Leadership + People: Episode 25 - Randy Garn - Part 1 of 2

Randy Garn, Partner at Skipio.com, shares his experience with business from the beginning, highlighting the importance of communication, explaining what drives his investments, and why he says you have to prioritize people in order to make any company successful.

Show Notes

  • Background and explainer behind the book, Prosper [1:17]
  • Overview: Skipio, A mobile marketing company [2:38]
  • Law of Reciprocity: The more people I help to succeed, the more successful the whole company will be. [6:24]
  • Prioritizing People: Just one of the Four “P’s” [8:32]
  • When you think about some of your favorite leaders, they don’t want the credit [10:00]
  • Compensation & Employee Profit Sharing [13:03]
  • Sales as an “individual sport” vs. game-ifying for teamwork, increased revenue [18:43]
  • Mark Eaton: Quit thinking about yourselves. “The more you give, the more you’re going to get.” [22:37]

Show Audio

References:

Randy Garn 1

This episode of Leadership and People was originally released on: February 27, 2018

Show Transcript

[BEGINS] 00:00

Welcome to Leadership and People. This is a series that pulls back the curtain on leadership by interviewing CEOs, senior executives and entrepreneurs who had large exits. We ask these experts about how they built trusted networks to rapidly grow their companies, and what device they wish they knew if they could do it all again.

00:23 HOST – JESS LARSEN: Today on the show I’ve got Randy Garn.

GUEST – RANDY GARN: When you think about some of your favorite leaders, they didn’t even — they don’t even care about the credit. I don’t even care if people really know if I exist or want to. I don’t need the credit. I want to build up. Right now in my career, I want to help.

00:41 JL: Randy, thanks for making time.

RANDY GARN: Man, it’s great to be with you, Jess.

Books On Books

00:44 JL: So, you’ve done a few things. I understand you got a New York Times best selling book. Is that right?

RANDY GARN: Yeah, we do. We hit New York Times best sellers 2010 and 2011, and we’ve also helped a lot of people with getting their books out and content. And so, I love writing. I love education.

01:05 JL: So, you’ve built a company. You’re in private equity now. You’re helping other tech businesses. Well first, tell us about your book and the best place for somebody to check that out.

RANDY GARN: Yeah, we wrote a book called Prosper. Ethan Willis and I, and we worked closely with Ken Blanchard — wrote a book with him called The One Minute Entrepreneur. And so, you can get it on Amazon. It’s Prosper is the name of the book and it’s really kind of the whole thing about how to balance money, happiness, and sustainability. It was a ton of fun writing it, and really, it helps you to self-reflect and say, ‘Man, how do I do those things?’

Because the book really is about, you know — a lot of people that we probably know have had really good success at making a lot of money, but they’re miserable. There’s other people that are really happy, but don’t have a lot of money. And there’s also a lot of people that are like grasshoppers — great on takeoff — you never know where they’re gonna land. So, we really — the term “prosper” is actually multi-dimensional. It’s a combination of how to balance making money, having fun, and doing it over a long period of time. And that’s when you really have sustainable growth and satisfaction in your life. So, that’s kinda the premise of it. But yeah, you can get it on Amazon. Just Prosper. Randy Garn.

02:26 JL: That’s great. And so, nowadays, you’re obviously doing private equity at the Greer Co. Spending a lot of time with sounds like one of your portfolio companies — Skipio. Can you tell us what that’s about?

Transitioning to Skipio; A Mobile Marketing Company

RANDY GARN: Yeah, we have an amazing company kinda like if you ask me what I’ve spent my 10,000 hours in and what my real core competency is. It is 1) growing people and helping other people see more and do more in themselves. My dad was a high school football coach for 29 years and kinda growing up in the whole coaching space, you know, we built one of the largest coaching and training companies in the nation from 1999 to 2012 and had a blast doing that.

But, right now Skipio is… I love watching for things that are really hot in the tech space, and especially in marketing and communications. To grow any company, you gotta be able to communicate well with your customers, right? So, we built a company called Skipio and it’s actually a tech mobile marketing company. And so, as you know, not a lot of people are reading email anymore, right?

