Episode 17

Impact and Income: Investing in Your Tribe and Borderless Talent

April 10, 2024


Randy Wootton
CEO, Maxio
Headshot_David Nilssen
David Nilssen
CEO, DOXA Talent

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Video transcript

Randy Wootton (00:04):

Well, hello everyone. This is Randy Wootton, CEO of Maxio, and your host of SaaS Expert Voices, where we bring the experts to you to talk about what’s happening in SaaS today and what’s potentially on the horizon for tomorrow.


And with me, I’m really excited to have Dave Nilssen, a guy I’ve known for years, an incredible CEO. Just a little bit on his background, which will lead to the conversations we want to have around borderless talents and the six secrets of success as a CEO. Dave’s been doing it all. Most recently, he’s been the co-founder and CEO of DOXATalent, which we’ll get into for the last four years. He’s also been part of the Entrepreneurs’ Organization, or what is called EO for many years. Most recently served a three-year term on the member of the board of directors, traveling all around the world. Every time I talked to Dave, he’s some other fabulous country doing some fabulous thing. But he was also, as part of his tenure at EO so far, the global learning chair, which led a committee and oversaw global events, executive education, virtual learning and chapter learning for 18,000 entrepreneur members. And so just what are they thinking about? What are they learning about? What are they worried about? We’ll get into that a little bit.


Prior to that, and where I got to know David was when he was at a company called Guidant Financial. He was a co-founder, CEO, and now is a member of the board of director, where I’m also a member of the board of directors. So we get to see each other pretty frequently. I love Guidant. Guidant is on a mission to increase the number of people who succeed in small businesses. I just love, it’s a mission-driven business. They help entrepreneurs find capital to buy or start a business and then provide ongoing services in terms of accounting, tax, payroll, etc., that allows the owner to focus on growing the assets. So the stories that the David and his co-founder Jeremy able to tell about the people and the impact they’re making on their business are really just awesome.


Let’s see. He’s also an investor. He spent time at NuWire Investor for seven years, and he’s an author. And so your latest book is coming out next year, is that right, David?

David Nilssen (02:07):

Yeah, it’ll come out later this year.

Randy Wootton (02:09):

Oh, okay. Later this year. Well, with all of that, David, welcome. Did I miss anything?

David Nilssen (02:14):


Randy Wootton (02:14):

You’re also a minister of a small country or inventor of some cool new technology?

David Nilssen (02:20):

No, no. You did great. I appreciate the introduction. It’s fun to be here.

Randy Wootton (02:23):

Yeah, no, great to have you. Well, so I framed up, we’re going to talk about two things. One is borderless talent, and the second is you’ve worked with a lot of entrepreneurs, you’ve been an entrepreneur, and framing what it takes to be successful as a CEO, I think will be a great conversation as well. But let’s start with borderless talent and DOXA. Can you give us a little bit of background? Who is DOXA? What was the vision? What were some of the trends that you were capturing on?

David Nilssen (02:49):

Yeah, well, so DOXATalent, we started, as you talked about, four years ago. The idea behind the organization, our purpose, I should say, is the lift of global communities by creating meaningful work. The idea there is that the industry has treated people like product for decades. In fact, my first time outsourcing was through the company, Guidant Financial, you talked about earlier. And through that experience, we realized there was a better way to treat people and I think a better way to create value for companies that were in that space. And so we’re bringing a more conscious and secure solution to small and medium-sized businesses that are really lifting people up while still providing that same skilled labor and a tremendous value to the end customer. And we believe we do that well, then we’ll succeed as well. So we believe in this world where everyone can win together.


Honestly, Randy, as you probably know, a lot of businesses, a little bit of luck is involved in some of that success. I think we picked a really good time to take what we had learned in years of outsourcing at Guidant and making that available to these businesses because there’s so many trends right now that are playing into why this is a really interesting place to do business. The first is talent scarcity. I’m from Seattle, and in Seattle there’s only about a million people in the city, and yet we’ve got those mega players like Microsoft and Amazon and Costco and Boeing, and this very robust entrepreneurial environment. Talent scarcity is something we’ve been dealing with for years there. So everything that people complain about today, it’s hard to find people. If you can find them, it’s hard to afford them. If you can afford them, it’s hard to retain them. That’s something we had to deal with for a long period of time. But there’s so much in just this talent scarcity conversation around the imbalance in terms of supply and demand. There’s 8 million jobs right now that are open in the US and only 6 million people looking for them.


In fact, I just read something the other day from McKinsey, that 40% of our teams, yours, mine, everywhere else, are looking for a job right now. If you look at demography across the world, birth rates have been in rapid decline since 1950, and that’s leading to some troubling population pyramids, which I’d be happy to get into if you want to. And I think the point that that makes is just simply that talent scarcity is not a moment in time. It’s here to stay. And in fact, it’s likely to get worse.


