This month I’m taking a radical change from the “norm” in this newsletter to deliver a report on what I learned after spending a day with Robert Herjavec, CEO of a $150 million Canadian IT security firm, the Herjavec Group, and #1 shark on CNBC’s reality show Shark Tank. This IS an abbreviated version of the full report that I delivered to Apprentice Club members; if you want the FULL report, please go to www.robinsapprenticeclub.com and renew your membership. That said, the insights I’m going to share with you in this report will have a dramatic impact on you and how you think, albeit in some cases providing an uncomfortable truth that will force you to look at certain beliefs and habits you have now and force you to either change or stay stuck in mediocreville forever. But first, let me set the stage for how this all came about…
Back in October of last year, we contracted Robert to speak at our Producers Club meeting. Given he’s already grown and sold an IT security company to AT&T to the tune of $30 million, and his current IT services firm delivers managed IT security (security as a service), he’s clearly “one of us” and could easily talk shop to anyone in the room. (Side note: Robert actually DID talk shop to people at the private breakfast we had, non-stop. I got a chuckle out of how much of a geek he is at heart.) Robert commented multiple times to me how much he enjoyed my group and how connected he felt to them; so while he was there, I proposed that we arrange a field trip to his office in Canada to get a behind-the-scenes look at how he runs his company. He immediately agreed, and last month I and 30 other IT services firm’s CEOs flew to Canada to meet with him and the leadership team, to learn what steps they took to grow from ZERO to $150 million and how they were tackling many of the same issues you deal with on a day-to-day basis, including selling their services, hiring and managing a team of people, competitive pressures and figuring out how to price, deliver and sell a profitable managed services model in a very competitive marketplace. MUCH was learned. Organized here are some of the significant lessons learned from that day. The following are in no particular order other than how they came to my mind as I wrote this. I believe they are ALL interwoven and necessary, just like parts of an engine work together.
#1. Be A Sales-Driven CEO.
I know you’re thinking it is incredibly self-serving and “convenient” for me to list this first, because it aligns with the agenda I’ve been pushing for YEARS (convenient, yes, but that’s not why it made the list). I’d also be willing to bet that some of you want to ignore this factor, hoping and convincing yourself that it’s not true because, consciously or subconsciously, you dislike selling and want to abdicate the “dirty work” to someone you can hire, believing at some level all salespeople are con artists, liars, cheaters and criminals, NOT a professional person like YOU. But the above statement is verbatim from Robert on why a rare few companies grow and land in the top 5% to 1% of their industry, while others barely break the million-dollar mark and constantly struggle for profitable growth.
#2. Embrace Chaos.
This is actually the title of a chapter in Robert’s book, Driven. I put it here because it flows directly from the previous lesson, in that successful, growth-minded entrepreneurs EMBRACE chaos, disorder and uncertainty, knowing they will bring order and process as they plow through uncharted territory. Growth in a business involves breaking through barriers, creating complexity, messes and uncertainty. You can’t delay sales until all lights are green, until you get more organized, more prepared, more automation, more structure, etc.
To be clear, you should NOT recklessly go forth and sell clients a service you truly cannot deliver on. However, the real reason companies don’t grow is that the owner and leadership team have a disdain for chaos and don’t have the mental fortitude to deal with the stress, workload and uncertainty of growth. They want to have a nice, neat, low-stress workday that is highly predictable and stable, without surprises and disorder (sound familiar?). Managers think that way, NOT entrepreneurs. Success IS messy. Driving more clients into your business and generating more sales will screw up the best-laid operational plans because it inherently strains the system and adds complexity and variables that cannot be accounted for. At the Herjavec Group, sales (or client and market demands) DRIVE operations, not the other way around.
#3. Your USP Has To Be Defensible BEFORE The Customer Buys.
Both at the Producers Club meeting and at his office, Robert hammered home the importance of differentiating your company and having a solid USP (unique selling proposition). His definition of a good business idea is “one that is original and appeals to a defined market.” So many IT firms try to differentiate themselves by saying their service is “the best” and that they employ “good people.” While it’s important to be able to deliver quality (and many don’t), service and caring people are NOT valid differentiators because, first, EVERYONE says that, and second, in order for a customer to determine if that is true, they have to buy from you. Good service, quality support and a sharp team are expected, not unique, just like good food and cleanliness are expected in a restaurant. Therefore, if your USP is to have any power, it MUST be defensible before the customer buys. It also has to be a big enough benefit for the customer to want to change. A BIG lesson Robert learned when starting his company was that “clients aren’t going to leave a vendor that is okay for something potentially better.” In other words, your product, service and offering need to have real teeth and a significant upside if you want to win clients away from competitors who aren’t massively screwing up.
#4. Put As Much Into Selling Your Services As You Do Into Delivering Them.
There are multiple lessons under this topic that I went into in depth on my full report that I cannot write about publicly, but here are a few key points:
- The Herjavec Group has roughly 250 employees, of whom 58 are salespeople. THAT little fact shocked a lot of the room. Robert mentioned about 58 dedicated sales reps — roughly 23% of the staff. Compare that against most other IT firms, where less than 1% of the staff has a sales role.
