Jeremy Weisz 17:52
So Greg, would you say, some of the lessons, they’re not taking a relationship for granted or not making assumptions, if the company is big, what their, maybe their budget is? I don’t know, what did you take out of it?
Greg Alexander 18:07
Well, all of those, yes. But I think there’s a theme that sits on top of those. And that is this was the heyday of our firm, and we were really crushing it. And we, I’m in this bucket, we got arrogant. And we lost the scrappy startup mentality. And we started behaving like the big guys on the team. And we got kicked right in the teeth, and we deserved it. That’s what happened there.
Jeremy Weisz 18:35
I was listening. And you were also on John Corcoran, my business partners podcast, Smart Business Revolution, which was great. And he said something to you about? It’s very meta, right? Your sales process is you’re teaching and you’re helping people with sales. Yes. What was your sales process like at that time?
Greg Alexander 18:55
Well, it was complicated. The first thing was, it really wasn’t a sales process. This is what’s intriguing about, it was more of a buyer process. So the belief that we had is that services are bought and not sold. And there’s things in a service itself that are different than in product style. And our sales process, once we documented it, reflected this. So for example, you can’t demo a service where you can demo a product. So that means that you’re selling an intangible, and at some point in the sale, you have to ask the customer with no proof to take a leap of faith. Right? So getting good at that is really important. With a product sale, you really don’t have to do that you do a demo or someone gets a free trial. Like the leap of faith just isn’t there. The product either has the features and functions that you need or it doesn’t services is entirely opposite. So we did a lot of things around helping clients overcome their fear building consensus is around a buying decision team because many times because the stakes were high and the fear was high, a lot of the fear was, hey, what happens if this doesn’t work? Like am I going to look like an idiot to my boss. So we would get our champion to take us to the boss, include the boss in the decision process. Very often, we didn’t even need to, like our target client had the authority in the budget to pull the trigger. But it was a way to help him make a decision sooner because we had his back, so to speak. So it was very well thought out. It was constantly iterated against it was based on the emotional psychology of a big ticket sale in an environment where was an intangible that required a leap of faith. And it was multi-stakeholder, it wasn’t uncommon for us to earn the approval from a dozen people at the highest points in a company. And we had a phrase, it wasn’t my phrase, it was one of my guys, I forget who said it, I wish I can attribute it to him. The phrase was slow down to speed up. We used to say that to ourselves all the time. Sometimes we would go fast, and we would say okay, we went from stage three to stage four, it’s time to close. And then we’d hit the pause button, because we had a central deal desk, where we reviewed all this stuff all the time. And we say wait a minute, we got two or three stakeholders that were not sure where they are in this. Let’s not go for the close yet. Let’s go build consensus with them.
Jeremy Weisz 19:03
What was the sales cycle? What was the length of the sales cycle?
Greg Alexander 21:41
On average, I would say probably six to nine months on the bigger deals.
Jeremy Weisz 21:47
So I was thinking like I was expecting you to say longer than.
Greg Alexander 21:51
Sometimes, depending on this, it was very much related to the size of the deal. And it was also related to the trigger event. So for example, we did a lot of work in PE. So if they recently bought a company, that sales cycle be really short, because they wanted to get to work right away. If we were doing work with a big Fortune 500 like I remember back in the day, Hewlett Packard was doing the largest salesforce.com implementation in the world was like 20,000 sales reps. And we were hired to help them with that, you know, that sales cycle took like two and a half years. It depended on the trigger event, mostly the length of the cycle, like what was the urgency?
Jeremy Weisz 22:33
What was interesting to me, Greg too, is you were not expecting to sell your company. But I like how you thought about the reason why you might as well decide, and it was partial prospecting. Talk about your thought behind, we might as well try this out.
Greg Alexander 22:51
Yeah. So one of our partners who actually ended up taking over from me to CEO, his name was Matt Shares, and Matt built our private equity practice. And it was a growth engine for the firm. And at this time, the amount of money that was being raised in private equity was exploding. And as a result of that, we went from, like 3,000 private equity firms to like 10,000 private equity firms. So we had a coverage problem, how do you get in front of this exploding number of private equity firms who are our prospects. So, when we started thinking about selling the firm, I mean, one of the benefits, one of the things that I thought about was, well, a lot of these private equity firms are going to get our CIN, a confidential information memorandum. And it’s like the best marketing brochure you could ever have. So when I was working with my investment banker, when we were building list, who to send this into, we were very strategic, not only were we thinking about firms that might be interested in actually buying us, but even though it might not be, I wanted to get my name and my story in front of them, right. And it worked extremely well.
