Transcript

Speaker 1:
You’re listening to Rattle & Pedal, divergent thoughts on marketing and growing professional services firms. Your hosts are Jason Mlicki and Jeff McKay.

Jason Mlicki:
Those of you keeping score at home, I just want to say that as now, effectively, Jeff, 6,000, Jason, one, in the category of inviting great guests on to Rattle & Pedal. So today, as part of our series on growth, we’re actually inviting Jay Laabs on, a CEO of Spaulding Ridge, to join us and talk about really his unbelievable journey of growth through multiple firms, multiple years. So let me just first say, Jay, thank you for joining us and maybe just kick us off, just tell us a little bit about you and who you are and Spaulding Ridge and then we’ll jump into this conversation.

Jay Laabs:
Sure. Thanks, guys. I’ve been working in the digital transformation space for about 25 years now. Spaulding Ridge is the second company that I founded. The first I started in my 20s, was based on Hyperion technology, which became Oracle. I exited that company in 2013 to Huron Consulting. While at Huron, I ran their technology business for about three years and grew that to over 500 people before starting Spaulding Ridge two and a half years.

Jason Mlicki:
So before Jeff takes us sideways and takes us into a bunch of culture conversations that neither one of us really want to have, I have a question for you. How did you find yourself in the Hyperion Oracle space in the first place? Like how did you find yourself in the tech business and in that particular technology stack in the very beginning?

Jay Laabs:
You know, sometimes it’s better to be lucky than good. When I graduated from the University of Wisconsin in 1998, I ended up taking a job with the little 40 person software company run by a couple of professors from the Kellogg School of Business. I had a finance degree, like I said, and many of my friends were all going into banking. But for some reason, the technology element was interesting to me. That’s when all the .com stuff was going on. And then Hyperion ended up buying that small company of ours in 2003. So all of a sudden we went from being a part of this 40, 50 person company to Hyperion, which at the time, was in their sort of march to a billion in revenue right before they went public themselves. So.

Jason Mlicki:
Wow. That’s cool. That was one story I was dying to hear. All right, Jeff, how do you want to break this thing down?

Jeff McKay:
Well, in the spirit of full disclosure, I met Jay through another startup. Jay is a mentor and investor to multiple companies and was introduced to him by a couple of sharp guys where he was mentor. And one of the things that just struck me about Jay, well, there were multiple things and you’ll see that as we talk here, but his thinking is so clean and so crisp and clear. And it’s, I don’t know what word I would put on it, refreshing, maybe. And having worked with firms like Huron and Spaulding Ridge was a prudent pedal client as well. I have an opportunity to look closely at those cultures and Jay has this incredible philosophy and I want to unpack it.

Jeff McKay:
So what I’d like to do is maybe high level, Jay, have you kind of talk about your philosophy about growth, but I know there are some precursors that shape your philosophy on growth, but give us a feel for how you think about growth and about your firm and your people.

Jay Laabs:
So growth to me is incredibly important to have success in this space. And a lot of it goes back to when I was a 22-year-old analyst thinking about what type of company, what type of industry I wanted to make my career around. And so in building companies, growth, to me, comes down to three things and why it’s so important. First, to your employees. Your people want raises every year. They want promotions. They want more perks. They want more direct reporting relationships. And that is natural, at least it’s natural for the kind of people that we’re looking to hire. They want a fast-paced, dynamic environment, especially, like we are doing digital transformation technology. That’s rapidly changing and evolving space. They’re looking for growth.

Jay Laabs:
Second is reputation. The market is an efficient, smart market. They see when a firm is growing, that many other companies are trusting you with their business. Growth is typically not accidental. It shows you’re delivering value for your clients. It shows that you are hiring the right kind of people. And once again, in consulting, you want those people advising you. And also it shows that you’re financially viable. Buyer of consulting services wants to know that you’re going to be around in a few years to help them as their digital transformation evolves.

Jay Laabs:
And the third part of growth I think is important is optionality. When you’re growing and you’re successful, we have the opportunity to invest in new offerings, maybe new technologies, and our clients are going to benefit from that too. We can offer them various perspectives on multiple software platforms, not just one. I think COVID really is played this out too, is that happened is we saw our different business lines all reacted a little bit differently and I was very, very grateful to have the optionality that we had in running our business versus I was looking at some former colleagues who were in more single-threaded businesses. Tough to manage through that.

