06 Apr April 8, 2019 – Funding Code Judy Robinett and Creating Loyalty Sandy Rogers
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Judy Robinett – Startup Funding Expert, Speaker and Author of Crack the Funding Code: How Investors Think and What They Need to Hear to Fund Your Startup – Read interview highlights here
As an investor, the first time you hear an exaggeration, a white lie, run!
Judy Robinett’s book, “How to be a Power Connector: the 5-50-150 Rule for Turning Your Business Network into Profits,” was published by McGraw-Hill in May 2014. It was named the #1 Business Book of 2014 by Inc. Magazine. Her new book teaches how to get funding by speaking the investors’ language. She is on the Advisory Boards of GATE Global Impact, Illuminate Venture Capital, Menlo Park Ventures, and Pereg Ventures. She is a Partner of Crowdfund Capital Advisors. She worked as the Managing Director of Golden Seeds angel investment firm, and as a faculty member for Goldman Sachs 10,000 Small Businesses. She is an advisor for the upcoming film She Means Business, and co-authored a chapter of Crowdfunding for Dummies (Wiley, 2013). She has given over 300 speeches worldwide for audiences at MIT, Cal-Poly, AT&T, Kingonomics, and more. Judy Robinett has been featured in Forbes, Washington Post, Wall Street Journal, Huffington Post, VentureBeat, NAWBO, Kingonomics, and National Press Club.
Sandy Rogers – Leader of FranklinCovey’s Loyalty Practice and Author of Leading Loyalty: Cracking the Code to Customer Devotion – Read interview highlights here
As leaders, put people in position to enrich the lives of your customers.
Sandy Rogers is the leader of FranklinCovey’s Loyalty Practice. He was previously senior vice president at Enterprise Rent-A-Car. During his 14 years there, Sandy managed the turnaround of the London, England, operation and led the teams that developed Enterprise’s marketing strategy and system for improving customer service across all branches. Before Enterprise, Sandy worked in marketing at Apple and at P&G. He is a graduate of Duke and Harvard Business School.
Highlights from Judy’s Interview
My college roommate, Margaret, was pretty shy, and she kept complaining to me that she didn’t think anybody would ever ask her out. So I gave her a task: She had to talk to four to five strangers, just say hi, during the day on campus. Sure enough, she ended up with several dates. Within that year, she was married.
Research shows we only talk to strangers 2% of the time. And it’s really sad. Most of us didn’t know our spouses, they were at one point strangers. And I tell people to develop this skill. The way to do it, is to either offer a heartfelt compliment or to ask a question. I’ve never had anybody be nasty to me when I’ve done this. Of course, I don’t bother people if they’re sleeping on the plane. But I’ve met billionaires who were taking hikes in Park City, so it’s an important skill to learn to talk to strangers.
In terms of networking, and going to that chamber event, there’s always someone standing there by themselves, who doesn’t know what to do, who would desperately appreciate you going up and shaking their hand. It’s amazing if you can take the focus off of yourself and put it on the other person. And introverts often are better than extroverts because they know how to listen. You never know who you’re standing by or the connections they may have. I’ll give you an example. Last week, I was in New York, doing a couple of TV shows, and I was asked to speak at a black women in tech conference. I did, and in the speaker room was this lady, and I started talking to her. She just introduced me to two really high end media contacts. So you just you never know. And it’s to your advantage to reach out to strangers.
I have found that in the situations where I’m uncomfortable, it’s easier if I do go up and initiate a conversation. I’m more comfortable having a bad conversation than being by myself, because then I feel awkward. You know, like everyone’s looking at me, and everyone knows that no one will talk to me, and that’s what everyone’s talking about. My fear was, why would anybody want to talk to me?
A trick you can do is go to the chamber a little early, and talk to the organizers by name. Tell them what you’re doing, and ask them to introduce you to a couple of key people. Another trick is to take somebody who’s been there before, and be their wing man. That works really well, too.
I had to write this book, because I was so frustrated meeting great founders who couldn’t figure out how to get funded. Angels and VCs and family offices can be pretty opaque. I’ve been an angel investor, I sit on VC boards, and I advise some incubators. I learned, as Einstein said, “If you’re going to play the game, you’d better know the rules.” The first one is that you position yourself as a high potential startup by being really clear on your exit, because those investors want their money back and an ROI.
