Right People, Right Seats… includes the CEO!

Meet Host, Mary Grothe

Mary Grothe is a former #1 MidMarket B2B Sales Rep who after selling millions and breaking multiple records, formed House of Revenue®, a Denver-based firm of fractional Revenue Leaders who currently lead the marketing, sales, customer success, and RevOps departments for 10 companies nationwide. In the past year, they've helped multiple 2nd stage growth companies between $5M - $20M, on average, double their MRR within 10 months, resulting in an average ROI of 1,454% and an average annual revenue growth eclipsing $3.2 million.

Don't Have Time to Listen, Read The Full Transcription.

[Theme music plays]

Mary Grothe: Welcome to the House of Revenue®. I'm Mary Grothe, the Founder, and CEO. I love scaling companies to their first 5 million, then 10, 15, and 20. If you've reached a revenue plateau and aren't sure how to get past it, you're in the right place. Listen in as we interview CEOs and solve their most pressing revenue challenges. If you want to be on our show or want to learn more, connect with us at houseofrevenue.com.

[Theme music ends]

It's me, again, you get me all by myself today. I promise I'll have a guest for you soon, but in the meantime, I'll keep it real for you. I was attending one of my CEO groups last week, and that topic of right people, right seats came up. How many times have you heard this? How many books is this in? How many coaches have told you about having the right people in the right seats? How many times have you heard this? Okay, a lot, I'm guessing. The question is, what have you actually done about it? What have you experienced? What are you willing to do tough decision-wise to get the right people in the right seats? What really happens as a result of that?

We will talk about that a little bit more today on what has transpired within our own company, what we've seen with some of our clients, and the limitations when you don't have the right person in the right seat? Then what happens when all of a sudden you do get them in place? I also want to talk about exhaustion for the chief everything officer. I might be talking to you, who does everything from CEO to admin. Okay, that's amazing for a certain party or scale, but at what point do you start offloading things and making that decision? It's really fresh for me because I'm experiencing that right now, making some really big decisions on our own evolution. This past week, I was asked: What happens if I leave my company for a month? Can I take a month off? Have I gotten to that point? What do you need to do to get to that point? We'll start talking about that piece as well. So all of this, we will jump into today.

Let's start off talking about the right people, right seats. The evolution of a scaling company, in the beginning, requires that CEO typically do everything. Maybe you picked a different title for yourself. For lack of a better word, just call yourself a CEO right now. Okay. So you start the company, Founder, President, CEO, whoever you are. And in the beginning, you've got to do everything to prove it out. I remember our first year, I had three brave clients that said yes. This was three and a half, almost four years ago. I had three brave CEO companies. I had this idea, "Hey, we're going to go to the market and be fractional VPs of Sales." I said to myself, "All I need to do is get three clients to pay $3,000 each per month, a highly, highly discounted rate." But that was a way to say, "Hey, you're pretty much spending nothing for a high functioning VP of Sales. Let me prove this model, and it worked. "

Within the first couple of weeks of talking to people, I had my three clients. I had my initial three clients. I was working like crazy, building all the infrastructure for our company, testing out different types of services, and exploring what kinds of companies we would work for and the type of work we were going to do. So early stage of figuring out product-market fit. In the very beginning, I remember the first growth decision I made was to bring on another fractional VP of Sales. At the time, I realized if I could take every function and responsibility of what this company needs right now, so everything from CEO to admin, I'm doing it all.

What's the one thing that moves the needle the most so that I can grow the company? Well, that would be to bring on another person that can do client delivery, because we do one thing and that was you know, sell people services. So that's what I did. But I was too scared. And I didn't have a product-market fit yet, and we were a super young company major startup phase, scrappy, bootstrapped. In our first six months, this is back in 2018. I didn't want to formalize and build employees and a payroll system and insurance and all that. I went the contractor route, and I thought if I could just find another fractional VP of Sales that can do the delivery work, I could split my time to be CEO to admin, run the company, do all the sales and marketing, all the backend components the billing, invoicing, accounting, whatnot.

Then I'll have this other piece, where I can grow through contractors on the client delivery side, the fractional VP of Sales. So that's what I did in the first six to eight months of operating. I think we ended up getting two, maybe three contractors. It wasn't a good model. With contractors, you can't tell them who, what, where, when, and why. You can't tell them when to show up, or how to do the job. I mean, if you're going to do it legally, of course, you can't do those things. Those are only a product of having employees. And so it was very difficult for me in our first six to eight months because I started growing by contractors. But what I was acknowledging was it was worse than herding cats. I had three people that wanted to do the job completely different.

