Bill Flynn, the author of Further, Faster, has a lot of experience when it comes to growing businesses. In fact, he has more than 30 years’ experience working for and with hundreds of companies including startups with a long track record of success. Today, he coaches other business leaders on taking their businesses further, faster.

In this interview, Bill shares some of his wisdom about growing businesses the smart and effective way, creating coherent systems, and avoiding some of the common pitfalls that plague businesses and prevent them from attaining their ultimate goal, growth.

Nikki Van Noy: Bill, thank you for joining us today.

Bill Flynn: Thank you for having me.

Nikki Van Noy: Let’s start by giving listeners and an idea about your professional background and how that led you to write this book?

Bill Flynn: Sure, I’m two things. I’m a student of business. I’ve been studying it for probably 30 years, always been fascinated with why some things work well and why other things don’t. That applies very well to business since most businesses go out of business within 10 years. The other is, I had a lot of experience starting businesses from scratch. I’ve done 10 startups over about 25 years–mostly in the high-tech industry here in the Boston area.

I love the puzzle, I love trying to figure stuff out and it gave me a lot of fodder to try and see, “Well, what works and what doesn’t?”

About four or five years ago, I decided that 10 startups was enough, did I want to do an 11^th? Sure. It’s fun, I love that stuff. But I decided I was 50 years old, give or take, and I had an experience between startup five and six which sort of led me to where I am today, which is I’m a coach. I didn’t realize it at the time but I turned into a coach.

I took over a business that was doing well but had a catastrophic incident and I had to fix it. I had to help people and, not necessarily save the business but certainly right the ship and I learned that I was a coach.

I turned it into now what I think is my final career and I know what a calling is. now. They say, if you do it for free, it’s a calling. I love doing this and so yes, I would definitely do it for free. Don’t tell any of my clients that!

Nikki Van Noy: Life is funny like that, how we sort of realize that we have switched directions after the fact.

Bill Flynn: Yeah, you look back and I definitely take time to reflect on things and what worked well. I found out that I’m an ideologist, which I never knew the word before, and it’s someone who studies cause and effect. I like to do that. You always have to look back and say, “Okay, this thing happened, but why, what were the things–that domino at the beginning of the process of them falling that were the first ones?”

That led me to write the book. I found that there are a few things that companies that endure, that succeed, that exceed expectations, they do well. So, I decided, “You know what? I’ll write that down, maybe someone can get some use out of it.”

Nikki Van Noy: Well, with 10 startups behind you, it sounds like you are speaking from a place that a lot of people can learn from.

Bill Flynn: Yes, I have made a ton of mistakes.

Nikki Van Noy: Let’s start there, actually. When you look back at all these startups, mistakes might not be the right word here, but when you look back over these 10 startups, do you see any common patterns in terms of there being a point that you can identify where things get especially tricky or might require action that’s not necessarily intuitive in order to make it to the next level?

Bill Flynn: I’m going to answer the question, and I’m not sure I’m going to answer directly so tell me if I miss. So, I’ve learned something really important that a startup is not a real business, they are a temporary organization in search of a business model, which is a Steve Blank saying, who is known as the godfather of startups.

That takes a special set of things. You have to find a problem we’re solving and then you have to find a way to solve it, which your target customer will actually pay you some money for. If you make it through that knothole, then you have a real business. There is some repeatability and scalability to it. But once you get through that knothole, you actually have to go back and revisit every single key decision that you made and make sure it still applies moving forward because those first set of customers aren’t necessarily the same as your next big set of customers.

You really have to focus on doing that, which most people don’t, they just sort of keep going. That’s why a lot of startups fail and that’s why a lot of businesses fail, they don’t really take the time to look through that. I think there’s one lynchpin that most companies take for granted, which is really understanding your core customer. Your core customer to me is something very specific, where 80% of your profit comes from and they’re the ones that you want more of. But most businesses want to grow for growth’s sake. There’s a great saying by this guy James Abbey who says, “Growth for growth’s sake is the ideology of a cancer cell,” and cancer cells kill their host. So, you’ve got to be careful and most businesses that do that really focus on growing in a healthy and flourishing way as opposed to just growing for the sake of growing.

