Trusted Counsel merged with Moye White on September 1, 2021. The following podcast was recorded prior to the merger.
In today’s business environment, change is happening faster than at any time in history and smart organizations know their competitive edge and success comes through transformation.
We spoke with Dan Dreschel, Senior Vice President of BIP Capital, a venture capital firm based in Atlanta about his experience as the lead investor overseeing Saas, fintech, and devtool investments and in business transformations as an actual operator. “The way I think of it is that if you think about business value, and value creation, and they are trying to monetize that or turn that into economic value, businesses start as a triumvirate, or if you will, of desirability, feasibility, and viability,” says Dreschel. “So if the products or services are longer desirable for the business, or the economics are no longer viable, or the product construction and delivery is no longer feasible, then those are pretty clear signs that you better get in gear and think about transforming your business into a different direction that creates a triumvirate that is market competitive.”
Dreschel was part of a successful transformation during the dotcom boom era. In 1998, he interviewed for the Chief Operating Officer position at Security First Network Bank, a relatively new bank founded in 1994. Security First Network Bank was actually the first internet bank worldwide. During the interview, he learned the bank was in the process of a transformation and the COO would take the lead.
Why did Security First Network Bank leadership make this decision after a mere four years? According to Dreschel, the bank was doing well at attracting deposits but lousy as a lender. With little revenues and stiff competition including large banking institutions such as Citibank and SunTrust, the bank concluded it had to transform from a financial institution to a technology company. In 1998, with the lead by wholly owned subsidiary Security First Technologies, Security First Network Bank was sold to the Royal Bank of Canada. In 1999 Security First Technologies was rebranded to S1.
Listen to the podcast interview to better understand what businesses need to think about to grow to the next level, the best way to deliver the “transformation” message to your team, important metrics to measure and more.
During the course of the podcast, entrepreneurs, business owners and C-level executives will learn about:
- Leading indicators that a business might have to undergo a business transformation
- Key areas business transformations often focus on
- Why a business transformation may not go well
- Preparing for a capital-enabled business transformation
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Leading Business Transformations and Getting it Right!
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John: Hello, and welcome to In Process. Today, we’re talking about business transformations. In today’s environment, there’s constant disruption, Evelyn. And so businesses always have to think about what they have to do to transform, to possibly take their growth to the next level, or maybe stop-
Evelyn: Stop and change positions.
John: … Right. Stop and change what they’re doing. Exactly. And so I think it’s very important for us to think about, what does that business transformation do? How do you go about it? It obviously has a fundamental rethinking of the way that businesses think about the way that they’re valued today and the way that they’re valued tomorrow. But there’s also a lot of things that they have to change from a culture and strategic standpoint.
Evelyn: Mm-hmm (affirmative). What’s their opportunity? How do they actually execute? So I think it’s a really interesting topic and probably not one that is discussed enough.
John: Absolutely. We are very fortunate to have an expert in the house today. We are joined by Dan Drechsel, Senior Vice President of BIP Capital, one of the most recognized venture capital firms in the Southeast. Dan has extensive operating experience for venture and private, equity-backed companies and has scaled technology businesses across multiple industries. Dan is currently the investor lead on enterprise SaaS, fintech, infrastructure and development software at BIP Capital. Dan, welcome to the show.
Dan Dreschel: Thank you. It’s great to be here.
Evelyn: Great to have you.
John: Well, Dan, as we were mentioning in the intro, obviously transformation requires companies to really rethink how they’re creating value and undergo fundamental changes. One of the first questions is, what are some of the indicators that a business might have, good or bad, that they might have to undergo a business transformation?
Dan Dreschel: Well, the way I think of that is if you think about business value, and value creation, and then trying to monetize that or turn that into economic value, businesses start as a triumvirate, if you will, of desirability, feasibility and viability, right? So if the product’s no longer desirable, or the economics are no longer viable, or the product construction and delivery is no longer feasible, those are pretty clear signals that you better get your … get in gear and think about transforming your business into a different direction that creates a triumvirate that is market competitive.
John: And are there any leading indicators for that? Is it in the numbers or in the market environment?