Jeremy Weisz 24:03
Just for people that don’t know, at the time when a company calls you in, whether it’s Salesforce or whatever, what were you actually doing with them?
Greg Alexander 24:11
Yeah, so we were a traditional consulting company. So first put us in that category. But our domain expertise was business-to-business sales effect, and that’s a multiple, what does that mean? So we would determine how much sales capacity you needed. So for example, how many reps you needed? Based on what was the demand in the market for your product or service? That was a huge kind of data analytics effort. Then we would say, okay, so if you need 1000 sales reps, I mean, what types? Do you need hunters and farmers? Do you need product specialists, industry specialists, etc. And then this was before COVID, where we did belly-to-belly selling, not zoom. How are we going to deploy it? Like, how many people do you need New York City versus San Francisco? And then what should their quotas be? You know, based on the demand and their local market? You know, what percentage of that demand can you capture? How does that translate to a quota and a compensation plan? Was all this type of work that we did?
Jeremy Weisz 25:02
Yeah, I know with Collective 54, these are things you discuss with the community you go over, which is we’re talking about culture, all this kind of goes back to culture. And you also talk about the life review. It goes called the ideal life review. Yeah, ideal life review.
Greg Alexander 25:19
Yeah. So, this is a cultural component as well. So when you’re hiring these VPs of sales in these big corporations, it’s tough to hire them because they’ve got big jobs, that big pay packages, and they got a fancy logo on their business card. And they can go to the Christmas party. And you know, Grandma and Grandpa are bragging about, hey, Johnny works for Google, right? Meanwhile, they go to work for SPI, and no one ever heard of SBI. And it’s like a shot to the ego. So we had to come up with an employee value proposition. So think of it, for those that are listening, think of what your customer value proposition is, what’s the problem the customer has? Why is your solution the best for it? And how much does it cost? It’s an employee value proposition is the same thing. So, this bigshot VP of sales, like what is he unhappy about? And if he comes to work for me, how do I solve that? And if I do solve that, like, how does that show up in his life in real dollars and cents and also qualitative terms? So the way that we would quantify that is we had everybody do what was called the ideal life exercise. So we said, if you had a perfect life, what would it look like? And there were several dimensions, very simply, like, where do you want to live? What type of people do you want to work with? Do you want to travel? How much money do you want to make? What kind of music do you like, all kinds of it was very comprehensive. And inevitably, what would come out of it is people would say, I’m 45 years old, 25 years into my career, I got 20 years left. And yeah, I’ve had some success, measured in material things, but I’m really not that happy. I’m not that fulfilled. For example, I got three kids in middle school, and I never get a chance to go to the football games, because I’m on the road. Right? We would hear things like that. So then we would say, all right, well, how can we design your job? And this is the benefits of being in small company? How can we design your job in such a way to get you as close to that ideal life as possible? Excuse me, fully knowing that we can’t solve all the world’s problems, but maybe we can contribute. So for example, before it became cool to work from home, everybody worked from home, at SBI. And the reason for that is we said listen, you’re gonna travel a lot. So when you’re not traveling on behalf of clients, it makes absolutely no sense to force you to go to an office, when you are home, be home and go to your kids’ ballgame. And if that ballgame, it’s Tuesday afternoon, at two o’clock, we don’t care. You can make up for it Sunday morning at 10. Like it doesn’t matter to us. So we had a tremendous amount of flexibility in that employee value proposition. Another huge one was we didn’t care where you lived. We are this one guy, his nickname was Heater. Because he was a chain smoker. He was one of my favorite guys. And he was living in Florida. But he was born and raised in Nebraska, of all places. But Nebraska at that time, maybe even now wasn’t a great job market. And he really wanted to move back to Nebraska, but he couldn’t find a job. And the reason why he came to work for us because we didn’t care, go ahead and move to Nebraska, as long as you got an internet connection, and you’re willing to get on a plane and you need to live wherever you want. So that’s what the ideal life was all about. And that’s how it helped us build that firm.
Jeremy Weisz 28:45
Yeah, thanks for sharing that. I want to talk about I like how you talked about it’s not the sales process, but it’s the buying process. And what that looks like for Collective 54.
