How to Hire Smart People to Get Funding
John Livesay interviews Dan Weinfurter
Hi and welcome to The Successful Pitch. Today’s guest is Dan Weinfurter, the author of ‘Second Stage Entrepreneurship’. He’s also the founder and CEO of GrowthPlay, a sales effectiveness business consulting firm. Dan consults with many organizations developing and implementing sales and leadership effectiveness, strategies that drive profitable growth. In his 25 years of being a serial entrepreneur, he’s built not just one, but three successful companies including Parson Group, his first start-up that landed number one on the coveted Inc. 500. In addition to consulting, speaking, and interim management, he guest lectures at leading business schools, and was a mentor for the Clinton Foundation’s Institute for Entrepreneurial Excellence. Dan, welcome to the show.
John, pleasure to be here.
What a great background that you have, and what great experience you have. You obviously know how to sell and pitch. Can you take us back to your early career of selling and your first start-up — how did you know that that’s what you wanted to do?
Well, it is probably a two-part question, so I’ll try to answer both singly and then we can go from there. Right out of college I was hired by General Electric, and I went through their sales training program. That was back in the day where a company would hire a 22-year-old and put him through a year of training, with the hope that the 23-year-old would be able to sell sophisticated services to executives in big companies. Those days are somewhat gone where companies spend that amount of time and effort bringing young people up to speed. But for me it was really fortunate and has got me started in a career early, even the businesses I’ve started, the common denominator has been the buildup and deployment of an effective sales organization. My GE career lasted eight years, and this is my fourth that I’m working are now, all in business services, trying to help companies do one thing or another.
Let’s talk about the Parson Group. Did you have to raise outside funding for that, and how did you come up with the idea?
The idea for Parson Group actually came from a business that I was involved with, previous to starting Parson Group, that was an information technology staffing business. We watched ourselves grow and we completely and continuously outran our operational capability which included finance in accounting, and we turned to the outside staffing, temporary service providers for help. As we watch what these firms did, we saw that they frankly were terrible and violated all of the things that we thought were responsible for our group at the firm that I was at. The notion was hatched: “Well, what if you took our business model and applied it to the finance and accounting vertical, and you had capital and you built it correctly, what could you do?” After ARC — the firm I was at — went public, I resigned, wrote a business plan, and raised $4 million on a PowerPoint. We used that to hire five people in Chicago in July 1995, and six years later we had a $90 million business, all organic growth.
Amazing. I bet those investors were happy.
Well, we needed to go back to them a couple of other times.
Which is fine. That’s expected. You hit the milestones. You need more money to grow, yeah.
We did, and so yeah, they were very happy. It worked well where all parties involved.
Great. Well, let’s talk about this great book of yours. I’ve had the pleasure of reading it cover to cover. It’s just fantastic. How did you come up with the title ‘Second Stage Entrepreneurship’?
Well, the original title was ‘How Hard Could It Be?’, which was not meant to be serious, but that was part of the problem. The editor that I was working with didn’t think that that title was right and thought it might offend people, so as we were working with the publisher — Palgrave Macmillan — we kicked around a bunch of different ideas. Frankly, the editor at Macmillan gets credit for this: she thought that there was this void between how you start a business and how you get it to the next level. There are plenty of books on startups, plenty of books on sales, but what we call ‘second stage growth’ she thought had a void in the market. We reshaped it a bit through the editorial process, and made it far more broad-based, and then instead of just talking about sales, we talked about all of the things that tend to be important in growing a business from an early stage to what we call the second stage, which is a much bigger business obviously.
One of the key things that’s important is hiring smart people, which you talked about in this great book. I know that investors look to who’s on your team that when you’re pitching for money. Even as you continue to be successful you need higher and higher rounds, one investor told me that the quality of your team has to equally go up. The CEO can’t be the CFO anymore. I love what you wrote when you said, “intellectual curiosity.” Tell me what that means.
I think that the hiring process, while it is the most important part of the growth journey for any company, my view is that it’s the least disciplined. Think about what’s involved in hiring a person. In most cases, it’s a million dollar and up decision that somebody is making, and seldom is that rigor applied for that level of decision-making. Salespersons, for example, seem fairly routine, it’s at least a million dollar decision, and then I tell people I’ve made it wrong enough times to know that my numbers are right.
As a manager, if you’re starting a new geography, that’s at least a $15 million decision and I could say the same thing there. I’ve made mistaked enough to know that that number is correct. First I try to ground people in the fact that these numbers are real, and if you get the right person, great things happen, and if you get the wrong person bad things happen. The trick is that every role for every company at every stage of growth is different, and you can’t just take what you’ve done in the past and apply it to the business that you’re a part of today. It might or might not work. It’s a flip of the coin.
I teach a class at Kellogg and I was guest lecturing into this class called Digital Innovation. One of the things that the professor teaches us in that class pointed out which is true is that, in the technology space, and it’s probably no different than anywhere else, the founder hires his or her number two 70% of the time without defining the role and without talking to more than one person.
Really? I can understand that for finding the role because it’s you’re going to do everything, but not talking to more than one person fascinates me.
That would be a lack of intellectual curiosity, would it not?
It would. There we go. We’ve got it defined, and you’ve brought it in full circle. I love it.
One of my favorite tricks, is after an interview is almost done, you ask a person, “What are you reading today?”, and it’s amazing to me how often you get the answer, “I don’t have time to read. I don’t really read,” or “I’d look at some magazines and there’s papers but I don’t read any books.” It’s hard for me to imagine how anybody can get the information that they need to do their job correctly without reading. Furthermore, if you’re curious about life, you ought to be picking up things even if they’re not business related in reading or pick up a novel, pick up a political and non-fiction book. Read something.
