In this deep dive, we explore the candid journey of a CEO's fight for profitability, the hard lessons of past years, and the strategic pivots that set the stage for a promising 2024. From grappling with financial challenges and organizational changes to making tough decisions that would shape the future, this conversation sheds light on the resilience and adaptability required to navigate the turbulent waters of business leadership.
- What You'll Learn:
The common pitfalls most CEOs face and how to avoid them
Strategic decisions that led from unprofitability to a promising outlook for 2024
Insights into balancing growth with financial sustainability
The importance of aligning investments with core business strengths
Techniques for fostering a motivated and high-performing team
- Timestamps:
0:00 - Introduction
2:15 - The Biggest CEO Mistakes
5:40 - Turning the Tide: Profitability in 2024
10:20 - Strategic Investment and Cost Management
15:35 - Building a Team That Drives Success
20:50 - Predictions for 2024 and Beyond
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Andy Mewborn:
You know, I asked him like, what's the one thing that like most CEOs get wrong?
Sam Jacobs:
When you question things, people push back on you.
Andy Mewborn:
As the founder and CEO of a company, you can do what you want.
Sam Jacobs:
And that's OK. Obviously, that's good.
Andy Mewborn:
But what the hell is going to happen in 2024? And I'll just open it. I have some ideas, man, but I want to hear what you think is going to happen in 2024. What are your predictions there?
Sam Jacobs:
My predictions are that 2024, particularly in contrast to 2023, is going to be a really good year. And I think a lot of, I think it's, I don't know what, I mean, you're, you're an earlier stage in your business. So, you know, maybe all of it's up and to the right at this point, but it's 2023 was a really hard year and a lot of hard lessons were learned. And I think, We've got another two years of applying those lessons before we get stupid again. And so I feel pretty good, is the honest truth.
Andy Mewborn:
I had to find stupid again.
Sam Jacobs:
Spending too much money on stuff that doesn't work, overpaying people, and not caring about profitability, and over-indexing. It doesn't mean growth isn't important. Growth is still the number one driver of enterprise value. it has to be at the right price, and I think obviously we all got used to not doing the math on what that price should be in terms of how much we need to spend in order to justify the growth. But I think we learned that lesson, or many people learned that lesson this year, and I think a lot of people are putting pretty conservative plans in front of their boards, and they feel pretty confident about beating or exceeding those plans. Certainly that's my situation. My situation is, my business is in much better shape today by a million miles than it was 12 months ago. And it's far more coherent, and it makes a lot more sense strategically, and our customers are happier, and our investments are in the right place, or I feel like much closer to the right place. And so for us, you know, we were unprofitable the last two years, and we're profitable, effective, you know, Jan one, we're profitable, which is great.
Andy Mewborn:
How, how'd you, how'd you do that? And it's probably a stupid question. Like, how, how'd you go from unprofitable or two years to profitable? And I know that there's the obvious stuff like cut head count and all that stuff, but like, what was the, what, what was your thinking in prioritizing what to cut?
Sam Jacobs:
Well, the, um, it's more like, uh, how did we go from being profitable, super profitable in 2020 to very unprofitable in 2021 and 2022. And that informs what we did to get back to profitability. And, and, um, you know, I've written a little bit about this, but basically I raised money two years ago, two and a half, 2024. So it'll be almost three years ago, two and a half years ago, almost three years ago. And immediately made three big bets or, you know, I don't know, like immediately, but like pockets of investment began to grow. And so those three investments were a large B2B sales organization. selling corporate memberships, a large learning team to develop content for courses and curriculum delivered through Pavilion University, and then a product and engineering organization to build out our own software. And I was under the impression for the last two years that I couldn't have this company if I didn't have my own software. And so we made, so first thing that we did was because we sold all these corporate memberships right heading into the recession, they ended up not renewing. And the math was just upside down on the business. And so we cut way back. on the sales team and really today we have one full-time person that sells all the new business and closes all the new business or closes all the renewals for our corporate sales effort and then we have two corporate success managers working under them but we had a much much bigger team before. And so, one, that happened in March, and that was sort of step one, but step two was me coming back from actually a guy's weekend in July, and realizing, because our head of finance at the time, who's no longer with us, paid a bunch of bills early. And we were supposed to be getting to break even, and I just realized that we were not close to break even, like it was not happening. And I just kept looking at the P&L and comparing every year over the last couple of years and realizing that, and then looking, and then we began to look at other software providers and realizing like, what are we doing? Like trying to build our own software. We're going to build our own community portal. Like community portals are a commodity product and there's five different options available. All of them will be better than what we're going to build. And I just realized that we need to focus on what we're really good at. What we're really good at is community, what we're really good at is learning, and what we're really good at is events. And so that's what our business is. And so two months ago, I fired the entire product and engineering organization. And that was, you know, unpredictably, Glassdoor got blown up. You know, one of the engineers wrote a really mean review of my book on Amazon. Oh no.
