the air. That I'm already keeping going.
- [08:31]
B
I was trying to work with someone the other day and I was trying to show him that, look, you can do organic growth all you want. We got to buy some companies. He's like, but Brad, I can do the marketing. I said, yeah, and the marketing takes how long? And he showed me. And I said, so it's a two year growth plan acquisition. We find that, we buy it. We've got the 10,000 customers in that marketplace on day one. Why do we want to go organic? Strategy for going big. I think that. And I'd love to see how your thoughts are. I think that when we try and get people to understand there's a different strategy to go 100 and bill. What. How do you get people through that? Or what is your thoughts? You ask them questions. Where do you go with that?
- [09:20]
A
Well, I think exactly what you said. We're going to do some research on this. We could do this organically if we set up businesses in these different cities or could we find, do the same research and find businesses that are like ours, that are in those cities that we could take a look at that we either buy and plug in or maybe they're broken in some way and we've got a better system that can fix them. In those cases, when I'm working with clients and I'm working with one right now that wants to grow through acquisition, the first thing we have to do is fix the inside of that business with a system that they can, when they, when they buy something like the board from, from Star Trek, they can immediately assimilate it. Because it's a good analogy because the worst situations I've ever seen and I, and I actually have been involved in companies who did this is you go buy this business and then it floats out there because you don't have systems to plug it in. And they either destroy your culture or you destroy their culture. And. But it takes forever and all the, all of the growth potential just dissipates because you didn't have a good plan. So I think that.
- [10:26]
B
What just on that. Why do companies not. Why do they still call things a merger rather than a takeover? You can't merge. You have to take them over.
- [10:36]
A
Take them over. It is. You're now in our system. Here's how we run our system. And we're plugging into your system. Because we're better than you.
- [10:45]
B
Yeah.
- [10:45]
A
And if I'm. That's different than a strategic. I could, I could do a strategic acquisition because they have some knowledge base or a Group of employees or something
- [10:54]
B
that different sort of strategic buy 100%. But if it's the same industry, if
- [10:59]
A
I'm buying to grow, it is, it is. We come in, here's the, here's the book. This is how we run the business. And here are the choices. You can leave or you can do it our way.
- [11:10]
B
Well, let's go back to that thing on systems because you can't scale chaos. So obviously you're the master of sales. What's the distinction between how do, how do you help someone realize they don't have a sales system, they just got salespeople.
- [11:24]
A
Oh, well, that's pretty much most businesses.
- [11:28]
B
Yeah. Yeah. It's like, why do you have a salesperson? That's how. But yeah, what then, okay, give us the distinction between salespeople and a sales system.
- [11:36]
A
Well, let's, let's maybe, let's be, let's be kinder than that. Everybody has some sales system. Whether the sales system is complete chaos or it's something that they've dialed in. The question really is do they have a system that allows them to maximize the ROI on every sales head? In other words, that sales head is producing at a level that is higher than what I've got now and the ability to add more sales heads in as I grow without losing that roi. Right. So I'm not going to cannibalize the other salespeople. So when we talk about sales system, we're talking about a lot of pieces, right? Your recruiting system's part of your sales system. Your onboarding system is part of your cell system. How you go to market, like what type of a cell are you in? Is part of the cell system. And the, the problem that we have is in some cases, especially with founder led companies that are scaling up, is that the founder is the saat that has the ability to close anything. And the founder has a system, but he can't explain it to anybody else because no one else can figure it out. And it usually sounds like this, hey, this is really easy. Just go do it. That's how they ask the sister buddy.
- [12:43]
B
I remember as a young man, there was a point in time where I realized I didn't have a sales system. I had a sales idiot. Me.
- [12:52]
A
Yeah.
- [12:52]
B
You know, I did them all. And it took me several months to start documenting what I did, why I did it, how I did it, all of that sort of stuff. And Billy, that you said something interesting there though, that I hadn't heard it put that way before. They're not going to Reduce other people by adding sales people. Tell me more about that.