- “Be the MOST professional guy in the room.” This is one of a handful of rules of the sales team shared by Michael Brameld. All of the top sales reps were wearing custom suits, and were immaculately dressed, with polished manners and social skills. At the Producers Club meeting, Robert commented that many professional IT services firms fail in sales because they are incongruent with their marketing. They’re trying to sell a prospect on their expertise and professionalism, but they’re wearing a shirt that doesn’t fit and jeans. When they bring a tech in, the tech is wearing any old shirt and sneakers instead of a clean, pressed, logo shirt. HOW you interact and show up for a sales meeting matters.
- What’s the single best characteristic of a great salesperson. Someone asked Robert what he found was the #1 characteristic of his best salespeople. After thinking for a moment he said, “The best salespeople have no similar sex, age, body type, background, etc. But the one thing that ALL the successful salespeople have in common is that they start taking action fast. They want to learn, but they don’t waste an excessive amount of time on researching, preparing, etc. They just want to jump on the phone and start talking to people, which is the BEST way to learn. After all, you can’t steer a parked car.
#5. The Saying “It Takes Money To Make Money” Is Crap.
Robert shared a story about a deal he closed on Shark Tank with Mark Cuban to invest $200,000 into a fledgling start-up. When they asked the owner what he was going to do with the money, he told them he was going to buy a car and pay off his mortgage. Much to his dismay and shock, both Robert and Mark “schooled” him that the money was NOT to leave the business and was ONLY to be used for its growth and marketing. Although this seems foolish, many entrepreneurs are just as foolish with the money THEY get during the normal course of business. Instead of reinvesting it back into marketing, hiring, training, better tools, etc., they buy a nicer car, go on vacation or get a bigger mortgage and starve the business.
This is a common theme I’ve found in all highly successful CEOs in our industry. When starting the business, they only took meager salaries, drove used cars, lived in “starter” homes and reinvested all the profits to grow the business for years. I wish I had a nickel for every business owner who knocks on our door looking for marketing help, only to tell us they “can’t afford” the $3,000 for the Toolkit — all while they’re dropping a few thousand on family vacations, new cars and running up credit card bills for things they can’t even remember buying.
#6. You Get What You Ask For.
As you may know, Robert is a huge race-car fan and drives competitively as a hobby. Four years ago he bought a race car. After buying his car, he called the company that sanctions his race series, EMSA, and told them he wanted his new race-car number to be 007 (James Bond). The woman he spoke to informed him, “You can’t have that number. It’s in the rule book that you can’t give your car a number that starts with two zeros.” So he hangs up the phone, goes online, downloads the entire rule book and combs through it that night. He calls her back the next day and says, “Hey, it’s me again.” She says, “Did you come up with a number?” He says, “Yeah. 007.” She replies, a bit exasperated, “You can’t do that. Like I told you yesterday, it’s in the rule book that you can’t have a race-car number start with two zeros.” He says, “I’m not trying to be rude, but could you tell me where it says that? I went through the entire rule book and I couldn’t find it.” She says, “Well, maybe it’s not in the rules, but we’ve been doing this for 25 years. Don’t you think if it was possible to have 007 that someone before you would have asked and gotten it?” To which he replied, “No. I think people have asked, you told them no, and they stopped asking.” Today, his race-car number is 007.
The point is, far too many people take the first no — whether it’s asking for the appointment, the sale or anything else in life, or simply having hard-set rules about what can and cannot be done. Real salespeople and entrepreneurs know to completely ignore the first no and industry norms to pursue their goals regardless of what others tell them.
#7. You Can’t Build A Business On Talent.
Robert commented, “The LA Lakers only have Kobe Bryant and one or two other key players; everyone else is interchangeable.” Simply, if your business’s growth, stability and success depend on finding and hiring only EXCEPTIONALLY talented, committed employees, you have a flawed business model. There’s just not enough of them to make that your strategy. Instead, you need to have systems and processes in place where good people can consistently deliver excellent results.
Side Note: When you do find that rock star salesperson or tech, he is NOT the asset you may think he is — he’s a liability — particularly if he’s the only one you’ve got, and he’s producing results on sheer talent, motivation and skill, NOT due to having a process or system you’ve created. What if he goes lame? Decides to leave and go to a competitor? If it was a sales guy, your entire sales and marketing “process” just walked out the door. If he’s a tech, same deal. What IS an asset is a process that can enable even a mediocre person to succeed. THAT’S the asset and that’s exactly the point Robert made.
#8. Know The Lifeblood Of Your Business.
When he was competing on Dancing With The Stars, Robert had to live in LA for months, practicing four hours every day. But during that ENTIRE time, he knew exactly where his business was by the numbers every single day. In my experience, most IT business owners have no clue how many leads are coming in, how many proposals are out and what their sales forecast is, and have no handle on their sales pipeline. Robert made a point to say he watches that like a hawk — it IS the lifeblood of his business — and he said that if you have any hope of being successful, you MUST master and know the lifeblood of your business.
I’m excited to announce I’m going to have Robert come back to Nashville and run a half-day hot-seat session at the October Producers Club meeting and I *might* organize another field trip to his office (TBD). If there’s any interest in that, send an e-mail to firstname.lastname@example.org and we’ll notify you first of any plans solidified.