Episode 381 - Todd Westra / Chip Royce

00:21 Hey, welcome back to another episode of the Growth is Scaling podcast. Today we are honored and blessed to have with us none other than Chip Royce. Chip, will you please tell us who you are and what do you do?

00:32 Thank you, Todd, first of all, for having me. So excited to be with you, a big fan of the podcast. What do I do? I ultimately create opportunities for B2B companies and help them uncover indirect sales channels. But the funny thing is more the origin of this. I mean, I was a tech maniac as a kid. I had an Atari 800 computer, you know, all the video games came out, never a program or anything. But I just always sort of felt that I could see how all this stuff was gonna get used at some point. Strangely enough, I decided to go pre-law in college and follow the family business. And by my junior year, I realized that was a horrible mistake. But I was really, really lucky.

01:15 It's not for everybody, that's for sure.

01:17 Absolutely. No, I enjoyed it. I enjoyed the intellectual rigor of it. It just wasn't going to be a fun way to go about having a career. And so after school, I postponed that, didn't shift from LSATs, and instead started working for a neat tech forward financial services company. So, I was helping them evaluate color laser printers and all sorts of cool stuff. But ultimately, my head exploded when I saw the first web browser.

01:47 I remember that day too.

01:48 What that could provide. Sorry.

01:49 I remember that day too.

01:52 Yeah, it blew me away. The first Netscape browser and its predecessor from the University of Illinois, because I said, wow, think of how you could communicate through this thing. And it just blew my mind. So I started a web design business, started doing an internet startup in 1995 before anybody had even heard about that, much less email. Bought the first search keyword ad on the internet with Yahoo. That was the word golf, by the way. But eventually got involved in a wide variety of industries, everything from very small startups to venture corporate. And then even large PC companies, Dell and Lenovo doing strategic alliances. But, but during that whole time, I realized, I was thinking about this, uh, a couple of weeks ago, you know, really the thread and all of that was partnerships, right. How do you get max leverage by working with others and take what you've got, your crown jewels and get, get more out of your company than just trying to, to do the slog alone by yourself.

02:50 Right, right. That's a very, very valuable way to grow and scale. And how do you do that? I mean, how do you, you know, it's one thing to say, you know, Dell, you need to work on partnership programs and they did it and they exploded and they have tons of partners. But how do you do that with a growing and scale? Like a lot of our listeners are post launch, you know, they found some success, they're generating revenue, but they don't know where to go next. And you know, I've had guests talk about acquisition. I've had them talk about innovating new products, but you're talking partners. Tell us about that because it's such a valuable, valuable resource that a lot of people don't tap into soon enough.

03:32 Yeah, well, I think there's a couple of reasons for it. Yeah, of course, if you're in the food industry, you're going to go through distribution in order to get in the grocery store. You might be savvy enough to sell directly first because that's a great way to build the brand and get some leverage in those conversations. 

03:48 If you can. 

03:49  Yeah, if you can, exactly. 

03:50 Right, right.

03:51 But if you think about like in the technology space, especially over the past 30 years where everything's been direct, put your Google ads up, you know, use social media, you know, blah, blah.That's fine. And it gives you some semblance of control in it. And it certainly gives you the ability to prove your thesis. But something that I see all the time is the company sort of hit sort of a growth plateau because they've exhausted that direct channel, or at least what they think are the boundaries of that direct channel. And if anything, going indirect sometimes allows them to be a little bit more self-reflective in the eyes of a partner and see where their value is. 

04:30 Interesting.

04:31 But I've also found a lot of the time by leveraging a lot of the experiences I had through those 30 years, that there's some pretty simple playbooks that are out there that just folks haven't seen lately and are able to go utilize and put to work. And all of a sudden, boom, triple or quadruple the business with a lot less effort if they know how to do it correctly.

04:48 So Chip, stop for a second, because I think I wanna catch everyone up to speed here, because you just said a lot of things that seem very casual to you and in your mind, and a lot of people listening are like, wait, wait. What did he just say? What you said, and what I heard you say, is that a lot of businesses don't recognize when they're hitting a revenue plateau, and they also don't recognize that when they do, because if you're listening and you haven't, you will. There's always this stage where you launch, you're growing, you got revenue, and then all of a sudden you start building teams out and you kind of stagnate. Oftentimes you get that revenue plateau, especially when you start spending money on teams. Where are you seeing this disconnect? What causes this? When you look at a business and you talk with a business owner and you start understanding what's going on in their business. What are you typically seeing as the causes for these revenue plateaus? Cause there, there's more than one reason, but what do you see?

