WEBVTT
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Hi, Mark.
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How are you doing?
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I'm good. How are you?
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I'm good, thank you.
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Good. Nice sunny but humid day today in Boston, huh?
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Uh, I am in New York this morning, but…
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Okay.
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Probably very similar. Are you in… are you in Boston?
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Yeah, yeah, well, I need them, but yes.
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Oh, Nito, yeah, I live in Brookline, so yeah.
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Oh, okay. What part of Brooklyn?
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Um, sort of between the village, Washington Square, and Coolidge Corner, and I can walk to all of them in about 10 minutes.
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Oh, right on.
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Okay, okay, nice. Yeah, I used to live in Coolidge Corner, and then my mom just moved to Chestnut Hill after a long time in Lexington. So it's a great area.
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Yeah, sure, sure. We've been there about almost 5 years.
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Okay, very nice.
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Yeah. Okay.
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Wonderful. Well, I'm looking forward to the conversation today. I was going back through the notes and I think we'll have a lot of interesting areas to talk about.
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Yeah, before we kick it off, is there anything in particular you want to sort of share with me? Any areas you would like to focus on?
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Anything in any stories to tell or not to tell.
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Yep.
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Yeah, so nothing not to tell. I would say, so just as a reminder, because I know it has been a little while since we spoke, I'll start with a brief introduction of your background and then I'll go into the opening question, which we had talked about that being around transformation that you led and you were going to talk about Fabrinnet
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Yeah, yeah.
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Sure, sure. Yep.
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And the growth, but then, like, the kind of stuff about kind of communication and alignment and all of that
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So there were a couple stories that you mentioned you would have that I'll like queue you up for in the discussion. I'm happy to kind of run through the rest of the flow if that's helpful, or I can just kind of throw the questions as they come. What's more helpful to you
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Yeah, whatever works for you, I'm good either way.
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Okay.
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How long do you think we will record for?
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Usually about 40 to 50 minutes, depending on the conversation.
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Okay. Perfect.
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Okay, and then I think I mentioned this to you, but I do usually take the conversations like pretty organically without a lot of post-production editing. But we certainly have the option to. So if like something comes up during the conversation and we need to like rerecord a question or if afterwards you say, hey, I didn't like how I kind of said that 1 thing, we can always
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And affix it and make sure you're happy with where we end up.
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Okay, I appreciate that.
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Okay.
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All right, final sip of coffee
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Anything else you want to talk through or anything else before we get started?
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No, no, I think we're good. You tell me.
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Okay, okay, wonderful. Let's get started then. Double check my recording
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Perfect. All right.
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I am really looking forward to speaking with today's guest. He is a fellow Bostonian, and earlier in his career, he pivoted from corporate law to become a serial company builder, co-founding and growing Fabrinet over 1 billion in revenue
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And a public listing on the New York Stock Exchange. He brings deep expertise in M&A integration, as well as leading across diverse global teams and cultures. Today, he leads a technology-enabled platform dedicated to helping retail suppliers boost revenue
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By safeguarding against improper deductions. He is the CEO of Stat Recovery, Mark Schwartz, welcome to the show.
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Thank you, Natalie. Happy to be here with you.
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Great to have you. And I'd like to start with a transformation story from your time at Fabrinet. And I know the company had gone through a period of extraordinary growth and that you hit a stretch where that growth had started to flatten. So I'd love to unpack what helped you lead through that and kind of persevere through that
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But maybe first for the listeners, if you can briefly take us back to kind of what was happening in the business at that point.
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Yeah, you know, you had mentioned that I was a corporate lawyer, and I happened to be assigned to work on a client that was founding.
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this business, a gentleman named Tom Mitchell, who became
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a friend and a mentor to me for many, many years.
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And.
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We started the business in 2000.
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Um, and by 2005,
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Um, we had grown from a standing start to, um, something near $300 million in annualized revenue already. Like, we had a very, very fast.
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start. And, um, and then we saw, sort of, year 5.
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That growth.
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was waning.
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And keep in mind, this was, you know, post sort of law school, being a lawyer.
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And then thrown into this entrepreneurial environment.
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And I was the chief financial officer, and at the time, I was still the general counsel.
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In a startup, you do a bit of everything. I ran sales and marketing for a few years. I always sort of had.
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IT and our people, HR,
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Um, and other areas, but…
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It was relatively new to me to be a particularly senior management.
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And, um, and I was just sort of spending those first few years soaking up everything I could like a sponge, trying to understand it.
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I joke that, you know, I had been a CFO.
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For 23, 25 years.
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But I never, that was my first role in business was CFO. I was never…
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didn't come through the ranks as an accountant, a senior accountant, and director, etc., etc.
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Starting at the top
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Sure.
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So as our growth is starting to wane,
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My partner and CEO, Tom,
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says, we need to bring an outside source in here to help us analyze what's happening.
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And my initial reaction internally, although I didn't voice it, was…
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What is a third party gonna tell us about our business that we don't know? Like, what kind of perspective will this person who doesn't really know anything about our business be able to give us?
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And I couldn't have been more wrong, ultimately.
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We brought in a coach who interviewed about 120 different people across.
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uh, virtually every department in the company.
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And he came back to us,
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And he said, look, he used the old Jack Welch model of sort of categorizing your teams. And he said, you've got
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Probably, you know,
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In a good organization, 5 to 10% of your team might be what Welch categorizes as the type A players, the next generation of leadership, your current strongest leaders, et cetera.
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And then you've got probably 80-plus percent.
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of your Type B players, which is really the proficient engine of the business that makes it go.
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The really, really great, hard-working, perceptive.
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Sharp employees that make the business go.
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And then there might be a small sort of percentage of type C that might be.
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might be really, really, uh, good at what they do, but they're not in that role. They're in the wrong role.
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or they're just not a fit for one reason or another.
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And they tend to cycle themselves out even before
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You have to have that discussion about a transition.
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Um, and so with that sort of bell curve, he said to us, you've probably hired 35% or 40% of your team are Type A players.
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Um, so, so kudos to how you've hired, but the problem is, you're not sharing with these folks.
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What it is that you're off to do as a company over the next several years. You haven't defined the mission.
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or the vision of the company, things that we sort of…
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take for granted as, like, Entrepreneurial 101 today.
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And even then. But we had never done that. And, um, one of the lessons I took from that, Natalie, was.
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You know, I knew what our strategy was. I knew what our plans were.
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I thought everybody did.
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And what's in your brain as a leader is not necessarily
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Being vocalized so that your team understands that.
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Um, and so that was a real sort of shock to my system, because it… the light bulb immediately went off as we had these discussions.
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with this consultant, and he was 100%.
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Correct. I was seeing it in…
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In the company, in different sort of.
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niches where people would want to work for one director, not another, because of how they incentivized folks, or how they promoted from within.
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Um, and you can't have that in a business. You can't have lots of small companies inside your one company. It's a real danger. And that was stifling.
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our growth.
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The other lesson I took from that.
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actually hit me 4 or 5 years later when I was taking a series of golf lessons.
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And my golf coach was trying to get me to do some particular move.
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And for 5 or 6 weeks, I just couldn't do it. I couldn't get it.
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And she would tell me every way she could think of.
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to try to show me or talk to me about how to do this particular move.
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And then one day she said something to me, and I don't remember what it was, and immediately, it clicked.
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And I said to her, how did you do that? She said, this is my job. I have to tell you as many different ways
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what it is that I'm trying to get you to do, and I know one of them is eventually going to resonate.
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And it took me back to those discussions we had.
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With this consultant at Fabrinet back in, sort of, 2005 timeframe.
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Because he was saying some of the same things.
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Um, and it really changed my perspective on being a leader and how to message.
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As a leader and as a manager of folks.
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Because not everybody hears things the same way. How many times have we all?
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left a meeting, and then heard folks talking about the content of that meeting later,
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And thought or said, well, that's not what we were talking about, that's not what was said.
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People hear things differently. And so as a leader, as a manager, it's our job.
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to consider as many different possible ways to communicate that message.
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So that you're being inclusive to the largest number of folks listening.
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Um, and it's… and it's something that takes practice to do, and there's a muscle to continue to exercise that.
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But those two sort of events, one business, one personal,
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sort of overlapped each other and really solidified for me the…
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The importance of, uh, of not only sharing the message, but sharing it in.
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as many different ways as possible.
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Yeah, yeah, I think that's so relevant. And so it's so easy for all of us to kind of forget when you're in the moment and everyone's busy and you maybe are tired of hearing yourself kind of say the same thing to yourself, to your leadership team, etc.
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I'm curious, kind of going back to kind of the experience at Fabrinet, once you clearly saw that, what were the things that you changed about how you were leading the organization? Were there other areas, I guess, besides the communication style? Because I do think of
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A big group of Type A's, can be a blessing and a curse, right? That you have self-motivated people
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Well, sorry to interrupt you, I think you're 100% correct. The blessing is you're hiring likely very sort of self-motivated folks and problem solvers.
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Without giving them…
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the… the tools by which they should be operating, the boundaries by which they should be operating, the guidelines of what do we do at Fabrinet, how do we handle these situations?
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then what they do is, because they're self-motivated and problem solvers, they bring their past experiences.
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And they, and they likely solve those problems differently from each other.
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And that's… that creates friction, that creates tension.
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In the absence of a clear, unified message, that's where you have rumors and people.
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Believing that this team is playing favorites, and this team is not following
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The path that they should be following, etc.
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So, so we, we went back to very, very basics, things that.
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then in all likelihood, we should have probably done.
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On day one, as we were building the business.
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And that is, let's… we all know what our values are at a senior level. Let's make sure everybody in the company understands that. What's most important to us?
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As we built this business.
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And we did that.
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creating things like a mission statement.
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And sort of communicating to everybody.
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What are the 4 or 5 or 6 things that are most important to us as part of the next three years of our growth?
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And what are the 4 or 5 things that we want to do this year that's going to build toward?
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that longer-term growth.
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Most companies do these things. We never, we never did any of this, and it was a wake-up call for us that we really needed to make sure.
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that these Type A players, and even the balance of our company, the brilliant engineers and others that were the engine that ran our business,
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Um, they were starving.
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To understand, like…
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Where are we headed? What is our leadership team doing? Where are they taking us?
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And so we went and we did all of that. We created.
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career training and development paths that were very.
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specific and tied.
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to the longer-term goals of our business,
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And if there was anything that interested you, you could latch onto that and you knew where that was going to be relevant in the business.
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Later on.
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I don't want to say forced, but we sort of mandated.
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That, um, that our leaders.
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They follow this quote-unquote fabrinet way that we created, and this is how we run our business. This is how we run meetings, this is how
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This is how we treat our teams. This is how we promote from within.
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across the board. And it took time, but over the course of.
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3 quarters. We saw our growth re-emerge.
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Um, we weren't doing anything different as a business. The industry hadn't changed.
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We were just aligned again.
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And… Yeah.
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to have that kind of reminder, and three-quarters, I'm sure you wanted it to happen as fast as possible, but that is relatively fast to make these kinds of changes and kind of feel the impact on growth and revenue. And I'm glad you brought up the mission and vision, because I know to some, especially like more technical kind of CEOs and founders.
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Especially in smaller companies, that work can feel kind of fluffy or like a luxury. We don't have the time to invest, but I think your story is an experience is, you know, exactly why it's so important to have that. And, you know, everyone talks about the analogy of rowing in the same direction, but it sounds like that's really what it allowed you guys to do.
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I'll add a little bit to that, Natalie. So, um, in my current role at STAT, we have two
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two companies that we… that we manage. I'm the CEO of STAT, and we have
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Stat recovery, as you mentioned, and we have a company called the Moresby Group.
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And.
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In total, between the two companies, our goal is to.
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is to be the profitability partner for a CFO.
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We call it the margin defense system in some cases. So where are their dollars that you might be leaving on the table?
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And, um, in February of this year, when I took over as the CEO.
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I woke up one morning and I said to myself,
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I don't think I could recite our strategic priorities for this year.
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And if I can't, if the CEO doesn't know them, there's no possible way everybody else in the company understands them.
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So I, uh, I pulled my executive team.
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And sure enough, there were lots of blank stares, and some folks remembered one or two or three of the things that we had written on a sheet of paper.
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Two months earlier.
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But that's not anything that you put down on a sheet of paper and put in a drawer and tuck away for the year.
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If it's really important, if it's really strategic, and you're claiming these are our priorities.
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then you need to make sure that that not only is disseminated.
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But further to what we talked about.
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earlier, over-communicated.
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And communicated at the beginning of every All Hands, and communicated at the beginning of every
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Full team meeting, or departmental meeting.
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Um, we've… we've gone so far as to.
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Uh, to come up with ways to put our strategic priorities on mouse pads and in posters, and so forth.
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Because we want.
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Uh, everybody to understand.
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Where we're headed, and we want their managers to be able to cascade down to them.
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The importance of what they're doing and how that rolls into the priorities for the entire company.
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Um, and so again.
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fairly simple blocking and tackling.
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But, um, but we weren't doing that here either, and I'm sure lots of companies, meaning have meaningfully.
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agonized over their priorities, but then don't spend a lot of time throughout the year continuing to communicate them to the team.
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And so we've been doing that much more and much more clearly.
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Uh, to our team members for the last 7 or 8 months.
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And.
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And it's working. You know, I see the enthusiasm and the energy for people, knowing that what they're doing is contributing to the bigger picture in the company. It's really important.
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Yeah.
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Yeah, yeah, I want to talk a little bit more about the communication side of this because I do think that like good communication is measured by what people understand, not by what was said or what the leader said. And I think sometimes there's a fallacy of
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You know, we just need to keep repeating the message and saying the same thing over and over again because people are busy and not everyone kind of pays attention the first time. But I think repeating a message is not necessarily the same as kind of communicating it differently in your golf example is a great one
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For that, right, different people take information differently, they, you know, all of that. So curious to hear, like, how do you know whether people kind of are understanding the message the way you intended?
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I wish I had the secret sauce there. I think there's not one right way to do it.
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Everybody's style is different.
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What I try to do is to disarm.
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A group of folks from being defensive, whether whether they.
00:22:36.000 --> 00:22:38.000
think maybe I don't really understand.
00:22:38.000 --> 00:22:41.000
what's being talked about, or I don't have the full picture.
00:22:41.000 --> 00:22:47.000
and give folks opportunities to ask questions. And I always like to say, I'll ask all the stupid questions, I'll get them out of the way up front.
00:22:47.000 --> 00:22:50.000
And then you all can ask the good ones.
00:22:50.000 --> 00:22:58.000
But when I'm sharing a new idea or a different direction, before we move to a different topic.
00:22:58.000 --> 00:23:04.000
There is always the, all right, are we understanding this? Does anybody have any questions? Can you recite?
00:23:04.000 --> 00:23:07.000
in one or two sentences, the direction that we're headed.
00:23:07.000 --> 00:23:10.000
Can you recite in one or two sentences?
00:23:10.000 --> 00:23:14.000
How we're going to achieve the goals that we just talked about.
00:23:14.000 --> 00:23:18.000
And give folks an opportunity to sort of put it in their own words.
00:23:18.000 --> 00:23:20.000
Um, and.
00:23:20.000 --> 00:23:29.000
And I'm sure you see this in your own practice. When folks hear it from others, not just from that one same voice.