I was struggling from an accountability standpoint. I was so busy and slammed with my own client work and trying to grow and run the company. I didn't have my eyes on quality assurance and attention to detail and what they were doing. So I was getting mixed feedback from our clients. I just won't stand for that. I don't want to be in business if we don't have a 100% success rate. We have to win every time. Otherwise, I don't even want to do this, so that's been a passion point for me.

Well, it wasn't working, and so I had to make that easy decision, really, in August of our first year, about 10 months into operating. We just started converting contractors to employees. I said, "We need to create a culture. We need to create processes. We need to create infrastructure. We need to create an actual offering here, have some standardization to the way that we approach clients." It was in that that we started this journey of right people, right seats. I think that there's an evolution that a lot of startups go through, especially service-based companies. I'm telling you more of our personal story. So we're a services business. When you look at the types of people that we had on board in those early days, these are people that were so incredible to our company. They could handle the risky nature of a startup. They could handle the fact that we had very little structure in place and that it was a lot of risks, a lot of winging it, and a lot of figuring it out as we went.

In those early years, the initial team was just attracted to the vision and willing to work at lower than market rates, without these amazing comp packages and benefits packages that we have today. Fast forward, right. But this was an interesting time for me while we were building out the right offering. So right people right seats, will all of a sudden, fast forward, we've heard a lot of our stories, I won't be redundant in here. And we get to the point now we've been in business almost four years, we're building out an executive team. Going into this next month, we'll have 28 team members. It's unbelievable. The infrastructure that we have in place, systems processes, the backend technology, everything is automated. We have everyone with very clear roles and performance metrics and feedback, accountability, everything is in place. It took a lot of shifts to get from where we were in pure chaos to where we are today.

As I'm looking at how my role is evolving, from CEO to admin and everything in between, it feels like every couple of months, maybe every quarter, I'm able to evaluate a task that I've held on to for the last now almost four years. I actually have an opportunity to evaluate it and say, Can I delegate this? Can we put this to someone else? Can we bring on a fractional team? Can we hire someone? Where does this go? And so that is such an amazing experience to finally be at this moment. But let's talk more just before we jump into the right people, right seats. So what did we have to do? A lot of it was trial and error. I read the book "The Hard Thing About Hard Things They Talk About." I'm sure you've heard this. People who get you to a certain point may not always be the people who get you to the next level. It doesn't mean that you don't have a place for them anymore in the organization. It's just that you're able to identify where their passions and their strengths are.

Just because you need a certain role to evolve, it doesn't necessarily mean that every person that's currently in that role can evolve with the role. So as your job descriptions change as the demands of the business change as the market changes, you're going to have team members that can't evolve alongside that change. They grow out of being the right fit for that role. Some team members will rise to the occasion. You'll also see others that maybe you underestimated; you had them in a role that was too small for them. They start raising their hand, taking on more and asking for more work, stepping up and sharing ideas, and being innovative. Well, that's incredible to see those People.

I think what we've been able to experience that has led to a lot of our ability to grow this year is that we have people who are very comfortably settling into the roles they're meant to be in. We highly encourage that. So sometimes, that means shifting into a different role completely. Or it could mean changing a division, which we've had a little bit of. We have just recently announced that we've got a couple more executive seats that just opened up on our team and two team members stepping into those. You look at where people's natural strengths are. My recommendation is, can you be brave enough as a CEO to move them? Or are you going to be stuck in your comfort zone, one, afraid to have a tough conversation, or two, afraid to take a risk?

One of our clients that we got to work with last year had an interesting scenario that is actually very common, where they have a VP of Sales. This VP of Sales is a really glorified individual contributor. We see this all the time. They're not really a VP of Sales, building infrastructure and working alongside the executive team to grow the department and diversify the sales, go to market, and bring in channel partnerships and other VP's. Okay, they're not doing a lot of the infrastructure and strategic visionary components. They're really a glorified individual contributor. In fact, they might even be semi-weak in sales, coaching, and accountability, and holding other people accountable, bringing forth that leadership. Very common. When we look at how we had this experience last year. We had somebody great in an individual contributor role. Got the VP title because it was a small sales team. They needed him to really be like a team lead. Well, as a team lead at the time, I think, when he took that title, there were just a couple of sellers on the team.

It was manageable, but as we came in and we started this rapid growth, all of a sudden, the sales team was 6, 7, 8 people. This person is not the right leader. It doesn't mean they're wrong for the organization. It doesn't mean that they don't have a spot there. And they can't be super happy in a role and productive and winning and everybody wins. It's just that we had to give this person an opportunity with all the resources and training to succeed. Then from there, be able to determine, hey, can they make it in this role or not? And if the completely acceptable answer is no, they didn't hit the mark, they didn't achieve what was needed at this moment in time, it doesn't mean they're a bad person, doesn't mean that we don't love them. And we're not thankful for them and excited that they're here. It just means that each of us has our own unique set of skills, desires, passions, abilities, capacity, capabilities, all of that, even myself included, like I've had to fire myself out of some roles within the company because I just shouldn't be doing it anymore.

