How to Shift from Any Revenue to Sustainable Revenue (Full Transcript)

[00:00:00] Speaker 1: When you're the CEO of the business and you're running the company town hall and your fingerprints are on every piece of everything and then you become part of an executive team then you you quickly need to lead more by influence than you can lead by just being the darn founder. So you are trying to get revenue really at that point to pay the team and pay bills and pay technology and you're trying to cover expenses within the business so you're willing to take any customer any revenue that you can. A lot of that business isn't a good long-term sustainable business. Difficult customers cost more. If you lose a great customer and you're like why did we lose you and it's just because of something that was completely preventable that's probably the more painful loss. We never had to go say hey we're not doing this anymore we're only doing this. We just naturally started only looking that type of business and at some point you just got to be and we're business leaders you got to be comfortable with some rest. Surround yourself with people around you that are going to challenge your thoughts and aren't going to confirm your biases and make sure that you're being open and honest with your team around you and getting good feedback.

[00:01:17] Speaker 2: Hey everybody it's Sam Jacobs. Welcome to Revenue Blind Spots. Revenue Blind Spots is powered by Otter.ai and it's a podcast where we explore the pivotal moments in the careers of top revenue leaders. Our focus is to dive deep into the blind spots that have shaped leadership strategy and growth uncovering lessons that can help the next generation of revenue executives and today on the show we're excited to have Matt Umholtz. Matt is a seasoned go-to-market operator with a track record of building and scaling high-growth businesses in the payroll and HR tech space. As president and CRO of Alliance HCM he leads sales marketing and growth across multiple verticals with a sharp focus on execution enablement and long-term customer value. Known for his founder's mindset and a bias for action Matt specializes in turning strategy into momentum and aligning teams around sustainable growth. Matt welcome to the show.

[00:02:09] Speaker 1: Yeah thanks so much for having me Sam.

[00:02:11] Speaker 2: We're excited to have you. Now before we dive into a blind spot that you are going to be talking about we do want to cover a little bit of your baseball card and figure out a little bit more about Alliance. So Alliance HCM is the company where you are president and CRO. What is, tell me what they do.

[00:02:27] Speaker 1: Yeah so we are an HR technology provider. We work with companies that are typically in the mid to enterprise markets that are looking for solutions around applicant tracking, paperless employee onboarding, benefits administration, time scheduling and then the last thing we do is payroll and pay people but HR technology over the past couple of decades has changed drastically. So we are more of a tech company than we are a payroll company at this point.

[00:02:54] Speaker 2: Makes sense and roughly we don't want you to violate any confidentiality but how many people in the organization, where are you in your growth journey?

[00:03:03] Speaker 1: Yeah so we at this point call it 150-ish people or so. You know the business is over 50 million in ARR and we're a business it's a little bit unique because we are still truly privately held. We do have some private equity investment but it's a minority and then they have a minority share of our board. So just a very unique business to operate and run where we're focused on growth but also at the same time profitability as we're staging this business to be around for a very long time.

[00:03:37] Speaker 2: That's great and how did you come to the business? Give us a little bit of background. Obviously we're going to dive into your experience through the blind spot but how did you arrive as president and CRO?

[00:03:47] Speaker 1: Very untraditional path for president and chief revenue officer but started my career in sales with one of the largest businesses in our industry. So we have two big players. I was with the one with the blue logo, the other one has a red logo. You can figure that out pretty easily. Spent almost a decade there and decided to leave and build a company from scratch. So started a business in 2012, ran that business for eight years. I was on the Inc 5000 several years in a row. In 2017, one of our very proud moments, we were the top company to work for by the Houston Business Journal here in Texas and eventually found that we were licensing technology at the time so we didn't have our own technology and there's limits to how you can scale a business if you can't build go-to-market around product. A friend of mine who had founded Alliance Payroll Services reached out and we spent probably eight months back and forth and then ended up merging my business into Alliance Payroll Services and short time after rebranded to Alliance HCM.