00:23:29.000 --> 00:23:31.000
With a little bit of a spin put on it.
00:23:31.000 --> 00:23:49.000
then that, I think, helps folks absorb that message even a little bit more quickly.
00:23:49.000 --> 00:23:50.000
Yeah.
00:23:50.000 --> 00:23:57.000
Yeah, yeah, for sure. And I think, you know, because people learn differently, some folks are more visually oriented, so getting a good kind of diagram to articulate it, which you talked about kind of posters or talking about analogies or kind of how did we get here, like covering more of the history versus the future looking like people latch on
00:23:57.000 --> 00:24:00.000
to different things, and I think having a mix of all of those, really helps to reinforce that as well.
00:24:00.000 --> 00:24:05.000
The other thing that we did at Fabrinet
00:24:05.000 --> 00:24:10.000
Um, which was a much, much larger organization, and we're doing it today at STAT.
00:24:10.000 --> 00:24:12.000
um, is…
00:24:12.000 --> 00:24:15.000
is to really pull in our
00:24:15.000 --> 00:24:21.000
next level of leaders, our directors, senior directors, in some cases vice presidents.
00:24:21.000 --> 00:24:24.000
And, um, and giving them.
00:24:24.000 --> 00:24:27.000
Voice and visibility.
00:24:27.000 --> 00:24:32.000
into some of the things that our senior executive team
00:24:32.000 --> 00:24:35.000
is debating and managing on a daily basis.
00:24:35.000 --> 00:24:39.000
And giving that.
00:24:39.000 --> 00:24:41.000
Extended leadership team.
00:24:41.000 --> 00:24:48.000
The ability to, to feel like they have some, some voice even if they don't have a vote.
00:24:48.000 --> 00:24:56.000
gives them more confidence to then go and cascade those messages down to their own teams, because they've been in the room, and they've seen
00:24:56.000 --> 00:25:01.000
the debates, and they understand the trickier points, the complexities of what we're trying to.
00:25:01.000 --> 00:25:09.000
to get through. And that gives them an opportunity to feel more confident cascading those messages down to their teams.
00:25:09.000 --> 00:25:27.000
Mark, I want to take us in a slightly different direction now, and I know you've led through a number of acquisitions, and I think integration is one of those areas where CEOs can find the real challenges begin. So I want to hear a little bit from you
00:25:27.000 --> 00:25:39.000
You know, what have you learned about M&A maybe specifically to start like bringing in an acquired team into the larger organization, especially like under the discussion of alignment we've been having
00:25:39.000 --> 00:25:42.000
Yeah, as a corporate lawyer,
00:25:42.000 --> 00:25:48.000
it was… these were… these were the transactions that I was exposed to, and… and helping.
00:25:48.000 --> 00:25:53.000
my clients to acquire another business or merge into another business.
00:25:53.000 --> 00:25:56.000
And it was very… so I understood structure.
00:25:56.000 --> 00:26:00.000
Um, but… but I didn't understand…
00:26:00.000 --> 00:26:06.000
The, the integration components, the people aspect of that.
00:26:06.000 --> 00:26:09.000
At Fabrinet, um…
00:26:09.000 --> 00:26:14.000
We we were and they still are.
00:26:14.000 --> 00:26:23.000
independent, public, very successful contract manufacturer, mostly of photonic devices, fiber optic equipment.
00:26:23.000 --> 00:26:31.000
Lots of the devices that are required for AI and for data centers, etc. So very, very relevant today.
00:26:31.000 --> 00:26:35.000
At Fabrinet, we would acquire…
00:26:35.000 --> 00:26:39.000
factories owned by our clients.
00:26:39.000 --> 00:26:47.000
Because we were… we were the company, and they still are, that handles the most complex engineering and manufacturing sort of.
00:26:47.000 --> 00:26:50.000
challenges that a company could have, because
00:26:50.000 --> 00:26:57.000
While you're… while you might be an expert at creating and developing a product and marketing and selling it.
00:26:57.000 --> 00:26:59.000
manufacturing, it might not be your core competency.
00:26:59.000 --> 00:27:04.000
And that was… that was Fabrinate. So we would acquire factories from our clients.
00:27:04.000 --> 00:27:12.000
Where they had made the decision, you know, February's doing such a good job for us on these other products, why don't we just give them everything that's in this factory?
00:27:12.000 --> 00:27:15.000
So we would acquire those factories, and then we would.
00:27:15.000 --> 00:27:17.000
transition the.
00:27:17.000 --> 00:27:20.000
the manufacturing operations in those factories.
00:27:20.000 --> 00:27:23.000
to our larger factories,
00:27:23.000 --> 00:27:25.000
in Asia.
00:27:25.000 --> 00:27:27.000
So…
00:27:27.000 --> 00:27:29.000
really interesting type of…
00:27:29.000 --> 00:27:33.000
Of acquisition because you're doing so.
00:27:33.000 --> 00:27:39.000
Where just about everybody at that factory understands that over a period of
00:27:39.000 --> 00:27:41.000
6 to 12 or more months.
00:27:41.000 --> 00:27:44.000
Um, that factory is no longer going to be there.
00:27:44.000 --> 00:27:47.000
Their job is no longer going to be there.
00:27:47.000 --> 00:27:50.000
And so, in those situations.
00:27:50.000 --> 00:27:56.000
Um, and we did this seven or eight times while I was the CFO at.
00:27:56.000 --> 00:28:00.000
at Fabrinet, and so I sort of owned.
00:28:00.000 --> 00:28:02.000
this exercise.
00:28:02.000 --> 00:28:07.000
Once the acquisition was announced, and perhaps it hadn't closed yet.
00:28:07.000 --> 00:28:10.000
I would go to the factory, and I'd hold a town hall.
00:28:10.000 --> 00:28:19.000
For everyone in the factory. And usually the first one was the most exciting, people were outraged and upset and etc. And it was all legitimate, and you can understand all of that.
00:28:19.000 --> 00:28:20.000
Right.
00:28:20.000 --> 00:28:22.000
Um, but…
00:28:22.000 --> 00:28:29.000
I would say, okay, listen, let me have your questions. Like, what can I help you with? We're going to make sure at the end of all of this.
00:28:29.000 --> 00:28:34.000
that we're gonna support you on your career path, and we will, we will.
00:28:34.000 --> 00:28:41.000
There'll be appropriate severance, but outside of the dollars, we're going to figure out how we can help you in training, and we're going to figure out how we can help you with.
00:28:41.000 --> 00:28:43.000
resume writing and building out.
00:28:43.000 --> 00:28:47.000
Uh, so, you know, whatever it is you're gonna need for the next step in your career.
00:28:47.000 --> 00:28:55.000
And I'd get questions like, um, I already put in it for a vacation with my manager. Can I take that?
00:28:55.000 --> 00:28:59.000
Are we getting paid the same days?
00:28:59.000 --> 00:29:05.000
What about my health benefits? What about this? What about this? What about this? Sometimes I had the answer right away.
00:29:05.000 --> 00:29:09.000
Other times, I would say, great question, thank you.
00:29:09.000 --> 00:29:13.000
And when I'm back here next week, I'll have the answer for you. And then I'd come back the next week.
00:29:13.000 --> 00:29:17.000
And I'd answer those questions, and then there'd be a slew of additional questions.
00:29:17.000 --> 00:29:20.000
And I would do this for…
00:29:20.000 --> 00:29:27.000
6 weeks, sometimes 8 weeks, every week, no matter where the factory was in the world, I would be there on that Monday or that Tuesday every week.
00:29:27.000 --> 00:29:33.000
For that period of time. And in almost all cases, by that 6th, seventh, eighth week.
00:29:33.000 --> 00:29:41.000
then people would start to come up to me and say, I really appreciate your transparency, thank you so much, we really understand the direction now and where we're headed.
00:29:41.000 --> 00:29:49.000
It's not going to be a great outcome for us in the end, we get it, but you guys seem to care, and that means a lot to us. And so, you tell us what we need to do.
00:29:49.000 --> 00:29:51.000
to make this work for us.
00:29:51.000 --> 00:29:53.000
Um, so that was just…
00:29:53.000 --> 00:29:58.000
And I did care about all of those folks and making sure they landed properly.
00:29:58.000 --> 00:30:01.000
But just that.
00:30:01.000 --> 00:30:03.000
being there over and over again.
00:30:03.000 --> 00:30:06.000
And in answering those questions.
00:30:06.000 --> 00:30:14.000
And… and showing that it really mattered to us, and it was important to us that they had a good experience as we were winding down that factory.
00:30:14.000 --> 00:30:19.000
um, made all of those engagements.
00:30:19.000 --> 00:30:21.000
um, successful.
00:30:21.000 --> 00:30:26.000
Now, that's one type of acquisition. It was really important for me to.
00:30:26.000 --> 00:30:30.000
to spend the time to do those things with those folks.
00:30:30.000 --> 00:30:33.000
In most cases, we would have a big party at the end before we wound it down.
00:30:33.000 --> 00:30:37.000
And everybody invited, and they bring their families and so forth.
00:30:37.000 --> 00:30:48.000
You know, the more typical acquisition, where you're trying to merge two businesses together, combine portions of a business into another, whatever form it takes, and there's many.
00:30:48.000 --> 00:30:54.000
Um, I learned a really valuable lesson from Tom, my partner and CEO at Fabrinet, early on.
00:30:54.000 --> 00:30:58.000
Because we did a few of those types of acquisitions as well.
00:30:58.000 --> 00:31:00.000
And his view was,
00:31:00.000 --> 00:31:03.000
Uh, breaking it down to its simplest form.
00:31:03.000 --> 00:31:12.000
The founder or CEO, the senior leader, the managing director, whatever it was, the senior most leader or leaders.
00:31:12.000 --> 00:31:17.000
of that business immediately became part of our executive team at Fabrinet.
00:31:17.000 --> 00:31:19.000
And that may not have lasted long term.
00:31:19.000 --> 00:31:21.000
In some cases it did, but…
00:31:21.000 --> 00:31:26.000
Early on, they became part of our leadership team. And so for the same reason I talked before about
00:31:26.000 --> 00:31:29.000
Giving your extended leadership team
00:31:29.000 --> 00:31:32.000
Voice and visibility, even if they don't have a vote.
00:31:32.000 --> 00:31:35.000
We did the same thing for…
00:31:35.000 --> 00:31:38.000
for the leaders of a company that we acquired.
00:31:38.000 --> 00:31:43.000
Because then they could go and turn around and talk about what they were hearing.
00:31:43.000 --> 00:31:45.000
At Faburnet Senior Headquarters,
00:31:45.000 --> 00:31:48.000
To their teams.
00:31:48.000 --> 00:32:02.000
And that was really important. It was never a situation where that team became a satellite, and it was business as usual, and in many cases, they were sort of forgotten about as part of that integration.
00:32:02.000 --> 00:32:06.000
Um, we made sure that they had a voice, and we made sure
00:32:06.000 --> 00:32:10.000
that they have the ability to then go back to their teams and cascade down what we were doing
00:32:10.000 --> 00:32:12.000
And where they were fitting into that.
00:32:12.000 --> 00:32:19.000
Um, and I think it's really important to do that. I think it's really important, early on. It doesn't have to last.
00:32:19.000 --> 00:32:24.000
Depending upon the size of the acquired entity and the size of the target.
00:32:24.000 --> 00:32:27.000
But for some period of time, making certain.
00:32:27.000 --> 00:32:30.000
that the senior leadership team there.
00:32:30.000 --> 00:32:35.000
can go back to the teams and alleviate some of the concerns that people are naturally feeling
00:32:35.000 --> 00:32:40.000
having a new owner. And that to me is is really, really critical.
00:32:40.000 --> 00:32:43.000
Um…
00:32:43.000 --> 00:32:57.000
I've seen good examples and bad examples of a longer-term acquisition strategy, you know, a particularly poor one that I recall was a company that had grown largely through acquisition and had made 40 plus acquisitions.
00:32:57.000 --> 00:33:00.000
Uh, over the course of about 5 or 6 years.
00:33:00.000 --> 00:33:02.000
And basically had…
00:33:02.000 --> 00:33:09.000
40 GMs and 40 heads of finance and 40 heads of sales, etc., and hadn't integrated any of them.
00:33:09.000 --> 00:33:12.000
And eventually it came back to bite them.
00:33:12.000 --> 00:33:18.000
And then there was some enormous restructuring that had to happen, which really impacted the morale of those teams and
00:33:18.000 --> 00:33:20.000
created more uncertainty.
00:33:20.000 --> 00:33:22.000
So I think to the extent.
00:33:22.000 --> 00:33:28.000
And this doesn't have to mean, Natalie, product integration. We're just talking about
00:33:28.000 --> 00:33:31.000
teams. To the extent
00:33:31.000 --> 00:33:36.000
that you can eliminate that uncertainty.
00:33:36.000 --> 00:33:39.000
In the first year, 6 to 9 months.
00:33:39.000 --> 00:33:45.000
Um, and… and not only eliminate it through your action, but also make sure that the messaging is consistent.
00:33:45.000 --> 00:33:50.000
with those folks, then I think you… you put that acquisition on a.
00:33:50.000 --> 00:33:53.000
on a proper footing.
00:33:53.000 --> 00:33:54.000
Right, right.
00:33:54.000 --> 00:33:57.000
to potentially be successful. Many acquisitions are not successful no matter what.
00:33:57.000 --> 00:34:00.000
But you want to take out the things that you can control.
00:34:00.000 --> 00:34:05.000
And make sure that those components of it, you've done the very best you can.
00:34:05.000 --> 00:34:27.000
Yeah. Well, I think oftentimes, you know, there's so much of a focus on getting the deal done that a lot of the integration components can become an afterthought and that really is to the detriment. You talked about kind of the 40 GM example
00:34:27.000 --> 00:34:28.000
Yeah.
00:34:28.000 --> 00:34:35.000
I think underappreciation for kind of what are the skills on the team of the company that, you know, got acquired? What are the processes they have? And sometimes, especially if it's a bigger company acquiring a smaller one, the assumption is
00:34:35.000 --> 00:34:46.000
Well, we're bigger, you know, we've got it figured out. They'll come and kind of follow our processes and our systems and all of that. And what I see on the go-to-market side is that's not necessarily the case, right? Sometimes these
00:34:46.000 --> 00:35:02.000
Younger, smaller companies that are getting acquired, they might have a more nimble or sophisticated tech stack. They might have, you know, customers that you don't have, that you need to look at kind of the cross-sell, kind of upsell opportunities. So to your point, even when
00:35:02.000 --> 00:35:13.000
It's not a product integration, looking at kind of what's the best of, kind of each of these disciplines that we can be now kind of bringing into our organization in the right way.
00:35:13.000 --> 00:35:20.000
One of the, to me, one of the most important qualities of a leader, really of a human being, but of a leader,
00:35:20.000 --> 00:35:24.000
is humility. And if you surround yourself
00:35:24.000 --> 00:35:28.000
At an executive level with humble people.
00:35:28.000 --> 00:35:31.000
then you're going to ask those questions right away.
00:35:31.000 --> 00:35:36.000
In an acquisition discovery process, what do they do better than us?