05:50 There's a great, that's a great question. And I think there's, there's two answers to it. The company thinks that it's, oh, we're just not efficient or we're just not, we're not, we don't have the right people in the right roles. Or if we only, if we only looked at our homepage and moved a button to the right and did some A B testing that that'll solve everything. No, and it's good. Use the data you have. But I think, I think there's, there's the other answer to it. What's really going on is a two-part thing. Versals become so data dependent.

06:10 That will solve everything.

06:11 You know, we live in our Google analytics. We, look at our customer data, but we don't realize that we, we probably don't touch 99% of the available market. And, and yet we fall back on the data because we're told to be data driven. So that's the first sort of blind spot. But I think the second thing is, is that we convince everybody, even myself, I'll admit it, right? We all get so convinced that we're right. And we've got to slog through, you hear this concept of imposter syndrome, right? Which I think is a result of I've got to convince everybody. I know what I'm doing in a small dynamic situation where we can't hire in the world's best market and the world's best salesperson. I got to do some of that myself. 

07:04 Right, right, right.

07:05 I think the results of the imposter syndrome to try to keep my hands are short. Sorry. I tend to go on a little bit here, but that is, is the people convinced themselves so strongly, they don't know when to let that go and say, maybe something's changed. Maybe what I thought was a truth before has changed a little bit and I need to adapt. And often I'd argue they just need to build better bridges with their customers to get that information and find out what would delight them, what would make you happy. So if I can do it, I've just reduced so much friction in my business.

07:35 So I love what you're saying, because I do feel like the best resource for any small business and anyone trying to grow is your current customer base. I mean, there's literally so much you can learn from them. They'll tell you what they like, they'll tell you what they don't like, they'll tell you about a good experience they had with their team and a bad experience. Probably more bad than you wanna hear, but you need to hear it and you won't hear it sometimes unless you ask them. So how do you help companies kind of put together the strategy to feed off of this customer feedback?

08:07 Well, there's two aspects to it, right? First is, I think just the general business, even if somebody said, look, Chip, I don't really wanna pursue indirect channels. I've got a good direct channel. I just, I need to figure things out. I'd be like, great, I'm glad you got that focus. But I believe we've already, and think about it, we've got generations of younger people who have grown up digitally. They're not that, they'll share feedback, but they'll tend to do it with their friends and family or colleagues more than they will the company. So, the first bit of advice to your question, I love it, is figure out how to collect that feedback with the least amount of friction you possibly can. And that means no three page surveys. It's only 15 minutes, but it takes forever because you're gonna kill any enthusiasm people had about helping you improve your business.

08:56 100%, 100%. How do you do it then?

08:57 I think the second aspect to that though is, you know, especially when you work with indirect partners, which, you know, say, Hey, look, there are these opportunities, but you've got to figure out when outcomes, right? You know, say, Hey, partner, can you collect this information or use my technology stack? Right? So that I can see what's going on and better support you and better support the customer. The last thing you want with an indirect relationship is to be completely cut off where you're blind. You know, you're just shipping out product or delivering your service and not really knowing what's going on in the backend. I'd argue that's the bad way to do it because now, even if it's accretive on a revenue basis, even if you're finding growth there, how sustainable is it if you didn't learn something?

09:42 Right? Not. It's not. It's not sustainable. And I think that as companies are trying to reach into their customers for information, I think there's a couple things you need to be looking at. A, and I think you're right on, is don't make it complicated for them to give you feedback. You need their feedback. You need to know what they're still in need of. And so, when I work with a client who's trying to gain this kind of customer feedback loop that they can have open with them, is trying to determine, okay, A, I want to know how to serve you better, and B, what else can we do for you that we're not seeing? Because oftentimes, companies don't recognize there is a huge revenue potential with their existing customer database. So, 

10:31 Exactly. No, you hit on the head. So think of the average software company, right?