[00:04:53] Speaker 2: Was there private equity backing at the time that you did the merger or did that come subsequent to after you guys combined entities?

[00:04:59] Speaker 1: Yeah, it's kind of interesting. There was. So the private equity investment came in late, call it 2019, and I was brought on thereafter. So our private equity firm at the time had said, you know, you guys need to build a sustainable growth engine and find somebody to run revenue. So I was, you know, part of the solution to that. It just required merging my business in to get me here.

[00:05:24] Speaker 2: And last question before, obviously I'm curious, what was the biggest lesson you learned or the biggest surprise going from you're the founder, you're the CEO, you're the entrepreneur, now you're definitely part of the leadership team, but to the point your title is not CEO, it's president at CRO. What's been the biggest adjustment for you?

[00:05:43] Speaker 1: Yeah, I think the biggest adjustment is, you know, when you're the CEO of the business and you're running the company town hall and you're shaping every nuance into that business's culture, and I mean, your fingerprints are on every piece of everything. And then you become part of an executive team, then you quickly need to lead more by influence than you can lead by just being the darn founder. So I would say that was one of the biggest changes for me is being a founder and running the business for over eight years with me at the helm and then being part of an executive team. It was definitely a shift and changing back to that kind of first team mindset of like, hey, we're all in this together, you know, truly being at the helm. So I would say, you know, leading through influence, probably the biggest change.

[00:06:32] Speaker 2: So let's dive in. You know, the subject of this show is revenue blind spots. And the prompt for the listeners is think of a time in your career when you had a significant blind spot in your approach to revenue leadership and we can dive into it. So what is one of the biggest blind spots you've faced in your revenue leadership career, Matt?

[00:06:48] Speaker 1: Yeah. And I would say that this goes through a couple different journeys, but I'll go back to and I've repeated the same mistake a couple of times, but in different iterations. But the first time that this really happened was in the early days of building my company, which is in the same industry I'm in today. And I call it the survive to thrive curve. So you are trying to get revenue really at that point to pay the team and pay bills and pay technology and you're trying to cover expenses within the business. So you're willing to take any customer, any revenue that you can. And eventually you find that a lot of that business isn't a good long-term sustainable business. A lot of that business makes the team unhappy to serve them or whatever it may be. And I remember distinctly one time I was talking to the team about challenging customers and the team was like, hey, this one person, Matt, but I know they're your friend. And I was like, okay, they're just making me happy, not the business. And that was a very troublesome customer that we needed to have a tough conversation with and probably not move forward with and serving them for the long haul. But just trying to grab revenue at all costs versus being strategic about the ICP we were targeting and trying to get a specific customer profile that was build long-term sustainable growth. So I would just sum it up as like not strategic growth, but very much just any revenue we can get. And Sam, I think that the challenge for me at that moment was coming out of sales and sales leadership at a very large company. Like my responsibility was getting revenue and there wasn't the strategic responsibility pushed down. And I oftentimes don't know if there was a strategic vision as it relates to growing revenue. Prior company I was at, at least at that moment in time. So you go from like, I just got to hit a number to wait. Now I have to hit a number and wait, I've got to implement and support these customers and keep them. And then eventually that'll drive retention. And it's just a, it's a different world when you think about it from a business and profitability standpoint, as opposed to just, Hey, I need to hit a quota.

[00:09:13] Speaker 2: But when you think about how do you re-architect, it starts with a mindset, I guess, besides, were there other data points besides the fact that, you know, one time the team came and said, Hey, do we really have to sell to your friend? Who's a jerk. But like, were there other things that were happening in the business, maybe, maybe retention troubles or other things that made it clear that you had to sort of redesign your approach to go to market in a way or revenue generation?