The second trend is remote work. I mean, COVID flattened the world. There’s no question about that. I think there’s obviously, there’s growing trend prior to COVID, but COVID showed us that we could actually be productive in a remote environment. And now there’s this weird workspace indecisiveness. Employees want to be remote, employers want them to come back to the office, and I stand on this side where I think remote work is actually the future. So collectively between my two organizations with 900 people and absolutely no office, one of them is number one place to work in Idaho, and it was the only company that’s fully remote. The other has an 8.4, or excuse me, a 4.8 on Glassdoor, and that is something I’m actually really passionate about. So if you want to dig in there, we can.


And then I’ll just say that the other two are offshoring. If you believe that talent scarcity is here to stay and you agree that remote work is also, then you have to consider offshoring because otherwise you’re limiting yourself both in terms of cost and increased competition for the talent within your geography. And the final one is AI. Right now, AI is helping already to make more complicated tasks, easier, cheaper, faster to deliver, and I think that’s another one. So those are the things that are happening within the talent landscape and where our business is able to make a meaningful dent.

Randy Wootton (06:11):

That’s great. And having just actually had the chance to visit with you all at your customer conference in the Philippines, I remember you and I were chatting about it. I was like, gosh, jumping on a plane. It was going to take 27 hours to get there, because I was trying to optimize to stay on Delta, and I was like, “Really? Am I really going to go all the way to the Philippines?” But I got to tell you, getting there on the ground, meeting the people, understanding what you’re doing specifically for the communities where people are able to go back to their home villages and support their families and have a meaningful source of income that they can depend on, truly different than. I think a lot of BPO’s in the Philippines are having people come into Manila and having to commute the three hours, sometimes each way just to be able to go do their shift. And so talking to all the people I talked to, they said, this is radically different than how other BPO’s may have been solving this problem.


With that, as you think about your focus is your stated ICP, ideal customer profiles, SMB, mid-market, what makes it harder or easier than focusing on the enterprise? Obviously, you’re cutting off a segment, so you’re going to come in first mover advantage, you’re marketing, for folks like us, it resonates. But beyond that, how do you think about the challenges you’re facing with that target market versus what the enterprise folks are wrestling with?

David Nilssen (07:34):

Okay, well, let me start just to just share a little bit about our ICP, I guess, so that we’re clear on that because mid-market is pretty broad. The demographic profile for the businesses that we’re working with are primarily located in major cities who are looking to either increase their capacity or reduce their labor costs. We don’t actually see what I would call industry concentration. We work with everything from FinTech to B2B SaaS, hospitality, healthcare, lots of business services. It’s really more the skilled labor because I think a lot of people think about sourcing is take the work that you don’t want to pay $25 an hour for in the US and send it off to a low-cost geography, but we’re doing more than that. We’re software engineers, accountants, biz dev reps, marketing automation, things like that. The psychographics actually are more interesting in my opinion. They’re more related to this purpose-driven component of our organization.


Our business really caters to people who are a little bit more socially conscious. They want to do well by doing good, but they still need security. Security is something they’re very deeply concerned about. Retention is crucial and legal compliance is as well. And legal compliance, because this industry has lots of different players, and this is where, going to your question, there’s really three types of companies. There’s lots of mom and pop companies who will provide you an executive assistant. They’re providing a little bit more than maybe recruiting services, but not a lot. Then there’s on the other spectrum, the enterprise customer who, there’s a lot of companies that are there to serve organizations like Wells Fargo and T-Mobile who have a high volume of repeatable tasks. They’re willing to sign up for hundreds of seats over a multi-year contract. And those relationships are more transactional in nature. They’re really paying for an outcome.


The mid-market company sits in between the two. They care about the things that the enterprise customer cares about, proper hardware and security, making sure there’s the right process and systems in place. They want quality talent, but they want a partnership to help them with risk management, team development, oversight, and even to help them develop that strategy. And so, that’s the person that we focus in on. And I think instead of the enterprise customer, which we actually, we serve all three of those different types of customers, but the enterprise customers that come to us are primarily focused on costs. They’re primarily focused on just outsourcing a specific outcome. The mid-market companies that we’re working with are really looking to transform their organization and they’re looking support in doing that. So that’s where we focused our energy and efforts.

Randy Wootton (10:09):

And I think it’s great. I mean, we’re a poster child for that. We started with an EA, which would be that, “Hey, I just need someone to help take care of my schedule.” Pretty low level in terms of complexity. You absolutely need attentive people and if they’re representing my brand, I want them to be fluent in English and have a personality and all of that. But I think of what you’re offering is really if it’s not just capacity and cost, it’s capability, it’s this talent augmentation. And so now we’ve extended our relationship. We have marketing folks with your team, we have BDAs with your team, we have accountants with your team, which I think was a big aha for my team at Maxio to think about, oh gosh, we could get this talent in the Philippines. I had done this once before, and we’ll chat about this in a second, and it Percolate and I saw this idea of it’s not just low cost labor market, it’s outsourced talent. Where are you go to find great people? And I think what you said in one of our pre-briefs was your principle is when you treat people as outsourced talent, that is what you get.


