Welcome to episode 12 of the SaaS Backwards podcast, where we interview CEOs and CMOs of fast-growing SaaS firms to reveal what they are doing that's working, and lessons learned from things that didn't work as planned.
This episode features an enlightening conversation with business transformation change agent Michael Richardson, founder and managing director of Tech-Azur, a consultancy providing support for digital business transformation initiatives, scale-up operations and c-suite advisory.
You can listen to the full episode directly below or wherever you listen to podcasts.
Transcript below is edited for clarity and readability
Host, Ken Lempit:
Welcome everyone to this episode of SaaS Backwards. This is a podcast for SaaS CEOs and CMOs to help them accelerate growth and increase profitability in their organizations. Today our guest is Michael Richardson. He's the founder and managing director of Tech-Azur. Tech-Azur is a really interesting executive consultancy and implementation service. Michael, I’ll let you introduce yourself briefly and tell us about Tech-Azur and position it for our listeners.
Michael Richardson:
Thanks for having me on today, Ken.. I founded Tech-Azur about 12 years ago after spending a few decades in successive CXO, CIO, COO, CTO kind of roles and realizing that what I really gravitate to is the business transformation that takes place at each growth stage in every kind of company. And when I think of the SaaS space, there are some very defined stages of growth and evolution that need to take place to become successful and grow. And so I've focused over a decade now on helping organizations like this to see around the corners, apply lots of experience so that they don't have to learn everything the hard way, and work together with resources that I've put together in a global ecosystem. So I tend to think of this as business transformation, change agent, virtual executive at the table that brings a delivery capability of proven offshore teams and methodologies for business transformation that are designed to help organizations.
Ken Lempit:
So business transformation. We need to make that a little real for people. And I think that in the life of a SaaS, there are kind of milestones that create the need to change the organization's capabilities, right? So maybe you could talk a little bit about what business transformation means from your perspective and why is it that a CEO or board would seek out capability to help them make that move.
Michael Richardson:
Organizations tend to focus, especially in the SaaS space, on their customers, which is intelligent, and on their platform, which is essential. But operationalizing themselves as an organization in order to grow and scale is a consistent blind spot for SaaS organizations that are growing. So I tend to think of it this way, what got you funded won't get you scale from an operational perspective.
Ken Lempit:
I might have to steal that. I think that kind of perspective, especially if you're a first- time CEO, you may not know what you're going to need on the other side of that funding round.
Michael Richardson:
Exactly right. And you shouldn't feel bad about any of this as a founder or a CEO or CTO or that core team that came up with the next great thing. You should be proud of what you've accomplished with your SaaS platform and maybe some early customer success and impressing some investors. That's all really hard work. The missing piece though is that most people that are good at those things are not necessarily skilled on operationalizing the activity. That tends to be a secondary thought and very often left up to the next round of people that are going to join the team. So that's where we help focus.
We're not there to tell you how to build your SaaS product. Our belief is that you've become the domain expert in the solution space that you're serving, but because of that focus you're probably going to need some help in growing into that space and taking it over as a fully functional and smooth-operating organization.
Ken Lempit:
That's consistent with what we tell CMOs and CEOs as well, that they're going to have to grow the organization across many areas of expertise. As you said, it's okay not to be expert in everything. And in fact, maybe that's a good segue to talk about why would a board or a CEO seek out an organization like yours. What's the reception like on the other side because if you're a CEO, a founder, and you're supposed to be the hot shot? Now, all of the sudden you're saying, "Hey, well, I don't know everything I need to know." Is that a hard or easy conversation? And how have you seen that play out?
Michael Richardson:
Well, I think that's a really interesting point because it is a bit of a dichotomy when you're presenting to the investors or other stakeholders or even strategic customers and channel partners. There is that inherent desire to seem like Superman. You want to be perfect. You want to be bringing the silver bullet to the marketplace. But you have to realize that the investors that you've brought on are also professionals. They've seen them come. They've seen them go. So there's no illusions there about perfection.
One of the things that we talk about in business transformation is this notion of continuous improvement. So it's not the search for perfection, it's the search for better. And it's okay as a founder, as the founding team to recognize the soft spots in the plan and shore those up. In fact, I think when it's done right in front of those stakeholders, it actually shows a maturity and a realism about how you plan, how you execute. So you can actually turn what you might feel as a vulnerability into a strength.
