Jeremy Weisz 11:37
I want to talk about, you know, we were talking before we hit record the importance of core values. And so I just, I mean, the evolution of your core values, business, core values, family core values come from this. And so I’d love to hear so you talked about your dad a little bit. I know you had a storied career in sports, high school, college. What’s a lesson you learned from your high school? Maybe coach and then from college?
Cliff McDonald 12:09
Yeah, that. Yeah, core values are so important, and being intentional. With core values is so important. Jeremy, there’s a real risk with accidental core values. And these are things that happen in group dynamics, when we’ve got kind of unwritten rules. And sometimes the wrong behaviors are rewarded, or tolerated.
So I was a late bloomer, athletically, and as I mentioned, you know, I realized early like, wow, it’s gonna be really difficult to be like my dad. But I wanted to play football. And my dad actually didn’t let me he didn’t think there was any need to play organized youth football, you know, with pads and equipment and all that played a ton of football in the park with friends, right. So finally, in eighth grade, my dad let me play football. And it was not a good start. My first game actually scrimmage in eighth grade. And in my town, Melrose, we played on the freshman team as eighth graders.
I broke my femur. Wow, the way that I was in a complete break, like a pop, you could hear it. And I ended up being in traction in the hospital for almost two months. So it was a tough start. But then I somehow I recovered, and my parents let me play the next year. And then I ended up playing, you know, four years High School and then four years at Dartmouth College. I played and coached for a year overseas in France and in Finland, one two Ivy League Championships.
My sophomore year in high school. We didn’t have a very good team. And the culture of that programme with the kids who were the leaders of that programme wasn’t great. I wouldn’t say it was toxic. But and I think this was prevalent than especially in that sport, there was a lot of hazing. And the upperclassmen would really give the, you know, the underclassmen a really hard time.
You know, a lot of teasing and pointing out, you know, physical things, right body stuff, whatever. And it wasn’t that much fun. And it was kind of confusing to me because I had wanted to play this game and be a part of this thing. And, you know, but what am I know, I’m 15 years old, questioning Oh, I guess this is just the way it’s supposed to work. And then my senior year, I was named Captain. We had a tradition of having one captain in my school. So my sophomore year we won three games my junior year we won two games.
But we started a lot of underclassmen, and we knew we had something good. And I don’t remember how intentional it was. But I remember we wanted to change the culture, and make it less the way it was, and be more nurturing and supportive of the younger kids, knowing what we had experienced. And we did not want our pound of flesh. And as the leader, I wasn’t going to tolerate that. And I think, again, going back to my dad, where, you know, we have to look out for everyone, and be compassionate and kind and loving. And it worked.
So after winning two games, our junior year, we ended up winning our first seven games of the season. And we were ranked first in the state, and no one really expected that it was pretty cool. So that was the first time we really realized how changing and you need talent. Of course you do, right. But I think that the core values and the culture of any organization is the most important thing. Whether that’s a family, a team and athletic team, a business organization, my favorite business growth, Jeremy’s Peter Drucker, and culture eats strategy for breakfast. Over and over and over again. Love it.
Jeremy Weisz 16:21
I’ve heard you talk about this, and I want to have you explain it. You were asked about someone was asking you because you come in and you help revenue generation and sales teams. And they’re asking you what do you do if someone asks, what do you do if someone doesn’t hit their? Their sales? You know, what they their goals, their sales goals? And you explained how sales is one piece, but marketing sits on top. But then can you talk about that? Because this relates to the core values, because you kind of backed it up to what has to start before it trickles down to someone hitting their sales goals?
Cliff McDonald 17:05
So what has to be a place? Absolutely. So it’s a really interesting topic. Jeremy, what happens if a person who has a sales quota does not hit that quota. So my early career in the business world, from 1993, to 1992, to 1996, was on Wall Street great, great opportunity to learn a ton about the capital markets.
I wasn’t extremely inspired there, left, tried some entrepreneurial things on my own, failed, rebuilt a little bit. And then I ended up in tech. To kind of see, I actually have to give myself some credit, I could kind of see where it was going. Right. And this was when the World Wide Web was not even really adopted from a commercial perspective, which is crazy, because that was only you know, 25, 27 years ago. So I ended up in a very, really high growth area, which was fantastic. I ended up working for a company that went through an IPO. And then I worked for bigger companies. One of them was Sprint, right, a large telecommunications company, that culture, Jeremy, they said it was 100% accountability. If you don’t get your number, right, you’re six months, there’s a revolving door, right?