Can you say a little bit more about that and how that permeates the way you hire, the way you train the customers you like to work with and how it plays out in your retention rates? Because I think that’s the thing that’s most interesting.

David Nilssen (11:25):

Yeah. Well, look, I mean if you look at the industry benchmark, 50% turnover in their employee base is the annual standard. I honestly don’t even understand how you can manage a business like that when you’re just constantly volume hiring and turning people over. The tax on your people and even your clients in that particular case is really challenging. So for us, we really decided that we would focus in on trying to create a world-class employee experience so that we could fix that, what I would consider industry flaw, which is the turnover ratio. And keep people being highly productive workers for longer periods of time. So we focused on things initially like providing higher base wages. We pay very well in the market, but we also expect a lot. We wanted to make sure that they were in fact employed so that they had the security of employment, the protections that come with that, but full family benefits, paying into the pension system, things of that nature.


We are a fully remote employer, so as I shared earlier, we have almost 900 people between both companies. There’s almost 800 at DOXA alone. And that particular organization, we don’t even have a storage space. I mean, it’s a fully remote organization, so we pay for their upgraded home internet connection to make sure there’s not latency issues. We have a very robust security environment for that.


But the things that we’ve invested in since then are things like an L&D team to make sure that we’re investing in them as people and professionals that they can increase both the impact that they have with our clients and our business, but also the income that they can generate long-term. And there’s a quote by Richard Branson that I love, which is, “Train your people well enough so that they can leave, but treat them well enough so that they won’t.” And that’s the mantra that we use internally to try and make sure that we’re living up to the actual purpose or the brand promise.

Randy Wootton (13:14):

Well, I think that’s great. We’re just already bleeding into the next part of this conversation was best practices with remote work. The one story that I share is I was at Percolate previously as CEO, a couple of years ago, and we were looking at building out some engineering talent capacity. We worked with a company based out of Africa, and it was very mission oriented. It was like, “Hey, we’re going to pay, well, we’re going to provide housing, we’re going to provide food, and it’s going to help the villages.” So it made it easy for the engineering team who initially was resistant to say, “Oh, we’re doing well. We’re going to do good.”


What was interesting was the first step was, well, let’s just get our engineers going to be bug fixers. And all they’re going to do is low level bug fixing. And what we found over the course of, I don’t know, two or three years, is they were really good engineers. And what made a difference was this idea of actually giving a meaningful work. Everyone had to do bug fixing, but meaningful work, own a part of the platform that they could take on, and you could have an engineering lead with some individual junior talent developing code, and then all of a sudden, we created cross ocean team. So you’d have people in Africa working with people in the US and so now you extended your amount of time that you could work on specific areas of the product. And so it was this real evolution from, “Oh yeah, yeah, give them the what we used to call in the Navy and they’ll probably have to cut this out, shitty little jobs, to make them part of the team, treat them as being equal and investing in building their well… Giving them meaningful jobs. Can you talk a little bit about that? And I think for one of the other things we’ve talked about is how career, focusing on their career, not just this specific job is really important to retention and impact.

David Nilssen (14:59):

Yeah. Yeah. Look, so a couple of things that we’re trying to do internally. One is to change the conversation in a lot of other countries. And I should note, the Philippines is where we started. That’s where we have a large number of our team members, but we’re also in Vietnam, Kenya, Columbia. So we’re becoming more and more distributed. What I’m finding is a commonality in a lot of these cultures are they don’t really want to talk about career development because their thought is, if I signal to you that I’m interested in something else, I may lose my job.


And so what we’re trying to do, and in fact Randy, it might’ve been you somebody years ago suggested to me this book called The Alliance. And the thing I loved about that is it actually changed my perspective on how to think about employee conversations and career development because it talks about this tour of duty, right?

Randy Wootton (15:42):


David Nilssen (15:42):

Come, spend two years, do a great job kick ass, but let’s make sure our job as an employer is to prepare you for the next role. And so, one of the things that we’re trying to do is one, create a culture where those conversations are okay and where we’re free to have those. And again, if we’re really clear, our job is to make sure that you continue to grow in terms of your impact and then your income, hopefully that’s with us. But if not, we’re going to high five each other and who knows, maybe you’ll refer us somebody someday or you’ll come back. And that’s happened in both cases. But one of the things that we’re now trying to do is take those conversations and also include the clients in that.


