[Top Agency Series] How To Build Profitable Businesses and Exit With Greg Alexander of Collective 54

Greg Alexander is the Founder and Chief Investment Officer of Capital 54, where he decides which entrepreneurs to bet on and which firms to invest in. He supports entrepreneurs by helping them scale and exit their firms, and he does so by sharing how he scaled and exited his own.

Before opening Capital 54, Greg had two careers spanning 25 years. He co-founded professional service firm Sales Benchmark Index and served as CEO for 11 years. After scaling the firm, he successfully exited in 2017 by selling his interest. Before SBI, Greg was an executive at EMC Corporation, a leader in the data storage industry. He is the author of The Boutique: How To Start, Scale, And Sell A Professional Services Firm, among other books. Greg is also the Founder of Collective 54 and a Young Presidents’ Organization member.

Here’s a glimpse of what you’ll learn:

• [03:08] Greg Alexander talks about the “F***up Fridays” culture strategy
• [06:06] Business lessons from the F***up Fridays
• [18:55] The sales process exiting a business and the lessons learned
• [22:51] Greg explains why he decided to sell his company 
• [24:11] The services Sales Benchmark Index offered 
• [28:57] How Collective 54 helps people and leverages the community business model to scale
• [37:19] The correlation between Collective 54 and Capital 54
• [38:51] Capital 54’s investment criteria
• [43:22] Techniques for hiring a sales professional

In this episode…

Entrepreneurs aspire to build businesses they can sell for a profit in the long run. However, starting and scaling a profitable business can be a daunting task. In this regard, learning from experienced professionals who have successfully grown and exited their businesses is imperative.

Greg Alexander, a serial entrepreneur, was able to grow and sell his first boutique business for an impressive sum of $162 million. Despite facing numerous challenges in the journey, he overcame them with a winning combination of strong company culture, dependable team players, and an unwavering focus on the end goal. Today, he helps other founders achieve similar success by providing them with access to capital and creating a community where they can learn from his wealth of experience, make more money, work less, and ultimately achieve bigger and faster exits.

In this episode of the Inspired Insider Podcast, Dr. Jeremy Weisz chats with Greg Alexander, Founder of Collective 54, to discuss how he successfully grew and exited his business. Greg talks about the “F***up Fridays” culture strategy, the sales process exiting a brand and the lessons learned, how he leverages the community business model to scale Collective 54, and Capital 54’s investment criteria.

Resources mentioned in this episode:

• Greg Alexander on LinkedIn
• Collective 54
• Capital 54
• The Boutique: How to Start, Scale, and Sell a Professional Services Firm by Greg Alexander
• Topgrading for Sales: World-Class Methods to Interview, Hire, and Coach Top SalesRepresentatives by Greg Alexander and Bradford D. Smart

Special Mention(s):

• Built to Sell: Creating a Business That Can Thrive Without You by John Warrillow
• Built to Sell Radio
• “How to Sell a 30-Person Consultancy for $162 Million” on Built to Sell Rdio
• Topgrading: The Proven Hiring and Promoting Method that Turbocharges Company Performance by Bradford D. Smart
• “Greg Alexander | From Gangsters to Growing and Scaling a Professional Services Company” on the Smart Business Revolution Podcast
• Pro Serv Podcast
• SBI Growth
• SPIN Selling by Neil Rackham
• Thinking, Fast and Slow by Daniel Kahneman
• CustomerCentric Selling by Michael Bosworth, John Holland, and Frank Visgatis
• The Challenger Sale: Taking Control of the Customer Conversation by Matthew Dixon and Brent Adamson

Related episode(s):

• “[Sweet Process Series] How to Build a Business That Can Thrive Without You with John Warrillow of Built to Sell” on the Inspired Insider Podcast
• “How to Hire A-Players and Build a Great Company with Chris Mursau of Topgrading” on the Inspired Insider Podcast

Quotable Moments:

• “The cover-up is always worse than the crime.”
• “If I can do it, you can do it.”
• “If you’re going to bet on yourself, bet on yourself.”
• “Services are bought and not sold.”
• “Slow down to speed up.”

Episode Transcript

Intro 0:01 

You are listening to Inspired Insider with your host, Dr. Jeremy Weisz.