Greg Alexander 28:57
The buying process. Yeah. Yeah. So what happens? So first off, let’s talk about our target client. So our target client is a founder, typically a first-time founder, like 90% of the time, whose psychological profile is they had enough courage to start their own firm. And they’re past the startup stage. So they’re not worried about survival. But they’re wondering, I’ve got this successful lifestyle business. But I want more than that. I want to move from having a practice to having a firm, I want it to be something bigger than me. And someday down the road, I want to be able to sell it. That’s a very specific person. There’s approximately one and a half million professional services firms in the United States that meet our demographic profile, which is in pro serv between 25 and 250 employees, but a far fewer number of those that meet that particular profile. Lots of people in pro survey are happy with a lifestyle business. We’re looking for people that have big aspirations. So the buying process for those people is very specific. For example, how do they even become aware of Collective 54? Well, somebody with ambition, like that tends to be a learner, somebody who educates themselves. So what did I do to attract them? Well, I wrote a book. Why did I write a book? Well, learners read. And we spent money on getting that book out there on Amazon with a marketing agency. And as you mentioned, at the top of the show, people read the book, and they love the book, and they become members. That’s an example. And that little example, is a good one for our show today, because it illustrates how you start with the buying process first, like we identified, ambitious people read, like, that’s what they do, not what we do. So we want to meet them where they’re at. So therefore, I wrote the book, and where do they buy books, they buy books on Amazon. So we showed up in Amazon. So we were matching our selling process to the buying process. Now, just because somebody reads a book doesn’t mean they’re going to say, sign me up. So they’re going to come to the website, we know this. That’s the next thing they do, like our audience doesn’t go to Facebook, doesn’t go to X. Who used to go to LinkedIn doesn’t anymore because it’s so crowded now. They come to the website. And they start pecking around. And what do they want to know? Well, as you can see, in the main app, the very first question when you’re selling a membership to a community. It’s not what you do first, it’s cool the other members. So the very first thing in our navigation is who we serve. And then they see themselves in that or not, am I in North America do I have between 10 and 250 employees? Am I a bold, determined founder, chomping at the bit to scale, etc. And they poke around on the website, then they want to engage with more content beyond text. So a lot of them are podcasters, why they’re learners. So we have the Pro Serv Podcast, which is doing well. And we feature members in the Pro Serv Podcasts very similar, Jeremy to what you guys do. And that they can hear members now not just read members, they can hear the members talk, it’s once people put those little white earbuds in their ears, it’s a different experience becomes more intimate, then our target spent a lot of time on YouTube. So we’ve got a YouTube channel. And then they want to try before you buy. So we invite them to be a guest and a member session. So these are some of the things that we do, this is how they buy and what we do in response to that. Because if you remember what I said earlier, it’s worth repeating so we can underline it is services are bought and not sold. So the job of somebody and services is to be a helpful facilitator of somebody’s decision-making process, the minute you try to sell, it’s a turn off.
Jeremy Weisz 33:07
Talk about, I’m looking at the end, by the way, if you’re listening to the audio of this, there is a video and we’re showing the collective54.com page, you could check it out there. And I’m on how we do it. Right. And I’m just curious from the first starting Collective 54 what it wasn’t the beginning. And I’m sure you’ve added things because you got feedback from people they wanted, whatever it is talk about some of the things I’m looking at here. And how this was implemented, because maybe feedback from the Collective 54 group.
Greg Alexander 33:43
Yeah, well, here, we got really lucky. And that is we’re standing on the shoulders of giants. So the community business models been around a long time. And as people in our space, like EO and YPO, Envisage that have been mastering this method for 100 years. No, like, I think YPO is 100 years old or something like that. And they have 50,000 members — crazy. And all mastermind communities are as everybody else is in our last look is there’s a little over 600 of them in the United States now. They all have six core features. Now, how you call these features and what these features mean to you might be different, but they are six core pages, and here’s what they are. So the first thing is you got to have a network. So when you join a peer group or community, if there’s no peers, there’s no community. So you got to have you got to build a really high super quality network. And that’s hard to do, especially in the early days because you kind of have a chicken and egg problem there. But that’s the first thing. The second thing is you got to have great content, highly relevant specific content, not chat GPT mumbo jumbo shit that’s created on the internet like real meaningful stuff, methodologies, tools, case studies, etc. And you got to have data because people come to communities to find out stuff they don’t know. So for example, a Collective 54. These are small business owners, there’s not a lot of publicly available data. So for example, if I’m wondering, how much should I charge for my services? How do I know? How much should I pay my people? How do I know? Well, if you’re in a peer group, you can find out you can say, hey, Bob, what are you paying for an engagement manager? Hey, Mike, what are you paying for a junior analyst? Or, hey, I’m pitching Exxon Mobil. Anybody else have that as a client? Yeah, I do. Okay, what’s your rate structure like this is super valuable stuff, they’re on data. Then you need software, and the community space, that’s a community platform. It has the basics, like a member directory, and activities, calendar, etc. But it gets really interesting in the community platform is the communication between the members in the platform, you can see these really interesting threads, then you need coaching. Coaching comes in many forms. Like, for example, we have mentors and mentees. So these members coaching each other, we have group coaching, and cohort orchestrated 90-day sprint learning sessions, we have one-on-one coaching. So for example, I play that role, sometimes people would like to have time with me. And we have office hours, kind of like we had when we were in college and university. And then the sixth and final thing is you have to have events, which these days are a blend of virtual events and in-person events. So what happens when you become a member is each one of our members gets onboarded. And in the onboarding process, we build a personalized journey for each member, based on who they are and what it is they’re trying to get done. And then we support our members with what we call a Member Success Manager, kind of like a customer success manager in the software space. And we’re monitoring the use of the membership. And we’re conducting quarterly business reviews with each member to make sure that they’re getting what they need. So that’s kind of a very high level 30,000 foot view of what people get and kind of what the journey is. No, I appreciate you sharing that. Yeah. And you’re in Jeremy. We didn’t invent that. Like those six features. I don’t care which community you go to, they all have some version of those six things.