Andy Mewborn:
That hurts more than anything, right?
Sam Jacobs:
I mean, she put her name behind it, so I appreciate that she sort of stood behind her words. And it's objectively hilarious. You know, she's like, this book is an insult to books. It's better to collect your dog's waste in your backyard than reading this book. It's better to get your blood drawn waiting in line at the DMV. I disagree.
Andy Mewborn:
That's a bird.
Sam Jacobs:
I know. I was like, that's really mean. It's funny, but it's still mean.
Andy Mewborn:
That is mean. Oh my gosh. Wow.
Sam Jacobs:
But I'll tell you though. And then there's this other part that, you know, again, as you add more people, Andy and your company grows, The thing that had happened to me was that for a bunch of different reasons, right? But I had allowed mediocrity into my company. We were not a team of all A players at all. And not only were we not a team of all-A players, we actually weren't even a team of people that were particularly interested in the space that we serve, which is go-to-market executives. And so while we're doing these big strategic decisions of, like, we're not going to have product and engineering, there's also, like, also, let's up-level the quality of the people here, and let's be more rigorous around who we hire. And so the other thing that's happened is I've begun, especially, and the insight I would share is at the director level, which is a way of the frontline manager level and maybe slightly above, but not the VP, but the people under the VP that are doing the hardest part of connecting the strategy to the actual work. I found some incredible people for those roles over this past year, and you feel the business moving faster. And it's wild. For the whole time I've been doing this, you know, we have growth targets and I was always the one most, I mean, all this year, I was the one that was most terrified about not hitting them. I felt like I was doing through my LinkedIn, like I was doing basically all of the selling. And we finally hired an amazing director of demand, Jen. And it's just I go to sleep. I don't worry about it. He's one of those people like you and me that if he doesn't hit his number, he doesn't he can't live with himself, which is fantastic.
Andy Mewborn:
Come ask you for a raise. He gets paid well, he gets paid well.
Sam Jacobs:
But yeah, it's when you have those people, you know, there's this phrase you can't put in what God left out. Like when you have self motivated people,
Andy Mewborn:
Yeah.
Sam Jacobs:
Yeah. You and especially if you've been working with people that aren't particularly self-motivated and somebody comes in and you don't have to kick them in the ass, they're kicking themselves in the ass. They want to be great at what they do. Yeah. That is leverage.
Andy Mewborn:
How do you test for that? Like, is it a luck thing? Like, how do you personally do that? Like to say, is this person going to kick ass without everyone, like lighting a fire under the roof?
Sam Jacobs:
I think you can call it case studies, but I'll tell you when I knew to hire this particular person. This particular person, Director of Demand, Jen, he's telling me about how he's leveraging the OpenAI API and pulling customized persona-based messages into Salesforce that the SDR team can then deploy. And he built all of it himself using Zapier. And I said, okay, show me, show me, do a screen share. And so he did a screen share. And he walked me through the flows that he had built in Zapier and what he was doing with the And it was clear that he was doing it himself, that this was not like, he wasn't sitting there putting together PowerPoint presentations. He was somebody that knew how to do the work and get his hands dirty. And he showed me that he knew how to do it. And that's, I was like, all right, you're hired. What do you want? Wow.
Andy Mewborn:
Yeah.
Sam Jacobs:
It's the kind of people that you just got to keep probing on specifics. The people that cannot answer detailed questions about their work at, you know, mid level, meaning like a director level, you got to avoid those people because those are the people that they're just used to bullshitting you. And there's a whole contingent of bullshitters out there that really have never had their bullshit called. And so you just got to keep pushing and be like, show me, show me, show me, show me.
Andy Mewborn:
Yeah. We call those just yappers.
Sam Jacobs:
There's a lot of yappers.
