A players want to work for squared away, exceptional companies that have incredibly high standards that are investment grade. They will line up to work for you. Even though I know a lot about your hiring process, it’s really tough, right? A players — that doesn’t scare them. Both of you guys would do whatever it took to work for a company like Fast Slow Motion because you’re like, “Hey, I’m an A player. I hope the standards are hard because I’m special forces.” So I just got to tie it back to talent and culture — be meticulous, be rigorous. Because A players run toward special forces.

This podcast is brought to you by Fast Slow Motion, a team of expert consultants that have helped hundreds of growing businesses build scalable systems on the HubSpot and Salesforce platforms. To learn more, visit fastslowmotion.com. Welcome to the Fast Slow Motion podcast, where we teach you how to build a business you love while enjoying your life. I’m your host, Sam Donaghy.

If you’re just joining us today, we’ll be continuing the conversation that we began in our last episode with Zane Tarence. He is a partner and managing director of Founders Advisors, a merger and acquisition firm serving middle market companies in a wide variety of industries. And John Burnett, the founder of Fast Slow Motion, which helps companies build scalable business operations on platforms such as Salesforce and HubSpot.

So let’s dive back in for part two.

Sam: Let’s go to reason six: your culture does not attract or keep the best people. It’s really about the management team and how you recruit and retain them. So let me throw you a softball — why are people so important? And John, people say, “You’re wasting my time. Why are you saying this stuff? Every business talks about this.” Let me tell you why I’m saying it: because our actions still don’t prove we really believe it. And as a banker, I see hard numbers, John.

Zane: When you have a team that is focused, that is excellent, that can communicate in a candid way — where it’s not about the CEO’s ego but about what is best for the company — I see Wharton and Harvard and Stanford doctors and MBAs pay up for those companies. You know why? They know exceptional people create exceptional results. I don’t think I have interviewed a business owner after business owner, worked with them, seen due diligence after due diligence — John and Sam, great people get it done.

And as we know as owners, our people are the ones that deliver on our organization’s promise, our brand promise. Our CEO — the other day, we were in a management meeting with a bunch of private equity groups — and I asked him a question, and he said, “It’s all about its customers.” He said, “Well, we’re not customer centric.” And at first I said, “Oh shoot.” He said, “We’re not customer centric. We’re people centric. Our people come first because they deliver what we serve.” So that math shows, John — it’s just pure math.

I used to kind of dismiss culture seven years ago. Eh, kind of fuzzy. It’s not fuzzy anymore. They didn’t measure it. They looked at companies that produce outsized return on invested capital for investors. Now with companies, it’s always about the people. And here’s another thing I’ve seen — and you read this in books. John, you help me with this. Michael and your team said this the other day. I was watching y’all on a presentation.

Once you have processes and systems for your people, that’s the best gift for your B players and for your A players. A solid, trusted, repeatable, definable process is a gift. But then guess what you can do? You can hold the organization accountable — what the investors want. I want accountability. I want predictability, the operational knobs to really control output. If you don’t have the right processes and then the right people, you cannot deliver on economic outcomes.

So I’m just saying the numbers are there, and it allows you to have accountability and great people. And if I look back on people — A players versus B players — I’m not judging anybody. I’m just saying an A salesperson isn’t 30% better than a B salesperson. They’re ten times better.

John: Zane, I’m talking about all the time — about you and your team, and how I’ve experienced you. A true IT architect developer, one that understands the database and the requirements — they’re not 50% better than a B developer. They’re ten times better. And their code runs like a scalded dog. So I just say — I rest on the math. People matter.

Sam: Zane, I read in your book that you say recruiting is worth obsessing over. And I really like that because I’m the recruitment director here at Fast Slow Motion. You say that recruiting should never stop — it’s a continuous thing. So can you tell me why you hold that position?

Zane: Yes. Because you never know where you’ll find talent. People say, “Are y’all hiring?” Yes, we’re hiring. I don’t care about the budget — if the right talent comes up, they will add ten times value to my companies. If the right talent comes up, you get after it. And if you turn it on and off, Sam, you can miss that amazing person. And guess what — if you’re growing, John and Sam, another reason to grow: you always need that talent. You can forward-staff because you know you’re going to grow into it. So never turn it off. Organizations that turn it on and off — I find they’re not as consistent.

John: Great question. Yeah. One of the best investments we ever made at Fast Slow Motion was hiring Sam to be our Director of Recruiting. I think — I don’t know the exact numbers off the top of my head — but thousands of people that Sam and the team interview every year, and we hire maybe 1 or 2% of those. So it’s harder to get into Fast Slow Motion than some Ivy League schools. But we dedicated a process and a system to attracting the right people, and then they start lining up.

