Rebuild It Like a Startup: A Software Turnaround | David March

speaker-0: Thousand Days. That's enough time to transform a company, but not enough time to waste. Welcome to the 1000 Day CEO, the podcast about decisive leadership, sustainable growth, and building a business that thrives beyond any one leader. Your host is Bill Canady. Let's make every day count.

speaker-1: Welcome everyone to the Thousand Day CEO. I'm Bill Canady and this is where we get inside the decisions that build enterprise value. Today I'm joined by David March. David and his leadership team were brought into a software company with declining sales and a business that was losing money. He was the executive vice president of sales and marketing at that time. Today, David is the CEO of Concier Energy. David is gonna walk us through his insights, what happened, and really what the magic was that made that possible. David, welcome to the show.

speaker-0: Thanks, Bill. And the first word is the one that's most important. Concierge. So my company is concierge power and capital. We solve energy problems for companies, organizations, et cetera, et cetera. The reason I chose the name concierge is because I wanted to communicate customer focus, customer partnership. I always consider a concierge as an ambassador, as a partner to the customer that sits on the same side of the table as the customer, helping them hand in hand with dealing with the issues and the problems that they're facing. I came to that realization as part, as Bill mentioned, as part of a startup, I'm sorry, as part of a turnaround team for a software company that was losing the money, declining sales, burning cash, all of those things. They had been very, very successful. And unfortunately, like too many high-tech companies and things like that, over time they became insular, inward-focused, egotistical. They knew better than anybody, you know, everybody else, et cetera, et cetera, and just started spiraling around the drain in that particular case. the board said, Yeah, that's it. They jettisoned the management team and they brought in a turnaround group. I was a member of that turnaround group, though. I was not the success generator. I'm going to give that to the CEO because it was really his vision that I wanted to share that made all the difference. When you think about a turnaround, and I've done other turnarounds, I was part of a company. We did lots of acquisitions of marginal companies, and we'd go in and we'd cut expenses. We do that. When you think about a turnaround, you typically think about Blocking and tackling. How do I cut expenses? How do I stabilize the business? How do I, you know, save the cash flow? You know, jettison anything that isn't, et cetera, et cetera, et cetera, et cetera. And at the end, let's say they get it to the point where it's stable, it got positive cash flow or something. And then I don't mean this in any pejorative way, they then sell it off to Power so to a PE shop. Okay? And they consider that was a successful turnaround. No. That wasn't. To me, that was sort of a medical intervention. Somebody was having a heart attack, they came in, they stabilize you and everything else. They put you on statins or something and off you go. A turnaround means exactly that. You're turning something back to where it was, back to growth, back to excitement and everything else. The CEO who led our team in this turnaround came in with a startup. mentality that we are not failing. We're just paused as we regroup to grow again. So his focus was never cut costs, what do we skinny down, things like that. He brought two primary focus. Number one was customers. He had said, well, wait a second, everything's about cash and everything else. Who pays the Bill? You know? I mean, from the standpoint of the cash register doesn't ring, everything else is pretty much a waste of time. Right. So focus on the customer because long term that is your only salvation and it is your only path to growth. Number two is customers buy value. How do you create value? And that is through your people. So a complete opposite of most turnaround mentalities, his was customers and employees. We met with every employee individually each month. And our goal with them was to sell the vision, to sell the mission. If you've ever been in a in a in a turnaround situation, most people are defensive, they're paranoid, their heads down, they're going to protect themselves. They close their doors a lot because they're on the phone with the headhunter and things like that, looking for someplace to land, or they're negotiating a bonus if they stay on board or something. We didn't deal with any of that. We took it from the standpoint of Don't worry about the cash, the capital, your jobs, any of that. Focus on the