So the best example I can give you, we have one of our clients who’s in the finance space, and they have historically, there was this one role related to 401ks where they had just a compliance administrator and then a specialist. It was a two tier plan. The problem is, 401ks don’t exist in any other country. So finding people who are a plug and play solution there is really hard. So what we did is we worked with them to develop a junior administrator role that could then become a compliance administrator and then a compliance administrator too before graduating to a specialist role. So somebody comes into the organization, they already know what’s the career path look like, this is actually a pillar of our culture. The second is they also know that at each level what that means in terms of income for them. So they get to decide how fast they move up and the company is happy to pay because they’re getting someone who’s performing a service at a much higher value along the way.

Randy Wootton (17:06):

Yeah, I think it’s interesting in the feedback I give to the people that report into my organization, I think you do a regular good job of soliciting feedback and rating the individual, you always have a question about how they come up with something new, have they made an impact? And I can see you thinking about, well, if you keep getting all these examples of the great impact they’re doing, you can come back later and say, “Look, they’re adding a lot of value. We’re going to charge more.” But I think to your principle that you’re saying is this idea of impact and income and having those two correlate and absolutely, it’s always a better to pay someone who’s advancing their career and making an impact on the business than have to go out and reboot and start over. So I think getting that social contract nailed is spot on.


One of the other things that, again, with me coming to the Philippines and just knowing you personally, this idea of how do you build culture and connections. And Cory on your team, the head of HR did a keynote, which I thought was fascinating about how do you build connections with a purpose, with a leader, and then I think with the peer group. Can you talk a little bit about that and why in remote work… It’s the thing I think most about is how do I build culture and community? We’re in a hybrid model, and connections and it’s just very, very different than when you and I were growing up. So what have you learned aboutthat? And specifically, how does it apply to managing remote work?

David Nilssen (18:22):

Yeah, so Cory, when he talked about that, it was talking about it really from the guidance financial perspective. So when I was CEO, Cory joined our team. And over time, led by him, we developed this concept of culture as connections, connection to purpose, connection to leader, connection to team. At DOXA, we’ve actually expanded on that and it’s now a five-part. It’s culture to purpose, so making sure that there’s awareness and alignment there. It’s connection to the leadership, making sure there’s accessibility, connection to the team, but then we’ve added understanding their client and personal growth. So for us, I would summarize it more as purpose, leadership, team, client and career.


So some of the ways that we bring that to life, there’s lots of ways and I hope at some point we’ll get a chance to talk about values, principles, all that fun stuff, but directly on point, like every, I would hope every CEO, we are talking about purpose and vision all the time. I write a letter to the entire organization every single month highlighting our purpose and the progress that we’re making, but really our values and principles and who is doing a great job of demonstrating those. So we’re constantly reinforcing that. And we’ve built this culture of gratitude. We’re a Microsoft organization, at least our tech stack has that. And so instead of Slack, we use Microsoft Teams and we created this specific Teams just for cheers. We want a culture of gratitude so that you as a team member are reinforcing that by calling people out that are doing a great job.


On the leadership front, interestingly enough, in a remote environment, in an office, you create culture by what I would call fun. I remember when people used to walk in the Guidant office, I wore this Wordle that we created a piece of art out of like a badge of honor. And it was two words that best described the guide culture. And at that time, family and fun were the number one and two that came up.


I just think that was so great. But when we were in an office, it was how many fun events do you have? We had the Guidant Olympics, we had a beer keg and a ping pong table, and that’s culture. In a remote world, it’s more about development and career pathing and meaningful connections. And so, funny enough, we surveyed our team and what we found is actually the number one thing that they appreciate, it wasn’t team events, it wasn’t book clubs or company parties, it was team meetings. A well-run team meeting was a huge contributor. The number two, very close behind it, was a supervisor, one-on-one, clear and effective one-on-ones with a supervisor.


Now I personally actually developed a system using Loop, which is a Microsoft plugin to have these dynamic agendas for my team, and it’s worked out really, really well. But the one-on-Ones is a place that we focus really heavily.


The second is what we call leadership coffees in the Philippines you call them [foreign language 00:21:05], but it’s really a leadership coffee where once a month I get together with 10 or 12 people from the team to just have a cup of coffee and get to know them. So that’s how we connect as examples of leadership, I should say. On the team front, it’s really about team meetings and making sure that they’re not just getting into a team meeting and getting to business and then leaving, but actually creating those personal connections. Most people who have led a business for at least a period of time know that the number one reason people leave you is because of the leader. The number one reason they stay is because they feel like they’ve got a best friend. That is harder in a remote environment, so you have to work harder there.

Randy Wootton (21:43):

Are you investing on that specifically? So again, we’re hybrids. We have some people opt to go into our offices in Atlanta, Ireland, Dublin, Krakow, San Antonio. Are you investing in team in-person meetings as well or you’re just really leaning in on make your team meetings, your virtual team meetings valuable?