And that's where we can come in by helping address some of those things. And we can do that at different levels. We can do that in the foreground. We can do that in a coaching mode. It's sort of tailored to suit the situation. That's important. I think recognizing that the thing to do is to resolve any issues and not to mask those or not to pretend like they're not there. Recognize it, get it out there, and get some help.
Ken Lempit:
Let's talk a little bit in particulars. So if I'm closing in on my funding round, or I've just closed, and I know that I'm going to need some help, maybe I have my core team, the people I built with and did my first pay round, I've got a lot of promises to keep. What are the opportunities that can be addressed by bringing in virtual C-suite execs, either in an operational or advisory role?
Michael Richardson:
The reality at that stage is that your goals have changed. As soon as the funds come in, what you realize is now you're 90 days away from reporting to someone else and needing to deliver on those really exciting, really compelling stories that you've polished up and pitched for maybe the last 18 months. And this is where it's important as a leader, as a CEO, for example, in an organization like this, to keep it together, to keep it core team-focused and not sort of do that, "Okay, we're done," kind of mentality. Take the weekend off or whatever, go on a trip. But the fact is that the really hard work is about to begin. And this is where the core team needs to continue to do what it knows how to do. And learn how to add, learn how to scale and grow and amplify the effectiveness of what that team is able to do, and start to use those funds wisely and filling out the soft spots, shoring that up.
I'll give you an example. We were working with a SaaS platform that had raised actually quite a bit from the venture world and had built a couple of very strong corporate relationships with some big brands that we would all recognize in the consumer space. They began to struggle early on because the methodology that they used was sort of a scrappy agile. And it grated on the nerves of some of the PE stakeholders that were involved because it didn't add up. It didn't tick all the boxes that they were used to seeing in an organization. And likewise, with some of the corporate relationships, small companies dealing with big companies is always kind of a mismatch in communication and method and no more so than when you're a SaaS firm trying to take on and serve the behemoths out there.
So that's a perfect moment to bring in some help so that you don't have to take your own eye off the ball of the product and the service and ensuring customer success. But instead, you can bring in some seasoned eyeballs, I would call it bringing in some gray hair around the table so that you don't have to lose all your own, and get some help with how do we address these organizations. One of the things I've been instrumental with is becoming a bit of a spokesperson, a bit of an ambassador to the larger organizations for two particularly challenging channel partners or even customers to help connect the dots and smooth it out, and then behind the scenes translate that to the to-do list for what are the weak points, the vulnerabilities in our operation, even in our product and our delivery that we need to address in addition to what we're used to doing as the core team.
Ken Lempit:
You know, I have this vision of the founders of Stripe, these two young guys needing some gray hair and experience behind them because obviously they had great vision, some great tech chops, and obviously very convincing on the fundraising side. And maybe Stripe's much too far along to really be talking about. But those are the typical kind of execs where they might benefit from someone who's seen the movie a few times and help them navigate those growth jumps, both in organizational complexity and complexity of the software and mission.
Michael Richardson:
That's very true. Another aspect of this for these organizations, like the Stripe guys or many other examples that we can think of, is the need to learn how to scale the technical operation and not take it as an attack on the technical architecture they've developed y because there's a lot of pride of parenthood in the SaaS product at that vulnerable moment.
The reality is that the scale of the team (the capacity and the scope) at that stage is typically not up to the task in terms of the expectation level that these new stakeholders around the table have. You've worked hard to set those very high expectations. Now to deliver on those promises, you're not going to be able to do it exactly the way you've done so far. You're going to need to learn how to build bigger teams, how to divide and conquer with more complex deliverables, to build a quality system and connect that very closely to your customer success team. The level of testing, certifications, all kinds of subtlety that was secondary or tertiary during the early days suddenly comes right up into the front row and things that would never block your progress a year ago are suddenly monsters that you need help to deal with.
Ken Lempit:
I think we should drill in just a little bit on what some of those are. In my experience, infrastructure, stability and resilience, compliance, you mentioned certification. Almost any publicly-held entity you're going to do significant business with is going to look into the security and operations and the data center behind you. A minimum viable product is very different from a production-ready, resilient environment. I think of a conversation I had with a CTO where he admitted that he was a great designer and builder, but he was really no good at operations. And I think operations integrity, it's not as much fun and exciting. It's not brave new world. But if you can't keep your system going, you're going to run into some difficulties. So I think it would just be good just to give some color on where you guys fit in and some of the things you've seen.