Andy Mewborn:
There's a lot of yappers out there, man. Wow. You know what? That's, that reminds me, I saw this like on, I don't know, on Instagram or something, Brian Chesky, the, you know, the Airbnb. Yeah. Airbnb. And there was this viral thread that like really hit me. And he did an interview. Who was he doing an interview with? Maybe it was Lex Friedman or something. Someone will correct me in the comments, but. He basically, your situation reminds me of his, where he's like, I felt like everything was getting away from me as we were scaling. And he goes, you know, I believe in not micromanaging, but being involved in the weeds and everything. And I felt like because I got away from that, we were suffering. And he said, I mean, he was more eloquent with it than that, but basically that was it. And he's like, I needed to be closer to everything. And, you know, the specifics of how he did that, I don't know, but basically he was like, I needed to be like micromanaging the product, what was going on, like, and be more involved. And so this kind of reminds me of that, right?
Sam Jacobs:
There's a thing that happens where as the organization grows, again, and some of this is specific to like the last couple of years where candidates and employees had the power, right? And they were paid a lot of money and SDRs were making 70, 80 base with no experience out of college. But there's this thing that happens where you start, when you question things, people push back on you. And that's okay. Obviously that's good. But where your intuition and your judgment, where you feel like you're almost being, you're, you almost are scared to listen to your intuition. And I think almost that's what Chesky is talking about to a certain extent is, you know, you don't want to overrule somebody because like a great sales, you know, VP of sales, you don't want to close the deals for them. So you need to let them fail. But you're getting kind of signals of feedback and you don't agree with them. You don't agree maybe with people that you're hiring, but you're like, well, I don't want to stand in the way. I need to trust my hiring managers. And maybe you're getting feedback on your values and you're like, well, I don't want to stand in the way. I want the values to be collaborative. And, you know, you're getting feedback on, you know, certain decisions and the way that the company's organized. And you feel like, well, I put these people in place. I need to let them. And there's a point at which you realize, like, that's all true. You want to empower your your leaders, but you are allowed to make calls as the founder and CEO of your company. You are allowed to say, yeah, we're not going to hire that person. And yeah, that person can't work here. Why not? Because I don't think they're smart enough, that's why. And you're allowed to do that. And you, there's a period, I think, when the organization is growing, when you feel you forget that. And it doesn't mean micromanage necessarily, it just means if you have a, my chief of staff called me over the summer, because we just, we parted ways with two people, where during the interview process, I said, I don't think we should hire those people. And they said, we think we should hire them. I said, okay, hire them. And they both turned out poorly. And she said, I need you to listen to your gut more. And I need you to overrule us when we're pressuring you because your intuition is good on these people.
Andy Mewborn:
Yeah. Yeah. And, you know, I interviewed Brian Long a couple of weeks ago, the founder of attentive and, uh, he was on the pod and he said something very similar to, which is interesting. You know, I asked him like, what's the one thing that like most CEOs get wrong? You know, um, and you know, his company is doing 500 mil or whatever. Yeah. Tentative is huge. Yeah. Huge. And he goes, you know, it's that as, as the founder and CEO coming, you can do what you want. And he goes, people, and he goes, people forget that. And he goes, I'm not saying that to be like, I don't know what I'm saying. That's because in a dictator way, I'm saying that in a way, as he mentioned, to trust your intuition. And, you know, you've been here for a while. You have good feelings about what you have good intuition about what's going on. And you should say, no, we're changing the direction. And this is the direction we're going because this is it. And that's your job, right?
Sam Jacobs:
Yeah. I mean, your job is still to communicate well. Yeah. And your job is still, you know, Matt Blumberg, who runs a company called Bolster and was CEO of Return Path. He's like, you can do anything you want. But how you do it matters. And I think that's true. But fundamentally, I agree with what you're saying, which is you have a right to make these decisions. That's OK. Yeah.
Andy Mewborn:
Yeah. And I think I don't know about you, but, you know, sometimes I get in this headspace where I'm a people pleaser, you know, and that in some ways that's helpful. But in other ways, that's like it could hurt you, like in these situations where you just want to agree with people. Uh, you know, and, and yeah, um, I have a situation recently we have, we have like, you know, our team is like six or seven now. And, uh, with that, you know, we, we, we had something going on and, and, uh, I noticed myself today doing it. And I was like, oh, I'm just going to let them do it, like make the decision. But I was like, I don't really agree with it. And then I thought about it for an hour. I went on a run and then I said, no, fuck that. I'm going to come back. I said, no, this just isn't right. You know? And guess what? At the end of the day, it was fine.
