Flint's Blog

The Secret to Great Hiring? Treat it like Sales.

We have dozens of hiring managers at Billtrust who are involved in the hiring process for their groups as well as other departments.  They all have different styles for sourcing, interviewing, and hiring. As expected, they experience a variety of different results.  Some are able fill open positions quickly with great candidates.  Some seem to have the same requisitions open for months on end.

One conclusion could be that some reqs are harder to fill than others and therefore take more time. Need a Senior PHP Developer who speaks Italian and can juggle? That might take a while. While there is some truth to this argument, I've found that the same managers struggle to fill a variety of different spots so I don't think that explains everything.

Another conclusion could be that the compensation range that was set for the position was too low resulting in an inability to attract good candidates. That has certainly happened but after adjusting the salary range, some hiring managers still struggle.

So what is the secret to great hiring?  Well it's really not much of a secret. Like most things in life, it's all about accountability.  

Recently, two managers who were struggling to fill spots both gave me the same excuse - "we're not seeing enough resumes from our recruiters".  My sarcastic response - "good excuse, I'll tell the Board that the reason we're not going to get that product released on time is because of our recruiters."

Great hiring managers treat hiring like sales.  The most successful sales people are religious about managing their sales funnel.  If you're not familiar with the sales funnels concept, it's really quite simple.  Into the top of the funnel go as many qualified sales leads as possible.  Coming out of the bottom of the funnel, are paying customers.  Great sales people know if they want to make commissions, they need a lot of leads at the top of the funnel because invariably some are lost throughout the sales process. They also know that the responsibility of the leads and managing the funnel falls squarely on their shoulders.  They don't make excuses like "I don't have enough warm leads" or "the prospect didn't understand."  

 

Here are some parallels for what Hiring Managers might say.

Weak Hiring Manager (WHM) : Recruiting is not sending me enough good candidates (blames others)

Strong Hiring Manager (SHM) : I'm sourcing candidates from recruiting, LinkedIn, Twitter, my personal network, lawyers, accountants, and professional organizations (takes accountability)

WHM : We're not offering enough money for the kind of person we're looking for (blames others)

SHM : Interviews candidates at a variety of different compensation ranges and explains to the senior leadership team why paying more  is the right decision for the right candidate

WHM : We lost the candidate to the competition

SHM : Makes sure there are numerous candidates for a position because invariably some will be lost.

Great sales people don't make excuses, they get it done.  Same with great hiring managers. If you think hiring is Human Resources responsibility, then perhaps you should rethink.  Every manager bears ultimate responsibility for their hiring.  

 

Using Your Board as a Weapon!

I've been thinking a lot lately about the Billtrust Board of Directors.  Not because I'm worried about it. More because people keep asking me about it.  A local CEO I had lunch with the other day asked me how we got such a great Board.  Edison Ventures asked me to present at their upcoming CEO Summit on the topic of building a great Board of Directors.  It keeps coming up.

Step 1 - Build a Great Board

Building a great Board is not something that happens by accident,  it doesn't happen overnight, and most importantly it doesn't happen without a great understanding of what you, as the CEO, want out of your board.  

I  look for Board Members that have certain experiences that I can tap into to help prevent me from making mistakes, that can help me think of things in a different light, that have had business success that are relevant to Billtrust, that are confident but also have a sense of humility. As a technical CEO, I know that I have certain areas that are weaker than others so I'm looking for Board Members that can bring something I don't have.

One of the first things I did when starting Billtrust was form an Advisory Board.  Most people think of Advisory Boards as a bunch of executives they can tap into from time to time.  For me, I treated the Advisory Board like a normal Board of Directors, without formal voting power.  We had quarterly board meetings; I gave them monthly updates, and would call them on average once a month for advice.  The three individuals who I invited all brought something different to the table - one was an entrepreneur who sold his company to Microsoft, one was a sales/marketing guru, and one was strong financial background.  All areas that I thought would help me.  