03:36 JL: There’s certainly an avalanche of it.

RANDY GARN: [laughs] Yes, so I mean, open rate on email as 2017, it’s 2018 now. It’s about 12 percent, and so, we’re teaching people how to utilize mobile marketing, text, and voice broadcasting appropriately with SMS and MMS. So that’s kinda the — it’s a text-based mobile marketing company for customer acquisition, customer communication, client retention — all that fun stuff. So it’s exploding and a ton of fun.

04:07 JL: Yeah, no kidding. And tell us about the business you built and sold.

Business Acquisition

RANDY GARN: So, there’s been several. We did a company called Prosper. We built that up and it was a ton of fun. We had well over 700 employees and had clients in 80 different countries. [We] built up a pretty large database of well over 2.4 million people and so that was a ton of fun to really grow that and learn a ton there of man, how you take a company from you know, zero. We bootstrapped that thing from the very beginning.

And so, it was just growing every single person you know, from one of our — one of my favorite employees, Jade, started in customer care and became our Chief Marketing Officer ‘cause he kept learning and growing and so, it was a ton of fun growing that and the people that I met and fostered through that are still really good friends and actually doing business with us today with the Skipio, the mobile marketing company. So, it was a huge success and a ton of fun.

05:11 JL: Yeah, no kidding. Well, you know, the show here Leadership & People, obviously being involved in multiple businesses, there’s a lot of both those things. When you think about, maybe early mistakes that you made in leadership and what you found works in the end, is there anything that comes to mind right off the bat?

Business from the Beginning; A Reflection

RANDY GARN: Yeah, I mean, a lot of things. I think as a leader… In the very beginning, you know, to scale and we’ve always heard the saying, you know — “If you want to go fast, go by yourself. If you want to go far and go big, build a good team.” I think in the early stages when I was young, we started our first company when I was a junior in college and won Entrepreneur of the Year and you know, built that and ran that for the next 14 years.

And so, when you start out and you do that, you think you have to do it all. I will say some of the things like I love the recognition of the growth. ‘Hey, oh look at all the success you’re having and look at all that you’re doing.’ To you shift that to really being like, ‘Man, how can I give others recognition and how do I get out of my own way?’ And the more people like that Law of Reciprocity, the more people I can help that work for me to have success, the more successful the whole company’s going to be.

So, after I sold that, we built a company called The Hero Club and we had you know, hundreds of CEOs that we were working with on strategy, innovation, you know, ideation, and this is what I would work with them on. I’d say, ‘K, guys, you’ve got to build your team and even if you’re gonna sell your company, or have a private equity company come in and buy it or VC, they’re going to buy the team. They are not going to buy your product or service.’ And I don’t know if you’ve seen that, Jess, because I know that you brand private equity groups and different things, but is that not the case?

07:09 JL: Yeah, I mean, obviously a product and future cash flows are what people get interested in to begin with. But I think what happens is, most of us — we get, at least this was the case for me. We get won over by a deal where we’re like, we’re kinda lying to ourselves a little bit about the people and we’re thinking, ‘Oh no, we’ll be able to manage them. We’ll be able to keep it in line. It’ll work out. Look at how great this deal is.’ And in my experience, those have been some of the biggest financial regrets of my life, right?

RANDY GARN: Yep, yep.

07:43 JL: And I think… maybe there’s plenty of people smarter than me that don’t do that in the first place, but I’m guessing there’s a few folks like me that they get in it for the deal at first thinking, you know, they can handle the less than stellar people or the things that they’re trying to convince themselves are just fine about the people involved and it never seems to pan out in my experience.

The Four “P’s” — Prioritizing People

RANDY GARN: Exactly. So I mean to have a really, you know — the difference between a really big company, let’s say you know for a $20 million company is you might have a really good product, or you might have a really good team that’s really good at marketing and sales. But to build, you know, a $400 million company or to have a tremendous exit, both of those have to come together. And, as soon as I learned that, that you literally have to be really, really good at four things and my four things are four “p’s.” And we teach this a lot. It’s product, you have to have the right price-point, you have to have the right promotion and marketing materials, and you have to have the right people. And I really do think that people are in any circumstance, are the very, very most important thing, and you have to spend so much time on growing and building your people if you want to build a very, very successful enterprise. And so, it’s “culture eats strategy for lunch” is what there [?] said. But I always say that culture and strategy together freakin’ rock if you execute well.