Sam Jacobs:
Again, this isn't like trying to create assholes, but I would encourage, I would underscore that point that you have a right to name the behaviors that you do not agree with. You have the right to name the decisions you do not agree with. You don't have to do anything that you strongly don't agree with. Now, if you don't have a strong opinion, I would probably say delegate to your team and let them figure it out. But I talk about this all the time in our CEO community, which is, and we talked about this at a dinner that we had in November in New York, which is you have a right to name the behavior. You have a right to tell somebody, this is what's expected from you. This is what I expect. If you can't do this, you can't work here, but this is what I expect.
Andy Mewborn:
Yeah. I mean, same goes in all relationships, too. Yeah, of course. Marriages. Clarity. Clarity helps. Yeah. Right. Just like knowing those expectations. And you know, it's funny. This brings up a good point where it's like, I have an 18-month-old now, and my wife and I read these children or parenting books and stuff like that. And the more I read parenting books, the more I'm like, we get older in age, but we're still all just toddlers. All the stuff you read in parenting books are business books in disguise. Like they really are. Like that's what I've been noticing. I'm like, holy shit. Like this works for adults too. You know, and it's pretty interesting. And so I'm like, huh, like maybe like everyone that's like a business book guru should just read these parents books that I honestly think I get more out of those a lot.
Sam Jacobs:
All right.
Andy Mewborn:
Well, give me a recommendation. I'll send you one over. I'll send you one over the one we're reading now, which is interesting. But yeah. So thanks for sharing that, Sam. And I think, you know, as you dove into that, I think a lot of people we talk about a lot of the successes, you know, on LinkedIn and our feeds to get the likes and the comments and the shares and the blah, blah, blah, blah. But like under the hood, The stuff that goes on is like not sexy. It's not fun. It's not it's none of that. And how do you like deal with your mental psyche as you go through all this? Did you have like a coach? Do you meditate? Do you do one of these things? Like what do you do to make sure you're not like freaking going crazy when you're doing all this?
Sam Jacobs:
I do a lot of drugs, just a tremendous, non-prescribed, illegal, every orifice. I'm kidding. The number one thing I do is exercise. You just said go for a run. Running saved my life in a number of ways. I have a good day sheet that I'm looking at right now. There's, these are the activities. The activities on this are read, like read a book, not Twitter, write long form, exercise, meditate, drink lots of water and find somebody else to help.
Andy Mewborn:
Oh, and that's your good day formula.
Sam Jacobs:
Yeah, that's the formula. I don't do it every day. And if I had to distill it down to one thing, it would be exercise. But really, what I would do is, and you know, the book recommendations I would give to people, the biggest one is The Power of Now by Eckhart Tolle. And then The Untethered Soul by Michael Singer, Springer, whatever his last name is. But the big theme, the theme for me is go slow, is slow down. And when I'm on tilt, it's because I'm clicking around, I'm doom scrolling, I'm not paying attention, I'm on a zoom but I got three other tabs open, I'm answering slacks, I'm not present. And that's why reading books, writing long form, I don't mean typing, I mean writing with your hand. All of those things are just ways of forced meditation. It's all ways of being like, dude, slow down, slow down. Everything's fine. And that helps a lot, you know? And then, you know, the last thing I'll say is like, if something's bothering you, the worst thing you can do is is just sort of like, live with it without defining it. You know, just like it's anxiety, but you haven't confronted it. I had all this anxiety, you know, over the summer about running out of money and going out of business. And the thing that got me out of that, and that's not because we were like down to $50 in the checking account, but it was because my investor said, listen, at this growth profile, unprofitable, there's no value. You know, the value is zero, which is another way of saying you got to fix this. And the way that I got out of that is by staring at the P&L and fixing it. And it sucked. And I had to fire a bunch of people. But I'm glad I did. Yeah. Yeah. And I'm glad to be at the position. Last thing I'll say, because probably have to run a year ago, I logged into bill.com and, you know, sort of like all of our bad decisions had been compounding. And so it was December 31st, New Year's Eve. And we had we had more accounts payable than we had the cash, but it was a terrifying number of bills that we owed. And that's how the year started. And the year started by me slacking my head of finance and freaking him out on December 31st and being like, what the hell are you doing? And that was the year. And I can tell you that that is not the way we're heading into 2024.
Andy Mewborn:
Yeah, hopefully not.
Sam Jacobs:
It just feels so good. It feels so good to have done the work and know that that's not how New Year's Eve is going to be this year.
Andy Mewborn:
Yeah, it's going to be a lot better, man. Well, it was a good discussion, I think. Hit you up soon, man. Have a good holiday too.
Sam Jacobs:
You too. Happy holidays. Talk soon.