10:32 Yeah, how do you work through that?

10:35 They're going to spend all this time. So Todd, let's do a little role play here. You are now the chief buyer of a piece of enterprise software that my company provides you. How many times would you just hear from the sales team and support team to you? But yet you've got 20 employees who use the application. And I'm just fixated on you because you're the head honcho, not realizing that those 20 people are voters. They all have a say and at some point in time they might go, Hey, look, we really hate the software. You either get rid of it or we're leaving. Well, 

11:09 Right, and they're likely the only ones in the software because the founder, the buyer's not even in the software anymore. They got a team doing it.

11:15 Well, and by the time I figure out that they're not advocates for it anymore, their vote is negative, it's thumbs down. I've probably been replaced already because they don't normally say, Hey, look, you know, Chip, you know, please, we don't really want your software anymore, but give us nine months while we find your replacement. That doesn't happen very often. So think of the value if you can establish those relationships beyond just kowtowing to the senior exec. I mean, think of how important those people would feel. Say, hey, look, I care about you. I understand you're just an admin, but how do I make your life better? And I think that goes a tremendous way, a long way, especially in today's world where very few companies do it. I think you can stand out.

13:34  Agreed, you know, I used to have a boutique business, an audio video company, and we had suppliers, speaker suppliers, wire suppliers, we had all sorts of different suppliers that would come visit us at our showroom. And I'll never forget, there was one speaker supplier who made it a point to get to know my estimator. They'd take him to lunch, they'd take him out all the time and talk to him about products, they'd let him demo things and it didn't matter what product I wanted to sell. Every time he was doing a proposal, that company's speakers went into the bid and I'm like, no, I want to do these ones. He's like, no, these are way better. And I was like, okay, all right, whatever, whatever. If he's taking care of it, we'll just run it that way. So it was a very eye-opening experience for me as the operator of the business, you know? It was kind of nice.

14:29 And not to be cynical, but I think the guy's doing the right way. Now he could be really salesy and schmoozy, but that's not going to last, right. That, that estimator, if he gets hit over the nose a few times, he won't do it for the guy's benefit, even though he got a free lunch out of it. But if he, if you truly build that relationship and find ways to distinguish yourself, yeah, I mean, it's, it's crazy. And then, and the return on effort return on investment is so low.

14:52 So, I definitely am a huge buy-in to what you're talking about. I love, love the fact that you're bringing up, talk more to your customers, offer new services to your customers, make their experience with you even better. What else is going on? What else causes this stagnation of growth? Because you've seen it, I've seen it. A lot of times they've got a great product, they've got a great audience, but they're pretty fixated. What else have you seen that they get stuck with? Why is there a revenue stop?

15:20 Sometimes I also see a great vision. They just haven't timed it right. So, imagine, and it's hard to give you a tangible example, but I have seen it where it's a product-driven company, they got great tech and they're like, you're gonna need to do this. They're absolutely right, but the customer is, that's step D or E or F. And they're still at A, B or C. And so for instance, think of their marketing materials. The marketing materials might be like, hey, we're gonna solve world hunger. And it's like, dude, I just need my next meal. If you can give me the next meal, I'm in a great place. And they don't realize is the price and sophistication and they didn't make it easy to digest if I stay on the food metaphor, those first couple bite, to take them down the path of where the real big breakthroughs could come from.

16:11 Right, right, I see that. So how do you help customers see this? How do you help company owners who are kind of stuck there see that as being a problem? Because I honestly feel like a lot of businesses stay stuck in their revenue plateau for a long time because they fail to recognize they're in a plateau. What are red flags that you see when you start an engagement with a company that you say, oh, duh, yeah, here's the problem. Are you see what kind of red flags you got?