David Nilssen (22:04):

Yeah, so we’re in an interesting place as an organization because we are fully remote. When we first started, we were really in Manila. And as the company’s grown, as I said earlier, we’re now in five different countries and we’re distributed all over the Philippines. And as you found out, you can try and go 20 kilometers and it can take you three hours. The traffic is awful. So we said we were remote first, but it is becoming harder and harder to facilitate those in-person meetings when you are fully distributed. And so at this point, we are leaning further towards remote only, with the exception of our annual client conference. And that’s really that what catalyzes connections between our people, between our clients and with our organization. And that’s actually was my example for the fourth pillar, which was the understanding of the client. One of the ways that we do that is making sure that they get together, we build this client conference, have them come in to share those experiences, giving back, learning together, and then celebrating at the same time. And then we talked about the career pathing, that’s another example of how we would connect people to a career path so they didn’t feel like this is just a job for a second, but actually an opportunity for them to grow over time.

Randy Wootton (23:14):

An opportunity for a lifetime.

David Nilssen (23:17):

I mean, that’s the goal. We really want this to be a place where people come and actually can progress. And I recognize there are some people that just want to come to work, do a good job and go home and disconnect. But one of our principles is actually obsess over learning. And so we are looking for people who want to grow and continue to push the envelope, because we think that’ll help drive excellence every day.

Randy Wootton (23:36):

Awesome. Just coming back to your client event, it was very well done and I liked how you did break it out into those three different days, three different areas of focus where you had a chance to go. Often I go to these conferences and I never leave the hotel room. You fly into the airport, you go to the hotel room, you do your conference, you fly out. And your ability to get us integrated into the community, I mean in some levels, heartbreaking to see the abject poverty, but then also just I think it really reinforces the mission that you all are on is to make an impact in those communities.


But then the learning that we did and the people that I learned from when I was there that were doing the other keynotes and then connecting with my team of people, I think we had 10 DOXA employees that came in from all around the Philippines for lunch, and then we were at the dinner. I think he did a really nice job. I think it was one of these things where again, I was hesitant to go, it was going to be such a long trip, but then when leaving I thought, gosh, DOXA for us in the Philippines in particular is a center of excellence, and we need to invest in it as much as we would if they were full-time employees in our own offices. And so I need to come back. Or someone needs to come back and commit to that connection.

David Nilssen (24:46):

I have to tell you a really funny story related to that. First of all, I was actually glad to see you come, and I’m always happy to see people, make people make that investment because if you were to survey our team and we’ve done it informally, you will find that very few, and I’m talking, my guess is out of 800, less than a dozen have ever met a client, because most people treat them as the outsourced labor. You just send it off to this geography, set it and forget it. Somebody else deals with it. And what we’re really trying to create is a center of excellence, feeling this is a part of your organization and something that’s worth investing in. Those connections mean a lot.


The idea actually came from Magic Johnson of all people.

Randy Wootton (25:24):


David Nilssen (25:24):

So I know you talked about EO. I had a chance to meet Magic Johnson and then later I had a chance to interview him for EO in a one-on-one conversation. He tells the story about when he left the NBA and he wanted to be taken as a serious businessman, and he saw all these opportunities across LA and the urban centers bringing Starbucks and theaters, but you had to do them differently because of the ICP in that particular case. And he said nobody took him seriously. One day he picked up the phone and called Howard Schultz from Starbucks, which this is a story only someone like Magic could pull off.


Magic calls Howard Schultz convinces them to come to LA and they walk the streets together. And they created a partnership as a result of that. And what he said was, “Sometimes you got to bring people to the deal.” And so when I talk to people, they always say, “Well, gosh, do these people speak English? Are they skilled workers?” And there’s just this lack of awareness, and it’s not by anyone’s fault, it’s just without knowing. And so we created DOXAcon as a way to bring people to the deal, not only to help connect them to their team, but also to give them a understanding of how they can continue to expand that over time. So there’s a business development motivation there too.

Randy Wootton (26:39):

Of course. And I think that’s clear. But I think the other part is just, hey, when we travel, the world becomes a small place and you recognize we’re all people that are wrestling with our own issues and we want to do good things and we want to work with people we like. And so I think that was a wonderful experience and I know we’re continuing to know our investments in DOXA and think of them truly as both DOXA and Maxio. And so really excited about that.


All right, well let’s shift. Thanks for all that and all the best practices. So if I were to maybe just summarize this before we go to the next section. Best practices with regards to remote work, importance of treating them as equal, and investing in building connections in community. Number two, required, you have to have an investment in remote employees and how that impacts employee turnover. And so thinking about the most expensive resource when they walk out the door is after two years where you spend all this time building them, how do you manage the investment against attrition and capability and impact? And then the third part, which you talked a little bit about was the need for intentional onboarding processes for remote employees and the investment in L&D and making sure they understand not just their job, but the critical skills for them to move up in their career, the clients, etc. So those were remote work 101.