The second is to mitigate how risk is viewed by the investor. So often during a pitch, someone will come in, and focus on having the greatest Kool Aid. They’re drinking the Kool Aid, they’re showering in their Kool Aid, and the investors want to focus on how you’re going to grow a successful business. If you understand that angels typically want their money back in five years, in your go to market strategy, you can have how you’re going to scale the company, all of that information, and then say that you’re looking at potential acquirers at year five. This will be music to the investors’ ears, and 95% of the exits are indeed strategic sells.
And you can find comparables. My favorite two places are CB Insights, and the PitchBook. Both of those are free resources, you can google and you can find out what the comparables are for the exits. You can also find out who’s investing what VCs, and what Angel groups are investing in your specific sector.
One of the wisest moves to find funding is to find a corporate venture capital group that is in your industry. And it’s just amazing, there’s more of these, and there are regular VCs, and the money they’re investing is 28 billion, it’s up considerably, the total VC amount that was invested is 100 billion. And so the numbers are looking really good. But any strategic partnerships that you have, anything to grow sales, that’s really important to them. So if you’ve done your homework, and you’ve looked at comparables of three other companies that have sold, you don’t even have to have it on the slide, you can just talk to it.
And as you’re talking through your story, or when you initially meet with the investors, you can tell them, because often, they will want to know what your plan is. It’s really, really smart to have developed a relationship. People have got to know you, like you, and trust you to fund you. But before those people invest, you want to have an agreement on what kind of exit you’re looking at, there’s probably been more breakouts and litigation over the exit than you can imagine, so that’s an important one to have developed up front. What’s your vision, how you’re going to scale, and what you’re looking to do for the future of your company.
Often I will meet founders and they’ve never done a startup before. And that causes a little bit of bank stuff in time with investors. If you look at the lean model that you have, the one pager that shows you there’s a value proposition with the ball around it, I tell people to put on the prettiest bow they can. And one of the ways to do that is to bring on two or three powerful advisory board members. Then people will look and go, “Oh, my gosh, if this person is in on this deal, this is a good deal.” So I’ve helped bring on the director from Microsoft, past CFO from PayPal, and you have top quality people, that helps them mitigate the risk. This group needs adult supervision. One way to provide that is to show them you have very credible, powerful people that you’re going to listen to. One of the ways to not get funded is not be perceived as coachable. So if you’re an arrogant know-it-all, you’ll get booted out of the room very quickly. You want to do your due diligence, and make sure that the people really will add value, and that there’s a good character chemistry set. Oprah says, when someone shows you who they are, believe them the first time. You only want people that are committed to your business, and they’ll have your future, and they’ll have your back.
There’s only two reasons that a startup fails. The first is lack of a customer. The second is lack of funding. If you have any partnerships, anything like that, you’re golden, because you’ve proven the dog was going to eat the dog food, as they say in the VC world. I meet a lot of people, and they think they’ve got this brilliant idea. And maybe their friends and family will buy it, but nobody else will open their wallet. At that point, you have a hobby.
There are three C’s that investors want. The first one is be coachable. If you’re an arrogant know-it-all, nobody’s going to give you their money. They worry what you’ll take their money, and you won’t listen to them. This isn’t a deal where they fund you and forget you, so it’s important that you’re viewed as coachable. Angel investors have often had exits themselves as entrepreneurs, and so they want to coach. They would like to be involved as a mentor, because they want it to be successful for everybody.
The second one is your character. Howard Stephenson, who’s known as the godfather of entrepreneurship at Harvard, wrote a book teaching people how to invest. He advised them that the first time they heard an exaggeration, a white lie, to run, not walk, because you would also lose your money. The third one is a level of confidence, because people worry about if you’re not confident, how are you going to sell. It’s so important to be a little confident.
I’ll give you some advice on this. When I was CEO of the public company, I walked around the house for a couple of months going, I can’t be the CEO of the public company. My PR guy, who’s come out of a big firm, was asked to do a training video, and he likes acting, so he got an agent, but he got turned down all the time. His agent sent him to a character actor. And this guy made him walk around the room for five minutes every morning and night and say out loud, “I am perfect for the part.” And it actually works. It helped me, and it will help you as well. And then realize that everybody in that room knows you’re broke. And your problem is their solution. The one thing they lose sleep over is finding a good deal. So change that in your head, you actually solve their problem.