00:35:36.000 --> 00:35:41.000
What are we missing? Where can we learn? I know we're the acquirer and maybe we're
00:35:41.000 --> 00:35:48.000
quite a bit bigger, but what can we learn from what they've done to reach the level of success they had that we're interested in acquiring them?
00:35:48.000 --> 00:35:55.000
And, um, and I think that's such an important part of the acquisition that you've just talked about because.
00:35:55.000 --> 00:35:57.000
Um, in most cases.
00:35:57.000 --> 00:36:03.000
that you're going to find that there are things that that target does better than you do.
00:36:03.000 --> 00:36:17.000
Yeah, I couldn't agree more. And I'd love to take us into a kind of other facet of business next in the discussion. And I know you mentioned you spent a lot of your career in finance, strategy, operations.
00:36:17.000 --> 00:36:34.000
But that also becoming CEO means kind of direct ownership of everything, and including go-to-market. And I think this is an area where I do see a lot of CEOs struggle to kind of wrap their head around it when they don't have a prior understanding. So I would love to hear from you, like, what have you learned
00:36:34.000 --> 00:36:41.000
About, you know, how a CEO without, like, a go-to-market background can be effective in leading that function.
00:36:41.000 --> 00:36:45.000
I'm still learning.
00:36:45.000 --> 00:36:47.000
I think…
00:36:47.000 --> 00:36:48.000
There's that humility we just talked about. I love it.
00:36:48.000 --> 00:36:53.000
Yeah, well, I've always been a very operations oriented.
00:36:53.000 --> 00:36:59.000
CFO, I love digging into the details, I love meeting with clients, I love sitting in on client meetings.
00:36:59.000 --> 00:37:01.000
And.
00:37:01.000 --> 00:37:04.000
And so that's always been sort of a
00:37:04.000 --> 00:37:08.000
I may be being curious has always been sort of a part of
00:37:08.000 --> 00:37:14.000
of what I enjoy doing as a CO, as a CFO and now as a CEO.
00:37:14.000 --> 00:37:19.000
So client-facing activity was not new to me.
00:37:19.000 --> 00:37:25.000
And I've seen really, really good.
00:37:25.000 --> 00:37:31.000
And I've seen average and less successful go-to-market teams over the years.
00:37:31.000 --> 00:37:33.000
And, um…
00:37:33.000 --> 00:37:39.000
And, and trying to sort of take the best of what I've seen and apply it.
00:37:39.000 --> 00:37:42.000
At, uh, at Stat and, and across STAT and Moresby.
00:37:42.000 --> 00:37:48.000
I think it's really important, particularly if you are selling into large enterprises.
00:37:48.000 --> 00:37:51.000
It's really important to have…
00:37:51.000 --> 00:37:53.000
to have a sales…
00:37:53.000 --> 00:37:55.000
process that everybody follows.
00:37:55.000 --> 00:38:01.000
Um, there's several of them that are popular and in.
00:38:01.000 --> 00:38:04.000
in substantial use, Medic and others.
00:38:04.000 --> 00:38:10.000
But whichever sort of sales process you follow and you and you sort of.
00:38:10.000 --> 00:38:15.000
believe in, um, you need to make sure your teams are trained in that, and then you need to make sure
00:38:15.000 --> 00:38:18.000
That, um, at the senior-most level.
00:38:18.000 --> 00:38:25.000
Um, those sellers know that that head of sales, that CEO, that CFO, are paying attention.
00:38:25.000 --> 00:38:31.000
Um, so one of the things I did at STAT is we started quarterly business reviews for our salespeople.
00:38:31.000 --> 00:38:35.000
And we've now done that for the last two quarters.
00:38:35.000 --> 00:38:41.000
And it's an amazing tool, giving each of those sellers the one opportunity that they have really.
00:38:41.000 --> 00:38:45.000
to reflect on history. Sellers are always looking ahead, forward.
00:38:45.000 --> 00:38:49.000
Um, but once a quarter now, they have to look back.
00:38:49.000 --> 00:38:55.000
What did I accomplish in the last quarter? How many deals did I close? What went wrong, and what could I have done?
00:38:55.000 --> 00:38:58.000
Differently, where did I need more support internally?
00:38:58.000 --> 00:39:04.000
And, um, and so I think it's really important, at least that one time, and hopefully more throughout.
00:39:04.000 --> 00:39:09.000
a quarter that an enterprise salesperson
00:39:09.000 --> 00:39:12.000
takes the time to sort of reflect on those things.
00:39:12.000 --> 00:39:20.000
And for me, it usually comes down to what additional tools do you need? What else can we do as an executive team?
00:39:20.000 --> 00:39:23.000
What can I do as CEO, pull me into those
00:39:23.000 --> 00:39:28.000
meetings where you think that having your CEO present.
00:39:28.000 --> 00:39:32.000
is going to answer some questions from the client.
00:39:32.000 --> 00:39:36.000
or get them to a level of comfort that maybe they weren't at previously.
00:39:36.000 --> 00:39:40.000
or create some other positive value for both of you and for the client.
00:39:40.000 --> 00:39:43.000
So I offer that and I do that.
00:39:43.000 --> 00:39:46.000
fairly often with clients. I love being in front of clients, so.
00:39:46.000 --> 00:39:49.000
Like I said, for me, it wasn't entirely new.
00:39:49.000 --> 00:39:52.000
But I think it really is having that process.
00:39:52.000 --> 00:39:54.000
and holding folks accountable.
00:39:54.000 --> 00:40:02.000
Under that process, um, and, and then being present, being in those sessions. A CEO who doesn't attend.
00:40:02.000 --> 00:40:06.000
the weekly or monthly or quarterly sales meetings, and isn't…
00:40:06.000 --> 00:40:12.000
Isn't seen around the sales department regularly.
00:40:12.000 --> 00:40:19.000
The message is that it's… that you're focused in other areas. It's less important to you.
00:40:19.000 --> 00:40:20.000
Yeah. Well, and then
00:40:20.000 --> 00:40:27.000
And obviously, the go-to-market engine is driving the business, or among the drivers of the business, and it's critical, and it's important that the CEO.
00:40:27.000 --> 00:40:31.000
is visible.
00:40:31.000 --> 00:40:41.000
Yeah, I think that executive presence is so important. And I think for, you know, it doesn't come as naturally to some, especially kind of on the customer or sales side
00:40:41.000 --> 00:40:58.000
But I think folks can underestimate how big of an impact they can have with the customer. I also think that question of where should a CEO get personally involved or own areas within go-to-market is one of those areas that can feel a bit
00:40:58.000 --> 00:41:17.000
you know, mysterious to folks, and, you know, when we're talking to customers, prospects, etc, I talk about, you know, the areas a CEO should be involved is kind of as little as possible, but there are key areas where they should be, and they need to make the time, and that's, right, the company's positioning
00:41:17.000 --> 00:41:34.000
involvement in messaging, understanding trade-offs of a plan. So both kind of, you know budget implications of if we don't do this, here's what we expect to happen. The sales and marketing alignment and any kind of shifts in what is sales being, kind of
00:41:34.000 --> 00:41:50.000
for what is marketing being kind of incented for, making sure that that is all aligned. And I think a lot of that comes back to the strategic priorities that you were talking about earlier, and then kind of being in the right conversations and some
00:41:50.000 --> 00:41:54.000
points, like, making the… the tough calls
00:41:54.000 --> 00:42:05.000
I'm curious to hear, kind of, from your day-to-day, and I don't know what kind of the leadership looks like in that function, but are there areas that you've found in that kind of planning where you've had the biggest impact with the team?
00:42:05.000 --> 00:42:11.000
Yeah, it's a great question. So we're structured where we have a, um…
00:42:11.000 --> 00:42:18.000
ahead of all sales who own sales, marketing, partnerships, sales operations.
00:42:18.000 --> 00:42:21.000
And under that gentleman,
00:42:21.000 --> 00:42:25.000
is a VP of sales and partnerships.
00:42:25.000 --> 00:42:27.000
Um, doing an amazing job.
00:42:27.000 --> 00:42:32.000
And, um, on the Moresby side of our business,
00:42:32.000 --> 00:42:39.000
We're in the process of hiring that that enterprise sales leader. Moresby was very fortunate.
00:42:39.000 --> 00:42:43.000
In their past, where, um, through referrals.
00:42:43.000 --> 00:42:46.000
Through clients leaving.
00:42:46.000 --> 00:42:49.000
A key individual had a client leaving and moving to another company.
00:42:49.000 --> 00:42:53.000
They never had outbound marketing and sales efforts.
00:42:53.000 --> 00:42:57.000
So that's a new muscle that they are exerting now.
00:42:57.000 --> 00:42:59.000
Uh, and building a pipeline that way.
00:42:59.000 --> 00:43:03.000
And so we're hiring an enterprise sales leader for that.
00:43:03.000 --> 00:43:06.000
business, to basically build out a lot of those processes and run that.
00:43:06.000 --> 00:43:13.000
But when I took this role in February, one of the first things I did is sit down with our head of sales.
00:43:13.000 --> 00:43:18.000
And consider how we were incentivizing our teams.
00:43:18.000 --> 00:43:25.000
And what we found was there were gaps in those incentives.
00:43:25.000 --> 00:43:27.000
We were incentivizing.
00:43:27.000 --> 00:43:30.000
our client experience teams,
00:43:30.000 --> 00:43:37.000
on retention, but we were not ex… forgive me, on expansion, but we weren't incentivizing them on retention, which is critical.
00:43:37.000 --> 00:43:44.000
And some of the incentives that we were… we had created for our salespeople.
00:43:44.000 --> 00:43:46.000
We're not having the intended
00:43:46.000 --> 00:43:49.000
Effect, and sometimes you design a sales plan.
00:43:49.000 --> 00:43:57.000
And you later realize from that sales plan that it drove a different behavior than you were attempting.
00:43:57.000 --> 00:44:02.000
to create. So we re-examine them, and, um…
00:44:02.000 --> 00:44:07.000
and others call it in the food chain of the sales cycle.
00:44:07.000 --> 00:44:13.000
And, um, and change some of those incentives. And it's been viewed very, very positively.
00:44:13.000 --> 00:44:15.000
By focusing in our company.
00:44:15.000 --> 00:44:19.000
Um, but sometimes you have to have a new perspective, and it just takes time.
00:44:19.000 --> 00:44:26.000
To do that, and you can't ever laminate it. You have to make sure that if something's not working.
00:44:26.000 --> 00:44:29.000
You're open and willing to going back.
00:44:29.000 --> 00:44:35.000
and making a revision that will sort of generate the right activity and behavior you're looking to create.
00:44:35.000 --> 00:44:37.000
Yeah.
00:44:37.000 --> 00:44:53.000
I could keep talking about go-to-market for the rest of our conversation, but I do have other areas I'd love to dive in with you. And I guess at this point, would love to hear a bit more about kind of the company and specifically, like, where you support
00:44:53.000 --> 00:45:01.000
Customers, and the theme of our podcast is transformation. So can you talk maybe about what are the kinds of transformations happening in your industry, and kind of where do you fit in?
00:45:01.000 --> 00:45:08.000
Yeah, so, so we have two business businesses that seem to be.
00:45:08.000 --> 00:45:10.000
Somewhat different from each other.
00:45:10.000 --> 00:45:15.000
Um, but I'll share with you how owning.
00:45:15.000 --> 00:45:18.000
The second business, the combination of Moresby and Stack.
00:45:18.000 --> 00:45:22.000
has forced us to look at our business through a different lens.
00:45:22.000 --> 00:45:27.000
So, the stat recovery business has been in operation coming up on 10 years.
00:45:27.000 --> 00:45:30.000
Um, two great founders.
00:45:30.000 --> 00:45:39.000
Blood and sweat, building the business and sold it to to a private equity firm, Cambridge Capital, about 2 and a half years ago.
00:45:39.000 --> 00:45:41.000
And, um…
00:45:41.000 --> 00:45:44.000
And, and, and the Moresby Group, similarly.
00:45:44.000 --> 00:45:50.000
Two great founders own that business for right around the same time, almost 10 years.
00:45:50.000 --> 00:45:55.000
And, uh, and they were acquired by Cambridge Capital and
00:45:55.000 --> 00:45:58.000
combined with STAT earlier this year, in January.
00:45:58.000 --> 00:46:01.000
of this year. Um…
00:46:01.000 --> 00:46:04.000
The, the stat business.
00:46:04.000 --> 00:46:06.000
has historically been
00:46:06.000 --> 00:46:17.000
In the business of what's called revenue recovery or at a base level deduction management. So.
00:46:17.000 --> 00:46:24.000
The consumer packaged goods suppliers into large retailers like Target and Amazon and Kroger and Walmart and others.
00:46:24.000 --> 00:46:28.000
Um, they are… they are sort of continually.
00:46:28.000 --> 00:46:30.000
hit with…
00:46:30.000 --> 00:46:35.000
With fees and penalties and deductions and chargebacks by the retailer.
00:46:35.000 --> 00:46:40.000
Um, many of them entirely appropriate, but others the result of human error.
00:46:40.000 --> 00:46:45.000
Um, that… that eat away at the margins of those.
00:46:45.000 --> 00:46:47.000
those CPG suppliers.
00:46:47.000 --> 00:46:53.000
Um, so, things like whether you've delivered something on time, or in full.
00:46:53.000 --> 00:46:55.000
Or to the right location.
00:46:55.000 --> 00:46:58.000
And.
00:46:58.000 --> 00:47:02.000
And, and if, if you don't do those things then
00:47:02.000 --> 00:47:05.000
Based on the magnitude of the size of the retailer.
00:47:05.000 --> 00:47:08.000
Um, it, it could create
00:47:08.000 --> 00:47:12.000
real problems in the warehouse for how they manage and handle those exceptions, so…
00:47:12.000 --> 00:47:17.000
There's a reason why they charge deductions to the clients to make up for some of the.
00:47:17.000 --> 00:47:21.000
costs of having to deal with those exceptions on a day-to-day basis.
00:47:21.000 --> 00:47:24.000
But as I said, there's oftentimes.
00:47:24.000 --> 00:47:27.000
these deductions are the result of human error.
00:47:27.000 --> 00:47:34.000
And so what we do is, uh, we've developed some proprietary tools over the last, coming up on 10 years.
00:47:34.000 --> 00:47:36.000
Where we help those suppliers.
00:47:36.000 --> 00:47:40.000
To recover the dollars that rightfully should not have been deducted.
00:47:40.000 --> 00:47:50.000
And in those cases, the retailers are absolutely willing and 100% proactive in delivering those dollars back to
00:47:50.000 --> 00:47:56.000
to our clients. Retailers want clean books as well. It's not… it's not a one-way street here.
00:47:56.000 --> 00:48:00.000
So our clients get their dollars back,
00:48:00.000 --> 00:48:02.000
And, um,
00:48:02.000 --> 00:48:09.000
And the retailers get it cleaned up off their books. That's the stat business. We serve the suppliers into the retailers.
00:48:09.000 --> 00:48:14.000
On the Moresby side of the business, as I said, it's a bit of a different business. Moresby.
00:48:14.000 --> 00:48:23.000
works with Fortune 1000 companies. Their typical client is north of $20 billion in annual revenue.
00:48:23.000 --> 00:48:28.000
And their typical client has a very high cost of sales, so a.