Jeremy Weisz 0:22 

Dr. Jeremy Weisz here founder of inspiredinsider.com where I talk with inspirational entrepreneurs and leaders today is no different. I have Greg Alexander of Collective 54 and Capital 54. And Greg, before I formally introduce you, I always like to point out other episodes people should check out of the podcast and another previous guest, John Warrillow. He wrote the book Built to Sell, actually, Greg is a great episode on the Built to Sell Radio, check that one out. Chris Mursau, he’s CEO of Topgrading. There’s some companies use them to hire A-players, they have the book, Topgrading, which people uses their Bible for hiring A player. So check that out, and many other episodes on inspiredinsider.com. And this episode is brought to you by Rise25. At Rise25 we help businesses give to and connect into their dream 100 relationships? How do we do that? We actually help you run your podcast. We’re an easy button for a company to launch and run a podcast. We do the accountability, the strategy and the full execution. Greg, we call ourselves kind of the magic elves that run in the background to make it look easy for the host in the company so they can develop great relationships and create great content. For me, the number one thing in my life is relationships. I’m always looking at ways to give to my best relationships. And I have found no better way over the past decade to profile the people and companies I most admire on this planet and share with the world what they’re working on. So if you’ve thought about podcasting, you should if you have questions, go to rise25.com. And Greg has a podcast as well. So you can check that out too. So Greg Alexander, he is the founder of Capital 54. And they decide which entrepreneurs to bet on and which firms to invest in. He supports entrepreneurs by helping them scale and exit their firms. And he does so by sharing how he scaled and exited his own firm. And he’s also the co-founder or the founder of Collective 54 Mastermind Community, which helps professional service firms with group and one-on-one coaching and networking and all of that. And prior to Capital 54 and Collective 54. Greg co-founded Sales Benchmark Index SBI, which is a professional service firm and he served as CEO for 11 years. After scaling the firm they successfully exited in 2017 for $162 million. And prior to SBI, he was executive at EMC Corporation, which is a leader in the data storage industry and also the author of The Boutique and Greg was telling us before we hit record, I my friend Chris Dreyer told me he read it seven times, and maybe I’m misquoting maybe not but I think he said this year seven times. So The Boutique, which is how to start scale and sell a professional service firm, among other books. And since Chris has told me that I’ve recommended it to a number of people. I’ve listened to it. It’s fantastic. So Greg, thanks for joining me.

Greg Alexander 3:07 

Thank you. It’s good to be here.

Jeremy Weisz 3:08 

So I want to start off what we’ll talk about SBI we’ll talk about Collective 54, and Capital 54 before but I want you to start off and tell us what’s F***up Fridays?

Greg Alexander 3:23 

Boy, people can’t outrun their past, I guess. All right, well, since we’re gonna go there, let’s go there. So when I had my firm SBI we are hiring model was to recruit into the firm, vice presidents of sales from major corporations. And the reason for that is because we sold sales consulting, and we competed with the biggest firms. So the McKinsey’s in the veins of the world. Any point of differentiation was, that our guys and gals are real practitioners. Whereas what you might see from McKinsey, as an example, would be a brilliant person, but maybe a Harvard MBA type, we’ve never really had a sales quota. And that was a real distinction for us as to why to hire us. Now. The problem is, after someone spends 2030 years in corporate America, they’re afraid of their own shadow. They run around and they think if they say or do the wrong thing, they’re gonna get whacked. And our culture was one of just the opposite. We wanted people to take big giant risk, and go for it. And so the way that we celebrated that is we had a ritual, and it was very ritualistic. It was called F***up Fridays, and it was a contest. And it was a cash reward that went to it. And people would get on a companywide conference call. And they would say, boy, I got a doozy for you. Let me tell you how I fucked up this week. And we would all listen, learn from the excuses and the mistakes and all that things and sympathize and empathize and thank the person, you know, for making a big f***up because that was proof that they weren’t playing it safe and they were going for it. When you do things like that, and in professional services, which is my area of focus now, entirely, culture matters, because what our services firms are a collection of people, and how people behave with clients with each other with themselves with each other is really important. So that was our way of putting our money where our mouth was, and really living that particular value.

Jeremy Weisz 5:37 

And I want to dig into, the reason I bring that up is because culture, I mean, it really talks a lot about culture. And so I want to talk about the culture there and because you consciously wanted to create a great culture. And that’s what helped you grow your company to help with the leadership. But I do want to dig into that a little bit, which is, we learn from our biggest mistakes. Well, where do you remember? What were some of the biggest F***up Fridays that stick out? That we can all learn from?