To demonstrate you’re coachable, it’s as simple as showing you acknowledge and appreciate advice you’re given. You can also ask a question of them. You could say, “We’re considering three paths here on scaling, what has been your experience?”
It’s always good to work with someone. The guy that I recommend on financial performance is David Meister out in New York, who will come up with very realistic performance. It’s okay to be forward-looking, you’ve got to, as Jack Welsh said, get better reality. You can’t say you’re going to have evaluation three times that of Facebook or your revenues are quick to be bigger. Those are the things that you certainly can be positive and forward-looking. There’s nothing wrong with that.
If you’re disruptive, you’re the new person, the new kid on the block, it is hard to figure out what that market space might be. And the advice that I often give is look at something that could be comparable, and look at those rates. Often, if you’ve got an idea, there’s other people out there that have the idea. So go Google and find out something that’s either similar or close to, and that will often help you come up with something that’s reality-based.
About some of the investing things, there’s no lack of money. There’s 279 trillion of private Global Wealth, 300 angel groups in the United States equally from north, south, west and east. And we’re seeing more and more family offices. Family offices now are having better deal flow than the VCs. So, no lack of money out there. It’s important to be persistent. Go to pitch events, go to incubators, entrepreneurial programs, certainly talk to the SBA, the SB DC and such. They all have relationships with investors. Then ask what I call my two golden questions. You meet somebody, you’re telling them about your startup. Question one, what other ideas do you have for me? And question two, who else do you know who I should talk to? You’ll be amazed, your dentist probably knows investors. Be persistent. Ask for help.
Feel free to reach out to me at Judy@JudyRobinett.com. You can find my book on Amazon. I’m really thrilled that it’s an international bestseller. I’m on LinkedIn. I tweet. Reach out, I’m happy to help.
Highlights from Sandy’s Interview
I spent most of my career at Enterprise Rent-A-Car. There we were focused on earning loyalty from customers through personal interactions they had with employees. And that’s primarily the basis of the work that we do at Franklin Covey, and what this book regarding loyalty is about.
Every car rental company has branches, and it has cars, it has people. What differentiates Enterprise Rent-A-Car is its people. No matter how automated your processes, occasionally, you’re going to run into a problem or an opportunity to speak with an employee, and that’s where enterprise really differentiates itself from the competition.
There are a number of great organizations that find and train people. We believe that you should look for people who live the loyalty principles that we talked about in our book Leading Loyalty, principles that govern our relationships with other people. By other people, I don’t just mean our colleagues and our customers, I also include our family, friends, spouse, and kids. There are three principles that we have discovered in our work over the last 25 years that are essential to earning the loyalty of other people. These principles are empathy, responsibility, and generosity. If we ignore or violate these principles, we will not be successful in earning other people’s loyalty. The book is all about how we can bring these principles to life more often in our interactions with people.
When we hear these things, we think, “Well, okay, of course it makes sense, because I learned those things in kindergarten.” And we did, and hopefully they’re ingrained in our psyche, just because empathy, responsibility and generosity are common sense. Unfortunately, they’re not common practice in many interactions with businesses today. Why would that be, given we know how important these things are? It’s because we’re busy. Think about all the people serving across the front line of every organization that you can think of today, whether it’s b2c, or b2b. And it’s not just face to face, it could be online, it could be on the phone, could be digital. People are busy, that guy goes to hit, they’re going to have expense reduction goals, and they’ve got these tasks, they’ve got to be done. We don’t create space in the whirlwind of our daily lives to bring these principles to life more often in our interactions. The idea behind the book, is to create a process that makes it easy for teams to bring these things to the forefront in interactions with each other, and with customers more often.
Let’s take Apple, for example. Everybody who works in Apple has a customer, whether that customer is inside the organization or outside of the organization. Now, it’s easy to envision all the customers outside your organization opening the box and experiencing the product. And of course, the people who are designing and engineering those products send me experiences associated with opening the box and getting them going. They need to be living by these three core loyalty principles too, and part of the reason why you’d like those products is that they have that. They took the responsibility to make it easy for you to get up and going with these products. They’re generous in the approach of how they’ve simplified them, so you don’t have to read a 100 page manual to figure out how to use an Apple product. It’s very intuitive. So these principles are relevant, regardless of your role in the organization, whether you’re talking about a personal interaction, or talking about a product or a service.