Dan Dreschel: Yeah. You can see … We have … If you think of … So if you just take them in order, viabilities, the accountants can find right away, right? Because the unit economics deteriorate and you can’t see how you’re going to make enough margin on the product. Feasibility. As material supply changes in a manufacturer or competitive feature additions in a software product become necessary to compete, you can very clearly see the product feasibility. And then on the desirability sign, as you proceed to try and sell the product, you … There’s a whole bunch of signals. Do you have people interested, but they never consummate? Do you lose competitive battles to other folks because the product is no longer market competitive, so it becomes less desirable, relative to its competitors? You can pretty easily track down the leading indicators, if you stop and inspect the pieces of the forest and don’t just wander around in the trees.
Evelyn: And keep ignoring it. Because I think that would be my question. At what point … I guess we’re talking about a CEO kind of overview look, but also probably an operating team I suppose that-
Dan Dreschel: Yeah, and sometimes, picked up a governance. The vantage the board has of standing back from the business and not getting involved in the daily operations is they take a periodic … Whether it’s monthly or quarterly or semi-annually, they take an inventory of the business from that higher level. And a lot of times, the businesses that exhibit good board governance will make themselves aware earlier of leading indicators that indicate that they need to make a move.
John: So what are some of the, I guess, key areas on which business transformations focus, then?
Dan Dreschel: So in our world, because we … BIP Capital is an early-stage investor. We tend to think of companies that are focused on innovation, usually in technology, software, those sorts of things. So I’m going to steer the conversation a little bit away from thinking about Fortune 500 companies and publicly traded companies and their transformation, into that earlier-stage, as an innovation company proceeds, what are the key focus areas.
Dan Dreschel: And we think of innovation companies accelerating onto a development path. And when we find them, usually, they certainly have somebody running the business. So there is leadership and organization. They’re usually … But when we’re involved, there’s usually a product, although other investors may invest pre-product. And usually, when we invest, there’s some level of customers. So you’ve got some view of the execution ability of the business, the desirability of the product, the feasibility of the product, and the viability of the product over time. And so we focus on the areas that that business needs to think about transforming. And we do it along a number of lines because almost always, when we’re involved, the business is transforming, at a minimum because it’s getting a significant infusion of capital in order to accelerate its growth.
Dan Dreschel: But often in early-stage businesses, certain areas of the business are underdeveloped, and that tends to be around market intelligence. Have they done enough customer discovery? Is the market what they think it is? Is the size sufficient to build a good business in? So there’s that whole market intelligence aspect. There’s a business development, leadership, organizational structure. So we often find a subject matter expert founder, paired with a technical founder. Or not, as the case may be. And often, there’s not a sales and marketing person in sight anywhere. Or the exact opposite. There’s a person who discovered a business problem during their career, went to solve it, has sales and marketing expertise and subject matter expertise, but may not have any technical capability to build a technical stack that can service the business problem in an operating model. And so one of the first areas we start with is that whole organizational design development and talent acquisition area.
Dan Dreschel: Then taking the market and try to do that very deep market analysis, so you know exactly what segments you’re serving, what the personas and people are that are buying in that segment, and what the competitive landscape looks, in terms of the features and functions of the offering you’re going to put in the market and how do those stack up, vis-a-vis the alternative choices that person has, to get that pull product/market fit. That then yields: what are you doing about technical feasibility of actually building that product that fits in that market, in a way that can be supported operationally? Then you’ve obviously got to take it to market. So that’s the whole, “How do I reach people doing my door-darkening with expensive salespeople? Am I using inbound and paying Google all my money? How am I going about trying to locate and then convince people to make that customer journey from unaware, to aware, to interested, to researched, to decision, to action?”
Dan Dreschel: If you can get those three parts working, then you’ve got the whole, “Now that I’m being somewhat successful, how do I consolidate that success with customer success strategies, capital strategies, and, if you will, re-investigation of revenue growth to figure out how to extend the reach and continue to grow the organization?” And that … We think of that kind of wheel, if you will, as every time you make a turn of the wheel and grow some, then you got to kind of start over and say, “Okay, is my organization sufficient?” So we think of … You asked about continuous transformation. We think of it as a wheel that is perhaps not continuous so much as periodic. It would be continuous if you could tackle all that regularly. But you can’t. So what ends up happening is you set a kind of a set of operating model in place, do it for a while. And then, as you discover bleeding indicators of the lack of viability, desirability, or viability, you try to turn the crank again.
