Startup Therapy Podcast

Episode #174

Ryan Rutan: Welcome back to the episode of the startup therapy podcast. This is Ryan Rotan from startups dot com, joined by my friend and the founder and CEO of startups dot com. Will Schroeder will sometimes things seem a little off in our startups, right? Sales might be a touch off, maybe lead volumes down. Maybe we got that odd email from a customer that made it through directly to us as the founder. And we're like, hm, maybe I should tug on this thread a little bit and see where it leads. When was the first time that you can remember understanding that sometimes this notion of if there's smoke, there might be fire is really important and we have to pay attention to it as founders. I

Wil Schroter: think I knew it instinctively for a while because I just started seeing it happen. But it kind of got explained to me so beautifully from all people, a car dealer and this was 1/4 generation car deal, right? Uh And they owned about a seven or $800 million dealership network.

Ryan Rutan: Hang on a second, hang on a 2nd, 4th generation. How many years ago was this? We're talking about 30 years ago. Their,

Wil Schroter: their, their, their great grandfather has a statue of him in the middle of the city. I was gonna say, yeah, he's been there a minute, right?

Ryan Rutan: You sure he was selling cars. They were selling,

Wil Schroter: you know, something that's really funny about everything we talk about here is that none of it is new. Everything you're dealing with right now has been done 1000 times before you, which means the answer already exists. You may just not know it, but that's ok. That's kind of what we're here to do. We talk about this stuff on the show, but we actually solve these problems all day long at groups dot startups dot com. So if any of this sounds familiar, stop guessing about what to do. Let us just give you the answers to the test and be done with it. So he's telling me the story about uh how they manage all these dealerships. And I asked him, I said, you know, how exactly do you stay on top of all this? Because this is like circa 2000, there was nowhere near any kind of automation or anything else like that. And I was just curious because it just looked like there's a lot of moving parts in this business. And he sits down and tells me this story that the way he manages the business, the way they've always managed the business across all these dealerships, et cetera is by walking around and looking for problems and I was like, well explain. He said, if I go to a dealership and I just pop in and I do this all day long across all places, I just pop in and I notice the cars aren't clean from a storm or I notice that there aren't enough people on the floor or I noticed this or I noticed that these really small things actually that every single time something is a little bit off, it's a lot of bit off and I have to investigate. And he said you'd be shocked at how often that little bit of smoke tells you exactly what you need to know. Now, the problem is sometimes we see smoke and we just think it's smoke. You, you get a customer complaint and like, oh, well, it's a one-off customer complaint. Well, at a car

Ryan Rutan: dealership, I see smoke and I, I assume it's the sales team behind the, uh service garage.

Wil Schroter: That's all of them. Yes. And, and so I think what's interesting about this episode is once we start to dig into this, and I think a lot of founders are gonna be listening to this going, you know, now, now that you say it, how do you say it? There are some things that sound a little bit weird and we'll talk about what some of those are, what we found. And Ryan, you and I were talking about this before the show what we found is that whenever you see something that's a little bit off as the founder as a management team, whatever it is, there's always something bigger behind it. In fact, I would argue, I would argue that statistically the number of times that we've pulled the thread as an organization and there was nothing was like, maybe 2%. The other 98% was everything from, we probably should have looked at this earlier to holy, I'm so glad we caught this before. This thing was gonna go apocalyptic. So I, I, I, I think that's, that's where we dig it.

Ryan Rutan: Yeah, and that's the thing and, and sometimes you uncover a, a big problem. Sometimes you uncover what is a small problem now. Uh But as we know, man, small problems have a way of compounding so fast. Uh and, and leading to other problems, right? Sometimes it's not just that problem that gets bigger, but it expands into other problems, right? It's a chain of reactions, right? We all have these related things that we're doing within the startup. So if lead volume is a little bit off right now and we go, well, it's only off by a couple of percent big deal and then we look at sales and, well, of course, it's gonna be off by a couple of percent. Now, these things just start to compound and snowball and it gets ugly quick.