- [13:14]
A
Well, let's give an example. So one of my clients 12 years ago brought us in because they wanted to scale up, they wanted more. And their average salesperson was selling about $300,000 a year. Okay. Today their average salesperson sells about $450,000 a month. Think about the difference there. Okay? The, the difference was that the ability to sell $450,000 a month was already there. The market would carry it. They just didn't have a system to get there. And it was little things, right? Okay, so it was recruiting. So am I recruiting the right people? Their training program was non existent. So you bring people in, plug them in, sit them next to someone else. So it's taking you a really long time to ramp that person. You, you don't have a process for knowing whether the person is good or not in a very short period of time. They didn't have a good sales compensation program. So they were incentivizing the wrong things. Their salespeople really didn't have a good process of taking an inbound call because an inbound sales team, vetting the customer, doing qualification, moving them through the process, closing the deal on the first shot, or following up, going down the road and we can go from there there. They did have a good leadership team and they had leaders who were selling and were lead, which is a really bad thing. So it took a while, it took a couple of three years of work to get all those pieces in place because there was no way you're going to boil the ocean all at one time. And by the way, making that shift, we couldn't, we couldn't lose the cells that we have while we were getting to the new model. So these days, like if you're, if you're selling $300,000 a month, they think that you're terrible. Like you're, you know, you're fire. And, and they've got some, some people on the team are selling, you know, 500, $600,000. So that's one set of that one type of system. I'm another client. When I met them, they were doing about $800 million a year in sales. Their biggest problem in their system, good company, great company, great product, was it was taking 18 months to ramp a new rep. Damn.
- [15:18]
B
Yeah.
- [15:18]
A
Long time now. We looked at them and said, you can do this in 90 days. And they looked at us and said, there's no way you've lost your mind. And so we started working with them and we Run like a six sigma process on, on their ramp time, take out all the variables. And a lot of it was just these embedded. You have to do this here, here, and here. My thought was all we need to do is teach them how to sell as fast as possible and then we can start filling in the other, other pieces. What does it make a difference if I teach them something on day two? Right, yeah. That they can't use until six months from now. And by the time they get to six months from now, they won't remember it anymore. So what we did was create a system for bringing a new person on and get that person selling faster. Now, for a business that wants to move to $100 million, this is important because when you ramp salespeople faster, not only do you create revenue at the top line, but you also draw profit to the bottom line because you're not wasting time with people and you start moving people way fast out of your system that aren't making it. So firing people is a system. So when you start thinking about like this whole process, there's all of these bolt ons, the system of the sales team. But the biggest thing you got to think about, like as a founder, is can the sales organization run if I didn't show off the work for a year? Yeah, because you've got good leaders who have a set of SOPs. You have playbooks for your salespeople, and you've got playbooks for everything that you do. You've got an HR team that is completely dialed in, and then you can plug people into your team and you can scale to the market's ability to let you scale without taking sales away from other people. So that that system has to tie directly into marketing. Because your marketing team at some level has to be able to create leads. You may not be able to create leads that'll cover everything, but if you're scaling up, it's suddenly your leads didn't keep up with your salespeople, hard to bring on new people, drop them in that slot if you can't feed them a little bit. So as you start thinking about scaling, you're not going to get $100 million without a sales team unless you're in some sort of a retail program where you're just doing e commerce. But you can't think, oh, we have a sales process, but you've got to think, how have we got this entire team organized? And by the way, what's the mechanism that allows us to iterate really quickly as market conditions change on things like Compensation and how we even do like the, the, you know, the span of control with your leaders. Does that make sense?
- [17:57]
B
It makes a lot of sense. But you touched on something that I think very few people hit on with scale and that is speed. Because people don't realize scale requires speed. Take, take me more into that comment.
- [18:09]
A
Yeah, so the thing about sales organizations is they have to move fast about the way, the pace because of things like GPT and, and it's all of the AI. Everything is, is moving so much faster. But, but scale is about momentum. Like as soon as you start stalling out, think about, let's go back to just the mindset piece. You still. As soon as you start stalling out, you get frustrated, your people stop believing that they can get there and, and the whole thing starts to collapse. Yeah. And the worst thing you can do when you're trying to scale is stall. Now you will stall, everybody will. Everything stalls. But I want to know when it's going to stall. So I want to predict the stall so that as the leadership team, it's stalling here. The people who run the company, we're already here thinking about the next hundred million dollars gap and we're in the boardroom figuring out what the strategies is going to be there. But with salespeople in particular sales teams, you gotta move fast. And moving fast means with new salespeople, I need to get them ramped fast. And if they're not gonna ramp fast, I need to get them out fast. And then when, especially when you're, when you know you can capture market share because your system's working, the marketing's working, the branding's working, everybody's energized, your competitors are caught flat footed. You gotta be able to plug new salespeople in as fast as possible and have them selling as fast as possible. So when the sun is shining, you're making a.