09:18 JL: Yeah, when you think about how many people pay lip service to that type of messaging versus the folks that actually do it, why do you think it’s such a temptation for all of us to give in to the short-term win of well, let’s just get it done and we can build our team skill-set later? Or, we can invest heavier in training and mindset later?

Recognition, Production and Compensation

RANDY GARN: I think that it has to do honestly, a lot with maturity. You know, real business maturity and “emotional IQ” is what I call it. Right now, I mean… when you think about some of your favorite leaders, they didn’t even — they don’t even care about the credit. I don’t even care if people really know if I exist or want to. I don’t need the credit. I want to build up.

Right now in my career, I want to help you know a young man that we’re working with now. He came and saw what we were doing and fell in love with what we were doing and he like picked up. He drove all the way from Denver just to come be with us and then he said, ‘Hey, I’ll move my whole family out here and be here,’ and now I want to build him up. You know?

I think that a lot of people do give lip service to it. I think there’s a few really good ways that I’ve learned – I mean, really good studies in helping people. It’s really important to give recognition where recognition is due and I don’t think a lot of leaders do that as well as they could and should. But, I also think it’s also arranging compensation in a way that really gets them engaged and involved.

I think comp plans are just as important as recognition. Again, and you gotta hit those two things both, that that recognition in saying, ‘Hey, good job,’ the pat on the back and the nice email or the recognition at the Christmas party with their wives is fantastic. But I think if you align compensation around production, and around production and success, then you’re gonna get a really good employee that actually feels really engaged, as well.

11:33 JL: Yeah, you know, I’d love to talk about that for a second because when I think about a number of our consulting firm’s clients, it is a question that comes up a lot. Is — People feeling a little bit lost on compensation. And I think the worst one is sales teams. Like I’ve had a lot of conversations and then we go through it ourselves in our own firm of like, ‘Man, we want to be — we want to pay well — especially with sales being one of the, you know, very few job categories where compensation you know, has been tied to higher performance, right?

You read a book like Drive by Daniel Pink and they say, ‘Hey, once they’re making as much as they’d make elsewhere, it stops having quite as much impact and meaning and autonomy and these things have a bigger impact,’ right? But sales is one — you know, per part manufacturing on sales is one where they say, ‘Ok, those two – we actually do see higher performance with the higher pay.’

And, I’m interested in your thought process of whether it’s setting up your own, or whether you’re advising portfolio companies on that balance of security and commissions, and not incentivizing selfishness, and how do you get them to still be part of the team? Interested in any thoughts you have about navigating that conundrum sometimes.

Analyzing a Profit Per Employee Ratio

RANDY GARN: Yeah, I mean there’s quite a few ways that you can do — and working with your team and sharing with them as like, kind of, if you look at profit per employee, right? And you do that just by dividing all your profit. You divide it by the amount of employees that you have. Because I love it when somebody asks me, ‘Well, how many employees do you have?’ You know. If they have 1,000 employees, does that mean that that company’s successful? Or, if they have 50 employees. What if you have… You know, we’re working with one company that has about 16 employees and is doing $24 million in revenue. You know, you look at that profit–employee between that and a company that’s doing $17 million in revenue and has 300 employees.

You can align compensation in such a way, and it depends on what industry you’re in and things like that, but one of the ways that you could do that is just do a little bonus plan each quarter around profit per employee. And, I really do believe things that are measured will make an impact, and especially if there’s something tied to that. And so, even if it’s small — even if you do something where it’s each quarter somebody gets $100 bucks or $50 and you say, ‘Hey, good job on that’ and there’s something tied to that, both economically and recognition because that is recognition.

But I think that there’s ways that you can do that simply by that profit per (by) employee ratio and come up with maybe a scaled tier pricing on how you do that and how you compensate accordingly. They could do that from the receptionist down to your business development guy, to your engineer. So that everybody’s aligned in the success of the company.