Jay Laabs:
So, really, to me, it’s about employees, reputation and having that optionality.

Jason Mlicki:
I have a question about that last part, Jay, and as I was looking at your current firm and even your last firm, what I was curious about from your perspective was how much of your success was about making the right technology choices versus kind of everything else in that model, sort of aligning yourself with Salesforce right now, versus having align yourself with Zoho or some other platform that maybe didn’t grow and prosper as fast as the technology you correctly picked.

Jay Laabs:
Yeah. Jason, that is spot on and a lot of people in our industry shy away from being direct about this, but a ton of our success is due to who we’ve chosen to align ourselves with. A lot of the big firms like to talk about how they’re agnostic and neutral and all these things and I look at that and I think that’s actually nonsense. We talk about how we try to pick the winners and we’re helping our clients align with the winners versus some of these also-rans, because if you’re really trying to deliver value to your clients, you want them to be on the best tech stack that is going to continue to get more investment, that have good leaders themselves running those companies, versus trying to be everything to everyone.

Jay Laabs:
So I know we have a little bit of a different perspective on it, but we say, Hey, we’re a best in cloud consulting firm and we only align ourselves with the winners.

Jason Mlicki:
You know, Jeff, what I love about that as you think about that notion, I’d never thought about this until you said it right now, Jay, but just that notion of being objective and being hired to give the client advice and the right technology. In some ways, by you picking technologies that you’re going to be deep in, you’ve sort of pre-made the choice for them. You said, look, the reality is is that in most instances, this technology is going to be the right fit for a lot of companies because they’re the winners. It’s cool.

Jeff McKay:
You know what I love about Spaulding Ridge and that philosophy and it’s one that I tried to bring out when I’m working with my clients is you’re being paid to share a point of view and the clients are smart enough to know if they should trust you or they should not. Just give them the point of view and let them weigh the pros and cons. And most firms don’t want to do that. They don’t want to take the risks. They don’t want to go out on a limb and say that, but the firms that are most successful have that clear voice. And you’re not going to be 100% picking winners, as Jay says, but so far he’s been pretty good.

Jason Mlicki:
He’s got some pretty good, pretty good success wins. Right? Success stories.

Jeff McKay:
Right. Right. But you don’t just say that because, Oh yeah, we’re aligned with AnaPlan, example, because we get a higher kickback from them. You have to rationalize it. Here’s why we do it. Here’s the upside of that. Here’s the downside of that.

Jay Laabs:
So when we go in and talk to prospective clients, we take that same direct approach and try to tell them, because look, if you try to say what you need to say to get the work, I mean, you still have to deliver on the project and you’re not going to deliver on it. So this smooth salesmanship and all that that I’ve seen at other firms, I think that a recipe for disaster. If you’re going to be successful in your projects, make your clients successful, you have to be very transparent upfront what works and what doesn’t, because if you screw up the project, the world we live in, people will know about it and once your reputation is damaged, it’s game over.

Jeff McKay:
Wow. Let’s just cut that and put it on a plaque because it’s so true. So we’re talking your philosophy, there’s these why you do it and how you choose to align and why you choose to align with the partners that you do, is all of your growth coming just through your partners?

Jay Laabs:
No, certainly it helps to be aligned with DocuSign, for example, when you look at what they’ve done in 2020. Our growth also comes from us developing these adjacent practices. So we work with these different technologies, but we don’t look at something as, okay, this is a Salesforce problem in a silo. We look at that as, okay, how do we make sure that it’s integrated well? It could be a data problem. Do we need to bolt-on an AnaPlan? Sales forecasting model off the back of that versus Excel. So when you start to connect these offerings, we get a lot of growth within our client base, just from that.

Jay Laabs:
And once again, it’s making it easier for the client to have us take them down that path, to have us worry about how to integrate all these things because that’s one thing in the cloud that people definitely still do not talk about. The integration of all this stuff is way harder than all the vendors probably want to let on. And so we get, yes, we get growth from being aligned with the right people, but we get growth because we can offer a wider set of services than what’s kind of typical of smaller digital transformation shops that focus on just kind of one or two technologies.

Jason Mlicki:
I want to pause for one second. So I just realized that some people listening to this may not know Jay or know Spaulding Ridge, and I want to shout out some of his credentials real quick. This is important to me, I think.