[00:09:37] Speaker 1: Yeah, there's really two elements. I mean, one is the cost of supporting a customer, difficult customers cost more. So you see it start to show up within, you know, we track like customers to client service, individual customers to implementation, things like that. So you see, see it start to show up in the data from that viewpoint. The other piece is retention. Yeah. If you lose a great customer and you're like, why did we lose you? And it's just because of something that was completely preventable, but the team was spending time on other customers that were more needy. That's probably the more painful loss. And then seeing the, you know, newer customers a trip because they just weren't the right customers to have in the first place. Like you just could have never supported them regardless, right? You can sell them and convince them, but then keeping them long-term sort of show up in the, in the data.

[00:10:34] Speaker 2: Yeah, I'm sure. What's the process by that, that you go through to redesign, you know, the supply chain of revenue so that you can, because I think it takes, it can be quite painful to move from closing every deal to trying to close the right deals. How do you think about the sequence and the order of operations and redesigning the go-to-market team so that you can drive retention, not just new acquisition?

[00:10:56] Speaker 1: There's two ways to do it. I mean, you can slow down everything and say, Hey, we're going to refocus to this particular market, or you can kind of do it over time. We chose to do it over time as to not completely stall the business. But, you know, first you you've got to look at and identify what customers are actually happy and sticking, right? Like analyze data to understand, you know, who are the happiest customers? Who are the most profitable customers? You know, our customers, you know, we have access to inbound call data and support data and everything associated with a particular customer. So which ones are actually profitable and lower support demands? So you, you look at it from that viewpoint and then, okay, now you've identified the customer. For us, that's specific industries, specific size, and then specific personas within that business. And then it's, all right, so how do we tell those customers stories within the go-to-market side of our business? How do we encapsulate it? And then we have to go get the data. So how do we get the data and load our databases with the right customer profile? That's a really hard thing to do sometimes. And then you've got to get everybody making their outbound calls and doing your outbound marketing to the right people. So you're not actually directly targeting people who are not, not good prospects. As you know, within SDR and BDR teams, they love callbacks. So then you're convincing them, hey, your callback from, you know, eight weeks ago that said it would be, you know, the time to buy right now, but they're not the right profile. Like, hey, I get it, but, you know, we've got to go this direction because it's the best for the business. And then all the way through the funnel. So think about the sales cycle has to be reshaped because you can tell a better story because you're more honed in. And then you get to implementation and you can start, and our business is very implementation heavy. So now you can start shaping the story and shaping the implementation to be really systematized and best practice for that industry. And now you're telling the story of, hey, we serve others just like you. We do a great job. We speak like a native, not a tourist to this type of business. And then we get to implementation and, hey, we've architected the front end to be best practices built by your peers. So now we're standardizing the conversion and making it simpler and less friction for them to convert and come on board. And then long term, you know, with the customer success and retention side, you continue to blend it all the way through to, you know, keeping customers for a very long time.

[00:13:39] Speaker 2: You mentioned the toughest part of this, to your point, is trying to not stall the business while you renew your focus on your core ICP. And even to the point of there was old pipeline that the SDRs had that maybe wasn't good fit customers and you have to tell them to focus, was the process of not stalling simply, let's redirect the outbound motion. Let's change our marketing to focus on this ICP. But if people are coming in inbound and maybe they're not a great fit, maybe we keep selling them until we feel like we're in a better position. How do you think about navigating that transition so that it's not a hard stop? And to your point, you can keep the lights on because you're running cashflow generating businesses. This isn't relying on institutional capital for the most part.

[00:14:26] Speaker 1: You know, I think as a leader, typically what we focus on, everybody else focuses on. So as you start to ask questions and look at pipeline build for that specific ICP or industry, naturally your team's eyes start to go that direction. So you don't have to do a rip and replace of a new prospect database or ICP. You just start to really draw your attention to it and talk about it and everything the business motions are doing are heading you, you know, in this specific direction. And it naturally for us, it naturally happened. So we never had to go say, hey, we're not doing this anymore. We're only doing this. We just naturally started only looking at that type of business. And then a sales leader's pipeline review there. Hey, let's only talk about these. Well, I've got these others. Hey, I get it, but let's talk about these.