And if you don’t hit your number of publicly traded companies, you have to report earnings to Wall Street. So the accountability is good, right? We have to be results oriented. But the environment that that creates, often is one of selfishness. And one of borderline unethical behavior, too. Right? Like I have to get this deal done. Right. So what does that promote? And this, in some ways, you could say wasn’t that long ago, but it was a long time ago, I think we’ve changed so much with core values, and with you know, humanistic approaches to business.
But there are very toxic environments that result from that. So today, when we’re working with lower mid market businesses, a lot of times when we start an engagement, number one, there aren’t quotas. There aren’t real expectations. There are target addressable markets. They’re our ideal client profiles. So a lot of times all these things don’t don’t even really exist and we can help to build them.
And it is good to set goals. Right? So okay, can this person be responsible for bringing in 1 million dollars in revenue over the next calendar year? Right, and we have to be honest with setting those goals. And if an individual contributor I don’t even like to use that term, because it’s a team sport.
Let’s say this person does have a number, and that is a best practice and they don’t meet that. The first thing we have to do is why. Right? How many bats? Did we get? Were those at bats created by a marketing department that generated leads? Right? Were they referrals? Or are we relying on this person to go find opportunities to, which is really hard?
And then are we competitive? from a product perspective? Are we competitive from a pricing perspective? In the best companies, right, the accountability is going to be at the top where the leader says, it’s on me and you guys are helping, but not, hey, 27 year old sales kid for a $5 million business, you didn’t hit your number, so you gotta go find a new job. Some companies operate that way, they typically do not have high sustained top line growth.
Jeremy Weisz 21:02
Talk about you were mentioning a few things on what needs to be put in place, right? Because these companies that you’re working with, may not have these pieces in place like these fortune 500 companies you worked with. You mentioned, first of all, figuring out your ideal client profile, what are some of the other things you have to go in? And put in place?
Cliff McDonald 21:26
Yeah, great, great question. Right. First, you have to have a strategy, we talk about the importance of pre qualification, which is usually non-existent in the Lower Mid market, or in early stage companies pre qualification is deciding which companies we are going to try and work with. And we want that to be really specific. So what happens early Jeremy is we fall into this WW FM trap will work for money. So if someone says, Hey, I’m interested in working with you, you say that’s awesome. What can we do for you, and you’re gonna pay us and you get really broad. And you’re not disciplined? Typically, understandably, though, because you want to generate some revenue, so your business can start to grow.
So usually, we don’t see a lot of discipline with who we’re even choosing to spend time with. And at the end of the day, it should be okay, we work best with Midwestern healthcare systems that have 200 to 600 beds that focused on oncology and pediatrics that are for profit businesses, they’re not 501-C3s. That is where we’re going to play. And we’re going to be very disciplined with doing that. You typically never see that.
So that’s the first mistake is we’re usually chasing so many different things. And when you’re doing that, you can’t really get specialized in you can’t get efficient. So that’s the first thing we want to do is an exercise. So what is our target addressable market? What is the ideal client profile? So that’s like even a subset of the target addressable market?
And then Jeremy, within that, who are the buyer personas, those are the individuals within that company that have a problem that that specific individual is probably responsible for with his or her job description that we might be able to fix. So it’s very, very specific. Right? And it might be okay. There are three to five buyer personas at those types of companies within our target addressable market.
Jeremy Weisz 23:54
When the companies come to you, or they typically have a sales team in place, they have a small sales team where they typically at with with their journey,
Cliff McDonald 24:02
Yes, so early stage companies, right typically would be newer companies that might have some capital, they might have validated a product, an MVP, they might have some revenue. Typically, we like to work with companies that have hit a 1 million ARR revenue threshold for early stage companies, mid market companies, more mature companies would say, you know, 20 million or 50 million in revenue or less.
Usually what we see on the smaller end early stage companies, the CEO founder is the revenue generator. That’s usually how it starts. And then you build out a team. So we see anything from you know, two or three revenue responsible people up to 10 or 15. We have yet we’re a young company, Jeremy again, only been in business about four years.
