Every revenue leader on the planet is trying to figure out one thing:
How to grow profitably without adding headcount or budget.
The truth is that every revenue leader is at mercy of current macroeconomic conditions, but is still expected to hit an even bigger revenue target. But when the going gets tough, the tough get advice from proven leaders.
And that’s why I recently invited Steve Singh, Managing Director at Madrona Venture Group, to The Run Revenue Show. Steve has decades of experience in building companies and has steered them through the ups and downs of the ‘99 dot com burst and the 2008 financial crisis, and now advises many companies in his portfolio at Madrona Ventures.
As expected, the show was a masterclass in learning how to build with true grit and resilience.
Here are my top takeaways from the show. I hope they help you in your journey too.
1. It’s always about the customer—and it’s never overnight
Everyone thinks of Concur, where Steve was Chairman and CEO for 23+ years, as an overnight success. But that’s not the case.
“I remember the first couple of stories that were written about Concur said, ‘hey, they're an overnight success’. There was nothing overnight about us. It was the first time that many people had heard about it. From their point of view, it was an overnight success. But the reality is, it's digging into details, really trying to make sure that whatever you do, you're the best in the world at, and delivering value to customers.”
To build a successful business or company, you need to be obsessed with the customer and really providing value to them. You need to spend time and effort in getting everything about your product or service just right for your customers. This relentless focus on the customer is the hallmark of all great and truly profitable companies and business leaders.
2. You need to create a deep rooted culture of being the best
There’s a popular saying: If you want to go fast, go alone. If you want to go far, go together.
Looking back at my own experiences, the companies that have really made an impact are those where the entire company speaks the same language and rows in the same direction.
Steve echoes this as well:
“I’m working with the next generation of entrepreneurs who are building companies that will replace the legacy companies I worked at. The thing that I really try to make sure I focus on with these incredible individuals is that there are a couple of elements that they have to get right. The first is there has to be a deep rooted culture at the individual level and at the corporate level in wanting to be the very best in the world at understanding your customer, your business, the marketplace you operate in, literally every detail of your business.”
You need to have a team-wide commitment to being the best to succeed. And this starts early— right from hiring for the right values—to creating a culture where everyone’s expected to do their best work.
3. 99% of success is showing up and doing the work
Most of us will agree with this statement and probably have a cool t-shirt or coffee mug with the same slogan. And yet, just doing the work can be hard because it involves a level of commitment that most people find really hard to maintain.
But it’s not just the 99 percent. The remaining 1 percent is also important because it involves determining what work you want to do aka your focus areas. This is where all the magic happens, as Steve shares:
“If you look at individuals who are the most successful, they share a couple of common attributes. Number one is they actually understand what to focus on. And number two is they're really well instrumented. And those two things go hand in hand.”
What does it mean to be really well instrumented? It means whether you understand every single metric of your business or not.
Metrics such as:
- Which features are being used most by your customers
- What's the value those features are delivering
- How do you get better at deploying your products and making sure your customers actually drive value out from them
- How do you get better at filling the top of the funnel
- How do you get your customers to commit to being a customer for life
All of these metrics come from instrumentation. And as Steve says, “What I find really amazing about these [successful] people is that they're not only committed to making sure they understand what to work on, they're instrumenting the heck out of their business to make sure that they really understand how to drive increasing value across their business.”
4. Share information and empower your team
The more information you share across your team, the better your people will perform without any oversight. This has been made easier in today's era of computing, shares Steve.
“Today with cloud native architectures, whether you're talking about a Clari or a Stratify, we're getting real-time information about the metrics in our business. That information is available to everybody in the business. And if it's available to everybody in the business, not surprisingly, better decisions are made.”
5. Don’t chase growth at all costs
There are too many companies chasing growth without understanding the cost of that growth and assuming that their customers will eventually turn profitable.
And as Steve counters, “I would argue that that's not the right model. It never was, never will be. And the only time it is, is when money is cheap and when you're undisciplined…. Great businesses are built over decades. They're not built in one, two, three, four, five years. They're built over decades. The team that wins is the team that can drive disciplined action on a sustainable basis across their entire company.”
And according to Steve, this growth always comes from data, instrumented processes, and prioritizing what you're going to focus on.
Given the current macroenvironment, there has been a shift in mindset at most companies from growth at all costs to growth with profitability. At the same time, many business leaders think about the macroeconomic environment as something out of their control. But the truth is if you look at your company metrics closely, you can forecast so many things and make decisions in a forward looking way. It's a really interesting way for you to take back control of things.
6. Focus on predictable growth—and know your numbers
The most important thing is the ability to predict what business is going to close in the quarter. This information alone enables you to think more strategically about spending and where you're going to make your investments.
According to Steve, “Each leader should be asking themselves, do I know within a 1% margin of error, what business is going to close this quarter? If the answer to that is yes, you are far ahead of everybody else…. If the answer to that question is no, you are at a massive disadvantage to cultures that are all about metrics to instrumentation.”
He adds, “I would argue that there should never be a day when you don't understand every line item of expense in your company, what you're going to show up with on total expenditures across your business, whether that's on a daily, weekly, monthly, or quarterly basis. There should never be a day when you don't understand what business you're going to close and what your revenue is going to be in that period.”
7. Build trust with the board by being data-driven
Steve has been part of innumerable board meetings so he knows a thing or two about what makes the board trust the executives. Steve shares that the leaders he’s inspired by don’t just know where they stand on a particular revenue metric, but that they are trying to understand the why.
- Why is their close rate moving up?
- Why is the close rate moving down?
- Why did the customer choose them over somebody else?
This level of understanding of the why is driven by the fact that you are measuring and reporting on key metrics in real time.
“This shows me, as an investor and as a board member, that you have a deep level of understanding. And from that understanding, you have trust. I trust that individual to make the right decision. I think we're not going to always make the right decision, but nine times out of 10, they're going to make the right decision because they're armed with data.”
8. It's not about doing more with less—it's about doing better with less
When it comes to choosing what to focus on, I see really effective leaders share both lists of what to do and what not to do with their teams. It really helps their teams understand what and how to prioritize projects.
And that process of prioritizing is a discipline that unlocks incredible value. Because it becomes part of the culture of the company and drives better performance. In Steve’s words, “This idea of having to do more with less is an incredible blessing, an incredible opportunity for the best leaders in the world.”
Steve’s parting words of wisdom for leaders
”Share information across your business and you'll be amazed at what your people are capable of doing. And share that information in real time. It shouldn't be us communicating with one another. There should be systems making data available to whoever needs it. That unlocks the real power of the organization and the incredible human beings you get to go through life with.”