Nikki Van Noy: I have to say, we are five minutes into this podcast and you’ve already thrown down a couple of great quotes. I’m very impressed.

Bill Flynn: I read a lot, yeah.

From Startup to Business

Nikki Van Noy: So, I’ve actually never heard this before that a startup and a business are two different things. Is there a point that you can identify where you shift from one to the other or some sort of marker that people should look for?

Bill Flynn: Yeah, it’s not crystal clear but basically, you’ve created this environment, you’ve taken a lot of guesses, you’ve made a lot of assumptions, and then you find that the same thing is happening again when you apply the same things, you learn it’s happening over and over again.

I can tell you a story that really illustrates that for me is I worked at a company a number of years ago called LiveVault. When I joined, they were still a startup but they were in business for a long time. They were in business for like seven, eight, or nine years and to me they were still a startup. They hadn’t quite figured it out and they had gone through multiple realms of funding and they had some really good, nice VC’s there, which is unusual, that kept them going because they thought there was something there.

I came in and said, “Hey, don’t expect anything for two or three weeks. I want to go in and I want to talk to your best customers. I want to find out why they’re your best customers. What about what you do makes a difference in their lives?” Before I did that, I asked the head of marketing, the head of the company, and my boss, “Why do you think these people buy from us?” and they had a really good answer for me, which was insurance.

We were a data backup company and they were looking to use us and pay us a little bit every month to make sure that if their data ever was in trouble or they lost it that they could get it back quickly and as much as possible. They equated it to an insurance policy, which again was a great answer for me because most of the time I asked that they’d say, people would say, “Oh, it’s because we’re awesome, we have the greatest this and we do this really well and it’s not what you do, it’s what you do does for the other person that makes the difference.”

I said, “Great, but I want to go and talk to these people,” and I had about 20 people lined up and I stopped at 17 because I heard the same thing over and over again. When I asked them one question, which was, “What is the most valuable thing that you got from using our service?” And a large percentage of them, I think it was 12 out of 17 when I went back and checked, said the same words, “Set it and forget it.”

So, we were selling insurance but they were buying time. What I told my sales team, I said, “Say these words, whenever you’re talking to a prospect, say, we know that you’re a super busy small and medium business owner, there’s so many things you have to do, we can take one more thing off your plate that’s really important, you can just hit a few buttons and never have to worry about it again. You can just set it and forget it.”

Eighteen months later, Iron Mountain bought us for 10x revenue, it wasn’t all that we did a bunch of other stuff but it was because Iron Mountain, who was a partner to us for many years, understood that we got it and we found a way to repeat the process and that’s when they bought us. They’re still doing it.

Nikki Van Noy: Interesting. That takes me back to what you said earlier about understanding your core customer. What advice do you have for companies in terms of really understanding who their core customers are and how to appeal to them in a way similar to what you were just talking about?

Bill Flynn: Yeah, two things. One core customer–you want to make sure you give them a big hug all the time because they’re the ones driving your business and you need to make sure who they are. Actually, you do a really simple exercise. I recommend everybody does this and it’s in the book too. It is my second most popular blog post. I write a twice-monthly, a sort of newsletter and I push it out a LinkedIn and Twitter, et cetera.

That is, make a list, get your CFO or whoever owns a list of customers, go back a reasonable amount of time, a year, two years, whatever it is depending on your business and put them in some this order, which is put three columns next to all those names and you want to ask yourself, “Do they love you?” What I mean by love is, you can hear their smile on the phone, you know that when you ask for something, they’re happy to give it to you, they send you referrals all the time without asking. That’s someone who loves you. That’s a customer who loves you.

The other one, you love them. Is that they’re great, they don’t cost you a lot of money, they don’t put unnecessary burdens on your team, they treat your team really well, you love them. Then lastly is order by profit. Those people who have 2x’s in each of the first two columns and then by profit, those are your best customers.