customer, focus on value creation. We were able to take a declining sales company and double its sales revenue and license revenue within one year. We were able to take it from negative cash to positive cash in under six months. We were also able to bring it back to profitability. And the most important thing is we recreated, turned around something from a failure to something that was aspirational and was able to grow and go and do more and better things and stuff like that after that. So it's the reason when Bill asked me to speak with everybody, I wanted to bring this one up is because sometimes you've got to really step back and say, am I looking at this the right way? way. On a personal note, I married the daughter of one of my college professors, who I had for three semesters and everything else. And he had a great, he had a great sort of statement or philosophy, which was there's only two kinds of problems in the world, trivial or impossible. If you have a complex one, you probably haven't looked at it the right way, because it'll either become trivial or it'll become, you know, basically impossible and then walk away. And that was exactly this is we have this sort of set of default mentalities in business when we walk into something and say, It's this situation. This is how I should respond. Nothing is ever the same. Everything is new and different. I was very lucky to have a number of great mentors through my career. And another one remot r I I just remembered right now. was I was doing a I was running worldwide operations for a supercomputer manufacturer out of Europe. I was living in Europe at the time. And I had to go and negotiate with the French government. And then my boss comes down, the CEO comes down, he says, I need you to take so and so and so and so with you. And I go, I look, I'm totally, totally capable of doing this negotiation by myself. And he looked at me sort of seriously and he said, Dave, four eyes. got do mean? Four eyes. What does four eyes mean? He said, simple Dave. You have two eyes. That allows you one perspective. You need at least another two eyes to be able to give you a different perspective on that negotiation, on that customer. That type of thing is you bring too much individual bias and narrowness to a situation. And you see that so often, especially with CEOs. They become so fixated and so narrow. And many times they think that they know they're the only one who knows the answer and they have all the answers and everything else. No, not the job. The job is to create that incentive, that mission, commitment, and things in people to bring you new ideas, new ways of looking at things. Every situation you walk into, stop the immediate problem solving, step back. And absorb it. Really try to understand what's going on and what are all the different avenues. Debate with yourself, right? Say I could take multiple actions. Try and be objective. Write them down. If I do this, what if I did that? What if I did that? What are all the things that could proceed in a different sort of venue or avenue or something? And again, the reason it came to mind when Bill asked me was this turnaround. When they recruited me, right, I was thinking at least when the board was talking to me, it was kind of like, okay, I'm gonna come in, it's gonna be hardball. You know, I was polishing or sharpening my elbows or whatever the the case may be on that one. And you know, and the CEO said, you know, no, that's just not the way we're gonna do it. We're going to do it by rekindling the spirit of the company, by rekindling the startup. Again, remember it was a software company, right? And what was r also fascinating is he was a quant. He was a PhD operations research person, right? I mean, nobody knew, you know, productivity and how to optimize manufacturing and stuff better than this guy. But at the same time, what he also learned from that experience was no matter how good the math is, it's still somebody's hands and somebody's eyes. But most importantly, it's somebody's emotion and commitment to the company. That is going to generate that success. So if you're in again, in the case of a turnaround, it's not about, and I mean this in the turnaround to true success, it's not about stabilization, get the cash flow, and jettison this thing off with a focus on trying to retrieve as much value for the shareholder as possible. It's about rekindling that passion in people. People want to work, people want to succeed. People want to grow things. They want to feel good about themselves. They really, really want to commit to an organization and the mission allow them to do so. And that's what I learned from this CEO. And that's why I named my company concierge. Because we wanted to bring the story. Bring that same mentality.