Jason Mlicki:
Spaulding Ridge is what, two years old?

Jay Laabs:
We’re two and a half years old. We have 200 people. Our plan is to probably grow another 50% next year.

Jason Mlicki:
Yeah. So I wanted to call that out first and then I wanted to call out the prior firm that you sold to Huron. I liked the way you framed this in your LinkedIn profile. Basically, it said you took it, you scaled it from a $30,000 investment to a $30 million sale. And the reason I bring this up is I want to make sure that our listeners understand that you have gone through aggressive growth successfully multiple times and you’re living in it right now. So you’re not talking from conceptual philosophies on growth. This is like what actually happens.

Jay Laabs:
Yeah. I’m happy too, Jason, to talk about I’ve done this. The first business was entirely bootstrapped, no outside money and I’ve never had investors and we’ve just kind of done it our way at every step along the way.

Jeff McKay:
But you know what’s really, I think, a tell-tale of Jay’s philosophy, because there may be people out there particularly in larger firms saying, Oh, that’s great because he’s a little startup and he has total control over everything. But after Jay sold his first company to Huron, he did the exact same thing within the walls of Huron. Right?

Jay Laabs:
Yeah. In my three years at Huron, I took our 100 person practice over 500 people.

Jason Mlicki:
How do you do that? How do you grow so quickly? I imagine for some clients listening to this, it doesn’t even sound feasible to them. They’re like, well, how did you do that?

Jay Laabs:
Well, at Huron, one of the first things I did is got us into the Salesforce business, because there’s been an M & A component to all of this, but before everyone says, Oh, you bought your growth. That’s not true. The way we like to use M & A is to buy, and I did this both at Huron and at Spaulding Ridge, look for a 10 to 20 person shop that can help you so you have some basic capabilities, probably a shortlist of clients, but you probably already have your agreement set up with the vendors. So that sort of three to four months startup phase, you just sort of leap beyond that.

Jay Laabs:
So at Huron, we bought a little Salesforce shop and then aggressively scaled it internally. And we were able to do that and we’ve done it here again at Spaulding Ridge because we and a nice list of clients, but also we invested in our back office.

Jay Laabs:
We have good HR. We have good systems. So we feel like when we’re going after work, we have a very good understanding of what’s profitable, how to price something. Maybe when to back off of something. I believe we make better decisions than many others out there. And I think some of that comes from when it’s your own money and it’s not the big four’s money, you look at these decisions differently because I have been in life or death situations with the firms and I think myself and the team around me are used to having to make those tough calls. But if you look at the results, I think we’ve got a lot of them right.

Speaker 1:
You’re listening to Rattle and Pedal, divergent thoughts on growing your professional services firm. Your hosts are Jason Mlicki, principal of Rattleback, the marketing agency for professional services firms, and Jeff McKay, former CMO and founder of Strategy Consultancy, Prudent Pedal. If you find this podcast helpful, please help us by telling a friend and rating us on iTunes. Thank you. Now back to Jason and Jeff.

Jeff McKay:
You know what, Jason, you’re not going to like this, but the thing that I hear coming out of Jay’s philosophy is there’s business rationale for growth. The employees demand it because they want raises and opportunities. The reputation fuels growth and it gives you options if you will, for new opportunities as well. And one of the things I love about Jay is his humility in saying, Hey, yeah, we caught a rocket ship in terms of an industry, for sure.

Jeff McKay:
But what I think is so critical to this philosophy is the virtue of prudence. I mean, really, the ability to assess the situation and what is actually really happening there and making smart decisions based on what is, not what you would hope it to be, but bringing those philosophies into that situation. And I think a lot of firms get caught up in, well, I wish it were this way instead of it is this way. It’s the way it is.

Jeff McKay:
What do you say to that, Jay?

Jay Laabs:
I kind of struggle with you too in the right word, but I agree with you completely, that I think we have a certain clarity about removing a lot of the noise and just the facts, accepting the facts of what is happening in the market. What resonates with clients, what works with clients, and also the assumption that the buyers of services, these people are, the vast majority of the time, very smart people, and they’re going to want to hear about specific results, specific use cases, and you can’t sort of fancy PowerPoint your way through that conversation or throw big firm logo around.

