Focusing on what matters is what every business should be delivering. Instead of always going for that new shiny penny, your sales team should know who your customers are and make sure that their needs are met. Ben Baker’s guest today is Tim Kubiak, the CEO of Zepol Productions. Tim discusses how we should be chasing clients that are willing to have those conversations with us and help figure out what they need to grow or profit. He also highlights the importance of stepping away and pointing them in the right direction should we fail to help them meet those needs.
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I have Tim Kubiak with me from Zepol Productions Inc This is back-to-back. I was on Tim's podcast. We had a blast. I figured, “I have to have him on the show.” We are going to talk about Don't Chase Everything and Do What Matters. Tim, welcome to the show.
Thanks for having me, Ben. I'm excited to be here.
We had such a great conversation off air. The synergies are there. We are going to have a phenomenal conversation. It is an important topic for people who are managers, leaders, owners of companies. Even within your own private life, it's an important conversation. What I want to do is I want to let people have a little bit of understanding of who you are, where you came from and what brought you to this point. Tell me your story, Tim.
My background is in global technology. I grew up in the IT distribution space in a small company in Pittsburgh, Pennsylvania. I’ve got acquired it in the early 2000s before everything went sideways and spent essentially 25 years in that original company and other places in between. I have run small and midsize businesses along the way. I have worked for some private equity distribution companies and holdings as well but frankly, when you go high enough up the food stack, eventually, you are not doing the business anymore. You are staring at spreadsheets and yelling at people, “That's my money, not your money. Your money, not my money.” I’ve got tired of that so I’ve got into working with startups, entrepreneurs and high-performing salespeople. That's what led me to Zepol. I started as a client engagement and was looking at some of their sales processes. It turned into a much bigger role. It was one of those things when you stop looking at something that last.
It's an amazing story that people tell. There are a lot of us that are recovering senior management at large corporations. We sit there and go, “We have done all these incredible things. We have been client-focused our entire life. We build our way up the food chain thinking that you are going to get a bigger piece of the pie, more part of the conversation, etc.” You get to a point where either you are at the C-Suite, VP level or wherever you are.
All you are doing is watching spreadsheets. You don't talk to people anymore. You are not out with the customers anymore. You are not dealing with the actual problems. You are dealing with the process within the company. That's a real challenge that most of us have. We become disillusioned. I left the corporate world many years ago. It was probably one of the best things I ever did. I want to talk to you about that. Where is that thought process for you? What led you to that a-ha moment that said, “It's time to move to be able to go somewhere where I can add value again,” or where you thought you could perceive that you could add value again?Don’t chase everything. You need to go after what you need versus what you want. Click To Tweet
My entire career was don't ever put me in charge of anything that works. Only give me things that are broken. I call it Black Ops. I don't mean that in a politically incorrect way. I ran Black Ops and skunkworks my entire career. From early days, pre-acquisition, we were building and we were the ones nobody wanted and wasn't supposed to make it. We’ve got sold for the most. I have had this conversation with my therapist, “If it works, I will break it so I can fix it again.” Do not give it to me. Relationships, businesses, anything, if it's not broken, it's not going to work for me. I’ve got to the point where my last corporate gig, I had been acquired. I left a couple of startups, went back to that same company, did a bunch of the skunkworks stuff, had a global job. Frankly, I probably would have never left it except a Fortune 150 company came in and bought the Americas.
The true story of how it went down is I'm sitting on this side of the table working on the business processes on a Tuesday. Wednesday morning, I walk into the corporate headquarters and they were like, “You’ve got to sit on that side of the table. You and your team became part of the North American deal.” I joked, “I lost Europe and Asia in the divorce.” The next day, I was fighting against the words I fought for the day before. I hung out. I had a great one-year stay package. They were good to me. I could still be there but they had 106,000 employees and that's not me. I never went to work for the big marquee names. Even if I was in the meetings every quarter with the CEO, it didn't fit me. I went to work for a PE health post-acquisition company here, European leadership. I’ve got ten years of experience in sixteen months and destroyed every part of my life in the process.
You like breaking stuff.
I love breaking stuff. I broke everything, relationships with children, spouses, partners, friends and I gave up yoga. All I did was work. When that run ended, I had to step away a little bit and say, “What do I want to do?” I like working with small businesses. I like working with founders. I like high-growth things that are going to change every day. That's what got me to where I am.