Jeremy Weisz 33:43
Yeah, for sure. And then talk about your thinking of Collective 54 and how it relates to Capital 54.
Greg Alexander 37:19
Yeah. So Collective 54 is the membership community. And at times, some of those members are doing very, very well. And in order for them to reach their full potential, they need growth capital. So they become the pipeline to my family office, which is Capital 54. So for those that don’t know what a family office is, a family office is just like a private equity fund with one exception. And that is the families investing their own money versus investing monies from limited partners. So that’s what Capital 54 is the money that I made at EMC and the money and made it SPI is the capital that we invest there. In addition to that, some of the members that Collective 54 aren’t looking for an investment, but they want to sell that firm. And they’ve never been through an exit before. And they require hand-holding to help them through the exit. So Capital 54 also provides that advisory service to help them do things like figure out who they might want to sell their farm to, what it might be worth, what the terms might be. How to pick an investment banker or business broker, an M&A advisor, how to negotiate an LOI, there’s all kinds of things that people need to know in order to exit. So those are the two services that Capital 54 provides.
Jeremy Weisz 38:41
Talk about criteria, investment criteria. Yeah, that’s my criteria. Yeah. You’re like, we know what, who do we decide to fund or not fund?
Greg Alexander 38:51
Yeah. So there’s two categories of criteria. And the easiest way to think about it is you have the founder, and you have the idea. And the debate always for an investor is what do you back to back the idea, do you back the founder. So if the investment thesis says I’m backing the founder, you almost don’t really care much about the idea is you think you have located an exceptional human being that is going to be successful no matter what. And you want to get on the train with that person, and help that person by augmenting their expertise. So that’s one investment thesis. The other investment thesis is to invest in the idea and that is, the idea is so compelling, that even a mere mortal founder is going to be successful in that space because it’s the power of the idea. So that’s what we’re thinking about. You know, there are some other dimensions, you know, for example, I mean, I’m not a billionaire, right? So it’s not like I’m writing 100 million dollar VC style checks. So size is consideration, the stage of the firm is a consideration. We tend to invest post startup, but pre-scale. The startups are a little too early for us. But if they’re mature companies, it’s a little too late for us as an example. I only invest in services firms. Warren Buffett taught us this concept of circle of competence, which simply says, invest in what you know. So I’m only investing in services firms. So these are some of the criteria.
Jeremy Weisz 40:32
Is there one that you don’t have to name names that you could talk about? And as you think of them, maybe, to some people, they wouldn’t have invested in it? But you did, because of whatever reason?
Greg Alexander 40:46
Yeah, there is one where I lost my, maybe that’s a good one. Back to the earlier part of our conversation,
Jeremy Weisz 40:52
This was the F***up Wednesdays, where you lost money.
Greg Alexander 40:57
So there was a person that I wanted to bet on. And this person was a giant in his field. And he had an idea. And the idea was to build a membership community, to support the 7 million executive assistants in the world. And that these executive assistants, the difference between the good ones and the bad ones is really large. And that the CEOs that have a killer executive assistant tend to be a lot more productive. So the pitch there was, as you were going to sell to the CEO, hypercharging this executive assistant, and then he would get a substantial buyback of time. And I just thought it was a great idea. And I thought this individual was a great individual. So I wrote a check, I put $377,000 into that business, not a huge check, but enough to catch my attention. And then he recruited his former executive assistant to be the leader of this business. And the business got off to a pretty good start. And then it started to stall a little bit. And we ran into our first adversity, which, by the way, happens in every startup journey under the sun, right? And instead of buckling down and saying, hey, Greg wrote a check here, you know, I’ve got to get his money back, before I make any decisions, he just quit. And so now all of a sudden, I go from owner to operator of an executive assistant business, which is not where I wanted to be spending my time. And he abandoned this person that he recruited in. So I ended up selling the business at a steep loss to her and she’s still running the business right now. And from what I understand, she’s making a go of it. But that was an example of I made a decision to bet on the person. And he was the wrong person to bet on.