Now, what you want to do is you want to find more of those customers. What I recommend you do is you send them an email and you say, “Would you please,” and you have to pick the right people for the customer, right? The person who makes a decision, maybe the person who is the main driver of keeping you and you say, “Hey, I’d like you to do me a favor. Would you send me back an email that you would send to someone who you believe is a peer of yours who would benefit from our service as much as you do and ask them and tell them what you got from our business, what was the thing that we’re doing, how are we making your life easier?” Then start to see all those answers. I would say 90% of the time, you’re going to see a pattern and that’s what you want to use to go get the next one of those.

You want to tell your salespeople, you want to tell your marketing people, you want to incorporate all these things. There are 11 different ways in the blog post that I say how to use that information. But that’s when you know who your core customer is. It’s not someone who gives you a lot of money because if they’re low profit, you know, that’s fine but you want to be a business that drives cash because cash is fuel. If you really want to grow, you need cash.

You can certainly get it from third parties, but you want to generate yourself because it keeps you in control, it allows you to manage your business better. Those people are driving cash because they’re your most profitable customers. That’s to me what you do.

Nikki Van Noy: That makes sense. I found this really interesting. You talk about how a lot of businesses survive through a combination of effort and luck. Talk to me a little bit about how that can happen?

Bill Flynn: Well, here’s what happens. When you first start off, there’s somewhere around five of you usually. Maybe a couple but eventually sort of four or five key people. And there are three constituencies that are the most important to you. Of course, your customer, the employees, and then the market which, would be competitors and other people in your market.

When you’re just the one to five people, you’re in touch with them because you have to be, you’re the one who answers the phone, the email, all these things, you’re going to the trade shows et cetera. That group of people, those constituencies are always on the outside of the circle. Then what happens is you start to grow and then you add more people and maybe you get to 25.

Those three constituencies, customer, market, and employers are still on the outside but you’re pretty close to them because you know everyone’s name, you probably know the kid’s names and the dogs and all that kind of stuff. Then you grow some more and you get to 50 and then a hundred. Then what happens is, you start to lose touch with what got you there and that’s what starts to be a problem.

Because now, those few people who you relied on greatly, you still rely on them. Maybe you’ve added a few more but now, it’s 10 or 12 of you pulling a hundred people as opposed to just all doing it yourself.

As you grow, what happens is, the time you spend doing that becomes greater and greater. Because if there’s only 10 or 12 of you doing it and you have to do all the really important stuff then you have to spend more time and more effort, and you are relied on a lot. What happens is you burnout.

Either you leave the company or you go do something else and that’s what happens to a lot of people, you talk to a lot of really big business owners and you ask how much time they spend in the business and it’s 70, 80, 90 hours a week. I think they’re lying because they’re probably doing it in the weekend too. That’s what you run into and you’ve got to figure out how to train the rest of the organization to do the stuff that you know how to do because your job isn’t to run the business anymore day-to-day. Your job is to predict the future and the only way to do that is to fire yourself as quickly as you can from the day-to-day running of the business.

The Danger of Getting Too Comfortable

Nikki Van Noy: Do you find that a lot of people have trouble doing that?

Bill Flynn: Yeah, this great word I heard from my friend Rick helped a long time ago. He learned it somewhere in digital equipment. What happens is this phenomenon of the mink hole. A mink hole, do you know what a mink hole is?

Nikki Van Noy: I don’t know.

Bill Flynn: A mink hole is a rat hole that feels really good.

Nikki Van Noy: Okay.

Bill Flynn: You like doing that stuff, it’s the stuff that got you there. You keep doing it because you know how to do it and so that makes you feel good, makes you feel competent. You want to do more of it and growing is uncomfortable. Learning is going out of your comfort zone, so it’s inherently an uncomfortable situation. So, we as human beings don’t like to do the uncomfortable, right?

Our brain wants us to keep doing the same thing over and over again. Because it’s a very efficient organ and doing something new, we don’t even know it but there are biases underneath that are telling you not to do that. “I don’t like new. New is bad.” To your brain, new is death.