Jay Laabs:
We just live in such a transparent world and it’s becoming even more so in just making fact-based decisions make, because kind of going back to the beginning of this, look, when I moved to Chicago after graduating college, I literally only knew one person, my college roommate from the year before. I’m from rural Wisconsin. So it’s almost like I didn’t know any better and probably more importantly, I didn’t know anyone at a big firm to tell me that it was supposed to work a certain way. I had to figure it out for myself.

Jason Mlicki:
I have kind of an ancillary question to that. I love everything that you both said. This idea of, I really liked that phrase you had, Jeff, the idea of making decisions based on what is versus what you’d like it to be. So my question to you, Jay, is what are your sources of learning? So on some levels, like it seems like you’ve made really good technology choices. You’ve built good backside infrastructure so you have data to make good decisions, but you have to be able to put information into the model to make decisions. So how are some of the ways you go about developing your marketplace insight to get the data you need to make those choices?

Jay Laabs:
For those that have done business with me, they will say that I’m typically the quietest person in the room.

Jeff McKay:
He is.

Jay Laabs:
I like to ask questions and really try to surround myself with really smart people. And I know everyone kind of likes to say that, but then they’re the one talking the entire meeting where I really try to lean on the people around me and a lot of this though in the software world is just getting to know a lot of the salespeople that I respect, that are client-centric, and really talking to them and hearing what’s working, what’s not, the unvarnished. I don’t want to talk to marketing or in many cases, I don’t even want to talk to the sales leaders. The folks that are on the ground level.

Jay Laabs:
Because we got involved with Anna Plan about a year and a half before they IPOed, and once that IPO took off our business exploded and getting into that ecosystem. Frank was just some friends of friends and actually, some of my former employees from my first company worked there. But once again, these weren’t executives. These were people on the ground level, kind of a lot of, as my wife likes to say, I love to just talk shop all the time. And that’s where I think a lot of these learnings have come from, is being willing to ask the questions and not be swayed by the often very impressive marketing that goes around in the cloud world,

Jason Mlicki:
You know what I love about this, and Jeff, you’ll hate this, is that it kind of goes completely opposite to the playbook put forth by some MarTech company I can’t think of right now that claimed that traditional sales models were dead and created separation between buyers and sellers and that there was this whole cloud of information out there to answer any questions. So, and I love the practicality of it. So let’s just talk to the salespeople and see what’s really working and what’s not. That’s really refreshing, I think, for a lot of people.

Jason Mlicki:
We’re running short on time, Jeff. I know we both had a laundry list of questions we wanted to throw a Jay. Are there ones that are just burning that you have to get out before we lose our time together?

Jeff McKay:
Yes, but I only have 20 of them so we’ll go quickly.

Jason Mlicki:
Okay. So pick negative one.

Jeff McKay:
So one of the things that stands out about Spaulding Ridge and for me is, in addition to your philosophy, is the whole concept of culture and culture is the driving force of everything and that culture dictates who’s on the leadership team. And my sense is you’re constantly recruiting. You are spending so much of your time being the example for your people, but can you share with us in terms of the leadership team, the culture, and how you execute the growth that you’re talking about and I’d also like to kind of understand what is the impact on the psyche of those people, both positive and if there are kind of negative attributes to that fast-paced grow, grow, grow type of mentality, but give us an understanding what’s at the heart of this growth.

Jason Mlicki:
So Jeff, when I said one question, I met one question, not question 1A and 1B.

Jeff McKay:
I think I got this out.

Jason Mlicki:
Jay, this is what I deal with on every podcast. I have to basically try to course correct him at every turn. It’s getting painful. But I appreciate you taking the time to answer his five-part multi-pronged question, Jay.

Jay Laabs:
To answer the series of questions, I go back to what I think was my most significant mistake at my first company and it was we tried to be a little too perfect for every employee, like we would do whatever we could to not have turnover and I think some of that even transpired with our clients. And this time around, we’ve taken a very different approach. We’ve taken this, we call it compassionately direct approach, where you opt into our model, because we’re transparent about what our culture is. You can go on our website, you can look at the YouTube videos. We’re assuming if we’re even talking to the first place that your technical chops are where they need to be. But we say, if you identify with our values, you likely will be successful here. But if you don’t, if some of these don’t feel right to you, you shouldn’t work here.

