NY Report: Rob's Blog

Why Someone You Pay $500K Quits

Robert Levin

I know plenty of business owners who have wildly profitable businesses who have told me that they overpay their people so that they don’t have to worry about turnover. For most of them, that seems to be working. But my guess is they probably have good cultures, too.

A few weeks ago I met a former big company executive who recently became an entrepreneur. She told me about several of her former colleagues that were making around $500k a year, who quit for lower paying jobs. Why did they quit? Simple. The culture sucked and no amount of money was worth spending time at those companies.

©iStockphoto.com/spxChrome

Money talks… to a point.

What Are the Hottest Global Economies?

Robert Levin

Recently I attended Doing Business in Emerging Markets, produced by HSBC. Most people are familiar with the BRICs (Brazil, Russia, India, and China) which, several years ago, was the group of countries that were identified to have the strongest growth, and in fact, did. The new group of developing counties is called CIVETS—Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa.

©iStockphoto.com/scyther5

The CIVETS all have populations of at least 50 million and rising incomes. However, doing business in those countries is not a walk in the park. The CIVETS are very hard to do business in because of a variety issues, including regulations, inflation, and governmental challenges. In addition, despite the growth potential, the top two countries with the highest projected growth rates for the next five years are still China and India, according to the Economist Intelligence Unit.

Are the CIVETS good opportunities for your business? Well, they are certainly fertile ground. But the risks are high. As always, thorough research and the right local partners are a must. One panelist said that while the opportunities are high, it is just too hard to do business in some of the CIVETS right now.

Is Bigger Better?

Robert Levin

Among the perennial debated issues in business is, “Is bigger better?” In one camp, you have those that say “grow or die.” In the other, they say that the size of your business should be a reflection of what you want as an owner. If you don’t want to have a big company and all of the headaches that come along with that, then staying small is just fine. While I personally want a big company, I had always believed that your business goals should follow your personal goals and could agree with those who wanted to stay small. However, I am rethinking this of late. In certain situations and industries, it is critical to continually grow and get to a certain size. Here are a few reasons why:

Size gives you a deeper bench. Let’s say the size of your business calls for having two salespeople, but one leaves or isn’t performing. Now you have a big problem. In fact, your company could be in jeopardy. However, if the size of your business calls for having eight salespeople and one leaves, you have a more manageable problem.

Size gives your more options. I recently spoke with a successful entrepreneur and we discussed how hard it is to hire salespeople. One idea we talked about was for him to start his own sales training program. His business is growing to a size where he could hire five or six entry-level salespeople and train them knowing that one or two will ultimately work out. When you are small, you can’t afford to do that.

Size gets you a better exit. Many entrepreneurs that I speak with are realizing that most exits in their industry are earnouts, which doesn’t provide the liquidity event that most entrepreneurs work all their lives for. However, if you can grow to a $30-million- or $80-million-dollar company, you will attract bigger suitors who can pay cash for your business. On the other side of this issue, I know a lot of entrepreneurs who are acquiring companies with earnouts like crazy so that they can have the big exit.

I still think that the growth of your company should be determined by your personal goals. Whether you stay small or pursue growth, you will have challenges. In the end, bigger may actually be better.

I Found Out We Hired an Intern on Twitter

Robert Levin

I'm at the gym at 6:15am yesterday doing a plank. As I'm waiting for my 60 seconds to go by, I decide to check out our Twitter "mentions" on my iPhone and I see that @katelriley says that she can't wait to intern at @nyreport this summer.

Wow. The times sure are changing. NY Report "news" is breaking on Twitter. (When I told Daria that I found out about hiring Kate before anyone in my own company told me, she replied with, "That's great. We hired the right intern.") I was also excited because this is just another example of my team taking the initiative.

Three Tips on How NOT to Grow

Robert Levin

About 15 years ago, someone told me, “A strategy isn’t just what you decide to do, it’s what you decide not to do.” And a couple of years ago, serial entrepreneur Steve Messer added something to the effect of, “As an entrepreneur, you need to balance unlimited opportunity with finite resources.” (To read about Messer, click here.)

I don’t know about you, but the entrepreneur in me really wants to do 100 things at one time (surprising once you find out I started my career as a CPA). But I know that this is a recipe for disaster and a sure-fire way to piss off your team. Of course, the challenge is picking those opportunities that are “right” for you and your company.