Evelyn: Evaluate and change.
Dan Dreschel: And you evaluate and change, yeah.
John: So for you all, this is part of a formal process that you have, right?
Dan Dreschel: We do it all the time, yeah.
John: And how do you make sure that it gets implemented properly?
Dan Dreschel: Ah, therein lies an interesting conundrum, right? So part of what we do is we work with companies that are perspective partners with us, entrepreneurs that are trying to build businesses, is we try and be aggressively transparent, that this is the way we think, and that we’re institutionally incapable of staying away. Right? So if somebody wants capital and wants somebody just to sit on the board and help a little bit, we tell them that they need to think about other people because we’re going to show up, and we’re going to be working with them on the series of transformations as they perfect their business. Our objective is to help entrepreneurs get onto their maximum growth path and then sustain it, or even accelerate it, beyond what the historical growth is, onto a different growth path as it becomes available. And sometimes it’s just capital. But in the … Because we’re such an early-stage investor, it’s rarely just capital.
Evelyn: So how long a timeline though? Let’s assume that you’ve got a CEO with a team that it’s all aligned. One of your operating partners, or you, go in. And so how long does it usually take to identify all of that and get that flywheel moving, I guess?
Dan Dreschel: So we have the advantage, on the investor side of, we see this movie more frequently than the entrepreneurs do, right? So sometimes, we can recognize what’s going to happen next. And then, in some cases, particularly in the early stages of us working with a company or an entrepreneur, there may be resistance of, they didn’t invent it, they didn’t come up with the idea. They haven’t seen the movie enough times to see around the corner. Classic example is you’re beating on somebody about, “Hey, your go-to-market strategy involves training, and this, and that, and the way you’re going to service customers. And you haven’t even started hiring a training person, but you’re about to sell 40 of these.” So we’ll work with them on those sorts of things. Over time, we see a tighter cycle.
Dan Dreschel: So David Rudolph is one of our outstanding CEOs of one of our firms we’re invested in, called PlayOn! Sports. And I think, if you went back 10 years or 9 years, he and Mark Buffington would have these discussions, and it might take a year and a half for Mark to convince him that some significant change needed to occur. Today, they can talk on the telephone for 10 minutes. They see eye-to-eye on what’s coming. David’s now cranked that wheel four or five times. And so he knows that he’s going to be changing and altering places in his business regularly, over time. He may have known that before we ever got involved, but now he really knows it. And so that can be a very … It can be a three-month period.
Evelyn: So I think that’s really interesting. I think that … My experience … I think our experience with entrepreneurs that have raised capital at least for the first time, okay-
Dan Dreschel: Right. First-time CEOs with institutional backing, yeah.
Evelyn: … Never having … Exactly. They always think that they … They have a view that is kind of glossy, where it’s all like, “No, I am brilliant. And I have come up with the plan. And this is it. You’re just going to give me the capital and leave me alone.”
John: Yes. And we see that.
Evelyn: So I think it’s really important that they actually do have the knowledge because it sounds like a very experienced, successful CEO, David Rudolph that you just mentioned, you said it’s happened time and time again. Over that time it takes, you’re constantly changing.
Dan Dreschel: Yeah, so even in his own business, he’s seen the movie four or five times now. Right?
Dan Dreschel: And it is hard for the investors to mentor entrepreneurs in a way that’s comfortable for them and not meddle. We try and identify meddling as under-wanted intervention and mentoring as desired intervention. Right?
John: Those are good definitions.
Dan Dreschel: And trying to separate those two and move from one or the other is a skill that’s required in a venture investor to work with portfolio companies successfully. Maybe the people that are investing in high-growth C rounds of fast-growing, $10 million companies, or $20 million companies may not see it the same way we do. But when we find … I don’t want to say it’s two guys and a dog, but sometimes, it really is. In fact, there was one in the office the other day. There was two women, a guy, and a dog, and that company is going to … They’ve got a brilliant idea. They’re well on the path to the beginnings of executing it very well. But there’s going to be hiccups along the way.
Evelyn: And I think it’s really important that every management team inside of a group like that understand that it’s the nature of the beast of the business, the kind of business that they’ve chosen to actually create and grow, that it has to lend itself to having a more open-minded view of, “My way or the highway,” is not going to do it.