16:45 There's a couple red flags. The first is brought on by the entrepreneurial process itself, which is, you know, do more with less. You might've heard the term R&D and I don't mean research and development, meaning rip off and duplicate. And what I mean, and I say this nicely, right, is wow, you know, you might have a couple coffees with somebody and say, hey, really, I think that there's an opportunity for you to do X, Y, and Z. For instance, one of the areas that I tend to work with is technology commercialization. Somebody may have a material or a software package and it can be used in so many different places but they don't really know the right order of operations. Where do I start? Where's the right level of investment here and there? Sometimes just through some neat brainstorming, we'll come up, hey, I think there's an opportunity with this market and this market. All of a sudden, the phone goes dead. And why? Because they were sort of trained by the process to just, oh, great. Well, I could go after this market and, and only if I get stuck, maybe I'll call somebody else from the outside to come help. And I can understand it, but is that the best use of time? If you're a, you're a CTO or a, you know, very technically driven person. Um, yeah, it might be easy to start calling around to the companies, but do you have a process? Do you have the infrastructure? I call it partner ready. Are you, are you in a position where if they said yes, you would delight the heck out of them and their customers, 

18:13 Most people are not. Yeah

18:14 Because it's very easy for them to find a partnership agreement. It's another for them to deliver the commitments on unless they're prepaying for what you do, and most folks won't do that.

18:22 Now a lot of people listening are probably thinking in their heads right now, all right, you're talking about partner programs, I've been taught about affiliate programs, what's the difference and how do they mesh, how are they different, and what do you suggest people go for first? Like what's an easier play for the typical business founder?

18:42 Well, that's a great question. Part of it is industry driven and part of it's opportunity driven, right? So there are a wide variety of things you can do when you're creating an indirect channel. You could find distributors who you sell your product to wholesale and we'll get it to the end user. So that you might see that in grocery. Your point about like a B2C or a B2B company that's got a simple product, they can set up an affiliate program, which they're gonna pay people for sending in leads. Basically you do the marketing and I'll give you a piece of the pie on a closed deal. Great simple way of doing it. There are also some more complex ways of doing it, like being part of a marketplace. If you have a physical product, you might try to sell it through Amazon or eBay. So you're more in control as the seller, but you're utilizing their channel. And then you even have marketplaces like Salesforce or Shopify, which are trade platforms, right? Salesforce is a customer relationship management piece of software, but they allow other companies to layer on their software to help make that process better or richer. Shopify isn't... 

19:46 Now, I've had a few of those, I've had a few amazing, I've had a few amazing guests on the podcast who literally, their entire business is a Salesforce application that they build on top of, I mean, it's amazing, and Shopify, same thing. You can build an entire business model without having to build a piece of software. Just an add-on, plug-in, whatever. Yeah.

20:05 Yeah. And so, but you could also take it a step further. So for instance, I had a client called one price taxes. They, um, they were never really marketplace driven, but they, it was a direct to consumer, prepare your taxes. And by the way, they were cheaper because they figured out how to update 43 states and the federal taxes every year at perfection so they could charge less than the big guys. The weird thing was, is that going up against the big guys, they had such big marketing budgets, there was no way to beat them. And that's, that's stank, right? Because we should have been able to beat them. The funny thing, and this is sort of a tangent on what I call white labeling or co-branding, is the ability to take this perfectly awesome platform and use it for a whole different audience. So we had gotten all these inbound calls from small tax shops and accountants, etcetera, who wanted to do tax preparation. Now the problem was this platform doesn't work in their world. They have their own unique account with the feds, with the IRS. So you have to have this whole sort of relationship management system so that Utah, for instance, if you were a tax preparer, could then go and do five different tax filings for five different customers. The our platform didn't do that, but boy, it looked attractive. And, but how do we not cannibalize our core business? So what we did is we created a parallel brand called Tax Prepare Solutions. We built that whole layer on top of it, but it was almost a build once, use many, because it doesn't need to be updated all the time. And all of a sudden, not only did small tax people start flooding in, some of our consumer competition, who didn't even know Tax Prepare Solutions was affiliated with OnePrice Taxes, right? They came to their blood enemy and said, we're a big storefront player, we've got an online product, we have our in-store product. We hate updating the software, you do it great, can we use your platform? 

22:03 Yeah, that's funny.

22:04 And now you're talking about massive licensing fees, guaranteed revenue and growth off of all of their efforts. So that's sort of an extreme example, in this case for a software company who was able to.

22:17 I love it though, you know, it's getting creative with your client, getting creative with the people who don't buy, you know, just doing these slight deviations from your norm can sometimes be the winning prize, right?