[00:15:23] Speaker 2: Would you let them close the others? Would you still let them close bad fit customers? Because we need, you know, for now we need the money at some point in the future, the whole pipeline will be full of good fit customers. But for now we recognize we're all trying to still maintain some velocity. We did. Yeah. I don't know whether that's right or wrong. I don't think it's the wrong decision. You say like, you live in the real world. We need cash.

[00:15:47] Speaker 1: Yeah. And there's also an element of, you know, we've got salespeople that are talented that are out there. They're, you know, they need to make money. So they're, I mean, if you cut it off, all of a sudden you've got, you know, a 90 day to 120 day lull. And I don't know, it was probably an easier decision just to let it kind of play out as opposed to completely shift. But for us, we chose to let it play out.

[00:16:13] Speaker 2: Well, I, I'm speaking from personal experience when I say that we are undergoing exactly the same process with my company and we're making the same determination because again, we also need to survive on cash flows. We don't have an infinite balance sheet and it is let's draw. It's exactly what you said. Let's draw our attention to the right ICP. Let's prioritize the experience for the right ICP. But if there are non ICP customers that come in through a self-serve motion, we're not going to turn them away. At least not yet. How long does this process take? Do you think, you know, how, and what did you message to the board as you're doing this? Are you, you know, because there's a lot of expectation management that comes into saying, we're going to go through this journey. It's going to be painful before it's wonderful. And this is how long you should think about having it take.

[00:17:00] Speaker 1: Yeah. For us, we were fortunate, Sam, to be able to find in our data, a natural ICP that we had good traction at the time with, you know, so the mantra of, Hey, this is what we're going to focus on was obvious. Like everybody's like, okay, that makes complete sense. There is an element of, if you go so hard one direction, all of a sudden you don't have diversity in your customer base. So there's more inherent risk because you have concentration risk in a certain area. So I find myself more answering the concentration risk question than, Hey, it logically makes sense to double down here. So it's been more of, you know, answering the concentration risk, what we're doing about that, how we think about it. Like, let's say we completely tap this, the TAM of this, you know, target we're after, which would be a massive company at that point. But if we completely maximize it, then what? And there's two paths. Like you expand to other markets, other industries, other personas, or you add product to increase the TAM within that market. And we've got both options. One of them actually gives us less concentration risk. But with that, you don't tell the story as well to another industry and you don't know it as well. And it's not as efficient, not as profitable. So there's risks on both sides. And at some point you just got to be, you know, we're business leaders. You got to be comfortable with some risk.

[00:18:37] Speaker 2: What's your preferred method these days? I mean, obviously it depends. So we know that to the point of, you know, selling more products, expanding revenue per user within the same vertical or pushing into new verticals with, let's even assume, you know, maybe you had some positive experiences, but with just much less visibility onto whether it would work. I guess maybe you allocate some portion of your budget, so to speak, for those new experiments, because the enterprise impact of demonstrating a new vertical can be significant, even if the money itself isn't that much.

[00:19:16] Speaker 1: Yeah. And I think about it from the viewpoint of, you know, percentages you allocate to each. So, you know, if we've got 80% of our budget assigned to our number one vertical and we're trying to tap that as hard as we can, and then we can expand and get additional products within that market, you know, until it's tapped. I mean, I think that we've got to continue to, you know, double down there and figure out ways to win. It's so hard to go speak to another buyer in another industry in the same way you can when you really just know that buyer. It's really hard. And then you think about the marketing efforts and the product efforts. I mean, we build software, so now we've got to build it for a whole new person, whole new industry. It's really hard. So the majority of our budget goes to there. But as you mentioned, there are other verticals that, you know, we eventually really want to do the same thing in. So we looked at, you know, really what I've described as kind of a lookalike business, like who is a similar admin, similar in our world, similar employees, similar supervisor, similar product set where there's not a ton of, you know, sculpting a whole new product, but we can tweak things that buys a similar way so we could get to them in a similar go-to-market motion. And then that's where, you know, we're choosing to run some tests on those other markets. And it's difficult. I mean, it's difficult to say, okay, this persona and industry buys similarly, looks similar, likes the same product. With a little bit of, you know, product tweak, we can get there at a similar scale. It's hard.