Wil Schroter: I also would say that when things look off. It's because they're off. So, so just to give you a sense for it and, and these are, these are nitpicky things and, and I think some folks are even say, oh, you're, you're thinking about it too much. But let me tell you that the individual details sound totally innocuous. It's the patterns that come in, right? For sure. For, for example, back in the day when people went to office, the person that comes in habitually late, right? People used to get so upset when I would pick on their tardiness. But here was an interesting thing. The people that weren't tardy tended to be doing the rest of their jobs pretty well as well. Right now, the equivalent we have is slack. You look at the morning and say, you know, who's on slack, who, who's responding, et cetera, we slack somebody and it takes them an hour to respond in the middle of the day. There's usually a reason. Now again, stuff happens, life happens. I'm not like you're monitoring every single last response time, but when you see a pattern, correct, if you see somebody that's off in sales or if you see somebody that's behind on their deadlines, whatever, I can almost guarantee that it wasn't just that you saw a whole string of things happening that started to lead to that and time and time and again, it's so tell

Ryan Rutan: for sure. Yeah. Yeah. I think that, um, it's, it's easy enough again. And, like, part of the challenge here is that there's so many details. Right. And we have to be careful not to get into analysis paralysis either where we're like, we're examining every little thing and we're running around doing forensics all day long. It's not what we're suggesting, but we also can't easily write off everything is, ah, it's probably an anomaly. Right. Oh, it's probably an anomaly. Right. If you see one or two of these things, it's probably time to take a look. Right. At least, at least give it a passing glance. And I think that over time and I'm sure some of this has changed over time with, you know, things like not being in offices and moving from things like, you know, more physical businesses to more digital businesses where we're not just talking about people. We're also talking about processes and systems and software, some of which aren't even ours, uh, that, that can cause problems. This becomes maddening and yet it's still so important to make sure that we trend spot. And of course, I think, like, over time you become better at this. Right. And it's sure organization to organization, team to team, it's gonna be a little bit different. But like you said, you get that one person who's kind of always been there at the same time, everybody else is, and then they start to show up late once or twice and then it becomes a habit that's definitely something to dig into. Right? And it may not even be impacting their work performance, but it's incumbent on us as founders to ask them like, hey, I noticed you're not coming in at the same time. You always were, what's going on. You're like, it's like, hey, my kids drop off time uh started and I'm really sorry, but like, I just like, there's no way for me to make it there and make it here at the same time. Cool. Probably nothing to worry about right again. Maybe it's not impacting the performance, but it's still not one of these things we can just ignore and say it's probably OK, do that 100 times over and it's probably not.

Wil Schroter: I, I just tend to find that when people are on their game, they're also not doing it while giving excuses. It just kind of, that's it. Right. You tend to not hear, give me an excuse for why you got an a on this paper, right? Like that's not exactly the way this works when, when things are missing, when they're little things, they're always, they always come as part of a larger package and, and I remember, uh Elliott and, and, and you as well have said to me and Ellie brings us up at all time. I, I say to you guys and say, hey, I have a feeling this person's gonna be leaving and at the time it doesn't sound like the behaviors are there but I watch it meticulously and I look for that little bit of apathy when we're sitting in a meeting and they don't contribute anything or they used to, they used to, you know, be nonstop but all of a sudden they sort of

Ryan Rutan: stopped. Right. Something's different. They're checked

Wil Schroter: out. Correct. Right. Like, in other words, in their mind, if you were super excited about what you were building, you would be contributing, you would be offering to do things when you stop doing that, that aligns with a pattern of behavior. That means you're no longer on board. And so we've gotten pretty good at spotting this months ahead. I would argue sometimes even before our staff knows they're going to leave,

Ryan Rutan: we see that they're checked out before they know because we're looking at those macro signals, right? We're seeing like, how does this impact the whole? Uh and again, like when you're in it, you, you, you may not be able to see it from the outside. Sometimes it's far more clear that that pattern of behavior has changed that their, their level of engagement or enthusiasm around a project, something they should be excited about. They're kind of like, man, and maybe they don't really feel it strongly, but we sure see it. I agree.

Wil Schroter: And, and again, I think you see a certain amount of enthusiasm uh that comes with when people are, are on the job, for example, in our slack uh, we've got, uh, sales slack marketing. It's like all these different things when things are going well, that thing blows up. Right. My messages are going crazy when people are making sales, you know, sales are coming through. That thing never shuts up. Right. Success is

Ryan Rutan: never silent. Right.