22:29 Yep. And last but not least also provides diversification, right? Think of a mutual fund. You know, if I told you, you're going to invest your retirement in one stock, how would you feel? But what if you could lay it out and spread it out a bit farther around on the table? So in changing economic conditions, you know, if you're working with a couple of big players, they're able to carry the water. They've got a little bit more resilience than you might have in just your direct, you know, sales or let's say your Google ads price spikes and you go, wow, this is no longer sustainable. Instead, shift resources and feed your other channels.

23:01 I love it. So, Chip, tell me though, as we kind of end this conversation with this huge value you dropped on us, I mean, there's so many little points here we've talked about in a growth projection or ways to recognize where you need to bend your focus on. How do people, how do you help them? What do you do to help these companies see the path and how do they engage with you?

23:31  Great question. Well, usually it just starts, I will meet people through networking events, conferences when I'm speaking, and even folks come through to my website. So if folks would love to spend the time, I would love to have a 30 minute chat with anybody just to see how their business is going. And if there's a few ideas I can stick on the wall. 

23:48 Love it. And I, you know, 

23:50 My company website, sorry. 

23:51 Keep going. Keep going.

23:54 Oh, sure. So my company website is flywheeladvisors, all one word.comflywheeladvisors.com

24:01 Awesome.

24:02 And there's a big button on the top that says, let's talk. But there's something about.

24:04 Well, we definitely have a link down below in the show notes for this. And so check out, to be honest, I think there's so many companies out there just trying to figure this all out on their own. They haven't gone to an advisor, they haven't talked to even peers, a community of other CEOs to talk about issues that they have because they don't recognize they even have an issue. So for those listening, I gotta tell ya. This is a recurring theme I'm finding with companies is that you've got to take a step back, look at your past five years. A lot of people see a cycle where you launch, you go, you generate revenue, you're doing well, and you're just maintaining. You're still profitable, you're doing all right, but you're still maintaining. You have got to have someone like Chip in your corner, or go to a peer community, or do both, and have these people in your corner helping you see, oh dude, yeah, I got stuck there and this is what I did and all of a sudden I diversified and boom, I found my real target audience was this, not that. And so Chip, what do you suggest? Are people seeing that enough? What can we do to raise the awareness to people that hey, being profitable is great, but really finding that niche that you fit in, it may be one niche over than where you're at right now, to really take off.

25:31 So there's a couple of things. First is it helps to have a mirror, a lens, you know, another person to be bouncing stuff off of. So one of the things I do is just pure advisory where I'll sit in team meetings and sit with the CEO a few times a month. And it's very low touch, but it's just to be there to help provide thought, ideas, and a counterbalance, right? They're too strategic. Hey, what are you thinking about in terms of execution? If they're all execution focused, it's like, okay, but what's the underlying strategy know, because if I'm asking, your people are asking. But the second thing is also to understand that, and by the way, I love your sort of mastermind group that you've got with lots of leaders, because I feel like having people know that they've got others in their situation is very comforting, right? And it helps them generate ideas, but also get resilient. But then the next step past that is if one of your peers says, hey, you really need to go look at this Just be honest with yourself. Do you have the skillset and experience to having done it? Because it could be a great idea, but you could really step all over yourself as opposed to saying, hey, you know, 

26:44 Could also be a huge distraction, right?

26:45 Yeah, how do I not make this a distraction? How do they make this a good use of time and capital? Because let's be honest, especially in the tech world, capital is not flowing freely the way it used to be. And that means time is money too. So If you're thinking about these things, I think, you know, the advice I give to folks is be as efficient as possible with your time and your capital. So, if you're going to do it, do it right, because you're not necessarily going to get two or three swings at.

27:09  Love it. Chip, I love the conversation. I love where it's gone. I love how we were able to bounce off each other there to provide value and those listening, if we provided the value, do us both a favor. Share this episode with those that need to hear it. You all know people that need to hear things like this and if you're dealing with it and this has been a value to you, don't hesitate to like, share, subscribe, be part of the community, jump in and get on a call with Chip and find out how he can help you and potentially help guide you to that next place you need to be to really explode your business. Chip, thanks so much for being here.

27:46 Thank you, Todd. It's been a pleasure.

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