00:48:28.000 --> 00:48:30.000
A consultancy business,
00:48:30.000 --> 00:48:36.000
or a software business where their largest expense is people wouldn't be a great client.
00:48:36.000 --> 00:48:40.000
for Moresby, and they probably wouldn't use Moresby's service.
00:48:40.000 --> 00:48:43.000
But for distributors and manufacturers.
00:48:43.000 --> 00:48:46.000
Healthcare.
00:48:46.000 --> 00:48:53.000
hospital groups where they have a high cost of sale, they're buying a lot of equipment, or they're, they're.
00:48:53.000 --> 00:48:57.000
They're buying lots of services and products to support their business.
00:48:57.000 --> 00:49:00.000
Those are the better candidates. And so.
00:49:00.000 --> 00:49:03.000
Um, those companies are often.
00:49:03.000 --> 00:49:06.000
Um, under the most margin pressure.
00:49:06.000 --> 00:49:12.000
And those companies are often in the midst of some type of a cost transformation exercise.
00:49:12.000 --> 00:49:15.000
And so, what the Moresby Group does.
00:49:15.000 --> 00:49:17.000
is works with those clients.
00:49:17.000 --> 00:49:21.000
To to negotiate.
00:49:21.000 --> 00:49:23.000
Um…
00:49:23.000 --> 00:49:28.000
Payment terms and payment price, purchase price.
00:49:28.000 --> 00:49:31.000
For the long tail of their supplier base.
00:49:31.000 --> 00:49:36.000
So if you think about of a fortune 500 or 1000 company,
00:49:36.000 --> 00:49:44.000
Maybe they're global in all likelihood, maybe they've got 15, 20, 30,000 different suppliers around the planet.
00:49:44.000 --> 00:49:54.000
And in most cases, they have really seasoned and robust procurement teams. They have to, to be that size.
00:49:54.000 --> 00:50:02.000
Those procurement teams are not actively managing those 25,000 or 30,000 suppliers. There's a bit of the 80-20 rule. They might be managing.
00:50:02.000 --> 00:50:07.000
20% of the suppliers that are 75-80% of the spend.
00:50:07.000 --> 00:50:15.000
And the rest of them, in many cases, they don't have contact information. They're not exactly sure what they're buying. It's done at a local office in Antwerp, Belgium.
00:50:15.000 --> 00:50:18.000
Um, and… but…
00:50:18.000 --> 00:50:26.000
These, in total, this 20% or 30% of the spend could be 2, 3, 5 billion dollars in spend.
00:50:26.000 --> 00:50:32.000
So, it's an enormous amount of dollars that they just don't have the bandwidth to pay attention to.
00:50:32.000 --> 00:50:35.000
And Moresby has developed proprietary processes.
00:50:35.000 --> 00:50:38.000
that enable them to vet that.
00:50:38.000 --> 00:50:42.000
group of long-tail suppliers determine where they're likely to have.
00:50:42.000 --> 00:50:47.000
The greatest opportunity for success in renegotiating purchase price or payment terms.
00:50:47.000 --> 00:50:54.000
And then actively managing those negotiations on behalf.
00:50:54.000 --> 00:50:55.000
Hmm
00:50:55.000 --> 00:50:58.000
of the client. And they'll do so as part of the client.
00:50:58.000 --> 00:51:02.000
And so that's their business. Now, when we combine the two together.
00:51:02.000 --> 00:51:10.000
Um, they're very different. Moresby sells to sea level. They sell to the CFO, to the chief procurement officer, the chief supply chain officer.
00:51:10.000 --> 00:51:14.000
At STAT, we tend to sell to the VP of Sales.
00:51:14.000 --> 00:51:21.000
or to a… to maybe a director level or VP of accounting.
00:51:21.000 --> 00:51:23.000
Um, so a different…
00:51:23.000 --> 00:51:26.000
Client profile that we're selling to.
00:51:26.000 --> 00:51:33.000
Um, so it doesn't… it doesn't immediately seem obvious how you'd put those two together. But when we think about the two businesses.
00:51:33.000 --> 00:51:38.000
Together, then we view them through the lens of.
00:51:38.000 --> 00:51:42.000
We are a margin defense system collectively, or we are a.
00:51:42.000 --> 00:51:45.000
The profitability…
00:51:45.000 --> 00:51:48.000
partner to the office of the CFO.
00:51:48.000 --> 00:51:53.000
And when you look at it through that lens, you could consider a number of additional capabilities.
00:51:53.000 --> 00:51:58.000
that we could provide our clients that would be enormous value to them.
00:51:58.000 --> 00:52:04.000
And so that's how we're thinking about it. We like to say we need to earn our way into becoming a platform.
00:52:04.000 --> 00:52:09.000
These two single-point solutions we have, one specifically helping CPG suppliers,
00:52:09.000 --> 00:52:11.000
The other, helping…
00:52:11.000 --> 00:52:16.000
the largest companies in the world that have heavy cost of goods sold.
00:52:16.000 --> 00:52:18.000
They're not necessarily compatible yet.
00:52:18.000 --> 00:52:22.000
To build a platform around. As I said, two single-point solutions.
00:52:22.000 --> 00:52:24.000
But eventually, we will…
00:52:24.000 --> 00:52:32.000
put more products and features around them and earn the right to call ourselves a platform. And that's the direction we're headed.
00:52:32.000 --> 00:52:49.000
Yeah, yeah, so interesting. And I like that overall kind of umbrella positioning because I think it was we were talking earlier about strategic priorities, kind of putting yourself in the right category. And it doesn't mean we have to solve kind of all the things within that category, but it kind of helps with that roadmap and to prioritize
00:52:49.000 --> 00:53:07.000
Both for product team, kind of what goes in next? Where do we focus on, but also paint that vision, I would imagine for sales and marketing to kind of hear the right things when they're in sales conversations and bring the right kind of market feedback back to kind of help inform that.
00:53:07.000 --> 00:53:08.000
Thank you for sharing that.
00:53:08.000 --> 00:53:12.000
You know, Natalie, it's funny, though, even though these businesses are seemingly so different from each other.
00:53:12.000 --> 00:53:15.000
We at STAT have been asked,
00:53:15.000 --> 00:53:19.000
If we will negotiate for suppliers. And Moresby has been asked.
00:53:19.000 --> 00:53:21.000
If they handle deductions.
00:53:21.000 --> 00:53:29.000
just in the day-to-day of their negotiations. So, there is even that little bit of overlap already.
00:53:29.000 --> 00:53:35.000
And it will become more relevant for us as we build out a shared data layer, intelligence layer,
00:53:35.000 --> 00:53:38.000
and start to enrich.
00:53:38.000 --> 00:53:40.000
each other's data with the other.
00:53:40.000 --> 00:53:48.000
And, um, and start to be able to provide more insights to our clients. So we're really excited about the changes that are coming for our businesses.
00:53:48.000 --> 00:54:08.000
Yeah, yeah, well, it does sound exciting. And I know, Mark, we're nearing the end of our time. I would love to kind of hear a little bit more about you personally and maybe take us back to your childhood. Are there any kind of stories or experiences that really shaped kind of who you became kind of as an adult in your career
00:54:08.000 --> 00:54:12.000
I'm not sure many that I want to share publicly, but…
00:54:12.000 --> 00:54:17.000
You know, I was born and raised
00:54:17.000 --> 00:54:22.000
Uh, in New York, um, out east on Long Island in a very, sort of,
00:54:22.000 --> 00:54:25.000
Uh, safe and middle class sort of upbringing.
00:54:25.000 --> 00:54:27.000
And, um…
00:54:27.000 --> 00:54:34.000
Uh, decided to go to college down south at the University of Miami on a, on an academic scholarship, and then I
00:54:34.000 --> 00:54:36.000
went to, uh, to law school.
00:54:36.000 --> 00:54:39.000
And I did that on the West Coast. Most lawyers.
00:54:39.000 --> 00:54:45.000
uh, tend to work around the area that they end up going to law school in and I thought, well.
00:54:45.000 --> 00:54:48.000
California seemed really nice at the time.
00:54:48.000 --> 00:54:55.000
Um, so, uh, I met my wife in California, and we moved up to the Bay Area and lived there for almost 30 years.
00:54:55.000 --> 00:55:01.000
Um, and, um, and everything that I was involved in, either as a lawyer or.
00:55:01.000 --> 00:55:05.000
In, in business has been technology related.
00:55:05.000 --> 00:55:08.000
Um, I just enjoy that, and I enjoy not only.
00:55:08.000 --> 00:55:11.000
Um, the technology itself,
00:55:11.000 --> 00:55:15.000
And I'm not a technologist, but it's always fun and interesting for me to be around that.
00:55:15.000 --> 00:55:19.000
But the passion of the entrepreneurs and the people.
00:55:19.000 --> 00:55:26.000
involved in these businesses that in many cases really believe that they are changing lives, and they are making things that are better for people.
00:55:26.000 --> 00:55:31.000
And that, for me is so inspiring to be around. I just love that.
00:55:31.000 --> 00:55:33.000
Um, and so.
00:55:33.000 --> 00:55:40.000
You know, I've really tried to put myself in positions over and over again to find those types of situations and.
00:55:40.000 --> 00:55:42.000
the industries that I've been involved in,
00:55:42.000 --> 00:55:48.000
Um, don't have a lot of consistency. They sort of span different areas of software and hardware.
00:55:48.000 --> 00:55:51.000
But for me, the one thing that I've always looked for
00:55:51.000 --> 00:55:54.000
Is the people and that passion.
00:55:54.000 --> 00:55:56.000
And what are they building and why?
00:55:56.000 --> 00:56:04.000
And there's a connective tissue between those answers to those questions and the various companies that I've been a part of.
00:56:04.000 --> 00:56:12.000
I love that. I mean, I do will say, like, passionate energy is infectious, right? So anytime you can put yourself around that, that's a… that's a positive.
00:56:12.000 --> 00:56:13.000
100%.
00:56:13.000 --> 00:56:23.000
And I'd love to ask Mark, what would you say is the best piece of advice you've been given, whether in a business or personally, that still shapes you?
00:56:23.000 --> 00:56:25.000
There's a lot of them.
00:56:25.000 --> 00:56:29.000
Um…
00:56:29.000 --> 00:56:33.000
I think it's something we've talked about already, and that is, um…
00:56:33.000 --> 00:56:37.000
That, that people hear things differently from each other.
00:56:37.000 --> 00:56:40.000
And it's really important to make sure
00:56:40.000 --> 00:56:44.000
that if you want to include a larger number of people,
00:56:44.000 --> 00:56:47.000
in an understanding of a particular topic or action.
00:56:47.000 --> 00:56:50.000
That you really think
00:56:50.000 --> 00:56:55.000
How can I, how can I act and, and speak about what we need to do.
00:56:55.000 --> 00:57:00.000
In a number of different ways, so that I pull in the most number of people.
00:57:00.000 --> 00:57:04.000
Uh, to make sure that they understand it.
00:57:04.000 --> 00:57:15.000
Well, thank you for that, and thank you for so eloquently bringing us full circle to where we started the discussion. As we do wrap up the conversation, can you tell our listeners how they can reach you if they want to get in touch?
00:57:15.000 --> 00:57:27.000
Yeah, absolutely. Um, you can find me through either Moresby or Stat at mark at statrecovery.com. Very easy to find me.
00:57:27.000 --> 00:57:39.000
Wonderful. Well, thank you. I really loved this conversation, and there's so much that I enjoyed talking about, but especially the way we started with your experience at Fabrinet and how that kind of
00:57:39.000 --> 00:57:46.000
Brought the importance around thinking of alignment and communication and all the themes that we've been talking about. So thank you so much for that.
00:57:46.000 --> 00:57:49.000
Thank you, Natalie, I've enjoyed it.
00:57:49.000 --> 00:58:06.000
I have as well. And thank you too to everyone who's listening. If today's conversations parked something for you, and I am sure that it did, please pass this along to another leader because we know that insights like this fuel fresh thinking for all of us and help us drive real transformation in our companies and in ourselves.
00:58:06.000 --> 00:58:14.000
Thanks again, Mark. And this has been another wonderful conversation on Shift and Thrive. I'll see you all next time.
00:58:14.000 --> 00:58:16.000
Wonderful. Thank you, Mark.
00:58:16.000 --> 00:58:17.000
You're very welcome. You do a great job at that, Natalie.
00:58:17.000 --> 00:58:22.000
That was great. You're a pro at this.
00:58:22.000 --> 00:58:23.000
That was fun.
00:58:23.000 --> 00:58:27.000
Yeah, I appreciate you having me and, um…
00:58:27.000 --> 00:58:34.000
And, you know, I, I learned from every one of these conversations, you, uh, you do a really good job.
00:58:34.000 --> 00:58:35.000
Oh, thank you.
00:58:35.000 --> 00:58:37.000
at framing the discussion, so I appreciated that.
00:58:37.000 --> 00:58:47.000
Well, thank you. I love it. And just to share next steps. So I think your episode is getting released next week on Wednesday.
00:58:47.000 --> 00:58:52.000
So by Wednesday morning, it should be out in all the podcast networks
00:58:52.000 --> 00:59:10.000
And we will send you an email Wednesday morning with the links. We'll have a social post on LinkedIn with a video clip of something that you shared during the conversation so we can promote that. And I always say, if there's any other kind of video footage or anything else from the conversation that's helpful to you, just reach out. Happy to
00:59:10.000 --> 00:59:12.000
share that as well
00:59:12.000 --> 00:59:18.000
And if you know anybody else that you think would be an interesting guest on the show, please let me know now or in the future.
00:59:18.000 --> 00:59:21.000
I will, I will definitely do that, ok, thank you so much.
00:59:21.000 --> 00:59:23.000
Wonderful. Thanks so much. Have a good rest of your day.
00:59:23.000 --> 00:59:25.000
You too, bye-bye.
00:59:25.000 --> 00:59:27.000
Bye-bye.
00:03:59.000 --> 00:04:00.000
Hi, Mark.
00:04:00.000 --> 00:04:02.000
How are you doing?
00:04:02.000 --> 00:04:03.000
I'm good. How are you?
00:04:03.000 --> 00:04:05.000
I'm good, thank you.
00:04:05.000 --> 00:04:08.000
Good. Nice sunny but humid day today in Boston, huh?
00:04:08.000 --> 00:04:11.000
Uh, I am in New York this morning, but…
00:04:11.000 --> 00:04:12.000
Okay.
00:04:12.000 --> 00:04:16.000
Probably very similar. Are you in… are you in Boston?
00:04:16.000 --> 00:04:17.000
Yeah, yeah, well, I need them, but yes.
00:04:17.000 --> 00:04:19.000
Oh, Nito, yeah, I live in Brookline, so yeah.
00:04:19.000 --> 00:04:20.000
Oh, okay. What part of Brooklyn?
00:04:20.000 --> 00:04:33.000
Um, sort of between the village, Washington Square, and Coolidge Corner, and I can walk to all of them in about 10 minutes.
00:04:33.000 --> 00:04:34.000
Oh, right on.
00:04:34.000 --> 00:04:35.000
Okay, okay, nice. Yeah, I used to live in Coolidge Corner, and then my mom just moved to Chestnut Hill after a long time in Lexington. So it's a great area.