Wil Schroter: Success is never, never. That's the quote to take away from this. Right. That's my next tweet. As soon as those messages stop, I'm our CFO I don't even have to look at the numbers. I know exactly what those numbers look like. No one forgets to tell you how hard they work. Like no one's like, oh my God, I've been put in 100 hours. I should probably mention that to somebody. But when it goes the other direction, when people are slacking or anything else like that, they get real quiet and that's quiet that, that, that quiet sense should tell you something when things are going well, you don't get random customer complaints. I mean, every now and again, it could happen but they tend to happen because there's a pattern that's precipitating this. Right. Yeah. Um When we're not engaging in meetings, we're not closing sales, we're not doing whatever it is that we need to do to move the business. There's usually a pattern and a feeling that existed long before that, that kind of got us there. Right. Sometimes people just burnt out. But again, that's also something we got to dig into

Ryan Rutan: Exactly. We have to address that. Right. Just letting somebody be burnt out, letting them stay silent. Uh Not gonna, not gonna self correct in most cases. Right. Where there's silence, there's smoke, where there's smoke, there's fire. So we have to pay attention to these things. Right.

Wil Schroter: They're also small details. They're small details. Right. It's, it's little things that my fear um for a lot of young founders especially, but not just young founders who haven't been through this before is they overlook the details. And I think there's a couple concerns people have as managers. The biggest thing is, um, well, I don't want to be a micromanager. You don't want to pay attention to what your organization is doing because that's just called being a manager like, um, micromanaging. I is, is when I'm watching every single move the person makes and, and like making adjustments,

Ryan Rutan: you've got your hand over their hand on the mouse. Right. Yeah,

Wil Schroter: exactly. Exactly. But, but knowing what they're doing day to day, that's just called managing. That's what you're supposed to do do. Right. And so if, if you've got some aversion to saying, well, I don't want to get two in the weeds. That's their world. You gotta understand the cost to that, the risk to that, which is significant. And if that becomes your default, like, oh, I just let everybody kind of, you know, run, do their own thing and, and we'll see if the numbers come out that just feels straight up, irresponsible.

Ryan Rutan: Yeah. You know, it's funny because we've, we've talked about, you know, like rockstar teammates and, and, you know, one of the terms we use internally sometimes is like, you know, having somebody that you can give that no look pass to, right. Which feels great. Right. It feels great to know that you can hand something off to somebody and trust them to get it done in the way that you want. And that is great. But that too can be a trap, right? You, you, you start to get used to being able to do that all the time and you don't check in with somebody. You don't really follow through to make sure that they're really following through and a year goes by and it turns out that first one or two things you handed off to them got done exactly as you would have wanted to the next eight, maybe 75% in the next couple after that. Right. So you just, you have to keep on top of these things. And I think, you know, to your point there is, there's a line there. We don't want to be micro managers, but we also can't be just letting the ship run itself. Right. Particularly as you go from a team of two or three where that probably works. Ok. There's enough osmosis there, there's just enough cross contact and cross pollination between projects that you sort of know what everybody else is doing or not doing when you're 15 or 20 people, it's exponentially less effective. Right. It's really easy to lose out on those details. Things start getting missed. Um, I mean, we see this where you, we understand it, like the larger something gets just by nature, the less efficient it gets, look at big corporations, look at our government, look at anything you want to, it's grown well beyond the, the the size of its potential and you'll see this, right? So it's, it's important that we do stay close to those details and this is where we come back to things like having proper reporting, making sure you have organizational alignment, right? Whether you're using K pr A K P I is OK. R is some sort of management framework. This is really helpful for keeping you on the right side of that line that is management versus micromanagement and having visibility and just, you know, being able to see those smoke signals earlier, the faster we catch the stuff, the easier it is to stamp it

Wil Schroter: out. Yeah, and, and like we're saying, in taking it seriously. So for example, right now, if, if I get a customer email that makes it back to my inbox and I gotta say our customer success team is unbelievable. So