speaker-1: Absolutely. What a great story. You know, I tell you one of the things that may help our listeners is to understand because what you're talking about is just extraordinary. Understand maybe where the company was at so they can see the magnitude of what you accomplished in such a short period of time. So maybe if you don't mind, walk us through what the company did in software, right? And how far its sales had fallen, how much money was losing anything you can remember about the details, I think would help kind of ground us to where you started.

speaker-0: Sure. So again it software company not huge. We were under a hundred million dollars in sales, declining at that time at about twenty percent a year, which is not good.

speaker-1: That's terrible.

speaker-0: And at the time that we stepped in, the revenue was all recurring maintenance. There was no no new sales. So that was revenue. No new sales, no new licenses, nothing. And we were able to turn that around and bring new license new licenses, which were at zero. We brought them to the highest level they had ever seen in under a year. How do you do that? You know how it yeah, how it's done. It's done by getting a and I apologize for the for the for the sacchariness of this. It's the sparkle in the eye of the salesperson when he's meeting with a customer. If your salespeople don't believe in you, don't believe in your company, don't believe in your product, I don't care how articulate they are, I don't care how great your sales process is or something, it'll still come across, there is a subconscious trust factor there that your salespeople have to be able to emote to that customer so that they literally see it and say, you know what? I believe this person. I'm gonna try give this, I'm gonna give this a shot. I trust that person. And that has to be true to every interaction that the company has with any employee and any customer. One of the things that we also did was we would hold, I'll call it training classes for all our all our employees, every single employee, including secretaries and everybody else. And we would feature, it was a monthly training class, we would feature a specific customer each month. And we bring the customer in, we'd bring the salesperson in, and they would talk about their business. How our products and services fit into their business, why they chose us. And somebody said to me, like, well, why do you have the front desk receptionist, you know, in this training class? Very simple. The first person that they may that a customer may engage with is that person that answers the phone. And if they ask a question and the answer they get is, I don't know, I'm just a receptionist, you know, it's you know, it it leaves. Kind of a bad taste if the recessionist goes, you know, Mr. So-and-so, you're from so yes, I learned all about your company. Can you imagine the first impressions or just the impressions they've got that a company cares that much? And at the same time, the CEO has a path. He leads, but he doesn't necessarily have a tactical solution every time, or at least not the best one. Get everybody else. to give you ideas, to you know, generate concepts, et cetera, et cetera. So if you train them about the customer, who, who it is, what they do, why you're important, et cetera, et cetera, you may be doing something and somebody's going to come up to you because you've now opened the environment from paranoia to missionary. They'll come up and say, you know what? Maybe you ought to do it this way. And you know what? Most of the cases, they were right. And that comes back to the four eyes thing. I have two eyes. I looked at it in a certain way. This person has a different perspective. They all looked at it in a very different way and I went, Man, I missed that. You're absolutely right.

speaker-1: Interesting. You said two groups mattered the most, customers and employees. What did you hear when you started asking them and talking?

speaker-0: On on the customers.

speaker-1: Yeah, from the customers and employees. What did they say when you started listening to what they had to say?

speaker-0: L let's start with the customers, because that was really fast. We were having huge defections, huge defections. And they were not treating the customers right. In be honest, they were literally not telling them the truth in many cases. Especially around service things, et cetera, et cetera. So I replaced the head of service and customer of service and like 170 people in that organization. And we went to a trade show and we rented a business. Booth separate from the company booth, which was the customer complaint. Come talk to me, booth. And we sent a personal email, a personal letter to every customer and said, We're going to be here. Me and the head of service. We know you have issues. We want to hear from you. The line from that booth went all the way down the aisle. Now, You would say if you start of the twenty-eight companies in the industry, we were ranked twenty-seventh, just to let you know. Okay. Of It's a little tough. Yeah. It's not much, yeah. You would think of that as an unmitigated disaster, a failure. But how are you going to turn it around if you don't willing to sit down face to face, take your medicine, say you're sorry, say you'll do better, literally give them deliverables. We will do this by this time. We will do this. And then the most important thing is. Execute, execute, execute on all those. They may they may be angry with you and things like that, but they still know that if you succeed, they succeed. So we were able to turn that around. Yeah, it was a painful. I called every single customer. If a complaint came in or any service record or anything, I called every single customer. How'd it go? Da da da da da da da da da da da da da da da da. Okay.

speaker-1: What was their general message to you? What did they say? Most

speaker-0: of them and again had been long-term customers and it was always that you know you guys used to you guys used to be so good right it's so painful to have to change we've stayed with you but okay but we can't do this anymore okay all right there's still a customer right they loved you in the past let me try and make you love me again and I would say 90% of the time they're willing to give you the second chance. They don't give you much of one. Okay. So what you have to be very clear is what you're going to do, when you're going to do it, and then do it. Don't give them vague promises. we'll try to do this or something. Give them very tangible, specific things and then execute on those. And they'll go, okay. And it's almost a step by step approach. Got it.