When we raised some venture capital in 2006, we converted to an official Board of Directors and converted two of the advisory board members and added some additional firepower that brought other relevant experiences. One was a entrepreneur/CEO who sold her company to ADP, another was a CEO who had a wealth of payments experience.

It's important to think hard about the kind of people you want on your Board.  Equally important is the types of people to stay away from.  I've had both.  A loud VC that thinks he knows everything will absolutely kill your board dynamic (I call that the board bully).  A financial investor that brings nothing but money to the table won't add a lot of value.  A Board Member who has experience in a much later stage of business evolution will be out of place.  Building a Board with great names from great companies may look good on your web site, but unless they're actively contributing, I think it's a bad idea.

Board compensation is often a question I get asked.  My attitude towards this is to offer board members stock options but no cash component for three reasons.  First, early stage companies are usually cash starved, and having additional expenses for board members is not optimal. Second, if potential board members need the small amount of cash I can afford, I've probably picked the wrong person.  Third, and most important, it aligns interests.  As the company grows, we all prosper.  This changes when a company gets larger and responsibilities grow.

Step 2 - Use Your Board as a Weapon

In the early part of my career, I thought of the Board as someone I reported to, gave them quarterly reports, and for the most part did not involve them in the business.  This was mostly because I had built a dysfunctional board at my first company that was stocked with VCs and couldn't help with much except for fund raising.

I now use the board very differently.  We still have our quarterly meetings but we do very little reporting, we try to spend the majority of our time digging into strategic discussions.  What kind of company do we want to be in three to five years?  Do we have the right product mix? Should we be doing more or less M&A?  If your Board Members can't weigh in intelligently on these kinds of topics, you probably could use some upgrades.

I use the board to get introductions for partnerships, for recruiting new executives, for bouncing new product ideas.  All of the Board Members are different and all can contribute in different ways.

One of the best pieces of advice I can give was summed up nicely in a post by Brad Feld on the topic of Being Vulnerable.  You need to be able to recognize what you, as the CEO, need help on and have those candid discussions with the board.  This will potentially make you more vulnerable to criticism, but will lead ot far better board discussions.

Step 3 - Go back to step 1

In a company that is growing, what you need from the Board changes over time.  No different than management team members, board members run out of gas and might no longer have relevant experiences. Two years ago I had a Board Member tell me that he thought it was time for him to swap out.  He still wanted to be involved in the business, but just didn't think based on our company size that he could add much more value.  That's not going to happen often.  Very few people will volunteer to come off the board.  So it's the responsibility of the CEO to make those kind sof calls.

I sometimes hear other CEOs complain about their boards, and this is always surprising to me.  You don't hear CEOs complain about their management teams, because that's their problem to fix.  I think of the Board in the same way. It's my Board and my responsibility to make sure they are engaged, strategic, and adding value.

 

Be Remarkable!

Each December we try to craft a theme that is supposed to guide our company behavior for the coming year. A theme is different than concrete and specific goals. Goals are really important and each of our division leads has their own SMART goals. But a company theme is more "meta". 

In 2012 we had two major themes - Drive High Margin Revenue and Drastically Improve Quality. We did a good job on both of these themes but could have done better. We probably didn't do a good enough job reinforcing these themes across the organization which resulted in some quality slippage. Nothing awful, but enough to know that all of our people weren't quite on the same page.

We had a management offsite meeting last month and we were discussing what the theme for 2013 should be. A lot of back and forth between team members with nothing really resonating. Finally, our VP of Marketing, Mitch Rose, put forth the idea that we should just simplify, and just get everybody to try and be remarkable with everything we do. Instant lightbulb moment for me, the 2013 Billtrust theme is Be Remarkable!

OK, some of you may be asking, who wouldn't want to be remarkable? Surprisingly enough, there are a lot of organizations that don't strive for this.

• They strive for answering 80% of their calls within 6 rings. That's OK but it's not 99% of the calls.
• They strive for satisfied customers, but not customer zealots.
• They strive for minimizing quality errors, but not zero defects.