Ryan Rutan: yes, they are Brian team. We're looking at you guys, we're smiling

Wil Schroter: very good credit where credit is due. Uh But when I get something. My first thought is an, oh damn, you Brian and your team. You know, what did you do? My first thought is I hardly ever get these emails. So, something must be really off and again, I don't take it to them necessarily. They're just one line of defense. But now I look at a whole chain of events before it got to our customer success team. Someone was using our product. What did that look like before they were using our product? They would have got our marketing um propaganda or they would have gotten, you know, through our sales team, et cetera. What did they understand in that process? What was broken there? There's a whole number of places that, that could have been the cause of that issue. But when I get that email, I don't think about, oh my God, this customer is upset about this one thing I'm like, oh, that's, yeah, we'll, we'll solve that. I need to find out why I got this email at all and again, nine times out of 10. Yeah, sure. The customers, you know, was upset about something but that, that was on us. Like there's somewhere else. We dropped the

Ryan Rutan: ball, right. They're like, hey, we want our funding and, and it turns out that I had been sending uh out a mass emails that said free bags of money, right? You know, I won't do that again. I will. Great, great lead acquisition. Really? Really? Poor customer satisfaction after the fact you live and you learn

Wil Schroter: free money. Um But I think from our standpoint as managers, when we see those little details, if we start to get really good at reacting to them and not the same as being reactionary where we're just making a whole bunch of assumptions. Here's my assumption tree. When I get that email number one, I know that our customer success team is outstanding. And so I know that there's not a AAA total failure there that said, I don't just assume that, that they couldn't have done something wrong, but I give them the benefit of the doubt because again, I, I know the team has a long history of performing extraordinarily well, but my first thought is OK, let's talk to Brian and his team and let's figure out uh how they saw it because there's always another side of it. Um And I look at that and then I ask him, this is the important turn. Where else could this have been a problem before it got to you? Where else could this have been a problem? And he said, well, you know, we have like a recurring message that's going out, that's saying something slightly different than what our customer expectations are. Shit. Ok? Now, we have to go good and that's exactly right. Like we're, we're sabotaging ourselves probably from some silly email that we wrote years ago, never thought about since. Um And but that's the thread. That's exactly where these things come from. They're not always people, they're often people, but they're not always people, sometimes they're dormant rogue processes that have happened, you know, stuff, uh, that people haven't been paying attention to for a while. I'll give you another good example. Uh, as, as our CFO, I go through all of our expenses at the end of every month, right, line by line, line by line at every single line item. Uh I look at and I say why exactly is this is this line item as high as it was last month and the month prior,

Ryan Rutan: that charge at the Mercedes dealership last month. Uh It's a marketing expense of more questions.

Wil Schroter: Um And, and what do you know we signed up for some Sass thing? Nobody's used it in a year. We have 15 people assigned to it that don't even either work here or work on that product, et cetera. And it's just one of those things where those are the threads where you keep pulling and you, you find so much stuff.

Ryan Rutan: Yeah, Phantom costs can stack up fast but it's, and it's the cost. Yeah, this is the cost. It's Phantom processes Phantom like there, there's kind of the point we started off with, right, which is like the dealership you can walk around, you can see you can feel you can touch, you can smell right like it's, it's very visceral. Um often in very bad ways at, at car dealerships but uh not picking on car dealers, the, the, the modern version of the business, right? A a tech company or some or a, just a fully remote company that's not even tech necessarily has all of these processes running all of these Softwares. They're often forced to work together. I was on a call last week. I and we found out that we were, we were running a process through ZAP year, which is a fantastic tool. There were 11 steps in this ZAP between two of our systems which gives you 11 possible points of failure, right? And if any one of those things fail, not necessarily an obvious or easy smoke signal to find, right? So it's y again, to your point, you gotta be diligent, you gotta pay attention, you have to chase the threads, right? If we just react to the problem, we just react to the symptom and say, oh lots of customer complaints, we need to talk to our customer service team and get them to do a better job of customer complaint handling. Without thinking about why are these people complaining in the first place? We are blowing a hole in the bottom of the boat.