speaker-1: Many employees say, as you were talking to them.

speaker-0: If you can you can imagine in a turnaround situation, how negative and paranoid they were, right? So they so when you have the first like all hands meeting, right, that's called, everybody shows up and figures it's either they're on the chopping block, they're gonna tell you about what the chopping block is, how they're going to cut it, you know, cut expenses or something like that. And then it's completely the opposite. It's an evangelical, you know, experience. Like, we're going to turn this thing around. Here's our vision. Here's where we're going to go, and everything else. Relief and disbelief. Okay. Well, no. Relief in like, hey, I'm not being fired today. I'm not being laid off today. Disbelief is, and again, the the the disbelief is. These guys don't know what they're getting into. I've been around here through this. This place is a, you know, this place is a shit show. Blah, blah, blah, blah, blah, blah, blah. They're not going to be able to turn around. So there's a sigh of relief and a lot of skepticism. But then it's exactly the same thing as with customers. You do tangible things and you deliver on them. So rather than saying, we're going to cut these expenses. You go and say, we're going to focus and we're going to invest here. And we're going to make this money available. Even if you have to go raise it and beg and everything else, you may reassign people, but you say, This is where success lies. It's not in cutting. Success is not in cutting. Success is in building. Let's get together and build things. And it's amazing. As soon as you go from You're an expense to you are a solution. You are a value generator rather than you are a cost. People start to literally generate. Yeah, people

speaker-1: wanna win and you can't cut your way to glory. I you know, you gotta you gotta grow the thing. Yeah. You know, you treated it you talked a lot about you treated it like a startup versus a turnaround. What did that mean in practice?

speaker-0: I always I'm gonna I'm gonna t say that the evolution of a company in three phases startup maturity turn around turn around all right

speaker-1: I see. Turn around, right?

speaker-0: startup is about enthusiasm it's about mission it's about looking outward always looking outward looking at the customer looking at the market and by looking outward you're not looking inward at politics And things like that. It is we're all we may have conflict, we may have arguments, may have all that, but it is we're all pointing and rowing in the same direction. We're trying to build this, may have different opinions, all those kinds of things, but we don't demonize anything or anyone or anything else. It's a different perspective, but we're all r you know, we're all pulling in the same direction. Many times when companies get big and mature. The focus now becomes more internal. The inertia gets higher. And I I guess the way to say is it if you're in middle management in a large organization, where does your success lie? Does it s lie with the customer? Really, because you're not that close to the customer. Does it rely on the you know the person in the manufacturing plant? Maybe not. You're not a frontline person. You are middle management, which is primarily focused on internal. Communications and decision making. So what determines your career success is the rel internal relationships. So what your boss thinks of you is much more important to you than what you think about the customer. I hate to say that, but that's just kind of the nature of people responding to their environment. In a turnaround situation, it's again totally internally focused. But now it's survival rather than in the big c in the big company middle management, it's internally focused on my career. Now it's internally focused on getting out. Or getting in a sense, getting out with you know, with as much economics as you it you know, as you've got. That's why it's a turnaround. If you if you you're not getting out, you're getting back in. That's what's important. You're getting back in.

speaker-1: Makes a lot of sense. Customers pay for value, but employees have to deliver it. How did you get the team to believe in the recovery?

speaker-0: By having them see and directly experience the success of that value creation. So we had a big Bill. It was between the two buildings. And when a sale got close, the purchase order came in, they had a sale, you know, you go and ring the Bill, at which point everything stopped. Everything stopped. Everyone stopped and gathered around, and the salesperson stood up. Told us who the customer was, what was most important, why way why we want it and all those things. And most importantly, said two words to the assemble group. Thank you. Sorry, go ahead.

speaker-1: I was just gonna ask you about how did you get that priorities and accountability and incentives changed to drive that behavior?