Greg Alexander 6:06 

Yeah. Well, I mean, there was several, I’ll give some obvious ones. A lot of times consulting companies are sharing best practices from one client to the next. And many times, the reason why clients hire consulting companies, is to see what other firms are doing. And not have to reinvent the wheel and start with a running start, so to speak. So sometimes there was one in particular, where there was a big readout. So imagine a boardroom with a private equity stack to board, a CEO, VP of sales, and three or four of our people in there, and we’re doing a big project read-up. And he’s going through the slides. And it was the slides of another client, not of that client. And I mean, we all wanted to crawl under the table. And the clients like, let me make sure I get this correctly, I’m paying you guys $1,000 bucks an hour just to repurpose some stuff from somebody else, like it was really, really, really bad. So that was an example. Now, what was great about that example, number one is listen, you got to pay attention to detail, you can’t do that, what was the quality control process, etc, etc, etc, which drove kind of process and methodology. But the bigger thing was, is how this individual tap danced in the moment in recovered from it, which was nothing short of a Houdini exercise. And the meeting went great, we ended up getting follow on work. So, what did they do? They spun it. They said, instead of lying to the client, they said, You’re right. I am repurposing work from another client. You’re correct. You caught me. However, I’m not going to try to cover it up. I specifically picked this use case from another client, because of how powerful it can be for you. So let’s get past the issue of maybe me being sloppy with deck creation. And let’s evaluate the idea on its merit. Here’s the idea, do you think it would work in the client’s eyes just opened right up. And it actually was a brilliant idea for that client. And they went ahead for it. So in the teaching moment, there was it would have been worse trying to bullshit your way through it. Right, the cover-up is always worse than the crime. And this individual, he just owned it, and we rocked from there.

Jeremy Weisz 8:28 

I love that cover-off. It could be worse than the crime. So what’s another one? You were going to talk about another one?

Greg Alexander 8:33 

Yeah. So then there was some that were not so great. For example, we have a guideline is expensive. So he got on the f***up call and talked about how he got caught as expensive but I mean expensive, what I mean expenses, he was five filing with the client reimbursable expenses. And then he got caught by the client. And it was an embarrassing thing. And in that case, this was countercultural, because we fired him on the spot in front of the entire company when that happened, there are fuck ups that are a bridge too far that crossed the line. And you know, and that was one. Needless to say, that was a very tense call. I didn’t believe in having HR in my firm, which is a controversial subject. I literally fired the person right on the spot and took the legal risk associated with doing something like that. But that even in and of itself, send a message to the team which is, there are non-negotiables and that’s one of them. And if you do that, you’re gone. No hesitation. And what really was terrible about it. Is this individual that did that was a top performer. I mean a big biller and a big rainmaker, but we blew him out right there on the spot. And I ended up getting sued. Thankfully, we won the lawsuit and the client conducted a deposition and participated in the arbitration with me.

Jeremy Weisz 9:59 

So why not HR, what made you make that decision?

Greg Alexander 10:03 

Well, looking back on it now, I probably would have HR. But I was like many of our members that Collective 54, I was a first time founder. And I didn’t want anybody in the company that sat between me and the culture. I didn’t want an arbiter of the culture, I wanted it to be as real as a heart attack. And I have an oversized appetite for risk, even more so back then when I was a younger man. And I didn’t really care about compliance legalities. And I figured, let’s go for it. And if you want to sue me, let’s go to work. And that was a reason why I have no HR. And it was unnecessary and reckless at times. But that was the reason.

Jeremy Weisz 10:51 

What else would you have done differently? So you would have you put, looking back, you would have had HR? What else?

Greg Alexander 10:57 

Yeah, well, the biggest mistake, and he talked about John Warrillow, who I have a lot of respect for. And I was on his show Built to Sell. And for those that are listening to this, I encourage you to listen to that. John is doing us all a wonderful service with his show. And I made an $80 million mistake. So I sold my firm for $162 million. And I don’t say that to brag, I say that to say, if I can do it, you can do it. Trust me. There’s nothing special about Greg Alexander. Early on in my company, I gave away too much equity. And when I went to sell my firm across me at big ones. So that was a giant mistake.

Jeremy Weisz 11:42 

Yeah, me, Greg, I listened to that episode. And there’s an argument for I mean, yes, it’s an $80 million difference. I don’t know if I’d categorize the mistake. You mean you do. But you also attracted great people to your company to like, would you have attracted that leadership if you weren’t generous with giving that away?