I couldn’t agree with you more. It’s like what you’re putting into your body for fuel, what are you putting into your brain through reading to keep yourself growing? One of the things you say in ‘Second Stage Entrepreneurship’ is: “The cost of hiring the wrong person is higher than leaving the position unfilled.” Can you give us a story around that?
One of the things that I learned the hard way is it’s better to have no one in the role than the wrong person. The theory is there is if you have no one, you do something about it. If you just hope that it’s going to get better, guess what? It doesn’t. I encourage all people, if you have somebody who’s not correct in the role, to move that person along and then go about finding the new person. You’re going to be far better served, even in the short run.
How long do you give somebody in a new position to prove themselves? Three months? Six months? A year?
Well, I’d give you the classic consulting answer: it depends.
Let’s say if it’s a new salesperson. Let’s say I’m a founder of a startup, I’ve got somebody who obviously needs some training, and to come up to speed; how much time do I give them to prove themselves, before I know it’s a wrong choice?
If you’re paying attention, it shouldn’t take very long, and again, you have to pay attention. It’s not so much that you manage it by numbers per se, because the specific numbers can be wildly good or wildly bad based on luck and timing. But if you’re paying attention and you’re working with that person, you can see the quality of interaction they’re having with others, you can see if they’re doing the right things that are likely to make it work over time. Be a little bit lax in terms of the specific empirical outputs, but be really rigorous about the quality of the interactions and the qualitative aspects that you know will dictate success for that role over time. That’s the critical thing.
That’s incredibly valuable.
It could be a week, it could be a month, it could be six months, but you just have to be paying attention.
I love that, because so many people just look at the numbers. If you don’t meet your quota by this time, boom! You’re out. Like you said, there’s a lot of other circumstances. If the person has a good work ethic, and is a good culture fit, and like you said, doing what it takes. The number of sales calls, phone calls, emails, whatever it is, to be successful, then focus on that.
Now, let’s dive into this whole section you have in ‘Second Stage Entrepreneurship’ about the power pitch. I love your whole philosophy that if you ask five sales people to describe what the company does, five other people who are in sales, and then five trusted customers to describe what the company does, sadly, you would probably get a lot of different answers.
You will, and it’s so fundamental and so basic.
You keep talking about the need to be targeted and consistent with your branding.
Think about it. Everybody should be able to answer these questions with complete clarity. What do you do for your customers? What do you do that’s different? What do you do that’s better? Be able to demonstrate or prove it. You should be able to do that in very short periods of time. You might only have, literally, 20 seconds to answer the question ‘What do you do?’, you might have 15. People think it’s easy and they just wing it. But to get that nailed down with the level of clarity and rigor that’s necessary, actually involves a lot of practice, and a fair amount of preparation so that you have different versions of that for different audiences.
If you’re talking to somebody at a cocktail party, it’s probably different from if you’re talking to a CEO or you have a prearranged meeting.
Most people think they can just wing it, and are so afraid of sounding robotic or they don’t want to memorize anything. I constantly teach people, “Tiger Woods doesn’t wing it. Meryl Streep doesn’t wing it. Everybody who is a professional prepares.”
They prepare, and the only way that I’ve ever gotten people to take it seriously is to film them and then show them how bad they are at it.
Yes, you really hear the stumbling and how hard it is to follow what they’re trying to say and how few people really understood what they said at all.
Well, I go back to my GE days, and we did this every day for my entire first year of training. We need to do these role plays and if you did it badly they played it back three or four times until everybody in the room was laughing. It was all in good fun with all these people here, but you get it nailed down. This stuff is hard and needs to take practice. That’s where all these started from and it’s how I become part of what I used to be, a critical path for business success, and nailed it.
Since you’re an expert in sales, managing sales teams and hiring the right team, one of the things I’d love to have you share with us is how you get sales people who are so competitive. Not only outside of the company but within the company, how do you get them to start sharing best practices with each other, so that the whole company can benefit?
Well, it’s a simple question, but probably a complicated answer. Sales people are competitive with each other, but they also like to be part of the gang. There’s a fair amount of camaraderie, if everybody hates you and you’re a salesperson, that doesn’t work very well because no one will hang out with you. Effective sales teams that I’ve been part of, while they are competitive, are certainly more than willing to talk to their peers about what they do. Many times they will have the point of view of: “You probably can’t do it as well as I do, so I have no risk in telling you what I’m doing”. But I think the sales manager who’s doing his or her job correctly is drawing from the entire group all of the things that can be done that tend to move the meter in work in that particular business. Then they bring the team together so that those best practices are shared amongst the group in a way that they’re digestible or consumable, and most people that I’ve worked with are more than willing to be part of that process.
But wait, there’s more!?
This post has been adapted from The Successful Pitch podcast. Listen to this past episode for more on the inspiring story of Dan Weinfurter
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About
As a funding strategist, John Livesay helps CEOs craft a compelling pitch which engages investors in a way that inspires them to join a startup’s team.
After a successful 20-year career in media sales with Conde Nast where he worked across all 22 brands in their corporate division [GQ, Vanity Fair, Wired, W and Vogue] and created integrated programs for clients such as Lexus, Hyundai and Guess, John won salesperson of the year in 2012 across the entire company.
Follow John on Twitter at @john_livesay. We welcome your comments.