We have not seen ever a good internal development programme, where we’re teaching coaching, nurturing the required skills and mindset to be an effective revenue generator, which is absolutely insane. Think about what we’re doing. We’re hiring people and saying you’re going to help us go find people who will give us money, and will provide value to them. And you’re not giving them training, you’re not giving them coaching. And we expect them to be successful.
So turnover, in lower mid market companies in revenue responsible roles is really, really high. And think of the wasted capital that goes with that. And for us, it’s like, why, how did this become standard? Right? But, you know, one of the reasons why too, is because historically, the lower mid market companies wouldn’t have access to resources to one of the most exciting things is barriers to entry have been reduced. Technology does this.
Think of like democratization of tools? Like today, Jeremy, a $5 million company, with 40 employees can have a technology stack, just as good as a fortune 100 company, which is awesome. Because now, we think that the advantage actually can be with the smaller the we know, they can be more nimble, they can be more agile, they can make decisions quicker. But now they’re not disadvantaged because they don’t have the tools, which is really exciting. And that is recent, and it’s still happening.
Jeremy Weisz 26:52
What and this is probably a popular question, because people love to talk about tools in tech, even though the training the culture, all that stuff, it’s probably because harder to implement, what are some of the tech stack that you recommend? A team half from a sales perspective?
Cliff McDonald 27:09
So top of funnel, right, so think we have this kind of concept of a double funnel, p&l? So the P&L, the profit and loss statement? Right, Jeremy? You know, a lot of people think of that as the scorecard, the scoreboard for a business, right? You see revenue, cost of goods sold your gross margin than your expenses.
Bottom line, right, five line items, top line revenue, we think that calling revenue top line is misleading, we almost think like revenue is the middle line. And above revenue, you have a sales funnel, above the sales funnel, you have a marketing funnel. And above that, you have your go to market strategy.
So there’s so much that needs to go into generating revenue. And within those two funnels, there are so many breaking points. Right? So if we want to look at tools, at the way top of the funnel, is how are you building brand awareness? And how are you measuring that? Who even knows about our brand? Jeremy, so many of these companies, not the early stage companies, but more mature mid market businesses that might have been around for 20, 30, 80 years? A lot of times they don’t have Google Analytics set up.
Think about that. They don’t know how many people are visiting their website. They don’t know where those visitors are coming from. They don’t know what content they’re consuming. They don’t know when they leave the website. So that’s a simple thing to a website is an amazing tool. You can connect with the world through your website.
So we look at that as a top of funnel metric, right? Google Analytics, right? How many visitors do we have? And then you can look at things Jeremy, if they are running marketing campaigns, a lot of times they’re not right, say email marketing, for example. What is our open rate? Right? How many people have downloaded a white paper that we shared? Right? Have we gotten anyone to fill out a form, contact us to set up a discovery call.
So those are all things we want to measure? We would call up those top top of funnel metrics. And then as we move down the funnel, and we have discovery calls, right, you want to have a sales pipeline. And within that sales pipeline, you’ve got categories.
There stemming from early right? Discovery call arranged to discovery call completed. Right, then maybe you get into proposal. Proposal, send negotiation, and then win or loss. Again, recurring theme here, it’s common for us to see companies that do not have an effective CRM.
And all of the data about the company’s opportunities resides in some sales guys spreadsheet. And I think a lot of us have been guilty of this, I’m sitting here with a notebook in front of me, which is where I still take notes, even on discovery calls, my team does a good job at holding me accountable for making sure these get into our CRM.
But think about that, Jeremy, if you’re not capturing that data, of all of that engagement with potential clients, and you’re not capturing that data, and that salesperson leaves, that’s IP, that data is valuable. And you’ve just lost all of that. One of the mindsets that we have to struggle with and we try and change all the time is this concept of my territory, singular, possessive, but historically, so we’re talking about CRM, and the importance of putting all of the data in a system with prospects and contacts and opportunities. And how important that is, right? We’re creating data, we’re creating IP for the company.
Historically, there’s been this mindset, and we fight to change this with a lot of kind of old school sales guys that like, these are his deals. This is his territory, like possessive singular, which is crazy, right? These are the opportunities for the company, right? And you have the privilege of being able to represent the company and work this territory or manage the relationships with these other businesses and these other people.
So if you’re not committed to the tools, Jeremy, right, and you’re not committed to using technology, you have someone on the team who’s out in the field, having conversations, discovery calls, finding opportunities, they leave the company, and you don’t know any of that. Right? And so it’s important that everyone completely commits to using the tools and the technology. Huge competitive advantage to for a lower mid market business.