Dan Dreschel: Quite right.
John: The expectation in the business is that there will be a business transformation. You all have actually put in a process that sort of forces that to happen. But I want to go back a little bit to talk about some of your experiences in transformation, not as an investor, but as an actual operator. So you have some, I guess, some very interesting experiences in that area. But can you tell us about one of your favorite?
Dan Dreschel: Well, sure. I guess the biggest and maybe, if you look at the Atlanta community, one of the most successful transformations of a business that we did, leading up to the dotcom boom, was I joined a company, in the middle of 1998, called Security First Network Bank. It was the world’s first Internet bank. It was founded by two brothers-in-law. They had both married sisters from Kentucky. Michael McChesney, who had a Internet secur- … or not an Internet, a Unix-based security firm here in Atlanta. And a guy by the name of Chip Mahan, who was a banker, and, at the time was, fixing broken savings and loan in Ohio and selling them to Bank One in Columbus, Ohio.
Dan Dreschel: They were at Thanksgiving dinner, somewhere in Kentucky. I can’t remember exactly where. And Michael said, “There’s this thing coming called the Internet, and it’s going to be big.” And Chip said, “Well, let’s sell CDs on it,” as you would expect from a guy that’s fixing savings and loans, right? And so in 1995, they launched Security First Network Bank, using a bank charter that was one of the ones Chip had received as part of his process of buying and fixing up savings and loans. Turned out, it was from a no-stoplight town in Kentucky. So famously, the world’s first Internet bank got founded on a charter from a town that wasn’t big enough to even have a stoplight.
John: Wow. That’s great.
Dan Dreschel: So they started Security First Network Bank and were able to attract deposits very aggressively. But if … For those of you who are familiar with bank profit and loss statements, you know that banks … Deposits are actually a liability, and you make money in the banking business by lending money. And they couldn’t figure out how to lend money on the Internet. So they could attract deposits. In fact, it was the fastest-growing bank, in terms of deposits, in the United States. But we couldn’t figure out how to lend money, so we had very little revenue. And the combination of having to compete with the brands of Citibank and SunTrust … Well, I think it was Trust Company Bank back then … and others that had significant and established brands, and the inability to figure out how to lend money, led us to conclude that we needed to not be in the banking business.
Dan Dreschel: The company had a data-processing subsidiary that had built all the software to enable online banking because it had founded the first online bank. We had actually resold that infrastructure or sold it as SaaS, effectively, before the word SaaS even existed. And we had 120 banks running their online bank on our software. And so we sold the bank to the Royal Bank of Canada, became Security First Technologies initially, and then later, S1. And we had a very successful transformation-
Evelyn: Complete transformation.
Dan Dreschel: … becoming a technology company, rather than a financial institution.
John: Now, when you first came to the conclusion that you had to change the way that you were doing business, how was that received? Was that an aha moment, everybody was on board? Or was there some resistance to it? Because you were obviously having very good success at the time in a different way, attracting the deposits.
Dan Dreschel: Yeah. So there’s … Change always, there’s winners and losers, and there’s conservatives and progressives involved. Right? So the conservatives are favoring the status quo. The progressions want change. The people in the bank weren’t really enthusiastic about no longer being part of the world’s first Internet bank, which is what they’d signed up for.
Evelyn: Bankers don’t tend to be the most open-minded kind of people anyway.
Dan Dreschel: Yeah. Well, we had fairly open-minded bankers.
Evelyn: I would imagine, yes.
Dan Dreschel: And they had fought through the regulatory issues of opening the world’s first Internet bank, which was a huge jump. But the leadership, in terms of Chip Mahan and Michael McChesney, kind of knew that they had a thing on their hands where every bank was going to need to be in the online banking business, forthwith. We had the technology to do it, and the bank P&L just didn’t look that good. And so the fundamental data signals were there. They were able to interpret those, appropriately and aggressively, and made the move to begin the process to figure out how to get from bank to technology company. I actually came in as part of that, so I wasn’t there when they made the decision. One of the moves, in terms of transformation, was to add a software-centric chief operating officer, which is why I joined the company.
Evelyn: Oh, okay.
John: So you came in and the plan was sort of set, but not executed at that point.