When we get to a certain point, like I have limits, I have caps on certain pieces and functions of the business that I should be doing. You, as the CEO, if we are getting outgrown, we need to bring on people. Other chances are going to happen to other team members inside of our company. I feel like there's this scary, paralyzing, "oh crap, what do we do? It's not the right fit for this role anymore?" There's this fear of what happens? Well, I think creatively speaking, you must solve for the answer of where they fit? And what kind of role can we create? Or can we put them in where they can really flourish? How do we go about that conversation in that transition to really honor that person, and we keep their passion high and their ability to produce high, and they're happy?

Going back to this client example. We were able to run side by side with this VP of Sales for a year and a half. Then, eventually, he transitioned into an exciting individual contributor role. There was still some influencing coaching for the team on product knowledge and specific market scenarios that he could assist with. But he's flourishing, selling more than he's ever sold. He's making a phenomenal income. He's so happy in his role. He gets to be more of this coach and mentor-type role without that responsibility of direct management, which is a very different deal when you can be a mentor and a coach versus someone managing and responsible for the number, responsible for all the leadership components, inspiring and building infrastructure, leading meetings and bringing agendas, and all those different components.

It's just very different, and so it's very freeing as a CEO when you can look at your team and with all respect and honor just analyze and say, who are the right people? And are they in the right seats? If they're not in the right seats, what are we willing to do about it? That's the question that you must ask yourself, what are you willing to do about it?

In our scenario, we're willing to do something about it to really unlock that freedom to scale because you just cannot scale if you don't have the right people in the right seats. So I'm going to ask you the same question. So you, CEO, are you in the right seat? Are you stifling the company's growth? Are you inspirational, do your people like working for you? Are you creating the right vision? Or have you become stagnant? Do you need to bring in a chief innovation officer? What were your strengths when you started the company? Or if you didn't start the company, but you stepped in as CEO? What has shifted? Are you still performing at the highest level? Are you starting to acknowledge that a few things inside the company may have outgrown you, and you just can't do them anymore? Are you holding back anyone, any division or department any process? It's time to look in the mirror and ask if you're in the right seat? I had to ask myself the same question. "Am I in the right seat?" The answer was no.

I had to have the same difficult conversation with myself. We were scaling 2020 was a very profitable year for us. We did 2.2 million with the group finished about 27% EBITDA, so great earnings, great health in the company financially. I wanted to maintain those great earnings that great EBITDA, but the thing is, I had to face the reality that if I wanted to do three and a half or 4 million in revenue and maintain that, I can't scale myself to that level. I had to look at the roles and functions that I was doing big - one, being business development for the company. The second one is leading our VPS of Revenue. I play the Chief Revenue Officer. Meaning, for all our new client engagements, I'm the Chief Strategist. I love ideating. I love to go to market strategy. I love sitting with these companies and figuring out where we could create a blue ocean for them and understanding all the nuances and how to kick off the lead in the first six to eight weeks of an engagement. That's really been an area that I've been strongly contributing.

Well, I love doing that work. I also love business development. I also love running the company. I also love assisting with recruiting. I also do accounting and payroll and back-office work. I don't love it, but I do it because I'm good at it. And it's easier for me to get it done than it is to pay somebody, at least at this moment in time that will be shifting soon. I had to make a decision and asked, "Am I the right person to be doing these two huge components still of the company, which is business development? As well as the new client kickoffs and the first six to eight weeks in these new client engagements?." Because as we're continuing to grow, that was a big realization for me. I'm getting spread too thin. One with a prospective client goes to book a meeting on my calendar. They can't find any time because I'm busy onboarding new clients, leading my team, and getting in on client projects. I can't have both.

Yeah, the earnings are really nice. The EBITDA is really great. But I've hit the ceiling. If I maintain being in both seats, I can't get to the next level. We can't grow. I have to dip into that cash flow. I have to dip into those profits to carve out a new role to start to multiply, asking myself, "what am I willing to give up so I can gain more?" Because I can't gain any more right now at the current threshold? And so it is figuring out CEO, are you in the right seat? And you need to ask yourself that question a lot. And the answer for me was no. So we have someone in that seat now. And that unlocks our ability to scale because I won't be doing kickoffs and client work anymore at all. I'm going to have a CRM in place. And so I'll have this very, very smooth handoff. Well, this is brilliant, because now I'm freeing up about 20 hours of my workweek. And what was I willing to spend to gain 20 hours back in my workweek in client-facing hours? Do you know the worth of those hours? Right now, at my max, we're doing about three and a half million in revenue?