Whether the organization makes toilet paper or computers or airline flights, everybody’s got a customer. And we need to treat those customers with empathy, responsibility and generosity. The customer has to feel those principles in their interactions with your organization. So I mean, take toilet paper. It’s got to be designed in a way that meets legitimate customer needs, right? It takes responsibility for the real job to be done.
These things are so vitally important in earning our loyalty, that this book is really not centered around PNG and Apple and product centric companies.
This book comes out of my experience with these companies, and the hundreds of others that we have worked with directly, to help them increase their customer loyalty. Everybody understands the value of customer loyalty. A ton of books have been written about how valuable loyal customers are, and how they tell all their friends, and they help you grow your business, and they lower your cost of supporting customers.
This book is different in that it actually teaches organizations how to earn customer loyalty. And it comes down to it’s not about reward points, or frequent flyer miles, or discounts, because those things are easily copied by competitors. This book gets into the more difficult job. And that is how to change the behavior of all the people in my organization, so that when customers walk away from an experience with a product or service offered by that company, they feel like this is a great company. They make great products, and have great services.
At your chicken gizzard company, you have customers, or you don’t really have a sustainable business. And we believe that the people that you interact with permanently are an example. If they want to feel like, when they have a problem or an issue or concern, that your people that interact with them are doing it in a way where they have empathy, they take the time to make a genuine connection, and they listened to learn and really understand what issues that person has had with your company, and with the green gizzard that are not performing as well as the blue ones. Your customers want to feel like you really take responsibility for helping them to achieve their job to be done. A Harvard Business School Professor, Clayton Christensen, said that people hire products and services, even chicken gizzard, to do a specific job for them. To be responsible for our customers needs, we need to take the time to understand what are you doing with our product, and what are the challenges, and then not only discover the real job to be done, so that we can help to meet it even better, but then follow up, which is another practice of responsible people. It works better than waiting until they have a complaint. Be proactive to understand how are our products working for you all, and what, if anything, could we be doing to better serve you? And that comes right into to being generous, right? Because in being generous, we’re sharing our insights where we’re helping customers to reduce their effort to make it easier for them to do business.
In a service business, people inevitably are in touch with customers. As I mentioned earlier, everyone in an organization has a customer, whether they’re outside of your organization or inside the organization. You might work in the finance or manufacturing area, and you have customers in the organization. We need the loyalty of our customers to be successful. In this book, we’re trying to take everything we’ve learned over the last 25 years, and explain it through these three core principles of empathy, responsibility, and generosity, which are essential to earning the loyalty of other people. But more importantly, give a process to help bring these principles to life in more of our interactions. You know, everybody’s busy. So how do we remind everybody how to do these things in our interactions with customers, whether it’s face to face, online, over digital communication. You have to bring this stuff to life. And we do this with these huddles that we’ve designed.
There’s three loyalty principles, and there are two practices which go with each principle. For example, to have empathy for someone, we believe you need to first make a genuine human connection, we all know the difference between a genuine and a fake connection. And then we listen to learn to understand their story, because until you understand my story, it’s difficult for you to have empathy for me. And what the huddle does is it takes a principle or a practice, there are 11 of them in total.
There’s 11 chapters in the book, each chapter describes what is discussed in the huddle. And then we give a huddle guide at the end, so that when the team comes together once a week, for 15 minutes, they commit to do the huddle. And while the content of the 11 huddles is different, the agenda is the same. First thing the team does in the huddle is to celebrate. It’s not always what’s measured that is what improves, it’s what’s celebrated. We want to call out or share a story about somebody on our team who lives the principle or practice we talked about last week, and really applaud that. The second thing in the huddle is to learn about the particular principle or practice this week. How do we apply it within the context of the work that our team does? Three, we commit to do that over the next week, and then share what we learned. And finally, we schedule our next huddle.
11 huddles and 11 weeks, 15 minutes per week for 11 weeks. And through that process, you have taught everybody on the team, what the principles and practices are earning loyalty in whatever work that you do. And when you’ve completed all 11 huddles, are you done? Absolutely not. I mean, you don’t go to the gym for 11 weeks and decide you’re done working out–not if you want to stay fit. You keep doing these huddles continuously. You’d let everybody on the team have a chance to lead each one, because we learned best what we’re teaching. What you find, and we’ve been doing these hurdles with organizations around the world who’ve been testing this approach, they find these things are more and more fun and engaging. The stories are richer, the discussion about how do I actually apply this in the work I do in a call center every day becomes more and more useful and powerful.