A company theme is not something you can simply announce and it magically happens. It's going to take a lot of work, a lot of reinforcement, and most importantly it needs internal champions. These are the people on the front lines where it really counts. They don't accept the Status Quo and stop to ask "Is that remarkable or could we have done better?"

So to all my fellow Billtrusters, now approaching 200 strong, what could we be doing to Be Remarkable!

If I Wasn't So Busy I Could.....

This weekend I was at my Mom's and I was encouraging her to get on this new Facebook thingy so she could better stay in touch with her grandkids.  Her answer, which she has given me before, was that she was just too busy.  My Mom is retired and plays a fair amount of bridge but I think she could probably squeeze in a few minutes here and there so I probed.  We didn't really come to any conclusion, it wasn't a fear of technology, or a fear of something new.  It was mostly a prioritization thing, she wasn't interested enough to prioritize it over anything else.

Curiously enough, the NY Times had a piece on Sunday about almost this exact topic called "The 'Busy' Trap' - you can read it here.

The take away for me is that "Being Busy" is a state of mind.  I work with some people that are so incredibly busy that they can't get basic things done.  While others seem to get a ton of things done and always willing to take on another challenge.

I like to consider myself a pretty organized guy, I don't stress too much, I work hard but not excessive number of hours.  So as the CEO of a company, how do I have time for coaching our kids, playing basketball and softball, reading magazines/books, and the occasional Facebook post.  The answer is really pretty simple, you just do it.  Figure it out.  You prioritize things you want to do over other things.  It simply comes down to choice.  Do you choose to watch that reality TV show or do something else?  Do you choose to wake up early and exercise or sleep in ? (I choose sleep in)

So the takeawy for my Mom is - it's not that she doesn't have time for Facebook, it's simply she chooses to prioritize other things over it.  

P.S. - Hi Mom, tell TK I miss him.

The Mystery of Patents

A patent used to be something to be proud of.  You work hard, invent something creative and new, and protect your invention with a patent so nobody could rip off your design.  Thomas Edison had over 2,000 patents granted to him to protect his inventions.  

We've done some amazing things at Billtrust over the last 11 years, but one of things we haven't done is try to patent anything.  I've always been a firm believer that vision and creativity are important, but execution is the name of the game.

So I was somewhat surprised to learn that on April 24th of this  year, I was awarded a patent.  Yay me! You can read about it here.  This is actually a patent that was filed for way back in 1999, when I was at Paytrust, and VCs were enamored with funding companies with I.P. ("intellectual property").  

This patent is a relatively new type of patent and it's not for an invention, but for a way of doing things - they're called Business Method Patents.  Business method patents are issued for lots of things, like one click purchase from Amazon. This certainly doesn't feel Edison worthy, but the rules are the rules. I personally think they're completely bogus but I'm starting to question my beliefs.  

One of the more repugnant types of business that are out there these days is the business of being a Patent Troll.  These companies buy Patents from others for the sole purpose of suing companies with deep pockets.  It's almost always cheaper to settle out of court so these companies make money with just the threat of a lawsuit.  They don't invent things.  They don't protect they're inventions.  They exist solely to sue others.  Gross.

Much has been written about patent reform, how we should do away with business method patents, but congress doesn't seem to want to do anything about it.  Brad Feld writes about it persuasively and often - see here.

It's gotten so ridiculous that companies now buy blocks of patents from others just so they can have something to defend themselves with in case they're sued.  AOL recently sold patents to Microsoft for $1.1 Billion dollars.  Perhaps the only smart thing AOL has done in the last 15 years.

I say it's broken.  The folks at Twitter think it's broken and have said they won't attack other companies with patents.  Just about everybody thinks the patent system is broken, except for the trolls.

Since I'm a "Fix the problem, not the blame" kind of a guy, let me propose a solution.  Let's "open source" our patents.  If enough people agree to share their patents for the sole purpose of providing defense against frivolous lawsuits, we might be on to something.  If Wikepedia can exist, this doesn't sound that hard.