If I'm able to take half of my client-facing hours, being you know, Monday through Friday, eight to five hours. If I'm able to take half of those and reallocate them into growing the company. Could we not double the size of the company? There's probably some error in that mathematical equation, but I think it's real. And so what am I willing to give up so I can gain? We can't get past three and a half million if I'm going to hold on to everything. It doesn't work that way. We're hitting ceilings. I've walked you through the right people in the right seats. We've talked about the CEO to admin covering everything in between, leading to that potential exhaustion or inability to scale. I have asked you if you're in the right seat or what you're willing to give up to gain more.

Now, I'm going to ask you this question. What happens if you leave your company for a month? What happens if you take a month-long vacation? Can the company actually run without you for 30 days, a full billing cycle, a full monthly cycle of invoicing and payroll, and everything that happens on a monthly cycle? What makes a list? What in the business would absolutely not function if you're not there for a full rolling 30 days? I'm asking myself that question because I believe the answer to those would be referred to as the owner’s trap. Where are you trapped in your business that it can't run without you? If you're looking at increasing your company's value, you've got to remove all these different components that increase your owner’s trap.

I asked myself this, "Well, gosh, I've been on this journey over the last six months or so, pretty much all in 2021, trying to figure out how I continue to remove myself from the business. But maintaining these exceptional levels of performance that we have in our team is unbelievable." You should see what they are doing, and maybe some of you are. But with that, I had to ask that question, "What happens if I leave for a month?" I answered that, and now I have a very short list of the items that truly cannot function without me.

So guess what? Now I made a list, and now I have a plan of action. I've committed to you in the next 90 days. I'll be cross-training team members on those core functions of the business - processing payroll being one of them, invoicing clients being another one. So I have 90 days. I've given myself this deadline to have two team members cross-train. Let's just be honest with ourselves, CEOs; what if something happens to us, your business stop at its tracks? I mean, do you have business continuity planning in place? What if something happens to you? I'm just curious if you've thought that out, and you have backup and people who are trained to handle it.

I'm not saying that you need to give these items up. For example, I love doing business development. If you know anything about my story, I'm a former top sales rep for a payroll company, and I love sales. I love everything about the profession, and I absolutely thrive being in that seat. It's good for my company. I have a super short sales cycle and a really high closed rate. Well, that's good for business. But I also get great, great, great fulfillment out of being in that seat, which means I'm happy, and guess what happens when I'm happy and full of joy? That's the stuff that rolls down. That's what other team members get to experience with me because I've put myself in the right seat.

Okay, so what happens now if I leave for a month? Well, guess what? I've already trained three other people in my company on the business development process. I have one person that can do our proposals and scope from top to bottom. Then I have two people, one on the House of Revenue® side and one on the Revenue Studio side, that can scope and sell for me. Great, okay, check the box. I've got that part covered.

Now I got to train somebody how to process payroll. I got to train somebody on how to do invoicing, easy, easy tasks, and I will have that completed in 90 days. So here I am. We will celebrate our four-year anniversary four years in business as of November 2021. I can officially say we're easily on our path to that 4 million run rate or service business. We're profitable, scrappy, bootstrap did it all. Now I could take a month off if I want to. I don't want to. I love my team. I love being here. I love working for this company. I'm so thankful that this is what I get to do.

I'm so proud of everybody and how we've all come together to build one of the most remarkable companies I've ever seen in my life. We are so fortunate. When we get to work with scaling companies. That's what we do for a living. And so we have an opportunity to see under the hood of a lot of other startups and small businesses. I'm just so proud of our team. I'm so proud of how everybody's pulled together. The work ethic is unbelievable, but the commitment to doing remarkable work and excellence ensues because of everybody's passion here. Oh, it's out of this world.

Hopefully, this was helpful for you right people right seats that CEO to admin covering everything, asking yourself that question. What happens if, gosh, what happens if you left for a month? My recommendation is to focus on high-value tasks. Invest in systems, find ways to automate, and most importantly and what I will leave you with today, choose whole life success. Be well.

[Theme music plays]

Thanks for listening to today's episode. If you're interested in being on our show or want to learn more about how we can help you scale your company, connect with us at houseofrevenue.com or with me Mary Grothe spelled G-R-O-T-H-E on LinkedIn, Twitter, or Instagram.

Connect with House of Revenue® on LinkedIn, Twitter, and Instagram.

[Theme music ends]