We’ve got a backlog right now of people. I’m really motivated to grow right now because we’ve got a backlog of people that want to come work here, and I want to have a seat on the bus where they can do it. It creates a pipeline of talent development. When you work that stuff out, you create a nice little flywheel where the business kind of runs itself and the people perpetuate the culture. It’s not the leaders of the organization — it’s the individual people that are enforcing the culture, creating that meritocracy, and ensuring the level of excellence never drops. And that’s a beautiful thing.

The final thing I’ll say on that is — and I tell our team this all the time, and probably don’t tell them enough — the greatest blessing I’ve had at Fast Slow Motion is to see what our team does and how much better they do it than I did. There’s nothing better than to see that play out and think, “Wow, I never dreamed this big. I never thought it could be done this well.” That’s very fulfilling as a leader of an organization.

Zane: John, I love it. And that’s the whole purpose. I’m sorry — I’ve got one other point. Someone asked me, “I’ve got enough money. What’s the number one reason out of these 70 reasons that I should care about my valuation?” First of all, if you have people that own options, you should care about them. But here’s the number one reason: A players want to work for squared away, exceptional companies that have incredibly high standards that are investment grade. They will line up to work for you. A players aren’t scared off by a tough hiring process. Both of you guys would do whatever it took to work for a company like Fast Slow Motion because you’re like, “Hey, I’m an A player. I hope the standards are hard because I’m special forces.” So tie it back to talent and culture — be meticulous, be rigorous. Because A players run toward special forces.

Sam: Love it. All right, let’s cover one more and then we’ll wrap this thing up. This has been very, very valuable. Zane, thank you again so much for sharing all this wisdom. So reason seven: your company’s competitive advantages do not protect or grow its market share and its barriers to entry. Obviously if you’ve been to business school, there’s a lot on this — it tends to be academic and theoretical. Talk to us about what this really means from a practical standpoint and why it’s so important.

Zane: John, it’s one of my favorite metrics. MBAs from Emory — whole courses on this. Michael Porter wrote volumes on it. I love this because practically, if you truly have a competitive advantage — and we all think we do — you can’t argue with what the record says. Look at it practically: if you truly have a competitive advantage, I would look at one thing, John, and that’s your gross margin as compared to your cohorts. What’s your cost of services? What’s your pricing model? If you can create the same level of product, service, and value for your client at the same cost to your client but price it higher than your competitors — that tells me you must have intellectual property. There’s something compelling that you have that the market didn’t have. If you can produce the same quality of service and sell it at the same price while doing it for less, you have a competitive advantage. I don’t know if it’s your recruiting, I don’t know if your secret weapon is Sam being able to recruit the right people — I just know there is a competitive angle there.

I see private companies all day, every day. When investors are doing due diligence and they see an outsized gross margin, they automatically check the box: competitive business. Now they’re going to ask you, “We noticed Fast Slow Motion has a critical gross margin — why?” And then you get to talk about your people, your intellectual property, your documented processes.

Competitive advantage is critical. I want to know you have it, because if you don’t, you’re not going to get market share, you’re not going to grow. And what it does is squeeze out the barrier to entry. Why can’t somebody just come into my business and compete with me? Why couldn’t they just hire my people and compete? That’s your competitive advantage. So I ask every person I talk to: what is your competitive advantage?

And John — Fast Slow Motion — what you’ve created, what you’ve done — why can’t someone just figure out HubSpot and deliver amazing consulting services? Why don’t they just come hire your people and compete? So I’m going to put you on the spot — we haven’t talked about this, but I know you well enough. What makes Fast Slow Motion one where you’d say, “Giddy up — I’ll give you my workout, I’ll give you our processes. I ain’t scared of you because this is what we do that you can’t.”

John: Yeah, great question Zane. We joke about this all the time — it’s really easy to start a professional services firm, really, really hard to scale one. And that’s honestly extremely true. That’s why you see a lot of small firms — 5 to 15 people — and then you see a lot of big companies, like the Deloittes of the world, huge consultancies. The reason is you have to make the transition out of doing the work yourself to focusing on building people, hiring and recruiting them, and developing them — so you can build a team atmosphere where the team is doing the work, and you’re not. At the same time, you’ve got to develop those same disciplines on the sales and marketing side to keep the work coming in. A lot of professional services firms get so busy that they stop focusing on sales, and then that business dries up. They wake up one day and they don’t have any sales activity because they haven’t focused on it.

So it’s a combination of focusing on those disciplines, building systems and processes, and being very intentional about where you want to go. And then finally — the real secret sauce I’ve learned after helping build a couple of professional services firms — is aligning compensation to the outcomes you want in the business. You can’t always control the outcomes, but you can control the inputs and make sure those inputs drive the results you want, then tweak the inputs along the way.