I recently came across a great article from CFO Magazine on this very topic, “How Not to Grow.” Here were my top three takeaways and ideas from the piece:

1. The article cited Steve Jobs’ statement that if Apple had pursued the idea of a tablet (as a follow up to the Newton) too early, the company would not have had the resources to build the iPod. So, even Apple has to worry about resources? I guess I’m not alone. This quote also reaffirms that timing is everything. Ten years ago, the world was ready for the iPod, not the iPad.

2. Coinstar has had success with its DVD rental company Redbox, but they are already planning for the day when Redbox growth slows due to movies being even more widely available at home. This told me that you have to consistently evaluate how the prospects of your products and services will change down the road and adjust your strategy accordingly.

3. The average success rate of a new product or service is under 50 percent. Don’t put all your eggs in one basket. At NY Report, we are currently working on a new product launch. On the one hand, we are doing what we can to ensure that the product is on the right side of the 50 percent marker by conducting focus groups and surveys. On the other hand, we are being cautious by keeping a tight lid on expense related to this new product.

While we spend much of our day dealing with clients, colleagues, and putting out fires, it is important to remember that long-term planning and strategic issues are the keys to sustainable success in our businesses (and ultimately, our lives). Figuring out where to—and where not to—grow takes a lot of time and deliberation. Make time.

Hope this helps.

Is My Band Good for Business?

Robert Levin

Last week, I was having a discussion with a business contact who is also a friend. We were discussing my band, Fantastic People, and our upcoming debut on March 29th. He told me that he had heard several common business connections mention that they were going or considering going and asked me how I was promoting it. I told him that in addition to the usual stuff (Facebook, etc.), I was also emailing some clients and mentioning the event on LinkedIn. He had replied with something along the lines of: “I would be afraid of mixing business with pleasure and someone not viewing me as a serious business person.” I was perplexed by his response and told him that he had it all wrong. Here’s why:

Even before I was a business owner, I thought the lines between my business and personal life were very blurred—and that is probably an understatement. Why do the two have to be separate?
More than ever, real people (that includes most New Yorkers) want stuff that is real. Being yourself is real. The show will be an opportunity for clients to see that side of me and vice-versa. That is real bonding.
The event, while not a NY Report event, will be a fantastic networking opportunity as the majority of the members of both bands (Rock Steady, the other band on the bill, is led by Damon Gersh, principal of Maxons Restoration) are entrepreneurs who are friends with other entrepreneurs. If I invite business contacts to an event that happens to be at a club and they make valuable connections, I delivered value.
I don’t believe I have to worry about anyone who knows me or NY Report not viewing me as a serious businessperson. Why does my playing in a band make me any less serious of a businessperson?

M5 has several in-company bands. They have their own, fully equipped rehearsal space in Manhattan (not cheap) and have their own battle of the bands in a big venue. Oh, and they recently were acquired for north of $150MM. Good for their business? I’d say so.

I have spent thousands of dollars on music equipment and rehearsal time so I can’t say that the band is good business. But good for my business? Absolutely.

Grow by Knowing How Not to Grow

Robert Levin

About 15 years ago, someone once told me, “A strategy isn’t just what you decide to do, it’s what you decide not to do.” And a couple of years ago, serial entrepreneur Steve Messer added something to the effect of “As an entrepreneur, you need to balance unlimited opportunity with finite resources.” I don’t know about you, but the entrepreneur in me really wants to do 100 things at one time (surprising once you find out I started my career as a CPA) which I do know is a recipe for disaster and a sure-fire way to piss off your team. Of course, the challenge is picking those opportunities that are “right” for you and your company.

©iStockphoto.com/aluxum

I recently came across a great article from CFO Magazine on growth, “How Not to Grow.” Here were my top takeaways and ideas from the piece:

The article cited Steve Jobs’ statement that if Apple had pursued the idea of a tablet (as a follow up to the Newton) too early in the late ‘90s, the company would not have had the resources to build the iPod. So even Apple has to worry about resources? I guess I need to, too. Also, timing is everything. Ten years ago, the world was ready for the iPod, not the iPad.

Coinstar has had success with its DVD rental company Redbox, but they are already planning for the day when Redbox growth slows due to movies being even more widely available at the home. This told me that you have to always be evaluating the prospects of your products and services down the road and adjusting accordingly.

The average success rate of a new product or service is under 50 percent. Don’t put all your eggs in one basket.

I highly recommend that you read the original article. Like a lot of content that is created for bigger companies, you have to figure out what it means for you, but it is a great read.