I can think of organizations in almost every industry that are much better at applying these principles than others. I can think of any airline based on who they are hiring and how they’re training and rewarding. They are bringing these principles and practices to life. The employees know how to have empathy for passengers, they know how to take responsibility for the real job to be done. They don’t have to be generous. And so the trick is, how can you bring these things to life? We certainly did this at Enterprise. But before this book, we were just talking about these principles, and there wasn’t a real process or game plan to make it easy for teams, or class organization to learn and apply these things consistently. In your gizzard company, let each of the five employees have an opportunity to lead each of the 11 huddles. And leading a huddles is simple. You just hand them the book and say, “Hey, would you mind leading this huddle? Just read chapter four, and use the discussion, a guideline at the end of the chapter.” It tells you exactly what to do. First we celebrate people who are doing what we talked about in huddle three last week. Now this week, we’re going to drill down on particular practice, which is really listening to learn. And then we’re going to make commitments on how to actually do this more effectively. There’s a hotel chain that has been doing huddles at every level of the organization for many, many years, they still do it today. And it is what has given them their competitive advantage in the area of customer service.
This was invented by Sheltie, who led the Ritz Carlton chain for many years. And he really cracked the code to employee empowerment. His point was, in speaking with all the employees of the Ritz Carlton, we are ladies and gentlemen serving ladies and gentlemen. And he said to his team, no matter what your job is, we each have to own this responsibility of providing a great customer experience. Even if you’re refilling the water glass in the restaurant, and you overhear a guest complaining about her bathtub drain not working, you own that problem until it’s resolved. Let her know, listen, say you’re sorry to hear that. Say, “I’m going to call the engineer and I’m going to keep you informed until we get this fixed.” Sheltie told his employees they had $2,000 in personal discretion to make it right for a guest. Now imagine you’re making $12 an hour and you’re being entrusted with that kind of responsibility. Empathy and responsibility and generosity is a prerequisite to them and in turn treating the customers with those principles.
TD Bank, well known for customer service, lives by this idea. It takes one to say yes, but two to say no. So it’s okay for you to say yes to a bank customer. But if you’re thinking about saying no, please check with your manager first. We love how they give every frontline employee respect, and the accountability to say yes whenever possible. But unfortunately, in so many organizations today, what we all understand about the importance of empathy and responsibility and generosity, these things just don’t come to life often enough.
For example, how an airline communicates a flight delay, or how a store deals with a return that a customer needs to make. We hear these horror stories. I was told a story by the CEO of a leading retail chain. He said, “One of our customers came in carrying a load of unopened baby items. And our person says, “Well, Sarah, do you have the receipt? I’m sorry, you can’t return them without the receipt.” And the CEO covered his face and said, “How could I have allowed something like a receipt to get in the way of doing the right thing? I mean, this man and his wife had just had a miscarriage, they’d lost their baby. That’s why they were returning these unopened brand new items.” But this is an example of not saying yes to customers. Otherwise, check with your manager. We’ve got to, as leaders, put people into a position to enrich the lives of our customers to live these principles, because in doing so, it’s not only going to earn customer loyalty, that’s the secret to earning employee loyalty, too.
Franklin Covey specializes in helping organizations achieve results requiring a change in human behavior. And I’m focused with our team on the loyalty practice, where we’re trying to change behavior throughout the organization in ways that will earn the loyalty of colleagues and customers. In our work, over the last 25 years, working with hundreds of organizations, b2b b2c, there are a set of principles that have to come across to the other person in order to earn their loyalty. And I’m not just talking about the loyalty you get with a reward program, I’m talking about the fierce loyalty that is fueled in the heart through positive human interactions with other people. We’ve done about a million surveys over the last 20 years. And if you look at the difference between customers who rated an eight versus a 10, invariably, it comes down to talking about the people involved in the transaction and how they made the customer or the employee feel. So we’re really focused in this book and the work we do to help organizations bring that to life.
Go to leadingloyalty.com, and learn about Leading Loyalty, Cracking the Code to Customer Devotion. We hope and believe this is a very simple way for teams throughout the organization, not just frontline teams, but anybody who’s got a customer to learn about and practice these principles more often.