- [19:35]
B
You said something in the middle of one of those comments there where you talked about the owner being a savant.
- [19:40]
A
Yes.
- [19:41]
B
And I hate to put it bluntly to owners, but there are a lot of owners who, let's just say they stop their own company growing. They. They become the limiting factor. I've just agreed with my team to hire CEO and step into the chairman role because it's like I need to hire a professional CEO. Where do you see that happening most? Or how do you see that? And how do you see owners actually getting to the point of yes, I'm going to admit and I'm going to hire or grow.
- [20:14]
A
It is so Hard, I know, trust me. Because we work with a lot of family owned companies. We run into this a good bit
- [20:26]
B
and
- [20:28]
A
sometimes people can tell this owner that has built this massive business mean you're $100 million business. That is a massive business. You started someplace blood, sweat and teared this thing all the way to 100 million, however they got there. And then you got to go sit in their office and go, you're, you're holding your company back. And, and I know those folks and hopefully my clients are watching. I know who you are, they know who they are. And, and you know, and the problem is, is that, you know, if I'm the consultant telling them to do that, I mean, they may hear me, but that's probably the last day I'm going to be their consultant. So I think that, I think that the, what we all need is we need people around us.
- [21:10]
B
Yeah.
- [21:10]
A
Who are telling us the truth that we'll listen to. I know that, you know, we've got, I mean we, we, we're. I'm a business that runs through the same stuff and I probably got about three to four more years where I'm going to be able to be the person that's leading our company. But at some point and I'm already thinking, you know, I'm going to have to hand the reins over to someone who full time can think about where we're going to go and think about bigger things than I can think about because, you know, I'm stuck in, I've built this thing from the ground up. I was the guy that was, you know, you know, sitting in my office all by myself, one person making cold calls, calling everybody I knew. So, you know, do you need some sales training? Yeah.
- [21:53]
B
We weren't even a million dollar me when I was there.
- [21:55]
A
Yes. So I think, I think that the, it's, it's the awareness factor. Now sometimes it happens because the owner decides to sell to someone else. Right. And then they're still in the business.
- [22:10]
B
Well, you're going to make an exit, right? Yeah. Every one of us is going to make an exit. We choose to either pine box it, shut it down, or go the two positive routes of hand it over to someone that will run it for us or sell it on to someone. And I think you're right. The selling it to someone makes us understand that if it can't run without me, I can't sell it for this money.
- [22:31]
A
That's exactly right. So that, so sometimes you get that wake up call. The problem is, is that founders are Crazy.
- [22:39]
B
Yeah. Nah.
- [22:41]
A
I mean, yeah, they're. I mean, they're just. A lot of them are just nut jobs.
- [22:44]
B
Yeah.
- [22:45]
A
And. And I'm a fan.
- [22:46]
B
That's what makes us successful in all those cases.
- [22:49]
A
I know, but it's the thing that when you start thinking, I want to get to 100 million, 200 million, $300 million. Okay, let's say that you're going to grow your business that way. You're not. You're not selling it off to a pe. You're not going to be a platform company. You're going to plug other people in, use up Bill's money. You're going to actually build your business to that level. It does take a certain level of crazy to get there. The problem is. You said the word chaos. The problem is that crazy people have a tendency to create chaos because kicking over ant piles is how they grew the business in the first place. If you don't have the ability to dial that back to change that, then your company's going to suffer. And my litmus test for crazy is this. So we work with a lot of private equity companies that come in to help us solve sales problems. And when the founder of the company, who is still working there, hops on the first call and they're on their phone walking down the street, or they're in the back of a car, or they're on the beach, or they're someplace else on the phone, that's my litmus test for omg, this is going to be a struggle.
- [24:01]
B
Yeah.