Making Money Selling Razor Blades

Robert Levin

When I started my career, someone once said that the key to business is selling the sizzle (the marketing), not the steak (the product). Back then, I didn’t get it. Well, I get it now.

Sure, you need a great product or service, but almost everyone has a great product. Companies that are winning today have great marketing. Check out how Michael Dubin is using video to sell an exciting product like razors.

The Importance of Trust in B2B Sales and Marketing

Robert Levin

Ever since the great financial collapse of 2008, it has been harder than ever to win new B2B business. The recession that followed resulted in a greater resistance to change and a slowdown of the opening of wallets. Nowhere is this more apparent than the small business market, where purchasing decisions have elements of business and consumer buying habits. Because of these shifts in buying, it is more crucial than ever that both marketing and sales incorporate the building of trust into their processes and initiatives.

Is your company building trust? Here’s how to find out:

Marketing

Is your target market aware of your company?
What is your target market’s perception of your company?
Does the market know how you help your clients?
Does your website (where your company is being validated) engage visitors?

Sales

Are your salespeople building trust with buyers before proposing something?
If you sell your product or service over the web, have you removed fear, uncertainty, and doubt throughout the buying process?
Are your salespeople armed with testimonials and referrals to put potential customers at ease regarding perceived risk?

Looking back on when I started The New York Enterprise Report, I wish I had spent more time understanding how people make advertising and marketing decisions. Had I understood that, I truly believe we would be much bigger today. Never before has it been so essential to understand the importance of trust in the buying process, and then to adjust accordingly.

Performance Evaluation Made Simple

Robert Levin

Whether you ask the reviewer or the employee being reviewed, “Do you like the performance review process?” I guarantee that you will get the same response: “No.” We sent a man to the moon over 40 years ago, but we can’t seem to find an employee review process that people don’t hate.

Well, for the past two years, we tried something new here at NY Report and I think we are on to something. So I would like to share our process with you.

I will start by saying that I meet “semi-formally” with everyone who reports to me at least once every other month to discuss them and their job (as opposed to discussing their projects). In addition, I casually check in with them more frequently (usually over lunch). So, regardless of the preview process, we are not waiting six or 12 months to find out how things are going. It also means that there are rarely any surprises.

How It Works

1. We set up time to meet for an hour.

2. In advance of our meeting, the reviewee puts together a bulleted, one-page list of

the following:

Hits (accomplishments)
Misses
Top goals for the coming year.

3. Prior to the meeting, I review their list.

4. When we meet, we very briefly go over the list. We spend more time going over any difference of opinion. (Of course, because of the casual check-ins, differences have been very minor.)

5. We discuss their goals. In particular, I want to make sure they are aligned with the company’s goals and that they are measurable.

6. If appropriate, we discuss resources they need to accomplish their goals.

7. We discuss professional development.

8. I mark up their list using “track changes” and save it.

9. Sometimes there is a follow-up to discuss their action plan for goals.

That is it. I know there are nine steps, but the whole thing takes a couple of painless hours. And my team seems to like this process, too. James Linney, marketing manager, said, “I like the process because it is informal and doesn’t take up a lot of time. It is also practical, because now I know that Rob and I are on the same page with respect to my performance and goals.”

I can’t tell you that this is the perfect system. I can tell you that both I and my team like the process and get value out of it. And while this might seem strange to have your employees begin their own review, I like it because I don’t have to spend hours working on it and searching for the right words.

Hope this helps.

Why We Should Have Moved Sooner

Robert Levin

Back in the fall of 2007, we were in a shared office in Chelsea and were craving our own space. I received an email that a sublease was available right around the corner. I raced over with our GM at the time, full of excitement, to check the space out. When we walked in, we didn’t see the office for the dingy space that it was, with chipped concrete floors, hanging wires and a 100 percent lack of natural light. We saw a space of our own. (I think we called it “very lofty.”) A handshake and a sublease agreement later, we had our own office. Sure it was all gray and the bathrooms… well, that’s not really fit for print. But it was ours.

As the ‘07-‘08 winter set in and the heat didn’t work every day, we fooled ourselves into thinking that these were temporary problems that would get resolved. But the bathrooms got even… We never said it, but we really didn’t invite clients over to meet in our makeshift conference room—what if they had to go to the bathroom?