14:43 JL: Yeah, it’s interesting because — specifically for sales — you know, historically it’s so much what did you do, right?  

RANDY GARN: Right.

14:51 JL: And you can end up with sales teams that have got somebody posting really big numbers, but basically abusing the rest of their co-workers, right?

RANDY GARN: Exactly.

15:02 JL: Well, let’s talk about — thinking about subjects like this, let’s take it to when you’re evaluating an investment. When you guys are choosing another saas company that you’re thinking about getting involved with, what kind of things are you looking at compensation-wise, and whether they’re over-paying/under-paying, and how do you evaluate stuff like that as far as the attractiveness of an investment for you?

Investments, Companies, and Compensation

RANDY GARN: Well, I think when you look at a company — we just acquired a company out of Dallas, Texas, and you know, most of the team is now moved out here and you know, the CEO — who was the CEO of that company that was acquired — is now working with us and he’s got his hands in this meatloaf going strong and continuing to build the company.

That was nice because you know, once you acquire it, we were actually able to give him a little bit of a raise from what he was doing because he was bootstrapping so much and putting everything back in the company, that we were able to give, you know, more and to stabilize that, and to get him a place where he’s like, ‘Ok, I don’t have to worry about anything else. I’m just gonna now focus and grow this company.’ Because before when he was doing it, you know, he’s taking a $50,000 salary and then pumping all of the profit back in, but we were able to come in, do a little bit of a low equidity for him and then also then you know, do a much better salary and then now continue to grow the company.

And so, I think that that’s why you need to look at you know — and especially in the saas-based services — if you’re trying to bootstrap, again, you need to look at, ‘Man, how fast do I need to grow this?’

We look at the economic engine of the company first and foremost because like, you know — is it a solid product? Is it in the right space? Can we continue to get the right engineers and software to grow? And then let’s look at compensation of the team. Where we’re able to come in and acquire that and then you know, give everybody a lift, and now it’s just running hard.

And so, it is — it’s different. You run it differently when you’re able to really do that. But, then you gotta now align on performance. ‘Ok guys, we’re increasing people’s salary and we’re doing this. But now we have to run hard. Now we’ve got to perform. We’ve got the resources needed. And now we’re gonna grow this thing from you know, $1 million to $15 million in two years.’

17:37 JL: So, specifically with that, let’s talk about that one. Where you guys are… I mean, sounds like you’re trying to change the pace of what’s happening. What’s a tangible thing?

Like, let’s say somebody listening today is saying, ‘Ok, we have kind of hit that milestone and now we do want to accelerate our team to that next level.’ Any tactical examples of what that looks like structurally? Or, is there a scoreboard on the wall? Or, what’s an example of helping them run at that faster pace?

Taking Business to the Next Level

RANDY GARN: Yeah, I mean, there’s a good example that we did back… and this is kind of for sales specifically. You know, sales — it can be an individual sport, right? But, we’re able to you know — we had actually hundreds of sales reps — we were able to break them into pods of eight to ten with the manager over them. Where before everybody was just kind of on commission-based, based salary plus commissions of what they did.

We actually started to “game-ify” it and we put them in, and I’ve actually seen groups of six to ten work really well with a manager. And what we did is, we said, ‘Ok, here’s your base. Here’s your commissions.’ And then we said, ‘For your team, if you guys hit these different levels and sells volumes, then we’ll give an extra 2% kicker that shared with everybody — that shared with your whole team — but according to how much revenue you brought in.’

So, if somebody brought in $10,000 in sales and somebody brought in you know, $48,000, it would be perry pursue on how much of that 2% they would get. But everybody would get a little kicker.

So, it became a really good team effort to have great success. But it was, again, on what they were able to do. Doing fun things like that, where there’s a team incentive, and breaking them into teams so that there’s more teamwork and effort, that worked really, really well for us and then we just exploded once we kind of came up with that compensation structure.

19:55 JL: Interesting. Anything besides the structure to help people want to bring more of that team feeling to work — on something that can be an individual sport like that?