Michael Richardson:
In terms of SaaS, we often see this situation where the founding team usually consists of somebody that's really a natural salesperson--a magnetic personality that gets the domain, that understands the pain points they're solving. And they've partnered up with their brother, sister, or best friend who happens to be a wizard in some level of technology, and they've figured out a new thing. They've got the killer app for this application or this market, and bringing the solution is the only thing at that stage. Once you've brought the solution, making that jump is incredibly painful, full of really unexpected surprises, filled with opportunity to learn new things about yourselves and about how the world actually works at scale. It can be fearful, but it should be embraced.
The kinds of specifics I'm talking about are things like establishing real DevOps so that now we really understand how to use all the tools to build amazing SaaS solutions now, and we can go so much faster than we used to be able to do. But the ability to operationalize your DevOps around that so that it is rock solid--you can be confident and be able to sleep at night without worrying that this amazing new customer relationship you just built could fall to pieces because you haven’t done a pen test, or because you’ve never looked at this particular kind of vulnerability because it just wasn't yet on the docket. The opportunity to crack the model gets to be very large at this scale. And that's where it's good to bring in people that have that experience.
DevOps in a containerized or virtualized, globalized and localized scale is an art and needs help operationally--getting the right people, learning how to recruit and retain and grow and play well with others in this stage where the kind of inner priesthood now has to open up the doors a little bit and bring in more of the faithful. That's not always easy to do. And building those trust relationships across the tech team, across the business team, and between tech and business is really critical. Learning how to clip on additional tech delivery resources, how to add this design or development pod to go after the next great vision in your product management team's eyes is really important because it's so easy to get that wrong and burn the clock and burn a lot of resource only to discover that you built on the sand. And so we're there to help prevent some of those natural errors.
Ken Lempit:
So on the tech side then, what we're really talking about is building your development foundation so that whatever the technology and project management environment is going to be, then getting the resources we need to fill out our roadmap to accelerate accomplishment down the roadmap. And it sounds like also some help building out the organization.
I want to move over to the other side of the house. If someone brings you in as a COO, we're also looking at the marketing and sales function as well, aren't we? We're kind of looking at how do all these things play together?
A big part of our interest in the space is removing the barrier between sales and marketing. Could you talk a little bit about this notion of silos and core competencies versus shared goal setting? Any point of view you have on sales and marketing alignment and what that might look like from the COO perspective would be great to share with our listeners.
Michael Richardson:
Absolutely. I'll give you an example. I'm working currently as the virtual COO for an industrial IoT firm that's building a really interesting solution in the industrial space. And the founding team is an interesting combination of scientists in a specific space around materials and around machine operations. And they're very analytical types that are looking at the financial modeling of the marketplace and the impact that this really cool IoT SaaS solution will have on big manufacturing organizations and others that are using these industrial machines. The missing link there is a real sense of marketing. They really need to build into a marketing solution.
I find myself from the COO role spending time helping not just digitalize the operation behind the scenes of the SaaS platform, but also driving that to a go-to-market strategy so that as the marketing vision solidifies and it becomes more clear:
It turns out that how we operate is directly impacted by all that. The promises that we're going to make through the sales and contract process, we need to be able to deliver on. And the direction that the product wants to move, from a development point view, actually requires a huge amount of operation.
Think about it. Most SaaS solutions have a huge dependency on integration. We talk about APIs. We talk about service-oriented architectures. We live in a massively integrated world. You're not going to have a successful SaaS platform that doesn't connect to many other platforms and point solutions inside the enterprise, inside customer organizations, in the cloud and so forth. And operationalizing your ability to integrate at scale and at speed is a number one gap in everybody's plan.
Everybody's got the slide of “What's the ecosystem”? “What are we connecting with”? We talk about cooperation with other platforms in the space and all this cool stuff. But somebody's actually got to do all that and manage those integration points for the organizational integration, the legal and paperwork, the sandbox environments, and the testing. You know, the myriad of details that is required to get yourself integrated into the ecosystem is actually not a technical challenge. It's an operational challenge.
Ken Lempit:
So this is really interesting. We come at this from the perspective of sales and marketing, sharing goals, and kind of blurring or removing the distinction between the sales and marketing KPIs. It's a totally different perspective here. Sales almost wagging the dog of product management and sort of needing to create an environment where you can almost make good on some of these commitments you might have rejected. The unsaid words are how are we going to make good on the promises these guys have just made, right?
Michael Richardson:
Exactly. And in the old days of sort of brittle IT, there was always this battle between development and IT and sales where sales viewed IT as the sales prevention department and IT viewed sales as the guys that sell everything except what we have.