As we back up a level and think about secrets of success for you as a CEO. I’ve been writing this Seven Secrets and had the chance to talk about it in the Philippines. It was a lot of fun. Won’t go through all seven of them, but one of them, being Maxio, a company that talks about metrics, the first one I’d like to talk about with you a little bit is driving results. And we talk about how the CEO’s number one job is creating shareholder value. The trick is really about figuring out which results matter most. That could be defined by the metrics you track or KPIs or whatever the language is. So can you share a little bit in terms of what metrics are you using to track your business and how do you think about it?

David Nilssen (28:32):

Yeah, so look it’s highest level. Our business is very simple, right? It’s new logos. So for us, it’s how do we attract more customers to the organization. The time to fill their need because we want to make sure that we do that quickly because time definitely kills deal. How we expand that relationship. So in your world? That’s net revenue retention. It’s how do we grow that business over time. And then employee retention is extremely important to us, because if we can make sure that our bucket is not leaking, then it’s much easier to fill. And then below those tools, what does it cost us to actually secure that new logo? So CAC and then especially in such a labor heavy business, gross margin becomes really important. So we track some labor ratios that are really critical for us, but at the highest level, those are probably the most critical key metrics that we track on a regular basis.

Randy Wootton (29:25):

And so even thinking back at Guidant, which was a different business in some ways, similar in others, but do you have specific lessons learned that you had in terms of what metrics you look at? I know for example, in the Guidant board meetings, you guys were really focused CAC. And it was a 1.0, which is interesting I think because in SaaS writ large, customer acquisition costs, new customer acquisition costs has increased significantly. It’s gone up from 76 cents, so 76 cents of sales and marketing to get $1 of ARR to today I think the average in the industry is a $1.78, meaning you’re spending a $1.78 on sales and marketing for every $1 of ARR. Well, that sounds like you’re going to burn out, flame out. The assumption is you’re going to have customers from several years, and so the lifetime value offsets the initial investment. But I know at Guidant you guys are pretty dialed into nothing above 1.0. Is there some other lessons learned you would’ve either from your Guidant experience or your experience with DOXA in terms of metrics and what you’ve seen and the volatility and how you really dialed in?

David Nilssen (30:32):

Well, I would say a couple of things come to mind. First, I’ll specifically speak to the CAC thing. The interesting thing about the Guidant business is that we don’t make a tremendous amount of money financing businesses. That’s what we’re known for, but we actually really try to break even as you’re pointing out on that particular deal. And then we have tax and accounting payroll and 401k administration on the backend. And so what’s really interesting about that business is that we’ve figured out a way to acquire a customer, profitably acquire a customer, and then provide them with other services that really has no acquisition cost associated with it. So that was something we were really focused on. Whether that’s right or wrong, I don’t know, we’ll find out.

Randy Wootton (31:14):

Well, some people would talk about a blended CAC and you would take your sales and marketing that you would apply to the new logo versus the expansion. And so what you’re getting is a lot of customer growth that’s driving your NRR and long-term profitability, but you’re able to dial in your new CAC and it’s working for you. And I think that’s the thing that the CAC ratio is one of the things that you got to understand what works for you and your business and your contacts. And if it’s costing you a buck 76 to bring in a dollar of ARR, you better be really good at retention. Retention and growth.

David Nilssen (31:46):

Yeah. That was actually motivated by the 2008 crisis. So in 2008, we were a very transactionally-oriented organization. We realized pretty quickly when transactions stop, it’s harder to sustain a business. And so we made this really concerted effort to grow the ARR side of that business in a very, very methodical way. But we also, that particular organization is not venture-backed. There’s no pool of cash that was sitting around to help us burn into growth. And so we had to do it very responsible.


I would say my biggest takeaway if I look at all of this, when I first started, I was very focused on Guidant. As we’ve now shifted and been able to start this other organization, DOXA, I’m actually trying to learn more about other industries and how they think about growth and trying to correlate that within my own. The second is trying to figure out what are the appropriate benchmarks, right? That’s not something that we were able to do at Guidant because we are really creating its own category, that does exist here. And actually it’s really interesting and it’s helpful for us to see how do we compare against our peers, but what are other people doing?


And I’ll give a great example, you know this, net revenue retention, that is something that you actually helped me identify a couple of years ago in regards to what SaaS CEOs are looking at in a subscription business. But if you really look at our organization, it is still a subscription business. We don’t do project-based work. And so taking that corollary example or taking that example and putting in our own context, it has really helped us think about how we expand those relationships more intentionally as an organization. So to me, a secret of success, understand your industry and understand best practices and others.