I'll start. I hereby grant patent 8,165,958 to the common good.  Who else is with me?  

 

 

Why We Bought Invoice Connection

Today we announced the acquisition of Invoice Connection (press release here), a competitor in the outsourced billing space.  Billtrust and Invoice Connection have been competitors for several years. Despite the rivalry, there has always been a mutual respect for each other.  We felt that the combination of our companies made strategic sense.  More specifically, here's some of our thinking.

1. If I were to ask you "Who are the nationwide powerhouses are in the payroll space?" you would likely say ADP or Paychex.  If I were to ask you the same question but substitute in "the billing space" you would have trouble coming up with an answer. Our vision for Billtrust is to become the nationwide powerhouse in billing solutions and acquisitions like this get us closer to our goal.
   
    
2. Billtrust is the number one provider of billing services in the wholesale distribution space. Invoice Connection was number two.  Having a large number of customers in an industry allows us even more opportunity to provide our customers with exciting new products and services.  We have an exciting new product that we’ll be announcing early next year that we think will be a big hit with our wholesale distribution customers (consider this the first initial tease of things to come).
   
   

Unfortunately, as most people know, most mergers fail (see here).  We go into this knowing we have to perform exceptionally well to make this a success.  We need to go the extra mile for all of our new customers but also continue to perform at a very high level for our existing customers.  We’re confident that we can do this.

 

Go Visit Someone!

I'll admit it, I'm a slave to my laptop / iPad / SmartPhone.  I like to think of myself as pretty organized. I'm usually focused on the right task at the right time which is essential to staying on top of your game. Except when it isn't.  

What about the tasks and activities that never show up in your inbox or on your task list?  What about the things that you should be doing that you're not even aware of?  How do you know what you don't know?

Last week I attended an industry conference called the Council for Electronic Billing and Payment.  This is a show that I hadn't attended before and I had two primary reasons for going: first, it was a topic that our company is very interested in and second, it was in New Orleans in February.  

The show had a number of sessions on a variety of topics and it was informative, but nothing that I couldn't learn sitting at my desk in about half the time.  The real value was in the networking.  I met some competitors,  some partners, and some former coworkers from my Paytrust days.  I left with probably five to seven meaningful follow ups that if I sat at my desk, I wouldn't have had.

We've been on a big push recently with our team to visit with clients and prospects.  We frankly had become too dependent on webinars for selling and training.  They're easy to setup, convenient because there's no travel headaches, and very cost effective.  However, they're awful for building relationships. They're awful if you want to have a real conversation about what kind of pain someone is having. If you want to talk to someone, they're great; if you want to have a meaningful dialog, forget it.

So lesson learned, go visit someone, you never know what you'll learn. 

My Favorite Management Picture

Today I was walking through the hallway and overheard what I imagine is a very typical conversation in companies throughout the world - "The customer wants this done one way and we do it another way. We can't do what they want."  So I popped in the office and drew my favorite management picture (see below).

I've given this example to lots of people throughout my career and assumed that the individual would have seen it by now.  Much to my delight he had not, so we proceeded to my normal script:

"We can't do this specific thing the customer wants", he said.

So I drew a picture on the white board of one big circle, and one little circle, with two arrows going back and forth.  

I then asked him "What's this?"

He thought about it for a second and gave up.

I said "The big one is the Earth, the little one is the Moon.  These two arrows represent that we have figured out a way to get people back and forth which seems like a pretty hard problem.  I'm guessing we should be able to figure out this problem out as well."

I know it's a silly example, but it's true.  Problems don't seem so hard if you assume most can be solved.  The old "Can Do" attitude is still relevant in 2011.

We then talked through the specific issue, and sure enough there was a solution.