Ken Lempit:
Yeah, like Larry Ellison, right? Sell first, build later. Right?
Michael Richardson:
Exactly. My favorite phrase for that was never confuse selling with installing. And now I think because of SaaS, because of the prevalence of smartphones and IOT, in some cases it's the other way around where the tech and marketing side say, "Of course, we can do that. We can do anything." I've seen actually sales teams that are really organized around customer success have almost reversed the model now and said, "Okay, I'm going to go promise this to this customer. I have to make sure that I'm actually going to be able to deliver this thing because I'm on the line, our customer success is on the line, and I can't just take it from the tech founders in the backroom that, 'yeah, we'll figure it out.'"
And that's an operational opportunity to align sales, marketing, and the product management tech roadmap around a methodology. It's not saying we've got this fixed menu and if it's not on the menu we can't do it. That's not the operationalizing I'm talking about. I'm talking about the ability to be fungible, to be agile at scale, and to be able to listen to what actually constitutes customer success as heard by sales, as reflected through the marketing materials, and then interpreted into, "Okay, so what do we do about it operationally in the tech and in the delivery?" This is where I think the COO and growth-oriented CIO is the best friend of the sales and marketing diatribe.
Ken Lempit:
So you're calling for a rapprochement between operations and sales that people might not anticipate or expect.
Michael Richardson:
That is exactly it. Again, this is one of those complete blind spots in most SaaS organizations. I've seen this in working with a financial services SaaS organization. They've gone through many iterations of growth and discovery, some painful, some really successful. And the successful cycles were always a matter of matching up operational capability with customer success expectation. If those are not aligned, you're going to fail. And so someone needs to keep their eye on that ball. And this is not in the wheelhouse of most founding teams.
Ken Lempit:
I want to dial back a little bit or go earlier in the organization, the arc of an organization. Does it pay for a founder to seek someone like you and Tech-Azur as they're getting close to funding? Is this something that would help them generate confidence in an investor that they're going to start on an accelerated path? It seems to me that it would really be a bummer to be 75 days into your first quarter and realize you haven't gotten much done and then all of a sudden you're looking for help. So where does the smart CEO founder start looking for this kind of advice and how can they line up with a resource like yours?
Michael Richardson:
You hit on a really, really excellent point. We're working right now with a founding CEO. He made the wise choice to connect and engage Tech-Azur about 90 days ago as he was getting to serious rounds in effectively a significant seed round that he's looking to raise because he was struggling and he began to realize that it was going to be difficult to present the how to support the what. He was having that struggle because everybody's domain expertise sort of overlapping in the solution space and not in the delivery space. I've been able to step in and help as essentially a virtual CTO in this case to help crystallize how do we describe this platform to these potential investors and the credible storyline of how their funds, what's the use of funds as applied to this platform development and the customer success, or in this case patient success, of the resulting operation.
I think a wise founder will reach out to us and engage at a starting level. We're not talking about bringing in a whole team here. We're talking about an advisory role. And that's one of the things at Tech-Azur we've focused a great deal on understanding how to tailor what we're delivering to the particular need. Whether they're asking for it correctly or not, we can do a bit of a situation analysis and then recommend, "Well, this is a good focus for now. At this next stage, then we can ramp it up and bring in some delivery support, or we can clip on a couple of integration teams or some tests and certification, security validation." So I think it's more important to have the discussion, not assuming that we're a hammer, everything's a nail, but instead say, "How am I going to be really well-prepared to make this investment hitch and be convincing about use of funds thereafter?"
Ken Lempit:
I mean, every one of these presentations has a team slide, right? If you're on the receiving end of these presentations, it's kind of nice to know that there are people who are going to actually be able to execute on the plan across the domains you might as an investor believe are important. And if it's a founding team of six people, that might not be enough, especially if there's no obvious plan for how do I get from six to 25 in 45 days?
Michael Richardson:
Yeah.
Ken Lempit:
I think that that's where if you're not a multiple or serial founder, right? If you're not a serial CEO and a successful fundraiser and builder and seller of these companies, you can't anticipate the things that are going to be deal killers for the investors. And I bet execution capability is probably top of the list after is it a good idea.
Michael Richardson:
Absolutely. Our most appreciative clients are first-time entrepreneurs. They've put this together. They've done something amazing. And when they look back down the mountain, I've been to many an investment or a PE or a buyout sort of celebration in which there's sort of a pat on the back like, "Wow, you know what you told us two years ago, that was really right. We are glad we did that after all, even though we may have struggled with it in the upfront."