Jeremy Weisz 43:04
How do you assess, then, in this case, adversity, right, like you said, in business, I know that you hire. You talk with John about this, actually. This is one thing I’m looking at what other things but you hired athletes? Yeah. Other things you looked at?
Greg Alexander 43:20
Yeah, I mean, back in the day was, you know, growing up in the sales profession, competitiveness was a trait you were looking for in salespeople, particularly new business salespeople. And especially when you were hiring young people, like a Collective 54, we’ve got a sales team. And I think the average age is like 24 years old. And so how do you assess somebody’s potential on a trait when they don’t have a track record? So one of the things we do is we were hiring athletes, and what was their athletic achievements in performance growing up as a kid, and did they demonstrate leadership capability like, were they the captain of the team? Did they not make the varsity the first time and come back and make it the second time, like, all these types of things, is what we were looking for, in those scenarios. So, in assessing an individual, you know, you mentioned Chris Mursau in Topgrading. I don’t know if you know this, but Dr. Brad Smart, the creator of Topgrading, and I published a book together called Topgrading for sales. It’s a little old. Now. It’s we’ve released in 2008, I haven’t looked at in a while. My guess is it’s probably still pretty accurate. But that was this conversation, how do you assess an individual for the role of sales? And Topgrading proved very, very helpful there.
Jeremy Weisz 43:21
Love it. Greg, I have one last question. Before I ask it. I just want to thank you. Thanks for sharing your journey with all the content you put out with your book and everything people can check out collective54.com and capital54.com. And The Boutique book which we mentioned, my last question is just resources. It could be groups, I know that you’re a member YPO? What are some books? or other resources you recommend to your group and others?
Greg Alexander 45:16
Yeah. That’s a good question. Resources. Well, I’m gonna repeat myself a little bit, I think for those that are interested in selling their firm John Warrillow’s podcasts, a fantastic one. I think for those that are listening to this, because of my background in sales, and they want to glean something from that the greatest sales book ever written, in my opinion, was SPIN Selling by the great Neil Rackham. So I would drive everybody to that. You don’t have to find interesting. Something that’s not often talked about in business circles is the book Think Fast and Slow. People often don’t talk about it, because it’s very dense and very…
Jeremy Weisz 46:07
Daniel Kahneman ‘s book, I think, yeah. It is Dan, that’s a good way to describe it. Incredibly dense, yeah. A lot of research.
Greg Alexander 46:15
It’s worth to get through it. But it teaches the most important skill in life, and that is decision-making. We all eventually our lives are the sum total of the choices that we make. So if you can become a really good decision-maker, which is what Think Fast and Slow is about, then your likelihood of success goes up. This book’s not often talked about it in a business context, which is what we’re discussing today. It’s talked in an academic context or even in behavioral finance context. That’s one that I would point everybody to. And then, of course, to all the podcasts that you guys do and just the podcasting world in general. I love listening to podcasts, I listen to them all the time. Even I find myself entertaining myself through podcasts. I’m a big fan of Tim Ferriss podcasts. I love Joe Rogan’s podcast and all those, some of the obvious ones.
Jeremy Weisz 47:04
Any other favorite-selling books? You mentioned SPIN Selling any other favorites people should check out that you have?
Greg Alexander 47:10
Yeah, there’s another great one from a friend of mine, Frank Visgatis called CustomerCentric Selling. It’s really good for software companies in particular. And it’s more on this concept that I mentioned earlier about putting the customer at the center of the sales process and understanding how they buy. That’s a really good one. One to avoid, in my humble opinion, is The Challenger Sale. That got a lot of press. But to this day, I am still not sure. That got implemented well in a lot of places. It had less to do with the theory in the book. The theory was very sound and the authors did a really good job presenting it, but it required some dexterity in the implementation. The idea was to go into a client’s office and challenge them. Well, if you don’t do that, right, you can be labeled a jerk in a hurry. So that would be one maybe proceed with caution on.
Jeremy Weisz 48:06
Cool. Greg, thank you Capital 54, Collective 54, check out more episodes of the podcast and thanks everyone. Thanks, Greg.
Greg Alexander 48:15
Okay, thanks, Jeremy.