Evelyn: Right. We were a third of the way through it, or something like that.
John: Right. And so what were the steps in thinking through? I mean, it’s … I hear a lot of ideas and a lot of plans bounced around, but it’s the actual execution which is the hard part.
Dan Dreschel: It often is the … And just a side story, talking about resistance. So I started. The day I started, the gentleman who was responsible for 60% of the revenue of the company was on vacation. He was gone a week. And after a week, I had called some people and I said, “Where is he? He was supposed to be back on Monday.” “We don’t know. We’ll call.” Two days later, “We can’t find him.” He actually never came back.
John: Oh wow.
Dan Dreschel: So there was resistance in certain [crosstalk 00:20:29]. And I met him about three years later. So yeah. So it is execution. And for us, a key part of it was finding the right buyer for the bank because we now had an online bank that we could enable. We actually sold it to the Royal Bank of Canada. They needed a bank in the United States to service all the snowbirds that go to Naples from Toronto and Montreal. And so they were looking for a southeast servicing bank.
Evelyn: That was a great fit.
Dan Dreschel: It was a great fit, got them into a great banking company. Royal Bank of Canada became a customer, a larger customer, as part of that. And we were able to drive forward from there.
Evelyn: So was the technology … I know that Michael came out of security software, before anyone knew what security software was. But was the technology platform built, in a way, from the beginning, that it was able to basically handle the idea that you’re going beyond, and now, you’re licensing it out, basically?
Dan Dreschel: Yes. So the idea of multi-tenancy, like we know it today in the SaaS world, didn’t really exist then. But the security aspects of it were there. Hewlett Packard had a operating system. Boy, it’s reaching in my memory. I can’t even remember what the name of it was, but a specialized, ultra-secure operating system that basically had a firewall in the middle of it. So there was a front half and a back half. And you could exert significantly more control over the security of a banking platform in a heterogeneous environment. We were basically going to banks and saying, “We’d like you to outsource your processing.” I mean, we were an early SaaS company, basically.
Dan Dreschel: And you have a bank’s CIO, who’s got a budget of $1 billion at the Royal Bank of Canada. I think that’s probably what it was back then. And we’re a bunch of relatively young … certainly a young company. And you’d think the resistance would be very difficult. But it … And it was in some ways, but the conversation would run along the lines of, “Look. The most complex thing you’ve got in the field, outside of your firm, is ATMs, which is a five-screen, heterogeneous application that you’ve standardized. What we do is a 50-screen, homogeneous thing that runs on anything anybody hands it. And we are able to effectively run that, and maintain the security, and keep up with the rate of change. Do you think you’re better equipped to do that, or we’re better equipped to do that?” And that would usually break down the resistance.
Evelyn: That’s awesome.
Dan Dreschel: Yeah.
John: Did that require a different sales team, or you just kept the same people and retrained them?
Dan Dreschel: Well, no. There was no sales team for the bank, fundamentally. And the customers that had come in before that, we had one person, basically. It’s the only time I ever have invested in a corporate jet program because starting in about September of 1998, up through 2000, every bank on the planet suddenly needed to be in the online banking business. And we had a few people, Chip Mahan, who was famous as having fixed these S&Ls, and had sold them to Bank One, and was connected all over the banking business, and Chuck Ogilvie, who had effectively invented supermarket banking. So I don’t know if you ever … The bank in your local supermarket, he pioneered that at a Tennessee-based bank. So he was famous in retail banking circles. And then we had a gentleman, who was just a good sales guy, who did a lot of the rest of it.
Dan Dreschel: But we needed those people to be at darn near every bank, on the same days, in the United States, and around the world. And so we would pilot up the corporate jet in the morning, and do a meeting in Toronto, and then one in New York, and then fly west and catch one in Utah, on the way to LA. And they made a lot of sales calls. But it didn’t take a lot of … It wasn’t a volume salespeople game. Each contract was tens of millions of dollars. So we grew that company from 28-ish to 73-ish, so tripled it in ’99. And then tripled it again to about 210 in the year 2000.
John: It sounds like, in this instance, the business transformation happened pretty quickly and with pretty good success. Was there ever a moment where there was some doubt as to whether this was going to happen?