Ken Lempit:
We're also seeing a lot of founders that are subject matter experts, but they're not necessarily software or SaaS experts. Folks are really good at what they do and they bring a unique insight into, as you talked earlier and we talk a lot about, pain points that they can address, but they may not have the full picture as to what it takes to grow, build, drive revenue, and ultimately drive to a liquidity event.
Michael Richardson:
Yeah, exactly. It's unrealistic to expect a person that is super deep in these domains or maybe has an amazing network of skilled resources in that space to also somehow magically be a brilliant strategist or the magnificent operations visionary. It's just not how we're built as humans. We need the help. We need the village. And we bring that part of it through Tech-Azur that is generally always missing. And it's just a question of have you realized it yet? You know, have you realized it before the challenge, maybe in the middle of the challenge, or after the first crash?
Ken Lempit:
So it's the unknown unknowns, right?
Michael Richardson:
Yeah.
Ken Lempit:
I think that's everybody's fear. They talk about founders and great leaders being able to look around corners, but if they don't have the vision themselves or the experience, it's incumbent upon them just to bring those people that can help them be their scouts. I want to talk a little bit about measuring success in the relationships that you have. How have you positioned that for your clients? How do you measure that success? And can you talk a little bit about some of those outcomes that were measurable?
Michael Richardson:
We find generally that there's a scoping period that needs to happen upfront so that there's not an assumption of all or nothing or that there's a massive commitment required. So we have a conversation and then drill in a little bit to the situation and choose together what the right set of services are and the right kind of support that's needed. And I think time-boxing things and defining goals, objectives for the relationship upfront is very important. That might include a recent funding event and now we need to go integrate with these three solutions, or we need to hit a certain level of scale, or we need to build the team to this strength level within a timeframe. This is the 90-day thing. This is a six-month thing. Anything that's farther out than six months tends to be imaginary. So we try to focus on what we are going to do this week, the next week, six weeks, 12 weeks, etc.
And how are we going to know during that period that we're delivering?
Success metrics would be things like completions of specific integrations or being capable of a specific thing within 90 days. Resolving a platform move for example--things like that where we can put time and numbers to it in terms of dollars. But also, we can look at an outcome. What is a successful outcome and how do we know it's going to happen?
And then accept the idea that part of our role at Tech-Azur when we come in is to discipline the process. We're not just a service provider in that way. We're a member of the team around the table and our voice will be heard. We're going to make sure that we can extract the deliverables that are needed out of the organization and escalate if there's a problem, why that is, and then help bridge the problem. Very often, and this is why I think of it as a business transformation, because you're transforming from what you are right now to what you aspire to be, current state, desired future state, if you don't know what the parameters are of the desired future state, just better or just less painful is not good enough.
Ken Lempit:
You have time, numbers and outcomes, you can shape a professional services relationship pretty succinctly, can't you?
Michael Richardson:
Yeah. And that's the way SaaS when it's done right solves problems for customers. It's not just psychology. It's real deliverables. And it's got to feel good, but it's actually got to do something. And again, such a blind spot not knowing how to operationalize, to live up to the potential of this magnificent platform you're developing.
Ken Lempit:
Well, I think that's a great place to land the podcast. This was a really wonderful conversation. I think there's a lot for people to think about who are in leadership at SaaS. Also, I think investors, if you're behind a SaaS firm, if you want to help them to achieve their goals, and obviously use your money wisely, it would be great as an investor to consider this kind of resource and role for your investments, your portfolio. Michael, how can people reach you if they want to learn more?
Michael Richardson:
Well, again, the name of our company Tech-Azur. The website tech-Azur.com. You can reach me directly. My email address is simple: michael@Tech-Azur.com. And let's have a conversation. My calendar is available on our website. And let's dig in and help your SaaS firm succeed to the dream level that you have in your mind right now.
Ken Lempit:
Excellent. Well, thanks so much. Really enjoyed the conversation. If people want to reach me at Austin Lawrence, my email is kl@austinlawrence.com. I'm also on LinkedIn at linkedin.com/in/kenlempit. Thanks everyone for listening. And we'll be back soon with another great episode digging deep into what helps SaaS companies to build their success.
Thanks for listening to the SaaS Backwards Podcast. Brought to you by Austin Lawrence Group. We're a growth marketing agency that helps SaaS firms reduce churn, accelerate sales, and generate demand. We hope you'll subscribe, and thanks again for listening.