Let's get into this, don't chase everything and do what matters. What does that mean to you in terms of a business philosophy? How do you help your clients understand that? It's a fundamental thing that most companies may understand esoterically but they never live.
I watched a documentary, Ford v Ferrari, and the early days of Le Mans. I'm not necessarily an F1 guy. I am a car guy. Watching what Ferrari did, he never wanted to sell cars to the masses but he sold cars to the public to fund his race team. That was his passion. That's what made them exceptional. Ford wanted to race cars and beat Ferrari so they could sell cars to the masses. “Win on Sunday and sell on Monday” was the line from the documentary.
Part of the problem is that people don't know what they are doing or why they are doing it, especially tech founders and it's not a knock-on founder. You have people with visionary or revolutionary ideas. They haven't defined to use a marketing term for their customer avatar. They don't know what their perfect client is. They don't even know who they are selling to. The number of times I have walked in the door and people with advanced degrees, pretty fancy places and I go, “What does it cost to make this and who's going to buy it?” They go, “This is what it does.” That wasn't the question.
In the not chase everything, you have to know who your customer is. You can't fix every process. I joked about things being broken. Some things will always be broken and that's okay as long as they get you there. Focus on what matters is what the client wants, needs and what your business is designed or should be delivered. It's not necessarily all the fancy stuff. A lot of times, it’s boring and basic things but that makes all the difference.
Wants versus needs. It is such a fundamental thing telling people what you want versus what you need and getting the same answer. It’s not. It's never the same. This is what I want but this is what I need. How do we first help companies define this? That comes down to not chasing everything because you need to go after what you need versus what you want. That comes down to doing what matters. How do you help clients understand the differentiation between wants versus needs and enable them to get back to doing what they need to do to make sure they get what they need?
We will start with the sales side because that's where I spend most of my time but then we can look at the upside. You walk into any founder, CEO, small business owner, 90% of the time. You hear them say, “I want to sell more. We need to sell more. We need to do this. We need more customers. We need more leads.” You take it right down the line to any of those things. It goes back to why do you need them? There's always the philosophy, “I've got to keep getting bigger and bigger.” That is public company economics. There are a lot to be said about being highly specialized, doing what you do well, measuring your growth moderately and being far more profitable.
You and I both have a tech distribution background. We sell stuff at single-digit basis point margins all day long. One of the things I'm doing now with Zepol, what we do is compare to what distributions used to 10X the margin. My whole conversation there is our value prop is completely different. I'm not going to drive your revenue number but I'm going to drive your profitability. What you need is a business. Don't chase the revenue number. Don't chase the customer account or the new logos if what you need is more revenue and you are not exploiting the offers where you have them. You have them from an operations perspective, focus on efficiencies and the customer experience. Selling stuff that doesn't go in clean and people aren't happy, buying in and aren't retain, is a wasted effort. That's the other part of the need.
The other thing is you are in this business. Everybody doesn't need to be a household brand. You need a brand in their segment. One of the hardest conversations I have to have with clients is you go in with a founder and he's like, “I'm going to be the next Facebook, Twitter, Amazon, United States government, whatever.” They have these dreams. You are like, “Have you raised the $1 billion? Are you cashflow positive? When are you going to be cashflow positive?” It's great that people want to reinvent the world. I'm not saying people shouldn't dream and have those goals. The reality is maybe 100 new customer acquisitions and a quarter would be transformational to everybody involved. Focus on what you need and not, “I want 1 million people to use my platform now. I want to be on CNBC because I grew up in X and Y, and I went to school at Z.” I know a lot of guys that didn't go to school that probably made way more than you.
One thing that comes to mind is top-line versus bottom-line dollars. There are many people and these are clients of mine. I had one pre-COVID. It was $20 million in 2020. That was their key thing. I said, “What is that going to mean in terms of profitability?” They couldn't answer it. I said, “What does that mean in terms of long-term growth for your company? What does this mean to your people? What does this mean to a bunch of other things that you look at long-term growth and long-term success?” There was no answer whatsoever. It was $20 million in 2020. They went, “As long as we've got this number ahead of us, we are doing great.” What if you did $20 million and it cost you $19.5 million to get the $20 million? A lot of these organization does.