You’re here because your ancestors didn’t die, which means they were really cautious. Your brain is working from a 10 to 20, 12,000-year-old script. The world doesn’t work that way anymore. So, our brain cannot separate social threats from physical threats very well. The social threat is growing and not knowing what you are doing and looking like you don’t know what you are doing and being vulnerable, you don’t like that as leaders, right? Because we are supposed to know all the answers and that’s hard.

Nikki Van Noy: So, what does that require of business leaders? Actually, let me personalize this, have you found yourself in that situation before?

Bill Flynn: Oh yeah, when I first started out I thought I needed to know everything. I realized, I look back at those 10 startups and I’m like, “Wow, we did it so wrong. We could have made it so much easier on ourselves.” So yes, I was the answer man. I loved doing that. I liked feeling like I knew stuff. I loved to learn anyway so it sort of fed on itself but I learned eventually that doesn’t work and plus you hired all of these really great people, why not give them the reigns to do stuff? Let them figure it out.

Don’t tell them how to do it. Just tell them what to do and then let them figure it out. They’ll surprise you with their ingenuity and I think that’s a General Patton quote right there, but lots of people say that. You know, you need to figure out how to give direction as opposed to telling people what to do. That is what I did a number of years ago when I said between five and six is I took over in a situation where I didn’t have all the answers and there was no way I could do it.

I took over an entire organization, of which there were two or three parts that I had no understanding of how it worked. But I did know where I wanted us to go and I looked to the people who worked with me on that team and said, “Here is where I want us to go, here is what I think you guys need to do in terms of the destination, you tell me if I am wrong and then let’s agree on that. Now you need to draw me the road map from where we are today to there and tell me how I can help.”

And that worked really well. That’s the reason I am a coach today. If I didn’t do that I wouldn’t probably be a coach today because my resume looks really good. We were very profitable, all the cool stuff. But the best part was two of the people that I worked with came back to me when I left. I left a little less than two years later and they said, “I just want you to know the stuff that you made me do I hated it, it was really, really hard but I am so glad I did it.” Because now I know how to do it and that is something that I wanted more of. So, I wrote the book. That’s why I am a coach. So, hopefully I can do that for more people.

Nikki Van Noy: Interesting. So that is one of the big themes that you touch on this book is the importance of creating teams. Are there any elements to creating a great team that will help your company grow or that will help shift you from startup through that notch hole to business that people miss out on or overlooked?

Bill Flynn: Yeah, well first of all if you ask someone the definition of a team, you will get tons of different definitions. I am a big Pat Lencioni fan and he has a really good definition of team, which I am going to paraphrase. I’m not going to quite get it right but basically it is choosing a small set of people. Jeff Bezos calls it the two-pizza rule, right? Any group that can eat more than two pizzas is probably more than you need. That’s your team, people that can eat the two pizzas.

You are in a situation where you’re coming together to solve the problem and you share the rewards and the responsibilities to do it and you have each other’s back. That’s a team. Most people say, “Oh I am on a team,” but there is backstabbing, there is inadvertent ways of getting in the way of people. That is not a team. A team is a set of people who really care about each other as human beings and they are trying to figure out how to solve a larger goal as opposed to push their own agenda forward.

So, if we agree on that definition, then your job as a leader is to figure out how to create leaders of teams because your business is run by teams of teams. ADP did some research a little while ago and they said they went to over 19 countries. They asked about 20,000 people and said, “Are you on a team or not?” and 83% I think said they are on at least one team, about 70% of those said they’re on more than one team.

So business is run by teams, it is not run by individuals. You know, as I say in the book, performance is a team sport. You need to understand that as a leader, your job isn’t to run the business, your job is to make great leaders and great leaders of teams. If you can do that then the business will run itself without you and then you can spend more time thinking, “Where are we going the next few years? Where are we headed?” Because that’s your job.

Nikki Van Noy: What’s interesting to me about that is the way you’re explaining it, it seems like especially when it comes to growth, you are not talking about creating one team. You are talking about creating a collection of teams that all network together to create this larger thing. Is that correct?