[00:21:12] Speaker 2: One piece of advice for upcoming revenue leaders based on what you've learned over your career, perhaps contemplating this blind spot.

[00:21:21] Speaker 1: The biggest piece of advice is, and I would say right now it's a lot different because the confirmation bias or the bias that we all have needs to go out the window because the world is changing rapidly. I mean, everybody's saying this at nauseam about how quickly the world's changing, but just, you know, surround yourself with people around you that are going to challenge your thought and aren't going to confirm your biases. And, you know, make sure that you're being open and honest with your team around you and getting good feedback and really having people kind of beat up how you think. Because the way we have to think now is just different. I mean, the playbook from, you know, 10 years ago, it doesn't work. I mean, it does not work. I mean, the things that we're, you know, thinking about, and I'm tapping, you know, my network and asking a lot of questions around how individuals think about certain things and think about go-to-market and resourcing the go-to-market engine differently because the world is just different. So I would say, you know, surround yourself with people that will challenge you, be open, listen. As revenue leaders, sometimes we're not great listeners, but definitely, you know, listen and, you know, leverage others around you for sure. For sure.

[00:22:55] Speaker 2: Matt, second to last question is, you know, we like to pay it forward a little bit and figure out what are the books, what are the podcasts, what are the influences that have had a big impact on you that you would share with us? Could be a mentor, could be an investor, could be your favorite boss, but, you know, something that helps us with professional development. What comes to mind when I frame it like that?

[00:23:17] Speaker 1: One of my favorite books, it has a bit of a funny name, but it's called The Road Less Stupid by a guy named Keith Cunningham. And it has probably one of the most simple concepts. And I actually, one of my leaders was in my office this morning and I quoted the book and he's read it. So I said, I said, what do you think you need before you make a decision? And he said, I need thinking time. And one of the outcomes of that book is really thinking time. And he talks about sitting in the corner in your office with a yellow notepad, no technology, nothing, write down the goals of what you want to actually think about. And he says, you know, the majority of people, they make quick decisions without deliberately thinking about them and they end up, you know, hurting them in the long run, hurting businesses in the long run. So really be deliberate and give yourself space to think. And as I say that, I'm talking to myself just as much as everybody else, because we, we all, you know, just saying it, I'm like, I'm not, I'm not doing that enough. Right. But, but that's a great, just a great book, great concept. At the end of every chapter, he says, so here's your bumper sticker. And it's like just a catchphrase from the chapter and just is well delivered. So I'd highly recommend that.

[00:24:43] Speaker 2: I love it. Matt, if folks are listening and they want to get in touch, maybe they want to become a customer, maybe they want to work for you, learn more. What's the best way to get in touch?

[00:24:51] Speaker 1: Yeah. Best way for me is just look me up on LinkedIn. There's not a lot of folks with the last name Umholtz, U-M-H-O-L-T-Z. So Matt Umholtz, look me up on LinkedIn, connect with me there. Would love to expand the network. And if you have questions, just ping me through LinkedIn. Would love to love to meet you.

[00:25:10] Speaker 2: If folks are out there, want to get in touch with me, it's Sam at JoinPavilion.com. This has been another episode of Revenue Blindspots. Thanks to Otter AI, who's providing the call recording and revenue intelligence technology that we need to look around the corner and avoid blind spots. Matt, thanks so much for being our guest on the show.

[00:25:28] Speaker 1: Yeah. Thanks, Sam. See you soon. You too.