Dan Dreschel: Well, not whether the transformation would happen, but whether the rocks in the stream would catch it was a whole different … Yeah, we discovered, some time in, well, let’s call it August, in 1998 that our software was not year 2000 compliant. And not only that, neither was our data center. And so we built a whole new data center, moved and built all the compliance software, and transitioned 200 banks before year 2000.
Dan Dreschel: So that could have … those were certainly shoals we could have landed upon. But no, I will say this, that having a vortex of demand, it’s one of the reasons when we look at companies, we look for authentic demand. When the market’s pulling, you can screw up a lot of stuff and still get home and dry. When you’re pushing, the mistakes show up much more, in much darker light.
Evelyn: So did you have competition?
Dan Dreschel: We did, later in the game. We had a company called [Carillion 00:26:00], out of Oregon, that came … or maybe Seattle … that came forward. We had interesting times with them. They did. They won SunTrust, which we used to prove that they had violated our patents, interestingly enough. I’m one of the few people you’ll meet that actually helped file on a patent lawsuit that eventually was won, although long after I had departed, as is the way with patent lawsuits. But yeah, we filed a … They were going public in, I don’t know, early 2000. And we actually filed a patent lawsuit the morning of the start of their road show, so we were not very nice people that week.
Evelyn: No. That must have tripped them all little bit.
Dan Dreschel: I don’t think it did very much, really. It was … Again, it was one of those markets-
Evelyn: That time that was so … yeah.
Dan Dreschel: … that had such strong demand that people were over willing to look a lot … willing to overlook a lot.
Evelyn: So what happened to S1?
Dan Dreschel: S1 was … We eventually became a successful company at about 225 million in annual revenue. And it was sold in 2005, or 6, or 8, somewhere in there, to ACI, out of Omaha. I don’t know if you know ACI, but they build the guts of the ACH system.
Dan Dreschel: So all the money tran- … They build all the money-transfer software in the United States.
Evelyn: Perfect acquirer.
Dan Dreschel: Right, exactly. So they were a good acquirer. And then I think that since then, they’ve been sold to, or they’ve been acquired by either FIS or Fiserv.
Evelyn: Hence, your background in fintech.
Dan Dreschel: Yes. Spent some time understanding the bowels of fintech. And that wasn’t the first time. My first general management job, I ran a joint venture between ADP and CheckFree, in the days before the Internet, trying to bring online bill payment to small businesses, which became popular about a decade later.
Evelyn: Yeah. Sometimes, that window doesn’t open too early, or you’re too early for the window to open.
John: Now, have you ever been part of a transformation that did not go very well, or seen one, I guess, in an invested company or otherwise?
Dan Dreschel: Yes, but I would say usually more along the lines, that I’ve been involved in personally, failures of one of those three attributes I was talking about earlier: desirability, feasibility, and viability. I was working for a company that had a brilliant product idea. We took it to market and promptly couldn’t sell it, never figured out how to sell it. Everybody that you talk about to the business still believes it’s a brilliant product idea. And nobody will buy it. So all the transformation around … We probably transformed the go-to-market strategy half a dozen times, trying to find a way to go to market that would pair up what people believed the desirability of the product would be with the actual desirability in the market, and never really successfully found a path. Happens all the time in venture-backed companies.
John: So what’s your first thought, if one of your companies comes to you and says that they’d like to undergo a business transformation?
Dan Dreschel: The first thing is, as an investor, capital is one of the key resources you’re bringing to the table, right? So a capital-enabled transformation to move a business headed in the right direction, to an accelerated-growth path headed in the right direction, yay, let’s go. Right? The ones that run into trouble are the ones that are much harder calls, where either the product fit isn’t right, or the market isn’t accepting the product, or desiring the product the way you’d like it to. And you’ve got somebody proposing either a full pivot, which is effectively what we did with Security First Network Bank, or a partial pivot, a transformation of their go-to-market process or a significant change in their product offering. And we always look at those much more skeptically and go back to first principles, is, do we have the aggressive market intelligence to understand what the customers are thinking? Who would buy it? Are we in the right segments? Have we fully explored the personas? Do we understand the motivations? All that stuff, so that you’re not leaping from frying pan to fire, if you will.
John: So this is, in no way, any sort of gut call of, “We sort of feel it.” You all are doing a lot of actual research and analysis into real numbers on this.