Wil Schroter: You bet. I also think if we sit and we assume that everyone's always going to be 100% performant. Yeah. Yeah. I, I think that's a total myth. People like, oh, if you hire a players, you know, they, they'll always, uh, you know, right at the top of their game. Definitely not true. And I say that because there's a reason that top athletes have trainers have coaches have people that push them to be better athletes. And those are the top athletes. If you look at more, most organizations, you're not loaded with top athletes. Just the nature of distribution with that said, if we're not constantly on top of things and coaching people and kind of getting them back up to, uh you know, their, their peak performance, it's rarely gonna happen by itself. Ron you and I have talked about this, but we kind of have this theory which is the organization will slowly regress to its slowest mover, right? So it's,

Ryan Rutan: it's plumbing at the end of the day, right? You're, you're always gonna be limited by the, the smallest pipe, right? Like whatever that rate limiting factor is will eventually dictate the pace of at least that part of the organization, if not the organization as a whole, right? And that could be literally just from somebody uh kind of being a blocker in a process and slowing things down. I e people are waiting for their work or it could just be a work ethic thing, right? Like, hey, those seven people all seem to show up 20 minutes later than I do every day. Why the hell am I showing up 20 minutes early when they show up? Right? And, and so it can be patterns of behavior. It's, it's work ethic, it's all kinds of things. It's, it's the way we communicate. Uh, these things can spread really, really quickly. And again, if they're positive, awesome. If they're not, not awesome.

Wil Schroter: Ultimately, it's our job again as the management team, the, the leadership et cetera to be able to keep resetting that again. If we see things are off, we can't assume for a second that every person every day is gonna come in and crush it. And I can tell you this, anybody who's crushing it will let you know they're crushing it. I've, I've never pulled the thread. M oh wow. That person is working 80 hours a week and they forgot to mention it. Right. That's literally never happened in 30 years. And I've never been like, oh my God, I, I, I can't believe I didn't notice how hard they were working. Um uh that, that signal is well telegraphed. It's the other one that we're concerned about. And if we don't show, we don't demonstrate a level of interest, a level of accountability to be able to say, hey, like, so it seems a little bit off here. You, you good to your point of, hey, you keep showing up 20 minutes late every day. No, they're not good. People are performing. Don't show up late consistently. There's always a reason. Always a reason. 100%

Ryan Rutan: man. Let's, let's flip it for a second. Let's look at it from the, from the perspective of the individual. Let's look at it from, from somebody who's maybe, maybe moving a little slower than the pace car at this point. We gotta be really careful in assuming that they actually see the pace card that they understand the speed at which the organization is moving and that there's a delta between what they're doing and what they're not. Right. This is again, this is incumbent on the manager to be telling them that it's incumbent on leadership as a whole to be addressing how the units are performing, how individual performance is impacting overall performance and giving them enough visibility to see this, right? We, we cannot, especially now in what is a vastly remote culture, assume that people see this, right? They, they, they may not have that same level of visibility outside of a couple of slack messages a day to know where anyone else is at. But we have to be very careful in assuming that they know how fast they should be moving. And if they're not living up to that expectation, let's address why? Let's make sure first that they understand before we tell them, hey, you're not living up to expectations. Let's make sure they knew what they were in the first place, right? Let's make sure they can feel that pace, see it and understand where they fit into that picture.

Wil Schroter: And I don't to your point not like, in an offensive way. But even for players that are really good picture, like, you know, whatever team you've ever played on, you have somebody that's really good on your team and they just keep kind of dropping the ball, you know, they're a good player, but sometimes people have bad games, right? It just, it happens, part of it is just saying, hey, dude, like I keep passing, you keeps bouncing off your chest. Are you good? Because like normally you dunk that right? At least recognizing the fact that something is off because more often than not when you start that conversation, it opens the door for them to go say honestly, I'm not in a great spot.

Ryan Rutan: Perfect example. Well, you're not supposed to pass to my chest, you're supposed to pass to my feet. I'm a soccer player, right? You pass to my chest. You're creating a problem that I now have to solve before you got to do my job.