Jay Laabs:
And it doesn’t mean something’s wrong with you, or something’s wrong with us as a company. It’s just a fit thing. So I think through this opt-in mindset, people know what they’re signing up for when they come to work here. They know it is going to be a little crazy. I tell them about the only thing I can guarantee them is a year from now they might have a different role because we’ll have to change because of either the growth or our alliance partners are growing and they just know that’s part of the deal, but they know that this is all foundational or it really goes to our core values that start with all business is personal. And we say, we do business between the names on the business cards, not the logos. This is about between people. We’re going to make everyone’s life, whether it’s our clients, our colleagues, or bandmates as we call them, or even our software partners, we’re trying to improve this for everyone.

Jay Laabs:
Our culture drives our strategy, even though I’m supposedly a strategic planning consultant. We let our culture drive our strategy. Our third value is maximum efficiency and you’re probably getting a sense of that. Our directness, because we are growing so fast, we don’t have time for politics. We don’t have time for jockeying for this position or that position. It’s just nonsense. I won’t hear any of it.

Jay Laabs:
And the last thing is since day one, having a global impact has been a core value and I think that frankly has served us very well the last six to nine months when the world is changed on us, but we’ve been talking about this for two and a half years. And I think that’s just, once again, helped, the right kind of people opting into our model.

Jeff McKay:
Oh man, is that refreshing. Jason, that’s why I say secure, confident firms don’t have employer brand marketing. They just know who they are and they attract the people that want to be a part of that. And I can attest to what Jay just described. His leadership team is young, dynamic, incredibly smart, driven, collaborative. If you could have your pick of leadership teams, what Jay has put together would definitely be at the top of my list. And that just speaks volumes to Jay and his style and the whole point of this podcast is you don’t grow Willy nilly, you grow on purpose. And there’s a philosophy that feeds that, and out of that philosophy cascades pretty clearly the answers to what you need to do to grow, what needs to be there, and probably just more importantly is Jay said, what better not be there? That was excellent.

Jason Mlicki:
I think that’s a great place to close. I hate to say it. It’s been really eye-opening and it’s been a really great conversation, Jay. I really want to thank you for joining us and telling us your story and just sharing your wise words of wisdom on someone who’s lived through rapid growth over and over and over again and seems to be still coming back for more. I think it’s refreshing to hear it.

Jason Mlicki:
And also, I agree with Jeff. I love the, what I’ll say, is almost stark simplicity to all of it. I mean, I think for so many firms, growth is so hard and you make it seem easy though I know it’s not, and I know you, I doubt you would say it’s easy, but you make it seem easy and I think that’s what’s so really powerful about what you have to say. So thanks for taking the time.

Jeff McKay:
Jay gets me excited and you know what really is exciting about what Jay has said and what I’ve seen. And I’ll bet you a dollar to a donut that Jay believes this as well, is what is so cool about what Jay is doing and what’s led to Jay success has been starting with zero relationships in Chicago and building all these relationships and sharing knowledge and wisdom and working together for everyone’s success and doing it in multiple places.

Jeff McKay:
I think it’s going to be so much fun to watch to see that the Jay Laabs juniors, if you will, coming out of Spaulding Ridge and starting their own firms with the same philosophy. I mean, it’s almost like a movement in and of itself. And I don’t know, Jay, are you looking forward to seeing your people create firms that share your philosophy?

Jay Laabs:
Absolutely. I think that there likely is going to be a changing of the guard on how a lot of the way our space works and I wouldn’t be surprised. I mean, there are 10 to 15 people already at Spaulding Ridge that could have my job tomorrow and I love it. I know that that means we’re doing the right things.

Jeff McKay:
That’s a leader folks.

Jason Mlicki:
All right, guys. Well, let’s call it a day. Thank you, Jeff, for bringing us another great guest. And thank you, Jay, for sharing your knowledge, insight, and wisdom.

Jay Laabs:
Yeah, guys, I just wanted to say thanks too. I’m a listener. I appreciate what you’re doing for the professional services space. I wish I had this access many years ago, so thank you.

Jeff McKay:
Thank you.

Jason Mlicki:
Thank you.

Speaker 1:
Thank you for listening to Rattle & Pedal, divergent thoughts on marketing and growing professional services firms. Find content related to this episode at rattleandpedal.com. Rattle & Pedal is also available on iTunes and Stitcher.