We were talking about these companies that are valued at $1 billion. These unicorns still have yet to make a profit. Some VC somewhere has decided that this company is worth $1 billion. We need to sit there and say, “What do you want versus what do you need?” We need, as an organization, to be profitable, unique, differentiate, add value to our customers, take care of our staff and our vendors. Few companies, as far as I'm concerned, focus on that. The question is, why do you see people fixated on the wants and chasing everything versus doing what matters?If you get comfortable, you get lazy. Click To Tweet
They read too many business and mainstream publications. Ford, General Motors, Bell Canada, Rogers and what have you are unique companies. The whole hockey sticks curve upward thing, if you have been around long enough like I have, we have watched people fall prey to in the late ‘90s. In the year 2000, you had the dot-com bust and all of that. We talked about paper welfare and people fell into that. I love when executives stand up, “This is about shareholder value.” No. It's about compromising your future revenue streams to pull in the three deals that made your number for this quarter so everybody got the bonus and not their dividend. It's not about fundaments.
It's about individual bonuses and making sure that the shareholders get their share goes up. That's what it's about.
The problem is its quarter by quarter economics and management. Look at many of these companies, they change out leadership. The minute there's a blip, there's this and there's that. It may be an execution problem. Maybe it's time for change like me. Everybody has a life cycle on a roll but so often it's a reaction to drive a share price. It's not about the customer. It's not even about the profit like we said.
If you are running your own business, you have to step away from that. I can feel the economics professors everywhere are twitching and the monetary policy guys twitching. The truth is profit still matters. It's a dirty word but it still matters. If you are running your P&L, by the way, I get paid on even in a lot of cases. That's a good way to get people focused. Don't pay them on revenue. Pay them on profit. You can pay salespeople that way too. It's revolutionary.
I always paid my salespeople on profit. We always paid them on profit. We paid them a good healthy percentage based on profit. We said, “We need a minimum of X amount of profit before you are going to get your full commission.” Therefore, people were focused on the bottom line number, not the top-line number.
The second part of that is you get into the, “I need to raise PE money on my strategies to be acquired in 48 to 60 months and move to Malibu or whatever it is.” That drives that weird top-line behavior. When I look at most acquisition work that I have been involved in, it's always based on EBITDA. Top-line matters. Logos or the ability to represent something matters. Customer count matters. At the end of the day, the real payout is on EBITDA. Especially the small stuff, this isn't weird, we are going to have synergies and eliminate 40 million jobs and save 8% acquisitions. It's the ones that happen for the guys with the $10 million or $20 million shops.
Most businesses are small businesses. Ninety-five percent of businesses across North America are under 100 employees. I don't know what the exact number is but it's somewhere in that range. They are probably under $50 million. We are not talking enormous economics. We are not talking about the $250 million companies, the Fortune 150s, the Fortune 500s, even the Fortune 3000s. We are dealing with the average company. When the average company is being acquired, a buy and sell situation, it’s usually at a time of retirement. The person who's looking to buy this company is going, “Is it profitable?”
That's the number one question when I'm looking at a business, “Am I going to buy this business or not? Has it been profitable for the last 3 to 5 years? Do I perceive that it's going to be profitable for the next 3 to 5 years as I'm figuring out what goes on inside this company?” Until you buy it and you are in it, you truly have no idea of what's going on. You can read every financial statement in the world. You can talk to as many people as you want but until you are owning the company and dealing with it on a day-to-day, you are never going to know.
True words are rarely spoken so until you get under the hood and you are the man behind the curtain or the person behind the curtain, you don't know what operates and what doesn't.
A lot of the company, people that read this are that small to medium and some large corporations as well but we are talking probably companies under $250 million. As the average person who reads this, where do we go from here? Many organizations are quarter to quarter and are thinking, “What have you done for me lately?” The top salesman gets a Cadillac. The second salesman gets a set of steak knives. The third one gets his walking papers. It may not be that bad but it's not the fact that you have been a great salesperson for years and years. It's like, “You have had three bad months in a row. It's time for a review.” How do we get people beyond that short-term thinking and start thinking about policies and procedures that enable businesses to succeed 1, 5, 10, 25 years into the future? Also, have more of an Asian philosophy of long-term business of generation versus weeks, months and quarters?
The first step in that is to be realistic about the company you are running and what you want that company to be. If you want to take it public, you are going to be dependent on the swings and it doesn't matter. Part of the reason the Asian companies can do that is culture. Part of it is they do play the long game. To use a hockey analogy, they are looking at not where the puck is but where it's going. American companies have very much lost that. They become reactionary. They do acquisitions to pump the revenue. It’s not because it's a strategic fit. It's maybe aligned. We can back out the revenue and we can take that as growth going forward.