Randy Wootton (33:28):

Yeah. You couldn’t tee me up better. For the Maxio Institute Growth Report, we take our 2300 customers and we’re a system of record for billing and invoicing, and now, we’ve provided four reports at the end of each quarter. And in part, it’s to address that need that you described is what are the benchmarks? If I’m a SaaS CEO, what has the growth been by stage, by series, so by size, by go-to-market motion? So PLG versus SLG. And you can use that to triangulate on what success looks like for you. And if you’re invested by private investors, so VCs or PE, you also have the opportunity to align expectations in terms of growth. They always come in and say, “Hey, increase revenue and reduce costs.” You’re like, “Yes, tell me how and how much.” And I think you’re playing with other people’s money. So you’ve got to be able to talk about where over the next three to five years you expect to be exiting or transacting, and what are the growth rates that are going to get there. But one way you triangulate on where you are today is using benchmarks like you described, and then being awful about how do you learn what’s best in class.


And so to that point, and maybe that’s a good segue to the other secret of success, you and I talked about, it’s investing in your tribe. And when I talk about the tribe, I think of it along four dimensions. One is you have a mentor who is able to help you with your specific context of your business. You have a coach who’s someone who’s able to provide you feedback on your interpersonal effectiveness. For me, first coach I had was when I was at a public company, so helping me manage a public company board.


The third, I think especially for CEOs, is about having a peer group, a peer group of other CEOs who know what it means to be in the corner office, know how lonely it is, and will call you on your own BS. And then the fourth is a peer advisory group. So peer advisory are those people who know you deeply and personally and are able to give you feedback, well throughout your life, but just at critical moments where you’re trying to figure out where you want to go, and it’s a lot of chaos and they’re able to say, “Hey, Randy this is who you are. This is who we know. This seems to be what you’ve articulated in terms of where you want to go.” And just really grounding you in you, because they only love you and there’s no other ulterior motive.


One of the things I found fascinating was you’ve been involved for EO, Entrepreneurial Organization, for a long time. You’ve also been a YPO, Young President Organization. I joke, I was never an entrepreneur, so they didn’t let me in EO. I was too old for YPO when I became CEO, so I had to find my own group. I ended up doing Alliance of CEOs initially, and then now I’ve gone to Vistage, which I think is relatively similar, but can you talk a little bit about EO, why you joined it? Clearly, you’ve invested an enormous amount of your own energy and life force into it. So what’s the value you’re getting out of it, and what would you recommend to our audience? If they may be entrepreneurs, bootstrapped and are doing it on their own, why should they think about something like EO?

David Nilssen (36:30):

Yeah. So by the way, when you were talking about your secrets to success, this one really stood out to me. Because if I think about the greatest personal professional growth that I’ve had in my own life, it was absolutely because of peer groups. And then I would also add, there’s some mentors and actually coaches that I brought on that just have really helped me turned the mirror around and be a little bit more introspective than I naturally am, maybe.


Yeah, I joined EO in 2005. So just for context, when I started Guidant in 2003, I was 24 years old.

Randy Wootton (37:06):


David Nilssen (37:07):

So I was really young, very, very young in my career. And we grew like a rocket ship. And I quite frankly didn’t know what I was doing at the time. You’re basically running through a brick wall and then planning for what’s on the other side.

Randy Wootton (37:22):

Hanging onto the tail hook. I described it, you’re just like, “Whoa, here we go.”

David Nilssen (37:26):

Just enjoying that ride.

Randy Wootton (37:28):

Yeah. Yeah. Yeah.

David Nilssen (37:28):

So I joined EO because I mean, I was really hungry to learn, but it was really hard, because as you said, it’s lonely when you’re leading an organization and nobody wants to hear about your problems.

Randy Wootton (37:37):

That’s right. That’s right.

David Nilssen (37:38):

And I wanted to learn, so somebody introduced me to EO, I joined, and it was instantly my tribe. These are people who, most of them are not venture backed. So these are people that have had to rub two nickels together to make their first payroll and mortgage their home and are really grinding it out. Some aren’t, but for me, there was the sense of the forums, which allowed me to do what you’re talking about in terms of advisory group. These are entrepreneurs who are not competitive with you, but really know you on a very deep personal level in addition to understanding your business and things about it than most never will. And then they have great learning events.


And what I found really quickly is that EO, in order for me to get the most out of that is that I had to treat it like a gym, not a spa. And so I’ve really applied that in terms of you go to the gym, you have to proactively prepare for and put in the work to get the result that you want. And the more you give to that, the more you receive from it. And somebody convinced me to just step up one year in local leadership, and I realized instantly I created a new forum out of that leadership group of highly engaged EO leaders, and it just set me on fire. So that was back in 2008. And this year I will be finishing my last year of service. So I’m going on a good 16, 17 years of service to the organization, and at its climax, the global board of directors. But I’ll tell you, man, for every hour and day and year that I’ve invested, I’ve gotten infinitely more back. I’ve got a network globally of amazing entrepreneurs. I’ve had a chance to travel the world, but more importantly, I’ve had a chance to grow as an individual.