Bill Flynn: Yeah, of course. It starts with your team as a leader. So, you’re the head of the company, you have usually five or six people on most leadership teams. You need to make them a really good team first because if they are not a good team, guess what happens? Then they’re not making a good team and then there is another team under there. You are a leader for a reason. You’re a leader not because you have authority, you are a leader because people follow you and why would they follow you? Because they love what you do. They love where you’re going, they love who you are, and they want to be part of that. You have to make a great example of the team that you lead. You have to lead them, so they are also feeling that they have status and certainty and their own autonomy and there is fairness and there is not an in-group and out-group. They are all a part of one thing. That is what makes us feel safe to be a really good team.

Build So It Can Scale

Nikki Van Noy: I think what strikes me about this is I’ve heard from several of my friends who have worked in startup environments where it starts out being incredible and then it grows. Just based on the things that they have told me, it seems to me like perhaps those startups were trying to create one team as opposed to recognizing growth and then creating those other cohesive units within it. Because as you talked about earlier, as you scale, things change. It’s much different to instill team mentality amongst 50 people than it is five. It seems to me that if you are not intentional about that, you’re going to lose control of it.

Bill Flynn: I think there is a law of thermodynamics, which is basically entropy. If you don’t continue to add things in from the outside, then you have entropy, which is, in essence, chaos and that’s what happens with a lot of businesses. They don’t intentionally build the business so it can scale. Even if you want to sell it in the long term. If you talk to investment bankers or just people who buy businesses or sell businesses and you ask them, “What are the most important things about buying a business? What makes it the most valuable?” and they say the first thing is almost always that the leadership team that runs the business and especially the leader, him or herself, is redundant. If they are not redundant then there is a risk because they have the industry knowledge and institutional knowledge that they have to figure out how to get out of their head. But if they are redundant, they already know the businesses can run without them. And so you have to start acting like that.

In a startup it’s crazy, right? It’s fun if you love crazy and you do all sorts of interesting things and late at night, you’re drawing on whiteboards and in the morning you are selling that thing you drew last night. I mean it’s a blast but that is not a real business and you are just chasing revenue.

Eventually, a real business can’t chase revenue. They have to go after cash as a primary financial growth metric because that’s what grows a business. You have to pay for it, you know growth sucks cash. I didn’t write this book for startups, just to be very clear. Although some of the things are applicable to startups this is for businesses that have gone through the knothole and are now wanting to scale and want some repeatability. That is where this is going.

Nikki Van Noy: So, as you’re coaching, are there any points where you tend to find that the businesses and people you’re coaching seem to be most at a loss or overwhelmed by this idea of growth?

Bill Flynn: Yeah, well sometimes what happens is–there’s a saying, “What got you here may not get you there.” Sometimes the business outgrows the person in that role. So, you have to be very clear. One of the exercises I do with my clients very early on is called a key process flow map and it is based upon drawing what we call a functional organizational chart and all it says is, what are the key functions that drive your business? And we just lay them out and the whole team goes through it and they debate, and you finally complete the list, usually between eight and twelve key functions. What I mean by function is the head of the company is a function, marketing is a function, sales is a function, operations is a function.

Then we take a subset of those and draw a map of, “Okay, what are the six or so functions that we use that actually make money in the business?” Everything else supports that. So usually marketing is at the beginning. Then you probably have some sort of sales function and there is some sort of operations, be it manufacturing or customer success, whatever you want to call it and then some sort of payment. You’ve got to get paid. Then you draw a map and you see what those key functions are and then you write down, “Okay, how do we know when that function is working successfully?” Not the person, just the function.

Then when you look at it from a functional perspective, you can then figure out, which other people are able to do that? Has it outgrown them? And that is where you start to see people who haven’t quite done it, right? Then you have metrics and you measure it and you say, “Great. So we have agreed to this. Here’s what we believe the ideal outcome is and how we are going to measure it,” and then go make it a success. If they are not successful you come back. You try to help them, you coach them. But even sometimes you find that’s just not their thing. They don’t enjoy it anymore. It’s not what they like.