speaker-0: One, you just do it, but again, in my case, I was lucky because I had a CEO that was absolutely committed to it. Two, you fight a lot with the CFO. Okay. Because you put, you know, in managing sales, and I and I g I'm gonna say this and I don't mean it as pejoratively as it sounds, but they tend to be coin operated. Like you

speaker-1: That was the words in my head. I was waiting to ask you, how are they coin like what did you how how did you put the coins in differently, right?

speaker-0: Right. So the the and and this is this could be a a college degree on how do you build sales incentive plans that actually work. First thing is never have a CFO involved in it, okay?

speaker-1: Well you gotta make sure you can pay for it.

speaker-0: It's yeah. So you have to understand really three things. Number one is what do you want them to deliver? Be very specific what you want them to deliver. Number two, do they have the essentially do they have the authority to do it? Do they control it? So you could say, I want my salespeople to deliver margin. They don't control margin. They don't control the cost, they control the sale, right? So you want to build an incentive plan that incentivize them to do what they control. So you want them to sell. Now, CFOs always come and say, Yeah, but we want you to sell the stuff that's most profitable. Well, you can change the incentive plate and you get a higher commission for that and everything else. But it's up to the sales manager to sit down with the CFO and say, Look, dude, if the customer isn't buying this as much as they're buying this one. Why are we trying to incentivize and making something inefficient? I can sell two of these for every one of these. Yeah, but these are more profitable. Yeah, but they're not as interesting to the market. And, you know, new sales is kind of the most important thing. So focus on what it is you want them to do. We want you to close sales, then pay them on what they deliver. Not like, You sold this, but we're not going to pay you until it's delivered. Okay, well, that's fine from a cash perspective, but wait a second. It's six months until it's delivered. So I earn my commission when I bring you the purchase order, especially now with the way supply chains are. I mean, in my own business, the stuff I'm getting, quote, is 40, 50 week delivery time. Right. So you say to a sales guy, is sell this thing and I'll pay you next year. Not particularly motivating there. So pay them for what they do, don't delay it, and then don't then go and try and cut it and say, Yeah, but when you know the when when we finally delivered it, it wasn't as profitable as we thought. Sales guy didn't control that. All right. So the first thing for sales management to get the kind of commitment out of your salespeople is your sales management has to have their back and fight for them. I remember fighting with the CFO all the time. I'd put an incentive plan together. And again, remember, this was a turnaround, right? So your your sales are here, and they say, We want to get them here. Okay? All right, fine. They get them there. Here's what the incentive plant looks like. Okay. Then you blow the socks off of it, right? And they come back and say, Well, wait a minute, wait, wait a minute, no, no, no. We can't pay the salespeople this much. Why not? Well, it's it it it they would get more than the CEO. Who cares? Well,

speaker-1: Yes, good.

speaker-0: who cares? Okay. You wanted it here, we're doing better than that. And they would they would try to say, Yeah, but above this, you know, we're not going to pay as much. No, it's the exact opposite. Your marginal cost above this goes down. Accelerators, incentive. I had a sales guy that was incredible, did his bogey in six months, kept selling, kept selling, kept selling. Called me on December 24th and said, I'm trying to close this deal. I need your help on the you know, this this thing. And I said, Todd, come on. You blew your you know, you made your bogey six months ago, et cetera, et cetera. And he looked and I said, Why don't you just coast? You know, take the rest of the year off, you know, go to the beach or something. And he goes, Dave, this is when I make real money. Because he was in all of the accelerators and everything else, et cetera, et cetera.

speaker-1: Suppliers going.

speaker-0: Yeah. So you gotta understand that psychology. Salespeople like to win, you have to make it noticeable, you have to reward it from me for them, and you have to make it easy for them to understand the win. And what I mean by that is there, Bill, I can tell you we're a salesperson. You got to be able to run the numbers in your head. Yeah. Right? I'm sitting here and if like I close this, I make this. Is it worth my time versus this versus something else? Your salespeople are your number one triage in the marketplace. Absolutely.

speaker-1: So what did you what did you get l wrong along the way?