RANDY GARN: You know, it is — yes. We do not just, and I’ll go off the compensation to actually doing team incentives. I do a lot of training, a lot of work on really kind of experience economy. And you know, we’ll take our sales team out and go shotgun shooting for the day or you know, do an incentive — whoever does the best. Or, we’ll take our executive team out skiing.

We just had Mark Eaton come into our office and we hired Mark Eaton to come in and he talked about the four commitments of a winning team. And his last two commitments were basically — you have to recognize others, and get out of your own way and know when to pass the ball off to somebody. His last one was take care of your teammates. You know, have loyalty, and the more you build people up and that.

So Mark came in here and talked just recently, actually on Monday about culture and about teamwork. And so, we bring a guest speaker in every single month. Every month we bring somebody in that focuses on culture, that focuses on teamwork, that focuses on growth. Also, I think keeping the employees really in the right mindset and things is really, really healthy. And so, we actually invest quite a bit in training and quite a bit in leadership, along with aligning that compensation.

21:45 JL: Yeah, you know, I’m interested in that subject for a minute because I think it’s easy for people to feel like — on the outside, bringing in Mark Eaton. For people that don’t know such a — wasn’t he in [the] Hall of Fame for like the second-most amount of rebounds in NBA history or something like that?

Playing as a Team Even in Sales, an “Individual Sport”

RANDY GARN: Yeah, I mean, the guy is just ginormous heart, ginormous person. He’s 7 foot 4. If you go to https://7ft4.com. But yeah, he just wrote a new book that’s actually gonna be coming out in April and he kinda shared everything with us. But yeah, Mark is just — he’s humble. He’s amazing. He was an auto-mechanic and you know, they found him underneath the hood of a car and he played for UCLA, and then he went on to be the NBA’s all-time shot blocker.

The guy is just awesome, but he inspired everybody to kinda — basically said, ‘Quit thinking about yourselves. The more you give, the more you’re going to get.’ And he shared real stories with the coach that brought him under his wing. He would have never played in the NBA. His dad didn’t believe in him and now he had one of the most successful careers of all time.

But he said once he learned how to play a team game — even the Utah Jazz were horrible. They were horrible. They couldn’t even get people into the stadium. He said when he started, there was maybe 3,000 to 4,000 people max at each game and they were all just playing an individual game.

So, he came in and shared with us the coach’s philosophy — Frank Layden — came and shared with us. He’s like, ‘Guys, you guys aren’t the best players, but we’re gonna be the best team.’ And honestly, like, it — for this whole week, our guys have been working together. We’ve been breaking records. They’ve been discussing what he shared with us. It has been phenomenal because now people’s mindsets are in the right place, and that’s so important that your employees feel you know, both engaged and that you’re investing in them, and that they’re watching out for one another.

And so, when you have a company that literally cares about one another, and wants each other to succeed and you get away from that just one-on-one playing — whether it’s the engineer team or the sales team, or the marketing team — where everybody’s working together… Where the marketing team goes, ‘Man, if I don’t do this well, then our sales guys aren’t gonna have the materials they need to sell.’ And then the product team’s like, ‘Man, if I don’t get this product done by May 1, then they’re not gonna be able to do this event,’ right? So, it’s when you work together that you see some really good magic happen.

So, we had Rob Shallenberger on leadership come in the month before that, and then we’ve got another guy… We had Dave Horsager. He’s talked about the speed of trust come in — he’s coming in next month. And so, you know, he speaks to the U.N. and all over, and so, I mean we really, really believe in educating our employees and helping them really learn from the greatest thought leaders.

24:44 JL: That’s great. Well, listen, I think this is a good part to end part one of the episode. Before we go, where’s a good place for people to check out what you guys are doing? Is it go to https://skipio.com, or what’s the best link for somebody?

RANDY GARN: Yeah, it’d be awesome if you want to check it out. It’s really hot tech that’s growing like crazy. If you just go to https://skipio.com — S-K-I-P-I-O dot com — is the best place to go kinda check out what we’re doing and we have it right now so you can go on and get a demo. If you want to go in and get a demo of it, but it’s a really fun technology.

25:20 JL: Very cool. Ok, thanks for making time.

RANDY GARN: Awesome. Thanks, Jess.

[ENDS] 25:23

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