00:04:35.000 --> 00:04:39.000
Yeah, sure, sure. We've been there about almost 5 years.
00:04:39.000 --> 00:04:40.000
Okay, very nice.
00:04:40.000 --> 00:04:42.000
Yeah. Okay.
00:04:42.000 --> 00:04:50.000
Wonderful. Well, I'm looking forward to the conversation today. I was going back through the notes and I think we'll have a lot of interesting areas to talk about.
00:04:50.000 --> 00:04:58.000
Yeah, before we kick it off, is there anything in particular you want to sort of share with me? Any areas you would like to focus on?
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Anything in any stories to tell or not to tell.
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Yep.
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Yeah, so nothing not to tell. I would say, so just as a reminder, because I know it has been a little while since we spoke, I'll start with a brief introduction of your background and then I'll go into the opening question, which we had talked about that being around transformation that you led and you were going to talk about Fabrinnet
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Yeah, yeah.
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Sure, sure. Yep.
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And the growth, but then, like, the kind of stuff about kind of communication and alignment and all of that
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So there were a couple stories that you mentioned you would have that I'll like queue you up for in the discussion. I'm happy to kind of run through the rest of the flow if that's helpful, or I can just kind of throw the questions as they come. What's more helpful to you
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Yeah, whatever works for you, I'm good either way.
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Okay.
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How long do you think we will record for?
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Usually about 40 to 50 minutes, depending on the conversation.
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Okay. Perfect.
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Okay, and then I think I mentioned this to you, but I do usually take the conversations like pretty organically without a lot of post-production editing. But we certainly have the option to. So if like something comes up during the conversation and we need to like rerecord a question or if afterwards you say, hey, I didn't like how I kind of said that 1 thing, we can always
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And affix it and make sure you're happy with where we end up.
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Okay, I appreciate that.
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Okay.
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All right, final sip of coffee
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Anything else you want to talk through or anything else before we get started?
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No, no, I think we're good. You tell me.
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Okay, okay, wonderful. Let's get started then. Double check my recording
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Perfect. All right.
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I am really looking forward to speaking with today's guest. He is a fellow Bostonian, and earlier in his career, he pivoted from corporate law to become a serial company builder, co-founding and growing Fabrinet over 1 billion in revenue
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And a public listing on the New York Stock Exchange. He brings deep expertise in M&A integration, as well as leading across diverse global teams and cultures. Today, he leads a technology-enabled platform dedicated to helping retail suppliers boost revenue
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By safeguarding against improper deductions. He is the CEO of Stat Recovery, Mark Schwartz, welcome to the show.
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Thank you, Natalie. Happy to be here with you.
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Great to have you. And I'd like to start with a transformation story from your time at Fabrinet. And I know the company had gone through a period of extraordinary growth and that you hit a stretch where that growth had started to flatten. So I'd love to unpack what helped you lead through that and kind of persevere through that
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But maybe first for the listeners, if you can briefly take us back to kind of what was happening in the business at that point.
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Yeah, you know, you had mentioned that I was a corporate lawyer, and I happened to be assigned to work on a client that was founding.
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this business, a gentleman named Tom Mitchell, who became
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a friend and a mentor to me for many, many years.
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And.
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We started the business in 2000.
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Um, and by 2005,
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Um, we had grown from a standing start to, um, something near $300 million in annualized revenue already. Like, we had a very, very fast.
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start. And, um, and then we saw, sort of, year 5.
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That growth.
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was waning.
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And keep in mind, this was, you know, post sort of law school, being a lawyer.
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And then thrown into this entrepreneurial environment.
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And I was the chief financial officer, and at the time, I was still the general counsel.
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In a startup, you do a bit of everything. I ran sales and marketing for a few years. I always sort of had.
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IT and our people, HR,
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Um, and other areas, but…
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It was relatively new to me to be a particularly senior management.
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And, um, and I was just sort of spending those first few years soaking up everything I could like a sponge, trying to understand it.
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I joke that, you know, I had been a CFO.
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For 23, 25 years.
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But I never, that was my first role in business was CFO. I was never…
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didn't come through the ranks as an accountant, a senior accountant, and director, etc., etc.
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Starting at the top
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Sure.
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So as our growth is starting to wane,
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My partner and CEO, Tom,
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says, we need to bring an outside source in here to help us analyze what's happening.
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And my initial reaction internally, although I didn't voice it, was…
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What is a third party gonna tell us about our business that we don't know? Like, what kind of perspective will this person who doesn't really know anything about our business be able to give us?
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And I couldn't have been more wrong, ultimately.
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We brought in a coach who interviewed about 120 different people across.
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uh, virtually every department in the company.
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And he came back to us,
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And he said, look, he used the old Jack Welch model of sort of categorizing your teams. And he said, you've got
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Probably, you know,
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In a good organization, 5 to 10% of your team might be what Welch categorizes as the type A players, the next generation of leadership, your current strongest leaders, et cetera.
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And then you've got probably 80-plus percent.
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of your Type B players, which is really the proficient engine of the business that makes it go.
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The really, really great, hard-working, perceptive.
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Sharp employees that make the business go.
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And then there might be a small sort of percentage of type C that might be.
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might be really, really, uh, good at what they do, but they're not in that role. They're in the wrong role.
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or they're just not a fit for one reason or another.
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And they tend to cycle themselves out even before
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You have to have that discussion about a transition.
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Um, and so with that sort of bell curve, he said to us, you've probably hired 35% or 40% of your team are Type A players.
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Um, so, so kudos to how you've hired, but the problem is, you're not sharing with these folks.
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What it is that you're off to do as a company over the next several years. You haven't defined the mission.
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or the vision of the company, things that we sort of…
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take for granted as, like, Entrepreneurial 101 today.
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And even then. But we had never done that. And, um, one of the lessons I took from that, Natalie, was.
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You know, I knew what our strategy was. I knew what our plans were.
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I thought everybody did.
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And what's in your brain as a leader is not necessarily
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Being vocalized so that your team understands that.
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Um, and so that was a real sort of shock to my system, because it… the light bulb immediately went off as we had these discussions.
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with this consultant, and he was 100%.
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Correct. I was seeing it in…
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In the company, in different sort of.
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niches where people would want to work for one director, not another, because of how they incentivized folks, or how they promoted from within.
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Um, and you can't have that in a business. You can't have lots of small companies inside your one company. It's a real danger. And that was stifling.
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our growth.
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The other lesson I took from that.
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actually hit me 4 or 5 years later when I was taking a series of golf lessons.
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And my golf coach was trying to get me to do some particular move.
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And for 5 or 6 weeks, I just couldn't do it. I couldn't get it.
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And she would tell me every way she could think of.
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to try to show me or talk to me about how to do this particular move.
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And then one day she said something to me, and I don't remember what it was, and immediately, it clicked.
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And I said to her, how did you do that? She said, this is my job. I have to tell you as many different ways
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what it is that I'm trying to get you to do, and I know one of them is eventually going to resonate.
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And it took me back to those discussions we had.
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With this consultant at Fabrinet back in, sort of, 2005 timeframe.
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Because he was saying some of the same things.
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Um, and it really changed my perspective on being a leader and how to message.
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As a leader and as a manager of folks.
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Because not everybody hears things the same way. How many times have we all?
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left a meeting, and then heard folks talking about the content of that meeting later,
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And thought or said, well, that's not what we were talking about, that's not what was said.
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People hear things differently. And so as a leader, as a manager, it's our job.
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to consider as many different possible ways to communicate that message.
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So that you're being inclusive to the largest number of folks listening.
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Um, and it's… and it's something that takes practice to do, and there's a muscle to continue to exercise that.
00:14:15.000 --> 00:14:19.000
But those two sort of events, one business, one personal,
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sort of overlapped each other and really solidified for me the…
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The importance of, uh, of not only sharing the message, but sharing it in.
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as many different ways as possible.
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Yeah, yeah, I think that's so relevant. And so it's so easy for all of us to kind of forget when you're in the moment and everyone's busy and you maybe are tired of hearing yourself kind of say the same thing to yourself, to your leadership team, etc.
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I'm curious, kind of going back to kind of the experience at Fabrinet, once you clearly saw that, what were the things that you changed about how you were leading the organization? Were there other areas, I guess, besides the communication style? Because I do think of
00:15:03.000 --> 00:15:09.000
A big group of Type A's, can be a blessing and a curse, right? That you have self-motivated people
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Well, sorry to interrupt you, I think you're 100% correct. The blessing is you're hiring likely very sort of self-motivated folks and problem solvers.
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Without giving them…
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the… the tools by which they should be operating, the boundaries by which they should be operating, the guidelines of what do we do at Fabrinet, how do we handle these situations?
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then what they do is, because they're self-motivated and problem solvers, they bring their past experiences.
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And they, and they likely solve those problems differently from each other.
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And that's… that creates friction, that creates tension.
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In the absence of a clear, unified message, that's where you have rumors and people.
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Believing that this team is playing favorites, and this team is not following
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The path that they should be following, etc.
00:16:00.000 --> 00:16:05.000
So, so we, we went back to very, very basics, things that.
00:16:05.000 --> 00:16:08.000
then in all likelihood, we should have probably done.
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On day one, as we were building the business.
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And that is, let's… we all know what our values are at a senior level. Let's make sure everybody in the company understands that. What's most important to us?
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As we built this business.
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And we did that.
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creating things like a mission statement.
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And sort of communicating to everybody.
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What are the 4 or 5 or 6 things that are most important to us as part of the next three years of our growth?
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And what are the 4 or 5 things that we want to do this year that's going to build toward?
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that longer-term growth.
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Most companies do these things. We never, we never did any of this, and it was a wake-up call for us that we really needed to make sure.
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that these Type A players, and even the balance of our company, the brilliant engineers and others that were the engine that ran our business,
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Um, they were starving.
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To understand, like…
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Where are we headed? What is our leadership team doing? Where are they taking us?
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And so we went and we did all of that. We created.
00:17:14.000 --> 00:17:19.000
career training and development paths that were very.
00:17:19.000 --> 00:17:21.000
specific and tied.
00:17:21.000 --> 00:17:24.000
to the longer-term goals of our business,
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And if there was anything that interested you, you could latch onto that and you knew where that was going to be relevant in the business.
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Later on.
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I don't want to say forced, but we sort of mandated.
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That, um, that our leaders.
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They follow this quote-unquote fabrinet way that we created, and this is how we run our business. This is how we run meetings, this is how
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This is how we treat our teams. This is how we promote from within.
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across the board. And it took time, but over the course of.
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3 quarters. We saw our growth re-emerge.
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Um, we weren't doing anything different as a business. The industry hadn't changed.
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We were just aligned again.
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And… Yeah.
00:18:11.000 --> 00:18:30.000
to have that kind of reminder, and three-quarters, I'm sure you wanted it to happen as fast as possible, but that is relatively fast to make these kinds of changes and kind of feel the impact on growth and revenue. And I'm glad you brought up the mission and vision, because I know to some, especially like more technical kind of CEOs and founders.
00:18:30.000 --> 00:18:48.000
Especially in smaller companies, that work can feel kind of fluffy or like a luxury. We don't have the time to invest, but I think your story is an experience is, you know, exactly why it's so important to have that. And, you know, everyone talks about the analogy of rowing in the same direction, but it sounds like that's really what it allowed you guys to do.
00:18:48.000 --> 00:18:54.000
I'll add a little bit to that, Natalie. So, um, in my current role at STAT, we have two
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two companies that we… that we manage. I'm the CEO of STAT, and we have
00:19:00.000 --> 00:19:04.000
Stat recovery, as you mentioned, and we have a company called the Moresby Group.
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And.
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In total, between the two companies, our goal is to.
00:19:10.000 --> 00:19:14.000
is to be the profitability partner for a CFO.
00:19:14.000 --> 00:19:21.000
We call it the margin defense system in some cases. So where are their dollars that you might be leaving on the table?
00:19:21.000 --> 00:19:26.000
And, um, in February of this year, when I took over as the CEO.
00:19:26.000 --> 00:19:29.000
I woke up one morning and I said to myself,
00:19:29.000 --> 00:19:34.000
I don't think I could recite our strategic priorities for this year.
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And if I can't, if the CEO doesn't know them, there's no possible way everybody else in the company understands them.
00:19:39.000 --> 00:19:43.000
So I, uh, I pulled my executive team.
00:19:43.000 --> 00:19:50.000
And sure enough, there were lots of blank stares, and some folks remembered one or two or three of the things that we had written on a sheet of paper.
00:19:50.000 --> 00:19:52.000
Two months earlier.
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But that's not anything that you put down on a sheet of paper and put in a drawer and tuck away for the year.
00:19:59.000 --> 00:20:04.000
If it's really important, if it's really strategic, and you're claiming these are our priorities.
00:20:04.000 --> 00:20:07.000
then you need to make sure that that not only is disseminated.
00:20:07.000 --> 00:20:10.000
But further to what we talked about.
00:20:10.000 --> 00:20:13.000
earlier, over-communicated.
00:20:13.000 --> 00:20:18.000
And communicated at the beginning of every All Hands, and communicated at the beginning of every
00:20:18.000 --> 00:20:21.000
Full team meeting, or departmental meeting.
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Um, we've… we've gone so far as to.
00:20:25.000 --> 00:20:32.000
Uh, to come up with ways to put our strategic priorities on mouse pads and in posters, and so forth.
00:20:32.000 --> 00:20:36.000
Because we want.
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Uh, everybody to understand.
00:20:38.000 --> 00:20:44.000
Where we're headed, and we want their managers to be able to cascade down to them.
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The importance of what they're doing and how that rolls into the priorities for the entire company.
00:20:51.000 --> 00:20:53.000
Um, and so again.
00:20:53.000 --> 00:20:56.000
fairly simple blocking and tackling.
00:20:56.000 --> 00:21:03.000
But, um, but we weren't doing that here either, and I'm sure lots of companies, meaning have meaningfully.
00:21:03.000 --> 00:21:10.000
agonized over their priorities, but then don't spend a lot of time throughout the year continuing to communicate them to the team.
00:21:10.000 --> 00:21:15.000
And so we've been doing that much more and much more clearly.
00:21:15.000 --> 00:21:19.000
Uh, to our team members for the last 7 or 8 months.
00:21:19.000 --> 00:21:21.000
And.
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And it's working. You know, I see the enthusiasm and the energy for people, knowing that what they're doing is contributing to the bigger picture in the company. It's really important.
00:21:45.000 --> 00:21:46.000
Yeah.
00:21:46.000 --> 00:21:49.000
Yeah, yeah, I want to talk a little bit more about the communication side of this because I do think that like good communication is measured by what people understand, not by what was said or what the leader said. And I think sometimes there's a fallacy of
00:21:49.000 --> 00:22:04.000
You know, we just need to keep repeating the message and saying the same thing over and over again because people are busy and not everyone kind of pays attention the first time. But I think repeating a message is not necessarily the same as kind of communicating it differently in your golf example is a great one
00:22:04.000 --> 00:22:16.000
For that, right, different people take information differently, they, you know, all of that. So curious to hear, like, how do you know whether people kind of are understanding the message the way you intended?
00:22:16.000 --> 00:22:24.000
I wish I had the secret sauce there. I think there's not one right way to do it.
00:22:24.000 --> 00:22:26.000
Everybody's style is different.