Jeremy Weisz 32:36
What CRMs do you like or they use?
Cliff McDonald 32:40
Well, we are a HubSpot partner, right? So we love HubSpot. We’ve only been a partner for a couple of years. Two of my partners were in Boston last week they host in an awesome image. Exactly. Yep. So HubSpot is fantastic. It’s also more cost effective.
You know, the dominant market fire for years and years was Salesforce. Great tool really expensive. I would almost argue prohibitively expensive for some, you know, lower mid market companies. So we like HubSpot. So HubSpot is a CRM, so you can store all of the data for opportunities and contacts. It also is a CMS, which is a content management system.
So you can do all of your content, all of your newsletters, email marketing, and it’s all connected. It’s a great tool. Awesome.
Jeremy Weisz 33:40
I want to talk about RehabPath, a number of levels, but, um, what did you and the company do with RehabPath?
Cliff McDonald 33:49
Yeah, thanks. RehabPath is a fantastic company. And Jeremy, you know, I am in recovery. And I am very public with my recovery coming up on five years. Substance use disorder alcohol for me, or you could say I’m a recovering alcoholic.
So just kind of randomly I work out of a place called StartingBlock in Madison, which is an awesome entrepreneurial incubator. A few years ago, down the hall, I saw a logo on a door of a company called RehabPath, which I did notice like while I had been to repack, rehab, rehab, I went to rehab twice, actually to inpatient, and when you are very sick, which I was you do require that level of care, which means you’re going away and living somewhere for a period of time, typically 20 to 30 days.
So I met Ben and Jeremiah, who are wonderful human beings. Neither of them is in recovery. There Joe? Just absolutely mission based fantastic people that want to help people. And their mission based. Jeremiah owned a marketing agency called Blend Marketing, which is a wonderful company that helps travel and tourism companies.
And Jeremiah, I think kind of accidentally got a couple of treatment centers as clients. And with working with those clients, he got to learn that marketplace. And he saw that there was opportunities for improvement in that marketplace in the behavioral health treatment center industry. And he came up with an idea of building a platform that would connect people seeking treatment with the right treatment provider at the right time.
And we started really just as friends and colleagues down the hall, you know, a lot of discussions about the industry. That turned into a formal modest engagement. And it just grew, and we became very close partners. One of my partners, Bernie became involved. He’s fantastic. And he helped us in ways that I wasn’t able to help.
Jeremy, we’ve gone from four employees to I think 55 employees today, over the past few years. RehabPath got a series a capital from HealthX Ventures, an awesome early stage digital healthcare venture capital firm here in Madison, recently crossed a significant 10 million ARR threshold.
So a company’s extremely high growth, and doing absolutely wonderful work. I was asked to build an advisory board, Jeremy, which you mentioned, and I did. And we were lucky to get four amazing leaders from this space who really support our mission, they’ve been very active with the growth of our business.
And, you know, personally, it’s the work that I love doing more than any other work. Recovery is hard. And turning the corner is really difficult. And the odds aren’t good, even when you have the privilege to have the best resources and the highest level of care.
So again, this is hard. But when you do see people turn the corner, and they recover. It’s absolutely amazing. And you see people just these amazing stories of people turning their lives around. And many of them go on to do wonderful work, and do their best work. So it’s fantastic.
Jeremy Weisz 37:39
What kind of work did you do with RehabPath when you came out? And I want to point out there as I went to Madison, right, so there is a top Wisconsin, Wisconsin entrepreneur series that I’ve done on the podcast I had. Troy, who started one of the I think he’s one of the people who started co-founded gener8tor. And I had one of the co-founders of EatStreet, which is actually started in Madison. And actually, I don’t know if he still is, but Dan, who is head of the entrepreneurship center, Weiner Center for Entrepreneurship at University Wisconsin. So we did an interview with Dan Olszewski, as well. So check those out. But what did what work did you do with RehabPath?
Cliff McDonald 38:28
Yeah, and I know some of those names Jeremy, Troy Vossler, I believe. Yeah, right. Yeah. Fantastic. Huge impact on the startup community here. Where we’ve where we did most of our work with RehabPath was in revenue generation. And the business model, Jeremy for RehabPath.