And I’ll just make one note, which I know is not the focus of this, but most people join these organizations to be better business leaders. I actually think I’m a better husband and father as a result to come to these groups too. So it is not just about professional development, but about having a well-rounded life.

Randy Wootton (39:31):

Yeah, I think that what I’ve heard from folks that do EO as well as YPO, that it’s the whole person.

David Nilssen (39:35):

Yeah, that’s right.

Randy Wootton (39:36):

And you’re on a journey together with a cohort and usually for years that you’ll be with these same people and you’re growing together as you make these life choices. Can you talk a little bit about the difference you saw between EO and YPO and why one would join one or the other, or both? What were you getting from?

David Nilssen (39:55):

Yeah, look, I joined EO at first because at the time I was a much smaller organization, and EO has a million dollar threshold, unless you’ve raised capital. If you’ve raised $2 million or more, I think it’s two and a half million dollars or your revenues were a million dollars or greater, you can join EO. So I joined that one first and I loved it. At some point though, YPO, which is actually the Young President’s Organization, isn’t exclusively for the entrepreneur. So the presidents or the senior business leader is welcome to join even if they founded or not. So it’s a little bit different culture in that regard. YPO has a threshold that’s almost 10X higher in terms of being able to join. So until you get to about $10 million, you’re not eligible to join. 10 million in annual revenues.


And I would say that at a very, very high and simplistic level, they operate similarly. EO, the culture was more my tribe. It’s a little bit more connected, it’s a little bit more really, the whole person, YPO I found to be a little bit more business-oriented. And really for what I was looking for at that point in my life, I tried both of them. And I realized when I joined the Global World Directors, I didn’t have time to do all of those things simultaneously. And so I gave YPO up at that point. But I think it’s an amazing organization, phenomenal networking. It’s actually twice as big as EO. So the network of it is very large network effect, but EO is where I wanted to hang my hat.

Randy Wootton (41:21):

Well, that’s great. You had to run a business too. In addition to doing all of the-

David Nilssen (41:25):

Turns out.

Randy Wootton (41:27):

Jetting around and meeting all your friends around the world, you literally had have time to have a business. I think that’s maybe a good place for us to wrap up.


No one teaches you how to be a CEO. I remember going to business school and taking classes and it was all about, “Well, you’re going to be the general manager, you going to be the CEO,” but then all of a sudden you step into this role either as a founder or what I am is more of a professional CEO or I’m brought into a situation. And then it’s you. You’re on the stage. And you’re at the nexus of all information. No one’s happy with you, the board’s not happy with you, your peer group’s not happy with you. There’s no one to complain to, to your point. And I find it to be both invigorating, because at the end of the day, you’re in the seat and you got to make the call and you going to be held accountable for it. But also terrifying, because there’s no way to predict the future. And who knew there was going to be a Black Swan event and the SVP was going to shut down and all of these things. But it certainly keeps it interesting.


And so I think one of the skills that you’re, things you’re describing, which I think is the skill that we all have to develop, is this idea of how do we operate at the edge of our own ignorance? How do we keep learning? And how do we have enough humility to ask? Because part of the thing I think as a CEO is people look at you for the answer and sometimes you don’t know what the answer is. And so you got to admit that you don’t know, and then go ask questions of everyone you can, like what you’re describing with learning about subscription businesses and how that model works is, going to help you be a better leader and create a better business. And so I think it’s this really interesting dynamic in terms of when you step into the seat of the CEO, everyone’s looking for the answer. And you are often, I think when I’m looking in the mirror saying, I have no idea, but let’s give this a shot.

David Nilssen (43:09):

100%. Well, I’m an expert at operating at the edge of my own ignorance. But look, I’ve always personally believed if you approach things from a perspective of curiosity and intention to learn, that helps. But you’ve got to have that ownership mentality, the ability to just own it and be okay with the outcome and be accountable for that. And then the third thing is I think taking good care of people. I mean, I’ve always been in the business services arena and I consider myself a people oriented CEO, but I think that curiosity, that ownership, and then that relationship people first perspective is how I’ve seen some mild success along the way.

Randy Wootton (43:50):

Well, mic drop. Awesome. Thank you, David, for your time. I’ve really enjoyed it. You’re sharing your background, your experience, talking about how we think about remote work, the very specific tactics you can do to take advantage of this global talent base that we have. And then always love learning from you and the secrets of success about the metrics you watch and how you operate at the edge of your own ignorance was awesome. So thank you.

David Nilssen (44:13):

Appreciate you having me.