00:22:26.000 --> 00:22:30.000
What I try to do is to disarm.
00:22:30.000 --> 00:22:36.000
A group of folks from being defensive, whether whether they.
00:22:36.000 --> 00:22:38.000
think maybe I don't really understand.
00:22:38.000 --> 00:22:41.000
what's being talked about, or I don't have the full picture.
00:22:41.000 --> 00:22:47.000
and give folks opportunities to ask questions. And I always like to say, I'll ask all the stupid questions, I'll get them out of the way up front.
00:22:47.000 --> 00:22:50.000
And then you all can ask the good ones.
00:22:50.000 --> 00:22:58.000
But when I'm sharing a new idea or a different direction, before we move to a different topic.
00:22:58.000 --> 00:23:04.000
There is always the, all right, are we understanding this? Does anybody have any questions? Can you recite?
00:23:04.000 --> 00:23:07.000
in one or two sentences, the direction that we're headed.
00:23:07.000 --> 00:23:10.000
Can you recite in one or two sentences?
00:23:10.000 --> 00:23:14.000
How we're going to achieve the goals that we just talked about.
00:23:14.000 --> 00:23:18.000
And give folks an opportunity to sort of put it in their own words.
00:23:18.000 --> 00:23:20.000
Um, and.
00:23:20.000 --> 00:23:29.000
And I'm sure you see this in your own practice. When folks hear it from others, not just from that one same voice.
00:23:29.000 --> 00:23:31.000
With a little bit of a spin put on it.
00:23:31.000 --> 00:23:49.000
then that, I think, helps folks absorb that message even a little bit more quickly.
00:23:49.000 --> 00:23:50.000
Yeah.
00:23:50.000 --> 00:23:57.000
Yeah, yeah, for sure. And I think, you know, because people learn differently, some folks are more visually oriented, so getting a good kind of diagram to articulate it, which you talked about kind of posters or talking about analogies or kind of how did we get here, like covering more of the history versus the future looking like people latch on
00:23:57.000 --> 00:24:00.000
to different things, and I think having a mix of all of those, really helps to reinforce that as well.
00:24:00.000 --> 00:24:05.000
The other thing that we did at Fabrinet
00:24:05.000 --> 00:24:10.000
Um, which was a much, much larger organization, and we're doing it today at STAT.
00:24:10.000 --> 00:24:12.000
um, is…
00:24:12.000 --> 00:24:15.000
is to really pull in our
00:24:15.000 --> 00:24:21.000
next level of leaders, our directors, senior directors, in some cases vice presidents.
00:24:21.000 --> 00:24:24.000
And, um, and giving them.
00:24:24.000 --> 00:24:27.000
Voice and visibility.
00:24:27.000 --> 00:24:32.000
into some of the things that our senior executive team
00:24:32.000 --> 00:24:35.000
is debating and managing on a daily basis.
00:24:35.000 --> 00:24:39.000
And giving that.
00:24:39.000 --> 00:24:41.000
Extended leadership team.
00:24:41.000 --> 00:24:48.000
The ability to, to feel like they have some, some voice even if they don't have a vote.
00:24:48.000 --> 00:24:56.000
gives them more confidence to then go and cascade those messages down to their own teams, because they've been in the room, and they've seen
00:24:56.000 --> 00:25:01.000
the debates, and they understand the trickier points, the complexities of what we're trying to.
00:25:01.000 --> 00:25:09.000
to get through. And that gives them an opportunity to feel more confident cascading those messages down to their teams.
00:25:09.000 --> 00:25:27.000
Mark, I want to take us in a slightly different direction now, and I know you've led through a number of acquisitions, and I think integration is one of those areas where CEOs can find the real challenges begin. So I want to hear a little bit from you
00:25:27.000 --> 00:25:39.000
You know, what have you learned about M&A maybe specifically to start like bringing in an acquired team into the larger organization, especially like under the discussion of alignment we've been having
00:25:39.000 --> 00:25:42.000
Yeah, as a corporate lawyer,
00:25:42.000 --> 00:25:48.000
it was… these were… these were the transactions that I was exposed to, and… and helping.
00:25:48.000 --> 00:25:53.000
my clients to acquire another business or merge into another business.
00:25:53.000 --> 00:25:56.000
And it was very… so I understood structure.
00:25:56.000 --> 00:26:00.000
Um, but… but I didn't understand…
00:26:00.000 --> 00:26:06.000
The, the integration components, the people aspect of that.
00:26:06.000 --> 00:26:09.000
At Fabrinet, um…
00:26:09.000 --> 00:26:14.000
We we were and they still are.
00:26:14.000 --> 00:26:23.000
independent, public, very successful contract manufacturer, mostly of photonic devices, fiber optic equipment.
00:26:23.000 --> 00:26:31.000
Lots of the devices that are required for AI and for data centers, etc. So very, very relevant today.
00:26:31.000 --> 00:26:35.000
At Fabrinet, we would acquire…
00:26:35.000 --> 00:26:39.000
factories owned by our clients.
00:26:39.000 --> 00:26:47.000
Because we were… we were the company, and they still are, that handles the most complex engineering and manufacturing sort of.
00:26:47.000 --> 00:26:50.000
challenges that a company could have, because
00:26:50.000 --> 00:26:57.000
While you're… while you might be an expert at creating and developing a product and marketing and selling it.
00:26:57.000 --> 00:26:59.000
manufacturing, it might not be your core competency.
00:26:59.000 --> 00:27:04.000
And that was… that was Fabrinate. So we would acquire factories from our clients.
00:27:04.000 --> 00:27:12.000
Where they had made the decision, you know, February's doing such a good job for us on these other products, why don't we just give them everything that's in this factory?
00:27:12.000 --> 00:27:15.000
So we would acquire those factories, and then we would.
00:27:15.000 --> 00:27:17.000
transition the.
00:27:17.000 --> 00:27:20.000
the manufacturing operations in those factories.
00:27:20.000 --> 00:27:23.000
to our larger factories,
00:27:23.000 --> 00:27:25.000
in Asia.
00:27:25.000 --> 00:27:27.000
So…
00:27:27.000 --> 00:27:29.000
really interesting type of…
00:27:29.000 --> 00:27:33.000
Of acquisition because you're doing so.
00:27:33.000 --> 00:27:39.000
Where just about everybody at that factory understands that over a period of
00:27:39.000 --> 00:27:41.000
6 to 12 or more months.
00:27:41.000 --> 00:27:44.000
Um, that factory is no longer going to be there.
00:27:44.000 --> 00:27:47.000
Their job is no longer going to be there.
00:27:47.000 --> 00:27:50.000
And so, in those situations.
00:27:50.000 --> 00:27:56.000
Um, and we did this seven or eight times while I was the CFO at.
00:27:56.000 --> 00:28:00.000
at Fabrinet, and so I sort of owned.
00:28:00.000 --> 00:28:02.000
this exercise.
00:28:02.000 --> 00:28:07.000
Once the acquisition was announced, and perhaps it hadn't closed yet.
00:28:07.000 --> 00:28:10.000
I would go to the factory, and I'd hold a town hall.
00:28:10.000 --> 00:28:19.000
For everyone in the factory. And usually the first one was the most exciting, people were outraged and upset and etc. And it was all legitimate, and you can understand all of that.
00:28:19.000 --> 00:28:20.000
Right.
00:28:20.000 --> 00:28:22.000
Um, but…
00:28:22.000 --> 00:28:29.000
I would say, okay, listen, let me have your questions. Like, what can I help you with? We're going to make sure at the end of all of this.
00:28:29.000 --> 00:28:34.000
that we're gonna support you on your career path, and we will, we will.
00:28:34.000 --> 00:28:41.000
There'll be appropriate severance, but outside of the dollars, we're going to figure out how we can help you in training, and we're going to figure out how we can help you with.
00:28:41.000 --> 00:28:43.000
resume writing and building out.
00:28:43.000 --> 00:28:47.000
Uh, so, you know, whatever it is you're gonna need for the next step in your career.
00:28:47.000 --> 00:28:55.000
And I'd get questions like, um, I already put in it for a vacation with my manager. Can I take that?
00:28:55.000 --> 00:28:59.000
Are we getting paid the same days?
00:28:59.000 --> 00:29:05.000
What about my health benefits? What about this? What about this? What about this? Sometimes I had the answer right away.
00:29:05.000 --> 00:29:09.000
Other times, I would say, great question, thank you.
00:29:09.000 --> 00:29:13.000
And when I'm back here next week, I'll have the answer for you. And then I'd come back the next week.
00:29:13.000 --> 00:29:17.000
And I'd answer those questions, and then there'd be a slew of additional questions.
00:29:17.000 --> 00:29:20.000
And I would do this for…
00:29:20.000 --> 00:29:27.000
6 weeks, sometimes 8 weeks, every week, no matter where the factory was in the world, I would be there on that Monday or that Tuesday every week.
00:29:27.000 --> 00:29:33.000
For that period of time. And in almost all cases, by that 6th, seventh, eighth week.
00:29:33.000 --> 00:29:41.000
then people would start to come up to me and say, I really appreciate your transparency, thank you so much, we really understand the direction now and where we're headed.
00:29:41.000 --> 00:29:49.000
It's not going to be a great outcome for us in the end, we get it, but you guys seem to care, and that means a lot to us. And so, you tell us what we need to do.
00:29:49.000 --> 00:29:51.000
to make this work for us.
00:29:51.000 --> 00:29:53.000
Um, so that was just…
00:29:53.000 --> 00:29:58.000
And I did care about all of those folks and making sure they landed properly.
00:29:58.000 --> 00:30:01.000
But just that.
00:30:01.000 --> 00:30:03.000
being there over and over again.
00:30:03.000 --> 00:30:06.000
And in answering those questions.
00:30:06.000 --> 00:30:14.000
And… and showing that it really mattered to us, and it was important to us that they had a good experience as we were winding down that factory.
00:30:14.000 --> 00:30:19.000
um, made all of those engagements.
00:30:19.000 --> 00:30:21.000
um, successful.
00:30:21.000 --> 00:30:26.000
Now, that's one type of acquisition. It was really important for me to.
00:30:26.000 --> 00:30:30.000
to spend the time to do those things with those folks.
00:30:30.000 --> 00:30:33.000
In most cases, we would have a big party at the end before we wound it down.
00:30:33.000 --> 00:30:37.000
And everybody invited, and they bring their families and so forth.
00:30:37.000 --> 00:30:48.000
You know, the more typical acquisition, where you're trying to merge two businesses together, combine portions of a business into another, whatever form it takes, and there's many.
00:30:48.000 --> 00:30:54.000
Um, I learned a really valuable lesson from Tom, my partner and CEO at Fabrinet, early on.
00:30:54.000 --> 00:30:58.000
Because we did a few of those types of acquisitions as well.
00:30:58.000 --> 00:31:00.000
And his view was,
00:31:00.000 --> 00:31:03.000
Uh, breaking it down to its simplest form.
00:31:03.000 --> 00:31:12.000
The founder or CEO, the senior leader, the managing director, whatever it was, the senior most leader or leaders.
00:31:12.000 --> 00:31:17.000
of that business immediately became part of our executive team at Fabrinet.
00:31:17.000 --> 00:31:19.000
And that may not have lasted long term.
00:31:19.000 --> 00:31:21.000
In some cases it did, but…
00:31:21.000 --> 00:31:26.000
Early on, they became part of our leadership team. And so for the same reason I talked before about
00:31:26.000 --> 00:31:29.000
Giving your extended leadership team
00:31:29.000 --> 00:31:32.000
Voice and visibility, even if they don't have a vote.
00:31:32.000 --> 00:31:35.000
We did the same thing for…
00:31:35.000 --> 00:31:38.000
for the leaders of a company that we acquired.
00:31:38.000 --> 00:31:43.000
Because then they could go and turn around and talk about what they were hearing.
00:31:43.000 --> 00:31:45.000
At Faburnet Senior Headquarters,
00:31:45.000 --> 00:31:48.000
To their teams.
00:31:48.000 --> 00:32:02.000
And that was really important. It was never a situation where that team became a satellite, and it was business as usual, and in many cases, they were sort of forgotten about as part of that integration.
00:32:02.000 --> 00:32:06.000
Um, we made sure that they had a voice, and we made sure
00:32:06.000 --> 00:32:10.000
that they have the ability to then go back to their teams and cascade down what we were doing
00:32:10.000 --> 00:32:12.000
And where they were fitting into that.
00:32:12.000 --> 00:32:19.000
Um, and I think it's really important to do that. I think it's really important, early on. It doesn't have to last.
00:32:19.000 --> 00:32:24.000
Depending upon the size of the acquired entity and the size of the target.
00:32:24.000 --> 00:32:27.000
But for some period of time, making certain.
00:32:27.000 --> 00:32:30.000
that the senior leadership team there.
00:32:30.000 --> 00:32:35.000
can go back to the teams and alleviate some of the concerns that people are naturally feeling
00:32:35.000 --> 00:32:40.000
having a new owner. And that to me is is really, really critical.
00:32:40.000 --> 00:32:43.000
Um…
00:32:43.000 --> 00:32:57.000
I've seen good examples and bad examples of a longer-term acquisition strategy, you know, a particularly poor one that I recall was a company that had grown largely through acquisition and had made 40 plus acquisitions.
00:32:57.000 --> 00:33:00.000
Uh, over the course of about 5 or 6 years.
00:33:00.000 --> 00:33:02.000
And basically had…
00:33:02.000 --> 00:33:09.000
40 GMs and 40 heads of finance and 40 heads of sales, etc., and hadn't integrated any of them.
00:33:09.000 --> 00:33:12.000
And eventually it came back to bite them.
00:33:12.000 --> 00:33:18.000
And then there was some enormous restructuring that had to happen, which really impacted the morale of those teams and
00:33:18.000 --> 00:33:20.000
created more uncertainty.
00:33:20.000 --> 00:33:22.000
So I think to the extent.
00:33:22.000 --> 00:33:28.000
And this doesn't have to mean, Natalie, product integration. We're just talking about
00:33:28.000 --> 00:33:31.000
teams. To the extent
00:33:31.000 --> 00:33:36.000
that you can eliminate that uncertainty.
00:33:36.000 --> 00:33:39.000
In the first year, 6 to 9 months.
00:33:39.000 --> 00:33:45.000
Um, and… and not only eliminate it through your action, but also make sure that the messaging is consistent.
00:33:45.000 --> 00:33:50.000
with those folks, then I think you… you put that acquisition on a.
00:33:50.000 --> 00:33:53.000
on a proper footing.
00:33:53.000 --> 00:33:54.000
Right, right.
00:33:54.000 --> 00:33:57.000
to potentially be successful. Many acquisitions are not successful no matter what.
00:33:57.000 --> 00:34:00.000
But you want to take out the things that you can control.
00:34:00.000 --> 00:34:05.000
And make sure that those components of it, you've done the very best you can.
00:34:05.000 --> 00:34:27.000
Yeah. Well, I think oftentimes, you know, there's so much of a focus on getting the deal done that a lot of the integration components can become an afterthought and that really is to the detriment. You talked about kind of the 40 GM example
00:34:27.000 --> 00:34:28.000
Yeah.