 

 

Throwing Out The Roadmap

I read an article recently where Eric Schmidt, the CEO of Google, was discussing the history of Google and how some of the great products they launched were the result of "a few developers just banging something out in a few weeks".  He also said, that those days were over.  That Google had gotten too big for that to work any longer. That was somewhat depressing to me.  Sort of like throwing in the towel on just getting things done quickly.

As our company Billtrust continues to grow, we struggle with that as well.  Certainly, not on the magnitude that Google does, but I can feel it creeping in.  In the beginning, I would sit down with our CTO, Jim Eichmann, and we would basically split up the work and say what is the most important things we should be building right now.  Long term planning was not even discussed, we didn't even know if we would be around long term.  Then we started hiring developers, and we added them to the mix of what's the most important thing they should be working on.

But as you continue to grow, you start to think longer term.  You have product roadmaps.  You have customer advisory councils.  You make contractual commitments to customers.  And while you're working on important things, you really lose the ability to do quick trajectory changes to get projects done.  

I think to keep things exciting for your team, you occasionally just need to give them some latitude to "go off the roadmap" every once in a while.  A product roadmap, for those that don't know, is simply a schedule of new products, or new product releases, that are planned for the next 6 to 60 months.  Bigger companies need to plan for longer periods of time because resource allocation is incredibly complex, customers need to know, and sales people need to know what they're selling.

But sometimes things come up, that you deep down know are a good idea, that just need to get done.  We were having a conference call last week with our Customer Advisory Council, a group of 8 influential customers that help guide our product roadmap.  One of our customers was asking about when we were going to build an online user forum because the exchange of ideas between customers on the Council has been awesome.  We hemmed and hawed, talked about out plans to build into a future version of one of our products, but gave them no firm commitment since it wasn't within the next 12 months on our product roadmap.  Then one of our customers said "Why don't you just used LinkedIn?"

This was so blindingly obvious the right way to go, that we just had to do it.  It's not going to be exactly what we want because it won't be integrated into our product suite, but who cares.  We can roll it out in like 10 minutes and start giving customers value.  So the hell with the roadmap.  So two days later we went live with the new LinkedIn Billtrust User Forum.  If you're a customer of Billtrust, you can access it by Clicking Here.

The User Forum wasn't on our short term road map but sometimes you just have to throw out the roadmap and do the right thing.

Educated Buyers and the Last 10%

Seth Godin had a great post today about what really separates great solutions from good solutions.  He calls it the last 10%.  The basic takeaway is the first 90% of designing a web page, baking a cake, building a software solution is the easy part.  It's the last 10% that is really hard that separates the good from the great. 

The problem in our business, is that unless you've got an educated buyer, they never really understand what a great solution should be and why they might need it.

For example, Billtrust sells an email billing solution.  The uneducated buyer says, "I don't need your email billing solution, my Oracle system sends out invoices via email for free."  

The first 90% of building an email billing system is actually pretty easy, and most ERP systems and most of our competitors do this.

1. An email bill should look identical to a printed bill, preferably in PDF format
2. If multiple bills are sent in the same day, don't send multiple emails, send one email with one PDF file because customers still like to print them.

You'd be surprised how many systems can't do the above.  Our first version of email billing did just this and it was modest success.  And then we learned that it wasn't nearly enough to satisfy the market.  So we added the last 10%.

1. The body of the email should contain a customizable summary of the invoices included in the attachment.
2. There should be an option for customers to get individual PDFs because they like to import them directly into their archive system.
3. Managing the deliverability is essential through staying on white lists and off of black lists.
4. Making sure the email is branded as a customer communication and not a Billtrust communication.
5. Including a separate file along with the PDF so that the customer can import data directly into their accounting package.
6. Providing marketing opportunities in the body of the email.

This stuff may not sound important, but when you've got real clients counting on your solution, this stuff will kill you.

Billtrust likes to think we go the extra 10% to deliver a great solution to the market.  Our growth numbers certainly back this up.  But it still drives me crazy when we have a buyer who issues an RFP that simply says "How much for XXX?"  They're not willing to become educated to even learn the right questions to ask!