These types of businesses sometimes are called two sided marketplaces, where there’s a B2C, right? The people seeking treatment or loved ones seeking treatment, and the B2B is the healthcare organization, the provider the treatment center. So the vast majority of treatment centers that you see on the platform, Jeremy, are not paid advertisers.
RehabPath has built out about 3500 profiles. For treatment centers, the goal is really to just uplift the entire industry and provide access to care. Right now there are a handful more than a handful, less than 10% of the treatment centers on the platform are paid advertisers.
So that’s really where we worked mostly was trying to grow revenue with paid advertisers also had a lot of involvement with the technology stack. With strategy. As I mentioned, we did build that board and we get the opportunity to do a lot of development, working with people on the team, doing some coaching, a lot of strategies.
So it’s been fantastic. And I have to give credit, both to Ben and Jeremiah for being very open minded and creative with partnerships. And also my partner Bernie, who’s out in San Francisco. Bernie’s much better than I am Jeremy, he’s in San Francisco. Right, right in the heart of the tech thing with the tech stack. And the tools and automation and data in these been absolutely fantastic on this project.
Jeremy Weisz 40:28
What kind of work and let’s take a totally different industry for a second and commercial painting?
Cliff McDonald 40:36
Yeah, yeah. Yeah, there’s a shift right, from a digital platform to commercial painting. As you and I discussed earlier, we’ve got a client in Boston called CE Painting, and certainly not the most glamorous industry, commercial painting, they paint big buildings and they are a premium brand, however, and we’ve been working with them for about two and a half years. And they have tremendous core values.
Eric And Chris, CE, Chris and Eric, they’ve built such a great team. From a humanistic perspective. They treat their people extremely well. They’re very kind, compassionate people. And in that industry, Jeremy, there’s usually really high turnover. In the trades, you get that, right. And painting historically, is not considered the most sophisticated of the trades, right? Think of barriers to entry, or lack thereof.
A lot of people can say I’m a painter, we’ve all painted a room in our house, right or done something like that. So see, painting has an extremely low turnover, because they take care of their people. And they have great core values. So that company, Jeremy, I haven’t been here this whole time. But in 2017, I believe they were less than a million in revenue. And last year, we crossed 10 million in revenue. And they work with some of the biggest, best general contractors in Southern New England and Boston.
But we’ve also been involved with this, which has been really fun. We’ve developed a specialization in education. So you know, there’s no shortage of higher education institutions in New England. And see painting has developed the real specialization with Northeastern Wentworth Institute of Technology, Boston University, University of New Hampshire, Tufts University.
Painting schools is really tricky. Think about dorms, think about how big they are. Think about how banged up they get with 1819 year olds living there. And think about the small window you have to do those jobs. So this is what we talked about earlier, Jeremy with target addressable market, ideal client profile, and buyer persona. And we haven’t seen a commercial painting company that had said, we do this industry really well. So it’s been really fun to be a part of that. And we’re having great success there.
Jeremy Weisz 43:30
We just have another minute, Cliff. But I want to know, how does it work to work with you when someone comes on board? What’s the process look like?
Cliff McDonald 43:39
Yeah, thanks, Jeremy. So So typically, just like any other revenue generation sales organization, we will do discovery, we spend a lot of time in discovery, we really want to try and make sure we understand the business as well as we can in the problems they have before we even recommend a proposal.
And then we always start with a modest 90 day engagement. And we do that to reduce risk for both parties. And then our arrangement, Jeremy typically is a fixed monthly fee on a retainer basis. 90 days, our most common engagement would be one of our partners, that is a fractional leader. So it’s basically you’re getting a Chief Revenue Officer on a fractional basis, or a Chief Growth Officer. Most of the companies in our target addressable market, Jeremy could not afford a full time executive like that. So it makes sense to do that on a fractional basis.
Jeremy Weisz 44:43
Thanks for laying that out. I just want to point people to your website, Cliff, everyone could check out brainheartgrowth.com to learn more, and I just want to be the first one. Thanks for sharing your journey and we didn’t get to all of it. You know, I know you own several bars that you open that you grew to $5 million. And that just so many cool stories along the way that got you to brainheartgrowth.com Everyone check it out and Cliff thank you so much.
Cliff McDonald 45:14
Thank you Jeremy. Really appreciate you taking the time to spend with me here.