00:34:28.000 --> 00:34:35.000
I think underappreciation for kind of what are the skills on the team of the company that, you know, got acquired? What are the processes they have? And sometimes, especially if it's a bigger company acquiring a smaller one, the assumption is
00:34:35.000 --> 00:34:46.000
Well, we're bigger, you know, we've got it figured out. They'll come and kind of follow our processes and our systems and all of that. And what I see on the go-to-market side is that's not necessarily the case, right? Sometimes these
00:34:46.000 --> 00:35:02.000
Younger, smaller companies that are getting acquired, they might have a more nimble or sophisticated tech stack. They might have, you know, customers that you don't have, that you need to look at kind of the cross-sell, kind of upsell opportunities. So to your point, even when
00:35:02.000 --> 00:35:13.000
It's not a product integration, looking at kind of what's the best of, kind of each of these disciplines that we can be now kind of bringing into our organization in the right way.
00:35:13.000 --> 00:35:20.000
One of the, to me, one of the most important qualities of a leader, really of a human being, but of a leader,
00:35:20.000 --> 00:35:24.000
is humility. And if you surround yourself
00:35:24.000 --> 00:35:28.000
At an executive level with humble people.
00:35:28.000 --> 00:35:31.000
then you're going to ask those questions right away.
00:35:31.000 --> 00:35:36.000
In an acquisition discovery process, what do they do better than us?
00:35:36.000 --> 00:35:41.000
What are we missing? Where can we learn? I know we're the acquirer and maybe we're
00:35:41.000 --> 00:35:48.000
quite a bit bigger, but what can we learn from what they've done to reach the level of success they had that we're interested in acquiring them?
00:35:48.000 --> 00:35:55.000
And, um, and I think that's such an important part of the acquisition that you've just talked about because.
00:35:55.000 --> 00:35:57.000
Um, in most cases.
00:35:57.000 --> 00:36:03.000
that you're going to find that there are things that that target does better than you do.
00:36:03.000 --> 00:36:17.000
Yeah, I couldn't agree more. And I'd love to take us into a kind of other facet of business next in the discussion. And I know you mentioned you spent a lot of your career in finance, strategy, operations.
00:36:17.000 --> 00:36:34.000
But that also becoming CEO means kind of direct ownership of everything, and including go-to-market. And I think this is an area where I do see a lot of CEOs struggle to kind of wrap their head around it when they don't have a prior understanding. So I would love to hear from you, like, what have you learned
00:36:34.000 --> 00:36:41.000
About, you know, how a CEO without, like, a go-to-market background can be effective in leading that function.
00:36:41.000 --> 00:36:45.000
I'm still learning.
00:36:45.000 --> 00:36:47.000
I think…
00:36:47.000 --> 00:36:48.000
There's that humility we just talked about. I love it.
00:36:48.000 --> 00:36:53.000
Yeah, well, I've always been a very operations oriented.
00:36:53.000 --> 00:36:59.000
CFO, I love digging into the details, I love meeting with clients, I love sitting in on client meetings.
00:36:59.000 --> 00:37:01.000
And.
00:37:01.000 --> 00:37:04.000
And so that's always been sort of a
00:37:04.000 --> 00:37:08.000
I may be being curious has always been sort of a part of
00:37:08.000 --> 00:37:14.000
of what I enjoy doing as a CO, as a CFO and now as a CEO.
00:37:14.000 --> 00:37:19.000
So client-facing activity was not new to me.
00:37:19.000 --> 00:37:25.000
And I've seen really, really good.
00:37:25.000 --> 00:37:31.000
And I've seen average and less successful go-to-market teams over the years.
00:37:31.000 --> 00:37:33.000
And, um…
00:37:33.000 --> 00:37:39.000
And, and trying to sort of take the best of what I've seen and apply it.
00:37:39.000 --> 00:37:42.000
At, uh, at Stat and, and across STAT and Moresby.
00:37:42.000 --> 00:37:48.000
I think it's really important, particularly if you are selling into large enterprises.
00:37:48.000 --> 00:37:51.000
It's really important to have…
00:37:51.000 --> 00:37:53.000
to have a sales…
00:37:53.000 --> 00:37:55.000
process that everybody follows.
00:37:55.000 --> 00:38:01.000
Um, there's several of them that are popular and in.
00:38:01.000 --> 00:38:04.000
in substantial use, Medic and others.
00:38:04.000 --> 00:38:10.000
But whichever sort of sales process you follow and you and you sort of.
00:38:10.000 --> 00:38:15.000
believe in, um, you need to make sure your teams are trained in that, and then you need to make sure
00:38:15.000 --> 00:38:18.000
That, um, at the senior-most level.
00:38:18.000 --> 00:38:25.000
Um, those sellers know that that head of sales, that CEO, that CFO, are paying attention.
00:38:25.000 --> 00:38:31.000
Um, so one of the things I did at STAT is we started quarterly business reviews for our salespeople.
00:38:31.000 --> 00:38:35.000
And we've now done that for the last two quarters.
00:38:35.000 --> 00:38:41.000
And it's an amazing tool, giving each of those sellers the one opportunity that they have really.
00:38:41.000 --> 00:38:45.000
to reflect on history. Sellers are always looking ahead, forward.
00:38:45.000 --> 00:38:49.000
Um, but once a quarter now, they have to look back.
00:38:49.000 --> 00:38:55.000
What did I accomplish in the last quarter? How many deals did I close? What went wrong, and what could I have done?
00:38:55.000 --> 00:38:58.000
Differently, where did I need more support internally?
00:38:58.000 --> 00:39:04.000
And, um, and so I think it's really important, at least that one time, and hopefully more throughout.
00:39:04.000 --> 00:39:09.000
a quarter that an enterprise salesperson
00:39:09.000 --> 00:39:12.000
takes the time to sort of reflect on those things.
00:39:12.000 --> 00:39:20.000
And for me, it usually comes down to what additional tools do you need? What else can we do as an executive team?
00:39:20.000 --> 00:39:23.000
What can I do as CEO, pull me into those
00:39:23.000 --> 00:39:28.000
meetings where you think that having your CEO present.
00:39:28.000 --> 00:39:32.000
is going to answer some questions from the client.
00:39:32.000 --> 00:39:36.000
or get them to a level of comfort that maybe they weren't at previously.
00:39:36.000 --> 00:39:40.000
or create some other positive value for both of you and for the client.
00:39:40.000 --> 00:39:43.000
So I offer that and I do that.
00:39:43.000 --> 00:39:46.000
fairly often with clients. I love being in front of clients, so.
00:39:46.000 --> 00:39:49.000
Like I said, for me, it wasn't entirely new.
00:39:49.000 --> 00:39:52.000
But I think it really is having that process.
00:39:52.000 --> 00:39:54.000
and holding folks accountable.
00:39:54.000 --> 00:40:02.000
Under that process, um, and, and then being present, being in those sessions. A CEO who doesn't attend.
00:40:02.000 --> 00:40:06.000
the weekly or monthly or quarterly sales meetings, and isn't…
00:40:06.000 --> 00:40:12.000
Isn't seen around the sales department regularly.
00:40:12.000 --> 00:40:19.000
The message is that it's… that you're focused in other areas. It's less important to you.
00:40:19.000 --> 00:40:20.000
Yeah. Well, and then
00:40:20.000 --> 00:40:27.000
And obviously, the go-to-market engine is driving the business, or among the drivers of the business, and it's critical, and it's important that the CEO.
00:40:27.000 --> 00:40:31.000
is visible.
00:40:31.000 --> 00:40:41.000
Yeah, I think that executive presence is so important. And I think for, you know, it doesn't come as naturally to some, especially kind of on the customer or sales side
00:40:41.000 --> 00:40:58.000
But I think folks can underestimate how big of an impact they can have with the customer. I also think that question of where should a CEO get personally involved or own areas within go-to-market is one of those areas that can feel a bit
00:40:58.000 --> 00:41:17.000
you know, mysterious to folks, and, you know, when we're talking to customers, prospects, etc, I talk about, you know, the areas a CEO should be involved is kind of as little as possible, but there are key areas where they should be, and they need to make the time, and that's, right, the company's positioning
00:41:17.000 --> 00:41:34.000
involvement in messaging, understanding trade-offs of a plan. So both kind of, you know budget implications of if we don't do this, here's what we expect to happen. The sales and marketing alignment and any kind of shifts in what is sales being, kind of
00:41:34.000 --> 00:41:50.000
for what is marketing being kind of incented for, making sure that that is all aligned. And I think a lot of that comes back to the strategic priorities that you were talking about earlier, and then kind of being in the right conversations and some
00:41:50.000 --> 00:41:54.000
points, like, making the… the tough calls
00:41:54.000 --> 00:42:05.000
I'm curious to hear, kind of, from your day-to-day, and I don't know what kind of the leadership looks like in that function, but are there areas that you've found in that kind of planning where you've had the biggest impact with the team?
00:42:05.000 --> 00:42:11.000
Yeah, it's a great question. So we're structured where we have a, um…
00:42:11.000 --> 00:42:18.000
ahead of all sales who own sales, marketing, partnerships, sales operations.
00:42:18.000 --> 00:42:21.000
And under that gentleman,
00:42:21.000 --> 00:42:25.000
is a VP of sales and partnerships.
00:42:25.000 --> 00:42:27.000
Um, doing an amazing job.
00:42:27.000 --> 00:42:32.000
And, um, on the Moresby side of our business,
00:42:32.000 --> 00:42:39.000
We're in the process of hiring that that enterprise sales leader. Moresby was very fortunate.
00:42:39.000 --> 00:42:43.000
In their past, where, um, through referrals.
00:42:43.000 --> 00:42:46.000
Through clients leaving.
00:42:46.000 --> 00:42:49.000
A key individual had a client leaving and moving to another company.
00:42:49.000 --> 00:42:53.000
They never had outbound marketing and sales efforts.
00:42:53.000 --> 00:42:57.000
So that's a new muscle that they are exerting now.
00:42:57.000 --> 00:42:59.000
Uh, and building a pipeline that way.
00:42:59.000 --> 00:43:03.000
And so we're hiring an enterprise sales leader for that.
00:43:03.000 --> 00:43:06.000
business, to basically build out a lot of those processes and run that.
00:43:06.000 --> 00:43:13.000
But when I took this role in February, one of the first things I did is sit down with our head of sales.
00:43:13.000 --> 00:43:18.000
And consider how we were incentivizing our teams.
00:43:18.000 --> 00:43:25.000
And what we found was there were gaps in those incentives.
00:43:25.000 --> 00:43:27.000
We were incentivizing.
00:43:27.000 --> 00:43:30.000
our client experience teams,
00:43:30.000 --> 00:43:37.000
on retention, but we were not ex… forgive me, on expansion, but we weren't incentivizing them on retention, which is critical.
00:43:37.000 --> 00:43:44.000
And some of the incentives that we were… we had created for our salespeople.
00:43:44.000 --> 00:43:46.000
We're not having the intended
00:43:46.000 --> 00:43:49.000
Effect, and sometimes you design a sales plan.
00:43:49.000 --> 00:43:57.000
And you later realize from that sales plan that it drove a different behavior than you were attempting.
00:43:57.000 --> 00:44:02.000
to create. So we re-examine them, and, um…
00:44:02.000 --> 00:44:07.000
and others call it in the food chain of the sales cycle.
00:44:07.000 --> 00:44:13.000
And, um, and change some of those incentives. And it's been viewed very, very positively.
00:44:13.000 --> 00:44:15.000
By focusing in our company.
00:44:15.000 --> 00:44:19.000
Um, but sometimes you have to have a new perspective, and it just takes time.
00:44:19.000 --> 00:44:26.000
To do that, and you can't ever laminate it. You have to make sure that if something's not working.
00:44:26.000 --> 00:44:29.000
You're open and willing to going back.
00:44:29.000 --> 00:44:35.000
and making a revision that will sort of generate the right activity and behavior you're looking to create.
00:44:35.000 --> 00:44:37.000
Yeah.
00:44:37.000 --> 00:44:53.000
I could keep talking about go-to-market for the rest of our conversation, but I do have other areas I'd love to dive in with you. And I guess at this point, would love to hear a bit more about kind of the company and specifically, like, where you support
00:44:53.000 --> 00:45:01.000
Customers, and the theme of our podcast is transformation. So can you talk maybe about what are the kinds of transformations happening in your industry, and kind of where do you fit in?
00:45:01.000 --> 00:45:08.000
Yeah, so, so we have two business businesses that seem to be.
00:45:08.000 --> 00:45:10.000
Somewhat different from each other.
00:45:10.000 --> 00:45:15.000
Um, but I'll share with you how owning.
00:45:15.000 --> 00:45:18.000
The second business, the combination of Moresby and Stack.
00:45:18.000 --> 00:45:22.000
has forced us to look at our business through a different lens.
00:45:22.000 --> 00:45:27.000
So, the stat recovery business has been in operation coming up on 10 years.
00:45:27.000 --> 00:45:30.000
Um, two great founders.
00:45:30.000 --> 00:45:39.000
Blood and sweat, building the business and sold it to to a private equity firm, Cambridge Capital, about 2 and a half years ago.
00:45:39.000 --> 00:45:41.000
And, um…
00:45:41.000 --> 00:45:44.000
And, and, and the Moresby Group, similarly.
00:45:44.000 --> 00:45:50.000
Two great founders own that business for right around the same time, almost 10 years.
00:45:50.000 --> 00:45:55.000
And, uh, and they were acquired by Cambridge Capital and
00:45:55.000 --> 00:45:58.000
combined with STAT earlier this year, in January.
00:45:58.000 --> 00:46:01.000
of this year. Um…
00:46:01.000 --> 00:46:04.000
The, the stat business.
00:46:04.000 --> 00:46:06.000
has historically been
00:46:06.000 --> 00:46:17.000
In the business of what's called revenue recovery or at a base level deduction management. So.
00:46:17.000 --> 00:46:24.000
The consumer packaged goods suppliers into large retailers like Target and Amazon and Kroger and Walmart and others.
00:46:24.000 --> 00:46:28.000
Um, they are… they are sort of continually.
00:46:28.000 --> 00:46:30.000
hit with…
00:46:30.000 --> 00:46:35.000
With fees and penalties and deductions and chargebacks by the retailer.
00:46:35.000 --> 00:46:40.000
Um, many of them entirely appropriate, but others the result of human error.
00:46:40.000 --> 00:46:45.000
Um, that… that eat away at the margins of those.
00:46:45.000 --> 00:46:47.000
those CPG suppliers.
00:46:47.000 --> 00:46:53.000
Um, so, things like whether you've delivered something on time, or in full.
00:46:53.000 --> 00:46:55.000
Or to the right location.
00:46:55.000 --> 00:46:58.000
And.
00:46:58.000 --> 00:47:02.000
And, and if, if you don't do those things then
00:47:02.000 --> 00:47:05.000
Based on the magnitude of the size of the retailer.
00:47:05.000 --> 00:47:08.000
Um, it, it could create
00:47:08.000 --> 00:47:12.000
real problems in the warehouse for how they manage and handle those exceptions, so…
00:47:12.000 --> 00:47:17.000
There's a reason why they charge deductions to the clients to make up for some of the.
00:47:17.000 --> 00:47:21.000
costs of having to deal with those exceptions on a day-to-day basis.