Dan Dreschel: We are huge believers in data-driven decisions. So when people come to us with gut-feel decisions of, “Hey, I think I’ve got … I’m not getting traction here. I think I need to change my …” Well, that’s a … It’s almost a nonstarter with us.
John: Right. What are some of the examples of data that you might ask them to provide? I mean, what-
Dan Dreschel: How many people are coming to your website? What’s the conversion rate of people raising their hand once they see what’s on your website? Once you get them from unaware to aware, what’s the level of exploration? How much time are they spending? Are they taking a call from a sales person? Really exploring all those steps in a conversion cycle is one example of that.
John: … And so do you ever allow them to run, I guess, a pilot and just test out that avenue?
Dan Dreschel: We absolutely encourage them to test before producing. I mean, there’s some places where it’s hard, right? So one of the problem … One of the huge advantages of selling in consumer and small business is, if you pitch them, you don’t … You’ve ruined one consumer, one small business. And they’re like Doritos, there’s more of them, right? If you go into Delta and you make a wrong pitch, your chances of being back at Delta anytime soon are pretty small. So … And if you’re selling in the Fortune 1000 and you knock one out, you’re now selling in the Fortune 999, right? And so there’s areas of product and market where it’s a lot easier to do that, and where, often, the data’s more telling. And again, in enterprise software, you never get a statistically valid sample of anything because there’s only a thousand of them. And you never get a response rate more than about 150 of them. And so your testing can’t proceed the same way it can in a more expansive market.
John: So one of the things … I guess a book that we like and have looked at was John Doerr’s Measure What Matters. And it got us thinking, too, what is it that you are looking to measure within a business?
Dan Dreschel: Well, so we don’t want to dive too much into that because we actually have 212 specified metrics, that we group into a higher level of metrics, but-
John: You all are data driven.
Dan Dreschel: … We really do try and be pretty data driven. But for us, focusing on too many things is the same as not focusing at all. Right? So the key to running a program like OKR is to specify the metrics that you need to measure to change the business. So if you’ve got a desirability problem, focusing on desirability measures. If you’ve got a feasibility problem, focusing on measures of feasibility. Again, back to David Rudolph, his business was dependent for seven, eight years. They film high school sporting events, and now they stream them. Right? Well, they were fully dependent on a high school kid showing up to film them. So they’d market the ever living out of Friday night’s ballgame, and somebody’d break up with somebody, and the person-
Evelyn: Wouldn’t be there.
Dan Dreschel: … wouldn’t go to film it. All the customers are going, “Where is it?” So they’ve … From a feasibility standpoint, they’re in the process of rolling out automated cameras to all the high schools in the United States, to go in the gym and the field house, to be able to auto-film practice, football games, basketball games. And so they’re taking a significant feasibility issue out of the problem. And that … The measurement of metrics around that are what’s most important in the business right now because that’s an existential threat, to not be able to produce your content. And so they’re making huge progress on that.
Dan Dreschel: So it depends on what’s going on in the business. That’s why Andrew Grove, who invented a lot of that stuff that Doerr wrote about, focused it quarterly, and more or less said, “Don’t try and focus on more than three things.” So we have a whole bunch of metrics that we measure. And some of them, like revenue, you’re going to measure every month, right? But others of them, if you’re engaged in transforming a piece of your business, you need to center the objectives and key results down, so that the people involved in the transformation are measured against the things that will prove to you, or will measure the results of, the transformation that you’re attempting to make, or the completeness of that transformation you’re trying to make.
John: Well, Dan, this was great. I mean, I really enjoyed it. And I got a little bit of Atlanta history during this, too. I was not aware of some of the history behind the online banking. And so this has been fantastic. I really appreciate you joining the show.
Dan Dreschel: Well, it’s great to be with you. Thanks for all the great questions, and look forward to continuing to speak.
Evelyn: And tell us the kinds of companies that BIP is interested in [crosstalk 00:35:50].
Dan Dreschel: So we like B2B software companies between a million and five million of revenue, that need checks between 2 and $7 million.
Evelyn: Sounds great. I’m sure there’s a few of them out there that are going to be calling you up.
John: Thanks, Dan.
Evelyn: Thanks so much, Dan.
Dan Dreschel: Thank you.
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