©iStockphoto.com/jekershner7

Then, in 2008, we ramped up our hiring. In January 2008, I hired Daria Meoli as our managing editor (now executive editor). When I told her that I was going to write this blog about our last office, she said, “When I walked into the office for the first time, I thought you were going to kill me. It looked like the basement in Silence of the Lambs. It was only that you told me that you grew up in Jersey that I decided to stay for the interview.” Fortunately, Daria, who is also from Jersey, saw past the gray and saw the opportunity at NY Report.

But this post is really not about Daria. It is about those 150+ sales candidates that I interviewed that walked in and decided, before they met me, that there was no way in hell they were going to work in that office. I bet some of them were really good, too. Of course, they never told me that they would never work there, but they weren’t interested in meeting again either. I didn’t read between the lines. And I should have.

You see, finding, recruiting, and motivating great salespeople is one of the most important things that I do because we are in a very sales-intensive business. And as I have said many, many times, great salespeople are few and far between. There is no question in my mind that I lost out on good people, not because of comp or lack of opportunity, but because our office space did not represent our image, product, or growth potential.

Fortunately, I did find a couple of salespeople who did see the opportunity through the gray. More importantly, my team loves our new office space. I am sure that it is helping morale. And happy team members are productive team members.

[Editor’s note: The above photo is not actually of our old office space, but it’s not far off.]

PS – Last year at our Beyond Motivation event, our panelists talked about “Employer Brand” and how important it is to have a very positive one and convey that. On March 8^th 2012 we will be producing a webinar titled Become the Employer of Choice for Top Talent. I will not only moderate the webinar, but I will be taking notes very carefully.

Confessions of a (Former) Bad Salesperson

Robert Levin

I started my career as a CPA and then become a CFO and CEO before starting NY Report. Up until I was in a position where I was out selling advertising for the magazine, I thought I knew how to sell. When I was a CFO, I was riding my sales managers and salespeople, asking why things in their pipeline were taking so long to convert into revenue. Looking back, I was probably wrong more than I was right, because I didn’t know crap about sales.

When I started in NY Report, I was the only salesperson. Within six months, I realized how bad I was at selling and took sales training classes for about three years. Between the training and non-stop selling, I became pretty good. Then I started to hire salespeople and added sales manager to my responsibilities (by the way, I don’t believe that the CEO should be the sales manager, but that’s an article for another time). I have also interviewed over 300 sales candidates and extended offers to about three percent of them. So while I don’t profess to be the best salesperson, sales manager or CEO out there, I have learned a few things. Here is my list of what a CEO, who is not a salesperson, needs to know about salespeople:

The Good

Sales is mostly science and a little art. And it is a process. Sometimes that process takes more time than you think it should.
You will get more out of a good salesperson by not hounding them. If you are hounding them, either you don’t trust them or they don’t deserve to be trusted, and you should let them go.
Better salespeople know that they need to develop rapport first, which means no selling. Let them do it. It takes more time, but cutting it out to speed things up rarely works.
Top salespeople will not take a position at your company unless they think that you, your company, and your products are great.

The Bad

A lot of salespeople are not controlling the sales process. If you don’t control the sales process these days, you are dead.
Good salespeople know everything about their clients and prospects and their industries. They can speak like an insider. Less than 10 percent do that.
Many salespeople don’t prepare for appointments (agenda, desired outcome, etc.). Another kiss of death.
The killer: most salespeople talk more than they listen (which is what I thought sales was about before I took sales training classes).

If you are a CEO and don’t have good sales experience, you have options. Hiring a good sales manager or getting some help from a good sales trainer is a great start.

What have you done to make sure your company has a great sales team?

How to Operate in the Zone

Robert Levin

We all have an idea of our strengths and weaknesses and how we work. But do we really understand how to leverage the way we think, work, and act? I was recently introduced to Deidre Siegel of Pear Core Solutions on Long Island. Pear, among many other things, helps companies and executives figure out what they are good at and how they work. Deidre explained to me that top performing companies and/or teams have a very good idea of strengths and weaknesses as well as how they work. More importantly, they know how to leverage this information.

Deidre convinced me to take the Kolbe A and Kolbe B assessments. The Kolbe A measures a person's instinctive method of operation (MO), and identifies the ways he or she will be most productive. The Kolbe B measures an individual's expectations of how he or she should perform in a current job. Comparing a Kolbe B Index result with an A Index result yields insights into how to leverage instinctive talents at work.