00:47:21.000 --> 00:47:24.000
But as I said, there's oftentimes.
00:47:24.000 --> 00:47:27.000
these deductions are the result of human error.
00:47:27.000 --> 00:47:34.000
And so what we do is, uh, we've developed some proprietary tools over the last, coming up on 10 years.
00:47:34.000 --> 00:47:36.000
Where we help those suppliers.
00:47:36.000 --> 00:47:40.000
To recover the dollars that rightfully should not have been deducted.
00:47:40.000 --> 00:47:50.000
And in those cases, the retailers are absolutely willing and 100% proactive in delivering those dollars back to
00:47:50.000 --> 00:47:56.000
to our clients. Retailers want clean books as well. It's not… it's not a one-way street here.
00:47:56.000 --> 00:48:00.000
So our clients get their dollars back,
00:48:00.000 --> 00:48:02.000
And, um,
00:48:02.000 --> 00:48:09.000
And the retailers get it cleaned up off their books. That's the stat business. We serve the suppliers into the retailers.
00:48:09.000 --> 00:48:14.000
On the Moresby side of the business, as I said, it's a bit of a different business. Moresby.
00:48:14.000 --> 00:48:23.000
works with Fortune 1000 companies. Their typical client is north of $20 billion in annual revenue.
00:48:23.000 --> 00:48:28.000
And their typical client has a very high cost of sales, so a.
00:48:28.000 --> 00:48:30.000
A consultancy business,
00:48:30.000 --> 00:48:36.000
or a software business where their largest expense is people wouldn't be a great client.
00:48:36.000 --> 00:48:40.000
for Moresby, and they probably wouldn't use Moresby's service.
00:48:40.000 --> 00:48:43.000
But for distributors and manufacturers.
00:48:43.000 --> 00:48:46.000
Healthcare.
00:48:46.000 --> 00:48:53.000
hospital groups where they have a high cost of sale, they're buying a lot of equipment, or they're, they're.
00:48:53.000 --> 00:48:57.000
They're buying lots of services and products to support their business.
00:48:57.000 --> 00:49:00.000
Those are the better candidates. And so.
00:49:00.000 --> 00:49:03.000
Um, those companies are often.
00:49:03.000 --> 00:49:06.000
Um, under the most margin pressure.
00:49:06.000 --> 00:49:12.000
And those companies are often in the midst of some type of a cost transformation exercise.
00:49:12.000 --> 00:49:15.000
And so, what the Moresby Group does.
00:49:15.000 --> 00:49:17.000
is works with those clients.
00:49:17.000 --> 00:49:21.000
To to negotiate.
00:49:21.000 --> 00:49:23.000
Um…
00:49:23.000 --> 00:49:28.000
Payment terms and payment price, purchase price.
00:49:28.000 --> 00:49:31.000
For the long tail of their supplier base.
00:49:31.000 --> 00:49:36.000
So if you think about of a fortune 500 or 1000 company,
00:49:36.000 --> 00:49:44.000
Maybe they're global in all likelihood, maybe they've got 15, 20, 30,000 different suppliers around the planet.
00:49:44.000 --> 00:49:54.000
And in most cases, they have really seasoned and robust procurement teams. They have to, to be that size.
00:49:54.000 --> 00:50:02.000
Those procurement teams are not actively managing those 25,000 or 30,000 suppliers. There's a bit of the 80-20 rule. They might be managing.
00:50:02.000 --> 00:50:07.000
20% of the suppliers that are 75-80% of the spend.
00:50:07.000 --> 00:50:15.000
And the rest of them, in many cases, they don't have contact information. They're not exactly sure what they're buying. It's done at a local office in Antwerp, Belgium.
00:50:15.000 --> 00:50:18.000
Um, and… but…
00:50:18.000 --> 00:50:26.000
These, in total, this 20% or 30% of the spend could be 2, 3, 5 billion dollars in spend.
00:50:26.000 --> 00:50:32.000
So, it's an enormous amount of dollars that they just don't have the bandwidth to pay attention to.
00:50:32.000 --> 00:50:35.000
And Moresby has developed proprietary processes.
00:50:35.000 --> 00:50:38.000
that enable them to vet that.
00:50:38.000 --> 00:50:42.000
group of long-tail suppliers determine where they're likely to have.
00:50:42.000 --> 00:50:47.000
The greatest opportunity for success in renegotiating purchase price or payment terms.
00:50:47.000 --> 00:50:54.000
And then actively managing those negotiations on behalf.
00:50:54.000 --> 00:50:55.000
Hmm
00:50:55.000 --> 00:50:58.000
of the client. And they'll do so as part of the client.
00:50:58.000 --> 00:51:02.000
And so that's their business. Now, when we combine the two together.
00:51:02.000 --> 00:51:10.000
Um, they're very different. Moresby sells to sea level. They sell to the CFO, to the chief procurement officer, the chief supply chain officer.
00:51:10.000 --> 00:51:14.000
At STAT, we tend to sell to the VP of Sales.
00:51:14.000 --> 00:51:21.000
or to a… to maybe a director level or VP of accounting.
00:51:21.000 --> 00:51:23.000
Um, so a different…
00:51:23.000 --> 00:51:26.000
Client profile that we're selling to.
00:51:26.000 --> 00:51:33.000
Um, so it doesn't… it doesn't immediately seem obvious how you'd put those two together. But when we think about the two businesses.
00:51:33.000 --> 00:51:38.000
Together, then we view them through the lens of.
00:51:38.000 --> 00:51:42.000
We are a margin defense system collectively, or we are a.
00:51:42.000 --> 00:51:45.000
The profitability…
00:51:45.000 --> 00:51:48.000
partner to the office of the CFO.
00:51:48.000 --> 00:51:53.000
And when you look at it through that lens, you could consider a number of additional capabilities.
00:51:53.000 --> 00:51:58.000
that we could provide our clients that would be enormous value to them.
00:51:58.000 --> 00:52:04.000
And so that's how we're thinking about it. We like to say we need to earn our way into becoming a platform.
00:52:04.000 --> 00:52:09.000
These two single-point solutions we have, one specifically helping CPG suppliers,
00:52:09.000 --> 00:52:11.000
The other, helping…
00:52:11.000 --> 00:52:16.000
the largest companies in the world that have heavy cost of goods sold.
00:52:16.000 --> 00:52:18.000
They're not necessarily compatible yet.
00:52:18.000 --> 00:52:22.000
To build a platform around. As I said, two single-point solutions.
00:52:22.000 --> 00:52:24.000
But eventually, we will…
00:52:24.000 --> 00:52:32.000
put more products and features around them and earn the right to call ourselves a platform. And that's the direction we're headed.
00:52:32.000 --> 00:52:49.000
Yeah, yeah, so interesting. And I like that overall kind of umbrella positioning because I think it was we were talking earlier about strategic priorities, kind of putting yourself in the right category. And it doesn't mean we have to solve kind of all the things within that category, but it kind of helps with that roadmap and to prioritize
00:52:49.000 --> 00:53:07.000
Both for product team, kind of what goes in next? Where do we focus on, but also paint that vision, I would imagine for sales and marketing to kind of hear the right things when they're in sales conversations and bring the right kind of market feedback back to kind of help inform that.
00:53:07.000 --> 00:53:08.000
Thank you for sharing that.
00:53:08.000 --> 00:53:12.000
You know, Natalie, it's funny, though, even though these businesses are seemingly so different from each other.
00:53:12.000 --> 00:53:15.000
We at STAT have been asked,
00:53:15.000 --> 00:53:19.000
If we will negotiate for suppliers. And Moresby has been asked.
00:53:19.000 --> 00:53:21.000
If they handle deductions.
00:53:21.000 --> 00:53:29.000
just in the day-to-day of their negotiations. So, there is even that little bit of overlap already.
00:53:29.000 --> 00:53:35.000
And it will become more relevant for us as we build out a shared data layer, intelligence layer,
00:53:35.000 --> 00:53:38.000
and start to enrich.
00:53:38.000 --> 00:53:40.000
each other's data with the other.
00:53:40.000 --> 00:53:48.000
And, um, and start to be able to provide more insights to our clients. So we're really excited about the changes that are coming for our businesses.
00:53:48.000 --> 00:54:08.000
Yeah, yeah, well, it does sound exciting. And I know, Mark, we're nearing the end of our time. I would love to kind of hear a little bit more about you personally and maybe take us back to your childhood. Are there any kind of stories or experiences that really shaped kind of who you became kind of as an adult in your career
00:54:08.000 --> 00:54:12.000
I'm not sure many that I want to share publicly, but…
00:54:12.000 --> 00:54:17.000
You know, I was born and raised
00:54:17.000 --> 00:54:22.000
Uh, in New York, um, out east on Long Island in a very, sort of,
00:54:22.000 --> 00:54:25.000
Uh, safe and middle class sort of upbringing.
00:54:25.000 --> 00:54:27.000
And, um…
00:54:27.000 --> 00:54:34.000
Uh, decided to go to college down south at the University of Miami on a, on an academic scholarship, and then I
00:54:34.000 --> 00:54:36.000
went to, uh, to law school.
00:54:36.000 --> 00:54:39.000
And I did that on the West Coast. Most lawyers.
00:54:39.000 --> 00:54:45.000
uh, tend to work around the area that they end up going to law school in and I thought, well.
00:54:45.000 --> 00:54:48.000
California seemed really nice at the time.
00:54:48.000 --> 00:54:55.000
Um, so, uh, I met my wife in California, and we moved up to the Bay Area and lived there for almost 30 years.
00:54:55.000 --> 00:55:01.000
Um, and, um, and everything that I was involved in, either as a lawyer or.
00:55:01.000 --> 00:55:05.000
In, in business has been technology related.
00:55:05.000 --> 00:55:08.000
Um, I just enjoy that, and I enjoy not only.
00:55:08.000 --> 00:55:11.000
Um, the technology itself,
00:55:11.000 --> 00:55:15.000
And I'm not a technologist, but it's always fun and interesting for me to be around that.
00:55:15.000 --> 00:55:19.000
But the passion of the entrepreneurs and the people.
00:55:19.000 --> 00:55:26.000
involved in these businesses that in many cases really believe that they are changing lives, and they are making things that are better for people.
00:55:26.000 --> 00:55:31.000
And that, for me is so inspiring to be around. I just love that.
00:55:31.000 --> 00:55:33.000
Um, and so.
00:55:33.000 --> 00:55:40.000
You know, I've really tried to put myself in positions over and over again to find those types of situations and.
00:55:40.000 --> 00:55:42.000
the industries that I've been involved in,
00:55:42.000 --> 00:55:48.000
Um, don't have a lot of consistency. They sort of span different areas of software and hardware.
00:55:48.000 --> 00:55:51.000
But for me, the one thing that I've always looked for
00:55:51.000 --> 00:55:54.000
Is the people and that passion.
00:55:54.000 --> 00:55:56.000
And what are they building and why?
00:55:56.000 --> 00:56:04.000
And there's a connective tissue between those answers to those questions and the various companies that I've been a part of.
00:56:04.000 --> 00:56:12.000
I love that. I mean, I do will say, like, passionate energy is infectious, right? So anytime you can put yourself around that, that's a… that's a positive.
00:56:12.000 --> 00:56:13.000
100%.
00:56:13.000 --> 00:56:23.000
And I'd love to ask Mark, what would you say is the best piece of advice you've been given, whether in a business or personally, that still shapes you?
00:56:23.000 --> 00:56:25.000
There's a lot of them.
00:56:25.000 --> 00:56:29.000
Um…
00:56:29.000 --> 00:56:33.000
I think it's something we've talked about already, and that is, um…
00:56:33.000 --> 00:56:37.000
That, that people hear things differently from each other.
00:56:37.000 --> 00:56:40.000
And it's really important to make sure
00:56:40.000 --> 00:56:44.000
that if you want to include a larger number of people,
00:56:44.000 --> 00:56:47.000
in an understanding of a particular topic or action.
00:56:47.000 --> 00:56:50.000
That you really think
00:56:50.000 --> 00:56:55.000
How can I, how can I act and, and speak about what we need to do.
00:56:55.000 --> 00:57:00.000
In a number of different ways, so that I pull in the most number of people.
00:57:00.000 --> 00:57:04.000
Uh, to make sure that they understand it.
00:57:04.000 --> 00:57:15.000
Well, thank you for that, and thank you for so eloquently bringing us full circle to where we started the discussion. As we do wrap up the conversation, can you tell our listeners how they can reach you if they want to get in touch?
00:57:15.000 --> 00:57:27.000
Yeah, absolutely. Um, you can find me through either Moresby or Stat at mark at statrecovery.com. Very easy to find me.
00:57:27.000 --> 00:57:39.000
Wonderful. Well, thank you. I really loved this conversation, and there's so much that I enjoyed talking about, but especially the way we started with your experience at Fabrinet and how that kind of
00:57:39.000 --> 00:57:46.000
Brought the importance around thinking of alignment and communication and all the themes that we've been talking about. So thank you so much for that.
00:57:46.000 --> 00:57:49.000
Thank you, Natalie, I've enjoyed it.
00:57:49.000 --> 00:58:06.000
I have as well. And thank you too to everyone who's listening. If today's conversations parked something for you, and I am sure that it did, please pass this along to another leader because we know that insights like this fuel fresh thinking for all of us and help us drive real transformation in our companies and in ourselves.
00:58:06.000 --> 00:58:14.000
Thanks again, Mark. And this has been another wonderful conversation on Shift and Thrive. I'll see you all next time.
00:58:14.000 --> 00:58:16.000
Wonderful. Thank you, Mark.
00:58:16.000 --> 00:58:17.000
You're very welcome. You do a great job at that, Natalie.
00:58:17.000 --> 00:58:22.000
That was great. You're a pro at this.
00:58:22.000 --> 00:58:23.000
That was fun.
00:58:23.000 --> 00:58:27.000
Yeah, I appreciate you having me and, um…
00:58:27.000 --> 00:58:34.000
And, you know, I, I learned from every one of these conversations, you, uh, you do a really good job.
00:58:34.000 --> 00:58:35.000
Oh, thank you.
00:58:35.000 --> 00:58:37.000
at framing the discussion, so I appreciated that.
00:58:37.000 --> 00:58:47.000
Well, thank you. I love it. And just to share next steps. So I think your episode is getting released next week on Wednesday.
00:58:47.000 --> 00:58:52.000
So by Wednesday morning, it should be out in all the podcast networks
00:58:52.000 --> 00:59:10.000
And we will send you an email Wednesday morning with the links. We'll have a social post on LinkedIn with a video clip of something that you shared during the conversation so we can promote that. And I always say, if there's any other kind of video footage or anything else from the conversation that's helpful to you, just reach out. Happy to
00:59:10.000 --> 00:59:12.000
share that as well
00:59:12.000 --> 00:59:18.000
And if you know anybody else that you think would be an interesting guest on the show, please let me know now or in the future.
00:59:18.000 --> 00:59:21.000
I will, I will definitely do that, ok, thank you so much.
00:59:21.000 --> 00:59:23.000
Wonderful. Thanks so much. Have a good rest of your day.
00:59:23.000 --> 00:59:25.000
You too, bye-bye.
00:59:25.000 --> 00:59:27.000
Bye-bye.