Greg Alexander 12:03 

I agree in attracting talent is actually in professional services, nothing more important. And not being a greedy sob being a generous person is important. But 80 million, that’s a big step. I probably could have attracted the same people and had achieved the same outcome for 20 million instead 80 million, whatever. So but there’s no doubt that was a huge mistake. But yeah, I understand what you’re saying.

Jeremy Weisz 12:34 

Because at that point, it was equity. I mean, once you sold that equated to dollars, you didn’t know it was going to equal $80 million.

Greg Alexander 12:41 

Yeah, of course not. Right. And that’s the lesson for your listeners, if you’re gonna bet on yourself, bet on yourself, because someday your form is going to be worth a lot of money. So be really careful. In the early days before you have to give up a lot, be really, really careful. And thinking through

Jeremy Weisz 12:59 

that. Yeah. So HR, be careful with the equity, any other things that you would do differently looking back.

Greg Alexander 13:10 

I would have gone a lot faster. And this is something I hear a lot of people say on interviews like this one. And I used to listen to these shows, and try to teach myself these things. And out here, people say that’s and it kind of went in one ear and out the other ear. But our point of view expressed in the book The Boutique is that launched exits about 15 years. There’s three stages growth, scale, and exit. These are three distinctive evolutionary steps requiring different strategic approaches. And about five years at each stage. Now, I started my firm in 06 and sold it in 2017. So that was 11 years. The reality is, I probably could have got it done in like seven or eight. And I’ll give you some tangible examples to put meat on this bone. There were times where I had made people decisions, and I knew it, but I carried him for a while. Maybe I held on to somebody a year too long. You know, there were times where I had clients that I probably should have fired because they weren’t in our ideal client profile. But I was worried about making payroll, and I carry them and there was real opportunity costs associated with that. So I’m on the other side. Yeah, I’m on the other side of it now and Monday morning quarterback is easy, but if I was to do it over again, which is what your question, I would have not hesitated one second on either of those decisions would have pulled the trigger a lot faster. 

Jeremy Weisz 14:30 

Sounds like at times you did pull the trigger fast. Yeah. extreme cases. Any other F***up Fridays that stick out that were good learning lessons. You mentioned obviously one that was like a non-negotiable, like if someone does something that’s just against the core values of the company, but there’s another one that someone just admitted their mistake. What other ones stick out over the years.

Greg Alexander 14:57 

Other ones that were really instructed were blown opportunities, lost deals. Our business was what we call an elephant business as opposed to a rabid business. And what we mean by that is, we were architected to have a small number of clients, but each client spent a ton of money. Whereas a rabid business is just the opposite, you have hundreds, if not 1000s of clients, and each client spends a little. So when you’re in an elephant business, that means every sales campaign is like survive or die, like these are seven-figure type deals. And the losses were extremely painful, because somebody could be working on a deal for a year. And then a year was made or lost based on that big deal. So when someone lost a deal, because of a f***up, not because of something outside of their control, but something that they did wrong. And they were vulnerable enough to come into a public forum and say, here’s how I blew this one. Boy, those are fantastic. Because lots of people could ask really difficult questions like, hey, in the moment you did this, why, like, what were you thinking? When the outcome wasn’t what you wanted? How did you recover? How did you prepare for this? And why did you propose that when you were competing with this firm, like, what was your strategy to win? Like, it was so rich, those, we call them last reviews. They were incredibly powerful. And now that I talked about with him, I probably would say that those were my favorite.

Jeremy Weisz 16:31 

Would you remember one a blown one?

Greg Alexander 16:35 

Yeah, I’m gonna obscure their clients.

Jeremy Weisz 16:38 

Yeah, that’s fine. It’s secure everyone’s name.

Greg Alexander 16:41 

Yes, there was probably at that time, the fastest growing company in the world. They were in Silicon Valley. And they were a consumer focused company. And for the first time, they were becoming a business to business company. And we caught a huge lucky break. And that one of our former clients was hired as a chief revenue officer. And like, on day two in the job, he called us and said, come on in, I need your help. And we thought we were all that in a bag of chips. And we went in there with a huge proposal, and didn’t appreciate the fact that he had a reference point in previous work on what our prices were, and caught us speeding, trying to charge too much, and we lost the deal. And that deal, would have put us on the map in ways maybe would even have made our firm a household name. And that was a major, major loss. And that was a very, very powerful and painful loss review. That was the one that got away, so to speak.