One thing we do here at Fast Slow Motion is everybody is on a variable comp plan. They can make more money than they could elsewhere, but it’s all variable and aligned to their role and what they can control. So they’re highly motivated to make sure clients stay on board, highly motivated to make sure new clients are coming in, and highly motivated to think carefully before adding another team member — because they have to pay for them. And that system becomes our competitive advantage. It makes it really, really difficult for our competition to keep up.

And we see it. I mean, when those rock stars come along — even if you’re not technically hiring — and they raise their hand and say, “I want to come work for you,” you make a spot for them. We’ve had that happen over and over and over again. A lot of them were just frustrated that they were out-selling the delivery capability of their organization, or the projects they were on were three-year projects doing the same thing over and over. They weren’t learning and growing. And so we’re able to offer those kinds of things. That’s some of what we focus on at Fast Slow Motion to create a competitive advantage in a space where there’s technically very little barrier to entry — I mean, you basically just need a computer and an internet connection to start doing some of the work.

Zane: I asked Vista Equity — probably the number one private equity investor in software — three months ago, if they could share one thing from their playbook that’s having the most effect on their portfolio investments in software, what would it be? John, they said compensation systems. With A players, culture, and retention — again, it’s not all about the money. It’s about giving that A player a way to feel appreciated, a way to feel like they’re rewarded for their excellence. That was the one thing they said they’d want to share: the power of a compensation system. So that is absolutely a barrier to entry.

John: And at some point we probably need to do a podcast on it, because I think it’s a missing piece. It’s that alignment tool — it allows you to create a system and a flywheel for your business, and it allows your people to make way more money than they ever could before. But they’re accountable to the work that drives the profitability of the business. That’s the real key there. Because if you get those two out of whack, nobody wins. It’s a beautiful thing when you get it working. And yeah, definitely — we’ll flag that as something we can talk about in the future.

Sam: Hey Zane, would you mind if I asked one more question?

Zane: Sure.

Sam: Obviously your specialty is technology. What really excites you about this industry right now?

Zane: The confusion and the mystery. Wherever there’s mystery, there are margins. I could get upset about this, because AI is really pausing the whole software community — it’s like, what’s it going to do? I’m going to be careful about investing. But what I know for guys like me — who aren’t the most talented but are scrappy — when everything’s up in the air and everybody’s running around scared, there is opportunity. To create wealth. So I’m probably most excited about all the disruption, because boy do I think there’s opportunity.

Sam: That’s so good. Challenge is great opportunity. A lot of people get scared by challenges, and I get excited. I think, “There’s going to be a way to figure this out.” And it gets rid of the competition, which makes it easier to do business. The people that aren’t doing it the right way won’t last when challenges pop up.

Zane: John, nothing will show an excellent, institutional, investment-grade business more than tribulation. Stress test a business a little bit and see how they do. The character of our kids, ourselves — put me under pressure, make me get hungry and miss a couple nights of sleep, and see what I’m made of.

I love this because it just mashes out the great companies. And maybe some encouragement to the business owners and entrepreneurs out there — we’ve kind of lived in a fake economy for the last 2 or 3 years because of Covid and all the money injected. It was easy to do business no matter what you were doing. Now it’s a lot more challenging. But that’s fun. Let’s figure this thing out. It’s going to pare away the competition so you can really thrive. Those that aren’t passionate, that don’t have grit, that aren’t willing to be resilient — they’re not going to make it. And this is the opportunity to take advantage of those things. It’s actually fun times if you have the right perspective.

Sam: I love it. Enjoy that encouragement. I see a lot of entrepreneurs right now that are very down, especially in the tech space.

Zane: And tell the kids that are graduating from college — if you are exceptional in today’s economy, you’re going to get to the top of the lot fast. So be excited, focus on solid personal character, be intentional, read more, listen more, upgrade yourself. Hang around winners. It is a beautiful time in history for winners.

Sam: Zane, we always like to wrap up each of our episodes with a quote that really sums up what we’ve been talking about, or that’s personally meaningful to you. So is there a quote or some wisdom you’d like to share with our listeners?

Zane: Man, I love quotes. Quotes have actually changed my life — changed the trajectory of my life — because they remind me. Here’s one for today, talking about being intentional and on purpose. I stole this from somebody, but I actually had it on my whiteboard: “It’s not about the harvest we reap today, but about the seeds we sow.” Do those inputs every day, and the harvest will automatically come. You’re betting on yourself. You can only control the seed-planting process, not the harvesting process. That’s up to God.

Sam: That’s right. That’s awesome. Well, that’s it for today’s episode. Thanks again to our guests, John and Zane, for joining us. For our listeners, we hope that the insights shared in today’s conversation shed some light on what investors and buyers are looking for in a business, and what business owners should be improving to build a strong, investment-grade company — whether you plan on selling or not. Remember to subscribe to the podcast on your favorite podcast platform, or you can find archived episodes at fastslowmotion.com/podcast.