When I received the results and discussed them with Deidre, I found them to be right on the money. Here are some things I learned about myself:

When it comes to gathering and sharing information, I am “middle of the road”. I need some information but not all the detail and that is how I explain things. This means that I like to compare alternatives, but don’t want to get immersed in complexities.
I like systems and processes, but I don’t like when they are rigid. And I always need to have a plan.
I am pretty comfortable with unknowns and risks and exemplify that by experimenting. Several of our products have arisen from this trait (which can drive my team crazy!).
Seems that I can imagine what things will look like without something tangible. Several years ago, Fred Klein, founder of Gotham, called me a “thin slicer”, a reference to Malcolm Gladwell’s Blink. Fred, it seems that you are on the money.
I can operate in the zone when I give myself a deadline.
I procrastinate when I have to deal with a lot of details. (How the hell did I survive as a CPA for four years?)
I should continue to trust my gut.
I’m a better communicator when I explain that people have different ways of gathering information and mine is to get some info but not overdo it. At the same time, I am likely to criticize if someone doesn’t get to the point, is presenting old information or is very predictable.
Others believe that I expect the impossible (anyone on my team could have told you that). But I need to persuade them that I am right (see trust my gut above).

I’m only scratching the surface here, but I can tell you that I see a lot of value in these assessments. It is all about maximizing your (and your company’s) strengths and not wasting energy. I am contemplating having my staff take the assessments as I think we will become even more productive once we know how each other operates.

How 2012 Can Bring Real Change

Robert Levin

No, I am not talking about the elections—at least not here. (If you want to read my thoughts on government and small business, check out some of my posts on HuffPo Small Business.) Over the past year or so, I have written and spoken about how the world and the economy are changing and how our businesses must change too. (To read a couple of these pieces, visit nyreport.com/the_world_is_changing and nyreport.com/obsessed_with_growth). I shared what I learned from Gil Maurer about how the pace of change in business keeps increasing. In that vein, let’s all try to make at least one significant change in our business next year.

Here are some ideas:

Launch a new product or service
Make a big hire—someone that can help your business grow substantially
Enter a new market
Buy a company
Start a new company

Decide on at least one change before the end of the year, set a timeline, and get your team involved. Make it fun by setting milestones that are easy to track, and celebrate achievements along the way.

At NY Report we love changing things—we get bored easily. I am pleased to announce that in February 2012 we are launching the digital version of our magazine so you can read it on your tablet, PC, or even your phone. (For more information visit nyreport.com/digital). We are working on some other new ideas, as well.

Whatever your new thing is, on behalf of the NY Report team I wish you, your family, and your team a happy holiday season and a prosperous 2012.

PS—Just a reminder that this issue is a combined one for December ’11 and January ’12. Next month we will be producing Accelerate 2012, exclusive online content focused on four critical areas for propelling your business growth in 2012. To sign up to receive Accelerate 2012, visit nyreport.com/emailnewsletter. NY Report will produce our next print issue in February 2012.

Treat Prospective Employees like Prospective Clients

Robert Levin

I just heard a story from a friend of mine who recently came back from a terrible job interview. He, a senior executive who is well known in his industry, showed up at 9:50 for a 10am interview and checked in with the receptionist. At 10:25, he checked with the receptionist and asked, “Are you sure that [the interviewer/president of the company] knows I’m here?” The receptionist went to check and came back 10 minutes later, saying, “She’s requesting that we move the interview to a day next week. What works for you?”

My friend said the same thing I would have said (“It doesn’t.”) and left. By the way, my friend came highly referred from an important customer of the company he was interviewing with and I am sure word has spread through the industry.

Clearly, this is a worst case example of a company’s interviewing process. But I have heard many not-as-dramatic stories that really make me scratch my head. Examples include:

Making the candidate wait for 30 minutes over the set interview time.
Picking up the phone while interviewing a candidate.
Checking email during the interview.

I don’t know about you, but I feel that we are competing more for talent (even with nine percent unemployment) than we are for clients. I want prospective employees to have a great experience during the entire interview process so that they really want to work at NY Report and we have the option of choosing.

Danny Meyer, founder of the Union Square Hospitality Group (Union Square Cafe, Gramercy Tavern, The Modern), the king of hospitality, said that you take care of your employees and they will take care of your customers. I started my career at Arthur Andersen, which at the time had the reputation of being the place to work in the accounting industry. At Andersen, everyone involved in the interviewing process, including partners, were told that interviewing candidates was among the most important thing they did. Candidates were not to wait and you weren’t to be interrupted during an interview.

As a fellow business owner, I implore you to make employee recruitment a top priority at your company and show candidates the respect they deserve.