- [24:02]
A
Because that's how they've always done things like just completely on the fly. And it's always like, it's always the same outcome. And then when you get the one that they're on their professional. I got our team around them and they're like, okay, we're ready to figure this out. It's a little bit different outcome for those individuals. And I know that's a weird generalization, but if you're that person who says, I can be this different than everyone else, that's who I am. That's what I'm going to be. And you want to scale that big, you're going to struggle getting there. Because at some point, we start talking about systems and processes, there has to be some conformity to that.
- [24:46]
B
Yeah. I look at. And one of the best examples of this in my mind is the Microsoft example of, you know, Bill Gates had that visionary thing, tried to get other managers until they bought in a professional CEO as such. And the dough, like you had to bring in a professional CEO to do that. And I think it sometimes is hard. I like to teach founders that one day you get to be promoted to chair. And chair means you get once a month to come in and see it, and once a month on a board meeting. And once a day, I think by giving them the word promotion, I can sometimes convince them to that day. Flip it over just 1 sec. Top two or three things that stop a company scaling to ten hundred plus.
- [25:33]
A
You do not understand your finances. So you can't scale if you're not making money unless you're using someone else's money to get there. And that's a completely different amen. You got some D.C. that's throwing a bunch of money at you and just sit, burn it. That's fine. Those days feel like they've been over for a while. But I always say the number one thing is you want to scale up, but you don't have a really good understanding of your P and L, and you wake up one day and you're dealing with negative cash flow, it is going to put the brakes on very, very quickly. Number two is the inability to pick a lane and then iterate inside that lane. And what I mean by that is, okay, you're a company, you want to scale up. And let me give you an example. From a sales standpoint, you have a marketing organization that's spending a lot of money to generate leads. But in order to scale, there's no way you're going to be able to pour that much money into lead generation without your salespeople doing some of the heavy lifting on their own. So you realize that, you say, okay, well, we're going to have to start doing some outbound prospecting. Cold calling, very, very hard. Nobody likes it. And so you put in an outbound team and you put in the worst salespeople on that team because you're like, hey, I want to take my good closers and put them on outbound team. And you put on the outbound team and they crash and burn. Yeah. And then you feel burned. And so you go, we're not going to do that again. And so instead of saying, we know if that's the right place to go, because that's the only possibility for getting the amount of. Of opportunities, our pipeline that we need. So let's try it again, but let's do it differently this time, you abandon it, go away because you're hurt, or as we sit down south, your butt hurt over the past didn't work right. And then eight months later, you go, hey, we really need to do this because we're not going to be able to scale if we get there. And then you do it again, and you do it badly again, because eight months is a long time and you already forgot why you screwed up the first time. That's the second thing, the failure iterate. And the third thing, and this is crucial, is that even if your founder is an absolute nut job savant, okay, And I'm a nut job savant, like, I've got the same problems everybody else has. I am that person. So it's so much easier to look at the spec in someone else's eye, trust me. So you don't get professional leaders on your team that can at least fill in the cracks that you create. So you got to start there. And I would say that, you know, our company's scale really began when we bit the bullet, really worked at it, and brought in good leaders, and that that's made all the difference. And then building and investing in those leaders. And then once you get a group of leaders in, it's really easy to plug new leaders in because you got a good group of people who understand how the game is played and it begins to take the pressure off the savant to always be the smartest person in the room, always have all the right ideas. And my bonus fourth is if you are the savant and you have all those really good people and they're coming up with ideas, even though they're coming with ideas that are not your ideas and they don't feel like your ideas, and you feel sometimes offended because other people are thinking for you and you didn't think about it or you don't think it's going to work. The only way that you're going to get your people to believe in your vision and scale up is that you have to let them have those ideas. You have to let it go, and you got to give them some opportunities to fail without breaking the business. But to fail. And you will be so surprised that you're going to wake up one day and there are things happening in your company you don't know anything about. And they're good.
- [29:15]
B
Yeah. And that's how you make 100 million. Thanks, Jeb Blunt. Thanks for joining me on the $100 million podcast. If you've got value from today's episode, make sure you've subscribed and share this with all of your friends. Never miss a strategy that could change your business and your life. And remember, the fastest way to scale is to learn from those who've done it. That's what this show is all about. See you on the next episod.