I had a chairman in one of the companies I worked for said, “What does this company do?” I broke it out before their most recent acquisition and backed those numbers out. He said, “That's not what they reported. You are wrong.” I said, “No. This is what they did. This is what their acquisition did. They didn't do this. The other business unit did that.” Does it go into their corporate stock financials? Sure. How did they report this street? This is how they reported. You can't say they grew 50% because they bought 40% of that growth.
The reality is a lot of people are trying to buy themselves out of debt and are trying to buy themselves out of a bad situation. A lot of times, you get people that buy their competition strictly to bury it. You need to understand why you are buying somebody. Are you buying it for the assets? Are you buying it for the people? Are you buying it for the IP? Are you buying it because you believe in the company? Are you buying it because you believe by bringing this company into your organization, the entire organization as a whole is going to get better?
I'm not sure that a lot of organizations truly understand why they are buying it in the first place and the cultural communication nightmares that happened once that acquisition has happened because you have two different cultures, business philosophies, sets of customers. Forget about accounting systems. Never mind everything else. You need to bring it into one series and the costs of doing that both in personnel, headaches, extra time spent and physical dollars can be unbelievable.
That's why you see smart owners when they are selling into those situations, don't take their earned out based on EBITDA. They are taken on a revenue number or a margin number so it's all going to hit.
Where do we go from here? That's the big thing. How do we help companies change? How do we get them beyond? The question is can we get people beyond that short-term thought process, those quick hits, that adrenaline junkie mentality of looking at where the number is now, that focus on the numbers today, this week's numbers or this month's numbers? It starts getting people thinking about, “Where do we want to be?” You are skating to where the puck should be instead how do we help organizations change their thought process so they are not chasing everything?
It begins in the budgeting process and setting realistic expectations inside the company, public companies aside. One of the other things probably worth mentioning that 95% of small businesses is how many of them selling products made by the public company? Don't let them wag you. It's unpopular, by the way. Three guys in tech put a dagger in a voodoo doll of me for saying that. The truth is they love you and need you when you are in a certain stage. You are their middle school boyfriend or girlfriend when they have changed and say they want to go off-market or down market. They will throw you away. Run your business for yourself, for your customers and know who you are.
To your point, look where it's going. Understand where the market and industry are moving. Understand where the spend and the decision process are and stay on top of that. You can't fight the economic factors but you can certainly play into them. If it's growing 10% and you are in number three position, and you can move closer to number two by growing to 12%, great. Don't wake up one day and say, “We are going to do 40% next year. By the way, we are not making an investment. We are living no capital in a business.” You are mystified and fire the entire sales team when you don't hit it because they hit 15%. You see that every day as an owner and as a senior leader. A hard thing to do is to sit across the table and say, “I'm calling BS on that. That's not realistic.” Have those conversations internally. Have them with your suppliers who are pushing you to take that into quarter inventory that you don't need and probably isn't even your high-run product.
That communication at all different levels is vitally important to sit there and say, “Where are we and where are we going?” I tell every organization, whether it's a company of two or it's a company of 10,000, “You need to have somebody in your organization who's thinking five years out.” You need to have somebody looking at where the market is going. Who are the players who are coming into the market that are not bothering us now but could be bothering us three years from now? What's the new tech coming into the industry? Where are clients going? Coming out of COVID-19, everything is changing.
The companies that are not having one-on-one intimate conversations with their clients are going, “Where are you now? What are the challenges that you are facing? What are the things that you are hoping to do? What are your hopes, needs, fears and aspirations? How can we be a better partner to you moving forward?” They are going to lose it because somebody else is going to do that. How do we enable our sales teams to become better partners with our clients? You are chasing the people you already have relationships with. You are chasing the people that you already have a history with and that you build trust with instead of always going for that new shiny penny.
As part of that, you have to nurture those relationships. All too often, salespeople get comfortable. If you were sending me the POs and I'm dealing with you and you are in procurement, I will love you to death. If I don't know who's backing that stuff, I don't understand what I'm selling you has an impact on your business, Am I a cost? Am I a profit center for you? How can I help improve that side of the business if I don't understand what you as a customer are doing and where I play in that ecosystem?