You know, when you are a salesperson in a startup company, it is the Wild West. You could do all sorts of crazy stuff and trust me, you know we did it. It was fun but if you want repeatability that doesn’t work because as they say, if you don’t create a playbook for the sales team there is probably more than one way to have the perfect sale but there aren’t 50 to a 100. If you don’t have a playbook and you have 100 salespeople, guess what? 100 people are doing it their way and that doesn’t scale. That becomes difficult.

So, a good VP of sales is not someone who can sell really well but it is who can figure out how to create this environment that there is repeatability. I say there are three things that a really good VP of sales does. One is that they hire really well. They know how to identify the best kind of salesperson they need for the role that they’re in. Two is they train and they train and they train. Never stop training. Then lastly, they figure out capacity. Okay, if we want to be this big, you want to be $10 million bucks? Then we know that each person is a million a piece, we need 10 of them but it takes some six to nine months to go. So, we probably need 12 because two of them are probably going to lag behind. That is what generally happens is we don’t pay attention to that stuff.

Nikki Van Noy: Okay, it all makes such crystal-clear sense when you explained it. Do you feel like there are any pervasive myths out there regarding growth that people are really attached to for whatever reason that does not tend to lead them down the path of growth they are looking to go?

Bill Flynn: Well, there are tons of myths. One is I think it was from Michael Gerber who wrote the E-Myth, which is the growth paradox. You actually believe that growth is going to fix your problem and what happens is whenever you grow, it is like a seesaw. You’ve got people on process, right? So if you want to grow, that is a process. But if you grow a lot, you grow really fast then you’ve got people. Now you got all of these new customers in maybe they’re doing what you do well. Maybe you needed the sales guy that went a little afield and tried something different and you now got to figure out how to do it and that creates a problem.

So now you don’t have enough people or enough trained people to handle all of these customers. Then what happens is some of the customers get upset because they’re not responsive or they are not doing it quite the way you want. So, growth in itself is a paradox. You’re not going to solve your problems by growing. You solve your problems by figuring out how to create a system of growth and then you follow your system.

There are 23 different business operating systems that I could find out there and most people don’t actually employ a system. So, I say at least use any system because it’s better than nothing and some systems are better than others. We can go into that in a different call but that is the big one that I have seen is that “Oh we just need to grow. We just need more revenue, if we just have more revenue, we’ll be better.”

Well, how do we get more revenue? Oh, you just need to hire lots of salespeople. But of course, if you hire lots of salespeople and you don’t know exactly how to hire the right one, you don’t train them very well, guess what? You have chaos. And you may grow your revenue but you may grow out to being out of business because you don’t make any money. You are just bringing in top-line but you are not bringing in the bottom line.

Nikki Van Noy: As executives read through this book if there is one thing you wish that they’ll take away from it, what would that be?

Bill Flynn: Successful leaders transition from managing the tyranny of the moment to creating space and time so they can confidently predict their future.

Nikki Van Noy: All right Bill, let’s talk about where listeners can find you. So the book is Further, Faster: The Vital Few Steps That Take the Guesswork Out of Growth. Where else are you?

Bill Flynn: I have a website, which is called catalystgrowthadvisors.com. There I have lots of stuff on the website marketing and all those cool phrases and stuff and videos and that kind of thing. But the reason I get into this was that I think it’s a shame that some really good businesses and really good people struggle or fail unnecessarily, and I am trying to figure out how to help them as much as I can. So, I put a ton of resources on my site.

I actually created a separate resource area for the book and as you read the book you’ll notice, go to this URL and it will give you an exercise that you can do. So, you can, for all the DIY people out there, they can just do it themselves if they want or if they want to hire a coach like me, if I am available or whatever, great. If not, I have hundreds of coaches around the world I can introduce people to that do things very similar to how I do it.

I also do a newsletter, as I said, twice monthly and so you can sign up for that on my site. They are very short. I try to keep them to one or two minutes of reading and there’s almost always something to do. You know, “Try this, ask these questions, run your weekly one-on-one this way, see what happens.” All my stuff I try to do is very simple, practical, and actionable. So that is how you can find me.

Nikki Van Noy: You are a true coach. There’s no doubt that you’ve found your calling. Excellent, Bill, thank you so much for joining us today.

Bill Flynn: Thank you, this was fun.