speaker-0: I was not a friend of private equity. Okay. Just because they sort of came in and did their, you know, they wanted to do their thing on expenses and so y you know, you would fight all the time. Now, again, I was lucky because I had a CEO, you know, I my boss said said to me, he said, Your job is to do this. And I said, And what's your job? He said, My job is to protect you from these people. So, but in most cases, I'd say what I got wrong was not making some eight not making some resource changes that I showed up earlier on. And the I the idea being is you're coming around, trying to do a turnaround, you want to rekindle everybody. They've all been part of the, you know, the success of the past or something like that. But some people have just become too burned out, too jawnist, or anything else. And I had the na naivete to think I can turn them around as well. And I probably spent too much time too much time trying to get them back to good performance and things when it really and I hate to say it was really a lost cause. Would have been better to disjettison, but then I was scared. Okay. Because it's kind of like I'm gonna fire this person and and then I'll tell I'll tell you this story when I'm gonna fire this person and then it's gonna ripple through. So they're sh you know, they're they're laying people off, they're shutting down, you know, blah, blah, blah. Everything they said about growth and the mission is Bill bullshit. So I was too gun shy, but eventually had to do it and said, you know, fired the people. Everybody else came to my office and said, Why did you wait so long? And it was kind of like, Why didn't you tell me? You know, but I would say that was probably my biggest mistake.

speaker-1: It's always a big challenge with that. You know, just transitioning, you know, today you describe concierge power and capital as helping customers find their way through complexity. How much of the approach that you do today is what you learned, you know, out of this wonderful example?

speaker-0: It is I I'm I'm gonna say a a direct linear connection. And I go back to this when I said like four eyes, there's also the eyes and mouth. You've got one mouth and two ears, right? Use them appropri use them in the appropriate percentages is listen. Listen to your customers, ask questions, follow up and keep them focused. I go keep your focus on them and listen to them. Don't sell them. They sell themselves and they sell themselves by helping to educate you with what their challenges are and what their problems are. But you can't do and this this is a pet peeve of mine, right? You can't do that by asking stupid questions. Okay, like what keeps you up at night? They don't answer that question. What you need to do is get smart first and know the person's business before you meet with that person. Go through all their annual reports, go through their website, go through their financials, their 10Ks or 10 Q's, all that kind of thing, and get a feel for that customer and that company. So when you start asking questions, the questions are logical. They communicate respect that you've taken the time. They will then trust you and say, This is the problem I'm trying to solve. Once they say that, you either and and the other piece is. Be totally honest. You can say, I can help you solve that problem, or I can't. Be honest with people. Be ethical with people. To me, it's sort of the the theory of pay it forward. If I meet with somebody and I can't, I don't have the solution, I don't walk away. I'll say, I don't have the solution, but I understand what your problem is, but I might know somebody. that does. And I will make the introductions. I will, you know, put them together and say, you know what, I w if I were you, I would go this way. I would do this. This is that's you know, my my recommendation to you. I never ask for anything.

speaker-1: That's fantastic. So where should people go to learn more about you and your work and how to get in touch with you?

speaker-0: I would put you to two places. One, first, go to LinkedIn, look me up, David March, LinkedIn. And if you're interested in in in or if you're an insomniac, you can read some of my posts and my articles and things like that. I've published a bunch of things. Or you can look us up at concierge power capital. You'll learn more about concierge power capital than me, but LinkedIn's probably best if you want to reach out to me.

speaker-1: That's fantastic. Well, thank you so much, David, for walking us through the recovery, the decisions, the people, and the work behind the results. The questions for every listener is very clear. What do you do and what do your customers value? What do your employees need to deliver that? And what needs to change in your business to make it happen this week? Right. So follow the thousand day CEO and share it with Leader who's building out their next chapter. You'll find more resources at billcanady.com. David's links and his way to contact him will be in the bottom of this episode. We hope you reach out to him. He's been fantastic. David, thank you so much for your time today. It was great to have you on.

speaker-0: Well thanks, nice seeing you again. Take care. You've been listening to the 1000 Day CEO with Bill Canady. Follow the show for more decisive leadership, sustainable growth, and strategies that build enduring businesses. Until next time, make everyday count.