If I'm not talking, saying you can call every CEO, if I'm not talking to people across the different parts of the stack, I don't have a clear view. Too often, we get in, “This person's the manager and this is the purchasing person. I know them, they love me and it's great.” There was a large home improvement store. It was a person we were calling on at the beginning of COVID-19 that said, “We sold to them for twenty years. We had the same buyer forever. They love us. We've got this deal coming. It's going to be amazing. I don't need your help.” A few weeks later, my phone rang, they lost the deal. They were worried about how to keep the lights on. Do you know why? People change seats.
There's a fairly large organization up here that is a government organization. They change purchasers every six months. Every six months, you get rotated to another purchaser. As somebody who's selling to them, it creates havoc and all sorts of trauma. Their thing is they don't want anybody getting too comfortable with any of their purchasers. They don't want the opportunity for them to be graft. They don't want any opportunity to be special favors or any of the stuff that goes along with it. Therefore, the purchasers shift around regularly. It makes the purchasers better. It allows them to have a better understanding of a wide variety of different factors of the business. It also creates some chaos on the inside.
There's not a perfect situation. The purchaser that you were comfortable with for the last twenty years can retire. They could get hit by a car. They could have some type of impropriety and be fired within the organization. If you are not three wide and deep within any organization, you don't have relationships at different levels with different departments, you can go from being the person within this corporation to be out in a matter of weeks.
I have watched people lose deals to competitors that they didn't know that we are even present in the deal. Not even like for life solutions, completely transformational solutions because they were only talking to the same people. It's not new customer acquisition. It's also certainly not covering the account fully and understanding where it's going. You get comfortable and lazy.
Lazy is a big word. Lazy can kill any company because you get to a point where you think you know everything. You think that you are the only solution. You think that you are the only person that matters. You think that you are the only person who can solve their problems. There are people all over the world trying to figure out better solutions. In the global economy that it is now, it doesn't matter that your office is three blocks away from their head office. It doesn't matter anymore.
In the pandemic, that's one of the things that has shifted. I live on the road for over 200 nights for twenty years plus. At one point, I figured out I had spent 20% of my life inside a Marriott branded hotel and not counting all the others. I hope to never do that again. I'm doing as much business as ever and it's not with people down the street.Until you get under the hood or you’re the person behind the curtain, you don't know what really operates and what doesn't. Click To Tweet
Maybe 3% of my business is within British Columbia. My business is in Europe, across North America, Australia. I have a few clients in Asia. People that I may never physically meet or I meet once in my life but we have good solid relationships based on the fact that I'm asking the question, what do you need?
How often do you find that they don't know what they need? They haven't defined it. I find that a lot.
That's something that you as a supplier need to help your clients with. You need to be the one that can sit there and say, “Why?” We need to grow. Why do you need to grow? What are the factors that are creating this? What are the things that are causing you that you need to grow? Do you need to grow or do you need to be more profitable? We have had that conversation. Those are two different things. It's up to us as suppliers when dealing with our customers to chase the clients who understand those conversations and want to have those conversations with us.
Along those lines, it's important to know when you don't meet those needs and step away. Point them in the right direction, politely excuse yourself, any of the above. Knowing what you do well.
This has been an amazing conversation. I'm going to make sure that people can get ahold of you and have access to all your information and know-how to get in touch with you, etc. I have one question I asked everybody before I left them out the door. You are like me. You are a road warrior. You spent 200 nights in a row. I have spent 200 nights in the air so let's leave it this way, as we leave a meeting, we get in our car and we drive away, I'm looking forward to those times as well, what is the one thing you want people to think about you when you are not in the room?
He came prepared and he had my best interest at heart.
It's not about you. It's about them. Tim, it’s an amazing conversation. Thank you for all your wisdom. Thanks for enlightening me and my audience. I appreciate everything you do. Let's continue the conversation.
It has been great. I have enjoyed myself.
Business Geek, Nomad, Aging Metal Head, Nerd, & Coffee Addict. Plus the only big guy at Hot Yoga. For over 25 years I’ve been building high-performance sales team globally. Has sold over 2 billion in goods and services. Now I work with Founders, Business Owners, Executives, and High Performing Individuals to transform companies, bring new solutions to market and achieve their professional goals.
In the past year, my launches have included an app and coaching company that helps people win their most important deals in a complex competitive b2b sales environment, and an early-stage AI/ML solution to revolutionize the use of public health data by enterprises. A third company just entered their beta trials and should launch in mid-march.
Prior to the pandemic, I lived more than 20% of my life in my preferred hotel brand due to business travel.
My pronouns are He/Him.
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