Wil Schroter: But so, so from my standpoint, I think part of this polling thread is also saying on a consistent basis, I'm gonna open up a conversation and I think the conversation, if you approach it properly, if you're a jerk about it, you're a jerk about it. But if you approach it properly is, is powerful again. And I think more often than not, it leads to a really good outcome. You know what I mean?

Ryan Rutan: Sure. I, I, I love to ask the question, what do you want to get done this week or what do you want to get done next? Right. It tells you so much about not only what's about to happen but about where that person's head is at, where their mindset is, how they're feeling. Right? How do they even describe it? Right. Do they come back and like, man, next, I gotta dig into blah, blah, blah, blah. OK. That's not awesome. Right? So you're, you're not feeling great about this. So there's something, there's something there, right? There's a problem there that needs to be addressed, right? There's some reason you're having an emotional reaction to what about what's about to happen next on? Conversely if they're like, oh man, I can't wait to get this done because then that's gonna unlock this and I'm gonna be able to go do that like cool, great, still incumbent on us as, as leadership to make sure. Does that actually fit into the, the greater picture in the way we want to? Because the other thing can happen, right? You can have people who are operating at great pace that are running the wrong damn direction, right? It happens. We've all, we all had that kid on the team hit the ball really well and then took off for third base, right? It's not how it works, Billy. Uh So, you know, we gotta, we gotta be careful that, that we assume that even, you know, even when things look like they're going right from an attitude perspective, from an output perspective. Um I think we talked about this maybe in the last episode where we had the, the whole gang involved. I talked a little bit about this ability to zoom in and zoom out, right? And I think this is really important as we talk about this smoke and fire concept. When we see smoke or when we start to tug on that problematic thread, we have to go in close to the details and look at that. But I think it's also super important to zoom out and say, how does this fit into the bigger picture is this critical, does this matter? And and we've already talked about this a couple, couple different ways in the episode, but just to reiterate, where else could this be starting? Right? If we just stick right at that level of the problem and all we do is address that symptom, we may be missing the forest for the tree. And every time we have to be really careful not to do that, right? Zoom back out. Make sure we understand where does this actually initiate and how far does this spread? Right? How wide is the impact of this thing that's happening?

Wil Schroter: One of the most successful approaches that, that, that I've employed over the years and I've slowly gotten better at it is open the conversation with how can I help if I come in with here's where you're wrong. All I'm gonna get is a defensive posture and I also will stop learning because when the person is defensive, all they're trying to do is defend their territory, uh, they just want to be not wrong and they're no longer thinking about how to be more right? How to be right. Ok. And so I think from a manager's perspective and, and you have to be authentic with it, you have to genuinely want to help. It can be just a smokescreen for being a jerk. Um You know, like you have to come in and say, hey, like this thing is off, right? Hey, your sales are, are behind. Can I work with you on process? Can I work with you on leads? Can I work, you know, like whatever it is that's holding you up developers behind in their timelines. Why are you behind on your timeline out? You're, you're perfectly good at your job. So if you're behind, there's something else there, how can I get more off your play? How can we reduce scope? How you know, how can we get more developer, whatever? Like if you show up and people know that when something's off your first approach is to help totally different. And as a manager, you know, cooler manager, um I, I, I don't think again, I don't think this is a uh a matter of accusing a bunch of people, but I definitely think it's a matter of saying there's somewhere today that this organization needs my help. Where is it? And if you're looking for the big problems, they're rarely not what you should be looking for. It's those little ones, those patterns of behavior that tell you where you wanna be. And Ryan, you intimated this a minute ago, but I'm either holding folks back because they're just running as hard as they can and I'm trying to figure out how to like, keep them on track or I'm pulling folks forward because they're just not getting their jobs done right? If I look down the line of, of every person in our slack channels and every single person I'm holding back, then I'm doing my job the moment I look down and I'm pulling everybody along, then I need to be pulling some threads. And I think that's the key to all of this. So in addition to all the stuff related to founder groups, you've also got full access to everything on startups dot com. That includes all of our education tracks which will be funding customer acquisition, even how to manage your monthly finances. They're so much stuff in there. All of our software including Biz plan for putting together detailed business plans and financials launch rock for attracting early customers and of course, fund for attracting investment capital. When you log into the startups dot com site, you'll find all of these resources available

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